The Benefits of 3PL Scale with Jonathan Briggs of ShipMonk

Jonathan Briggs SVP @ ShipMonk 00:38

Now Justin, it's pleasure. Thank you for having me on. So I look forward to where this conversation takes us over the...

Jonathan Briggs SVP @ ShipMonk 00:55

Yeah, so I oversee our acquisition team. my customer, you know, my, I've got, we're customer facing, my teams are going after net new logos. And so I have an inbound team and outbound team and basically an account executive team. And so we're, we're in lots of net new conversations every day, every week. It's trying to understand what people want in the market. It's trying to get your face in front of them without.

Jonathan Briggs SVP @ ShipMonk 01:22

being pushy or annoying. as you know, sales is different in 25 than it was, you know, in 2020 even, right? Like it's, you know, this, I hate to say it, but I'm to say it. The tech salespeople have ruined this, the selling career path. Like the, spray and praise of the email, just, just send them that eighth email and they'll, they'll, they'll respond to you. It's not a positive, positive response in my world if we hit them that many times. So.

Jonathan Briggs SVP @ ShipMonk 01:50

So yeah, so my day in the life is a little bit different than my team's. I'm a balancing act of tactical and strategic at my level because I've got managers that reported me across all those teams. So I do spend a lot of time in merchant conversations. different stages. I sometimes I like being on the front end and sometimes I'm brought in at the negotiating level and to be the bad cop or the good cop or whatever, it depends on what the team needs me to play. But I do the number one thing that brings joy to my day and week is talking to other customers and brands and just hearing what their needs are, what their wants are and how we can solution something that takes away their pain that they're feeling at the time. So that's a big chunk of my time. And then a lot of it's also go to market stuff. So as we roll out new products, have to go to our marketing team and say, we need this messaging. I need this set of assets. This is the training that we need to take to our team to be able to then monetize it and communicate that properly. So a lot of GTM stuff that's going on these days. And then it's also like the forecasting and the... all the internal selling stuff that has to happen of, know, do we need more, you know, perfect to you. Like, do I need more buildings? Do I need more space in this market? Like what, what's real and not real in the pipeline? And do we need to start spinning up the resources on the engineering side or, so I do spend probably most of my. technical selling time is internal and making sure that ops is on board and engineering is on board and finances on board, et cetera, so that I can remove barriers for my team to be able to continue their sales cycles or whatever they're working on at that time.

Jonathan Briggs SVP @ ShipMonk 03:43

Go, no go should be part of at least the 3PL world strategy, right? Like there is a very specific lane that we play in. I think most 3PLs have a lane that they stay in or they should stay in. And if you're, you know, I find if we're in that right lane, we win, you know, a high percentage of the time. And if we're not, we spend a lot of time and a lot of resources and... Oftentimes don't win them then when we do it's not a good win for either us or the end customer. So we do spend a lot of time. I'm really hammering our teams to slow it down on the front end because sometimes it's so exciting. A customer wants to share data and they're ready to go and their lease is coming up or they have this problem. All right, we heard we had a 30 minute call. Let's go spend millions of dollars together. No, no, stop. Slow it down. Let's really understand your data, your profile. Do we fit? Is there a cultural fit, an operational fit and a capability?

Jonathan Briggs SVP @ ShipMonk 04:38

fit and if those three are yes then let's go let's go dive into it full steam if they're not then let's validate it again before we say no but then if not let's introduce them to somebody else that's better suited for them because you know this right like you're you're working with people like me on a regular basis and it doesn't take long for the truth to come out, right? If we're good at what we do, it's quickly known. And if we're bad at what we do, it's also quickly known. it's bad for both parties to take on a wrong-fitting customer because it's expensive to move. It's painful and disruptive to any business to go from point A to point B, from one warehouse to the other. And then if you can't execute for them, the teeth in our contracts and... It's just not for the faint of heart. so that's why you see, like in, I'm sure you see it all over your LinkedIn, because you're connected with people like me. It's a lot of complaining. Three PLs are the worst. I hate three PLs, right? Like, no, three PLs are really good. But again, are they aligned to their capabilities with the customers that they've taken on on board? And so it's not like changing software or

Jonathan Briggs SVP @ ShipMonk 05:49

changing a printer or even changing a transportation carrier where just a different truck shows up tomorrow that that's not disruptive when I have to move, you know, three, four or five months of inventory in three weeks and then kind of shut you down and start you back up like that's that's drastic, you know, and typically we see it's like two to three months of cost of their budget to make that move and and so you ask a lot for for a

Jonathan Briggs SVP @ ShipMonk 06:16

for a brand to come on board with you. And so I think our team is super transparent. We are trying to slow it down a little bit more on the front end and make sure we're doing right by us and by them. And then, like I said, if we are, then let's go. And if we're not, let's quickly get out of that conversation. One thing I love about this industry is it's, I guess the good and the bad, right? It's super fragmented. So the bad is it's super fragmented. And the good is it's super fragmented, meaning... I can hand off a lot of work to other 3PLs and they can make money and we can make money. And so a lot of our leads come from other 3PLs and I push a lot of work to other 3PLs. So there is a frenemy component to this.

