This episode features Sarah Siwak, the co-founder and Chief Revenue Officer at Airhouse where they are applying lessons learned from a less-than-traditional path to power logistics solutions for emerging direct-to-consumer e-commerce brands translated and I’m glad they did that for me-they are bringing the magic back to shipping.
Sarah defines "bringing the magic back to shipping". She shares how to win your customers' trust.
Listen to Sarah's thoughts on making it right with a customer if there is an error with an order. She shares some reasons that an eCommerce company would want to outsource their shipping instead of keeping it in-house. Learn the questions she recommends when someone is interested to start outsourcing.
Discover the advantage of using a non-Amazon warehouse for fulfillment. Learn more about Airhouse - the services they are offering their clients and how is that helping them increase their business.
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Andy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.
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Andy Splichal 0:00
Welcome to the Make Each Click Count podcast. This is your host, Andy Splichal. We are happy to welcome this week's guest to discuss today's topic, which is how to win customers trust and keep it. Today's guest is the co founder and chief revenue officer at Airhouse, where they're applying lessons learned from a less than traditional path to power logistics solutions for emerging direct to consumer ecommerce brands translated, and I'm glad they did that for me. They are bringing the magic back to shipping. A big welcome to Sarah Siwak. Hi, Sarah.
Sarah Siwak 0:33
Andy, good to be here.
Andy Splichal 0:35
Hey, thanks for joining us today. We're excited to have you. Definitely. Now that's a really intriguing intro. What do you mean, by bringing the magic back to shipping?
Yeah, you know, the way that I like to think about it, and this is a story I tell everyone who joins your house sort of on their in their first week is shipping is inherently magical. So just to give you a quick 22nd sort of rundown of why I think that why I started Airhouse, everything that goes into actually delivering a product, taking it from the factory to a customer's front door, extremely complex, really magical in that I'm always shocked when I get a package, I'm always delighted that it made that long journey. So you know, you're manufacturing all of the goods potentially abroad in a factory, it's got to go from the factory to the port in that country, it's got to cross the ocean usually takes about six weeks, Scotto arrive at a port in the United States get unloaded from a port, hook up to a freight truck, go to a warehouse, where then you know, I'll swipe my credit card, buy us buy something like a lamp or a hat. The warehouse will, you know, put it on a truck to go with FedEx. FedEx will put it on a truck, put it on a plane, and then it ends up at my front door. So that's a month long journey to kind of make take a lamp from a factory abroad into my house. Magical for the consumer, but it's not magical if you're managing it, it is extremely complex. So that sort of workflow I just described, you're working with maybe 10 Different companies. Again, it's taking months. So at Airhouse, what we do is we bring the magic back by sort of making it really easy for the companies that need to manage their distribution.
You know, that's a great story. I mean, it's just kind of like with the with the post office and people complain stamps are going up. I don't even know what they are now 60 sensor or whatever. But still, that somebody will take this letter for 60 cents and liberate across to the north of Alaska, if I want them to is just crazy. So I can see where you where you get that magic in there. Now, the title of this episode is how to win customers trust and keep it and those you know there obviously there there are two different things first winning the customers' trust and then and then keeping it but let's start with winning your customers trust. How are you doing that?
