Ep 19: Chevalo and Monique search for a product supplier

Learn about finding product suppliers.

Chevalo and Monique Search for a Product Supplier

Featuring: Chevalo & Monique Wilsondebriano, co-founders of Charleston Gourmet Burger and Serguei Netessine, Senior Vice Dean for Innovation and Global Initiatives and Dhirubhai Ambani Professor of Innovation and Entrepreneurship at the University of Pennsylvania

On Episode 19 of This is Small Business, Andrea talks about sourcing your products with Chevalo & Monique Wilsondebriano, co-founders of Charleston Gourmet Burger. More specifically they dive into shipping and fulfillment considerations you should make when you aren’t manufacturing your own product. Chevalo & Monique discuss where to find suppliers when you’re first starting out, questions to ask while vetting them, and how to keep your customer’s trust through a solid relationship with your supplier  – even if it means paying a little extra. Next, Serguei Netessine, Senior Vice Dean for Innovation and Global Initiatives and Dhirubhai Ambani Professor of Innovation and Entrepreneurship at the University of Pennsylvania, fills us in on all the different types of suppliers and what you need to consider when choosing one – like thinking about the returns process, price, service, and shipping time. Join Andrea as she fills out another chapter of her small business playbook.

Chevalo and Monique

Episode Transcript

[00:00:00] Monique: We trust our team, but at the end of the day, it's our word, and if something doesn't get done, everyone's looking at us, they don't know who's behind the scenes. So we have to make sure that we're in there and we're checking, and what we say is happening is actually happening.

[00:00:14] Chevalo: The turnaround time and quality equation is always something that is bumping up against each other. I mean, you want something quick, but you want it to be done right. And so it's always kind of a balance in there. How can it get done?

[00:00:31] Host: Hi, This is Small Business -- a weekly podcast -- brought to you by Amazon. I’m your host, Andrea Marquez. This show is all about learning how to start, build and grow your small business - I know it sounds intimidating - but I'm also learning with you, and will call out key lessons at the end of every episode for you to use on your small business journey.

A crucial part of setting up your business is figuring out shipping and fulfillment if you aren't manufacturing your own product – after you have your idea – how do you bring it to life? [00:01:00] How do you ship it to your customers? Who do you trust with creating your product? It can get complicated pretty quickly plus in this day and age where shipping can take one day, you’ve got a lot to think about. And even after you figure all that out, there’s still a lot of options and different solutions to shipping and fulfillment so which one should you pick?

Coming up -- I'll talk to Serguei Netessine, Senior Vice Dean for Innovation and Global Initiatives and Professor of Innovation and Entrepreneurship at the Wharton School of the University of Pennsylvania, about all the questions you need to answer when you’re on the search for a supplier. But first -- I want you to meet business owners Chevalo and Monique Wilsondebriano, Founders of Charleston Gourmet Burger Company – and I’m sure you can tell by the name of their business but it revolves around food – which is quite possibly one of the trickiest – and I imagine the hardest – products to deal with when it comes to shipping and fulfillment because of the shelf life.

[00:01:58] Andrea: Chevalo and Monique, thank you for being on This is Small Business.

[00:02:00] Chevalo: Happy to be here.

[00:02:02] Monique: Absolutely.

[00:02:05] Andrea: Tell me about Charleston Gourmet Burger and about how you balance being able to sustain that good quality while at the same time growing to be able to share with more customers.

[00:02:16] Monique: I will say for us, Charleston Gourmet Burger Company was created out of love. It really was. It's created from, you know, our love of hamburgers, our relationships, stuff we do with our family. So for us, that's what we do when we're creating products with Charleston Gourmet Burger Company, we create it with that same love. So every ingredient that we put in our products, it's lovingly put in there. And I, I tell moms that when we're at grocery stores and we're sampling, if we wouldn't feed it to our kids, we wouldn't feed it to yours. And so everything that is put inside of our products, all the ingredients, it's lovingly put in there. We know exactly what's in there. And so for us, it makes it easy when we're coming out with new products because we make it exactly how we make it at home. [00:03:00] You know, we know who's manufacturing our products, we know the process. So for us, it's not a hard process to do.