Jonathan Briggs SVP @ ShipMonk 06:58

Yeah, no. That's it. That's it. Yeah, you know, obviously what we used to go after and who we go after today are very different, right? We're 11 years now in the making and you know, what got us here is not going to get us to where we want to go type of a thing. So I think today, as we sit here back into 2025, our ideal customer profile looks something like either pure D2C or an omni-channel with a heavy influence of D2C that's probably at least 50 % of their at least order volume or unit volume is tied to more of an each's pick and a direct to consumer component. But we will support any and all channels. I just don't ever take on only B2B. That's just not us. We still are bent towards direct to consumer. Ideally in verticals that are things like nutraceuticals, health and beauty, footwear, apparel, CPG type products. lighter weight probably higher value type items so to speak or mid-valued items in there and then order volumes you know from 10,000 orders a month to probably a couple hundred thousand orders a month where somebody makes sense to still fit in a mixed use multi-tenant environment. And then I think really the ones that want to be in multiple locations and ideally multiple countries even, because we are running a global network and we really have set our setup really as not selling any given market or any given building, but selling the network. And we are trying to help brands with... to put inventory around the country, what splits of certain units and SKUs, and then we can spread it around as their geography changes or their customer demographic changes. So somebody that wants to be probably more than one node, potentially more than one country that's mid-market to the enterprise scale is typically where we're going after.

Jonathan Briggs SVP @ ShipMonk 09:26

Yeah, there's bigger, but you know, as of right now, yes, we set up a couple of buildings a year. We run about 12 different buildings across eight US markets and another four or five global markets. So it's not like we don't set up buildings. But I'm not running any single dedicated site for one client. You go into any one of my buildings, there's going to be multiple, multiple brands under roof so we can spread the resources and the overhead and all those types of things. And not to say down the line do I do something that way, but optimizing a single building, in my opinion, is kind of like early 2000s logistics.

Jonathan Briggs SVP @ ShipMonk 10:05

And more optimizing for the last mile is now where we sit in 2025 and beyond. And so if I'm building a dedicated building for you, I'm going to go against my core grain that I want to be a transportation solution for you versus just a fulfillment solution. So if I'm just building something in the golden triangle, say in Indianapolis or Columbus or Kentucky or whatever, say,

Jonathan Briggs SVP @ ShipMonk 10:30

put all of your SKUs in this one site and then we're just going to optimize that building to death and put some robotics and let's spend a couple hundred million together in CapEx and then we'll sweat those assets over the next seven to 10 years together. That's against what we're doing. And so yes, we build buildings, we deploy buildings, but they're built with a network effect versus a single optimized site for one brand.

Jonathan Briggs SVP @ ShipMonk 11:15

Yeah.

Jonathan Briggs SVP @ ShipMonk 12:00

Yeah, so first and foremost, automating in a multi-tenant mixed use environment is really hard because we've got different shapes, different profiles, different product types, all those things. so if you bring in anything in that environment, it needs to affect every client and every order flow in the building. Otherwise, I'm just raising the overhead of the building for certain clients and then they're paying for everybody else's benefits. it gets harder.

Jonathan Briggs SVP @ ShipMonk 12:34

Yeah, home goods or, you know, bedding or, you know, not, and we don't do too, too big and bulky, but I've got, I've got, you know, some oven guys and I've got some, you know, folks that are in the bedding space. So the pillows and the comforters and then, then you're right. Then those little tiny little things that are small. So all of those operate, pick, pack, ship in a different, different way. So.

Jonathan Briggs SVP @ ShipMonk 12:58

I think first and foremost our approach, we run our own software of all of our buildings. So the typical like acronyms, the WMS, the OMS, the TMS, the WES. like warehouse management, order management, warehouse execution is all in our own tech stack. And so we're using that to optimize the building first and foremost. we're...

Jonathan Briggs SVP @ ShipMonk 13:25

No, so I didn't create it, the organization created it. But yeah, so it's an in-house developed, obviously it's matured over time, right? Like I said, what we were doing 10 years ago is different than what we're doing today. So the beauty of owning your own tech stack is you can iterate it, right? So as customers profiles change, customers need change, new capabilities come about, and it's all set up single instance across the network. So if I make a change that affects one client, It's available to every other client that's under our our roofs. so that's nice.

