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Profitability of In-House vs Third-Party Fulfillment (and the Actual Cost of Running Out of Inventory!)
Cole South is the Co-founder of SDDC Goods, an e-commerce business that focuses on building profitable and marketable brands from the ground up. As part of two brands — BirdRock Baby and Gold BJJ — Cole has gained valuable experience, from maintaining multiple inventories to the market of cryptocurrencies. His passion for innovation allowed him to create Synchronize, a software tool designed for e-commerce businesses that helps streamline catalog management and sales predictions.
Here’s a glimpse of what you’ll learn:
- [4:46] Cole South talks about the transferable poker skills that helped him establish his e-commerce career
- [6:58] Third-party versus in-house warehouse fulfillment: what is the best method for your business?
- [9:09] Cole breaks down and compares costs between an Amazon and an in-house warehouse.
- [12:42] How to deal with the challenges of managing multiple inventories
- [18:24] Cole talks about software that streamlines inventory management
- [20:41] Synchronize: the ultimate e-commerce tool for sellers
- [25:03] Cole’s tips on maintaining a stable inventory and what to do if you run out
In this episode…
Successfully managing a product inventory is all about having a stable process in place and a reliable framework that could maintain the momentum of a business. But what happens when the inventory runs out?
According to Cole South, mismanaging inventory could be costly for a business, however, completely running out could be catastrophic. Fixing such an issue would not only cost substantially more, but it often takes time, which, for an online business, is of the utmost importance. Cole, however, has developed a system for success that integrates e-commerce and inventory data across multiple platforms to help you keep track of your available catalog. That way, your e-commerce business is free to focus more on profitability and growth.
In this episode of the Quiet Light Podcast, Joe Valley welcomes Cole South, a professional poker player turned successful entrepreneur. They talk about overcoming the different challenges of keeping a stable product inventory, maintaining shipment timeframes, understanding in-house and third-party warehouse costs, and how to tie all that up into e-commerce profitability.
Resources Mentioned in this episode
- Cole South on LinkedIn
- Cole South
- Cole South on Twitter
- SDDC Goods
- Synchronize’s special offer for Quiet Light Podcast listeners
- Quiet Light
- Quiet Light on YouTube
- Joe Valley
- Mark Daoust
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
- My Amazon Guy
Sponsor for this episode
This episode is brought to you by MyAmazonGuy, an Amazon agency to help level up your PPC, SEO, Design, and manage your entire Amazon catalog.
This episode is also brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
Not sure what your business is really worth? No worries. Quiet Light offers a free valuation and marketplace-ready assessment on their website. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!
What are you waiting for? Quiet Light is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi folks. It’s the Quiet LightPodcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals
Joe Valley 0:18
Hey folks, Joe Valley here. Thanks for joining me for another episode of the Quiet LightPodcast. Guess what we have a sponsor today. Today’s podcast is sponsored by my Amazon guy. I know the founder, Steven Pope, personally is good guy. He’s been on my podcast. I’ve been on his he’s got a YouTube channel. He’s sharing a ton of free educational content where you can learn everything you need to know about listing selling on Amazon, PPC, SEO design. Everything that you need to do they do at my Amazon guy, they can help manage your catalog, check them out at myAmazonguy.com. MyAmazonGuy.com. Okay, so today on the podcast, we’ve got Cole South, talking about a variety of things. Cole is a pretty impressive guy. Every morning, he does jujitsu. He’s been a professional poker player, been involved in hands that are topping to half a million dollars, runs two e-commerce brands touching on the eight figure range and launched a inventory management software recently that we talked about in the second half of the episode. And it’s actually Amazon’s inventory management software using Google Sheets. A lot of us have have all tried to manage inventory in different ways. But we often go back to Google Sheaets. And he and his business partner ended up going that way as well. But integrating Google sheets into the into the automation process so that at the end of the day, you’re importing everything automatically into Google Sheets, and I’m not going to get it all right. So listen to the second half of the episode. He talks about his story in terms of bringing inventory in house when COVID hit versus just doing everything at a 3PLs or everything at Amazon, about 60% of his revenue is from Amazon. But 40% is from his Shopify store. And it’s pretty steady that way. He lives in San Diego, not a cheap place. He’s got 5500 square feet. And he decided with his business partner to bring the inventory in house and then ship what’s needed to Amazon on a timely basis so they don’t run out. And he really hones in on the drawbacks of running out of inventory at Amazon and how much it costs you at the end of the day. So tune in this is our episode with Cole South. Here we go. Cole South. Welcome to the Quiet LightPodcast. How are you, man?
