#4 – Evans Richards

Mark Taylor:

Welcome to Supply Chain Saga. I’m your host, Mark Taylor. Today, joining me is Evans Richards, the CEO of Reven.com. Evans started selling on eBay at just 11 years old, and has grown his business to become a top 100 seller on Amazon.com. He has built his own fulfillment operation, fulfilling over 500,000 orders in 2022, and is on track to fulfill over 1 million orders in 2023. We’re thrilled to have Evans on the show to share his insights and perspectives. Let’s dive in. All right, we’re up.

Evans Richards:
Awesome. Good morning.

Mark Taylor:
Good morning. Well, first off, thank you very much for being here. Why don’t you take a moment and introduce yourself to the audience.

Evans Richards:
My name’s Evans Richards. I’m the CEO of eVend, reVend, and related entities. So I’ve been in the e-commerce realm for going on 19 years. I’m 30 years old. Started selling online first when I was 11 years old.

Mark Taylor:
Almost 30 years old.

Evans Richards:
Almost 30 years old. Next or this month now. Crazy. Started selling online when I was 11 years old. It’s a fun story of how I got there, but I’ve seen the rise and fall and the advent of hundreds of different marketplaces, websites, 3PLs, everything related to e-com, and so it’s fun to actually talk about it.

Mark Taylor:
Absolutely. So let’s go to the origin story. You are 10 years old, dreaming of-

Evans Richards:
11-ish. So I had a wonderful upbringing where my parents were just generous enough to spoil my sister and myself with travel and with education, but they would not buy me brand new Lego sets. We lived in an affluent area in Richmond, Virginia, and they would take me to yard sales on the weekends and just purchase buckets of used Lego for me. And at that same time, I wanted the brand new Star Wars sets that were coming out at Toys R Us. I wanted the brand new Harry Potter sets that were coming out at Toys R Us. And so I got on my mom’s eBay account as an 11 year old, and I just started listing stuff. And I specifically remember the first item that I listed was a lot of six different Insectoids, which was a space insect mini fig. And they sold for $18 or something, and I was hooked.
And so after about six months of doing this on my mother’s eBay account impersonating Christie, luckily my voice had not dropped yet, so when I had to do calls into eBay, it still sounded like a hypothetical christie. About six months into doing this, my father calls me into our formal dining room at our house, and he sits me down and he’s like, “Evans, why are there $11,000 worth of PayPal charges on my Chase Card?” And I’m like, “Daddy, Daddy, I can explain. I’ve got $39K in PayPal, but I can’t figure out how to actually use it.” I didn’t have a bank account to connect it to. I didn’t have… This is old school PayPal too. I mean, this is when it’s a basic interface that is storing money for people online. None of the frills and whistles that PayPal or platforms like that have now.
And so after I verified that I had that money there, I pretty much had free reign on the internet, which as an 11 year old, that is a terrifying and dangerous thing. But fortunately, it turned out pretty well for us. By the time I was 15, I was hiring some of my high school friends over the summer selling mainly still on eBay and a Lego marketplace called Brick Link. When I was 18, I did not get into the university of my choice, and I started doing this full-time. First year that we did it, we did just shy, it was $14,000 shy of $1 million dollars in sales with one employee and myself. And after that, we just kept growing. We were fortunate enough to be an early adopter over on Amazon.com’s marketplace, and then we were one of the first 20-ish companies invited over to sell on Walmart.com. And by the time we started selling on Walmart.com, that’s really when we became a multi-marketplace vendor. And that’s really when we started to see some significant growth.

Mark Taylor:
So I got to back up for a minute. 11 years old, what year is this?

Evans Richards:
2004.

Mark Taylor:
Wow. Okay.

Evans Richards:
So 2004 or 2005. So I sunk my teeth into e-com at the same time that episode three of Star Wars was coming out, and as just an insane Star Wars nerd and expert really in Star Wars, it was a perfect time for me to get into selling used Star Wars toys.

Mark Taylor:
So I remember old eBay, you had to digital camera digital. Not everybody had digital cameras at the time.

Evans Richards:
Yep.

Mark Taylor:
So you had the wherewithal at 11 to take pictures, learn how to post it online, list it for sale. That very first thing, the Insectoid toys, I think is what you said, that very first toy that you sold, were you just, I mean, were you watching it? I mean, were you watching the bid get bid up? I mean, how did it-

Evans Richards:
I listed it. I scheduled the listing to end on… I’d done a ton of product research. So pretty much how I learned e-com was I’d just get into a category on eBay, and every single night I’d scroll through sold for that day. So if I was studying a Lego category, or if I was studying a Funko category, or whatever I was studying, I would just literally every single night go scroll through the sold listings on eBay in that category, and just garner an insane amount of product information and price point information off of that. This is prior to a lot of the popular price guides that are out there now for collectibles. And so really, you had to see what things actually sold for.
I don’t think I actually was even monitoring really what that sold for. I listed those, I set up really good listings, took great pictures. This is prior to the invention of smartphones. So I just remember sitting there clicking with an old Sony digital phone that I think was a, might have been my… Or not even phone, it was a camera. It might have been my sister’s. I’m not sure. But I remember using. That they sold, shipped them out. This is still back… Some of the purchasing that I was doing online was mailing cash.
I specifically remember I wanted to buy these custom Lego blasters, Star Wars blasters from a shop in, I want to say Denmark. It was either Denmark or Belgium. It was called Little Armory back then. And they did these custom D11 Star Wars blasters, and they were $1.00 each. And so I had my sister actually drive me to the post office to mail out $11 US cash, which got me $8.00 plus shipping back or whatever it was at that time. Six months later or whatever, after the cash has gotten to Belgium snail mail, and the blasters show back up, I’m like, “Wow, that actually worked. People are inherently good. I shipped cash off to a foreign country, and I got Lego back.” And so it was, it’s cool to see. I’ve shipped cash since then, and it hasn’t gotten me anything back. So don’t know if I’d suggest that, but maybe the internet was still a better place back then.

Mark Taylor:
That’s incredible. Okay. So you start hiring your friends. I mean, when you start asking, “Hey, you want to come work for me,” as a 15 year old, what’s the reaction? I mean-
Evans Richards:
I’ve always phrased it as, “Do you want to come work with me?” Because I mean, you can attest to this, but my work schedule is essentially my life.

Mark Taylor:
Sure.

Evans Richards:
So I’ve never tried to present it as like, “Hey, this person is working for me,” especially back then, because we were so passionate, all of us that were doing this. We loved Lego, we loved just the nerdy aspects of what we were selling, and we still do. If you look at our executive team now on the toy side, we are all still absolute nerds. And so it was fun. We were essentially building mini figs. We were becoming even more subject matter experts in different aspects of Star Wars, or Harry Potter, or just a wide range of different collectibles back then. And so I don’t think it was actually that hard of a sell because you’re getting paid cash. I mean, we’re 15. We’re making pretty good money, and we’re selling something that we love.

Mark Taylor:
At what point did you move over to Amazon? Was it as soon as they opened up?