Jonathan Briggs SVP @ ShipMonk 13:58

That's it. Yeah. so, you know, we're in conversations right now that there's like three clients all asking for the same thing that doesn't exist. And it's like, all right, well, the first person on board is going to, we're going to do it for them. And then the next two guys will take advantage of it. Right. So, that helps us because we can be super agile. We can. do changes when we want to make changes as we see the need to make changes. I'm not at the mercy of a third party. I don't have to get a statement of work and then get in line with the resources and hope for nine to 12 months down the road we can solve it. So within that, because it's not just WMS, it's also warehouse execution, there's a lot of optimization that's gone into things like slotting and rotations of slotting. So very dynamic. so what's in the front of the aisle today and next week might not be the same item, right? as demand changes and velocity changes on those SKUs, we will reposition the inventory across the warehouse and pretty close to real time. So it's a combination of where we place it, how much depth or lack of depth we have around goods in an open pick area. And then ultimately optimizing the pick paths and the pack outs and all those different things will come. more of our time right now is optimizing manual processes through the software.

Jonathan Briggs SVP @ ShipMonk 15:17

about some of the automation and we invested heavily as a business in automation coming out of COVID. We had a massive scale in that time frame just as a lot of 3PLs did. So if you've seen it, we've deployed it at some point in time from AMR robots to pick to light, put to light to robotic arms and automatic case erection and all different things that At the time, coming out of 21, 22, labor was insane. Availability of it was not good. Cost of it was out of control. And it seemed like it was never going to stop rising there for it. So we went all in and then as we've progressed and matured, we've actually unbolted a lot of that technology and gotten back into optimizing of manual carts and optimizing of where the product sits in the warehouse and batching of orders versus just going and swarming. and going back to the same location 100 times a day, let's go there once and grab 100 units, right? So it is a lot of going back to basic blocking and tackling because of the environment that I'm talking about. Like I've got a mix of all different order, shape, sizes, customer types, et cetera. I have to account for all of that. And then the volume is also sporadic and in a direct to consumer environment. So what I do in November and December is drastically different than what I do in other parts of the year. Yeah.

Jonathan Briggs SVP @ ShipMonk 16:46

So that's the other thing is like, so am I building an automated warehouse for those six weeks or am I building it for 52 weeks? Realistically, we got to build it for 52 weeks and use extra shifts, use different SLAs that time of the year to offset some of those things. So we've gotten away from a lot of the automation. I still run some AMR. still, obviously a lot of conveyance, a lot of sortation is really important to us. But we've shied away from, not to say like we'll never automate again, but right now,

Jonathan Briggs SVP @ ShipMonk 17:16

A good example, like when I go into my California site, I run about 100 to 125 units picking with an AMR solution. I run about 350 units per hour with a manual solution doing the same thing. So, it negatively impacts throughput. It negatively impacts our overhead. So, yes, is it nice to have when I do a customer tour to see a robot zipping around? It looks awesome.

Jonathan Briggs SVP @ ShipMonk 17:41

But is it really creating value for those clients in terms of cost and throughput? At the moment, the answer is no, it really isn't. It's a dream.

Jonathan Briggs SVP @ ShipMonk 17:53

Yeah, there is. It really is. So we're still doing a lot of basic blocking and tackling, know, industrial engineering type activities to really focus on throughput and optimize the warehouse as best we can in those regards. So, yeah, so it's...

Jonathan Briggs SVP @ ShipMonk 18:16

So it becomes really in that specific example, it's about the density at the order level. So AMRs cap you at an eight order profile. And I can run push carts depending on the customer size of products. I've got one customer we do about 52 orders on a pick path versus eight on a robotic pick path. So it's the density that I can get on that cart. And so I'm going to that... that area for picking significantly less times because I can go there and satisfy up to 52 orders in that one example versus I'd have to go back there maybe seven, eight times with the robot. And so it's repetitive visits to the bin, it's extra touches. And as you know, like lot of the things that are touted as robots today are not robots, they're material handling equipment. And so I still need a body to take it on or put it off. So I'm not really displacing labor in those instances. And so

Jonathan Briggs SVP @ ShipMonk 19:11

So those are some of the factors. think the other things we run into, you know, my contract links with my customers are much shorter than if I was running like that dedicated environment where I signed them up for seven to two years.

