#360 - Supply Chain Lessons from Building Seed, Liquid IV, and Celsius

Speaker A: Foreign. This is D2C pod, where the worlds of creators, consumer goods and brands collide. We get behind the wheel to show you how today's biggest products and ideas are made, launched and scaled. If it's shaping the future of commerce and culture, you'll Hear it here first. Catch new episodes weekly on Spotify, Apple Podcasts or D2C pod dot com. Be sure to check out our newsletter for weekly breakdowns and recaps linked in the show notes. So before we, before we kick off today's recording, I've got one more for you. E Commerce costs are rising. USPS changes alone could push delivery costs, uh, up more than 25% this year. And to stay competitive, you need a supply chain partner built for scale. And that's what Stored is. A modern 3 PL that unites warehousing, fulfillment and transportation with cloud software for full visibility and control. In 2024 alone, Stord saved customers $130 million in parcel fees and powered nearly 1% of all U.S. black Friday and Cyber Monday sales. Now they're offering a, uh, free mystery shopping report. See how your ops and logistics stacks up against competitors with real actionable insights. Get yours at Stord. Link Mystery and scale smarter with Stored. What is going on DTC Pod? Today we are back with Nathan Burstell who is the director of business development at Pelagic. Uh, I am really excited for this conversation because we're going to be talking about everything supply chain recently. Um, if you guys remember, we had on John Morgan, uh, from Pelagic as well who is responsible for building out seeds supply chain in the early days as well as a bunch of other things. He's recently launched Pelagic and works with Natan. I've had the pleasure of getting to chat with Nathan on a variety of projects and uh, he's just got a tremendous amount of depth and knowledge in the field. So today we're going to be unpacking supply chain pitfalls. Everything that you need to know how to build a resilient supply chain for what you need to look out for, whether you are a brand that's just starting out and you're looking to um, you know, go omnichannel and start to scale a little bit or you're in the scale up phase where you're rapidly scaling, uh, and looking to blow up, uh, nationally. So I guess Natan, without further ado, why don't you tell us a little bit about yourself. How did you, uh, tell us a little bit about yourself, your career, how you made it to Pelagic and what your focus is on these days?

Speaker B: Yeah, probably like everybody else in the D2C space, not the most uh, linear path to getting to where I was. Uh, my family's background is in the contract packaging space. So was exposed to that at a young age, freshman, uh, year of college, working as a quality inspector on a production line and said I don't want to do this. Went off to school, became a teacher. So I was a public school, public school teacher for almost 20 years. All the while the family business continued to grow. Eventually got pulled into that, um, and then ran the business with my father where there we got to see some very exciting brands including John's, uh, work with Seed, but other very well known brands like Liquid IV and Celsius and Element and lots of dummy brands that a lot of folks have heard of and really innovative brand builders that were trying to come up with something new rather than uh, just a copy of something that was already out there. And got to hear those founders challenges in trying to create something that didn't exist yet. And through that we grew, we had a lot of success. We were fortunate enough to exit about three and a half years ago. And when John caught wind that I was a free agent, he had told me about what he was building at Pelagic and met the team and the rest was history. So um, yeah, that's how I came about to landing at Pelagic. But we essentially act as a fractional supply chain team for brands at their various stages of growth. And as you know Blaine, the challenges when you're trying to get from 0 to 1 are very different than when you're rapidly scaling to when you are the brand and category leader and you've got to think about your business in different ways at each stage of growth. Um, and so we have departments dedicated to each and specialists within that space.

Speaker A: Yeah. And I mean I think what you guys do is so cool because everyone when you're thinking about dtc, you know, it's a lot of marketing and a lot of brand and a lot of pretty packaging and all this sort of stuff. But truly the bones of making a successful uh, DTC or omnichannel brand work is the supply chain. It's like how do you get a product created, how do you ship it, where do you store it, uh, what does that form factor look like as it makes its way to the customers? How do you ensure that, uh, you know, there's no breakage along the way? How do you make sure things don't get lost? How do you make sure the customer understands things like there's so many elements and it's, you know, easy to get wrapped up in, in pretty packaging. But what does pretty packaging mean if your product arrives damaged or if your product can't make it through? You know, say it's not heat resistant and you know, and spoils in transit or something like that? There's so many ways in which things can go wrong. Um, so, you know, supply chain, it's one of those things that often gets overlooked but is so, so important when it comes to actually turning your brand into your business and into like real revenue that's able to scale and grow month over month over month.