Evans Richards:
It was not as soon as they opened up. We were actually very hesitant to go over to Amazon because it was a higher fee structure. So we were very used to eBay fees, and this is even back when eBay fees were cheaper. So I mean, we were probably paying somewhere in the ballpark of 9%-11% on average on eBay with our Power Seller status. And on Brick Link, which was the Lego marketplace, our fee structure was about 3%. So we were used to very low fees. Getting on Amazon back then, specifically Amazon FBA, it was not the extent. Now, if you read stories, I mean, the average cost of selling on Amazon when you factor in advertising etcetera, is close to 50% of your list price goes to Amazon. Back then it was not as bad. I remember that FBA averages for us were between 27% and 33%, but we were also doing zero advertising on Amazon because the product that we sold sells itself.
It is brand name items that people are already searching for that have a collectible aspect to them. And so we didn’t really have to do the advertising on that platform. I remember, I cannot remember the gentleman’s name, but essentially, an Amazon salesperson reached out to us after finding our eBay store, and just seeing the wide selection of vintage Lego sets and sealed Lego sets that we had on eBay and was like, “Hey, this is a great marketplace for you over here on Amazon.” I want to say this is probably 2007-ish, if I had to guess. Maybe 2000… No, I was 18. So this is a little later. So this is probably 2010-ish, and I didn’t really switch on until 2010, 2011.
But I remember specifically he reached out about a Deadpool Lego set that we had just thousands of them. We were selling them on eBay just left and right, and he was like, “Hey, you’re selling them on eBay for $34.99. Buy box on Amazon is 50.” So we went over, and we listed them for $44.99 seller fulfilled, and we just sold hundreds of them in the first two days. And so, I mean, we’re sitting there and we’re like, “Hey, we just sold hundreds of this unit on Amazon in two days that would’ve taken us probably about two months to sell on eBay.”
So we just started trickling other items over to seller fulfilled on Amazon. And it got to the point where we were shipping out hundreds of items a day seller fulfilled. And then another person on Amazon, this is when FBA is blowing up, reaches out and is like, “Hey, you guys are selling items. Seller fulfilled for $44.99. Buy box is $59.99. If you put the prime badge on that, you’re going to sell it for $59.99, and your net take home is going to be more than what you were listing seller fulfilled.” And so we started shipping stuff into Amazon’s FBA. And really for about three to four years, we were primarily an FBA company after that. Seller fulfilled fell off. We still used eBay and we used Brick Link and other marketplaces for used items. But pretty much all of our new Lego sets, new toys went straight to Amazon.

Mark Taylor:
So I want to back up, and there’s something to this. You’ve come a long way. I mean, obviously at this point from selling what you found at a yard sale-

Evans Richards:
Oh, yeah.

Mark Taylor:
… to purchasing hundreds if not thousands of Lego sets. How did you identify which Lego sets to purchase? And how did you first form those supplier relationships?

Evans Richards:
So realistically, a lot of that is just product knowledge. And so it goes back, harkens back to those countless hours that I spent on eBay, or other experts spent on eBay, or just determining what market value of something is. So we can look at a Lego set, and we know the exit date, we know its retirement date. We know when it’s going to stop being produced. We can go, and we can take that Lego set and be like, “Hey, if we purchased this Lego set at $16. We think within X months, let’s say 18 months after retirement, we think that this is a $44.90 set. And then we look at it from a skill standpoint, and we’re like, “Hey, can we move 2000 of this post-retirement? Can we move 5,000 of this post-retirement, 10,000 of this, 20,000 of this, whatever it might be.”
And so there’s a ton of just inherent knowledge that goes into the different themes, and goes into the different sets, and thinking if that set’s going to get recreated or relaunched as something else. And there’s some guesswork too. I mean, a lot of it’s arbitrage. It’s speculation same as stock market, except we’re investing in physical assets that we think are going to go up.

Mark Taylor:
Of course. So how do you find somebody that has 1,000 units? I guess that’s part of the question I was asking. And the second part of the question is how, especially when you were starting out as a young buck, what was the first set, where was the connection that you said, “You have 5,000 of those? I want them.”

Evans Richards:
Whew. So many. For years… I mean, now we’re more of a company that is doing a lot of direct purchasing so a lot of wholesale purchasing from manufacturers. For years though, we lived on the outside of that. So we lived sourcing pretty much living and dying by sourcing inventory. Really, we were one of the first what I would consider large retail arbitrage sellers across Amazon and Walmart, except we were very category-focused and we were very subject matter experts in what we sold. And we sourced from a variety of places. I mean, we sourced directly from Lego themselves. We sourced from big box stores such as Walmart. We sourced, where at times we were purchasing directly from Amazon and holding onto it and reselling on Amazon.
And so wide variety of different things. I mean, we’ve got some really fun stories. At one point, Lego dropped off pallets, truckloads of sealed sets at a local Salvation Army Center. Just donated them in Richmond. And Salvation Army knew that we bought Lego, and called us up, and we got all of these Lego sets for $2 each. And I mean, it was tens of thousands of them. And we sold those over the next couple of years, and made a lot of money off that deal. And so there’s just a ton of fun opportunities that when you are a… I don’t even know how to explain it, but when you’re looking for those niche retail opportunities, you can find them. It’s not as much what we do anymore because it’s very time intensive. It’s very time consuming. I would rather at this point, go to the manufacturer and be like, “Hey, I want 20,000 units of that item. We’re going to sit on those for three years, and then we’re going to sell those.” And so that’s what we’ve evolved into from the scrap year days.

Mark Taylor:
Nice. Because what I was envisioning is part of your friends that you’re hiring to work with you at 15,16 is going to local toy stores and buying these last three, these last four.

Evans Richards:
We absolutely did that, for sure. I mean, it’s very funny to actually see our hiring because I shopped at Toys R Us a ton, and we shopped for a ton of what we were going to resell at Toys R Us. We also began, when we started really hiring people, hiring from local Toys R Uss. Because these guys already knew toys. They already knew e-commerce fulfillment because Toys R Us was doing a dual fulfillment from store path for their stores. They didn’t really have big distribution centers. They had one DC out of Ohio. Toys R Us really did not do e-commerce well. But that’s a different story.
And so these people had the perfect product knowledge and the perfect skillset of what we were actually hiring for an e-com toy company. And so we went, and we cherry picked them from various Toys R Uss in Central Virginia and had them working at our facility. And so this was great because about 65% of our sales back then came in a six week period during the holiday season, just Christmas sales. And so the Toys R Us employees were already very, very used to just having a hellacious six-week period of mid-November to early January. And that catered well to us when we were shipping thousands upon thousands of orders 24/7 come Christmas time. So very fortunate there that we got some of our early hires from Toys R Us. A lot of them actually still work with us now.

Mark Taylor:
That’s fantastic. So you mentioned that at the beginning, I mean, right when you were making the switch to Amazon, you went directly to seller fulfilled Prime and-

Evans Richards:
No, directly to seller fulfilled.

Mark Taylor:
Thank you for making the decision.

Evans Richards:
So I should actually make a further distinction there. I call it seller fulfilled. It’s actually fulfilled by merchant so it’s FBM. Back then though, it was seller fulfilled, but that was before seller fulfilled Prime existed.

Mark Taylor:
Seller fulfilled Prime actually wasn’t until many years later. It’s just what I’m used to saying I guess. But you went from fulfilled by merchant, and you immediately went to selling a couple hundred units a day and shipping a couple hundred units a day. How did you design your early shipping processes?

Evans Richards:
Oh, it was terrible. So I mean, this is prior to the advent of even Ship Station, I believe. I don’t even know if Stamps.com existed. Essentially, we were purchasing our shipping labels directly in Amazon’s backend. And so come Christmas time, I’d be getting into the warehouse at 4:00 AM, and I would be individually printing labels, and individually cost shopping across the different carriers. And back then, pretty much the carriers were USPS, FedEx and UPS. That was pretty much the only three. And so I just remember, I mean, trying to print out during Christmastime thousands of orders in a day. I’d get there at 4:00 AM, I’d be printing until midnight, and I’d just do it again the next day. My entire job essentially was printing and rate shopping during Christmas, and then my coworkers would actually be packing everything up. It was terrible, I mean, doing it that way.
We really though relied on Amazon to purchase shipping. It was cheaper. They had better negotiated rates. And it stayed that way until we began cross-listing on Walmart as well. When we began cross-listing on Walmart… So we were super early over on the Walmart.com marketplace. And that’s actually when we stopped using FBA. So we had gone from doing all of our own orders with eBay, to very few of our own orders besides seasonally with Amazon, and then when we cross-listed on Walmart, we couldn’t trap our inventory at Amazon. Amazon would fulfill Walmart orders. They weren’t like happy about it, but they would through FBA. I don’t even know if they do that anymore. I think they do, but I still don’t think they’re happy about it.
So we couldn’t just trap all of our inventory at FBA anymore. We needed diversity across both Walmart and Amazon. Walmart was like the Wild West. Sales were incredible. There were like 30 of us selling on there. So just anything we listed was selling come Christmastime in the toys and collectibles category. And so we began just doing our own seller fulfilled across all marketplaces. And that’s when we actually had to focus on a WMS. That’s when we actually had to focus on a shipping platform that could connect between all the different marketplaces, make sure that we did not oversell, make sure that we were actually catching all the orders as they came, and have a central hub to actually be able to fulfill and manage orders.