Yeah, so logistics and fulfillment in general is a super trust driven industry, not unlike manufacturing, super relationship driven industry. So I like to tell the story of sort of early sales at your house. It's an inherently trust driven because to work so hard and spend so much money to manufacture products and then need to find a warehouse to put it in, you need to know where your inventory is going. It's a bit scary to sort of relinquish all of your inventory and just hope it makes it in there. So early on. I think one of the main ingredients of winning trust is people like to talk a lot about transparency. But I like to also talk about honesty. So what I mean by that is early on, you know, first few companies that we were working with, I would just get on a phone call with people. And basically, I'm not a salesperson, sort of by my background and more of a marketer, I would get on a phone call with them and kind of just explain everything. And they're sort of you know, they get on a sales call, they're kind of bracing for a really hard sales pitch. But I would just walk them through, echo back to them a lot of their problems, you know, the issues that they were seeing with fulfillment, their frustration with warehouses, and just really empathizing with them and being able to say, you know, I know this is really frustrating. This is why, you know, I started this company and being able to connect with them on that level and really explain mirror back to them sort of what their problems are and how what our unique sort of take on it is and what the solution is that we've sort of developed. But that sort of honesty, it's not we talk about it a lot with sort of there's a book called, I think the transparency sale, where it's just explaining how something works, as opposed to really needing to package it up in a really robust way. Another thing that goes into that sort of early winning trust sort of process is when people shop for fulfillment, it tends to be really long months long process they run a really extensive RFP or RFQ process. Usually it's the norm now whenever I talk to a company, they're talking to like a dozen different warehouses. They're going through This really long process, they're doing sales reference calls are doing warehouse tours. And even then odds are very high that once they put their inventory in the warehouse and really start trying to ship it out the quality, the there's a huge disconnect, basically between the sales process and the actual operations, even after they've done all of this betting. So another thing that I like to encourage people to do that what we do to win their trust is sort of encourage a test, encourage a test shipment. So send through a pallet of inventory, send through some cases, actually see how it functions in order to, you know, feel like you can really trust it.
Yeah, you know, customer and retention, it has been just a huge emphasis of the podcast here in the new year and getting your products to the customer, as they ordered it in a timely manner is a big part of it. I mean, if somebody orders from you, and they can't trust, you're going to deliver it on time. It's not going to be likely they're going to shop with you again, do you have numbers or anything that that shows how important providing a good experience for the clients customer is to their growth?
Yeah, I think it really depends on the product. Whenever I think about retention, it's always a little bit of a balancing act. So depends on sort of the imperative of the business at that moment, there's a really tight relationship between retention and acquisition, where if you're acquiring a bunch of customers, you know, you're in high growth mode, but they're kind of falling out the bottom of the funnel, and they're, you know, not returning to you if you're an E commerce company. Or if you're, if they're churning if you're a b2b platform, or an agency. Obviously, that's not good overall for revenue. But one thing that I like to emphasize with retention is retention has a relationship to acquisition in the form of you know, getting case studies, getting customer references, getting reviews, so it's really hard ultimately to actually fuel acquisition without having happy customers.
Yeah, yeah. So you guys are solving that leaky bucket problem of the shipping for customers?
So let me ask I made mistakes happen. It's just just a fact of life. What happens if there's an error with an order something doesn't get shipped out on time or wrong item is shipped, etc? What what's the process with that?
Yeah, it's it's twofold. So two things I like to tell people if they are shipping, one point of that is prevention and sort of alignment before, especially if you're outsourcing. So a lot of times, companies will come to us and they might, you know, if you go and place an order with them, it'll say one thing about how long it will take for the package to get there on their shipping policy page. And then another thing at checkout another thing in the email, and then you'll get different, you know, actual delivery time when the package arrives at your front door. So it's really important to understand and align with the different services that you're using, and the shipping carriers to actually get estimates. And during the pandemic, honestly, this was very challenging. Everything was moving around a lot shipping carriers, were adding like a week here a week there. And as a consumer, just having clarity around when the package is going to get there. And having that clarity on from the brand is really important. So an ounce of prevention, sort of the approach there. But the other thing that we say in logistics is sort of nothing is perfect. You know, packages are going on trucks, it's people who are managing a lot of these processes and actually moving these packages. So just having a policy in place with your customer and with your team, your support team internally around what happens if you know a wrong item is shipped? What happens if you need to refund a customer or do anything like that. So at Airhouse, one thing that we do is we actually just refund customers, if we ship out a wrong item, we have an SLA, if you're working with a warehouse, it's really important to just know what are the thresholds? Generally, it's like 95 90% on time shipping 99% shipping accuracy in terms of the the items that you're shipping, so really understand and get in contract form, what those SLAs are with your warehouse and then just have a policy in place when things do go wrong?
