How to achieve supply chain efficiency for FBA and eCommerce sellers?

Oleg

Hi, Mark! Thanks for joining Devico Breakfast Bar. Thanks for finding time to record this episode. Could you please start by telling us about yourself and your professional background?

Mark

Sure. So, my name is Mark Taylor. I am the CEO and Co-Founderof Warehouse Republic. It's a full-service, third-party logistics company. I started Warehouse Republic with my business partner Abhi Dobhal. I originally ventured into entrepreneurship being an Amazon seller, like selling FBA products. And this was in 2015, and a few years later, we figured out that we needed to really learn how to control our own supply chain, stuff from the warehousing and staging, and that kind of a thing. We looked around, and there weren't a lot of people that wanted to work with us because we were so small at the time. And so, we worked with a friend of one of Abhi's. And it immediately started going really, really well and helped us save a lot of money, a lot of expenses. And so, I said, 'Well, this might be interesting for other people.' So, in 2018, I moved out to Southern California, and I was living in Austin at the time. I spent that time in Southern California living on an air mattress for a little while, while we got the business up and running, and living in the warehouse for a few months. And then I got up and running, and, like I said, we're going on 5-6 years now. So, that's where we're at now. We also have a second location we've opened up, I think, around 2022. It's been a wild ride.

Oleg

You deserved it.

Mark

Thank you.

Oleg

Thanks for sharing with us the story behind Warehouse Republic. What inspired you to start this venture, and what were some of the early challenges you faced besides the ones you shared?

Mark

I was always, even in our FBA business, I was the one that was finding the freight forwarders and working with them, and working it. You know, at the time we were storing, we would ship stuff to Austin, and I would store it in my little shed in the backyard so as many eCom sellers get started out. And so, I always really liked the logistics piece of it. And then you find that it starts to grow very, very quickly, and it becomes unsustainable or certainly uneconomical. When I started figuring out the warehousing piece of it, I really liked it. My business partner at the time was very, very good at really immersing himself in the numbers and learning the pay-per-click strategies and this and that. He was really good at staying on the cutting edge and knowing when to spend more with ads and this and that. It's a very unique skill set, I think. And for me, it was not something that I was very good at. When we started getting more into the warehousing piece, I really appreciate that. You know, if you store a drink here, and you move it over here, then you've moved it. I mean, the way to think about it is if something comes in the warehouse, it has to leave the warehouse. Now, I could leave it in a number of ways, but it's very visceral. Warehousing, to me, is very visceral, the physical nature of it, and I connect with that. So, that's really what inspired me or why I latched onto it and got a little bit more, little bit more into it.

Oleg

Sounds great. Could you share a memorable success story or milestone moment from your journey with Warehouse Republic that stands out to you?

Mark

You know, there are a lot.

Oleg

For sure.

Mark

I think one of the most interesting things that I had – I was in a motorcycle accident and was found myself in the hospital. And this was during the summer of 2021. And I didn't have to worry about anything. The systems and processes that we had in place meant that I could go, and I could be out of the loop for a while and focused on nothing but healing and that kind of a thing. And that was a really profound realization, and it gave me a great sense of pride that it was the first time I was forced out of the situation and forced to see that we've actually created this thing now that's working on its own, and we've got people who have a sense of duty and ownership for it who aren't going to let it fall off the rails. In that kind of moment, I realized that there was a thing that had become bigger than what I had initially started, in terms of process and that kind of thing. So, I mean, there are other goals, of course, but that was kind of one of the most profound ones. And it wasn't something that I really expected. It just happened, and for me at that time, it came with a great sense of gratitude that we had done some things right.

Oleg

Okay. You have a podcast where you talk to business leaders from different industries to gain insight, but how else do you stay on top of industry trends and events? Are there any particular valuable resources?