[00:03:10] Chevalo: And all of it all ties in from the branding to the labeling. Cuz how we see it is when somebody gets one of our products, one of our Charleston Gourmet Burger products. It's not just about the taste and the formulation of the product. They're really getting a piece of us. And so from the time we started out in our backyard or in farmer's markets to the company growing to the part of being a regional, then a nationwide company, and selling, all the across the country. All of that has to be part of the equation. You know our look, our branding, the ingredients, the experience, the customer experience all has to translate no matter what the size of it is. So, no matter who gets our product in their hands, however way they get it, whether it's coming directly, it's coming in the mail, it's coming from Amazon. [00:04:00] All of that has to be included, and that's why if it grows and when we grow, it's fantastic because all of that is all included in the experience.

[00:04:10] Andrea: I feel that love and that warmth through how you both speak about your passion that is Charleston Gourmet Burger. And I can also see that coming through in the branding. So you spoke briefly about manufacturing. I want to take one step back. Since this is specifically a food product, I imagine there are considerations to be made when manufacturing and also for shipping.

[00:04:33] Chevalo: Oh yeah. There's a lot of considerations that we have to make in the manufacturing and shipping, because one main thing with us is our products are all natural. You see, there's no preservatives with it. So even though it has a two-year shelf life, it's important for our particular products that we have as short a time from manufacturer to the time it's on a person's table. [00:05:00] So the manufacturer to table time has to be as quick as possible for the customer to have the maximum chance of having a great experience. So, we monitor every day. We are in there. We're making sure that if we more has to be shipped, more has to be manufactured… we have to keep that manufactured to table time as short as possible so that the customer has a great experience.

[00:05:27] Andrea: Ok, considering how vital that shelf-life date is for how, take me through how you find the right suppliers in your case.

[00:05:35] Monique: When we first started, we had no idea what we were doing. So it was important for us to be able to get out there to network with other people that were in the food industry. And so we started joining different professional organizations like the Specialty Food Association because we knew that a lot of the people that were in those organizations, they weren't only people that had, you know, products like ours. [00:06:00] They were also people that wanted to provide services for people like us. So we were able to find reputable companies that could manufacture our products. You know, for people that just are starting out, maybe they don't have a big budget. There were companies, that can manufacture your product. If you're just beginning, there were some people, you know, once you're starting to scale up, they had the capability to scale your product. We were able to find our labels because when you have a food product, a lot of people don't know, but all labels aren't made the same. You have to have a particular type of label depending on how your product is made. And so we were able to find all of our suppliers just from joining these professional organizations. And another thing that was great about it is that all of these companies, they're vetted. So you know that if you're using a company from there that you're gonna get a good quality product, you know, so that was important for us, and it was an important lesson to learn because when you're starting out, you don't know like, where am I gonna get my suppliers from? Who's gonna make this?

[00:07:00] Andrea: Now that you knew that these are suppliers you can depend on and you know that they have a good track record, how did you evaluate that one was better over another?

[00:07:11] Chevalo: Well one, as Monique mentioned, is the relationships. And yes, that they were vetted, and we got to speak with other people who used these suppliers. But what was important also to us, cuz at the time we were looking at really maximizing our chance to scale and so companies would have to have certain certifications and capabilities. And when you looked at that like, oh, like a company that would have like a bioterrorism certificate. Every supplier doesn't necessarily have that. Those sorts of certifications are pricey and every producer doesn't have that. So that was one way how we were able to differentiate what companies we could really go for and to supply us.

[00:08:00] And, you know, we wanted our product also to be of quality. So we had to vet them to say, hey, you know, can you source these natural ingredients? Our burger products are very particular, you know, we just don't sometimes use just off the shelf ingredients in ours, and we're very particular about what is in there and where it's sourced.

