Ep. #1094 - Restock Limits: Everything to Know in 2023
In today’s episode of Startup Hustle, let’s define restock limits for your e-commerce business in 2023. The conversation between Andrew Morgans and Chelsea Cohen, co-founder of SoStocked, will guide you. Get to know the best tips on managing your inventory wisely in the current market. And learn how SoStocked can help your Amazon business reach greater heights.
Covered In This Episode
It’s 2023—and there are new things to learn regarding supply chain inventory management. If you want more tips about restock limits, join Andrew and Chelsea.
In this episode, they shed light on the latest pointers in successfully having a good inventory. And they also delve into things like cost for each skew and inventory management tools.
Interested to know more about it? Listen to this Startup Hustle episode now.
- Chelsea’s backstory (02:53)
- The jump from production to financial management (05:50)
- Getting into Amazon (12:59)
- The spark that started Chelsea’s idea in inventory and stocks (18:02)
- Looking for inventory tools and solutions (21:30)
- What makes SoStocked an effective inventory tool? (23:51)
- Joining the Carbon6 family (30:46)
- Best tips about inventory to apply in 2023 (33:23)
- How can SoStocked help sellers manage inventory? (37:22)
- What is Chelsea working on this year? (44:08)
When we talk about profitability, we know that a stock is expensive . . . But the part that people don’t really factor in is all the money that you spent on that advertising to lead yourself into a stockout. [It] is another opportunity.– Chelsea Cohen
With these rising fees and inventory limits, everything’s getting harder. When everything gets harder, we need better tools to help us accommodate that. It’s not that it becomes impossible. It’s simply that now there’s more to handle than I can just do an Excel sheet.– Andrew Morgans
You need to really understand your numbers. I think a lot of people think they understand their numbers, but they don’t fully grasp what is referred to as unit economics. True unit economics is that money that you are actually spending, not just the landed costs.– Chelsea Cohen
Take advantage of what Full Scale can offer! Are you looking for advanced tech to use for your project? Do you want to build a software development team quickly and affordably? Full Scale’s got your back. Most importantly, the company’s proprietary platform automatically matches you with a fully vetted team.
Are you also looking for other business services? Our Startup Hustle partners can help you too.
Following is an auto-generated text transcript of this episode. Apologies for any errors!
Andrew Morgans 00:00
Hey, what’s up, Hustlers? Welcome back. This is Andrew Morgans, founder of Marknology, here as today’s host of Startup Hustle. We’re gonna be covering all things Amazon, e-comm, and inventory supply chain. We’re gonna be getting into the details today. Before I introduce today’s guest, shout out to our sponsor FullScale.io. Today’s episode of Startup Hustle is powered by FullScale.io. Hiring software developers is difficult. Full Scale can help you build a software team quickly and affordably and has a platform to help you manage that team. Visit FullScale.io to learn more. Today’s guest is a founder of a company called SoStocked, and I’m super excited to get into her story. Chelsea, welcome to the show.
Chelsea Cohen 00:41
Awesome. Thank you.
Andrew Morgans 00:43
Yeah, where are you? Where’s home for you right now?
Chelsea Cohen 00:46
I’m in Austin, Texas.
Andrew Morgans 00:48
Okay, I love it. More and more founders, entrepreneurs, I guess, and Amazon sellers I’m getting to know are in Austin, and I’m based in Kansas City myself. Austin’s a lot closer than let’s say New York or Miami or some of the other hubs. So super, super cool. I just met Kevin King and him on the podcast, another Austin native, and then Joey. Joey and Jamie, I met them recently. So my Austin crew is growing a little bit.
Chelsea Cohen 01:18
Yeah, absolutely. Yeah. Yeah, we’re working on getting groups together more often. Because there are a lot of people out here, but there’s no one pulling the community together. So we’re hoping to be able to work with Joey and then Erica, who runs marketing at Carbon6. And we’re working on having more regular meetups.
Andrew Morgans 01:39
Awesome. I was there for the Q4 kickoff party. And it was a lot of fun. I was surprised to just see that big of a turnout in the community. To me, that’s as close to home as a bigger Amazon community that I’ve seen. So yeah, yeah. Well, let’s get into your story a little bit. Tell me, I’m obviously the founder of SoStocked, along with some co-founders, I believe, but talk to me about yourself even before that. Like, did you always know that you were going to be a founder or an entrepreneur, or a businesswoman? Where does your journey start?
Chelsea Cohen 02:13
Yeah, that’s a funny story. Did I always know because when I was little, I went back to when I was eight years old, and my mom told me this story later on? But when I was eight years old, my mom was a business owner. She had her own school. First, it was a daycare. And then it was from school. My dad had a copy, a copy graphic store. And so, at eight years old, my mom was talking to me about something. Oh, well, when you have kids, you know, and she started saying something. And I’m like, Well, what do you mean? She says, Well, you know, when you have your own kids, and I said, Well, I’m not gonna have kids. She’s like, Oh, well, why not say who will take care of them. I want to be working. Like this startup, like, you know, my entrepreneurial spirit. You know, we made lemonade stands, we sold it, you know, Grogan sold vegetables. I tried to have a school store. So it was always things that I was doing to try to have some sort of a business.