Mark

You know, supply chain is really, really interesting, and I'm sure other industries do too. But I think to stay on top of technology and things like that, firstly, I still talk to a lot of my podcast guests. I consider, you know, BJ Patterson, somebody who speak a lot. We share stories with each other. There are a lot of great websites that actually create articles. I mean, Supply Chain Dive is one of them, and FrightWaves is another. The Wall Street Journal has a logistics section. And then, there's other podcasts in the industry. And then, of course, LinkedIn becomes a really nice source. You know, as you get a little bit more ingrained in a particular industry, it turns out 90% of your contacts are all related or very peripheral. Ward Richmond has a great podcast, keep on trucking or trucking on, I believe, anyway. He talks to, he has a combination. But I mean, there are a lot of places to get information. And supply chain really has been a very, very hot topic since 2020. And, you know, the pandemic.

Oleg

On a more personal note, what drives your passion for making the world more efficient, and how does this passion manifest in both your professional and personal invaders?

Mark

I think you get into entrepreneurship because you have this belief of how you think the world should work. I got into business, every business I've got into, or I've gotten into, from being an e-commerce seller to service, I am my own customer. And that has helped me to, you know, I know how I want to be treated as a customer, but I also know how things should work. And of course, you don't hit it all the time, but you certainly try to do it. And so, I think entrepreneurs in many cases have this vision of how they see the world, and they decide, 'I'm going to do this company, and this is going to be my version of how to serve.' I think it comes back to a service of others.

Oleg

Yeah. Are there any professionals or leaders in your network who inspire you in your professional journey?

Mark

Yeah, yeah, of course. In college, it was like an advisor, his name was Jim Wheeler, the University of Oklahoma, and he ran the Center for Entrepreneurial Studies. Oklahoma had an entrepreneurship department, and he really took me under his wing. We talked all the time. At the time I wanted to be an investment banker, he got me a bunch of meetings with Oklahoma alumni that were just really titans, kind of Wall Street: Michael Price was one, Bill Comfort was another one at City Venture Capital. I went up there, and I met with these guys among others. They got me on the stock exchange floor at a time, you know, post 9/11, when they weren't allowing people on the floor. And he was a good one. And then, I attended an MBA program called the Acton School of Business. Every single professor there, whether it's Jeff Sandifer, Jeff Sarah, Stephen Tomlinson, Jack Long, Phil Siegel, to name a couple of them off the top of my head. They were all very, very impactful. There are people in the industry, of course, I look up to. In my early days, it was certainly some of my educators, and most of those people had their own businesses. John Penton is another one. And he ran multiple energy funds, and he was my first entrepreneurship teacher at the University of Oklahoma. And he was just a fantastic guy.

Oleg

Okay. How do you envision the future of third-party logistics solutions evolving, particularly in the context of advancements in technology and changing customer behaviors?

Mark

Yeah, I think good operations and good operators are leaning a lot heavier on technology, whether it's using – you know, AI is almost a buzzword right now – but using more sophisticated automation techniques. But it's not automation in the sense of robotics that I'm talking about yet. I mean, the automation of information. People relying more on put-away functions, and how to set up a warehouse, and where you should go, and how to design your flows like that. That's becoming very, very, a lot more interwoven with technology. Once people lean on every aspect of technology that you can with warehouse management system and your technology stack, then, I think, you're also starting to see a lot more of the actual investment going into robotic automation. And that could be ASRS systems – things that bring stuff to you. It could mean the robots like Locus Robotics or, you know, 6 River Systems, which I think is now Ocado. But, those chucks were a good example of things. And there's all sorts of unique ways. I think the most interesting places are automation, robotics that take the suck out of jobs. So, nobody likes unloading a container. And you're starting to see more and more robotics options or solutions that allow for the unloading and even the loading of containers, like floor loaders.

Oleg

Okay.

Mark

We have with all the manual labor associated here. I mean, everybody's trying to get faster. We're trying to offset how hard it is to find people, like labor at this point. And then, we're also trying to make it to where these jobs aren't just where you go, you know, when you can't get a job somewhere else. I think the entire industry is trying to move toward logistics and supply chain jobs being better and better.

Oleg

And cheaper?