[00:08:20] Monique: But also Chevalo and I were dreamers. Okay. And so when we first started, I remember we laid on the bed and we run out a list of all the stores we wanted to be in. And we had like, all the top stores. And so, for us, when we were finding a new manufacturer, we would have conference calls and we would speak with them on the phone. There were sometimes we've actually gone and visited to see like where the product would be manufactured and it was important for us

to have someone that wanted to be a part of our team that was gonna dream with us, that was willing to get in there with us, roll their sleeves up and say, okay, this is what the packaging is gonna look like. Okay, this is what we're gonna go in there and present. These will be the samples. [00:09:00] And it, it wasn't like, you know, the first company we went to, we found that, you know, we had to do our homework, you know, we had to get on the phone. We had to sometimes fly, sometimes drive to different places to find that right manufacturer, and I'm glad we did that. Because you know, we used several different companies now, and they're not all in South Carolina and that's okay. But we kind of feel like we have that team, like we call it our All-Star team. And so everyone has the vision, everyone's part of the dream.

[00:09:26] Andrea: This reminds me a lot of Episode 11 of Season one. It featured August Graube, the owner of Fort Boards and it's, kind of like these gigantic Legos. He brought up that when it comes to manufacturing, sourcing his particular product, the options are: do you go with a larger less expensive manufacturer overseas or maybe a smaller American sourcing company and maybe it would be a little more expensive. And he decided to do the American one because it was smaller and because he felt like he had what you just described, that connection [00:10:00] where he could just call someone whenever he needed help or if something went wrong. They would have that one-on-one communication. Thinking about it in those terms, would you say that you would also choose something even a little more expensive because of that one-on-one relationship?

[00:10:18] Monique: We have absolutely done that. When we were choosing packaging for our frozen hamburgers, we chose a company in Ohio and it was four times more expensive than a company that was right here in Charleston, but we would have weekly, sometimes daily, once it got down to the end, conference calls and they were just very, very attentive to our needs. And, you know, sometimes there were call outs on the phone that Chevalo and I didn't catch. And they were like, oh, well, you know, this is off, this wasn't corrected, this wasn't updated and we hadn't even caught it. And so for us, yes, it was more expensive. But you just couldn't beat the attention to detail that we got, you know, we felt like we were their only clients. [00:11:00] And I know they had so many, but we really felt like we were the only ones, and it was worth every penny. We easily could have gone with the company that was here and they actually produced a box for us. And it was done in like two days. But we didn't speak to anyone over those two days, right? Like it was just like, uh, we put in the order and that was it, and we were just told to come pick it up. And that was all. That's all we got, you know, now I'm not knocking it because that may be the option for someone else, but for us, we were happy with the choice that we made.

[00:11:30] Chevalo: This goes to show even in the world of the internet and virtual, relationships matter. Mm-hmm. It's the connection between people and it doesn't always boil down to just dollars. We have a premium product, and so, we really want to deliver a premium experience. In order to do that, we're looking for the best. It's not always just a dollars and cents, just cheapest. And we realize and we appreciate our customers because, you know, they're willing to pay for a premium product [00:12:00] to do what is necessary, to have a premium product and that they can get their hands on that's the best, and it's our job to deliver that.

[00:12:10] Andrea: I think it’s also important to ask yourself, as a small business, what kind of relationship you want with a supplier, not just what kind of relationship you need. So, if I’m just starting out, what would be the top three questions you think I should ask myself when deciding to go into partnership with a supplier?

[00:12:26] Monique: I would say the number one important one would be their turnaround time, because you need to know, if I put in an order with you, when will you be able to get this? When will you be able to have it ready? You need to know that. I would also say number two would be minimums. Like how much are you expecting me to have manufactured because you don't wanna enter into a relationship to where they're saying, oh, you need 40,000 every month. So I would say, you know, are there any minimums? Um, and also, are they gonna make you sign a contract [00:13:00] because there are some companies that will say, okay, if you're going to use us, we want you to sign a contract, but you can only use us for the next five years. But that's a long time. And sometimes it's written into the fine print, and you may not see that. They may not call that out to you. So I would say to make sure you ask these questions up front, because let's say in year two. You don't like the job they're doing or they're just not meeting the deadline. Well, you've signed a contract to say that they're exclusively gonna be your only manufacturer for five years, and now you're stuck. So I would say those are like the top three call outs.