Cole South 3:02
Hey, Joe, thanks for having me. I’m doing good. Thanks.
Joe Valley 3:04
Tell the audience a little bit about yourself just so I don’t get it all wrong.
Cole South 3:07
Sure. Yeah. So I’m from Virginia. And in College in 2005, I discovered online poker and became a poker pro for a little over 10 years, which led me into the e-commerce world. Through my poker career, I got to travel and play high stakes games online in Vegas, Macau, Europe. But by the end of my poker career, the industry was shrinking. And I was ready for something new. So my wife and I moved to San Diego, and started an e-commerce business with fellow co-player based around products that he and I personally use. Because he and his wife had just had two young kids, they had an idea for a new type baby shoe. So we launched a baby shoe brand called Birdrock Baby, and a martial arts brand called Gold BJJ. Jay and I both train jiu jitsu every morning. And that was started our e-commerce business. It was just a side project, when it picked up enough momentum that we thought, hey, we’re really onto something here. People really liked these products. We jumped into it full time. That was in 2016. So we’ve been running an e-commerce business for six years now.
Joe Valley 4:04
And are you doing five figures? Six figures, seven figures, eight figures? What are you guys doing to get?
Cole South 4:09
Somewhere in the 7-8, 8 range?
Joe Valley 4:11
Okay, depends on the year probably right? Yeah,
Cole South 4:13
We’ve kind of had slow slow and steady growth over the past couple of years, but definitely some yo yoing around COVID For sure.
Joe Valley 4:19
So tell me what the hell is it about poker players that make them such good e-commerce entrepreneurs or entrepreneurs in general? Because I think we’ve got one under loi now and close to eight figures. And the dude’s a poker player. Jack Ness Mike net Jack is who formerly from San Diego friend of yours friend of mine poker player probably not as good as you but what what is it about you guys and e-commerce what what transfers over or am I just making this shit up?
Cole South 4:46
No, I mean it’s definitely has a lot of skill sets that transfer over I think the two main ones are one just approaching things analytically in poker, you really have to look break down the numbers and you know, take every play into account to figure out what the most profitable It is and that transfers over to e-commerce a lot. But I think even more importantly, in poker, you really get used to losing. And okay with that, and like, if you lose a hand, you really got to regain your composure, get back to the table, and not just play terribly the rest of the night. And that transitions over e-commerce. Because no matter how much you research, any new product launch or prepare for a new ad campaign, you never really know if it’s going to work. And so poker players have that ability and experience taking risks and being okay, if they don’t work out.
Joe Valley 5:28
That is an excellent point, because you’ve got to keep losing in order to win. And we’re going to talk about e-commerce here. But I’ve got one more poker question. We’re going to talk mostly folks about 3PLs versus bringing your warehousing in house and the profit, profitability difference between the two and all the logistics and everything. Cool. I looked at your Wikipedia page, what’s the most you’ve ever won in a poker game? And what’s the most you’ve ever lost?
Cole South 5:53
Oh, man, I mean, some of these high stakes games that were online, like the hands are all public, and you can pull them up on YouTube. And there’s a few, you know, pots in the five or $600,000 range? Yeah, there’s some really high stakes action. So definitely won and lost hundreds of 1000s of dollars on any given day. And, you know, it’s all about in the long run, and hopefully that the winds outweigh the losses. But there’s certainly plenty days that’s done for sure.
Joe Valley 6:21
I hope they did. I hope they did. You live in San Diego, and it’s not a cheap place to live. So I think you probably did, okay. If you move there before you started your your e-commerce business. Alright, so tell us about the two e-commerce businesses and let’s talk a transition talking about the concept of a 3PLs two, which is to most people it’s like, easy, I don’t have to deal with that stuff. Versus bringing it in house, which means you’ve got to be good at logistics good at managing people good at inventory management, you got to do that through PLs too. But what have you done? What do you do now? And let’s let’s talk about what you like.
Cole South 6:59
For sure. Yeah. So I mean, there’s a lot of ways to, you know, run your warehousing fulfillment for our business, we have so many different colors and size variations for our baby shoes, or a martial arts uniforms, that it’s really hard for Threepio to get their hands around all these different SKUs, which you might have limited inventory of some of them. So we kind of bounced back and forth between warehousing in house, as well as trying to use three peels from 2016 to 2020. And then when COVID hit and everything just went totally haywire trying to use three peels, we brought everything in house. So for the past two years, we’ve been fully in house warehousing, and it’s gone great for our business.