Mark Taylor:
And so what was the first WMS you guys put into play?

Evans Richards:
Oh gosh. We tried a couple, I’m honestly blanking on the names. It’s been about 10 years now. We tried a couple, and we settled on one that we actually still use. And it’s going on I think nine or 10 years for us using this WMS. We love them. Great company. It’s called Finale Inventory Management. I believe we were one of pretty much their first users. They started out as an, I could be very wrong here, but I think they started out as an inventory management software for fireworks, for firework distributors. And that’s where the name Finale came from. Someone Googled this and check me, but I’m pretty sure that’s how it worked. But for some odd reason, they were one of the only WMSs integrated into Walmart. Everyone else was integrated into Amazon. We had our pick of WMSs for Amazon, but there were three that were integrated into Walmart, and Finale was the cheapest.
We started using Finale. It was absolutely perfect for what we needed. It still is. We still use Finale for a lot of our own e-commerce work now, and we’ve never really looked back. So we use Finale, we use Ship Station, we use some integrations that tie them together, and some custom integrations for stuff that we do. But that was a pretty good package off the back, and it’s been fun to see how they’ve developed themselves over the past decade.

Mark Taylor:
So you started with one order, and then it was a couple hundred a day, and how many orders do you think you’re putting out last year and this year?

Evans Richards:
So last year was an interesting year for us. We moved. We consolidated three warehouses from Central Virginia down to 1 million square foot facility in North Carolina. And so our order volume fell during some of the off months. We shipped out probably around half a million units last year. This year I’d say we’re going to be shipping out between one and 1.3 million units out of our facility here. A lot of that is seasonal though. So during these normal non-holiday days, we might be shipping out 1,500, 2,000 units a day. Come Christmas time, we can have days that are 20,000 units. It’s a quite the balancing act to balance the seasonal adjustment.

Mark Taylor:
Of course. So going from the brute force method where it’s you rate shopping, doing labels, what are some of the, I guess the biggest lessons learned or aha moments that you’ve had in being able to ramp up and have that kind of volume?

Evans Richards:
Oh, that’s a great question. So many, and I’ve seen just so many different issues over the past decades of doing this. I’d say one of the biggest things that I’ve seen is over-reliance on a single carrier. I think we all got caught up on that in COVID. So for years we relied on USPS, and we still do. USPS is still our primary carrier in our network, but they could not keep up with volume during COVID. Just between employees being out sick, not being able to hire enough, antiquated operations, and just not used to that partial volume, they really dropped the ball, incredibly dropped the ball. There were times when our priority mail was not leaving their facility for weeks at a time. And so a huge lesson I think for us there was actually figuring out the right partners to use in pinch situations like that.
So after we figured out that they weren’t shipping well, and that was a holiday season, so that was holiday season 2020. We switched a lot of our shipping over to FedEx and UPS for that season. We just did an adjustment, even though it cost us more, we were like, “Hey, we got to get these in the hands of the customers prior to Christmas time, or we’re going to get tens of thousands of returns here.” So I think over-reliance on a single carrier without having a backup plan because we had to scramble. I mean, we had to get UPS and FedEx to be sending 18 wheelers daily to pick up from us when USPS couldn’t handle our volume. And we just weren’t used to that. We were very used to USPS handling all of the volume that we could push at them and doing a good job with it. They had for the past 17 years.
So I would still say USPS is a great partner now. They’ve made some adjustments. As much as you love or hate him, Louis DeJoy has done some stuff that makes sense from a partial carrier standpoint. And we’re fortunate enough now that we’re located down here in the suburbs of Greensboro to be pretty close to one of their major DCs. And so that helps us push out volume or even inject that volume into them a lot quicker.
There’s thousands of different lessons I can talk about from a shipping standpoint. I’d also say that one of the things people don’t think about a lot is we sell a lot of super high-end collectibles. I mean, we’re talking packages that could be worth tens of thousands of dollars, and they’re small packages. They get lost. They actually get lost, and pretty much no shipping carrier is going to cover those. You can buy as much insurance as you want, but you’re getting paid out $500. So there are some very interesting adjustments that we’ve had to do there, including rollout our own freight carrier.
So we were starting to see, I mean, we were shipping… We did a lot of conventions. Now we do San Diego Comic-Con, New York Comic-Con, the biggest conventions out there, and we don’t do as many of the small conventions. But I specifically remember in 2016, I think it was. It was either 2015 or 2016, we were attending a convention in Seattle called Emerald City Comic-Con. And we’d shipped out, or we thought we had shipped out a couple pallets worth of product to go to this con. And those pallets of product were super collectible stuff probably worth over $100K. I think it was $140K or something. They disappeared. So someone in those regional shipping hubs knew what those were worth, and they took them.
And we showed up at that show with no product and we were scrambling. We went to the Funko headquarters in Everett, Washington, and we just bought $40,000 worth of product so we had something that we could sell at the show. And that’s when we started realizing, “Hey, we might not be best served by other people’s logistics. We’re better at this ourselves.” So starting pretty much that year, we began purchasing our own trucks and we began running our own loads and running loads for people that were also in the toy and collectible space.
So if we knew that X, Y, and Z vendor was also attending San Diego and they were coming from the east coast, we’d be like, “Hey, we’re sending a 26 foot box truck over. There’s six pallet positions on it that are our inventory. Do you want to send six pallet positions too and just pay us?” And we quickly realized that “Hey, this is covering the costs of us doing our own transportation, and in some situations, we’re making money.” And that’s one of the ways that we started getting into logistics for others. It has developed from the trucking side from there to where we are a licensed motor carrier now. We have a fleet of different 18 wheelers and 26 foot box trucks that go all over the lower 48 doing work for ourselves, vendors, and third party companies.

Mark Taylor:
Outstanding. Were there any operational things that within your own pick and pack operation that were just leaps? I mean-

Evans Richards:
Integrating into a WMS. Prior to doing that, I mean, I literally knew the warehouse was a lot smaller. So now we’re talking hundreds of thousands million square feet warehouse. Our warehouse in Richmond when we integrated into WMS was 3,800 square feet. I knew where everything was in that warehouse. We actually had… It was terrible. I mean, we had spreadsheets that were color coded.
So we literally had spreadsheets that were color coded by warehouse that were color coded by storage unit because we had storage units all over the US. We had, back then, we had a warehouse in Phoenix, Arizona as well, and we had a warehouse in Riverside, California. And so I had a sky blue color that was Phoenix, maybe Sky Harbor. I don’t know why I did sky blue. But I had a yellow color that was California and purple was Virginia. And that’s how we managed it. So if we had 100 of a set, we would list 50 of it on Walmart, 50 of it on Amazon, and see how it sold until we got the WMS. Getting that WMS and having the ability for it to speak to all of the different marketplaces that we were on, the cross listing ability, and actually have accuracy when it came to orders, when it came to inventory, sales volume, and the integration into a shipping platform, is really when we became a pretty efficient operation on our own.

Mark Taylor:
It sounds like this entire journey has been around building relationships, and you mentioned earlier working with people that you’d met at Toy R Us that are still here, still working with you. It also sounds like as far as in the industry, there’s probably not a lot of subject matter experts, SMEs, subject matter experts around the stuff that you’re doing who have nearly the breadth. Because I mean, you’ve mentioned several different… Obviously, it started Lego, and then it has now, of course, branched into several other categories. What has been… Was that just all an organic, the more you’re in it, the more people you meet? Or were there some things specifically you did to build the network that you have now?