Mark

Yeah. Well, kind of. I don't look at it as cheaper. I'm actually trying to design our operations so we can have less human input, and then, the human input that we do have is compensated better. So, you know, trying to create more sophisticated jobs and then let the automation. And this is a ways down the line, but we're trying to, operate the warehouse with fewer employees, but the employees that are in here are, you know, these are jobs that they want, and they actually have to compete for, not just going to a local talent agency, which is nothing, there's nothing wrong with that. It's just I see that kind of going by the wayside.

Oleg

Okay. Great. Thanks for the response. Strategy, process deployment, and team building are listed as your core skills. How do you integrate these elements into the operation of Warehouse Republic, and what role do they play in ensuring the success of your company?

Mark

Right. So strategy, of course, is a lot of small tactical changes. Like, you see the mountain on the horizon, and then you inspire the troops to go take that mountain, while also looking around and making sure that that's still the right hill that you want to take. If it turns out that that's not the right hill you want to take, then you have to keep everybody driving until midway through you say, 'Actually, I was mistaken. This is the right hill to take.' So, it's a bunch of small tactical things that drive strategy and, of course, strategies, you know, long-term. Process implementation. There are some things in this industry where it's just like you see it, and you immediately recognize – we need this. And then, there are other things in this industry where you're like, 'Alright, we can get to there.’ But it's going to take a lot of small little iterative steps, and you don't change too many things unless the system is just completely broken. It's not a turnaround situation. It's an improvement situation, hopefully. And, finally, for team building, we do a lot of things. I love to cook. I love to do backyard-style barbecues in the parking lot for the guys, with the guys and the team. We do book club, which I know sounds kind of crazy, but...

Oleg

My wife visits it every second week.

Mark

Yeah. So, what we do is we pick a book. As a team, we've done extreme ownership by Jocko Willink, and that was good. Like, you know, the buck stops with me. And then, we also talk about what that means to own, and to own, you know, what you do, and to be on the team. Right now we're on How to Win Friends and Influence People, which is a classic book written a long time ago. What we do is we just read a chapter a week, and sit around, and have a round table, and discuss it As we grow, people can have different pods of discussion Whatnot. And so, you don't want these groups to get too big. You're not going to sit around and have a round table with 50 people, but that's just one way. I mean, so it's like a lot of the food that we do, a lot of the barbecues. We'll provide all the burgers, and we'll just say, 'Hey, anything else you guys want to bring? This kind of do it potluck style?' And the guys were always into it. So, the team.

Oleg

With your deep understanding of the challenges and opportunities faced by online retailers, what advice would you give to inspiring entrepreneurs looking to enter the e-commerce and logistics industry?

Mark

If you're new, and you don't have experience, go work for whoever's doing it best. Go in there. And I mean, like from my world, even going and working on the floor at Amazon for a few months is not going to be hard to get that job. You go in, you start seeing how things are done, you take best practices. And you know, reasonably smart people will be able to employ that 80/20 rule.

Don't stay there too long, but give yourself a few months. Maybe do it during busy season. Do seasonal labor type deal. And then, that gives you a really good look at the eCom piece. And then, maybe as another thing you go, and you look at – you do Walmart. Maybe do a couple of months there. I mean, you have to almost treat it as a journeyman-type position where you go to a few places, and then, once you've seen how the best people do it, maybe move up the chain or down the chain until you feel like you understand what you're really doing and how you're serving people. I think once you land in a place where you've got, you can learn on somebody else's dime, and you've got the great, you know, the intense experiences, of course, are a few months, but once you go to somewhere else, stay for a couple of years, maybe. And then, at that point, you move out. Then maybe go your own way. But in terms of a career, learning from the best people you possibly can. And that's if you don't have experience. If you already have experience, then your experience is going to dictate how you jump into the pool.

Oleg

Got it. As a leader, how do you ensure that your team remains adaptable and resilient in the face of unexpected challenges or market shifts?