Joe Valley 7:36
And did you do that simply because you felt like you had to or because they were screwing up so bad that you had to or you kind of thought maybe you wanted to prior to doing it?
Cole South 7:45
A bit of both. I felt like we didn’t have any control of our business, whenever anything went wrong. It was this, you know, 48 hour turnaround time to get an inventory count on a SKU or an answer to a customer of why their order hadn’t shipped out. And I didn’t feel like it was done being done with a bunch of precision either. Again, I think part of that is just due to the complexity of our business, and not necessarily the three people’s fault. If we had a business that was selling one SKU that was super simple and standardized and didn’t have a bunch of returns or anything, then I think repealing might make more sense for our business
Joe Valley 8:16
Might make more sense. Okay. And in your business, you’ve got the baby moccasins, lots of different, I would assume different sizes and colors. And the same with the ju-jitsu to it looks like uniforms and accoutrements and things of that nature,
Cole South 8:30
Uniforms, rashguards, bike shorts, all sorts of stuff like that.
Joe Valley 8:34
Lots of different sizes. But you live in San Diego. Somebody’s gonna go Yeah, that’s gotta be expensive, or did you open your warehouse somewhere else?
Cole South 8:43
No, our warehouse is here in San Diego. So yeah, it’s not cheap. It’s definitely I wouldn’t say a luxury for our business. But it’s definitely an Expense Center for sure, actually brought the exact numbers from our warehouse, as well as Amazon’s kind of want to break down, you know, hey, is this actually saving us money versus Amazon?
Joe Valley 9:01
Let’s let’s dig into it then. Because that’s the big question. Right? People? Yeah, people from expensive places like San Diego. Yeah, I can’t do it. It’s too expensive here.
Cole South 9:09
Well, my hunch, you know, before looking at these numbers was I don’t think running our own in house warehouse is maybe the best immediate financial decision. But there are a ton of intangible factors that we’ll talk about later that I think make it the right long term play. But looking at Amazon’s numbers, Amazon charges 83 cents per cubic foot. In the slow seasons, that’s January through September. That’s nothing I mean, a three cents for a cubic foot. You can imagine some products or cubic foot and that’s no closer $1 a month for story that Amazon. At our warehouse, we have 5500 square feet, and we pay 8600 bucks a month for rent. So that’s about $1.50 a foot. And if you figured that we could stack products, maybe 12 feet high, that’s 66,000 cubic feet in our warehouse. Obviously we can’t use all that. Let’s say we use a third of that. It’s roughly 20,000 cubic feet, we’re paying like 13 cents per cubic foot. Or sorry, you’re paying like 40 cents per cubic foot. So it kind of like half of Amazon. Yep. And then Amazon peak season, Amazon is charging you 2.40 per cubic foot. So we’re looking at, you know, a 6x savings during q4. So I do think on the storage side, we’re probably saving a little money doing it in house.
Joe Valley 10:24
What about on the customer service timely shipping side? Can you
Cole South 10:29
That’s definitely a different question. When it comes to a pair of baby shoes. Amazon is charging us $3.72 As an FBA fee to send a pair of shoes to a customer, to small light products, pretty simple to do, we can do that for roughly the same price, when it just comes to the shipping costs from our warehouse sending out via USPS first class is under a pound. But we do have labor costs a bunch of other things going into that. So we are definitely losing money, shipping ourselves compared to doing it through Amazon.
Joe Valley 10:59
Can you can you do it in the same sort of timely fashion that Amazon
Cole South 11:03
I would say we’re faster. And it’s just a better customer experience coming from our website, where we get our hands on the exact product before the customer just just out all of our employees know our products. So it’s not like, we’re on Amazon. So maybe somebody will buy one of our products returned something totally different. That then gets beamed back in our inventory. Another customer orders what’s supposed to be our product that then gets either a cheaper version or something totally unrelated. That’s pretty common with Amazon. So I do feel like we’re at the point with in house supplement where shopping on our website is a legit better customer experience than shopping on Amazon.
Joe Valley 11:41
What percentage of your orders come from Amazon versus your Shopify site?
