[Music] welcome to the stockout Omni Channel Edition I'm one of your hosts Mike bow joined by Grace fraudwatch Sharky um we're gonna talk Omni Channel today and and Grace what's kind of your your breakdown are you an inore Shopper a e-commerce person a person who places an order and picks it up uh what are you in the Omni Channel Spectrum uh honestly probably all three of those groups I mean dependent on the situation and the store and the the customer service aspect I mean there's some spots you know I just would not trust uh with deliveries right more of a pickup location if anything else so yeah I'm I'm I'm all I I love all the the channels I'm an omni Channel person for sure how about you primarily e-commerce person but um I don't do most of the shopping in my household so maybe I'm not the best person to to ask um but we'll get into all that um we have Alex Barry Flex ports vice president of omni channel on today to talk about that but first want to make sure everyone uh knows how to sign up for the stockout newsletter you can do that at www. fight waves. com the stockout or just go to freightwaves what I call the site and go up to newsletters and under Supply chains um go to stock out um I should stop calling it just the site because now we have a goar.
com site for the data side of of the business that's another one I would encourage en you to to check out um and we're going to go through a couple news stories but before we do that um want to thank our sponsor which is nicolah discover the future of Transportation today visit Nica's website and explore their zero emissions Class 8 truck transform your Fleet and lead the charge in sustainable Logistics learn more at Nicola motor. com so big thanks to Nicola motor still working on pronouncing it Nicola and not Nic I want I want to say Nica I production tells me that's not right it sounds like the cough droper that's what we want yeah it's kind of like Porsche it's like you have to pronounce it the way after the the person that it was um named after uh but going to get into our first topic which is the reaper Market refrigerated Transportation shows some signs of tightening and kind of interesting both um myself and also Zack Strickland chose to write about the reaper Market um in our latest you know write up mine for the stockout newsletters asks for the chart of the week and this is an interesting chart I think uh so this is the reer tender rejection rate 2024 is in white and you see for this time of the year considerably higher than it was the past two years and really what supported this and and drove some of this um you know writing about the reer market is there was a a a call that we had last week with large broker that is a sonar customer that does a lot of reefer um particularly out the West coast and he saw um you know kind of a change in the market sort of different than he's seen the past couple years uh and some of the the things that he said was past couple years that they were consistently told that um his his uh rates were too high you know shippers were telling him that that his rates were too high but now he's being told that his rates are priced competitively being told that by the shipper and then also seeing carriers basically reject loads at rates that they had not seen in in recent years so I guess from this broker's perspective has seen a major um at least a meaningful shift in the refer Market out of the West Coast from all of their anecdotes that so inar chart that we just showed seems to to bear that out where you're seeing higher tender rejection rates right now 13. 8% was closer to to 20% um right the beginning of November but you sort of look at a year ago and it was in the single digit so does seem like something is is changing there um so you can you know check out my um newsletter which I just kind of uh touch on that briefly but then you know for a little bit more detail you can go to Zack Strickland's chart of the week article which went up on the freight waves.
com site over the weekend and Zach goes into more more detail um you know has more experience with that sector than I do you know talks about how um the tener rejection rates have averaged about 14% since October that's compared to about 8% during the same period in 2023 you can see that on the chart that we're showing on on the screen and then it suggests that they're showing some some degree of tightening as we approach the protect from freeze season which is kind of ironic that there's the protect from freeze season um is uh when it starts to get cold that you need more refrigerated when it when it gets cold but um I guess that's because you know things can't get too cold uh it's really more temperature controlled rather than just refrigerated um and also are the reefer uh spot rates um he says Reaper spot rates have not yet risen um sustainably and that suggests that shippers are not yet resorting to using a lot of the in the spot market so there's not just a lot of spot volume just yet um but our data suggests things are starting to change and I guess from from your perspective do you think this could be a sign for what's to come for for dryan uh it's tough because I will say right now uh especially the last couple of weeks if you include that as well uh in those statistics we are hitting Christmas tree season so I think that is a big part of maybe what is pulling some of that volume will say as well over in the midwest we have had um not the most ripe Christmas tree condition so part of me wonders if some of that activity could be more of these longdistance tree halls and in those situations uh depending on what the temperature was like you were saying before the reapers are often used as almost like a temperature control compared to anything plus if you add in a lot of the the weather that we've seen in the Northeast and the Midwest over the past uh week and a half uh as someone who has has had the wonderful opportunity to experience it it's been a lot of snow so of course depending on what is moving those Reapers could be being used for that reason um do I 100% think that that will translate back over into to Van not 100% um but it is I i' probably the the tree season will die down here I think in the next following week it'll have to I mean right uh at some point the the trees won't need to be uh bought anymore uh I think we'll also see a lot of the the holiday goods and in Foods as well start to die down so I think near the end of the month i' I'd probably feel more comfortable making that call but it is interesting