[00:13:38] Chevalo: Well, the only thing I would add is do you have mechanisms for us to monitor the quality of the product that you're producing. You know, what mechanisms are in there, can I go in there at any time when you're producing our product and look and check. So cuz we are hands on wanting to always be on top of the quality of what's being produced. [00:14:00] And so that's a question I would ask.

[00:14:06] Monique: And for us being in food, we have to see because people are trusting us and they're gonna feed their family, you know, our product and they're going on our word. If we can't see it, how can they trust us?

[00:14:18] Host: A pause to go over the four very important questions to ask your suppliers: 1. What’s their turnaround time?; 2. Is there a minimum number of products that they expect you to manufacture?; 3. What type of contract will they make you sign? And 4. What mechanisms do they have in place to monitor the quality of the product?

[00:14:40] Andrea: One of the things you mentioned was turnaround times and mechanisms to ensure quality. Bridging those two, how do you ensure that quality products arrive on time to your customers?

[00:14:50] Monique: Well, what Chevalo and I do, we will just pick random boxes. We'll open 'em up, we'll see, and there have been times to where we've actually caught something, um, we have two [00:15:00] mechanisms put in place to ensure that our products do not leak. Well, it just so happens, you know, and it was during Covid, they didn't have a lot of staff, and I don't know what happened, but that initial foil barrier was not put there, and we ended up catching it. So just little things like that, you have to just physically be hands on. We love our team that we've created, but it's still up to you to check to make sure it's getting done the way it's supposed to be getting done. I keep everything I have organized; I have folders for everything. So I always know, okay, this is when this went out. Okay, this is when this is supposed to arrive. Chevalos really good with tracking. He'll call the trucking companies and say, okay, was this picked up? When is it gonna get delivered? So again, it's either you're gonna have to hire someone to be on it or you're gonna have to do it, but you have to be on time. And even though we trust our team, but at the end of the day, it's our word, and if something doesn't get done, everyone's looking at us, they don't know who's behind the scenes. [00:16:00] So we have to make sure that we're in there and we're checking, and what we say is happening is actually happening.

[00:16:10] Chevalo: The turnaround time and quality equation is always something that is bumping up against each other. I mean, you want something quick, but you want it to be done right. And so it's always kind of a balance in there. How can it get done? But I tell you, we're so happy with our suppliers. There are times when we wanted to get it. We, hey, we gotta get it to the consumer. But they're like, well, hold on, because the bottles have to be filled at a certain temperature. And then it has to go down in temperature. It has to sit for a certain point before it's released to be able to be shipped to a customer or to a distribution. And so there’s times when we wanted it a day earlier and they're like no, quality first. You cannot cut corners in any way. And we like that.

[00:17:00] Andrea: So quality beats speed and get people on your team who are so into the mission that they care for you and for what it stands for more than being a yes man, I love that. Any other considerations that small business owners should make when it comes to shipping and fulfillment?

[00:17:15] Chevalo: I think a consideration that should be made for shipping and fulfillment should always be that they can do what you want, what you specify in an expeditious fashion and so you don't want to give up or to compromise really on them being able to do what you really want, that you envision for your product and always realize it's really up to you. And if a company cannot do it for you, then you have to maybe look for an alternative or figure out a way for the company to really understand what your vision is.