Andrew Morgans 03:14
So I love that. I love that I think I didn’t know so early. I didn’t want kids. But I definitely like to have always worked two or three hustles or side jobs or, like, there was no other way. It was like a resource scarcity. So I was like, always trying to gather more, you know, where are you? Where have you been in Austin from even childhood?
Chelsea Cohen 03:34
Los Angeles, born and raised in Los Angeles. Yeah.
Andrew Morgans 03:38
So you were selling lemonade. In LA, I liked that. You’re gonna go and the market now as a place to grow up. And I think you get exposed to a much faster lifestyle, you know, you’re seeing everything. Okay, so you knew early on, you’re like, I’m gonna be a businesswoman. I’m running a business, like, what will happen there? Did you go straight into college and pursue it that way? Or did you go a different route?
Chelsea Cohen 04:00
Yeah, I sort of went to film school of all things I’ve always wanted to write. So it was always I wanted to write, but I also wanted to, you know, be a business owner. And so I went to film school, I went for a screenwriting class and then ended up going into film school. That led to a production company and, you know, fear of, I think it was more fear of success. I was afraid of what I didn’t know and that I would make a bunch of money and then owe a bunch of taxes or something like that. So I really kind of held myself back. But that was kind of the first, the first foray into everything seemed to always turn into some sort of a business, you know, and that was kind of every now and then I would go back into, you know, a job, but I would constantly pull myself back into something business oriented.
Andrew Morgans 04:53
It’d be like doing something, let’s say a hobby or pursuing a side hustle, no, get bigger, get just get bigger and turn into it thing. You said you went to film school? Did you get out that turned to production? Was that like your own production? Like a smaller production company? Or did you join in production?
Chelsea Cohen 05:10
Yeah, I, we created a production company. And it was very, you know, low-budget production. We do music videos, and then we write our own script. So we would produce our own. We produced a trailer for one of the scripts that we were trying to sell, which was based on Edgar Allan Poe. And, you know, so it’s a period piece that was probably the biggest production that we produced. And then we would do work for others and then get our production company name put onto the film.
Andrew Morgans 05:38
Yeah, I love it. Before I got into e-commerce, I was in a band full-time touring and not production. But in a way, you’re setting you to know, you’re coming into town, you’re setting everything up, getting the lights ready, is a whole thing, it was a whole thing, you know, tear it down and go to the next one. And I absolutely loved it and didn’t really know that that was my first, I guess, attempt at building a brand. And my first attempt to understand booking shows and creative and being on brand and from album art to payroll too, you know, everything we were doing was all about trying to make it and make it cohesive. And then you’re getting the labels to tell you, we’re doing showcases, and the labels would be like, well, you know, we’re really looking for a brand that’s like this or like that has this look or, and what were negatives, at that time really set, I think some of my baselines for like branding and things like that, like kind of getting guided and failing. Okay, so you go back into work, like, was it always in production and video, like, up until, you know, I guess you before we get here, I need you to help me make that journey.
Chelsea Cohen 06:43
Yeah, and actually, um, so in the film, I was always on the producer side of things. I thought I wanted to be a director, but I gravitated more toward producing production management assistant direction. So just running teams and doing all the organization, I take a whole script and break it down for every single element that is needed. And so on that side of things, there’s an analytical side, you know, not just a bunch of very strong analytical sides of me. When I ended up leaving, I got really burnt out. I went to a friend of my family’s financial management firm. So I ended up going and working at the financial management firm, managing the finances for some, you know, lesser celebrities, directors, and, you know, photographers, and that really got me into, you know, spreadsheets and numbers and, you know, profit and all of that side. See how it’s all coming together? Exactly. Yeah. So that’s how that whole side started, you know, I conquered my fear of taxes there, I brought that fear of taxes, you know, from, from the film side of things, so I can’t conquer that fear. And there was a moment there, because you have these celebrities, and you have, you know, actors and that you’re in, you’re looking to go, what’s so great about them, what’s so great about that person, they’re, you know, kind of, they’re not like the cream of the crop or whatever. And I came in with a very kind of jaded view and a jaded attitude because I had not made the film thing happen. And I found, and I realized that, oh, you know, what, the only thing that’s different between you and them is that they did something that you didn’t do. And that was a huge, like, shift in that I no longer had to be, you know, mad or upset at anyone else, that I needed to do something and do it consistently on the same course to be able to make something happen.