to see and especially where that shippers that you mentioned I some I wonder if some of that Reaper uh volume is being pulled into maybe some more long distance tree moves compared to the short ones which usually can just go on a van with some I mean I've seen guys just throw some ice in there to kind of keep things uh moist even know everyone hates that word uh but still I think there's maybe some conditions that are pulling that I'd like to see if maybe more longterm stability like you're saying at that uh rejection rate but we we'll continue to watch it right for the next couple weeks interesting I guess I had appreciated that the the Christmas trees have to be refrigerated is that right well yeah and it depends like if it's going a longer distance and depending on what the temperature is outside that it's traveling because you can also dry out the trees by using the reaper so it depends on the mileage but again if some of that volume of trees is needed more in the midwest or other locations in the United States that had different weather conditions this past year then I could see maybe some of that pulling that too uh you could do a Reaper two like more for a short distance uh but again it just it depends on like what the temperature of the tree was pulled out at and of course like where it's going to as well so that could potentially be with pulling that uh a lot of guys will turn the reefer off too and just run it as a van right so I mean I don't know if you've ever seen Christmas tree rates but they are a beauty for this time of year so I can see guys kind of maneuvering themselves for that market for that short period of time interesting so many seasonal aspects to to Freight transportation for sure um want to move on to another topic that I think goes really to the heart of um this obni channel discussion which is returns there's been some interesting articles um in the media past few days this is kind of the Year where there's you know uptick and returns Artic from CNBC another Comm marcial Journal I can run through a few of these stats which I think are pretty interesting so they say that the returns expected to be about 17% of all Goods up from about 15% last year believe they're just talking about Commerce um processing the returns cost retailers an average of 30% of the items original price McKenzie says that retailers pay 21 to $46 to process just a single item in 2023 81% of retailers rolled out stricter policies like shorter windows or um shorter Windows of or to where you can return them for free or restocking free fees which the consumers just really don't seem to like 76% of the consumers say that the free return is a key factor in deciding where they're going to shop uh their cons some consumers will just stop shopping a place if they don't offer the the the free returns and part of um the issue here is that there's a significant number of of fraudulent returns that one example of the guy who sold the $1,000 Lego set and he person returned back an empty box um that must have must have hurt I think it sound like it was a small toy shop um too that that was victim of that and then some uh are doing this kind kind of multi-tier return fees where depending on your loyalty status or if you have the subscription that that company has uh depends on what your fees are and then H&M and this maybe where the industry is going it has a personalized return fee where sounds like it's a sliding scale if you don't return very often maybe it's free if you turn all the time maybe there's maybe maybe there is a fee but but what do you think is the ultimate solution to this um return problem which seems to be a growing issue with because people I guess will order something they don't know if they're medium or large and and return the one that that doesn't fit yeah I would say that from my personal experience that's a lot of times what my returns are is those situations right where it's uh maybe that that particular product isn't available in store so I'm kind of just hoping and guessing and I mean that I think goes back to a sizing issue more systemic issue in that regards but I mean we we' talked returns are a huge problem for for most Supply chains let alone this beautiful retail space during this time of the year I've seen even more I feel like final sales right where it's like you can't even return these items I've seen that a lot more this past year that could do with also the inventory issues kind of finally pushing itself out as well but uh I've definitely seen more of uh less of like the easy convenient freeway right just dropping it off at a UPS store and keeping it moving and and definitely more of the fees attached to it which uh you know depends uh I'd have to track prices but I would be more willing to pay for return than have that maybe be sunk into the original purchase costs that I've have have done or used for that that item so if I'm seeing prices go down and maybe returned items at uh pricing goes up I'm actually would be fine with that I think most consumers probably would depending on the store uh but yeah it's a huge problem and and maybe one that we'll get into a little bit here with our guests I think as well yeah I why don't you go ahead and intro Our Guest yeah for sure well I'm very excited to to have this company on the show as well and we have with us today Alex Barry Flex Sports VP of omni Channel perfect for this wonderful Omni Channel episode as well Alex thank you so much for joining us this Monday morning happy to have you on the show oh we got to mute it can we get his sound back on for us let's see oh so mute have see we'll have the guys work on why they work on him Mike uh did you get any holiday shopping done this weekend is it all e-commerce for you it is it's if I have not been to a store but Dallas the stores are really crowded because it's it's just a growing population and this time of year and it's just it's just e-commerce I think is the way to go true I keep forgetting yeah you're in a big city like that yeah it's not fun there we go yes we can let's bring him back on Alex thanks for joining us appreciate uh you dealing with with our technical issues but uh let's see happy to have you back here on the show no no worries at all and thank you for having me very much looking forward to it oh let's uh dive right into it so we just uh finished up this past uh well two past weekends Black Friday Cyber Monday our last episode actually was on Cyber Monday so we get a chance to review those numbers how did that turn out for