How to Overcome Amazon Inventory Restrictions with a Local Warehouse

Episode 109

In this episode, we talk about our experience in owning a warehouse for our ecommerce business and why you should consider building or buying one too. For instance, it offers benefits relating to Amazon FBM (Fulfilled By Merchant). If you think however that owning a warehouse is not fit for your business at the moment, you can explore a few alternatives like subleasing a big warehouse, using third-party logistics, and buying a rental property.

Listen to this episode and grow your ecommerce business with local warehouses!

[00:01 – 04:38] Opening Segment

  • We introduce our topic for this episode
  • How the pandemic affected Amazon warehouses

[04:39 – 12:59] Using a Third-party Logistics

  • We share our experience about using Third-party Logistics (3PL)
  • How David found a warehouse for his inventory
  • What ecommerce owners should realize about new racking and shelving

[13:00 – 20:11] Why Own a Warehouse for your Ecommerce Business

  • We talk about the benefits of owning a warehouse
    • What does it mean to turn over an inventory?
  • Ecommerce owners should know this fact about Amazon FBM
  • Want some Amazon refunds? Check out Getida
    • Promo code: FTM400

[20:12 – 31:11] The Costs of Managing a Warehouse

  • Why set up your shipping templates for 1-2 days
  • Warehouses are not free and have associated costs
    • Here’s what to do
  • The forgotten part of the house that can help an ecommerce business

[31:12 – 36:07] Alternatives for Warehouses

  • We weigh in between 3PLs and warehouses
  • You can explore subleasing warehouse spaces
  • Real estate is another option for ecommerce owners

[36:08 – 37:49] Closing Segment 

  • Connect with us!
    • Links below
  • Final words

 

Tweetable Quotes:

“New racking and shelving versus shelving that’s 40 years old essentially does the same thing. They hold cases as long as it’s structurally sound.” – David Schomer

“One way to [fire the man] is to pivot and be flexible and keep moving forward. Always move forward and adapt.” – Ken Wilson

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David 0:00
Are you looking to grow your sales on Amazon? Chances are if you’re not selling on Amazon’s international marketplaces, you are leaving some serious money on the table. What keeps a lot of people from selling internationally are all the confusing hoops you have to jump through to get started. That is why we worked with Kevin Sanderson from maximizing e Commerce on our international expansion. Kevin and his team take care of the details and guide you through the process of expanding so that you can grow your sales and reach new customers. If you would like to find out if working with Kevin and his team is right for you head over to www.maximizingecommerce.com/fire FIRE, once again, that is www.maximizingecommerce.com/fire. And so we didn’t want, you know, 200 days of inventory sitting in FBA we wanted, you know, really between about 40 and 80 days, and for our higher volume products, we, you know would bump that number up a little bit. So anyway, if you imagine the general flow of things, pre pandemic, we would order, you know, an entire container and it would all go into Amazon warehouses. And now we can’t do that. And so we’re having that entire container shipped to our warehouse.

Ken 1:17
Now that we have our inventory, like David mentioned before, if you ship a container into Amazon, and that was your entire inventory strategy, you could never do FBM you don’t have the products for Seller Fulfilled or fulfilled by merchant, you need to have the products and be able to ship them in. And so with our warehouse now, we have our inventory here. And so we can take daily orders and ship them in. And so

David 1:42
Capitalism in the free markets tends to reward those that pivot the fastest. And I would say, when inventory restrictions first hit us, Ken and I looked at each other and said first, this sucks. But second, how can we pivot and adapt and you know, in a very short amount of time, we did large removal orders, we got the warehouse off the ground, I would like to give ourselves a pat on the back for pivoting quickly.

Intro 2:09
Welcome everyone to the firing the man podcast. A show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more then join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your hosts, serial entrepreneurs David Schomer and Ken Wilson.

David 2:33
Welcome everyone to the firing the man podcast on today’s episode, Ken and I talk about the warehouse that we just purchased, why this is very helpful in our business and some of the things that we’re learning as we get this off the ground, Ken, what’s going on, man?

Ken 2:47
David, what’s up? Exciting to be in the podcast studio, we were talking before, and we think it’s been four or five weeks, maybe six weeks. So it’s great to be in the studio taping a new show for the listeners super jacked up. It’s Monday morning I had four cups of coffee. So I am lively and ready to go. Got a great topic today. It’s a project that we’ve been working on a good part of the year, I’m excited to share it with everyone and offer some insights and value. So to kick it off, David, let’s talk about what happened to our business this year. And what put us into this mode.