Speaker B: Yeah. And there, and there's incredible creative folks that we get to meet with on behalf of brands. Sometimes they're in house, sometimes those are outsourced groups that have, uh, brilliant ideas. And I think our team gets what the vision is. We come in on the execution part. Okay, so you have this amazing idea, you have the market research, you have the pain points, you understand why this product, um, will be well received. But how do you actually get it made, you know, and how do you make, get it made in such a way that it's a sustainable business from a fiscal point of view, uh, because there's lots of folks creating a lot of products that are losing money and fundamentally in business that doesn't last very long. So we look at it that way. But there's also the consumer experience. The end user is really the arbiter of how you're going to do as a business. So we have to always keep them in mind in the decisions that we make. And while we're not going to speak to, oh, you should change this color on the packaging to this because it'll sell more. We could speak to, if you put this outer finish on the packaging, it will be less resistant or more resistant to scuffing as the unit is moving through the supply chain. And the end result will be what you want and just being able to call out, uh, from the mistakes of others, uh, for any brand that's going through it for the first time, Second and third time founders are some of our favorite people to work with or first time founders that have tried and have experienced some, some challenges, uh, they seem to understand the value uh, of the service that we provide.

Speaker A: Yeah. And I think another thing, I remember the first time I met you, part of supply chain is knowing how to avoid and navigate and avoid the mistakes that you know, oftentimes for other founders would be inevitable. And oftentimes challenge the success, uh, of the business. But like, other times it's also just a matter of speed, right? Like, for example, I remember the first time I connected with Natan, uh, I was working on developing, uh, a product in the supplement space and I saw another brand that had amazing like, packaging. And I was like, I could look on Google all day to try to like find like, how the heck do they do this? And I remember I talked to like different, um, packaging suppliers and they were like, oh, well, maybe we can kind of get there. Maybe we can kind of get there. And then I was chatting with Natan and I was like, hey Natan, do you know how you do this? He's like, oh yeah, I know the manufacturer. They're the only people that do it, talk to them, right? So like, and just being able to like, save that time and be paired with the right person for the right job, oftentimes when it comes to, um, you know, things like CPG or D2C, is, is so important because like, you could work, you know, tirelessly on an iterative cycle with someone who can't pull something off for versus working with someone who's done it, who knows how to do it and is going to get you the result that you're looking for. Because inevitably in this space, when you're building your own brand, there's things that you want custom, there's things that you want unique to you. And um, knowing where to go to get those things is oftentimes so important as well.

Speaker B: And one of the biggest challenges specifically in supply chain for the D2C space is the best providers. And it could be your primary or secondary packaging, it could be your manufacturer of the products, it could be your logistics partner, your fulfillment partner. Some of the best providers don't advertise their services because they don't need to, because they're good and other people tell other people about them. So if you're a brand builder, how do you find them? And the flip side is also true that some of the less ideal providers are some of the ones that are promoting their services the most. So there's this catch of, well then how do I find the right fill in the blank manufacturer for this? And we still as a company continue to discover these gems across the US and even globally that have been doing this work for many, many decades, quietly focusing on the quality of the service. And yet we've never heard of them until we've heard of them. And it's about building that network and vetting it because it's always changing. So a particular uh, packaging supplier could be your go to and three of your contacts said this is who you have to use. But something could be changing within their business. Almost by nature it will be changing. How are you vetting that and how are you paying attention to that? And that, that's the added challenge to navigating this whole sea. So on the one hand, you know, the, the best locations are uh, uncharted. Right. They don't show up on a map and you have to find out through word of mouth. And then secondly, it's always changing. So you have to, you have to navigate those challenges. And unfortunately a lot of brands get burned by that where they're just, they're mispaired. And it's not that the, the vendor or the manufacturer is bad, it's just a bad pairing either based on need or, or timing or people in the way that um, the ask is described, where there are assumptions made or misunderstandings, uh, whether it's to do with lead time or quality or as you and I were talking previously about a product actually pouring out of a bottle, because that's the whole purpose of the bottle. Um, maybe you could tell that story better. Um, but yeah, that's, I think that's the challenge, that's also the fun for us. So we're constantly looking to chart who are those best in class providers and then build a relationship with them, understand what's happening in their world so that we can pair them with the right brands. Because then everybody wins.

Speaker A: Yeah. And that's why I think the agency model in this space, especially for you guys, like on being able to be an agency that helps with supply chain and ops is so exciting. It's because like at the end of the day, agencies get reps. Right? Like it's like if you're a marketing agency, you're going to see the strategies that are performing across multiple different brands. What are the creative formats that are scaling, what are the best things to do, what's happening and your fingers on the pulse. Because you're not only like putting reps up on the board time and time again on one core competency. You're seeing that across multiple different brands. And it's the same thing on the supply chain side. Right? Like you are real time, you know, the network of suppliers, who they are, what they make and what their outputs look like in various different products. And that helps you guys bring different brands, um, you know, forward with it with, with a lot more speed. So, um, that totally makes sense. To me, I think what would be cool to do, I definitely want to tell the story, um, that we were chatting on earlier. So we'll get there a little bit later. But to start, I'd love to just talk about, um, you know, what it takes to bring a CPG product or ah, you know, a D2 CPG omnichannel style product to market. Um, you know, who are some of the players involved from um, you know the, the manufacturer to the co packer to the 3 PL. Like who are some of those players in the space? What roles do they play and what do you need to know as a brand as you're starting to, you know, bring your product to life From a supply chain point of view?

