EP 5 - 2025 is the year of COGS

[I’m in Brooklyn and have been working out of Liebre Cafe. You know the service is amazing when the owner hugs every guest/customer who walks in. I was the only outsider, but starting to feel like an insider. Lots of love for this cafe.]

In Today’s Email:

• Founder Shipping Sentiments

• Savings Vs. Simplicity

• Bookmarks

This week I attended Beanstalk Conference in Brooklyn, and was surrounded by many of the brightest minds in the DTC space, and COGS was clearly top of mind.

Because of tariffs, brands are looking for ways to save. If I had come here last year I don’t think my service would have been as relevant.

The shipping landscape is more competitive than ever. FedEx and UPS still have larger market share, but Amazon and many regional carriers that service 60+% of the population are putting downward pressure on the market. This is the perfect time for brands to improve their rates.

Here are three insights I extracted from my conversations with dozens of founders:

1. Lack of Data
   

   1. The biggest shipping optimization hindrance is a lack of understanding of data. This is because shippers sit on the opposite side of the table from you. They are incentivized to keep you confused to keep margins high, so they won’t give you the data you need to make insightful decisions.
      

2. Bad Contract Agreements
   

   1. Some 3PL’s truly help you, but many are extracting as much margin as they can.
      

3. Markup Percentages 
   

   1. Shippers often take ridiculous hidden markups. One brand I spoke to brought their FTL in house and literally cut shipping costs by close to 4x.

I attended Third Person’s webinar yesterday, and the brand owner on the call mentioned they consolidated down from 4 distribution centers in the USA to just one.

Why? He valued simplicity of operations.

 I asked him if there was a cost/simplicity tradeoff, and he said yes. Their average shipping cost increased since they weren’t as close to their customers, but they responded by simply raising shipping prices to make up the lost difference.

And, one overlooked think on having multiple distribution centers..

When you have multiple 3PL nodes, people model costs as if their inventory planning will be perfect, but in reality, multi-node brands end up shipping from less than optimal locations due to inventory imbalance, decreasing potential savings.

Single node vs. multi-node each have their merits…

See you all next Thursday 👋

Keyan

PS: Whenever you’re ready… we help brands save 10-30% on last mile shipping costs. If you’d like to work together, just reply “Ops” and I’ll shoot you details.