Evans Richards:
Well, it just gives the time. So I’ve been fortunate enough, I mean, even though I’m 30, I’ve been doing this for 19 years. And I mean, it’s a very different perspective possibly why my hair is graying so early. But it’s a very different kin of perspective to have when you were an 18 year old, and you’re playing in the big leagues. You’re going to the Toy Fair conventions, and you were purchasing directly from Hasbro or directly from Mattel. And so I grew up too quickly, if that makes sense. And a lot of the relationships are just predicated on people knowing that we know our stuff. People knowing that we’re going to respect their brand as a collectible or as a toy, and we’re going to advocate for growth in the category for their brand, and we’re going to give a good customer experience.
And so definitely relationships are absolutely huge. It is something that I pride myself on just being able to develop pretty intimate relationships with a lot of people across a wide variety of industries. You know that we have far-reaching expertise, even outside of e-commerce. And so relationships are huge, and just very fortunate that I was raised by parents that taught me the importance of that, and just how to communicate with people, and how to show people that you genuinely are interested in their success, not just your own. When it’s a one way street, it’s not a fun street. It’s not super helpful. When I look at a relationship, especially in business, I’m looking at how can we aid each other? It’s not how can I profit off of you? Because as soon as you get stuck into that loop, people don’t really want to work with you anymore.
And I’m sure that this is going to find its way on LinkedIn. I’ve seen your previous podcasts on LinkedIn. LinkedIn’s a great example of that. When you are just getting DMs constantly, and I mean, I’ve got I think whatever thousand plus connections on LinkedIn, people are DMing me. They see the title CEO and they’re trying to sell a service, but those services are all one way streets. It’s pretty much just a service that they’re selling. Unless they can put a successful pitch in front of me that shows that it’s beneficial to both parties, and it’s not just a sales pitch, I’m not even opening those. And it’s just sad to see that now. It’s sad to see that a lot of the traditional business relationships have gone away. The bartering of like, “Hey, this is good for you and good for me,” has gone away.

Mark Taylor:
One thing I’ve noticed, I started selling FBA, not nearly the scale as you. It was just I was in that 2015 mark where it was still pretty… You could still get into it fairly easily, and you could find a niche, and there were still a lot of people going out there and doing their research on Jungle Scout and this and that. But we carved out a little bit of a niche, and I very quickly start to, for me personally, I started really developing an aversion, if you will, to gidgets and gadgets, and just purchase and buying things new and doing this thing. And something that you said struck me a long time ago is you never buy anything new. And I think part of that comes from, it sounds like part of that comes from your early childhood where it was yard sales and this and that.

Evans Richards:
I would clarify there and not say that I never buy anything new, but it is very rare.

Mark Taylor:
Fair.

Evans Richards:
And most of the time I’m looking for a deal. I like bickering. I like bartering. I like making sure that I’m not paying full price for something. But you have to balance that with time because if you spend too much time to try and knock off 5% or 10% on an item that’s not worth you actually spending that time on, you’re shooting yourself in the foot.

Mark Taylor:
So I think just as a fun question, is there anything, when I ask you the question, I mean, this is actually going to be a little hard, I think, is there a thing that pops out to you that’s you bought that thing and you got such a deal on it or it was such a fast “Yes…”

Evans Richards:
That I didn’t barter?

Mark Taylor:
Yeah.

Evans Richards:
Oh, yeah. I mean, we’ve had things before where collections have been sold to us where we literally pay them more than what they’re asking because we’ve had people come and be like, “Hey, $500 for this collection.” We’re like, “That’s a $50,000 collection. Here’s $10K. We’re still going to make $20K profit on this.” And that’s rare. I’m not hyping myself up here, but don’t want to steal things from people. Because people sometimes don’t know the inherent value of what they’re actually selling. Gosh, there’s so many examples because my entire life has been built off of taking advantage of opportunities in a product marketplace essentially. So thousands of things. I know I keep saying that, but literally when you’ve been doing this for 19 years, and I was the head purchaser for probably 15 of those years. I don’t do as much the purchasing anymore, but thousands upon thousands of things.

Mark Taylor:
So as you brought people on to take over that role, because I mean, obviously now that you-

Evans Richards:
Other subject matter experts.

Mark Taylor:
It’s other subject matter experts.

Evans Richards:
So literally, the two main people in the company, three main people in the company that handle buying for us have been doing this for almost as long as I have. And so they are varied and they have different skillsets. So one of them handles our Funko buying. One of them handles our Lego buying. One of them handles our FiGPiN buying. So forth and so on. And it’s very important, that is… I mean, you’re a retail company, you live and die off of your margins on product.
We have been fortunate enough, since we moved into the 3PL space, to have two different sources of income, which is both our traditional sales from products and then our traditional fulfillment services… Or not traditional, our fulfillment services. So we don’t live and breathe as much off of retail anymore, but it is still one of the most essential parts of e-commerce is purchasing correctly. So very hard for me to give that up by the way. Took me years of comfortability and just faith and trust in these people to be able to slowly transition them over. Two of our main buyers now have been with me for over a decade.

Mark Taylor:
Wow. I mean, there’s a really nice theme of you meeting people very early on, and now they’ve been here.

Evans Richards:
When we find a good person to add to our crew, we try not to lose them.

Mark Taylor:
That’s fantastic. That’s great. So let’s have a little fun. Let’s say that you had to start over knowing what today; 2023, $25,000 to your name. What do you do? How do you do it?

Evans Richards:
I don’t get into e-com with $25K, I’m honestly not getting in at this point. So the markets have changed. You can no longer get on to Amazon and Walmart really and be an RA seller. You can. You’re not going to last long. Amazon and Walmart, and I fully respect them for this, have cracked down a lot on retail arbitrage because there’s a ton of bad actors, especially smaller bad actors, whether it’s counterfeit items, whether it is just poor customer experience. They’ve had to focus on brands that are doing their own CPG, brands that are direct with manufacturers. And so some of the Wild West aspect of those marketplaces is gone. If I had $25K right now, I honestly don’t think I would put it into e-commerce if I was starting. Sorry, I should clarify that. If I was starting again now, I do not think I’d get into e-commerce. If I did, it would be some sort of super niche service to other e-com sellers.

Mark Taylor:
Make sense. Obviously, I mean, at that point, if you’ve only got $25,000 to work with, and you know what you know, the most important thing you do have is as your knowledge.

Evans Richards:
Knowledge. And there’s ways that… I mean, to be perfectly honest, if I had $25K, I’d probably just do consulting because that’s not enough money to actually go and set up any sort of operations. It’s just not in this grand scheme of things.

Mark Taylor:
Off the top of your head, what would be the minimum number to start rebuilding what you’ve built?

Evans Richards:
$250,000.

Mark Taylor:
Okay.

Evans Richards:
With $250,000 I mean, I know I could start again. Just hire some people, do a warehouse, and just do the… It would not be inventory-based at that point. It would be services based. Because $250,000, I mean, is not enough to stock, get enough diverse range of inventory.

Mark Taylor:
That makes sense. So something I don’t want to gloss over, because I do think it’s very interesting is you’ve become your own third party logistics company. So actually, you’re a 1PL. And then you’ve offered your services to other people. So in a similar way, we started out. We got into warehousing. Warehouse Republic was started just so we could fulfill our own stuff. And so we had an option to not deal with the Q4 surge pricing and to avoid long-term storage fees if we made an incorrect move on a particular SKU.
So I really appreciate business out of necessity. When you’re solving your own problem, you’re going to look at it a lot differently than somebody who thinks they understand the problem. And so I don’t want to gloss over that. And what I think is even more interesting is how niche your third party logistics aspect is, and not all from the transportation side as well, because you’re not just going and taking a bunch of freight. You’re taking very specific, very high-value pallets.
Evans Richards:
And fragile.

Mark Taylor:
And fragile. And that’s the same with your individual direct-to-consumer fulfillment. So you guys have had to figure out a lot around what’s the best way to pack; what’s the most efficient cost from not only just from how long it takes to pack, but from a cost efficient perspective as well. What’s the best way we secure this box that’s in cellophane or that has a window on to make sure it doesn’t get crushed?