Cole South 11:46
It’s roughly 60% of our business. Right.
Joe Valley 11:48
Okay. Is that and is that growing or shrinking as a percentage of the overall revenue?
Cole South 11:53
Staying about the same? But I’d say it’s taken more effort to build the Amazon side for sure.
Joe Valley 11:58
Well, yeah, yeah. To be expected. So are you doing fulfill by merchant right? Is that what it is?
Cole South 12:03
So you’re shipping FBA, so we’re, you know, importing containers from China or Pakistan, to our San Diego warehouse, then splitting it up and drip feeding inventory into FBA? While we’re filling Shopify orders through our warehouse.
Joe Valley 12:17
Okay, so you’re still letting Amazon ship, but you’re just managing the total amount of inventory you’ve got there? How do you do that? That’s going to be quite the challenge, I would imagine because you run out of inventory on Amazon, and you have to build it back up and hope that they get it in time and check it in into up. I’ve heard stories, horror stories of people that ship products to Amazon, it takes three four weeks for them to, you know, get it I don’t know listed or whatever it is.
Cole South 12:42
Totally Yeah, can be unpredictable to especially over COVID, where prior to COVID typically ship something to be a pallet or UPS and we get checked in real quickly. But then Amazon’s had had such staffing issues with their warehouses that sometimes your shipment would sit outside their warehouse for three weeks before they look at it. I definitely think what you’re talking about here is the two biggest challenges we face in warehousing. And that’s inventory forecasting, and FBA, replenishment. So when it comes to the FBA replenishment side, we just tried to make sure we leave ourselves a decent cushion, where we’re trying to keep 45 to 60 days of inventory at Amazon. And we have alerts kind of set up in our inventory dashboard that hey, if that number dips below 30 days of inventory, we need to get on that quickly and replenish that good Amazon.
Joe Valley 13:24
Okay, so you’re saving 50% on the storage fees, you’re paying a little bit more to ship to the customer on the Shopify side. What about the labor? I mean, how many people do you have? Do you have to benefits do you have to deal with all that other stuff, you’ve done the full math, I assume whether you’re more profitable or less profitable by
Cole South 13:45
California labor is not cheap, for sure. And we found in warehousing that you kind of get what you pay for that if you go cheap on labor or warehousing equipment or anything else in the warehouse. It turns out to be very expensive in the long run. So we have a warehouse manager who is just an absolute Rockstar, we pay him really well type person that like I can just trust to make good decisions for our business. And I think he’s probably more productive than three people in the warehouse that are moving slowly don’t really understand our business don’t have a hustle to get the job done. So yeah, with labor costs, I would say probably tips warehousing, versus shipping everything directly to Amazon and not touching it to slightly unprofitable for us. But running our are aware our own warehouse does unlock the ability to sell wholesale for our baby shoes. For example, my wife runs a wholesale program. She’s got him in 250 300 stores across the country, that sort of thing that wholesale stores just are not going to be okay with their order dripping in from Amazon and 15 different packages with Amazon barcodes on it not going to work in a retail setting.
Joe Valley 14:46
Yeah, yeah, it makes sense. And it makes sense in your situation to do this. It’s interesting. Do you know Bill de la Sandro from Elements Brands, he’s
Cole South 14:54
Yeah, very familiar with this company.
Joe Valley 14:55
Okay. So what you’re seeing is very similar to what the Bill has told me in person and on the podcast, which is when you have, you know, an in house fulfillment center, and people that actually work for you versus VAs and 3PLs, like your guy, he cares about your business, and he’s focused solely on your business, and how to improve it. In fact, I think Bill was away on vacation. And when he came back, first of all, he was away on vacation, and was actually able to check out and be on vacation, versus having to deal with emails and things of that nature from a 3PL. But the warehouse manager, in his case, redesigned, you know, complained about the size of the pallets that were coming in and suggested a redesign, and ended up saving 1000s and 1000s of dollars a month, just simply because he was dedicated to Bill’s business, as opposed to a 3PL who’s just dedicated to the 3PL. So there is that benefit as well. So you’re slightly negative, but you can do other things like the wholesale stuff. What else are the other benefits for somebody that’s got multiple SKUs, sizes and variations?