Speaker B: Yeah, I mean there's, there's the nuance of what the industry vertical is. If you're bringing a frozen food product, that's very different than bringing an apparel product to market for obvious reasons. Uh, but no matter what, regardless of the product type and industry vertical, the thing that you're trying to sell to the end consumer has to be made. And it's made of things. Right? So we call the finding of those things the sourcing and the making of the product, the manufacturing. And even the words coman, contract, manufacturer, contract, packager, those are misunderstood even within the industry. Somebody gets the product made from its parts or raw materials into the way that you know, the end consumer is, is going to see it. And then there's also the distribution piece. Well, who's going to get it from the factory that manufactured it to blame the end consumer. And in some cases the factories have their own fulfillment capabilities. In other cases the brand founder themselves is fulfilling out of their garage, uh, until it makes sense to grow to a larger scale. But those are really the main pieces. Getting the thing made by, you know, either sourcing or having your manufacturing partner do it, then getting it moved and distributed, uh, and arriving at its final destination the way that it should, doing so in a cost effective manner without sacrificing quality, price or time, those are the levers that end up getting moved. Um, as you're making a decision as a brand founder, so are there ways to get things really quickly? Yes. Are you sacrificing the quality? Often? Yes. In some cases the price, yes, you pay for that expedited service. So really understanding what's most important for the brand and, and when to pull certain levers is the key. Um, a lot of it depends on the brand's, uh, cap table, if you will. Is this just Blaine, a founder by himself and he doesn't have to answer to anyone, or does he have a list of investors who have given him the capital to bring this idea to life and therefore there's some additional pressure. So we take all of that, uh, into account before we ever were to make any kind of recommendation for the brand.

Speaker A: Well, and I think that's so important. What you mentioned is like there's different companies that are on different trajectories, right? Like uh, if, and I think one thing that you said from the out the, from the get go is like we need to align on what the founder's idea of success is like, what are they in it for? What are they trying to do? Are they trying to, you know, build a pretty side hustle that's spitting out, you know, a, uh, million bucks a year? Are they trying to scale this to be a category dominator that has the uh, ability either get picked up by PE or go public? Like what is the scale of the brand and in order to achieve that, like what needs to happen on the supply chain side to, to, to make that happen?

Speaker B: Right, and rightfully so. We have some founders that weren't really sure the why or often it was driven by either they had an idea, they saw a white space that they felt like they could solve for or they had a product and people said this is really good. Like their community, uh, essentially said you should bring it to market. And we had some clients that had a second full time job if you will. And this was sort of a side hustle. But then it picked up steam. And I'm thinking of two really amazing brand builders separately that kind of came to us at the same time saying, I'm going to quit my other job. This is like we're going all in on this. And it was very exciting to see that happen in both cases. But their, their why was rooted in, you know, initially, uh, solving for a problem, but they weren't really sure where it was going to go. Whereas there's others. It's very clear I want to get to here by this time and you know, 12 months later go into retail in this type of retailer and they're hyper focused. Um, both can work, both can be challenging and a lot of it depends on things beyond their control.

Speaker A: Yeah, and I, I'd love to talk about. Because you've seen both sides of the coin, right? You've seen these businesses that are almost like bootstrap. They just kind of chug and chug along. They become super profitable and you know, they're, they Might be growing year after year after year. You know, 10 years on just spitting out crazy profit versus the ones that are like planned. Everything's coordinated to a table scale up. We're going to be in retail in 12 to 18 months. Everyone's going to know us. Massive brand campaigns, a lot of capital. Um, so maybe why don't we start with the latter and then we can go to the former. So you've seen these. What does the playbook look like? How do they set up their supply chains? How did some of these top in class D2C brands, how do they scale? What does it look like? What are they, what do they have to prepare for? How much are they investing into inventory and supply chain and being able to get everything right to scale like that?

Speaker B: I think in those cases they're spending a lot more than people realize, both in their time and then obviously in their capital. And the fall is from much higher because of that. So the pressure is much higher, uh, being paired with the right partners, having realistic expectations to timelines. Because the challenge is if we go back to that description of you need to find the stuff and then get it made and then get it moved, you don't do it necessarily in that order. Uh, some of the things are parallel paths. So, okay, we know that this is the formulation or these are the ingredients. Great. But who's going to actually make it? How do we know that they're going to make it to our standard? What is the packaging going to look like? Who's going to fulfill it? It's not one behind the other. They overlap because in some cases it's reverse engineered. This, uh, needs to launch by this date and you have to back into that and say, great. You have to make a packaging decision by this time. Like sometimes the artwork and the, the stakeholders of the brand agreeing on that is what can hold things up. So in a sense it's harder, but it's also easier because there's a set deadline. And as you know, most humans, uh, work really well with deadlines. And if it's vague and, oh, it's kind of this thing I'm doing on the side, it can be a little harder for people to get motivated to make important business decisions.