[00:17:56] Monique: It was important they were able to scale with us. [00:18:00] And so I remember when we first started, you know, we were this small company and like we would get our stuff manufactured and sometimes Chevalo would rent a trailer and he would pick it up and then we would get it shipped out. But then we ended up moving into, hey, we're going on Good Morning America. Hey, have you guys ship out thousands, so we ended up having to, you know, to scale it up, but it was nice because they were able to grow with us. Mm-hmm. And so you want a company that is gonna be able to grow with you so that you know when you, as you're expanding and you're scaling, that they can be right there with you, you know, along that journey.

[00:18:34] Andrea: Is there anything else you’d like to share?

[00:18:38] Chevalo: Relationships are important and advice I always like to say should be taken from people who truly have done what you are looking to do and in that particular genre. So, will somebody who knows about fashion distribution and sneakers from overseas and getting them in different sizes, could they give me great advice? [00:19:00] Yeah, they can, but it's not the same as speaking to a food manufacturer who's manufactured food and is in the game right now, in real time that it's not the same. So I would say if you're gonna seek out counsel or advice from people, only take it from people who truly know what they're talking about cause they're done, or they're actually doing what you want to do.

[00:19:30] Monique: And I would just add to that we meet so many people that are just standing on the sidelines cuz they're trying to gather all the information before they start and it's impossible. Mm-hmm. It's never going to happen. You're going to make mistakes. We all have. So just get out there and get going and, and start doing. Because the only way you're gonna learn is if you actually do it. You just have to know going in, I'm gonna make mistakes and just be okay. And just, and just get going that's the only reason why we know any of this. When we started, we didn't know anything. [00:20:00] The only reason we know is cuz we got in there and, and we rolled up our sleeves and we had to learn the process. And so just get going.

[00:20:09] Andrea: Chevalo and Monique -- thank you so much for being on This is Small Business.

[00:20:12] Monique: Ah, thank you so much. It was an honor for us to be here.

[00:20:16] Chevalo: An honor for us. We appreciate it. Thank you so much.

[00:20:20] HOST: MIDPOINT: You're listening to This is Small Business, brought to you by Amazon. I’m your host, Andrea Marquez. That was Chevalo and Monique Wilsondebriano, Founders of Charleston Gourmet Burger Company. You can find out more about their company in our show notes on our website: Thisissmallbusinesspodcast.com.

Chevalo and Monique gave us a lot of things to consider when figuring out who to partner with for product sourcing and for shipping and fulfillment. I love how they prioritize having communication and transparency with their sourcers because they care a lot about the trust that the customers put into their products -- especially since their products have a short shelf life. So thinking about the team that'll come along with your shipping and fulfillment choices is super important. [00:21:00] But even though you definitely want a supportive team, you should be wary of yes people. You still want team members who will keep you grounded and give you realistic expectations.

Did you know that more than half of the products sold in the Amazon store come from small-and-medium sized businesses? Charleston Gourmet Burger is one of the many small businesses selling in the Amazon store who have tapped into some of the tools and resources offered to help them succeed and grow. Learn more about them in our show notes on our website ThisisSmallBusinesspodcast.com.

[Possible VOICEMAIL]

My next guest is Serguei Netessine, Senior Vice Dean for Innovation and Global Initiatives and Professor of Innovation and Entrepreneurship at the Wharton School at the University of Pennsylvania. I'm excited for you to meet him.

[00:21:45] Andrea: Serguei thank you so much for being on This is Small Business.

[00:21:48] Serguei Netessine: Thank you for having me, Andrea.

[00:21:50] Andrea: Tell me a little bit about yourself.

[00:21:52] Serguei Netessine: I'm an academic, so first and foremost, and I've been doing research on e-commerce logistics, fulfillment, supply chain management [00:22:00] and in general on kind of innovation around e-commerce space for some 20, 25 years now. I'm also a very active angel investor, so I invest a lot in startups. I also invest in venture capital funds, which invest into similar kind of small businesses, hoping to help them grow. I also work a lot with big companies, helping them innovate. Very often it has something to do with omnichannel strategy, e-commerce strategy. And uh, last couple of years I've been working at Amazon part-time, one day a week, kind of helping Amazon innovate, which a lot of it is around fulfillment, selling, sourcing and all that stuff.