flexp and especially through its Omni Channel services and for its customers yeah you know we saw a really big black Friday Cyber Monday weekend so we were super pleased kind of with what we saw so definitely you know strong demand um so for us it was the most orders we ever received kind of during Black Friday Cyber Monday Black Friday was actually uh the biggest day in in in in our fulfillment history um so that was that was great to see and just to put some numbers to it um you know Merchants who were with us both last year and this year their orders were up about 12% uh on Black Friday and and you know through the full cyber 5 there up about 17% so awesome to see yeah you get such a surge of orders this time of year H how does company like like yours deal with having such a large surge of orders there while also you know having an efficient you know cost structure yeah absolutely uh it's a good question and it's certainly one we we spend a lot of time on so I think you know some of the context that might be helpful is one of the big initiatives we undertook this year so when flexport acquired Shopify Logistics um about a year and a half ago Shopify Logistics was operating out of you know upwards of 40 warehouses across the unit States and you know I would call these smaller warehouses so think 50,000 square feet to 200,000 square feet um and the majority of those were operated through third parties um and the big initiative that we've undertaken the last 12 months is to consolidate those you know 40 plus warehouses into five first party hubs across the US so we've got locations Los Angeles Dallas Atlanta New Jersey Chicago those are all about a million sare foot buildings plus that are operated by our folks um so moving from from that model of having these 40 plus warehouses into these five hubs across the country uh with our management has allowed us to drive a ton of quality for merchants um as well as improve our cost structure um in terms of quality you know not only can we get inventory placed really really well and those five locations are going to be very common amongst you know whether it's 3pls or companies who do fulfillment because you can be within two days of upwards of 80% of the US population in those five locations um so you can get really fast shipping for customers are kind of give Merchants that option to have fast shipping um but also with our managers in the building us doing for example labor planning our own forcasting you know having better abilities to react to volatility we see from merchants and then being able to you know have you know some Merchants be a little bit higher than we expected some Merchants be a little bit lower than we expected but having fewer buildings just gives us a better opportunity to absorb that volume um it also gives us just a really good ability from you know an inventory Integrity perspective right trying to make sure we get units received correctly we get them received fast they're in inventory they're sellable for these Merchants right having our managers in the building managing the process knowing what's coming has been super important um and then you know as we've continued to grow in this business one of the things we're really trying to emphasize is you know how can we show Merchants the value of leveraging flex Port both from a freight perspective but also from a fulfillment perspective um and we've seen more and more Merchants doing that and as Merchants are using our freight products uh to move Goods either into the country or within the country that gives us a lot of Upstream visibility uh to be able to see what's coming right which just allows us to better plan our labor you know understand what's coming when it's going to show up and just make sure that that we've got the resources necessary to to get that stuff inbounded into the network you know quickly and accurately and then of course from a cost structure perspective right when you're doing it yourself you're managing the efficiencies uh you know you're sort of finding ways to do this uh with less cost you can make your own tradeoff off in terms of you know whether it's quality whether it's cost and obviously you know we're going to prioritize quality over cost but we've seen substantial cost structure improvements from that move from those you know 40 sites operated by Third parties into these larger sites operated by us so we're super excited about that combination and that balance that we're able to strike yeah you know it's interesting uh in your title particular right dealing with all these different channels uh and especially when we're starting to see uh not only uh of of course you your uh particular services but even the capability of like Tik Tock Tik Tock shop right and being able to use more of these social uh channels to to sell as well can you tell us a little bit about how you work with uh customers to navigate those different channels of of purchasing and does it in order to fulfill those orders is it tougher than let's say uh more of a direct to Consumer situation compared to a purchase through a a social platform it's a really good question um and it's something that we've grappled with a lot over the last you know six to nine months just as something that continues to dynamically change uh as sort of time goes on so I'll break it into two categories for you in terms of my answer um so the first one will be that um you know we see a lot of Brands you know historically Brands may have operated with one or two you know Downstream retailers right I'm going to sell at Target I'm GNA sell at Walmart I'm GNA sell at Costco I'm GNA sell on Amazon uh now we're seeing Brands leverage more and more marketplaces right some of our larger brands are selling on four five six seven different marketplaces and and I'm obviously considering you know something like Tik Tok as one of those marketplaces um and so those folks being able to operate with what we refer to as a single pool of inventory is super important and and what I mean by that is is when you're doing manufacturing and let's say you're doing manufacturing internationally um right you don't know at the time of manufacturing where you're going to sell these unit Downstream you're having to to place those orders months in advance you don't necessarily know where you're going to Market you don't know where your demand's going to come from so being able to leverage a fulfillment provider or doing fulfillment yourself in a way that can be agnostic to those different marketplaces is is