Mark

Well, market shifts nobody sees coming. I mean, that is completely dependent upon leadership to see it, and interpret it, and then communicate it. And then, I think how well your team receives it is the culture of the organization you've built. So, if you built an organization where it's like this is how we do it every single time, there's no differentiation, and you've just got a bunch of people that aren't curious or interested in adapting, then that's a really hard sell. On the other hand, if you're constantly rotating people, or if most people specialize, but after they've completed whatever the specialization tasks are for the day, they jump on other projects, you keep it interesting, and it's a dynamic environment, which supply chain is very dynamic, that's gonna be a much better culture. That's gonna, be able to adapt when the leader, the person setting the strategy says, 'I know we're halfway up the hill, but now we gotta go take this other hill because this is the one we have to take now.' Going back to the leader or the person setting strategy, if all you're doing is one week you're taking one hill, and the next week you're taking the next hill, and the next week you're back, that's not a well-informed leader, or it's a little bit more impulsive. And now, to say that, I mean, the overall strategy is how to move products more efficiently, more to the need of the customer as cheaply as possible while still making an acceptable profit. And that's always going to be number one.

And I think a lot of that becomes what do you want to be when you grow up? So, as a logistics company, who are you serving really being defined, like very defined about that. But we do live in this world from an information perspective. I mean, if you're in a tech company, the speed with which you're moving after these targets and pivoting, and stuff like that, can be very, very quick. Even as an e-commerce seller, a lot of people got their start on Amazon FBA, or being a third-party seller using Fulfilled by Amazon. But now, some of the most successful sellers have diversified onto other platforms. And there's a new platform with potentially new requirements. It's not exactly FBA, but you can't send in a pallet that's more than this height, or more than this weight, and this is how you have to label. And those are just, you know, setting the processes in your warehouse and making sure the documentation is good. But as an e-commerce seller, you're constantly figuring out, 'Okay, well how do I do this? How do I do that?' Well, now it's TikTok commerce, but next week it's live commerce. It's ever-evolving. And it happens very, very fast. And of course, everybody's witnessing the AI wave. It's just changed the game for so many things. Like, how do we consume art? How do we create art? How do we write emails? How are we writing books? That kind of thing. And I mean, there's still, I think, a premium for well-thought-out art, and writers, and things like that. But I mean, AI has made a lot of the creative tasks in the world just so much more accessible to average people.

Oleg

Yeah. Yeah. Totally agree. Collaboration, excellence, and growth are emphasized as part of the culture at Warehouse Republic. How do you cultivate these values within your team, and why are they important to the company's overall mission?

Mark

It's all in culture setting, I mean, it's what you measure, and how you set the culture in the company.

When you say excellence, there are a couple metrics that come to mind, like accuracy of orders, and speed with which you do it, and then damaged products, or mistakes. There's a saying, it's like your team effectively performs to what you measure. And so, you just have to pick the right metrics for one and then two. You have to be very involved in making sure that your team cares. You know, we have the conversation with our team. It's like, you know, our customers trust us with their business, and we are non-negotiable for them. I mean, if it's not us, it's gonna be somebody else. But this component, this aspect, the way they do business is they have to. And so if they're gonna pick us, and we have such a critical role in their performance as a company, then we have to treat their business as our business because it is. You just constantly have that conversation. It's ongoing, and it resonates. And for the people that it doesn't resonate, they're not a good fit, and they don't stay for long.

Oleg

Many companies struggle with the scarcity of tech talents. How have you navigated this challenge, and what innovative approaches or programs have you implemented to attract and retain skilled professionals?

Mark

Sure. So, we have two things. The best source for us is we offer referral bonuses for our team. So, if we want to hire a couple of guys, then in the morning stand-up meetings, we'll say, 'Hey, we're looking for four or five guys, we're looking for this, we're looking for that.' And we put it out to the team, and if they refer somebody, then there's a cash bonus that we pay to them through our payroll company. And those guys get a certain amount, and then the person who comes on, if they make it 90 days – of course, this is contingent on them coming on and making it 90 days – but after the 90 days, there's an amount that the employee gets. Think of it as starting incentive bonus type thing, and then the person who referred him also get some money. So, that has worked the best for us.

Oleg

How scalable is it?