Evans Richards:
Absolutely. And so just to talk more about that, we’ve talked a lot so far about our own direct-to-consumer operations, our own story of how we got there. In 2018, we actually started doing operations for other e-commerce entities, fulfillment operations, logistics operations, storage operations, etcetera. Part of that came out of just the realization that we had the economy of scale to do that. So by 2018, we’re shipping out thousands of orders, hundreds of orders a day, depending on the day. We have multiple warehouse facilities across the US, and really, we’re just sitting there, and we’re like, “Hey, we’re seasonal.” So even though we want to retain our staff, awesome staff that we’ve hired and trained up over the course of the year, it’s hard to do that when 65% of your sales come in the fourth quarter.
So we began looking at ways we could supplement that. And with zero advertising on our own, literally word of mouth, we started doing a lot of e-commerce and fulfillment work for other sellers in the toys and collectibles category. Through to the point at our peak, we had about 180 different companies ranging from small mom and pop to well known stores utilizing our services. We have purposefully trimmed that back some to about 90-ish to 100-ish of the top performers there, the companies that had a growth trajectory to them and companies that we liked the diversity of their product, and we liked to fulfill their orders for them. And we have just really seen them grow. And it’s been awesome. It’s been humbling to see, we call them vendors. It’s our vendor program. It’s been humbling to see some of the growth that’s come for some of those small mom and pops.
I mean, we’ve had companies that in 2018 started with us with about $10,000 worth of inventory that they were fulfilling through us that have grown into the multiple seven digits figures at this point. We’ve had several that started out couple hundred thousand that have grown into the eight digits figure. And it’s just really cool to see that because a lot of these are actually American dream stories, where it’s small mom and pop stores that have gotten on the internet, and had exposure to e-commerce, and have just seen their lives change, and their livelihoods change. So it’s been fun, and it’s very niche. I mean, we go out of our way to not really onboard things that we’re not super comfortable selling. The majority of what we sell is toys and collectibles, high-end fashion or high-end street wear, fragile stuff, and just things that we’re actually passionate about.

Mark Taylor:
When you say high-end street wear, you mean limited edition sneakers and stuff?

Evans Richards:
Pretty much. Sneakers, T-shirts, premium stuff, what have you. So I mean, we’re an expert at selling on marketplaces that that stuff sells on, StockX, Whatnot, a lot of different marketplaces like that. So we have no problem actually selling that stuff and doing the fulfillment work for that stuff for vendors.

Mark Taylor:
I’m always amazed when we talk. You mentioned another marketplace I’ve absolutely never heard of. And so as we look to the future, what are the things that you are most excited about? It’s a two part question. And then who do you see, to the extent that you want to answer, as the next e e-commerce juggernaut? Who is making all the right moves, it seems like?

Evans Richards:
So I’ll put it this way. I started as an eBay seller. Don’t discount eBay. There are very few profitable companies in the e-com realm, consistently profitable cash flowing companies. eBay is one of those companies. eBay has made a ton of rational decisions in my history of selling on eBay. I think that there’s some stuff that they’re working on over there that can be huge that they have the target audience to actually really succeed with, and I think eBay’s going to come out swinging here over the next couple quarters with live commerce, and some other stuff, that’s really going to put them back on the maps for a lot of Americans that haven’t been shopping on there as much anymore. We’re very bullish on eBay.
I’m also very bullish on Walmart. Walmart started much later than Amazon did with its third party marketplace. They have made leaps and bounds to try and catch up. A lot of that, some of it’s been successful, some of it hasn’t. I think Walmart’s got a good future. If Walmart can figure out how to really capture, which they’re getting better at, how to really capture the 6,000 plus stores that they have within five miles of 85% of Americans as direct-to-consumer fulfillment operations, it’s going to be very hard for any company to compete with that, literally any company. So I think Walmart has a good track record.
I think we’ve seen some missteps recently from Amazon. They over-expanded. Their fees are creeping up to the point where it’s very hard for new CPG brands to grow there. And that was their bread and butter. Amazon was there to grow small businesses, and they still are in a sense of they have the customers. So small businesses have to utilize Amazon for that customer base. But if Amazon can’t find a good balance between fees and customer exposure, and I think some of that is coming from Amazon is being forced to raise fees and raise cost of selling on there because of their own over-expansion. I mean, if you look, they just announced that they’re halting their plans to continue building HQ2 in Northern Virginia.

Mark Taylor:
I did see that.

Evans Richards:
I mean, they’ve laid off 20,000 people over the past, what, four months now. And I still have a ton of faith in Amazon. They’ve got an incredibly good leadership team. They’ve got a lot of really powerful tools in their arsenal. They’ve got really well built out logistics. I’m very interested to see what AWD does to our industry in general. I think they could be a huge threat to the overall 3PL industry. And I think there’s going to be some massive, massive impacts there. I mean, when Amazon gets into logistics and distribution, they’re good at it. They’re very good at it. And there’s always going to be niche things that they’re not going to be good at, but just the general 3PL work, I think them having AWD is going to change some of that.

Mark Taylor:
Just for clarification, for anybody listening, AWD stands for Amazon Warehousing and Distribution. So just to put that out there.

Evans Richards:
And it’s essentially Amazon’s take on… Amazon had extra space. We had just talked about over-expansion. They had extra space, extra maybe not employees, but extra room to house items. I think they’re struggling somewhat on warehouse workers, but AWD is essentially their response to that extra space, growing a third party logistics platform.

Mark Taylor:
And I believe if you are in their position, it makes a lot of sense; it seems to.

Evans Richards:
For sure.

Mark Taylor:
And the first guest I had on the podcast who’s very well informed in the industry, he said that a lot of Amazon’s outstripping, it was outstripping talent that could actually open up the fulfillment centers.

Evans Richards:
Correct.

Mark Taylor:
So it wasn’t necessarily that they couldn’t fill the space.

Evans Richards:
Correct.

Mark Taylor:
They couldn’t get the operation up and running.

Evans Richards:
They could easily fill the space and charge those storage fees, and they like doing that, but you think they’re struggling from a personnel standpoint. This is all hypothetical. Anyone from Amazon listening feel free to correct me. But we see those trends ourselves with just watching Amazon’s expansion. So very bullish on eBay, very bullish on Walmart. I’m still bullish on Amazon. I think they’ve got a few things that they need to fix.
I think Target’s got a rough path in front of it. I think Target had a really good opportunity about three years ago to expand their marketplace. And instead they went with a cascading waterfall marketplace that I think only has 500 or 600 sellers on it. I understand that they’re trying to be very selective, that they’re trying to just have the top name brands on there that represent the Target brand. But unfortunately, I mean, there’s a reason that Walmart and Amazon are going for SKU diversity, and a wide range of products, and a depth of product. Because you cannot support just the overall growth and logistics growth that you need in e-com without that.

Mark Taylor:
So I always like to say Amazon crowdsourced their bad, their self-proclaimed, “We’re the everything store.” And they did that through crowdfunding a bunch of entrepreneurs. And then it hearkens the Batman quote where, “You either live long enough…” And I don’t know if… It probably did not originate on Batman, but that’s where I draw it from. “You either die a hero or live long enough to see yourself become the villain.”

Evans Richards:
You’re drawing it from the best Batman trilogy too.

Mark Taylor:
Thank you.

Evans Richards:
So that’s all that matters. Nerd.

Mark Taylor:
And that means a lot coming from you. But so much of their what they’ve touted is, “We’re providing all these little small businesses the opportunity to grow, the opportunity to become an entrepreneur.” I think that narrative internally has become the villain because part of cutting costs and everything like that to support 2 million sellers, 4 million sellers is incredibly expensive.

Evans Richards:
Well, I wouldn’t say that because they’re still the hero of our story. Without Amazon, we would be a much smaller company if we’d even exist. I mean, I don’t know if eBay could have sustained us to get through until Walmart Marketplace existed. So Amazon is still the promised land for a e-com seller. I think though, that there needs to be a better balance there from a fee standpoint to a customer acquisition standpoint.

Mark Taylor:
Certainly.

Evans Richards:
And Amazon is making strides. I was fortunate enough to be invited by Amazon to attend Executive Seller Summit in Seattle last October, which the top 100 Amazon sellers gather there. And we get to have some fun interactions with everyone ranging from Dharmesh to Claire to just a lot of different leaders at Amazon. And I really do think that they are starting to listen to some of the requests from sellers, both big and small.
Even at ESS, they were talking about sharing more data with us where we can actually now target actual Amazon customers by email and by other means. They’ve never done that before. But they are seeing that, “Hey, these stores have the opportunity to go on Shopify, and own their own customer data, and own their own customer acquisition. Let’s find a way to bring them back into the fold with Amazon and share some of that data with them.” And so they are listening on the data side.
I think they’re listening on some of just the operational side where we struggle and some of the seller performance and customer service side where they’ve struggled historically. And so it’s great to see those changes. I just need to see how long it takes them to implement and if it can turn around the small business side of Amazon because the big businesses were fine. We’re doing great on there. We’re used to it. We’ve been on there for a decade plus. We’re pretty good on there. But a small business now getting gobbled up by 50%+ of fees when you factor in advertising, I see that hard to sustain.