Andrew Morgans 08:45
It’s like a light bulb of ownership. Yeah. Accountability. Yeah, I love that. And I can definitely relate to, you know, I don’t know what the source of your tax fear was, you know, but a lot of times, it can be family, or like seeing mom and dad struggle about taxes or rent or something like that. And then, you know, for me, coming from a missionary family grew up abroad. Once we were back here in the US like I was 16. At that point. We were, you know, a family of five on, like, 30k a year, probably, if I’m being conservative. And, you know, you just, you’re pinching pennies, you’re like everyone’s saving their bucks, like, you know, mowing lawns. And for me, as a business owner now, with Marknology, and everything else, we do it there was tons of lessons of like scarcity, mindset type of thinking, like around money and finance and just like, Okay, can I be the first Morgans it’s like really good with finances or like, you know, setting kind of breaking some of those barriers. We were the finances of the family because we gave it all away to other people. Right, but what about keeping it? What about, like, is that going to correct me? Is that going to turn me, you know, into a certain thing, a different person than what I am and always having these, like, everyone has their own challenges, you know, but for me, it was definitely around finance. And it wasn’t until my lesson in that just to share was, I went to, I was always okay with my own budget, like, just because I, you know, seltzer get on your goodbye on your own plan for six weeks of the tour and be able to come back and work and like, but that was much smaller potatoes, you know. And it wasn’t until I went to a business accelerator in Babson College I got accepted into this business accelerator, and you got like these individual Crash Course days where you’re looking at your business Marknology, or whatever, like all as a group and a smaller group, but like with a teacher, and you get like eight hours of CFO type of thinking and building out plans. And I really came back from that with just like this, like, I guess ownership, this acceptance of just looking at the finances or mind of my own. I need to have maybe I’m intimidated by the conversation with the CPA or intimidated by the conversation with the bookkeeper. Not that I couldn’t do it, but more so hadn’t done it. And I’ve made those questions because I was insecure about something, you know, hey, I don’t understand this terminology, or I don’t understand this balance sheet. I don’t understand whatever, you know, but once I just took that on, to be like, You know what, I can be good at this if I want to be good at this. And it’s changed, it’s changed a lot in my business. Probably the last three years or so. Just owning that piece. Okay, so these are what the lessons are for, right? So you’ve got the ability to project to manage and break a project down almost like an engineer, then you’ve got the ability to manage profit and loss and budgets and timelines. And so if anyone is listening, like, She’s the founder of soy stock, and we’re gonna get into, like, you know exactly what that is. But I’m seeing the pieces kind of coming together and being like, you know, the perfect fit that makes a company like this come to life. So after, you’ve kind of been like, look, I’m gonna stop comparing myself to these, like celebrities or athletes or whatever, I’m gonna stop comparing, I’m gonna just do what your thinking was? Or what came up for that?
Chelsea Cohen 12:11
Yeah. Um, so we had done a couple of multilevel marketing things. And we weren’t really happy with that. We had friends who were visiting friends and trying to sell them, you know, on whatever we were selling at the time. And so it was we kept saying we, okay, my husband and I, my husband and I have always been in business together since. You know, since 2014. Really? Okay. Okay. Got it. Yeah, yeah. So so yeah. So we were talking to them, and we kept hearing, you know, that sounds great. But all my money is going into this course called Amazing Selling Machine that’s about to open up. Top kids kept talking to friends, one of our friends was making 60,000 a month, no experience whatsoever. And we thought, well, that sounds a lot better than what we are doing. And so we wanted to buy, we finally made the decision, okay, we’re going to get the course. And they had closed the door. It was one of these, you know, twice a year they open the door, then they close it. And so the door was closed, and we decided to look for other ways to sell on Amazon. So okay, well, let’s, you know, we ended up falling into retail arbitrage. We never ended up sending anything in I kept, we kept scanning things. And then you know, the scanner was set wrong, and they were not profitable. And I thought this can’t be what people are doing to make $60,000 a month. So as luck would have it, one of the people that we were talking to who was selling the courses, she was affiliated with the courses, she ended up getting someone who wanted a refund and talked to the course creators and asked, Can I just sell it to someone else? So we took $3,000. And without seeing what this thing was, we didn’t know what a private label was. We didn’t know the concept. We hadn’t seen a video or a demo or anything. We sent $3,000 via PayPal to someone across the country that we never met, and got access to the course and then watched the course and learned what a private label was. And I was like, this is brilliant. So that was kind of how we got into Amazon 2014 was okay, you know, taking a course.
Andrew Morgans 14:19
Yeah, so that was when I started my technology for, for context. I’ve been selling on Amazon or econ for 12 years, but 2014 was the birth of my technology. So we’ve been kind of out at about the same time. And that was like anyone that’s been there since then we have a certain level of context like automatically we understand how it’s changed and grown, and you don’t have to explain any of that. So you’re, you’re in the course you dive in, you just jump in. It sounds like you and your husband are risk takers for sure. So you jump in and you didn’t like sending product info to retail arbitrage before kind of understanding the process and Seller Central and scanning and understanding profits. So what happened after the course?