Speaker A: I think that's actually a really interesting point. I hadn't thought of that, uh, as it pertains to supply chain, but you're right. I think I forgot what the name of the principle is. But it's basically like however much time you allocate, you'll just expand and you'll take that amount of time to make that decision. Right. And sometimes, you know that procrastination can be good. You'll get more inputs and you'll have more information to make a better decision. But other times it can, like, slow you down and that can slow down other cycles and things. A process that might, you know, only needs to take three months can end up taking a year. Right. Um, so, um, I think, I think

Speaker B: the timeline piece, the, the timepiece is actually one of the least understood part of supply chain management where we, we've seen it on both extremes where people say, hey, Blaine, nice to meet you. I want to launch this product in one month. And you say, well, that's going to be very difficult because it needs to be custom and we need to source this ingredient that isn't in stock and we haven't designed the packaging yet and we don't know who's going to make it. So that's one extreme. On the other hand, we've had brands come to us saying, yeah, but I heard the lead time to get the, you know, this part of the process is this many months and it really isn't. It's like two to three weeks. And so people are working with false assumptions on time. And that's been the fascinating part for us, uh, where people do their research and it's just not necessarily true. Because on the raw ingredients side, there is an issue of like, I can't get it made if I don't have the pieces I need. But on, um, the actual manufacturing, some manufacturers will say, nope, our calendar is locked. And like, we had a manufacturer last week say, we're not taking on any more clients until January of 26. Then there's other manufacturers that are, uh, flexible and are able to move their production around and they have enough capacity that their quoted lead time may be 10 weeks, that they could actually get you on a production line in two weeks. And it's figuring out who those folks are and when they have that capacity and utilizing that to your advantage. That's the part that I think so many brands are just not aware that that's possible. And it has to do with the way that brands are asking questions of their supply chain partners. So if I go to you, Blaine, uh, the manufacturer, and I say, what is your moq? What's your minimum order quantity for this product? I want to make. I'm actually asking the question the wrong way. Instead I should say, blaine, I would like to make this many units. Are you able to quote this for me? So I'M now priming the volume. And if, if you know for a fact it's well below what you're willing to do, you will share that. And then I'll follow up with, well, who do you know within your network that I should speak to that you think can help me to get, you know, 3,000 units made, whatever the small amount is. And they often will have a partner to refer you to, knowing that you'll graduate them at some point and be the right customer for them, and therefore they were helpful. But if you say, what's your MOQ? And they say 50,000 and you need 5,000 made, you never really get to meet. So it's all in how you ask the question. And as it relates to time, you could also say, well, what would it take for me to have this made in 10 weeks? And, you know, after the jokes and the sarcastic comments are made, you really get to the brass tacks, which is, okay, so what needs to happen? And if they say you need to approve artwork within 48 hours of getting the okay, great. But you phrase the question that way, and a lot of these obstacles start to get removed, and you have to stay relentless that way and say, great. So if this particular type of packaging doesn't pour my, uh, product out the right way, then what do I need to do to get it to do so instead of just accepting your fate? I think so many brand founders, we see this with 3PL providers, where brand founders tell us, My 3PL provider is awful, but, you know, what can you do? And we think to ourselves, we know some wonderful three PL providers that would, Would love to take care of you, would love to introduce you to them. Uh, they just don't know each other and they've just accepted their fate as I guess that's how it goes in CPG and I, we refuse to accept that because we know there's some excellent providers out there.

Speaker A: Right? I love that. I love that in terms of just like, framing the thinking, because like you're saying when you're thinking about the moq, you're almost putting that out into the world because you're assuming that's what the, you know, your partner is. That's how they're evaluating the decisions, as opposed to just sticking what it is that you need and seeing how to get it done. So I think if there's one actionable piece of advice like I love that is just like leading with a. What it is you're trying to accomplish, see if they can do it. If they can't, who Else, you know, that can accomplish it. And if they can, but they've not at that timeline, well, what would it take to get it done in this timeline? Maybe there's a no, but at least you tried and you've.

Speaker B: You're the customer.

Speaker A: Gone down the right path. Exactly right.

Speaker B: Well, I mean, uh, m. Most people don't know this, but like, the higher level, the restaurant that you go to, with a few exceptions, you can ask for something that's not on the menu. They can also say no, but you can ask. Most people don't realize they can ask. You know, some menus will say no substitutions. Okay. Certain restaurants want your business, and they'll prove their value by saying, yeah, I can make that. And if you go into it with that mindset that you are the customer and you are, uh, essentially voting and choosing with your pocketbook by being there, and you have choices to be elsewhere, the right restaurant will decide to take care of you. And there are, uh, there are some exceptions where, you know, you're trying to get something made and there's only two manufacturers globally. Okay. You have less of a buying power at that point. But in a lot of the categories that we play in, there are multiple choices. And those manufacturers know that, that you have choices, so why should you go with them? Uh, it's really. Their account management is better. You know, the way that they, they treat you and follow up their lead times are better. Their quality of the product that they make and how they check is better or their price is better. That's really it. And, uh, I think that's another actionable thing for a brand founder, is to remember you're the customer.