What are some reasons that an E commerce company would want to outsource their shipping instead of keeping it keeping it in house?
Yeah, that's a great question. I usually ask the inverse of that question, which is, when is it better to insource and I would say there are not a lot of scenarios where it is better to keep it in house. And it's usually if your operations are extremely, extremely customized. And you can't sort of automate it and put it in a warehouse. So one of the the areas where it's best to sort of keep it in house is your very first shipments usually if you're still prototyping the product if you aren't quite sure what your packaging looks like, and you have a low order volume, you kind of want to understand it, you can go in, you know, platforms like Shopify or ShipStation, you can go and print out labels. But the minute it reaches the point where sometimes with customers, I say even an order a day sort of keeps you glued to your office or wherever you're shipping orders out of at that point, it's pretty good, good timing to outsource so as early as possible, but also with a caveat that you kind of need to have a few of the little nuts and bolts worked out before you're able to do that.
How do clients quality control? Let's say, you know, every package on the client, I want to have this coupon in there with a, you know, a flyer with a coupon for next order. How am I sure that you guys are sending that out?
Yeah, so what we do, the way that we tackle that is with test shipments. So when we work with our customers, and they introduce something new with their packaging, we will send them videos, photos, test shipments to actually ensure you know that things are going out as they expect. I think it's important even before you choose a warehouse to really understand the extent of their capabilities, the more customized things get with packaging, around the edges. Sometimes in the sales process, you'll you'll hear one thing, but it's not fully aligned when you you go on and actually start shipping with them. So I usually encourage people to keep things simpler, as much as you can put things onto the manufacturing side so that everything arrives sort of ready to ship. That's sort of the gold standard. It's the best practice what people end up optimizing for when they really start growing. But yeah, keeping things simpler and putting most of the the customization on the product itself is generally will make things easier for you when you're outsourcing.
Now, if you decide you want to outsource, that's the way to go. And you're, you're looking around, you've never done it before and you're looking around for outsourcing companies, what are some of the questions that you would recommend be asked
That's a great one. One thing I like to say no two warehouses are alike. So it is important to know, for the foreseeable future, how you're going to actually need to ship those orders out what your sort of strategy is. So just to give you an example, historically speaking, most warehouses are b2b warehouses. So their use they're not, you know, really tailored for eCcommerce or direct to consumer, they're really good at shipping out pallets or cartons to retailers like Target or Macy's. So you have that sort of style of warehouse. And then you have the newer sort of fulfillment centers and fulfillment providers, which are very ecommerce focused. And the problem with that is when you're sort of vetting a provider is to figure out what their strengths are, because no warehouse is typically good at all of them. And this sort of goes into why we started at Airhouse as well and have the sort of the model that we have having a bunch of different types of warehouses in our network. But really understanding everything from their operations to the integrations that they offer, to just basically how the types of shipping that they're able to accommodate and how that will constrain or enable your growth strategy. So even something as simple as you know, we're shipping ecommerce for years. And then we need to really start, you know, shipping, retail, we're dipping our toes in and we want to ship to target. That's a totally different type of fulfillment. And that's usually when you know, people start to shop for another option. So just understand how the warehouse was shipping out which types of fulfillment they're good at. And just understand that that will translate back into what you're able to do to grow.
You are located in San Francisco, right?
Yes. So we are headquartered there. But we have warehouses all around the world.
Where are your warehouses? Like if I guess what I'm getting at? If I'm an E commerce company, and I am based, I mean, I'm in California, too. But let's say I'm not let's say I'm in Texas, and I sign up with you to fulfill my orders. Does that create a Nexus where I would have to pay sales tax in those states wherever you have a warehouse?
Yeah, so usually, we typically don't advise on the tax front, but most companies don't exceed the sales tax nexus in different states. So state by state, it's different. Usually, for compliance reasons there. There are a few options like Avalara or tax jar we usually refer people to but for the most part, it Yeah, it's important to sort of that that a little bit the way that we choose our warehouse locations, we co locate them to the port. So we have warehouses in on the East Coast and sort of New England in the United States, warehouses on the West Coast, warehouses in the central US customers using one or a combination of those so it It is important to just take a quick peek at you know the implications of that for tax, I would agree.