Chelsea Cohen 15:08
Yeah, so we had a little bit of advancements, they would release an app module a week until we had a little bit of advanced runway to catch up on. And we got a product. Our first sale in seven weeks, we got from the point that we got the access to the course of the point that we launched, our first product was seven weeks, we, it was fast, because we thought we were behind. So we were rushing, and then we made our first sale before the inventory even arrived. Because, you know, you’re told at the beginning back in the day, you would turn on the FBM to get people to write reviews, you know, we literally went and took the product to people’s houses and said, okay, good, now write me a review. And you know, and back in the day when you can do that. So we sold them a couple of units before we even had inventory. So we had to handle that to make sure the inventory went out. And it just took off. We, you know, we started making money, we became our best selling products just, you know, pretty immediately. I think it had a lot to do with timing, the product was right, the product was hot, and we were better at copywriting you know, I had that background as a writer. So we just out marketed, you know, back in the day when you could just launch whatever everyone else had and just out market them. So yeah, so that went well for us still trying to do that today.
Andrew Morgans 16:31
But at that time, you’re right, at least 2014 was pre PPC. So it wasn’t even about advertising. It was about like, you know, having a good product and back then a lot of them had one image or no descriptions at all. And a lot of sellers would argue that they didn’t need SEO, it was really just reviews and giveaways like pugs going. I think it’s a combination of all of the above, just they were weighted differently. Yeah, whereas important, but I know exactly what you’re talking about. Okay, so you guys are off to the races you’re selling. You’re just jumping in? Did you run into some hurdles? Or like, you know, I wanted to understand how kind of this began to start forming in your mind about helping in regards to inventory and stock and really improving that.
Chelsea Cohen 17:22
Yeah. So we were helping people in other ways already. We, within our community, had a lot of friends join and then friends of friends. And so we kind of built up a reputation for helping people. We started, you know, affiliating for the course we worked for. I don’t know if you remember Ryan Moran, he’s still around, not as much on Amazon. He ended up he he’s, he started out with Amazing Selling Machine. But he ended up building his own stuff, a capitalism.com website, and he brought us in as some of the first mentors for his group. So that kind of started out with us just really helping out. A lot of people. I spoke a lot about copywriting back then. I still have a copywriting agency on the heels of that. But it was really looking at my own business, we had stalked out a couple of times in 2017, we made a bad move. And in terms of a purchase of a bunch of inventory. That was essentially it was a child listing of our best seller and Amazon and spun them and they wouldn’t let us spin them back together. And so we had all this inventory overstock and I just saw the profit margins really suffering because of the Overstock and the stock outs. So I went and I looked for a tool back in 2018. And there were a few out there, but none of them really worked the way that I thought they should.
Andrew Morgans 18:58
So it’s okay to say it’s okay to say whatever you want on this show. So I think that’s where a lot of trust comes in. It’s like, you know, now just speaking from this is the way it is but like, you know, I’m definitely a consultant. A team has tried so many things out there. You know, even a lot of the carbon six family which you know, for anyone listening, so Sachs was part of the carbon six family of tools. A lot of those tools ManageByStats or these were friends in the industry colleagues that have built tools that I had tried, I’ve tried in the past I’ve used so speaking to that, like, at least as an agency owner there were like tools for sellers and then there’s agency tools is a whole nother thing. And a lot of these conversations I feel like you had to be really good at Excel, really good at pulling four or five reports together and coming up with things like, you know, where your inventory is what you’re doing. Profitability is one of those big things and we all know that profitability, a big part of profitability comes down to the warehouse. was in a chain and, and how efficient that’s going. So you tried a couple of the tools out there for me and I’ll speak to it as the tools are only so good. We ran into hiccups, if I can remember right, for a lot of our sellers around FBM and FBA and essentially not accounting for both are doing both correctly, which almost every brand that we work with, I’m trying to get them to be an FBA and FBM. In case anything happens, right? You want to be able to pivot for your three packers and FBM. Back, there are different things. In the Tools, we’re limiting in that way. So you’re trying to solve some of the issues you came into in 2017. You’re trying some of the tools, they’re just not working? And you’re like, Well, I’m gonna add developer to the list.