David 3:19
Yeah, absolutely. So back in the day, the pre pandemic, you used to be able to send in multiple containers into Amazon no problem. And really, as long as you sold those units within a year and you didn’t get hit with long term storage charges, then it really was not that big of a deal. When the pandemic came along, Amazon warehouses got overloaded with inventory, they just simply put did not have enough room. And they were investing significant money into building more warehouses, but it does take quite a bit of time to get those warehouses off the ground. And so they were limiting what sellers could send in. And so for context, we have one particular brand that you know usually had about 10,000 units in inventory at any given time. As of this morning, that company can only send in 5000 units. And so we needed to really be smart about what we were doing with inventory. We also had to figure out a way to handle these large international shipments where we were ordering three months of inventory at a time in a container and so there was a couple different ways that we went about it. First was the three PL, and Ken if you want to talk about our experiences with the 3PL and you know both the pros and the cons on that.

Ken 4:38
Yeah, sure. So the 3PLs that we’ve used in the past, as David said you used to be able to ship in containers and to Amazon and that was great. However, you don’t have a lot of flexibility if you’re packing everything into a container and then sending it directly into Amazon. You’re kind of restricted everything is going there. You can’t shuffle or anything around and so we used a three PL for couple of years to ship in cases and then trickle stuff in. And with the three PL, you know, different three pls offer different services, some of them, you can do, you know, like FBM, they’ll ship in individual units to your customers, different marketplaces, but mostly, you know, storing cartons of inventory in our shipping container, they’ll unload it, store it in there. And then you can send in, you know, one carton at a time and send them into different locations, different marketplaces. So a three PL offers, you know, a variety of services a lot more flexible than just shipping a direct container into Amazon. And so we’ve had some good experiences with three PLS, some not so good. You know, it’s kind of a mixed bag, depending.

David 5:44
Absolutely. And so I think that, you know, another thing that we did in response to these inventory restrictions is we did a significant removal order, actually a couple of them for some of our slow moving inventory. What we’re learning as we navigate these waters is that sell through rate is very important. Amazon wants units in FBA that are turning over quickly. And so we wanted to prioritize if we could only send in limited inventory, we wanted to send in inventory that was going to turn, right, and free up more space for us to send in more units. And Ken I’m smiling as I think back and look at this. We did all the removal orders to my house. And my garage was from floor to ceiling packed.

Ken 6:34
Yeah, I think, I can’t remember the number of units. I think it was approaching, it was probably between 5000 and 10000 units between all of the brands, it was a significant removal order. Yeah. Were you able to park your car in there, David?

David 6:51
No. Both my wife and I were parking our cars outside. And we had a fleet of people coming over to help us get things repackaged. And, you know, definitely created a need for space. And where are we going to put these units? And that’s kind of what led to the warehouse. So I think let’s get into that. As I’ve mentioned on previous episodes, I have a couple of rental units, I like to invest in real estate and had a pretty good opportunity come along this past February, where I bought a single family home. That single family home was a 30 by 60 foot warehouse, and it had dirt floors, I bought it as is it was a good deal. But boy did we have to put in some sweat equity to get things moving in the right direction. So this home and warehouse was owned by someone that I would consider a hoarder. And that hoarding behavior had went on for probably 40 years while they were living here. And so when it came time to do rehab in the house, we filled up, you know those great big like 30 yard dumpsters?

Ken 7:58
Yeah, rollaways?

David 7:59
Yeah, we did like four or five of those just in the house. And so obviously, getting the house rehab was first priority. But you know, behind this house, there was a really nice building, and it had dirt floors in it. And it was really nothing fancy. But, you know, we were looking for dry space to put our goods. And so we decided that this was going to be the future spot of where we’re storing our inventory. So once we got that all cleaned out, which was not a short task that probably took three or four weeks, just getting everything out and either hauled off to the dump or burned or whatever. Once we got it all cleared out, we engaged a contractor to come in and pour a concrete floor. And then we took a portion of that space and put heating and air conditioning in it. So we can start manufacturing, which that’s another episode in and of itself. But yes, Ken and I are starting to manufacture some of our own goods here on US soil and we’re starting to see the benefits of that. So we’re gonna have to do another episode on that. So anyway, going back to the warehouse, a portion of its climate controlled a portion of it’s not, but it was basically a blank slate for us to start putting our inventory in there and getting it organized. So what are some of your thoughts on those early days with the warehouse?