[00:22:42] Andrea: Let’s start at the beginning. What is product sourcing?

[00:22:46] Serguei Netessine: Product sourcing means basically finding the right product that you want to sell then identifying the mode in which you're gonna source it and finally finding the right suppliers. [00:23:00] And so for the first part, which is figuring out which product to sell, you might want to look at trends and what's popular. Uh, you might want to go to industry shows and, you know, do all these kinds of things to identify what is the right product to sell.

Then there are different modes of sourcing. You could just buy the product outright from wholesalers and stock the product and then sell it to customers. You can try to find a manufacturer and manufacture a product, and it could be a branded product or kind of white labeled product. Or you can go drop shipping ground route, which means you never even touch the product. You just find the supplier and supplier ship the product directly to the customer. And for all of those modes, you will need to ultimately identify the supplier, visit a manufacturer, drop shipper, or wholesaler.

[00:23:47] Andrea: How do you think I should evaluate a supplier that is good for me? What questions should I ask?

[00:23:52] Serguei Netessine: So there are lots of questions to ask, and I think number one question that usually pops up in everyone's mind is price. Where can I get the cheapest price? [00:24:00] Right? And usually, this is an important question, but I think it's tied very closely with the question how exactly you want to source your products because different sourcing modes, uh, will require different capital, different outlay of cash. So if you want to manufacture your product, that will probably give you the lowest cost. You can probably find the relatively cheap supplier in China, for example, and you can negotiate with the supplier specifications of the product and get a very low price. But this probably means you have to pay some money for engineering design of the product, most likely there is gonna be a pretty large minimal order quantity. So supplier is not gonna do it unless you guarantee a few thousands of items, for example. And so the trade-off is yes, per unit cost is gonna be small, but then there is gonna be this initial outlay of cash and you will also have to worry about things like transportation, custom clearance. [00:25:00] The product is gonna ship, sit on a ship for a few months and all this headache until it comes to the port, and you have to handle it somehow and so on.

The kind of a second, the medium kind of option is to find a wholesaler in the United States, maybe who already has this product. and this would be kind of a medium investment because you need some cash to go buy the product and then sell it, distribute it, figure out logistics, how you're gonna deliver it to the customers. And by far the easiest and the kind of the lowest investment from the investment point of view approach is drop shipping. So you find someone, a drop shipping supplier who already has a product, has the capability to ship this product directly to your customers. So all you have to do is find customers. You send the customer address to the supplier, supplier slaps your label on the product, and then product goes directly to the customers. The problem is, of course, your margins are gonna be the lowest in this case. Uh, so the lowest investment cost, [00:26:00] but also the lowest margins because the supplier is gonna charge you for holding inventory and stocking product and shipping and slapping label and so on.

[00:26:10] Andrea: So, essentially for every choice there, you have to evaluate what you have to give in return. Like what's the catch? Because nothing is going to be the ideal choice, but there will be the best fit depending on your goals, your cash flow, and what the product is, right?

[00:26:25] Serguei Netessine: Yes, exactly. What matters a lot is what the product is. So if it takes a books which was the first product that Amazon used to sell, right? So at the time people didn't print kind of books on demand. They didn't self-publish or anything like that. And so, you know, you go to publishers, publishers already have inventory, and actually publishers have capabilities to ship those products wherever you want. Uh, which is what Amazon used in 1995, 1997. Right? Now, of course what it means is everybody can do it. So barriers to entry are very low. [00:27:00] There could be lots of people like you who can find this, drop shipping suppliers, and tomorrow they'll be selling the same product potentially at the same price and on the other side of the spectrum, if you want to be really unique, you want to have branded products, you want to have something that only you offer, then you go and find a manufacturer and create a branded product just for you. This will mean some kind of outlay of cash but on the upside, you are unique. You are standing out, you are creating kind of awareness of the brand, of your product. So, that's kind of another trade off: the entry cost.