Jonathan Briggs SVP @ ShipMonk 19:25

Yeah. Yeah, so I've got to be mindful of that. so, there are really good automation solutions out there that take significantly longer from a business case in terms of ROI to pay off. Well, if I'm getting something that's going to take me over five years and I have a contract that's between three and five years, I don't even see anything in the initial term of the contract in terms of gains.

Jonathan Briggs SVP @ ShipMonk 19:52

Yeah. And so now I'm putting that customer relationship at risk and hoping that I either sign them up a second time or the customer after them takes advantage of it. so in the environment I live in, we rarely do CapEx conversations with our clients too. So I'm the owner of the CapEx. We create an OpEx environment. And so again, I've got to be mindful that if I put too much in CapEx and I don't ask somebody to pay for it, then I've got a fixed overhead that doesn't, that then into a negative OPEX for that client. So we have to balance all of those things when we do the commercial modeling and how we do the pricing and stuff like that. So right now, as we sit in 25, the labor market's gotten pretty stable, at least in the markets we do business in. Availability and quality are pretty strong. Cost is stabilized now for the last two years. And so as we roll into 26, I think we'll stay the course. As we push towards 30, Will we do other automation? Absolutely. What that'll be, don't know because as you know, the rate of innovation, by the time, it's crazy. By the time you deploy it, it's already not good anymore. Yeah.

Jonathan Briggs SVP @ ShipMonk 21:50

Well, it's challenging. kind of the, yeah, this is like, gotta like, gonna have to send you a check after this for my time for therapy on this question, right? So I feel like I need to lay down on. Yeah. So 25 was an interesting year and it's been a very difficult year, but when you...

Jonathan Briggs SVP @ ShipMonk 22:18

talk to almost anybody in my industry, at least anybody that had apparel in their portfolio. So if you take a step back, December 17th in Mexico, there was a decree issued by the president of Mexico that was going to block entry of goods that were going to bypass duties and taxes for the US. so Christmas got wild. Everybody's coming off of Christmas and New Year canceling plans and going all this business down the south of the border and north of the borders coming back to the US. we were throwing, this is like a COVID year all over again. We just got to capacity, right? That's what it felt like. We took so many conversations. We had so many, so many people just blowing us up. We were taking, you know, 24th, 25th, 26th of December, cancel the out of offices. We're in serious conversations. And then all of a sudden the new year comes back and it's like, oh, we undo the decree. 90 days stay. All right, everybody takes a breath. Everybody down south, north, oh, we're good. We're good. We got this. And then the duties and taxes thing. Yeah. Yeah. So then duties and taxes start getting really loud and noisy, right? You're seeing all of this. And then there was the talk of de minimis. And then we're going to lock de minimis into 2027. It's only going to be about China. Then minutes later, it's not. It's the rest of the world. And oops, 2027 became August of 2025.

Jonathan Briggs SVP @ ShipMonk 23:48

Now what? Right? And so it's been up, down, up. So we had about basically four, what we've been calling spin-ups, where we talked to tons and tons and tons of brands we all want to do business with. And we think we're there, and then we're not there. And we spent a lot of resources. And so when it all said and done, only a handful of brands ever left the markets, but we all chased our tails. And so...

Jonathan Briggs SVP @ ShipMonk 24:12

What looked like it was going to be another 2020 or 2021 in this industry came to a halt fast. And so it's been delayed sales cycles because of all of that wild ride I just talked to you. So much uncertainty. Nobody wants to make a business decision. Maybe we just stay put. Let's just re-up for another year. Let's kick the can down the road. Eventually we'll know what's going on. And here we are in October. And we still don't know what's going on because the Supreme Court is going to maybe say that they're going to undo all of that, right? And so nobody wants to make that decision if all of that gets walked back and the border opens back up and de minimis gets this and you know, so.

Jonathan Briggs SVP @ ShipMonk 24:58

It's crazy, right? So we added a whole lot of uncertainty in the year. And as you know, uncertainty is challenging for businesses to make investments. so it's been a wild ride, but our teams have really dug in, have built really good relationships. Our business really rallied around it. We should end the year where we told the business at the beginning of the year we'd be. But it felt like four years in this year to get there. Like it's been wild. know, the deal cycles took probably 90 days longer than they typically would. I think our percentage win rates. in some months actually slipped below what they normally would. So we lost more than we expected to this year. which means we had to talk to more brands than we normally would. So my team's worn out in this year. We've asked a lot of them. It hasn't been easy, but they're going to come through on the right side of this on the other side. So really proud of what my leaders have done and what the teams below them have accomplished in all of the uncertainty.