Mark Taylor:
It is. I think it is as well. I agree with you. For that narrative to work, especially in the way that it’s being said though, I mean, if you look at the numbers I believe 2/3 of FBA sellers in particular are from Southeast Asia.

Evans Richards:
Yup.

Mark Taylor:
And I think-

Evans Richards:
You can get more specific if you’d like there, but-

Mark Taylor:
That’s okay. No need. But with… I see the American seller, the person who, and maybe this is a good thing, and actually this will parlay well into reshoring, which I’d love to talk about your perspective on that in a moment. But I see the American seller that the dream that everybody is sold when Amazon’s told like, “We’ve provided 2 million jobs.” You have, but only 1/3 of those are here in the United States.
Evans Richards:
Actually, I believe, I could be wrong there, but I believe actually they’re counting all of those 2 million jobs in the United States because it’s not just 2 million seller accounts.

Mark Taylor:
Correct.

Evans Richards:
It’s the jobs that come from those seller accounts. So even, I mean, technically, you could argue that our 70-ish employees here are jobs really provided by Amazon. I mean, Amazon is still 60% of our e-comm revenue. Regardless of what other marketplaces we try, et cetera, Amazon’s the juggernaut. And I think they can actually make that claim of the 2 million jobs here in the US pretty well.

Mark Taylor:
And I do need to say 2 million was a number a long time ago.

Evans Richards:
I actually believe it’s more than that. If you want to get into the political evidence, I think Amazon contributes a ton of jobs across the US small business-related. And that’s just the small business jobs and medium sized business jobs, the peripheral jobs that they’re creating in the logistics industry, the transportation industry, the shipping industry, et cetera, even the tech industry that are not direct Amazon employees is huge. I think Amazon has an outsize effect on the US economy. I truly believe that.

Mark Taylor:
I do agree with you. And I’m glad that you’re holding my feet to the fire on what I’m saying because originally, it was 2 million seller accounts. And of course, I absolutely agree with you on the magnification of that. And I guess the main point and point I would like to clarify is that 2/3 of the seller accounts in the United States marketplace are southeast Asian.

Evans Richards:
Yes. But that does not mean they’re not creating jobs in the US.

Mark Taylor:
Agree with that as well.

Evans Richards:
Yep. Because I mean, think about it. I mean, even looking at our 3PL services, how many of those are based out of Southeast Asian companies? Decent amount for a lot of the 3PL companies that I’ve seen.

Mark Taylor:
So for us, almost none, but-

Evans Richards:
Varies.

Mark Taylor:
And that’s not to say, I mean, most of my customers still source from China and South and other, and actually, I am happy to say that I’m starting to see a lot more shipments from Thailand, a lot more shipments from Vietnam. And if more people follow suit from our buddy Will Roman, we’ll start seeing a lot more from Mexico.

Evans Richards:
I’ll tell you too, I mean, I love seeing, one of my favorite brands on Amazon right now is a brand, I’ve actually got their hat right there on the door. It’s a brand called Ravenox. Ravenox is a US-based manufacturing company right here in Burlington, North Carolina, about 25 minutes away. They manufacture rope products. They’re super popular on Amazon. Great great company, and I look forward to seeing more American manufacturing jobs on Amazon, Walmart, all the different marketplaces sustaining those products.

Mark Taylor:
So the only thing that we didn’t talk about as far as the platforms go is what’s your take on Shopify?

Evans Richards:
We’ve actually not really been a Shopify user. We haven’t focused as much on our own D2C because we just don’t want to pay for advertising. When we sell products that are already sought after by consumers, it’s so easy to sell them on marketplaces. It’s actually harder to sell those same products on our own direct-to-consumer site. We are starting to use a Shopify storefront just to do limited edition drops. So if we have our own exclusive, whether that is with FiGPiN or another manufacturer, and we’re releasing 1,000 of those, they’re going to sell out pretty quickly. It does not yield itself well to selling on a marketplace. It’s better to do that on your own, direct-to-consumer experience on your own page. So we are using Shopify for that. Fantastic platform. Super easy to use, incredible, sorry, incredible UIUX, user experience, for both the seller and the customer.
I think Shopify is a great company. I think they are very blatantly making some mistakes with their acquisition of Deliver. I do not think that was a good acquisition for them. I also think that some of their integrations with Amazon are possibly a Trojan horse for Shopify. If Shopify is the anti-Amazon, and they’re integrating Amazon Pay, and they’re integrating Amazon FBA checkout, and stuff like that onto their actual site, they’re giving up a lot of that independence from Amazon, and they’re giving up a lot of that customer data and stuff like that back to Amazon. And Shopify makes its money off transactions. To hand hand that ticket, that golden ticket of their transactions and customer data over to Amazon just for ease of customer use… Shopify was already pretty easy to use. I don’t know if they needed to do that, and it’s very interesting to me to see them do that.
So like I said, I’ve been in this for 19 years. I’ve seen the missteps, and I’ve seen the successes of a lot of companies over the time, and I’ll tell you, most of the successes I’ve seen are at the Amazon level. Most of the missteps I’ve seen are at the companies that tried to go up against Amazon. I’m worried that Shopify had just such a incredible expansion period during COVID, and they’re trying to sustain that growth. But to do so, I think they’re sacrificing some of the independence that made them Shopify and that made them the anti-marketplace platform.

Mark Taylor:
It’s funny because you call them the anti-marketplace platform, which I think is industry wide. That is the role that they want. I happen to think that if they turn themselves into a marketplace-

Evans Richards:
They refuse though.

Mark Taylor:
I know. But-

Evans Richards:
They should have done that years ago. I mean, if they had turned themselves into a marketplace, they actually would’ve been a viable competitor to Walmart and Amazon.

Mark Taylor:
They would’ve been the number one positioned in my opinion.

Evans Richards:
Yup, and they refused, and I think they’re going to continue to refuse.

Mark Taylor:
It’s interesting. So there are a couple trends we’re seeing. Re-commerce, you are probably the first person I ever heard, say that word. What is, I mean, for the listener,

Evans Richards:
There’s thousands of different definitions-

Mark Taylor:
Of course.

Evans Richards:
… of re-commerce, but in general, re-commerce is reselling something that was either returned, excess inventory, refused, refurbished, a lot of res there. We love re-commerce. It’s not something we really practice across major marketplaces because you want to be selling new items to consumers on Amazon or Walmart, but I think there’s a huge, huge market out there for re-commerce. I mean, you even see it… I guess really the first place you saw a gaining prevalence, well, the first two places were electronics and fashion. Because when you have a Gucci bag that’s sold for $10,000, but it’s still worth $8,000 10 years later, there’s a market for that. It’s a huge market. It’s the same thing with used Lego. I mean, essentially I’ve been doing re-commerce for 19 years then because I started selling value added toys and collectibles on eBay, etcetera, back then.
I think that there is a lot of room for a good re-commerce company to still emerge and take market share. There’s some good ones out there. There’s been some innovative stuff done by Optoro. There’s been some innovative stuff done by several different niche re-commerce companies in different categories, but solving the re-commerce issue and really the return issue… Returns are skyrocketing right now from consumers. So many billions of dollars worth of stuff is literally getting trashed. Solving that issue is not only good for just the bottom line of companies. It’s good for our culture. It’s good for the consumers in America. It’s good for our environment. It’s good for literally everything. So the people that are passionate about that, I have a ton of respect for. I don’t think anyone has fully hit on how to deal with that kind of volume yet. Return volume from Amazon and Walmart is just absurd. People don’t even realize how much stuff gets returned on a daily basis. I don’t even think I realize, but I’m very excited to see where that field goes over the next decade.

Mark Taylor:
Yeah, it’ll be very interesting. The logistics piece of it, as you know, I mean, it’s not predictable. I mean, over enough orders, of course, you can predict, “Okay, we’re going to have 5%. We’re going to have this, we’re going to have that.”

Evans Richards:
But you can’t predict what it is. You can’t predict the sizes. You can’t predict where it’s coming from, which warehouse. I actually think it’s very unpredictable, and that’s why no one’s figured it out yet.

