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In this edition of our fireside chat series with innovators, visionaries, and leaders in the supply chain industry, Better Trucks’ SVP of Growth and Operations, Josh Fredman, sat down with Corey Apirian, Founder and CEO of Davinci Micro Fulfillment to discuss how things have changed behind the scenes between click and delivery confirmation over the past several years and how consumer expectations are driving a revolution in the parcel shipping industry.
When host Dan Ptak sat down with Josh Fredman of Better Trucks and Corey Apirian of Davinci Micro Fulfillment, their unique experiences and current roles made for an interesting take on the parcel industry. Because they have worked at either end of the process, they have great insights on everything from the customer ordering online to package delivery and how that has evolved over the past several years.
They started the conversation by discussing what is driving industry shifts and how companies are achieving improved service. They then discussed how partnerships between like-minded companies help everyone achieve their goals. From there, they looked at strategy and how data and accurate forecasting are a great foundation for it. Josh and Corey then dove into how parcel delivery has evolved and, more specifically, how Better Trucks has changed. Finally, they considered the impracticality of same-day shipping and how it likely won’t become the standard due to the expense.
Dan kicked off the conversation by asking about decentralized inventory.
“Customers want stuff in most cases in one to two days, right? Most people, I think over 90% of consumers opt into Amazon Prime and pay over a hundred bucks a year for a next-day delivery, not a same-day delivery, not a two-day delivery, a next-day delivery. You know, you're seeing more and more customers convert,” said Corey.
“At a shopping cart, whether it's a Walmart, you know, one to two-day flag, an Amazon Prime badge, a Shopify same-day, next-day type delivery offering. So like speed is really important. I think precision trumps speed in telling customers when you're gonna deliver stuff. But the only way you can really have a lower cost of fulfillment and get it to a customer within a precise timeframe is really by being in the same zone as that end customer. So I think the buying habit drives it,” he continued.
Josh chimed in with, “If you look at the package delivery setup of 20 or 30 years ago, shippers were demanding that carriers take lots more volume from larger facilities and get it to anywhere in the country that they need to go. And sometimes, you would find that distribution centers were in New Jersey and a large percentage of packages were going cross country. I think that, to Corey's point, and having clients want to receive that which they ordered in 24 hours or slightly longer, you know, that is the new customer expectation. And so, you know, Corey's understanding of the network and the technology that DaVinci employs, it is beneficial to not only the end client but also to folks like Better Trucks because we are much better equipped or much more ably equipped, I should say, to take packages shorter distances faster and at a cheaper rate.”
That led to Josh and Corey discussing how Better Trucks and Davinci work together so well.
“The whole concept of point-to-point deliveries are meant to have a lower cost of fulfillment and a sustained customer experience, but like, it's so much easier to plan that from a route optimization perspective, which I know the Better Trucks team does and excels at with their technology stack. From our side, the ability to sort and to give pre-sorted product to Better Trucks or Better Trucks to sort and have that first mile to the last mile cadence together, there's a lot of value to that. When you can get your inventory closer to the customer, there's a big effect on sustainability, too,” said Corey.
“It's not just about having a sort center and conveyors and massive mechanization to be able to enable that; it's really about the right network and the right tech to plan the inventory,” he added.
Continuing on the topic of partnerships, Josh had some great insights.
“I think that's why the partnership with DaVinci works so well. I think a lot of this need for data and technology it's been asked of everyone by the consumers to improve the customer experience, to improve the transparency. That just seems to me to be what's driving all of this. And I think that's a win-win for everybody. So, it's making companies become more efficient. It's making companies develop new technologies that improve communication. It's helping get costs out of the system, and that's the beauty of technology. And so, um, you know, I think that there's still a long way to go, but I think the last several years we've seen a huge uptick in just incredible technology stacks across the supply chain industry,” stated Josh.
Dan asked about the importance of optimizing networks and how Better Trucks and Davinci are achieving that.
“I think that as we have opportunity to grow, you'll see more of a kind of point-to-point type system like what Corey was talking about earlier. And that comes with not only the additional technologies we were just talking about, but kind of volume and also a better understanding of where your clients are, where their needs are, where there's opportunity. And that's all about data and maturity and scale. And that's what we're working towards because ultimately point-to-point is, at the end of the day, faster and cheaper, and that's what our customers are asking for,” said Josh.