Chelsea Cohen 20:50
Yeah, yeah. I mean, you know, more or less I, I wanted to kind of start to prove out the concept because I felt like I had an issue, and I was looking for a solution. And I kept asking people, I had, you know, a couple different masterminds that I was a part of, and, you know, these are, you know, decent sized sellers. We’re not talking about beginners, asking, you know, what are you using, to see if there’s something out there. And they kept saying, you know, we’ve tried everything, it all sucks, we’re back to spreadsheets. And for me, especially wanting to really gravitate more towards helping people and working with people I was getting, you know, kind of bored of just running a brand on my own. I really, really enjoy, you know, the collaboration. Yeah, absolutely. And so I thought, well, if, if everyone’s you know, everyone’s unhappy with this, and there’s no product out there that it’s doing, I think that I know what we should be doing. I think I have an idea of what’s missing here. A big piece of what was missing was that tools did not, they took past data from Amazon, but they didn’t allow you to know what was going into the algorithm. They didn’t let you customize anything. And they didn’t let you put your marketing plans into your inventory plans. So those were the three major pieces that weren’t being done. Right, which is, you know, where I kind of came in and said, I think that I think that we can do something here.
Andrew Morgans 22:23
Okay, well, I have some questions for that those three things that you just brought up before we do, finding expert software developers doesn’t have to be difficult, especially when you visit FullScale.io We can build a software team quickly and affordably use the Full Scale platform to define your technical needs. And then see what available developers, testers, and leaders are ready to join your team visit Full Scale that IO to learn more. So you know, a big topic this year is in 2023 is like restock limits and you know, pulling out excess inventory fees going up and all that kind of stuff. But before we jump into that, it’s, you know, kind of a common status quo. I want to talk about these things that you saw that were missing in software that you saw as an opportunity to talk to me about building marketing into your inventory plans.
Chelsea Cohen 23:11
Yeah, so that’s, that’s one of those variables, you say, you know, there’s the science of inventory, and then there’s the art of inventory. And if you don’t have your marketing plans built in, you can end up stocking yourself out before restock limits are the number one way that people did stock out was doing you know, going to some event or finding something on online and doing something to tweak their their marketing strategy, it going really well and then their burn rate just being so fast that they were not able to stay in stock. That was very common.
Andrew Morgans 23:49
And wanting to bring something to add here. I think that’s huge as an agency, we get hired by brands to manage their Amazon Marketplace, but we work hand in hand with the DTC team, the Facebook team, the PR team, the influencers themselves, you know, everything they’re doing in retail. And you know, so many times we would come across a brand that would like do a serious FM commercial or a TV spot or featured on some Oprah list or, you know, something like that happened us not be up to date or told what was going to happen sometimes because it’s happening randomly other times because it was like, well, the team just weren’t talking because it’s not in our scope of work to communicate with your DTC partner. And we would just sell through inventories, right which is like, and then you know, they’re they’re saying, Well, what’s going on guys, we’re missing our opportunity to sell, sell, sell, sell, and you’re like, we had no idea this this tornado was coming, so to speak. And so I can just really attest to that being especially the brands that have a strong off Amazon presence or like those things that happened a lot more common, a lot more common.
Chelsea Cohen 24:57
Yeah, absolutely. And some of them you know, You can’t predict, you know, when you don’t have any hands or eyes on that. But, you know, in other cases, it’s something that there should be coordination. Otherwise, you know, you’re, you’re spending and I’m sure you know, to get these spots, they’re spending money. So you’re, you’re actually the when we talk about profitability, we know that a stock is expensive. We know, you know, if you have to air freight or you know, express ship, if you have, you know, your your stocked out if you have to do any ranking, but the part that people don’t really factor in is that all the money that you spent on that advertising to lead yourself into a stockout is the other opportunity.
Andrew Morgans 25:42
Equation. Yeah, yeah. And you’re missing out on potential sales. The ROI goes up for each sale that did come through that marketing. Yeah, no, we’re down, I guess. Okay, what were the other two run me through the other two opportunities?
Chelsea Cohen 25:56
Yeah. They just were not able to see what was going on in the formula? It’s not being customizable, kind of a black box. Yeah.
Andrew Morgans 26:09
So meaning, we don’t know how Amazon’s seeing our inventory, if it’s good, if it’s bad, if we’re too low, like, you know, there’s IPI health and different things like that. But that’s a very high level.
Chelsea Cohen 26:20
Yeah. And, you know, you’ve got these people who build this software, and they say, Okay, we’ve got a bunch of, you know, statisticians, and they’re extremely smart, and they’re smarter than you are. And they’re going to tell you the magic number, and you’re going to just trust the magic number. But of course, you know, in the, you know, in our businesses, we don’t we want to know, what are the factors, what are the variables that tell me that I need to order 5000 units, if you can’t tell me that, whether it’s right or it’s not, I’m not going to trust it. And that was kind of what we’re, what we’re getting feedback on. That’s how I felt, and then we just, you know, verify that with, with the other sellers in the market that they really want to know, they want to know what the what’s behind the formula, and they also want to be able to customize it, they want to be able to, you know, tweak it for not just a cat on a catalog level, but on, you know, sometimes on the SKU level.
Andrew Morgans 27:11
Okay, and there was a third one. So we had, we had marketing built in, we had the ability to see what’s happening in the algorithm. And what was the third opportunity?