Cole South 16:03
I think one of the biggest ones for us is just less reliance on Amazon, to where this really hit us in the face and started COVID When Amazon slapped on inventory restrictions on how much inventory you could send in. And we were sending some products directly from China to Amazon. But very quickly, we had to change our workflow up because we couldn’t, you know, if we send an entire container of one product, we couldn’t restock anything else do the restock limits. So I think running our warehouse just gives our business some defensibility some ownership of our own products where you know, we don’t get a listing suspended on Amazon, and then we can’t fulfill Shopify orders, because all of our inventory, is there, stuff like that.
Joe Valley 16:37
Well, that part makes sense. But with the container stuff goes straight to Amazon, couldn’t you have sent that to a 3PL and they would piecemeal pack it and ship it off to Amazon the way you want it to? Yeah.
Cole South 16:47
In theory, I guess.Working with repeals like that? Yeah, it just it’s never as easy as like you walk into your warehouse and you break things up and you get the things sent to Amazon in an hour working with a free PL to do that. I feel like in our experience was both expensive, where you have the container unloading the the palletizing fee, the unpalatably feed the box label, all of these things that are stacking up. And just the turnaround time to do this made it so bandwidth intensive for our team and their team.
Joe Valley 17:16
How did you take this on? Like, how did you start? I mean, I know you did it because you felt like you had to? Because you just couldn’t deal with it anymore. But did you and your partner went out found the space and just started being warehouse managers and taking these products in and pick packing and shipping yourself until you got the rest of the crew to help out?
Cole South 17:35
Oh, yeah, I mean, we started not as warehouse managers. But as warehouse employees, we were slapping labels on orders for a good week or two, at least, you know, just just us figuring out hey, this is the process we want to run things through. You know, we need to be scanning barcodes to make sure order that the right orders are going out all these sort of things. Aaron Rubin from ship hero, I believe might have been on your podcast.
Joe Valley 17:58
I know I know the name, but I don’t think he’s been on the podcast. But if he has I’m sorry. But I don’t remember. But
Cole South 18:05
Amazing warehouse content and runs just like a really killer fulfillment company. So we’ve learned a lot through him. And he actually got his start and warehousing fulfillment, running a Brazilian Jiu Jitsu brand, which has been a big inspiration for us. So definitely kept an eye on what he’s doing and trying to learn a little bit from people who really know what they’re doing and warehousing because when Dave and I got into this, we certainly didn’t it is
Joe Valley 18:24
ShipHero’s just it’s a content site, or what is it exactly,
Cole South 18:28
no, I mean, ShipHero started off as a warehouse management system. Okay, and has grown into their own network of warehouses. I think they raised venture capital at a multi billion dollar valuation like absolute monster in e-commerce right now.
Joe Valley 18:41
Gotcha. Okay. So you started out as warehouse employees yourself got the process going things of that nature? What kind of software are you using in house? What have you tried? What did you not like? What do you what have you settled on now to, you know, obviously, print your labels and track your orders and all of that stuff? Or is it? Is it just, you know, UPS or, or usmail.com or something like that?
Cole South 19:07
Yeah, we ShipStation ShipStation. We run everything through it connects to Shopify perfectly. There are some more complicated things you could do with adding extra integrations in but I feel like just keeping ShipStation and Shopify as the source of truth, keeps it simple. And it works.
Joe Valley 19:24
If you were located in I don’t know, Midland, Texas, somewhere somewhere in the middle of the country, let’s say bordering the Mississippi, do you think that your costs your profitability on the warehouse would be in the positive or negative or would shipping it from the sea, on rail to the middle of the country offset any savings that you might have?
Cole South 19:49
Yeah, I don’t think getting a container from Port of LA to Midland, Texas is all that expensive, and you can fit so much product in there that I bet that costs will be relatively negligible. And warehousing in a cheaper area would probably swing it into the profitable category.
Joe Valley 20:05
You wouldn’t be able to go fishing, though. Not saltwater fishing anyway?
Cole South 20:09
No, no DC is efficient, of course, Mexico. Okay, sounds
Joe Valley 20:13
like you’ve done it and you enjoy it. For sure. All right. So one of the other things that you guys have figured out along the way through trial and error is managing your inventory. So you don’t run out making predictable, you know, guesses on when you’re going to run out what colors what sizes, things of this nature. And you developed, synchronize? First of all, what is synchronized? And how the hell did you get that URL? And let’s talk about that.