Jonathan Briggs SVP @ ShipMonk 26:13

Well, we've had some, we've had good stories in, in, CPG, we've had stories in health and beauty. We've had good stories in apparel. really, you we, we, the ICP, we focused on it. We, we stayed true to it. We didn't change our lane and we have really good merchants that, that have come before that act as good references for us in all of those categories. so, so our, brand partners have been really good to us and telling their stories to our clients. And it's not all like, you know, all perfect, right? Like there's, hear the goods, hear the bads that, we don't moderate those conversations. They have those that we broker and the back channel ones alike. so, but yeah, definitely those three categories have been really good to us this year. And part of that's just the capabilities. And the other side of it was the customers that we already service today. look like them, feel like them, and they can resonate and relate to it. And so it helps if you bring people into your buildings and they see themselves either directly in their competitors or just in your capabilities. It's like, this makes perfect sense. I see now all the things you've been talking about with the software and the reporting and all these things. And you see the volume and the activity at scale and like, okay, you can definitely handle. handle what we're doing and stuff like that. So yeah, those are our categories. Those we're going to, we're, we're investing heavy in for next year, especially apparel. want to do a lot more in it. We think that that narrows the lane a little bit in terms of capabilities. Or I guess three PLs with the capabilities, I should say, because of the skew complexity, the longer tail of the inventory turn, the returns aspects of it. So yeah, and that's a good differentiation because there's still a lot of folks.

Jonathan Briggs SVP @ ShipMonk 28:02

in the same buildings, in the same tech stack, right? Because there's a lot of folks that are outsourcing their returns to other providers and... Or there's other people that are outsourcing their tech stack to outsource providers that's a great product, but it adds cost and complexity to a process. And so we're able to do it in the same building, in the same tech stack that we own and operate. so that's why we want to do more of it. And the other thing, because we've had a business down in Mexico, so we were heavily affected by all this tariff stuff I talked about on the front end as well. But in that part of the, in those operations, we did a lot of value added services at the product level. And so we brought those capabilities into the U S this year. And so a lot of like embroidery work and obviously the specialty things on the, on the reverse logistics side and the returns. And then, and even a lot of things like even for non apparel, like a graving and etching and stamping.

Jonathan Briggs SVP @ ShipMonk 29:07

all this stuff. Yeah, so definitely leaning into personalization.

Jonathan Briggs SVP @ ShipMonk 29:20

Yeah. Absolutely, because you know there's ups and downs, right? Like things kind of go circular in all aspects and it seems true in the industry, right? Like everybody went crazy on personalized products, went crazy on personal branding of their packaging and then inflationary things happened and everybody kind of got white packaging and plain brown boxes and We're seeing that switch back to where personalization matters again, especially at a product level, at an order level, being able to do all those high touch, high VAS or value added service type items like I talked about are starting to be meaningful. And so we now are helping our merchants to be able to generate more income for themselves at a higher margin because personalized products generate a healthy margin for the brands. And it creates stickiness for us as a provider in that same breath.

Jonathan Briggs SVP @ ShipMonk 30:21

It is, yeah.

Jonathan Briggs SVP @ ShipMonk 31:18

Well, I mean, we're in peak now, right? We're in October. you know, peak, you know, if you ask my teams, they start in January planning for it and it's all year and you never stop about peak. we're really into it, right? Receiving has been heavy now for the last six weeks. All of our folks that are doing B2B, all the store replenishment stuff, you know, that's all happening now. And then as we get into November, then we'll transition into the direct to consumer peaks. so roughly we'll see somewhere like a probably a six to eight X lift across the network volume for about six weeks. So there's a lot that goes into it, right? It's shifts, it's people, it's workstations, it's pressure testing the systems and the software. It's the carrier management, right? Making sure you have enough capacity of trailers and trucks and also fitting it in between any caps that the carriers give us. Cause some of them, they want your business all year until it matters and then they don't want your business. We've got to juggle all of that, right? So my transportation team's doing a ton of making sure we've got the right capacity and the right markets and the right cutoff times and adding later trucks because we're adding second shifts and stuff like that. And we're interesting because year round we run a seven day a week network. So all we can do is add. hours in the day, like where a lot of folks are running typically Monday through Friday and they start adding a Saturday, Sunday and those heavy days. We're already doing that. So now we have to get longer in the day. We have to get more associates in the building in those hours and more throughput through any given hour to be able to maximize it. And then obviously, What I can do same day now, I can't do same day in a couple of weeks, right? So we have a little bit elongated SLA. So we have to manage our customer expectations there. We have to have them change their messaging on their websites. We also have to talk to them about how even the carrier performance will slip a little bit. And so we start managing those expectations. So we do lot of webinars and one-on-one conversations within the merchant group saying, hey, here's the impacts on the processing time in our four walls. Here's the impacts on transportation.