Speaker A: And I think the, the saying is don't ask, don't get. Right. Like, if you don't ask for it, you're not going to get it, actually.

Speaker B: Closed mouths don't get fed.

Speaker A: Exactly. I actually have a funny, funny, uh, example of that, which is again, more, more on your, like, restaurant example. But I have this friend who we went out to dinner and she asked for like the dinner was over and she asked for, uh, she said, and we'll have a round of complimentary tequila shots. And we're like a round of complimentary. I was like, that's a bold ask. And, and the, the waiter was like, sure. And like, it was around a complimentary tequila shots. And I. And I was like, oh, that's. That's a bold ask. But I was like, I guess don't ask, don't get right. So, yeah, um, it applies to this, this, this world as well. Um, okay. Moving forward, I want to talk about, um, you know, you've seen this happen time and time again with a different brand. You have different perspectives. So I'm going to throw this one on you. I'm going to let you pick the category of a brand. Let's just say you're starting any type of brand. It can be in, you know, the food space, it can be in the gummy space, apparel space. You pick. Right. Um, I want you to walk me through what you would do if you were launching this brand today. Um, what you would do as it pertains to like you know, figuring out and solving for your manufacturing, solving for your um, you know, your co packing or, or whatever it takes to get it packaged and solving for your fulfillment. And let's use the example of, you know, let's say you're not fulfilling out of your house, uh, for the moment just because we'll just assume that um, you know, it's, it's more of a scale up.

Speaker B: Brand new brand does not exist yet.

Speaker A: Brand new brand doesn't exist. You want to bring a product into the market, it can, it doesn't have to be a completely innovative. It can be just a different variation that you're putting your spin on. But how do you, how do you do it? What's the product? How do you do it?

Speaker B: Yeah. So m. No matter what, the theme is the same. If you're thinking about the sourcing or the manufacturing or the fulfillment, you have to think like those people. So if I'm thinking about the fulfillment piece of this product that doesn't exist yet and I think like a fulfillment partner, what's the most important thing for a fulfillment partner? It's three things like what is the thing and how many varieties of it do I have? The SKUs. And then how much space is it going to take up? How long is it going to be here? Am I going to charge you storage for it? And then how many units are you going to move through? What's the churn rate going to be like? So if it's a brand new product, everybody understands that there's no data on it yet. It's so much easier for us to find a right 3PL partner if there's actual data. Oh, they're moving 30,000 uh, orders per month. 3PLs get excited about that number. Oh, it's a hundred thousand orders per month. They get really excited about that. It's a brand new product. Okay. Do you have any kind of forecast and they have to then build that into the contract. So I would keep that in mind on how fast am I planning on moving this product, and that would then determine the type of 3 PL partner I would go to.

Speaker A: And maybe let's actually pause there. Right. I know we want to do this, but I think 3 PL and what you just said is super important. At what stage is. Do you think makes sense for a brand to go to a 3pl?

Speaker B: Oh, if I, if I can do the fulfillment myself, like if my significant other isn't going to kick me out of the house because we have boxes, you know, moving in and out. I would try to do that myself first for a number of reasons. One is you're the last to handle the product before it gets to the end consumer. You will then have a greater appreciation for what 3pls have to do. You will see how your manufacturing, uh, partners are sending you the product so you're able to essentially QA and QC their work. And again, I think you're closer to it. I've seen brand founders that do it themselves and add handwritten notes. Uh, they create content around that. So it's great. It's not sustainable beyond a certain size unless you have, uh, we have a couple of clients that have access to space and labor and processes that others don't like through other, uh, businesses of theirs. But ideally I would do it myself if I could. Um, I would even say the same on the manufacturing if I could.

Speaker A: One thing that you just called out that I think is so important if you're handling it yourself is what you just said about being able to QA and QC the product. Right. Like, um, we were just talking about the example of an olive oil bottle that doesn't pour properly because of the cap when we were fulfilling directly. Right. Like my wife, when she's fulfilling directly. You know, we've got bottles, we open them up, we're pouring them out, we're doing them all the time. Then we assume that everything's going to be good for the next batch. And boom, guess what? Olive oil doesn't come out of the gap. And that's something that you would catch when you're physically being able to handle your own product. You see how they should be packed. You understand that experience that the customer is getting now. We, We've. I think, I believe we transitioned out into a three pl when we were doing about, um, I think about 50 orders a day. It started to get like, kind of like, okay, like this is, you know, time to, time to go. But um, but having that, I think everything you're saying was like, spot on in terms of the closeness to the customer and the QA and QCING part of that customer experience.