Ken 9:20
Yeah, so to kind of put this into perspective for the listeners, David, you know, he texted me and said, Hey, man, you know, this is the new warehouse, sent me a picture of it and I was like, oh, my gosh, what is that? And so, you know, it was pretty amazing to see the transformation from you know, David, when, you know, you bought the property to where it is now today. It was a really fast transformation. And, you know, like anything else in business, you know, whenever you’re facing adversity and roadblocks, you have to pivot and change. And so that’s kind of what, this was a year of pivoting and changing and so, but back to the warehouse, you know, David, removed like he said rollaways of stuff. And when I first saw it, I think you’d already removed some of the stuff out of there. But there were still piles of stuff in there. And I was like, oh, man, what are we getting into now? And then within, I would say, I think four weeks, it was cleaned out, floors, and it was a project in motion. And it was exciting to see, you know, phase two was kind of racks. Okay, so now we had this big warehouse, what are we going to do? So we got storage racks, got them installed. And then it was kind of like, okay, you know, what else do you need for a warehouse, but getting and then starting to put inventory in. And so, David, talk a little bit about, as you mentioned earlier, we removed between five and 10,000 units, right. And so we had those units coming in. And also we had shipments now arriving at the warehouse. And so there was a touch and go period for like two to four weeks where there was a lot going on.

David 10:57
Yeah, absolutely. I would say the key to this, in terms of like getting us organized. As we got our removals, we would case pack everything. And we didn’t really know what we were doing. So we made these warehouse labels, which just had the name of the product, it had its SKU and Asin on it. It said how many units were in the case. And that was it. I mean, it was just pretty simply printed off on a piece of printer paper. And we taped it to the front of the box. And as we migrated from my garage over to the new warehouse that helped us stay organized and the products next to each other, just so when it was time to pick and pack things would be easy. So I’m really glad that we did that early on was just put some sort of label on the outside of the boxes. The second thing that we did was get racking, and that was something that, and I would say to anyone that’s thinking about building out a warehouse, and this is just my opinion, new racking and shelving versus shelving that’s 40 years old, essentially does the same thing. They hold cases, as long as it’s structurally sound. And so one move that we made pretty early on was we found somebody over in Illinois, who would go into warehouses and take down all their used shelving, and then resell it. And I would say that we were able to outfit that entire warehouse for probably 30 cents on the dollar of what we could otherwise buy new shelving. And it works great. I mean, they’re metal racks, they’re nine foot tall. And you know, they’re all height adjustable. So we kind of like got them right size to the sizes of our cases. But that was a huge move. And I don’t look at it, like, and wish that we would have done new shelving. But that was like an upfront cost that was just part of building out the warehouse. But I’m glad we did it. Because then we could start stacking things and getting stuff organized.

Ken 12:58
Yeah, absolutely. You know, fast forwarding from then until now. Like, it’s legitimately a fully functioning warehouse. And so, David, let’s get into the benefits of like having a warehouse. You know, what benefits do you have having your own warehouse?

David 13:16
Yeah, absolutely. So I would say the first thing is this trickle in inventory strategy. So Amazon has made it abundantly clear that, you know, they make money every time inventory turns over. And so, if they can have, you know, imagine a particular shelf at an Amazon warehouse, if they can have a product that turns over 12 times, versus one that turns over only one time a year, they’re gonna make 12 times more FBA fees.

Ken 13:46
David, can you go over like turning, what’s turning over an inventory?

David 13:49
Yeah. That’s a good question. So if you have a product that sells one per year, right, that inventory turns over once per year, if you have a product that sells 100 per year, that would be 100 inventory turns.

Ken 14:08
And so how does Amazon make money?