Your clients for ecommerce, are they mostly selling on their own website? Shopify? Bigcommerce, WooCommerce. That? Why I know Amazon offers kind of the same thing where they will you don't even have to sell this stuff on Amazon, the warehouse for you and ship it. What is the advantage of using non Amazon warehouse for fulfillment?
Yeah, two of them. So Amazon, obviously as a super efficient operation. But the what you have to do in order to conform to that tends to be a little bit steep for most brands, especially as they're starting out. So we'll have companies that sort of build their home, so to speak on their own website, like you mentioned, like a Shopify website. But then a lot of them actually will send experiment with Amazon. There are a few reasons why brands don't love Amazon. One is the cut that they take out of just your margins. Another one is just it's more of a retailer, the best way to think about Amazon in my mind is sort of like a target or like a physical retailer. You're competing with a bunch of different products. So it's, you're not able to really tell your brand story, you're not able to make it sticky, you know, in the retention sense. And you're not able to sort of own the data around your customers to remarket to them and do all that good stuff. So most people like to have a home that they kind of send people to and then branch out and treat Amazon like they would any other retailer.
Yeah, no, I understand. And I'm everything you said is right on. But I'm not asking why or why not advertise on Amazon? Why or why not use Amazon fulfillment? And instead, do use something like Airhouse?
Yeah. So it comes down to I think branding, and then what I mentioned with conforming to the really strict Amazon requirements, so in the branding sense, you're shipping something out, it's going out in an Amazon package, you know, and a lot of brands, it's kind of the norm for most of the brands that we work with to have their own branded packaging. So that's one of the reasons when they do store with Amazon. They do it's again, it's just sort of an experiment. But the other reason is the Amazon is super strict with with labeling and splitting up inventory in different locations. So for some brands, frankly, it is a good approach. I would say for commodity brands, it can be very effective. But if you're really trying to tell a story with your brand and encourage retention, you're getting something in an Amazon package. It's a little bit of a different experience.
Sure. Now you co-founded Airhouse, let me ask if there have been any business books out there that you can attribute to your journey as an entrepreneur?
Yeah, one of my favorites is, I read this a long time ago, not explicitly a business book, but it's called Refuse to Choose. And it's by Barbara Sher older book, but it's basically about kind of normalizing we're increasingly normalizing being a generalist just in careers in general. It was one of the first books that I read that not only normalized it but said it was an asset to have a bunch of different broad interests. So most of my career, again, was in marketing, but you know, being able to dip into design dip into sales, dip into data analysis, and just build this really broad skill set. It's a little bit different from you know, we work in tech, sort of the narrative around starting a company where you typically come from like an engineering background, right? It says, I like that book, because it said, basically, however, you arrived at starting a company, your skill set is super valuable.
Now let's flip back into Airhouse, what services are you offering your clients? And how is that helping them increase their business?
Yeah, so I would say with fulfillment, it is absolutely essential, of course, to an E commerce business functioning. So fulfillment is of course an extension of the transaction itself. If there is if you don't receive the package, you can't collect revenue, you need to refund the customer. So just foundationally having that be stable, consistent, high quality, reliable is one of the key cornerstones but also in terms of increasing sales. Making everything I described sort of about the how a warehouse functions, making it turnkey to be able to turn on new channels to be able to sort of expand into new markets. For example, late last year, we introduced fulfillment in the in the UK which going global for a brand is extremely difficult in and of itself handling things like customs being able to understand The local fulfillment market in the United Kingdom, it's a lot of extra work, a lot of the brands we work with, even if they're very large, in the revenue sense, and in the order sense, leaner teams. So making a lot of the ability to experiment and a lot of these new markets or with new channels, wholesale channels turnkey, through a mix of technology, and the operations that we have in our network, is is a key component to helping people grow.