Chelsea Cohen 27:23
I think it was the customization.
Andrew Morgans 27:25
Okay, so what does that mean? What does that mean, for me? I don’t understand what that means, either, as far as being able to customize what goes in?
Chelsea Cohen 29:49
Yeah. 2018. Yeah.
Andrew Morgans 29:53
Okay, so, never had conquered a programming project before. And you’re like, I’m gonna do this. I’m gonna jump in. In 2018 to join the carbon six family. What was that? Like?
Chelsea Cohen 30:06
Yeah. So we bootstrapped everything. I knew that I didn’t know anything about, you know, I knew Excel, I could build something in Excel and I had an idea that I could do something if I had someone. So I decided that I was just going to have to meet someone who would want to partner with me. Two weeks after making that decision, I met my business partner at a really tiny Amazon event out in Sugar Land, Texas right outside of Houston. And I had heard of his software, he I don’t know, if you remember Thomasson back in 2015. Yes, yes, yeah. So he’s one of the co-founders of Thomason. And we hit it off. And he kept saying, I’m so bored, I need a new SAS project. And I’m like, Hey, I got an idea for you. And you know, and finally, with the help of my husband, he convinced him like, No, I want, I don’t want to just give you this idea, I want to do this idea with you. Because he wasn’t interested in, you know, going and doing something, I mean, they probably wouldn’t have been able to do what they did without someone inside of the community, really pushing and teaching and all of that. So we just met and, you know, for whatever reason, they decided to throw a bunch of money into it with me. And, you know, we launched in 2019, in July of 2019.
Andrew Morgans 31:31
Okay, awesome, good timing, you know, I think I am set up for that. And now you joined the carbon six family, which I know brings a ton of value in regards to just the other founders there, being able to share information, share development, tech, share software stack and really grow things up. We spoke on the same stage a few times. So I’ve really seen, you know, stocks just growing into a powerhouse. Let’s spend the rest of you know, we’ve got about 10 minutes or so let’s spend the rest of the of the podcast kind of talking about, you know, we know, so socked is, you know, what are some of the things to think around, think about around supply chain inventory management, you know, with these rising fees, inventory limits, everything’s getting harder, I think that’s when everything gets harder, you just we need better tools to help us, you know, accommodate that. It’s not that it has become impossible, it’s simply that now there’s more to handle that I can just do an Excel sheet, for example, all these little nuance things matter. I gotta know where my fees are, what to pay attention to and what opportunities to look for. What are a few you would share, you know, with any listeners going into 2023 that are important?
Chelsea Cohen 32:43
Yeah, I mean, it’s important to think differently about business. Nowadays, it’s not as easy, the margins are slimmer. So I, I’m a big proponent of doing the hard work, the stuff that’s going to take a toll is it is a heavy lift, like you have, you know, light lifts like reimbursements is one of those light lifts. You know, you send your account to someone and they do it for you. PPC, you know, reducing the budget on PPC is one that people go to, you know, pretty quickly, they try to negotiate prices with their suppliers, those types of things. But there are more time intensive things that should be being done to really completely overhaul your p&l. I like to call it profit optimization across the supply chain. There are things that people can do. So it’s it’s two sides, one, you need to really understand your numbers. I think a lot of people think they understand their numbers, but they don’t fully grasp what is referred to as unit economics, true unit economics, you know, what, what is that money that you are actually spending, not just the landed costs, but to get that, that those units sold, what did each unit cost you? So I’d say that and then you know, and then on the other side, knowing how to leverage your supply chain in the right ways.
Andrew Morgans 34:09
Okay, so let’s get a couple of tips there. So someone’s trying to someone’s got a business, they know that their unit economics need to be dialed in, or they know that, you know, they need to look for profit optimization across the board, whether you’re in an agency service based or product base, you have products, right and services where someone gets started.
Chelsea Cohen 34:33
Yeah, I mean, for an inventory based business, you know, smaller is always better. If you can make something smaller, or you can make less of something that you’re going to pay less for it. So for example, if you had, you know, the same order size, but you had less pallets or you have less cartons, that would be great because every time you have a carton and it gets a label slot doggone it, you’re going to pay for that. So if you can cut your carton slot, you know your cartons in, you know, by a third, for example, that’s going to save you money. So every single unit that you’re paying for is going to cost you less money for those carton labeling fees. So that’s kind of the example, we have a free tool called a carton pallet optimizer. And that looks at your unit size and your pallet dimensions. And it reverse engineers it to figure out how to get as many units per pallet and as many units per per Carton as possible, within the restrictions that that Amazon imposes and within restrictions of, you know, palette guidelines.