David 14:10
Amazon makes money on inventory turns, by, you know, if you think about when you get an order, they’re gonna charge you an FBA fee, they’re gonna charge you a referral fee. And that’s how they’re making money. And so the more instances that that happens, the more they’re going to make. And so you know, previously, we may have had some slow moving products that we would just send in 300 units, and that would be good for the year. We only expected those units to turn over one time. Those 300 units. Now that we have inventory limits, we are prioritizing our highest profitable and fastest moving inventory to get it in because as soon as you sell it, it frees up space for you to send in more units. And so we didn’t want, you know, 200 days of inventory sitting in FBA we wanted, you know, really between about 40 and 80 days. And for our higher volume products, we, you know, would bump that number up a little bit. So anyway, if you imagine the general flow of things, pre pandemic, we would order, you know, an entire container, and it would all go into Amazon warehouses. And now we can’t do that. And so we’re having that entire container shipped to our warehouse, and then we, on a weekly basis, are making adjustments or calculations on okay, what’s our best bang for the buck in terms of sending stuff in? And so I think this is something that I expect this trend to continue into the future. Because Amazon, they were burdened with a lot of slow moving inventory. I mean, if you think of the typical Amazon seller, generally, they’re not gonna have their PhD in inventory management, right. And so, but they are burdened with a lot of amateur inventory keepers.

Ken 16:00
Like me.

David 16:01
Yeah. Well, and I mean, we’ve been learning as we go. And so you know, and also, like when you launch a product, you have no idea how many units it’s going to sell. So it’s kind of a finger in the wind. And that’s fine. That’s, that’s fine. However, having this warehouse is going to allow us, you know, to do that trickle in inventory.

Ken 16:20
Yeah.

David 16:22
So, I think another piece of this is FBM orders. And so you want to talk about that, and how we set those up?

Ken 16:30
Sure. So before we move into the FBM as a benefit, wanted to round out the Amazon piece of this. And one thing, David, you had mentioned inventory turns, that is how many times that you turn your inventory over. So you know, if you sell one unit a year, that’s, you know, you’re turning it over once, if you’re selling, you know, four times, whatever, you turn it over, and Amazon makes money on FBA, the warehousing fee, they make money on commission, and then their largest piece of the pie, which is really weird now, they report it on a different part of their financials, is advertising. And so they also make a piece on advertising every time you sell one, boom. So the other thing is, if you think about it, Amazon is a large company, it costs them a lot of money to build fulfillment centers, right. And they have to take capital expenditures money from their budget to build fulfillment centers. And so I think they’ve realized, as they’re growing as a company, what’s more profitable to them is turning over selling products versus building infrastructure, fulfillment centers. And so they’ve kind of, I think they’re squeezing that down now. And putting the onus on the sellers, third party sellers, and saying, we’re just going to basically screw them over and let them deal with their own inventory management. And we’re gonna focus on the piece of the pie that makes us money, which is turning inventory over. And so just wanted to round that out. And also, to put up stamp on as well as within our brands, we’ve expanded internationally, and into Walmart. And so this was definitely another piece of that pie. But before we get into those, let’s go over FBM like you mentioned, David. So now that we have our inventory, like David mentioned before, if you ship a container into Amazon, and that was your entire inventory strategy, you could never do FBM, you don’t have the products for Seller Fulfilled or fulfilled by merchant, you need to have the products and be able to ship them in. And so with our warehouse now, we have our inventory here. And so we can take daily orders and ship them in. And so one of the strategies that we’re doing or that we’ve done this year, especially before q4, it was a huge goal of ours is to get FBM listing set up for all of our FBA listings. And then in any of our listings that we have inventory in our warehouse, we load the inventory onto the FBM listing. And so if we’re out of stock, like stock outs have been crazy this year, because of the inventory restrictions, and so we’ve had so many issues. So you turn on the FBM listing, get it built out, load your inventory, and if your FBA listing goes out of stock, you’ll have a default to the FBM. And so you’re still making money, you’re actually making more money if you have your warehouse operations set up efficiently because you’re not paying Amazon the Commission on those. So being able to have a backup plan as an FBM. It’s just another layer of protection and diversity for your business which is huge.