How do you handle returns customer returns?
Yes. So typically, what we do sort of depends on the brand. It's interesting, of course, apparel brands tend to ship more, collect more returns, the way that we do it. Pretty straightforward. We have integrations with different returns platforms, they generate the labels for customers, they sort of handle that piece. And then we receive it back in the warehouse. And so returns are super, you know, totally depends. There's a lot of inspection. There's a lot of work that goes into restocking. So again, we come back to sort of videos, photos, different processes, we standardize them for folks so that they don't really need to actively manage it on their end.
What kind of assurance you get? I guess what I'm thinking is one of the services I actually offer now as a standalone is for Amazon clients to manage their cases with Amazon, because a lot of times Amazon doesn't credit back returns into an account. And if you don't, if you don't ask, they never will, especially for retailers doing a lot of volume. That's that's hundreds 1000s of dollars. How, I guess how do you reconcile that? So it's done done right on the client's behalf?
Yeah, so in our platform, we have an entire sort of piece of the platform dedicated to returns, where folks can understand the different return reasons, they can see the status of the return, if it was able to be restocked, it goes right back into inventory, and it's able to be shipped out more or less immediately. Or if it needs to go in quarantine, there's a status for that for folks to just be able to understand where all of their their inventory is that's been returned. So we have a level of customization, but basically treating, you know, the technology sort of Mission Control for people to understand how many returns they're getting, why they're getting returns, and how much inventory is in different statuses.
There sounds like another advantage over shipping with Amazon.
So do you have a favorite success story of one of your clients you could share?
Yeah, one of one of my favorites. Early on, was working with a company that manufactured home goods, and they started off with us really small. So what you were asking earlier in the episode about, you know, small brands, when is it a good time to outsource? They started with us, I think there were fewer than 100 orders per month, so quite small. And then they managed to basically 20x over a couple of years. Yeah. And keep the same team size and and be able to start selling wholesale be able to they're going to start going into the UK and selling from UK soon. And so all of that on the same platform never needed to change warehouses, never needed to change anything about their strategy or grow their team. So that's kind of a typical, I would say experience, but it's it's really rewarding to be able to see them grow as Airhouse grows.
And who is the perfect company for your platform?
I would say someone who high growth brands in particular. So brands that are really looking to try a lot of different tactics, it's super competitive out there super expensive to acquire new customers. You sort of need a fulfillment service that's able to keep pace. So we really look for brands that are very dynamic, lean companies. We work with brands, right when they're launching all the way through sort of they're on their fourth, fifth warehouse, and they're really looking to optimize and scale. So anyone sort of in that bucket, but we tend to work with companies that are owners of their own brand, as opposed to for example, larger retailers, larger marketplaces, you might sell into retailers and marketplaces, but they themselves are trying to develop an enduring brand.
And how can an interested listener perfect or not learn more about working with you?
Yeah, so if you go to our website, airhouse.io typically can set up a chat same day our team is is on deck able to help sort of sort through your fulfillment strategy, be you know, consult with you on what you might need and I'm happy to chat to if you mentioned to them you heard this podcast.
Well, this has been great. Is there anything else you would like to add before we wrap it up today, Sarah?
I think I usually encourage folks. Yeah, just get your hands dirty. Don't be afraid to go back to basics. I think you know, the more competitive the arena is, the more creative you need to be so advices is super useful. Make sure you're sort of fitting it to your unique circumstances, your unique competitive landscape.
Those were great final words.
For listeners. Remember, if you liked this episode, please go to Apple podcasts and leave us an honest review. And if you're looking for more information on Airhouse or connecting with Sarah, you will find links in the show notes below. In addition, if you're looking for more information on growing your business, check out our podcasts Resource Center available at podcast.makeeachclickcount.com. We have compiled all of our different past guests by show topic and include each for contact information, in case you would like more information on any services I've discussed during previous episodes. Well that's it for today. Remember to stay safe, keep healthy and happy marketing, and I will talk to you in the next episode.