Jonathan Briggs SVP @ ShipMonk 33:25

Make sure you check out your website. Make sure you're communicating properly to your end customer. Maybe even talk to them about strategies of what has to be delivered by Christmas and trying to talk people into going to maybe a shipping methodology that is labeled it has to arrive by Christmas. Because guess what? Not everybody that buys in December cares if it comes before the 25th or not. Some people like me are just buying to get a good deal or they want it or whatever, but it's okay to come and figure it out.

Jonathan Briggs SVP @ ShipMonk 33:59

Yeah. Yeah, so, well that's it. And so we do, then we go through a whole exercise of who is chasing the Christmas cutoff and who wants to go from all the way through the 22nd of December as an example and change your carrier strategy every day starting around the 15th of December. So we work with those merchants. There's a lot of that going on, a lot of the stress testing, like I said, around the systems and the software and everything. And so obviously peak is it, right? Peaks are Super Bowl. Some of our customers are doing 40 to 60 % of their order volume in that six week period. Like their year is made. or broken in that time period. so, and for us, the E, like especially not me, because my team does the net new stuff, but my peer who has to retain all of her business, the better we perform and peak, the easier her job will be in January to keep everybody around another year, right? So.

Jonathan Briggs SVP @ ShipMonk 34:57

So it's super critical, but I think there's a couple other topics you threw into your question that I want to hit on. You talked about kind of other risks and other concerns. so regulatory is always one. So one of the things that we did this year in the wake of all the Mexico stuff is we started opening up bonded operations. in our warehousing, so there's a lot of compliance stuff that goes with that. There's a lot of, and then again, if all of the...

Jonathan Briggs SVP @ ShipMonk 35:24

Yeah, so ours is true bonded. So goes in there and bonds. So it's technically not imported in the US, assuming that it's delivered in bond. I can't do any rework in it. So that's the difference between the FTZ, but I can fulfill from it or I can transfer out of it. We set it all up in the same building. So it's a back stock forward stock in the... So basically the high rack stuff is going in and bond and then we move it out, do our customs entry. So if any changes happen with that landscape, with everything that's going on with CBP. Or if all of the minimus walks back and Supreme Court says, so fast, it's not happening, then we made a major investment in something that's no longer a need or a requirement for our brands to do business with. So that's a risk, right? I think the whole uncertainty piece still exists around duties and taxes. Yeah.

Jonathan Briggs SVP @ ShipMonk 36:18

Yeah, it's almost like, obviously nobody wants to take an increased cost, like let's be candid about it. But when I talk people at this late in the year, at this point in time, I could handle the 60 % increase as long as we committed to it. And that's what it is. And I just move forward. What kills me is it's 60 % today and then tomorrow it's 20. And then the day after that it's 125. And so that's still... an ongoing thing as you know, even here in Q4 that will potentially carry over and all of that uncertainty is going to impact. And again, you probably study this data better than I do, right? There's a lot of recessionary type metrics that are getting hit right now. Can consumer keep spending the way they've been spending? You know, we see the consumer debt is increasing. We're seeing job numbers not so great. So,

Jonathan Briggs SVP @ ShipMonk 37:14

Yes, I just read that this morning, yes. So we're seeing that happen. Obviously the student debt stuff, people have still not been paying their bills on the student loans. So at what point in time can we keep staying out? I I hope, I'm not trying to introduce any more risk to the environment, but there's just a lot of... Yeah.

Jonathan Briggs SVP @ ShipMonk 37:37

But there's a lot of uncertainty in the financial side of things in the economic environment, both micro and macro that we see. And there's still lot of inflationary type pricing that's going on that is affecting our brands, it's affecting our end customers, customers I should say. So those things, until we get some certainty, Anytime there's uncertainty is risk, think, especially for guys like you and I that have to sign people up for long-term contracts and commitments. Nobody wants to do that when there's that much volatility still going on.

Jonathan Briggs SVP @ ShipMonk 38:13

Well, they're all over the map. Ideally, we're trying to get four to five year contracts. We will go as low as a year. Typically, that's like kind of our version of a trial. Like if you're not sure if you're ready to commit to us, we'll do a one year contract. Probably the average sits around three, but more and more. Again, what helps us is if the more we go up market, and the more success we have with the current merchants that we have, the easier it is for us to sign future customers for longer terms and renew existing customers for longer terms. Realistically, as much as everybody hates their 3PLs and loves to complain about them so loudly and publicly and LinkedIn and socials and all the other stuff, the standard for moving, the tolerance or pain is really high. So basically I describe it as like kind of meh. to great, you stay with your 3PL. So that's kind of like a 60%. Yeah.