Andrew Morgans 35:47
No, it’s huge. And I know that there’s, there’s all types of things like what kind of packaging you’re using? And is it hassle free packaging? Or is it eco friendly? You know, and obviously, the tried and true ecommerce, Amazon strategy of kitting and bundling and variety packs, you know, how do you get added marketing materials in their terms of service, and, you know, all the ways essentially, that you’re cutting, you’re cutting down on costs. For us, like Marknology has a warehouse and fulfillment center as well, just for the brands we’re building internally, it’s so important to be able to have your hands on those types of things and just be be controlling it all the way down to the last label the last 10 cents sticker or you know, whatever it is. Okay, I love that. And so, okay, so we talked about, you know, economics and these kinds of things. And then like, what is the software? How can software help sellers accomplish this?
Chelsea Cohen 36:42
Yeah. Part of I mean, you know, why I started this whole thing was that when you stock out, you’re off, it’s off, obviously costing you money, when you Overstock, it’s costing you money, especially now the fees are really crazy. Now, the new 2023 fees have just gotten to be pretty, you know, pretty unfavorable. So, there’s a very strong message that Amazon is sending, which is, you know, increase your sales through increasing that inventory turnover. So starting to think, you know, starting to think with that, and then to come up with a strategy to have inventory and marketing work together, to start to avoid stock outs and reduce the overstocking. So we do things like, you know, you should have a stock out Risk Report, what are those items that are going to stock out a slow sellers report, which should be kind of a range between, you know, let’s say, if for a specific catalog between five and 20 a day, it’s not the worst products, but it’s really it could use some help. And then you have liquidation products, which is, you know, something that is just selling so slowly that it doesn’t make sense to, you know, if you had to buy, you know, the MOQ was going to cost you five months worth of inventory, something like that. And then Overstock, which could be slow sellers, but it could also be best sellers, if those reports are being consistently sent to the marketing team and the marketing team becomes more profit focused, they realize that the faster they turn through that inventory, the better the profit is going to be.
Andrew Morgans 38:26
I love it, that was actually a great insight. And part of the reason like I built my technology to be full service was you need all these things to have a successful business on Amazon you have to be knowledgeable in the warehouse and your supply chain, your inventory management, your marketing your PPC are Lightning Deals your off Amazon efforts your influencers affiliate marketing, all the way down to your operations of getting the products out the door following up with customers refunds returns every single area and the the point you brought up about you know your let’s say your stocked or your warehouse or inventory team sending those reports to your let’s say PPC team, even though Hey, should we dial up ad spend on some of these ASINs you get product you know move through versus just looking at an A cost tacos target a huge difference in strategy. You know, I really can’t drive that, you know, if you’re like look on these products, we’re barely above breakeven on these were like our profits amazing. And you’re seeing that or inventory is getting low, pull off PPC here and move it over here. Which, like if you’re just looking at it from an advertising perspective, might not make sense. Because they are doing better in the green. But when you understand supply chain and supply and demand and what’s happening in the back of the house so to speak. You can make those adjustments on the fly and ultimately run a better business. Yeah, absolutely. Absolutely beautiful. Okay, as we round out, what’s something you’re working on within SoStocked that you’re excited about this year.
Chelsea Cohen 27:31
Yeah. So. So you have data, but is that data being looked at properly? You know, are, you know, does it make sense, if you’ve got Prime Day, for example, Prime Day has a huge spike. And then if you’re looking at the next 30 days, or 60 days, it’s going to be thrown off by that huge fight for a stock out. So these are things that as a baseline, you need to get your we call it daily adjusted velocity, because it’s adjusted for sale spikes and stock outs, it can even be adjusted for deep discounts to find that actual What is your true velocity? You know?
Andrew Morgans 28:11
So that makes so much more sense to me now, because thinking about okay, like, even the whole year of 2022 was kind of like that, right? Because of how 2021 went, you know, pandemic 2021-2022? How are we predicting stuff? We know that there was crazy demand and spikes and or if you’re launching a brand that doesn’t have a lot of sales history, you get a big push at the beginning, but that’s not what’s going to happen, you know, in perpetuity. Okay, so that’s making a lot more sense in regards to the customer being able to say, that’s an exception. What’s our norm?
Chelsea Cohen 28:44
Yeah, exactly. And being able to, you know, manual override, you know, set a manual override, say, you know, what, I’m watching your product, I’m going to start at 10 units a day, or, you know, I don’t have any sales data or that sales data, you know, is garbage for whatever reason. And then also being able to add your marketing plans. Are you going to, you know, be running a PPC campaign that’s going to get you an extra 10% Lift? Do you have Lightning Deals coming up? So just the information that’s being put into that’s being pulled in from Amazon is not enough to properly forecast. Unless you’re basically just sitting there, you know, you’re gonna run no promotions, and you’re gonna push in no direction.
Andrew Morgans 29:30
Right? It has no insights. I love that. Thank you for explaining that. It makes a lot of sense to me and hopefully for our listeners, too. Okay, so SoStocked comes about. You are like, these are the opportunities I want to build. I don’t see anything else there. You jumped in. What was 2017-2018? And then what is something that you’re working on? Let’s Chelsea that you’re excited.