David 19:19
Sorry to interrupt the episode you may have heard Ken and I talking recently about a new tool that we’re using for Amazon refunds. Now I have used other refund tools like this. However, I can tell you in the first seven days, they scrubbed the back end of my Amazon account going back 18 months and found $5,000 of refunds. And the nice thing about this is it’s my money, Amazon made a mistake and they are just auditing my account. The other thing I really like about this tool is there is no monthly fee. They only charge a commission if they are successful in getting you your money. Go to www.getida.com GETIDA and enter promo code FTM for firing the man FTM 400. This is an awesome tool. I can’t say enough good things about it. Now back to the episode. Yeah, I feel like anyone that has some experience selling on Amazon, if I were to lay out the scenario of, Hey, have you ever had something that’s gone through FC processing for three weeks? The answer’s yes. And so that would be where you ship something into Amazon, and they take forever to get it checked in. And so, you know, we run into that. And we know we’re going to continue to run into that. But this allows us to continue to make sales while we’re out of stock. And so because we knew that we would, you know, with the inventory restrictions in place, that we were not going to be able to get things in quick enough that this is just kind of a backup plan. And so you know, at the end of every day, we have, you know, one of our warehouse workers package up individual orders, and they’re actually sending that to the end customer. And a couple pro tips on anyone wanting to adopt this strategy, I would say first purchase your shipping through Amazon, Amazon has discounted rates. So on all of our FBM orders, when we go into manage orders, we are buying our shipping directly through Amazon. And that’s cheaper than actually going to the post office. Second thing that we do is when we’re setting up those listings, the asin remains the same. It’s just the SKU that’s different. And so what we, it appears that we have two listings, however, it’s the same Asin. So when you go out of stock on FBA, your FBM listings kick in. And when we do our SKU, we do the exact same SKU except we do dash FBA. So in terms of just keeping things organized, that’s been pretty helpful. And then when you do get FBA inventory back in stock, that is always going to win the buy box over and above your FBM listing. So, and I would say the last thing is, if you are going to adopt an FBM model, that you should set up your shipping templates, we gave ourselves three to five days to process orders. And the reason for that was twofold. One, we were just starting this, so we knew we were probably going to have some delays in shipping. And so if you set your account to two day shipping, one, you’re gonna have to go out and buy two day shipping, which is expensive. And if you don’t make that, then, you know, if you don’t make it in two days, then your account gets dinged. And so we just set the expectation three to five days shipping, and that has been perfect for our accounts.

Ken 22:43
Yeah, a couple of follow ups on that is, you know, if you’re setting up your FBM listings, like David mentioned, the shipping templates, go in and spend a ton of time in there, understand them, you know, maybe build out like your product sizes, and check pricing, you know, run a couple of test orders through make sure your times are set properly so that your warehouse workers can, you know, get the orders processed and out because what you don’t want to do is you don’t want to get your account shut down for, you know, FBM, you know, issues, orders late or whatever. And so spend some time on understanding the shipping templates get them built out properly, that is huge it’s crucial. One other golden nugget, our advertising agency, you know, shared this with us a few weeks ago. And if you, so if you’re an Amazon seller in 2021, you’ve likely went out of stock on several of your skus because of inventory restrictions and what Amazon was doing historically, and they’re still doing unless you turn this off, once you ship in inventory to Amazon, it goes into FC transfer, like David mentioned earlier, it could sit in there anywhere from one week to who knows, six weeks, eight weeks. And Amazon will, if you’re using Amazon PPC, which you should be, Amazon will advertise that listing and that listing will come up and say, you know, let’s say today’s December 13, when we’re taping this, if we ship in a case of 100 units, and our listing is down, it’s out of stock, as soon as we ship that out, that listing will go active and Amazon will say available soon coming soon. And they’ll run ads to that listing. And do you know what the conversion rates going to be on that? Not very good. How many people are going to go to that, especially if you’re shopping for a holiday and they see, oh, this jacket that I want, you know that I just clicked on the ad for, took me to listing and says coming soon. It’s not going to convert. So there’s actually a setting you can go in and change. You can toggle that off to only advertise your listings whenever they’re in stock and ready to ship and so that’s a golden nugget. If you haven’t turned that on, you might want to think about going and activating that feature.