Mark

I think it's fairly scalable. I mean, as you have a larger team, you've got more sources for referral, and people. You know, if you've got a really good teammate, and they're coming to you, and they're staying over months, years, whatever it may be, they just consistently carry themselves in a good manner, and you're like, 'I want more of that guy'. Well, the old adage – birds of a feather flock together. So, if this guy is recommending a potential teammate, I'm going to look at that guy a lot harder because there's social proof already associated. It's like, okay, if you know this guy, and the guy who's on the team vouches for him, that goes a whole lot to me. That goes further than just an interview alone. So, if I have a guy, and he doesn't have a bad interview, but he doesn't have a great interview, and then I've got a guy that has a great interview, but the guy who did okay was recommended, I'm still probably going to go with the guy, who was recommended just because there's that social proof. And especially, if that person speaks highly of them, says, 'Look, worked with them before. He's great worker, on time, shows up, consistent.' That kind of thing.

Oleg

Could you share how your development team in your current project is structured? Have you ever outsourced your technical needs – programming, quality assurance, any kind of development – to external outsourcing?

Mark

Yeah. So, this is where picking a good business partner who complements your deficiencies, if we'll say, is really good. Because Abhi, my business partner, has been in the tech world for a long time. And he's run development teams that, you know, people in Ukraine; he's had people who are in South America, Central America. And so, when it comes time for us to do any kind of development, because most of the stuff that we do as a warehouse is off the shelf. Like, our warehouse management system is extensive, and we use it. We use some other systems, Zendesk for a ticketing system we use. So, we have had to build very few things internally. But there are some things we've done. Like, we've built label little programs that don't look pretty at all, but they serve a purpose for our customers. To make a client label, we can scan everything when it comes in. So, those little things. When that comes up, Abhi will reach out to his network, you know, developers that he's worked with. This is not a knock to consultants at all. Some of my dear friends are consultants. They're very, very smart, talented people. I find that consultants, like, when I want to hire somebody, I look at a consultant as if I've got this very, very specific thing I want to figure out, I will find somebody who is an expert in that, and I will hire them to coach and consult. And so that's a lot of way. But for the tech piece, like the actual programming stuff, most of that has been developed by Abhi, who's pulling from all of his previous relationships.

Oleg

Okay. Do you know when he wants to outsource, or he doesn't have enough required skills, expertise, what are the precise factors to do so, except finding an expert? If consider that you're having an expert, or you can hire it in-house, whether you want to outsource, what are these factors to?

Mark

Social proof is a big one. So, when we've gone to look for web developers that develop in a language that he doesn't have a contact who's very strong or that contacts busy, then if you go to a place like Upwork, just as an example, they've got the nice things where it's like success rate; they've got these people qualify; this is how many hours have been done; examples of work. And then, of course, it's also in the way you write the job description. Like, you say, 'This is the industry I'm in, these are the aspects of what we want done, here are examples of other companies that have done this.’ Because rarely anything that we're doing is just no one else has it. I mean, it's usually our version of something. And so, I think it's very specific in finding somebody who's got the talent, who's got examples of work, and who's available. And we interview everybody. We want to make sure that there's a level of competency. We avoid agencies because agencies will typically have top-level, very well-spoken person talk to you. And after that, we really try to make sure that we're actually working directly with the developer.

Oleg

Have you ever worked with developers directly through agency? I mean, talking to them, to let them participate in your meetings, daily stand-ups, and so on.

Mark

No, no, of course, we found it useful.

Oleg

Oh, okay.

Mark

Yeah. Yeah. Look, at the end of the day, even if this isn't to knock an agency, I just say, and I should have said it differently. What I mean is when we find a tech professional, we want to have access to the actual programmer. Like in this example, I'm speaking with you, and then you're talking to whoever's got the project that day. We want to make sure that like start to finish, it's the same person, they understand, they hear, they recognize, they can communicate at a level where it's like when we're trying to communicate something, they can communicate back. You know, that kind of thing.

Oleg

Okay, got it. What are the benefits and drawbacks of outsourcing? How do you think?

Mark

Yeah, I mean, the whole reason why people go for outsourcing is it's cheaper typically. But I would say...

Oleg

It might be expensive.