Jonathan Briggs SVP @ ShipMonk 39:18

Well, like I tell my team, like if it's not a hell yeah, it's going to be a no, right? Like if they're not so excited in what we're doing, they have to jump through so many hoops to change in terms of like, you know, one, probably spending two to three months of budget that they don't have. Two, they're introducing a ton of risk, right? Because they got to transfer goods from point A to point B. You got to wind an operation down, stand another operation up.

Jonathan Briggs SVP @ ShipMonk 39:46

to think. Status quo is my number one competitor. That's who I lose out to more often than anybody else is that, know, so basically if you grade it on a like 100, 60 % to 100 % you stay put. 59 and under you start looking. And even then I don't know that you compel them because a lot of times they still have that same conversation at incumbent and say,

Jonathan Briggs SVP @ ShipMonk 40:14

Listen, either you get better or you get cheaper or you do both or we're going to leave and a lot of times they can scare them into getting what they want. Although I'm not so sure that if somebody wasn't good at a high rate how they get better at a lower rate. But no, no, no. But some people feel good about that as a win. But I get it, right? If I'm asking that much of a business to transition. Like I said, if you have, if it's not hell yeah when you get off that phone.

Jonathan Briggs SVP @ ShipMonk 40:42

you might as well write that off because there's just too much ass, too much risk in there. so, yeah, that's the nature of what it is for our organization and our teams this time of year.

Jonathan Briggs SVP @ ShipMonk 41:09

Well, I think that's why we can scale the business, right? I think that's why we got attractive to investment in the, 19s, 20s timeframe around COVID because of that ability to control so much of the technology. And obviously that's a huge cost layer for a lot of the three PLs. so that helps us a lot. And then the fact that we run our own warehouses, not just in the U.S., but globally, I know it sounds like a big thing, but it's amazing how many people are still doing four PL work. so with us having that single tech stack globally. You integrate one time into any one of my warehouses. You integrate into any and all my current and future state warehouses. Your dashboards, your visibility, your reporting, you can see it on a global scale, at a local scale, or a blend of both. So that really is really powerful. And what I'm finding now in our conversations as we've rolled out new capabilities, like in our reports, and our platform, and our automation of those systems, that we're actually seeing our brands get rid of software that they would do on the enterprise side. like not fully getting rid of an ERP, but at least getting rid of some like the BI tools, some of the, especially on the transportation world, we're seeing them get rid of like third party software that holds accountability or costing capabilities. Because in our program, we run what's called a virtual carrier network where...

Jonathan Briggs SVP @ ShipMonk 42:39

we're deploying a rate shop as a single service or a grouping of services. And then we also have behind the scenes, kind of like what I'd call a fractional transportation group for our merchants, where we are doing the service accountability, the cost accountability, all the analytics, all the reporting, all the things that you might need a third party or, know, that typically we see like a six, seven figure spend in a transportation world that we can eliminate under that program and execute really well for them. there's definitely those things all help with that scale, right? If I can simplify the businesses, eliminate waste of cost and deliver equal to or better from a service perspective, those are big wins for the brands that we work with. so, but that it, think it all starts with that. vertical integration that you were talking about to be able to have all those levers to pull all that visibility at their fingertips in real time, I think is probably our number one reason why people buy us right now.

Jonathan Briggs SVP @ ShipMonk 43:57

yeah.

Jonathan Briggs SVP @ ShipMonk 44:31

Well, I think we sometimes our name definitely brings a lot of stigma and we get grouped in some buckets with some other competitors.

Jonathan Briggs SVP @ ShipMonk 44:42

The ship part, the ship part, to be clear, the ship part. Yeah, the monk's all good, monk's all good, but obviously there's a lot of folks that started about the same time, late 20 teens, same ship this, ship that, right? All those things, and the connotations have not been great, and we even, our early days, we're not delivering excellence to the level that we are now, right? We, you know,

Jonathan Briggs SVP @ ShipMonk 45:08

Like in any business, right? How you are when you start is drastically different than where you mature to, right? And so we've grown up a ton. so I think a lot of ways, the myths that I see when we engage with people are a couple. One, they still think we're the shit monk of 2016, 2017, working with really small startup.

Jonathan Briggs SVP @ ShipMonk 45:28

Yeah, yeah, yeah. We were awkward and gangly and, know, pimply faced. you know, so we, we still get that kind of thing. Like we only work with small, medium customers or you don't have the capability. So we have to, you know, it's easy to dispel that, You, you, we, we talked through the conversations, we do a tour in our facility and what we're doing now is, is really, really solid logistics work. So think that's one.

