Last week I posted a video, here's the detail: So embarrassing story time - last year I lost over $500,000 because I priced a single customer too low in our Toronto facility. But am I the only one that is bad at pricing outsourced fulfillment? A really smart CEO I know raised $40mn and expanded his business by building out almost a million square ft of warehouse space, and 3 years later gave the entire fulfillment business away because it was losing money and he couldn’t see a path to making it profitable. And Easypost, a YC back firm that raised over $80mn, used a lot of that venture capital to build out a warehouse network and in 2020 gave the business to a competing 3PL, Ruby Has, and from my understanding Ruby got it basically for free. The obvious question is, why couldn’t those 3PLs that had spent millions of dollars acquiring customers jettison the money losing customers and hold on to the profitable ones? The 3PLs didn’t know which customers were profitable and which weren’t. Sounds crazy, right? I wish. I was in the same boat this time last year. My Toronto facility was losing more than the rent each month. That’s right, we were working our ass off to ship thousands of packages a day, and if we stopped shipping and simply left the building empty we would been losing less money than we were burning by operating it. Losing money every month and not understanding how to fix it is one of the most stressful places I have ever been in as a business owner. In retrospect that pain was an inflection point for ShipHero. My team probably wanted to kill me, but I shifted half our road map to answer what seemed like a simple question - for each of the 3PLs using ShipHero software, what customers were generating their profits and which were losing money clients. Such a simple question but impossible to answer. Until today. This is my proudest launch so far, because it is going to help the 3PLs using ShipHero make a ton more money. Introducing, The ShipHero Labor Cost Dashboard. You can now see what your labor cost is for every customer every day. So simple, and it will transform your business. What did we find? It was a standing desk company that was killing us in Toronto. We had priced them way wrong. Once we understood that, we recommended they go with a competitor and today everyone is happier. We also had a company that sold a small product with a high number of picks per order. We were very efficient in packing them, but bleeding money on the labor for picking the items. We focused our team on their picking process and we cut the pick times for that client by a third. The change for that one client will save us over $200K in 2024. If you use ShipHero, let me know what the Labor Cost Dashboard teaches you. And if you don’t use ShipHero, post a comment, lets talk.
This is great. Super helpful to know which clients are causing the hurt, but also equally good to know understand costs per vertical and profile. Kudos to you and the team
Very cool feature Aaron, one of the hardest questions to answer when in a multi tennant operation without a doubt.
Such a critical pain point. Great work, Aaron.
Congrats on this innovative launch and the positive impact it will have on the industry!
Awesome feature!
Love it! Aaron Rubin SKU-level costing vs Average costing is a real game-changer for driving improvements in FCs and across the entire supply chain. It is often avoided or deemed impossible by many as it requires a very mature depth of understanding of your process mapped to your software solution with quality master data.
CEO @Eubroker fulfillment | Freezone warehousing | Hoptrans Group
6moCongrats, Aaron! If i am not mistaken at one point you've mentioned that it took you and your team around 12-16 months of developing this feature. At first glance it seems as a straight forward and not so complicated algorithm it should be. What were the main obstacles? Hesitation? development team resources? time required to test if the solution is actually valid? So far this looks like one of the best new feature on the market that any similar software provider should seek for.