super important so that as you move those goods across the ocean into the United States or even just you produce them domestically and you move them into storage in the United States you don't necessarily know where they're going at that point yet either so then being able to to work with somebody who's able to help you you know get units prepared accordingly right because Amazon's got different preparation requirements as Walmart as Target and being able to place those correctly is super important um but you know for somebody like a Tik Tok for example um it gets a little bit more complicated in that uh there are different metrics that those folks will measure right so these Merchants all have scores um whether it's with Tik Tok whether it's with Amazon whether it's with whichever Marketplace uh which will stack rank kind of their search results and it'll obviously push their goods to more consumers the better their scores are um and those scores are are going to be driven by things like ontime shipping things like ontime delivery uh there's you know a fair amount of inventory and kind of you know stock rates that are important to that as well um so we do have to manage Merchants um who are using these different marketplaces a little bit differently um and you know we've created you know what we call high priority orders right knowing what's going to impact their scores with these different marketplaces to make sure that when we're working through backlog prioritizing orders right we're prioritizing those things first um so I think you know that's kind of the first thing and then the second thing that's been really interesting is with a lot of these Brands uh we'll get into this a little bit later I assume but you know you see the stretching of of sort of Black Friday Cyber Monday a little bit we saw sales a lot earlier this year than we have historically um but um what we've seen with a lot of these Brands working on Tik Tok and such is is a lot of viral marketing so whether that's leveraging influencers to do marketing or just getting you know specific about what Tik Tok campaigns they're doing which has inserted a lot of volatility um into their demand structure right it's a little bit less predictable um so so that's been really interesting to see as well but um there's a lot of positives to it just because when one of those things does go viral or does hit big uh some of the unit levels we see from these merchants on a daily or a weekly a daily or a weekly basis is pretty unprecedented yeah so you really have to understand the the algorithms it sounds like um and and and that's a value that you can add yeah absolutely and that's one of the things you know we try to do for these Merchant is obviously you know we as flexport want to go partner with Tik Tok with Amazon with whomever else it is right and a huge part of that partnership is not only understanding how they're scoring or ranking Merchants uh but it's also making sure we're getting real-time feedback to make sure the way that you know we're calculating those metrics we're monitoring is matching and there's a big question of you know how do we basically do that on behalf of merchants so we can get out in front of it so they never have to come to us and say hey my score is in trouble what's going on right we should be proactively managing that so that's been a big priority over the six months as well yeah and want to ask you also I mean it seems like maybe the typical seasonality is changing with maybe Black Friday starting earlier you know like the Amazon Deal days and whatever they call it you know starting a lot earlier than that and then other retailers trying to to match what what Amazon's doing um you know now you have that combined with with tariffs and we don't know what's going to happen with Sheen and with Tik Tock in the coming year so sort of what's your sort of overall Freight Outlook and how do you think that's going to Trend throughout 2025 yeah I mean obviously to your point I I wish I had the magic eightball uh I don't necessarily have it but I do think you know the last couple years to your point right we have seen that stretching out a little bit and it's a little bit less about the day of Black Friday and the day of Cyber Monday and I think you know we saw a lot of sales this year even going into the weekend before Thanksgiving um right so you know you're talking seven eight days before black Friday win-win stuff started and I think you know you saw similar Trends in China with 11-11 historically right trying to spread it over you know multiple weeks an entire month uh my opinion is I think that's what brands are starting to do is they're basically trying to make it into a holiday season of sales right how do I stretch this out as much as I possibly can just so it's not so specific to those two days um obviously you know we're not complaining about that necessarily because it does help us stretch out that demand a little bit right when was not so peaky on those days it's a little bit easier for us to manage um but that's sort of what I would anticipate to be true um in aggregate but I do think there's a little bit of the flavor I mentioned a minute ago about you know whether it's influencer advertising whether it's advertising on Tik Tok advertising on social media right when when when folks are kind of dropping these marketing campaigns and and certain things are hitting you are going to get that volatility so I think it's going to be a longer period of time there will still be volatility I just think those Peaks will have a little bit less magnitude interesting Stu Alex unfortunately running out of time here can people go if they want to learn more about the Omni Channel work that flexport is is in and of course maybe hit some of these deals as well yeah no absolutely I appreciate I think you're going to get a bunch of information on our website uh we've got a blog post out about kind of more details and kind of what happened during Black Friday Cyber Monday that's a great place um and if you and if you're ever in doubt uh feel free to hit up Ryan Peterson on Twitter that's that it's going to be a pretty effective way as well yeah uh wonderful job on to types fast is a perfect handle for him that's for sure and as an aage Shopper I thank you for making sure that all of my systems are working and that know products are getting everywhere for your customers as well and for audience uh of course make sure you go check out the stockout newsletter uh go ahead head to our website uh freeway.