Jonathan Briggs SVP @ ShipMonk 46:05

for sure. And obviously, You know, it's a big ask to get somebody to hop on a plane and come out and see a facility, but it's a great indicator that they have some level of wanting to do business with you, some level of trust to invest the time and the resources to go out to see it. So you're right. Like we, come in to see a facility, you know, likelihood of us partnering is pretty high at that point in time. So, but definitely we got to get over that awkwardness I talked about on the front end of like who, who they think we are versus what we actually, who we are today and how we do it. So we, we spent a lot of time on that. think the other thing. There's kind of this dichotomy right now when I sit in some of these more closing side of the conversations where there's the smaller medium customer thinks we're too big for them and is like, we're going to get lost in the shuffle and the machine that is shit monk. then there's like, as we've gone upscale and gone upmarket, then we have folks that say, we think we're too big for you and you couldn't scale or grow to us. So those are the things that we have to disprove and spend a lot of time on and the myths. Now one myth that I often tend to do

Jonathan Briggs SVP @ ShipMonk 47:27

Yeah. Yeah, exactly. those are kind of like the personal myths that I deal with. One of the myths that I deal with a lot that's like, I think universal to everybody is there's a lot more folks right now that do their own fulfillment in-house that are looking to outsource for the first time.

Jonathan Briggs SVP @ ShipMonk 47:55

And some of this is because of real estate, some this is because of labor, some of this is because of transportation scale, some of this is like operations is really hard, like there's a whole bunch of different things. So the myth that I deal with, and maybe it's not miss, but the challenge we deal with in those types of conversations is one, they don't know their costing of what it really costs them to do fulfillment. And so...

Jonathan Briggs SVP @ ShipMonk 48:19

They think it's like a labor component. Like, I pay $18 an hour and I got 10 people. That's my cost. No, like you have your building, you have your this, you have the software, you've got quality, right? Yep, so there's that piece of it. But even if they do know their costs, they expect because I'm scaled to be cheaper than them. And I have to just remind them that they're doing it as a cost center today. And my product is the fulfillment, so I have to put a margin on it. Like that's my product. So like they might sell a t-shirt. They sell it for 80 % markup. I'm in logistics, so we get to do single percent markups, but I have to put a layer on it, right? So, but my fulfillment is their t-shirt. And so we have to then still show a value even though the... Yeah.

Jonathan Briggs SVP @ ShipMonk 49:08

Hey, I'm going to charge you like a dollar more in order. where it comes with it is I can now put them in a better part of the country. or multiple parts of the country, I now can get them out of that single building scenario we were talking about earlier today and put them across the network. I can take their, let's say they're doing a million orders a year or whatever, and I can compound them with my 50 million orders a year and give them scale and transportation. I can give them scale and packaging. So there's other areas of value that I can create for them, but it probably doesn't exist in the four walls.

Jonathan Briggs SVP @ ShipMonk 49:49

for sure. no. Yes.

Jonathan Briggs SVP @ ShipMonk 50:17

yeah, yeah. so those would be the things that I'd say. And that's true, not just of me, that's true of anybody like us talking to somebody like them.

Jonathan Briggs SVP @ ShipMonk 50:43

I'd put more facilities in other parts of the world. Right now globalization and localizing international because of all the duties and taxes I talking about is changing. So people aren't really shipping from the US to around the world. They're now putting product in other parts. So I would definitely go pop one up in Australia immediately because Australia does so much business in the US. They're running a lot of empty warehouses in Australia right now because they outsourced in the wake of all these taxes. And so they've put anywhere from 50 to 70 % of their product now in the

Jonathan Briggs SVP @ ShipMonk 51:15

US or other parts of the world. So they're under utilizing their buildings. And so there's a good opportunity right now to take on that market. So I would go there. put something on the West Coast in Canada. So I've got East Coast today or more central in Toronto. I'd put something on the West Coast. I'd get more in Europe. I've got UK and I've got Czech, but I'd add Netherlands. I'd probably add something to Germany. put some pins on the map is the moral of the story. So yeah.

Jonathan Briggs SVP @ ShipMonk 51:55

I'm gonna go look this up after here. This has got my attention, yeah.

Jonathan Briggs SVP @ ShipMonk 52:13

Well, talked to a lot, we've got a lot of folks that are, you know, that we do business with down there. So I want to look this up and I'm going to run this by them and get their take on it. Yeah. Yeah.

Jonathan Briggs SVP @ ShipMonk 52:50

Well, Justin, thanks for having us. was a pleasure. Look forward to seeing how this combo turns out.

Jonathan Briggs SVP @ ShipMonk 52:55

All right, see ya.