Mark Taylor:
And it’s almost like you’d want to set up in whatever market is the cheapest warehousing market out there. You got to caveat that, the cheapest warehousing market that also happens-

Evans Richards:
It has to be accessible,

Mark Taylor:
… competent labor.

Evans Richards:
Well, competent labor’s good, but has to be accessible because if you’re spending an insane amount of money on just the freight and drayage to get these returns back to you or this re-commerce stuff back to you, there’s not enough margin in it in a lot of categories to actually make it work.

Mark Taylor:
I think there are going to be varying stages. So for a very high-end product, it absolutely makes sense. We have actually, we have refurbishment programs where somebody says, if a customer gets this and the core of the product is always going to be expensive, and so give it a new this, put it in absolutely new packaging, and then you can sell it as like new, previously opened, whatever it is. You’d QC test it if it’s electronic, of course. And I think it’s even going to be part of that sales cycle is going to say, look, you are now losing, on that particular product when you take into account shipping both ways or shipping even one way cost of goods on the product, you’re losing 60% of-

Evans Richards:
For sure.

Mark Taylor:
.. of whatever, because you’re refunding the entire amount. Well, I’m going to now I’m going to trade you, and you’re going to pay a little bit more money to move it back, but I’m going to be able to reduce your loss from 60% to now 40%, and that’s going to be appealing in itself.

Evans Richards:
Well, honestly, I think another thing that we’re going to see is I think we’re going to see return windows tighten up.

Mark Taylor:
Absolutely. Yeah.

Evans Richards:
I think we’re going to see policy changes on some of the, maybe not marketplaces, but seller level in sellers’ own stores. We’ve even considered doing some policy changes for collectibles that get damaged by the customer. Right now, we pretty much have a no questions asked return policy and refund policy where we will on our own website and on marketplaces customer is essentially always right. But we see such flagrant abuse and I mean, it is terrifying the amount of abuse that we see on the internet because of that. I do think we are going to have to crack down, and a lot of retailers are going to have to crack down on bad customer behavior when it comes to returns. It’s not productive for us. It’s not productive for the economy. It’s not productive for just the overall customer experience. If you have bad actors that are ruining your return policy, etcetera, it’s not sustainable.

Mark Taylor:
I agree with you. On the return, I mean, on the return adjacent to that, and we’ve brushed on it earlier, but when you look at UPS, USPS, FedEx, DHL, who’s winning the e-commerce? Like who’s winning right now?

Evans Richards:
Oof, not USPS.

Mark Taylor:
Okay.

Evans Richards:
I hate to say that. I love USPS. We do everything we can to support them. It’s one of our only guaranteed constitutional services, and I guess Ben Franklin had a great idea when he proposed it, but it’s very different now. Not USPS. Not FedEx. I think FedEx is having some serious issues. I think UPS is doing a good job, and I actually think DHL’s coming out absolutely swinging in the US e-comm space. I think they’re going to be a powerful player to watch.

Mark Taylor:
Are there any programs or incentives you’re seeing that are interesting that are in the works that are coming out?

Evans Richards:
I think there’s definitely some programs. What excites me the most is seeing a way that a company like us can really seamlessly integrate with small regional carriers. I would love to be able to rate shop between 20 different carriers that can service the Carolinas and Virginia. And that’s coming. I mean, we’re already seeing markets that are getting a bunch of regional smaller delivery carriers. The problem is we need the right integrations. We need the right tools there where we can actually utilize their services on major marketplaces, which is hard because the major marketplaces don’t want to give up the customer experience, and it’s hard to rely on these smaller startup regional carriers to actually fulfill that experience.
I’m excited in maybe three to five years when some of that trust factor is there, that just track record is there for these smaller regional carriers and some of them start getting onboarded, or we might get lucky enough and see some acquisitions from the Walmart side or the Amazon side or other sides where they start to purchase some of these carriers and offer those services. Or Amazon. I think Amazon’s planning on offering its delivery services at some point here soon to major sellers. I think they already do in Chicago and a couple other markets. That’s something we would utilize. I mean, they have a great logistics infrastructure built out, and as long as it’s cost competitive, there’s no reason we would not use that.

Mark Taylor:
Yeah, that makes sense. From your perspective, what is the ideal 3PL of tomorrow look like?

Evans Richards:
Communicative. It’s a huge one. Organized. Universal cross listing, or sorry, universal WMS software that actually really integrates into all the different platforms that sellers are on now. It is not a three or four platform race anymore. It is hundreds of platforms. And I think that’s where things are predicated towards the future. I think a dual threat to, sorry, 3PL dual threat, almost said C3PL, which not right. But I think the dual threat one that realizes modern trends in the internet realm. It’s hard because a lot of 3PLs are focused on fixed assets. They’re focused on warehousing. They’re focused on trucking. It’s an old school mindset for a lot of 3PLs, and it has to be. They have to profit, they have to cash flow each month. They’re not… Well, I shouldn’t say they’re not VC backed. A lot of the bigger ones are now VC backed-

Mark Taylor:
And private equity, yeah.

Evans Richards:
But the smaller ones, it’s cash flow. It’s making money . It’s sustaining those jobs in your warehouses. It’s really just dollars and cents. But I think that there needs to be more of a just modern technology push behind them and more of an actual ability to see trends in future e-com. Because e-commerce is always changing. If you are not adapting in this industry, you’re dying. And I mean, I can speak to that fully. Over the past 19 years, we have switched business models multiple times. We have changed core precepts of our business as things have changed in the e-com realm. And I don’t see the same thing happening necessarily with 3PLs when they should be adjusting.

Mark Taylor:
So I want to dig into that because when you say see trends and adjust and have forward-looking data on what’s happening in e-comm, we can only respond to what our customers are putting in the warehouse.

Evans Richards:
Correct.

Mark Taylor:
So I mean, a lot of the onus on that is on the customers. So maybe go into a little bit what do you mean?
Evans Richards:
Well, I think I have a different perspective, and you might too because we started as customers. We started as people that are actually selling. And so for me, it’s very hard to relate to a traditional 3PL that doesn’t even know the terminology that I’m talking about in the e-com realm. If you can’t stay abreast with what’s actually going on in e-com, you’re going to die. Or you’re going to have someone switch out of your services because they want someone that actually understands what they’re doing. Whether that is live commerce coming up, whether that is just the preponderance of direct-to-consumer brands that are coming off of personalities, and coming off of celebrities, and influencer brands, etcetera, there’s going to be a lot of things changing here I think about how Gen Z and other upcoming populations shop. And it’s going to be very different from how our generation shopped, and how baby boomers shop online.
And I think if you’re not reading those trends and getting up to snuff with them as a 3PL, you’re going to be suffering because you’re being reactive. I do not think being reactive in business is the right way to operate. You need to be proactive. You need to be figuring out, “Hey, what is the next best marketplace? How can I be one of the first 3PLs integrated there?” It’s like what Finale did with WMS for us. They were integrated into Walmart. They got us and hundreds of other sellers to utilize them, and I think a lot of us still are.

Mark Taylor:
So it seems there’s, and I do not mean this in a negative way, although it’s going to come across, it sounds like there’s a little bit of conflating going on between the WMS, which is responsible for the actual technology-

Evans Richards:
Correct.

Mark Taylor:
… of it, and the actual physical operation of the 3PL.

Evans Richards:
I don’t disagree, but the 3PL needs to be utilizing the right WMS. The 3PL needs to be utilizing the right tech stack to actually attract the clients. What we’re seeing is a lot of 3PLs that are just never evolving. I mean, they’re just utilizing the same old, same old, even us. We’ve had to utilize different tech partners to integrate into other platforms. And that’s where the stale, you can’t just do the same thing over and over, I think is what I’m trying to say here.
Mark Taylor:
Yes. And I agree with that, and it felt like somebody sneezed on me when you said you got to make sure you’re using the right WMS because the pain associated with-

Evans Richards:
With switching.

Mark Taylor:
… with switching-

Evans Richards:
Oh, it’s terrible.

Mark Taylor:
… retraining a team, and then just getting your team back to a level-

Evans Richards:
Competency level, yeah.

Mark Taylor:
… that they have with your legacy system… I mean, imagine if you guys switched off Finale.