Mark

It can certainly be expensive, but I think in many cases, if you're only willing to hire internal, then this is your pool. Like, this is your pool of people and talent to look from. If you're willing to outsource, then the entire world becomes your pool. And with almost a hundred percent certainty, you might find the best person in your small pool here for your team, and the way you communicate, and the way you work. That's fine. But there are people equally talented, and you're just opening up, and they all have different prices, and they all have different levels of engagement. And if, you know, the person you think is perfect, that's like within this little thing, is working on competing projects because they certainly will be if they're very good. Maybe you find somebody hungry that's in another country, that has the bandwidth now. And so, it's really just giving yourself so much more of a shot, of getting what you want for the price you want, on a timeline you want.

Oleg

Okay. Got it. How do you measure the success of collaboration with an IT outsourcing vendor?

Mark

For collaboration success, I mean, it's like, did I get it done? Did the project get done? Does it function? You know, we did a website redesign a while ago, and we were very, very pleased with how it went. But at the end of it, you know, it's so many moving parts. It's like you miss, you know, you miss, placeholder stuff. It wasn't on the main page, it wasn't on the secondary page, but if you click down into the third level, at the very bottom there was some Latin still in there that was still a placeholder. And two months later we reach back out and say, 'Hey, just out of curiosity, we realized that this wasn't taken care of. Can you please go in and fix that?' And the programmer was like, 'Sure.' I mean, it was immediately done. We didn't have to renegotiate the contract, we didn't have to do anything. They were good about the aftercare of 'Oh, we all miss that. That wasn't intentional.' And here you go. So, I think that was a very successful example because it's almost like a guarantee of work. And it's like we found a bug later on, and they still came back and fixed it because it was something they could very, very easily do in just a few minutes, and didn't really try to charge us anymore.

Oleg

Makes sense. And to wrap up our conversation, what advice would you give to the other companies considering IT outsourcing?

Mark

I mean, there are a couple of things. If you've never done it before, then I think that understanding, like you're going to have to really work. You're not going to have the best situation, you're going to get frustrated if you're not willing to do early morning meetings or late evening meetings from time to time. Because when people are in different time zones, there's got to be a willingness to flex and a willingness to try to meet people where they are. I would never expect our people, like anybody I've ever worked with, to meet with me at 2 p.m. Central Time, especially if that's 3 a.m. their time. So, there's give and take with doing it. And I think, making sure that you check the work that you think you want done. You've got to develop a rapport with people, you have to be able to talk to these people. And eventually, I think there's a high need to make sure that either the agent you're working with or preferably the developer you're working with understands exactly what you're trying to convey, and not only says they get it, but like demonstrates that they can achieve what you're looking for. And you want to see them have that light bulb go off that says where you're comfortable with 'Okay, clearly they're going to be able to do what I'm asking. I'm not asking anything crazy.'

And then also, for most of the technology-related things that I envision as an operator, if it's not already on the shelf, you're probably not asking for something crazy complex or groundbreaking. So, outsourcing is probably a very, very good option. For people who are, of course, wanting to innovate technology that's a much more involved situation. And I would want that person on the team. So, I mean, if this is things that, for instance, here would be a good example. So, we want our customers to be able to import their boxes, and a pallet configurator says this is how many boxes can fit on your pallet. So, if you're sending us 10, 000 of these boxes, this is going to be 150 pallets. All right, great. I mean, that is something that somebody can very easily, there are defined parameters, they can program it for you, and they can then make it look nice. But if you want to do something that is then connected to all sorts of different things and uses, It's trying to iterate design of your product, or it's like making packing recommendations, something that's never been created, then that's something you definitely need to, I would say, go work through an agency. And highly complex, never been seen in the market, nobody's doing it, that's probably starting your own company, building your own team.

Oleg

Got it. Thanks, Mark. We covered a few very interesting topics, and I'm sure it will be valuable for the auditory of Devico Breakfast Bar. Thanks for joining me today. I really appreciate your time to join and wishing you all the best and extreme gross success to Warehouse Republic. You're doing nice things.

Mark

Thank you so much, Oleg! I really appreciate the invitation. It was a very fun chat.