Speaker B: I mean, if we have clients that do a thousand orders a day and do it themselves, but they have a small team, uh, one of them even created a content creating studio within the space because they realized it was right there and it was great. Um, uh, I think there's definitely like a hustle and a respect piece to, to them doing that. Um, at some point it gets to be maybe not as manageable. There's also if, if the product that I'm selling is like, I'm looking at a tool that's sitting on my desk right here. If it was just that, uh, I'm a little less concerned about what you just referenced. So it really depends on the complexity of your product. We have clients that there's like a welcome kit that the consumer gets and then a, ah, ah, subscription model where there's a refill kit and they really want to make sure that first impression is right. Or how do you handle returns? Do you do that yourself? Do you have a partner do that? So there's nuance in every single step of the process that then should determine the strategy. We actually work with brands that say, okay, at what point should I outsource it to a 3 PL? And then at the opposite end of the scale, should we open up our own, uh, operation? Because they're dealing with tremendous volume and it just makes sense. In some cases, they even go in on a joint venture with their partners and set up shop where they put their brains together. But when is the signal for that is really the essential question. And the answer is, it depends. Right? How much capital do you have available? Your quality of life? You know, uh, we work with a lot of founders whose families are growing, right? And then I've got to get these boxes out of here. I have a toddler running around the house, you know, so that, that drives the decision. Even though fiscally it would make sense if they could still do it themselves.

Speaker A: And I'd also, I'd also love to hear about, um, your experience with different 3pls. So, like, I can say, you know, we're. We're working with the 3PL at the moment. The experience has been awesome. Like, they've got processes, they can build complex workflows, even to the point where if a customer order, like, say, you know, package arrives damaged, they literally have a video of every package that gets packed and they'll Send the video and be like, here we see exactly like what happened. And like, to me I'm like, wow, like that's good. That's not even something that I would have set up. I wouldn't even have these processes set up if I'm doing this operation, you know, myself in my house.

Speaker B: So like, yeah, I think, I think the three PLs are actually leading in the supply chain on how they've blended tech and tools into their processes. And it's probably because they've had to, because they have, in a sense, one of the hardest jobs. Because if they don't catch it, the end m consumer is catching it. We've seen some really interesting vision systems with some of our three PL partners and uh, ways to ensure that every order that's picked is the correct order. Um, there's some that utilize third parties to audit them, which very few three PLs do. Um, but again, at the forefront of like tech meat, cpg, it's really happening at the three PL sends and probably happening the least upstream at the, um, sourcing ingredients. Right. There's not a lot of tech enablement. Some of the manufacturers are. There are some, uh, interesting uses of systems and connected systems. Uh, real time inventory tracking is a big problem for brands. When you're utilizing, you know, multiple nodes. How do I know how much I have? Because I'm moving lots of orders every single day and I need to order more and that takes time. How do I ensure that I'm not overstock or understocked? Um, and so there's a few manufacturers that are creating, you know, customer inventory portals that allow the brand at any time to get a real life snapshot of what they have and where it's located. So I see the three PLs leading the charge and hopefully other folks in the supply chain uh, following suit because it makes a big deal. Uh, we've seen three PLs that have optimizations based on the weather forecast of where the product is going to. Uh, there's one 3pl partner of ours that will do that for products that are maybe temperature sensitive that depending on the time they will say, okay, we need to pack this differently and it needs to travel differently in order to ensure the quality. So that's really cool in our minds of how people are utilizing technology that way.

Speaker A: Oh, absolutely. And um, Nitan, let's. So let's talk about, uh, you know, let's go back to this brand example. So again, you're picking whatever type of brand it is you want to be. We just talked through three Pl which is the fulfillment side of things. But like, let's talk about bringing this product to market. Like, what are some of the considerations that need to be made between manufacturing the product and the packaging and then the three pl. Right. Because like, if you think like even in this example of like the olive oil, you've got the manufacturer who's putting the olive oil in the bottle, then you've got the um, you know, the, the co packer who might be, you know, if you're importing yourself, maybe you do the packing stateside, maybe you actually have to deal with importing something across the border, paying a tariff on it differently. There's a lot of different elements that are happening now in the supply chain. And then you've got packaging which needs to correspond to the form factor of the product that you're selling. Like in the examples that you just mentioned, you said a lot of brands that you work with, they want to do um, you know, first number or first uh, they want to design a kit for the first order and that's going to be different than the refill or whatever. But all of those now have contingencies based on the product and the form factor that's used in the product. Right. And then all that, yeah, geography part and then ultimately those are the things that make their way to the 3PL. So when the order comes through, the 3PL assembles everything and sends it out the door. So what looks like a really simple experience. There's actually a lot of contingencies and variables now in this equation. So you know your brand, you're setting it up, how are you thinking about things to make sure a, you're avoiding um, pitfalls at the manufacturer and packaging level and that you're able to get something set up quickly and out the door.