And then of course there is a whole logistics angle, which is how you're gonna handle deliveries, how you're gonna handle logistics, inventorying, warehousing, and so on. So that's also another outlay of cash potentially and depending on the product, it can be very significant. If you are selling something highly innovative with highly uncertain demand. Let's say something technological. You might buy inventory from the manufacturer or from the wholesaler, [00:28:00] and then demand never materializes and technological products become obsolete very, very quickly. So then you might be stuck with inventory, which is becoming worthless overnight, so that's kind of another consideration. Versus if you sell diapers, diapers are diapers, they will always be in demand. So eventually you will sell them, maybe not at the kind of a fast rate that you anticipate, right? But then your risk of inventory, holding inventory that will be worthless is pretty low.

[00:28:28] Andrea: Okay that was a lot of information -- with all these options and pro and cons -- risky cons – what are some other considerations to make that you think are important to customers?

[00:28:38] Serguei Netessine: Nowadays everybody expects to get their products very quickly and moreover, they expect other things like I want to be able to track product, I want to be able also to return products. So who's gonna do reverse logistics? That's also an important question. One of the important questions to ask wholesalers or manufacturers or drop shipping suppliers, will they accept returns? [00:29:00] And how are you going to handle those returns? Do you want to somehow agree with the manufacturer wholesaler that the product is gonna go directly to them? Right? So the, the returns process needs to be discussed and negotiated as well. And you might have to deal with many suppliers. In fact, what you might want to do, even for the same product, you might want to have options. You might to have a main supplier and then backup suppliers if something happens, you want to be able to say, hey, you know, I have this backup.

So, what a lot of companies do nowadays, they buy inventory from the wholesalers or manufacturers and to maximize margins they try to sell that inventory first, but then if the customer places an order and you are out of stock, you don't have anything to sell, then you quickly turn around and go to a drop shipping supplier who ships this product directly to the customer at a lower margin, but at least the customer is still happy.

[00:29:57] Andrea: Anything else you think we should consider?

[00:30:00] Serguei Netessine: You also might want to think about your pricing because pricing to a lot of small and medium sized businesses; they think about pricing in a kind of a very traditional way. It's like, I'm gonna establish the price. I'm gonna buy product for $100. I'm gonna sell it for $200. But there is really no reason to have fixed prices. All people have different ability to pay. And so what you might want to do is also think through some kind of a clearance sales, which are related to your inventory. For example, if you start having too much inventory in your warehouse, well, let's have a clearance sale. Let's have some kind of a discount, right?

You also might want to think proactively about pricing differently for different delivery speeds, right? Some customers will pay a huge premium to have a product shipped faster, right? And so nowadays offering these kinds of options can actually make you lots of extra money. But in general, when you promise delivery the important thing to remember is what matters is customer satisfaction. And customer satisfaction is a difference between two things. [00:31:00] One is expectation and the other one is what I actually get, right? So if you promise me one week delivery and I get product within two weeks, that's a problem, right? Because the promise was not fulfilled. And so what you have to evaluate suppliers on is consistency in the delivery lead time as well. So they might tell you it's an average one week, and what it means is it could be one week every time. And that's a problem if you're making some kind of promises to your customers. So, remember that. Remember to check how consistent is the supplier in delivering on time?

You also might want to check availabilities that supplier offers, right? So supplier will say, oh, we offer you 10 million products. Well that's great, but at any point of time, maybe half of it is out of stock and they cannot even tell you when it's gonna be in stock. [00:32:00] So, that's also very, very important to verify how accurate suppliers are with claiming availability. And then what is the kind of average availability? It may seem like a lot of products, but if most of them are out of stock, that doesn't really help you. Uh, you might also want to think about sampling suppliers. So you really want to find the suppliers that gives you some samples first so you can look at the product, touch and feel and evaluate. And then you might want to do some trial runs with the supplier. Say, look, you know, how about can we do something for months or a couple of months? And then I see how consistent you are and we will go from there.