Cole South 20:40
Yeah, so synchronize is a software tool that allows e-commerce sellers to use Amazon, Shopify, Facebook, and other data directly in Google Sheets. So for our inventory forecasting, we have virtual assistants that are every single day exporting the Manage FBA inventory report, Amazon sales for yesterday, Amazon sales in the past 30 days, Shopify sales, Shopify inventory, all these reports, they’re doing this across two different brands, uploading it all into Google Sheets. And we were pulling that data in our inventory dashboard. This was a huge pain point for our business, because all it took was an employee choosing the wrong date range when they exported the report, or uploading the wrong report to the wrong tab. So we built an in house tool to totally automate this where instead of importing and exporting these reports on a daily basis, can use simple formulas like equals Amazon inventory, my SKU, or equals Shopify sold units my SKU yesterday, and get these constantly refreshing data points that you can plug into any data dashboard, you could dream up in Google Sheets.
Joe Valley 21:45
And the entire point of it is what?
Cole South 21:48
So inventory management is a big part of it for us. So like we have, you know, our list of SKUs, and then the Shopify inventory, Amazon inventory, Shopify units sold over the past 90 days, Amazon unit sold, getting all this data fed into these dashboards on a real time basis. So we can make accurate projections for both ordering products, replenishing FBA, that sort of thing.
Joe Valley 22:11
I would imagine that that has helped with your working capital needs, right? So people that have not been doing this since 2015, or 16, that are still in the startup phase, fine. They’re taking every ounce of profit and putting it back into inventory because of growth. And sometimes their guesses and projections are off, and they’re holding too much inventory, and don’t have money for other things. How have you found this to help people with projections and yourself with projections and things of that nature?
Cole South 22:40
Yeah, absolutely. I mean, it’ll help you make more accurate projections, where you’re not over ordering. Personally, for our business, it’s more helpful on the other side, where it’s super painful, where you run out of stock, a product that you actually have demand for, and then you got to regenerate momentum on Amazon, get the listing back up. So in our eyes, where we’ve had serious pain points for our business, is where our projection is wrong on the short side, and we just don’t get enough inventory, or we don’t replenish FBA. And then like you were saying, it can take them a month check in the inventory, but we only have four days worth at Amazon, we’re gonna be out of stock for several weeks, Cisco has been very helpful for us to keep keep our inventory stocked.
Joe Valley 23:18
Just a little aside here, what actually happens when you run out of inventory, your your listing is not there out of inventory, and then you put inventory back into sales pop right back up, or do you have to spend extra money? Or, well, how do you get sales back to where they were before?
Cole South 23:36
Well, the issue in my eyes is that not only have you lost momentum, so your Best Seller Rank has decreased. But when Amazon starts to check in your new inventory, it’s not fully available. So the customer might land on your product page, and it says in stock, but it’ll say arrives in 14 days or something like that, because Amazon’s still shuffling it around. And that absolutely tanked your conversion rate, which then lowers your bestseller ranking even further because people are getting to your listing and not buying. See on our experience, you really have to fire up the marketing to revive listings as you get into a deck and stock.
Joe Valley 24:10
And so not only are you losing money, because you ran out of inventory, you’re not making those sales, but you’ve got to spend extra paid advertising to rent it back up because of what you just talked about.
Cole South 24:21
Totally. And that’s why the 80-20 minimum inventory management in my eyes is like if a product is a reliable seller, and you know you’re going to help with inventory at some point like do not run out of inventory at all costs, whether that’s at your warehouse or at FBA, because fixing that issue is just such a pain.
Joe Valley 24:36
I sold a few businesses over the years I think probably 80% of them. I always ask the question I used to have it listed a business reset personally for almost two years now. It’s kind of kind of nice. Everybody, you know, for the most part again 80% or so when I asked the question, have you run out of inventory on any SKUs the last 12 months they all say Yes. Why is that?
Cole South 25:03
It’s a hard problem to get you, when you’re running an e-commerce business, you’re juggling so many different balls in the air, got inventory management, you’ve got marketing, you’ve got a bunch of different SKUs over all of these parts of your business. So for one SKU to run out of business, or to run out of stock is really easy to let slip through the cracks.
Joe Valley 25:21
And synchronize is going to help with that. Yeah, for
Cole South 25:24
sure. I mean, synchronize pumps at all and all of your e-commerce data into a Google sheet where you can then make sure you’re very closely monitoring how many days of stock you have at your warehouse at VA, to make sure that you aren’t running out of stuff.