Speaker B: And I'm purposely skirting around uh, the pick the product exercise uh, that you're asking me to do because by picking I'm sort of choosing a lane. And so if I think about the product that you, you held up a moment ago, that's you know, an oil in a glass bottle that's heavy. I think about the strategy differently than if I have ah, 10 grams of powder in a single use packet because I may be able to move close to a million units on a full 53 footer container of a finished product, um, in that, that powder format. Whereas for you maybe if I'm lucky I can get 15,000 units. So now the cost, let's say it costs $5,000 to move a full container across the United States. That's way more impactful on your cogs in, in your bottle example than the powder example. So you're right. It's those nuances that really matter. And should I make it overseas and bring it in again? Depends on what the product is. We, we had a client that was sourcing their corrugate from overseas and there was, there was no reason to do that. There's fantastic options here. And generally you want to source it within, you know, less than 200 miles of where it's going to get packed, uh, because otherwise the freight doesn't make sense. Right. And it's a bit upside down and you have options. So I'm looking at, I have 30 different types of products here across my desk, and each of them has their own nuance. Um, some are cold chain, some are heavy, some are light, some have a shelf life or barrier issue. Uh, some it's time to customer that's the most important thing. Uh, because it's perishable. Um, yeah, some, it's just strictly, uh, a geography play that the brand just wants it to be easy. Um, and yeah, I don't know that I would launch a brand. You know what I would say?

Speaker A: No knowing what you know. No. But I think one, one important point that you called out and maybe the right framework to think about it is rather than, you know, starting with the, like, start with the little things, right? Like what are the most important things? Like what are the scale you're at, what's your form factor that you're dealing with? And where should you be getting that product from? Because that's something that's even important, right? Is it something. Because, you know, you can get products overseas that are a lot cheaper, but now you're dealing with tariffs and you're dealing with freight, right. And time again, tariffs, freight and time, right. And, uh. Or do you look for sourcing that's a little bit closer to where you're packing. And the crazy part about what we're just talking about is sometimes that equation, it starts to flip, right? Where in the beginning maybe it's cheaper, but like, as you scale, like now these, now these things really matter. And you're like, wait a minute, I actually, why am I sourcing this internationally and banging all these tariffs and this freight when it looked good, uh, to just, you know, test a couple units, maybe that equation doesn't look the same. Um, you know, as you begin to scale out.

Speaker B: Well, that's, that's the key that you just hit on, which is you have certain Understandings, certain assumptions. But your business should be evolving. It's rare that a, a consumer business is the same all the time. Forget just seasonality, but just in general, if it was the same all the time, it would be way too easy. And that's just rare. Uh, there's very few businesses that say that static, um, and those that do are either hidden gems or it doesn't last as long. And so it's gonna change. And that means you have to be looking at it all the time. And as a brand founder, asking yourself, okay, what assumptions that I've made in the past are not true anymore that I need to revisit? And you have to lead with curiosity. And some of the most successful brand builders surround themselves with people that they deem to be quote, unquote, smarter than them, that are going to look at things differently, that are going to challenge their assumptions as opposed to just being, you know. Yes. People that say, yep, that sounds right. Get it made overseas and bring it here so we don't have to think about it. And when you start to challenge those assumptions, you find tremendous amount of cog, savings, time savings, quality savings, uh, across the board. And it's always going to change. That's the frustrating and the exciting part of doing this. Now, if you're just in it for a short time, yeah, you can pick, uh, a lane and run with it. But a lot of the brand founders we work with are, they're playing the long game and so they want to strategically evaluate it. And when should you do it? You can't do it every day. That's maddening. But you also can't do it once every 10 years. And so it's finding that right balance of when should I revisit my assumptions about my packaging materials versus my manufacturing partner versus my 3PL strategy. Like, when should I move from having just a single 3 PL location to 2? When does that make sense? Um, and that's where I think our team, because to your earlier point, we get so many shots on goal and so many views, uh, are able to speak to that with greater confidence.

Speaker A: Um, one thing that I'd love for you to share was when we were chatting offline, you were telling me a little bit about your theory that, uh, the reason supply chain is so great is because it's so hard. Right. It's not something that everyone can get right. So now it actually, if you get it right, it creates an opportunity for you as a brand. And a lot of times it's not just like, oh, copy paste, whatever, someone else is doing. And it works like you as a brand can actually build moat and leverage and scale with building your supply chain the right way.