David 24:57
Absolutely. Absolutely. So I would say overall, you know, we’re about two months into having a live warehouse. And I would say that there’s definitely been benefits in our business, we’ve been sending out a lot of FBM orders in instances that we are out of stock. And so that’s been great. And as we were right in the middle of a really busy q4, and so we’ve been doing daily outbound shipments, just as capacity frees up. And so in a, especially for our businesses that are very seasonal, this has been very helpful. Now, I do think there’s, you know, we’ve covered a lot of the positives, I do think, you know, we should talk about maybe some of our negative experiences, or some things to consider if you’re going to make this move. And one I would say is there’s a cost here, you know, we were looking at what we were paying some of our three pls. And there was pallet storage, there was pick and pack fees, there was a lot of items that it seemed like we were paying a lot for. Now, you know, it wasn’t cheap to get this warehouse off the ground and so we, while we are not charging ourselves pallet storage fees in a roundabout way we are, right, there’s cost associated with just having a warehouse. I would also say there’s a labor component to it. So you know, we were getting charged, it was like five bucks per carton, pick and pack fee at one of our three pls. And we thought, man, that’s expensive. However, we needed to go out and hire somebody, and then pay them to pick and pack and so it’s not free. And so, I think that there’s some upfront costs there that, you know, we’re betting in the long term is going to be beneficial. But in the short term, not quite sure yet. And then I would say also some of like the fixed expenses, so like shelving and stuff. This is something that if Amazon were to open the floodgates on inventory, we would probably just go back to sending entire containers, because that’s easier, the less times you’ve got to move inventory across the country, the better off you are. And so, you know, that is a risk that we are willing to accept is that, you know, if Amazon puts up 50 more warehouses, and all of a sudden our capacities go way back up, are we gonna have a need for this? And, as I mentioned at the beginning of the episode, we are starting to do some manufacturing in house. And so the answer for Ken and I is yes. However, this is something that if you’re thinking about leasing versus buying, boy, I would probably lease for a year and see how this shakes out. But I don’t think inventory restrictions will ever go away completely. But I do think they’re going to loosen the belt a little bit, especially post q4.

Ken 27:53
Yeah absolutely. So circling back, we’re talking about pros and cons of having your own warehouse. So I have a couple more left on my sheet here. And so one of the cons, I would say that we have faced with is time. It’s taken a lot of time, where we could have been spending doing something else in our business to actually stand up the warehouse, you know, physically clean it, get, you know, search for racks, figure out how to run it, and just it took a lot of time over probably a three or four month period. So that was an investment, your time is very valuable. Now a couple of the other benefits of having your own warehouse. One was, you know, freedom and flexibility. Like I mentioned earlier, we have expanded to Walmart, we’ve expanded into international marketplaces. And so when we have our inventory local, that we can go in and modify it, test it, do a physical count, do whatever we want, you know, going into WalMart, you got to use different barcodes, if you’re using asin barcodes on your products, etc. And so we can take those off, recode them, send them in. And so there’s a lot more freedom and flexibility with your inventory. And the last one I have on my list is it’s forced us to have better inventory management. And so over the last six months, you know, David, being an accountant has been really deep diving into inventory management and figuring out all these you know, how many times we can turn them over, when are we going to send it in, and is really doing a deep dive into inventory management. And it shows. If we look back at our IPI’s over the last six months, they’re steadily going up. And so we’re really getting inventory management dialed in more. But prior to that, you know, my thing was, hey, I’m going to buy a container from China and ship it into Amazon. And I’m not worrying about it. That was my inventory management. Not anymore. Like I think the days of that are gone. And so it’s really you know, when you have your own warehouse, you really have to dial that piece in. So that’s a benefit of having it is we’ve dialed our inventory management in. So David, let’s pivot a little bit now and let’s talk about other options. If someone doesn’t want to buy a warehouse or run a warehouse or their business is small right now, what are some other options that people can do?

David 29:58
Yeah, absolutely. I mean, just because we have a standalone warehouse, everything that we’re doing could be done in a garage, or a basement or a garden shed out behind the house, to the extent that you had space available, I mean, can your basement I mean, we both have had periods of time where our basement looks like a warehouse, because, you know, we have several 1000 units down there. And that’s just part of running this business. And so, you know, if you have that space, if say you have an unfinished basement, generally that unfinished basement is earning you $0 per month, and so there is a way if you have some space, you know, at your house or wherever, to kind of replicate this model, you could do FBM orders out of a basement very easily. And so that would be something that you could look at. And I would say that FBM piece of this strategy is huge. And all you need for that is a printer. I mean, you just process all your orders, and you need some packaging, you need to package your orders up and send them out. But that’s pretty low hanging fruit in terms of getting that in order. You know, the other thing you can do is go through and establish a three PL and you know, we’ve had various experiences with those this year. I think a lot of three PL ‘s are very, very busy. Because when Amazon tightened up inventory restrictions, that was the natural place to look is a third party logistics company. And so we’ve had mixed experiences with those. I don’t ever see our business running without a component of a 3PL. Now, you know, we’ve had instances where we’ve said, Hey, can you do FBM orders? The answer’s no. Could you take all of our products out of the package and replace it with a Walmart barcode? The answer’s no. And so there is some flexibility you lose with the three pls. However, I do think in terms of diversification, I mean, I do like having them as a component of our business. What do you think, Ken?