[00:32:33] Andrea: I’ve learned a lot. And it feels a bit overwhelming, trying to keep up with all the considerations I need to make. Do you have a word of advice for that?

[00:32:42] Serguei Netessine: The question comes to listing lots of choices and creating some kind of a scorecard. You just list a bunch of criteria that are important to you, price, delivery, speed delivery, consistency, quality, availability, handling of returns and so on. [00:33:00] And then, evaluating each supplier on each of those criteria in your scorecard. So a lot of it is about research. A lot of it is about doing kind of your homework, checking on the suppliers, and thinking through what's important to your small and medium sized business.

[00:33:16] Host: That was Serguei Netessine, Senior Vice Dean for Innovation and Global Initiatives and Professor of Innovation and Entrepreneurship at the Wharton School at the University of Pennsylvania. Thank you for listening -- I learned so much from our guests today – they managed to turn a complex decision into something that’s a little easier to digest. Customer satisfaction comes first. And we’ve seen that again and again across episodes. It’s the reason small businesses exist. So you need to make sure you meet expectations, and manufacturing and shipping and fulfillment plays a large part in meeting those expectations. Here are some of the key takeaways I learned from Chevalo, Monique, and Sergeui.

  • First you need to figure out what kind of manufacturer you need [00:34:00] and what kind of relationship you want. Do you want that 1:1 all-in type of relationship where they run with you? Or something a little more hands off? Then, you need to do your homework. Sometimes even fly to see manufacturers in person. Because it’s an important relationship and you want to do things right. Networking and joining groups within your industry help you get started in getting the right team on board.
  • Make sure that the supplier is aligned with the particular things that you need for your product. And that they’re the right ones for it. As Chevalo and Monique mentioned, to them it was also important to have a supplier that would be willing to be in the thick of it with them.
  • Once you’re down to deciding who is best for your business… for your dream team, ask yourself: 1. What’s their turnaround time? 2. Is there a minimum number of products that they expect to manufacture? 3. What type of contract will they make you sign? 4. What mechanism do they have in place to monitor the quality of the product? [00:35:00] An added 5. And 6. From Sergeui Which are 5. check if they are consistent with their shipping times, and 6. ask if they have samples available. If in your scorecard, there are a couple of possibilities, consider what makes them stand slightly apart from the rest. Where are they going above and beyond? Like with a XX certificate.
  • It’s also important to remember, that every choice comes with a pro and a con. So make sure to know the risks. For Chevalo and Monique, it was more money. But as Serguei said, it depends on the product and your goals, but you will need to weigh what is most important to you when making the decision. For Charleston Gourmet Burger, it was about the 1:1 relationship and also knowing that the company they chose would be able to scale with them.
  • Two added considerations by Serguei was reverse logistics and having a plan b supplier. Making sure you have something in place [00:36:00] for when customers want to return a product, which is also something we talked about with August in episode 11 of season one.

And, we’ve spoken a bit about this in past episodes, but make sure that when you seek advice, it comes from someone who has done the specific thing you’re looking to do. Don’t get analysis paralysis and keep overthinking of how and when to start… just get going. You’ll make mistakes, and that’s ok… This is Small Business after all.

I'm curious -- what choices are you going to take when thinking of shipping and fulfillment for your business? Reach out to us at thisissmallbusiness@amazon.com to tell us what you're up to. Or let me know what you think of the episode by leaving a review on Apple Podcasts – it’s easier if you do it through your phone. And if you liked what you heard -- I hope you'll share us with anyone else who needs to hear this!

That's it for episode 7 of season 2 of This is Small Business, brought to you by Amazon.

[00:37:00] On our next episode we'll continue our conversation about shipping and fulfillment but with a twist – what if you’re manufacturing your own product? We’ll be talking about how to get started if you decide to go down this route and all the possible risks of manufacturing with Oliver Crane & Ash Heather from Epic Water Filters.

Until next time – This is Small Business, I'm your host Andrea Marquez -- hasta luego -- and thanks for listening!

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:37:36]


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