Speaker B: I mean I get to work with the brand. A long time ago that went to a retailer and, and the retailer looked at the product and said, I don't know where to place this. There isn't a category for this on the shelf. Well, nowadays the brand created that. It's, it's, it's a whole section of that, that store. And knowing the brand founder and the team that they put around them, how they overcame that challenge also was their biggest advantage. They had such a head start on everybody else that they became the category leader in what to some people looked like overnight. But it was really a many year journey of overcoming those challenges. When uh, they had something new. Those that have come after them and tried to play in that category had some things much easier. Like getting into the retail was easier because the shelf now exists, um, specifically in the location in the store. But they now had to compete with more people. So if it was easy, it would just be the folks with the most amount of money that would win. But we see all the time that these big, big organizations are really slow to make a decision, really slow to turn and to pivot. And the really lean organizations that are unafraid to make a decision and to do so quickly can get leaps and bounds ahead of them and sometimes get acquired by those bigger folks. Like uh, that's their growth strategy is to just apply, acquire the innovative brands. Um, so there's, there's plenty of room there, I think for that.

Speaker A: Yeah, absolutely. And n, as we kind of wrap up here, um, you know, I'd love to, I'd love for you to share any other major like tips or uh, you know, pitfalls that you've seen that you see time and time again, that you just think it's like really important for uh, you know, brands or brand builders to be looking out for as they're thinking about their supply chain. Like, what are the things that, you know, maybe are obvious to you now but like for that first time founder, you, you see it time and time again where it's like, oh man, this is something you just, you gotta avoid.

Speaker B: Be there in person. Just be there in person. If that's your sourcing, your manufacturing, your packaging, your fulfillment, be there in person. There are humans involved in the process. Um, make the, the interactions relational rather than transactional. Uh, and those are the brands that get it and those are the ones that then miss it. They Miss it because of that aspect. They think it's just a transaction. But there's humans, uh, involved. And if the humans care about your brand, they will time and time again rise to the occasion for you and be those great partners that you want to have. So people say that all the time. Like, we want to have a partner, not just, uh, a business relationship, but show it in your actions and try to understand the world through the different supply chain partners world, um, and through their lens. And ask them, what is it like to run a 3 PL? What are the headaches? The busy season is coming right now for all of them. They're all prepping for that into Q4 and into the beginning of the new year. What does that mean, the end of the day? These relationships are based on emotions, and people want to work with people that they like, and that includes their customers. Again, if we come back to the restaurant example, there's that, you know, older couple that always comes in on Wednesday mornings to the diner, and the diner goes out of their way to like, reserve their favorite booth, even though nobody else could have a reservation. It's like, it's, it's based on that. And how do you get that type of relationship? They didn't sign a contract to get that booth. Uh, but there was something in how they interacted with each other that made everybody look forward to seeing them and they became part of their family. And so how do you do that with your partners? And that's, that's the tough part.

Speaker A: Yeah, and I think that that one is so spot on because, like, when you're in this space, you, something's going to go wrong in some part of your supply chain inevitably, like pretty frequently, actually. Probably. So you're going to. These are the people that you're going to need to call on whether, you know, there's a delay in shipment from one and there's a contingency that you're waiting on. You had a scheduled production and one item isn't there. You need to move production up because, uh, you know, some other thing went missing. Like, there's going to be something. And I think to your point being there, having the established relationship with the partners that are involved in every step of your supply chain is going to be really critical when you have to call in that inevitable favor that you're going to have to hate to ask, and they're going to be like, screw this guy. I don't want to hear from him again. Versus, like, okay, like, uh, I get it. This makes sense. Like, these guys have been great with us and we're going to step up to the plate and make this happen.

Speaker B: Yeah, exactly. And, and think of it like a relationship, not like a transaction. And the world becomes a little bit simpler to navigate.

Speaker A: I love that. Still difficult, A little easier. Um, well, Natan, appreciate you coming on. This was super fun. Nerding out about everything. Ah, supply chain. We'll have to have you back, um, to, to. To go a little bit deeper. But in the meantime, for anyone who's looking to learn more, connect with you, maybe chat supply, uh, chain and ops, uh, with you and the pelagic team, um, where can we connect? Where, where can we find you? Why don't you shout out your socials, your contact info, any of that?

Speaker B: Pelagic Co is the website. If you go on there, there are ways to get a hold of us. Uh, in there you can fill, uh, out the contact form. We'll get it immediately and either myself or John will respond. So, um, yeah, looking forward. We're on LinkedIn, uh, as well. I have a strange enough name that I think it's pretty easy to find and just looking forward to helping people. There's incredible supply chain partners out there. They're just busy doing the work and we'd love to pair them with great brand builders because that's really what they need for their business.

Speaker A: Love it. Uh, love it. Thanks so much, Natan.

Speaker B: Thank you.

Speaker A: Take care. Bye. If you enjoyed the show, we'd love your support. A rating and review would go a long way as we continue to host the best builders in DTC and beyond. Follow and subscribe to the show and make sure to check out our show notes where you can find our socials and weekly newsletter. Visit us on dtcpod.com to join our founder, community and access resources from every episode. We'll see you on the next pod.

Speaker B: M.