Ken 32:07
Yeah absolutely. A couple more options that come to mind, one is subleasing warehouse space. And so if you, you know, say if you have a, you know, warehouse close to you, and you want to have more hands on with your products and kind of manage it yourself or have a small team, you can lease out warehouse space from a really large warehouse, say like, Hey, I just need, you know, whatever it is 1000 square feet, 5000 square feet of space inside of someone else’s warehouse, and then you can manage all of it inside there. So you can sublease space within another larger warehouse. That is an option. And another option that comes to mind is kind of a hybrid solution, using a little bit of everything. And so if anybody’s, if you’re selling in E commerce in 2021, especially on Amazon, you’ve had to pivot this year and figure things out, and being flexible and pivoting is crucial in sustaining a business. Like if you’re stale and stagnant, and you don’t change, you’re not going to be in business for long, you’re going to be out of business. And so you always have to pivot and change. And what a hybrid solution, what I mean, so I’m holding a pen in my hand, like David mentioned earlier, you can store products in your basement, you know, if you sell pens, as long as the velocity is really low, you could store you know, 5000 pens in your basement, right? If you’re selling couches, you’re likely not going to store 5000 couches in your basement. And so let’s say your catalog is, you know, 25 products, and you have five products that are oversized, and you have 20 that are standard size. Well, you could store all the standard size at your house and save money. And then you could have a three PL store the oversized ones and kind of have that hybrid solution to fit your catalog and be flexible. So that was kind of the last solution I was thinking of.

David 33:54
For sure. I would say in closing the capitalism in the free markets tends to reward those that pivot the fastest. And I would say when inventory restrictions first hit us, Ken and I looked at each other and said first, this sucks. But second, how can we pivot and adapt and you know, in a very short amount of time, we did large removal orders, we got the warehouse off the ground, I would like to give ourselves a pat on the back for pivoting quickly. And I would also say that this new inventory management system that Amazon’s requiring has put a lot of people out of business. And you know, whenever I’m frustrated with inventory restrictions, I often remind myself that hey, this is happening to your competitors as well. And so if you can navigate this better, and you’re selling high quality products, this is an opportunity in a roundabout way I do think this is trimming the fat on sellers that don’t have space to put inventory and are relying on just shipping entire containers into warehouses and so I’m proud of how fast we’ve pivoted. And I would say to our listeners, if you have not pivoted, I would not let this kill your business, I would go out and find somewhere a space to sublease, I’d find a three PL, or maybe even dip your toe into real estate and buy a rental house with a big ass messy garage out behind it. And you’ll have two sources of cash flow. So we will definitely keep our listeners in the loop on the future of our warehouse. But that’s our update up until now. Ken, anything before we close out the episode?

Ken 35:35
Yeah, just real quick. You know, if you’re listening to the end of this episode, you made it through a really long episode about warehousing and it’s probably dry and everything. But what I would say is just echo what David said, This year has been a very interesting year and a very challenging year. And so evaluate your business, where you’re at, where you could get better in terms of inventory management and make a hybrid solution for you. And then go make it happen because you want to fire the man someday if you haven’t already. And one way to do that is to pivot and be flexible and keep moving forward. Always move forward and adapt.

David 36:08
Definitely. All right. Well, thanks for tuning in everyone and we’ll talk to you next week. Thank you everyone for tuning in to today’s firing the man podcast. If you like this episode, head on over to www.firingtheman.com And check out our resource library for exclusive firing the man discounts on popular e commerce subscription services. That is www.firingtheman.com\resource. You can also find a comprehensive library of over 50 books that Ken and I have read in the last few years that have made a meaningful impact on our business. For that, head on over to www.firingtheman.com/library. Lastly, check us out on social media at firing the man, and on YouTube at firing the man for exclusive content. This is David Schomer

Ken 36:52
and Ken Wilson. We’re out

David 37:09
Before you go fun fact for all you Amazon sellers out there, when you start selling in international marketplaces, all of your reviews come with you. At the beginning of this year, Ken and I sat down and talked of ways that we could double our businesses in size and landed on international expansion as our number one initiative this year. We partnered up with Kevin Sanderson from maximizing ecommerce and he has made the process an absolute breeze walking us step by step through the process. If you want to grow your revenue and reach new customers head on over to www.maximizing.ecommerce.com/fire and connect with Kevin Sanderson today. Now back to the show.

Transcribed by https://otter.ai