Joe Valley 25:40
It’s interesting, you know, most people that do this, use Google Sheets, but aren’t doing the automated important things of that nature and projecting. Why did you choose Google sheets in this situation as you’re building the software?
Cole South 25:52
Yeah, it’s great question. So we basically had tried every hosted inventory solution inventory planner, there’s a bunch of them that I think they’re good pieces of software. But every every person’s business is just so different, and has unique little quirks that made it so we weren’t happy with any of them. And we would always end up back in Google Sheets. So we were first building this tool, we were thinking, hey, maybe we would build like a new hosted inventory management solution. But we were talking to a lot of other sellers. And they just had the same story of us that, hey, we tried these didn’t like them, we ended up back in Google Sheets. And now we’re doing this very manual process of getting our important data into Google Sheets, so we can run our analysis on it. So we thought, hey, if everybody’s ending up back in Google Sheets, and that’s what we’d like to do in our business. Why don’t we just meet them there and make sure we automate as much of the data exporting connecting process at the end?
Joe Valley 26:40
That makes total sense. Honestly, it’s only from a poker player, when somebody come up with something as simple and logical as that. All right. I’m curious again, I joked about it a minute ago, but how the hell did you get the domain name synchronized.com.
Cole South 26:54
You know, I’ve always been big and just collecting things, and gambling and all sorts of entrepreneurial stuff on the internet and flipping domain names has been one of them. So I bought the domain name synchronize.com, over 10 years ago, when another big domain name collector had some sort of cash crunch liquidity crisis in his life, and was buyer selling a big part of his portfolio. And I picked up synchronized.com Yeah, 2011 I think
Joe Valley 27:21
I can’t imagine what that would cost them. An actual .com a word that is a .com. Do you think about selling, it seems like you could sell a lot of money. Yeah.
Cole South 27:32
And I have flipped and sold some high value domain domain names. The thing is, it’s such an illiquid market. If you’re trying to sell something like synchronized.com, you’re gonna be sitting on your hands waiting for the perfect buyer to come along for you know, I’ve been waiting for 10 years. And I finally found a project that I was working on, that seemed like a good fit for us
Joe Valley 27:50
Yeah. And anytime anyone comes to us to sell a domain name, we don’t do it. We tried back in, you know, maybe 12-13-14. It’s just not what we do. It’s not our specialty. So if there’s somebody out, it takes a unique buyer essentially, is what it is. From a brokering standpoint, there could probably not be an easier business to sell. If you want to call a domain name that’s doing nothing of business. Because you know, there’s no p&l, there’s no analysis, there’s no risk growth, transferability documentation, none of it. Here does buy it or don’t. It all depends on how much they want it for so good for you. Cool stuff. Cool stuff. You’ve just launched synchronized.com, as I understand it, and you’ve got a special URL for the folks that are listening to try it out.
Cole South 28:37
For sure. Yeah, so if you run any party or business out of Google Sheets, I really do think you’ll find this tool useful. And if you go to a synchronize.com/quietlight will have a special offer for Quiet Light listeners.
Joe Valley 28:48
Sweet OkayYou are a former professional poker player. You’re running two businesses you do jujitsu every morning. what else what else are we missing in this incredible but you got kids too, you’re a dad?
Cole South 29:01
Yeah, two young kids two and a half year old son six month old daughter, a handful
Joe Valley 29:06
You do you do? Are you part of any events or meetups or anything like that in the San Diego area that a e-commerce driven that people can find you at
Cole South 29:16
You know I used to go to a decent amount of e-commerce events prior to having kids now that I’ve got a couple infants run around my house priorities have changed a little bit and that’s on the back burner for a bit. But I’m on Twitter at a at Cole South to reach me on there.
Joe Valley 29:30
Sounds like my golf game I played before I have kids and now they’re both off to college. So I’m taking lessons because I’m horrible after 20 years. So back at it. We’ll call this something great folks out there listening. Check it out. Synchronize.com And if you’ve got a single if you’ve got a single skill maybe you know doing in an in house warehouse isn’t for you. But if you’re in Cole’s situation where you’ve got multiple sizes, SKUs colors and all that certainly makes a whole lot of sense. Cool. Thanks for coming on the Quiet LightPodcast man. Appreciate it.
Cole South 29:59
Thanks, I appreciate it.
Today’s podcast was produced by Rise25 and the Quiet Lightcontent team. If you have a suggestion for a future podcast subject or guest, email us at [email protected] Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram, and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.