Evans Richards:
I mean, we’ve literally looked at options that integrate into some platforms that we want, and instead we’ve just gone to Finale and been like, “Hey, please integrate.”

Mark Taylor:
Please integrate.

Evans Richards:
“Because it’s a lot easier if you integrate than if we switch.” And I think you’re using a great… I know which one you’re using. I think it’s a great one. And so I’m not necessarily singling out a tech stack as being wrong. I’m singling out the mindset of 3PL owners and leaders that are not looking at ways to optimize, continue to grow their business, and make sure that they’re utilizing the right platforms.

Mark Taylor:
And I’m fine to talk. I mean, we use the artist formally known as 3PL Central, now branded as Extensive.

Evans Richards:
Yeah, and they’re a great platform. So I think there are 3PLs that are forward-looking. I just also think that as we see this recession that we’re heading into, and as we see changes in e-commerce and the economy in general, that there’s a lot of 3PLs that are going to get caught flatfooted. There’s a lot of 3PLs that have been on the gravy train for the past three years, and there’s a lot that are probably going to go out of business here over the next two.

Mark Taylor:
I think that’s accurate. We actually are starting to see a lot of subleases come up in Southern California.

Evans Richards:
And you’re starting to see non-paying customers.

Mark Taylor:
That is absolutely correct.

Evans Richards:
I think that is a industry trend right now. I mean, I have seen multiple Amazon customers, multiple Walmart customers whose sales are down 40% year-over-year. It is very hard. We’ve talked about margins. We’ve talked about fees. We’ve talked about a lot of things there. It’s very hard to sustain an e-com company right now if you have that year-over-year sales decline.

Mark Taylor:
It is.

Evans Richards:
And I think it’s industry wide in a lot of categories right now.

Mark Taylor:
Yes. So let’s start wrapping up, but what are you most excited about next five years? I think I’ve asked this a couple different ways, but-

Evans Richards:
I mean, for us it’s just growth. It’s just seeing different marketplaces. It’s seeing different things that we have forecast internally, seeing if they come to fruition. For me personally, it’s working with my team. I’ve been working with a lot of these people for over a decade. I was just fortunate enough to go out to California and be in the wedding of our VP of West Coast operations. And for me over the next five years, it’s just working with those guys. I should say guys and girls. But it’s working with our team. It’s getting to experience more of life with them. It’s getting to experience more of the day-to-day operations with them here. We are very close-knit team. All of us are friends and family essentially at this point.
Whatever growth we have organically or whatever, that’s awesome. We know it’s coming. We know we’re well positioned to grow, but really if we can’t have fun with our teammates along the way, there’s no reason for us to be spending the 100, 120 hour work weeks that we’re regularly putting out. So the fun for me is with people. It’s the relationships that we talked about.

Mark Taylor:
I think this is a fun one to end on. If you could go back in time and offer a piece of advice to 11 year old-

Evans Richards:
Don’t hire friends.

Mark Taylor:
Okay.

Evans Richards:
Don’t hire friends. Most of the worst things that have come out of my experience as both a business owner, leader, everything, have come from hiring friends. So unfortunately, that is something that I would just not suggest.

Mark Taylor:
So the thing that you’re most excited about in the next five years is also the thing that you would advise against?

Evans Richards:
Well, no, because when I hired a lot of these people, I wouldn’t have called them friends. I mean, I hired people for specific jobs.

Mark Taylor:
Fair.

Evans Richards:
They can develop into some of the closest people that you have in your life.

Mark Taylor:
For sure.

Evans Richards:
What I would advise against is hiring people that are already close to you in life because you tend to be disappointed by that.

Mark Taylor:
That makes sense. And I’m glad we got to clarify that because I mean, you have such the track record or such a track record with so many people that I think it would be hard to, I mean, it could be easy, excuse me, to say, “Oh, interesting. Well, it sounds like he works with his friends already.”

Evans Richards:
And that is a fair point to bring up. But they’re very different in my mind.

Mark Taylor:
No, when you explain it-

Evans Richards:
And I’m not saying that I was never close with some of these people that I’ve hired.

Mark Taylor:
Sure.

Evans Richards:
But it’s very different from hiring a childhood friend to hiring someone that you respect them and love them as a person in your company, and they develop to become one of your closest friends. So our two VPs in the company, I’ve been the best man in one of their weddings and a groomsman in another. Neither of them I knew prior to this company, if that makes sense.

Mark Taylor:
It does. And actually, I’m really glad we clarified that.

Evans Richards:
Yes. Yep.

Mark Taylor:
Well, look, this has been fun, informative. It took a bit of a… And I mean, I did this intentionally because it’s impossible to look at the entire supply chain saga without taking into account the people that we’re working for and with. And you have such unique perspective as it relates to being first an e-com seller, fulfilling on your own, creating your own, doing your own aspect of logistics. And I think from my perspective, when somebody says retail arbitrage, I’m thinking the guy that knows, or the woman that knows that XYZ shopping center is shutting down, and they buy everything for 20%, and they go and re-list 1,000 different items, and they never sell those items again.

Evans Richards:
And that is not a sustainable form of retail arbitrage, in my opinion.

Mark Taylor:
If you ever want to get sleep or ever want to not hustle or have a flywheel, yeah.

Evans Richards:
It’s a hustling form, and you can make a ton of money in it. We did a lot of that stuff when we were smaller, and we loved it. It’s some of the most exhilarating time I’ve had in e-commerce. But to build a sustainable cash flowing, net income positive company that is actually acquirable someday, retail arbitrage like that is probably not the best way to go.

Mark Taylor:
Got it. And I’ve lied because I’m going to ask you one final question on the way out.

Evans Richards:
Cool.

Mark Taylor:
Where do you put a dollar today to turn it into as much as you possibly can tomorrow?

Evans Richards:
Whew. That’s a great question. Honestly, just investing in our team. We’ve got a fantastic, fantastic team now of individuals that I can actually rely on and that can take some of the burden off me in different categories. Investing that money into them and letting them grow the company is probably the best dollar for dollar that I’m going to get.

Mark Taylor:
Outstanding. And then now for the listener put your investment advisor hat on. Where did they put a dollar in your team?

Evans Richards:
Oof. Not the bank with inflation, but also not the stock market. I’m in love with commercial real estate right now. Even though interest rates are high, I think there is still opportunity to purchase commercial real estate that you can cash flow very well off of. When I say commercial, I’m really talking about industrial and warehousing. I’m mainly talking about that. So real estate, it’s a hard market to get into, and it’s a steep cost. So dollar for dollar, it might not make sense for everyone, but real estate’s probably going to be my answer. If not, just start your own company. Even if you fail, even if you fail on your first three tries, you’re better off if you succeed on one of those tries than working any pretty much corporate job or anything you’re going to get.

Mark Taylor:
Love that. I really do love that. And I lied again. If there’s one item out there that’s currently for sale that somebody can go out there and purchase it on Walmart or Amazon or something like that, leave in the packaging…

Evans Richards:
And sell someday?

Mark Taylor:
And sell someday.

Evans Richards:
I just wouldn’t advise it because if you’re not… Most of those guys would be gated on Amazon, Walmart, StockX, wherever-

Mark Taylor:
Oh, no, no.

Evans Richards:
… you’re trying to sell it.

Mark Taylor:
I’m talking about a specific, buy a couple of these, and you can one day flip them on eBay.

Evans Richards:
Oh gosh. Probably a direct-to-consumer bigger Lego set. There’s a couple cool ones right now, some of the Star Wars ones. One just came out that I actually really want to build. It’s Rivendell from Lord the Rings. I just probably will not have the time to build it until 2027 or something, but I really want to build it. But I’d say direct-to-consumer Lego Sets that are going to retire within 2023.

Mark Taylor:
All right. Well look, I can’t tell you just how much I appreciate you sitting down opening… I mean, especially at 6:00 AM. But this was a great way to start the day.

Evans Richards:
Absolutely. It’s fun.

Mark Taylor:
I love your entrepreneurial journey, and the story, and very happy that we’ve found the ability to work with each other.

Evans Richards:
It’s exciting. I’m just excited we crossed paths.

Mark Taylor:
Absolutely. So thank you very much.

Evans Richards:
Awesome. Thank you, Mark. Good luck with your podcast.

Mark Taylor:
Thanks.