Chelsea Cohen 40:05
Cool. Um, so yeah, so we’re very focused on profit right now. We’ve got some integrations, we’ve got an integration with NetSuite that’s going to be coming for agencies and aggregators. My big passion is the profit side of things, really understanding we’re going to be launching in the next week or so, some columns for Overstock, so that you can see based on your sales, you know, your current sales velocity and your FBA inventory. What, what liabilities Do you have, if you don’t change anything, how much is it going to cost you for each SKU, which skews should you be focused on because they’re going to be, you know, costing you a bunch of money, because we’ve got the new age inventory fee, which starts at six months, you’ve got, you know, the monthly fees, and I actually did a calculation every single month, you multiply, if you have, let’s say, you’re paying 50 cents per month for a single unit, every month, you can multiply that by a half, one half. So, you know, month two, you’re paying one and a half times that monthly fee, month three, you’re paying two months that monthly fee, on average for the entire order. So it’s, it’s something where you start to understand, you know, that’s part of the true unit economics, if you standardly, keep, you know, four months worth of inventory, then you’ve got to multiply that by, you know, 2.5, and that’s what you’re paying on a monthly basis. And then, you know, that’s not even touching, if you you know, keep it in for six months plus, where Amazon does not want you storing inventory there for months, they want 45 days, most it feels like you know, 34 days, if you can run perfectly, that’s what they want, they want you to have, you know, 30 days worth of inventory there, they don’t want to be everyone’s storage facility.
Andrew Morgans 41:45
Yeah, and I understand that because they’re making, they’re just making leaps and bounds more money when they’re fulfilling your product. And when it’s sitting there. Someone running a warehouse myself, like we don’t make money storing products. We make money and fulfill products. When you understand what Amazon is trying to do, and they did that with vendor central, first pushing everyone to Seller Central made it a little bit easier to get to Seller Central and got rid of all those crap products on Vendor Central. Anything that they couldn’t realize, they can’t realize a profit, I think. And then now what they’re doing is, in retrospect, in my opinion, making everyone a central seller get better at their job, better operations. And so figuring out where they make money and in doing so, following Amazon’s lead, what I do believe is that it can be frustrating and annoying and hard, but we get better businesses by changing to operate that way. And I don’t just mean more, maybe less profitable businesses, but more of a fine-tuned machine, because you just have to be running a well-oiled machine to really, you know, to be really making money and to me, that was that comes down to like, Look, you can’t send half a container to Amazon anymore. You know, you need three pl. You need a fulfillment center. And one way to do that is having FBM dialed in and plugged in and ready to go. So that you’re not overstocking on the FBA side. Yeah, absolutely. There’s a lot of nuance to it. And then, lastly, what’s something you’re working on that you’re excited about this year?
Chelsea Cohen 43:28
What am I working on? Um, I’ve taken the time to really start to develop hobbies, reading, doing more, a little bit more writing, and just focusing on because I would come on these podcasts, and people would ask me, you know, what, what my hobbies are? And I was like, Well, you know, I like chopping vegetables when I cook food, you know, and so I’ve been really, you know, I stopped telling myself that I don’t have time for certain things and make the time for, you know, for reading and for writing and gardening and that sort of thing.
Andrew Morgans 44:04
I love that I think it’s super healthy. And something I’m trying to do as well. I think last year, for me, was like this huge milestone, but I read like 16 books last year. Well, they weren’t all business books, they were like, you know, mental health and some fiction. And, you know, for me, I just hadn’t taken the time to read that much in a very long time. And just found, you know, it was therapeutic. You know, when you’re running a business, you’re thinking numbers and like finance all this thing all the time to like, where are we finding some source of inspiration. And for me, for the longest time, the community stuff were all my hobbies, too. They weren’t making any money. So they were, they were very much hobbies and like, you know, community-driven, just a different kind of community around the business. So thank you for sharing that. Thank you for sharing your knowledge and your story on the show. This is our first time actually getting to know each other, but we’ve seen each other in passing quite a few times. It’s awesome to see, like, SoStocked like, what you’ve been able to accomplish in such a short time. Awesome. Thank you. You’re welcome. Thank you, Hustlers, for tuning in. Shout out again to our sponsor FullScale.io. Do you need to hire software engineers, testers, or leaders? Let Full Scale help when you visit FullScale.io. All you need to do is answer a few questions and let the platform match you up with a fully vetted, highly experienced team of software engineers, testers, and leaders. At Full Scale, they specialize in building long-term teams that work only for you. Learn more when you visit FullScale.io. If you’d like Chelsea and jumping in and need a software partner and don’t find one in the community, Full Scale is a great place to start and find somebody to join your team. Charles, thanks again for your time. Thank you. We’ll see you next time.