Corey had this to say on the subject: “I think if you can understand how to get the inventory right before that first click on the website and you're selling the right item in the first place on the right channel with the right tactics behind it, and it's available to be fulfilled in a same day, one-day, two-day format, I think that's the positioning that creates the success, and it's somewhat predictive, and you need technology, and you need experience in the ecosystem to really understand how to do that and why it all clicks together.”
Talking about optimized networks stirred Corey and Josh toward discussing Amazon’s strategies surrounding their logistics network.
“Amazon's built all these sub same day facilities that are these 75,000 square foot MFCs in their regional fulfillment model, but they have 50% of the country's volume, and it's more a lower operating expense and a byproduct, more so than anything else, that same-day muscle for them because they have the inventory there and it works for them to flow through their building out of their sortable FCs and MFCs. Right? With their carrier base, too, and they can control that flow,” said Corey.
Dan moved on to ask Josh and Corey about the technology investments their companies are making and the impact those investments are having on business and the industry at large.
Josh made note of Better Trucks’ dynamic routing, continuing to add, “That is not only the actual physical dynamic routing capability, but also the dynamic pricing capability. And so, based on the client's needs and wants, we have service offerings that we can align with their needs. And I think that's very different from what you might see with a national carrier.”
“I compare that to DaVinci in our own swim lanes, right? Why do we win? We win because I think our tech stack, our physical location network, our pricing, our philosophy, like those things, are very purposeful. And you have this innovator’s dilemma on the other side, like no disrespect to a traditional 3PL or a traditional order fulfillment company, they've built phenomenal businesses, but they built their businesses a decade ago when the ecosystem was different,” said Corey.
“One of the things I really appreciate and like about what DaVinci has done is they've opened up the ability to sell product for certain brands and for certain sellers in ways that didn't exist previously or that were much more difficult to access. And so, Corey, I'm thinking about some of your clients that are third-party sellers on larger websites, e-commerce sites; without you guys and without your technology, it doesn't happen and certainly doesn't happen as easily as it does today,” added Josh on Davinci’s technology.
Data is always a hot topic in the supply chain space, and the buzz certainly applies to fulfillment and parcel. Corey and Josh had unique takes on applying it in their respective businesses.
“A product leaves a building, and all of a sudden, a carrier damages it, or it gets damaged for whatever reason. Maybe it's one of our packers’ fault. Maybe it's the carrier's fault. Maybe it was undeliverable because there was a rabid dog at the gate, and the mailman couldn't go in. All of those things can and will happen. And ultimately, pinging an API call and understanding that there was a problem with that product before it even came back to the building allows our team to go reach out to the customer, operations, or e-comm operators at the merchant brand or retailer and be proactive on that. And then it's just a better customer experience, and then you can repeat that. Right?” said Corey.
He also noted that Davinci has used consumer data to improve sales by providing a solid customer experience, saying, “We looked and saw customers ordering three different types of a competitive product and three different flavors, rainbow Goldfish, cheddar Goldfish, pretzel Goldfish, and then another one looking at small bite size Oreos and Chips Ahoy and Nutter Butters. And we used the technology and the data to understand that mom or dad was looking for school lunches, and we were able to put small packs of original berry and tropical fruit flavored gummies into a box. And all of the sudden, that became a $2 million item with a Prime badge on an Amazon channel.”
Josh had this to say on how Better Trucks is utilizing data. “I think one of the more recent ways that we've been leveraging data is to figure out where we are winning packages during the rate shop from a pricing standpoint, from a zone standpoint, versus where we are not or where we were getting packages and where we're not, or where we're getting packages now versus where we hadn't been previously, or we're getting more packages. And so from that standpoint, we can use that and kind of figure out what's going on. Is it a pricing issue? Is it an economic issue? Is there certain types of industries that we're seeing volume changes in that might materially change plans for the future in terms of asset needs or geographical decisions on where to go to continue to grow the business?”
Dan asked Josh and Corey to weigh in on same-day delivery; they had great insights.
“When you try to ship something same-day, the volume and density that you're able to achieve is significantly lower than if you have a lot of other packages that you're trying to deliver after having them all under a roof and figuring out where they're going and what they're doing and when they're due,” said Josh.
“I think that customers want stuff in one to two days. I think same-day is a little bit of a novelty. I think it's purposeful for many categories, right? Like if you're delivering ice cream, you know, you better get that there in 30 minutes. Right?” added Corey.
He went on to say, “But you gotta have that same-day muscle for that convenience. Right?”
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