#9 – Courtney Folk

Mark Taylor:
Welcome back to Supply Chain Saga. I’m thrilled to be joined today by Courtney Folk, the co-founder and CEO of Renewal Logistics. Together with her husband, Brian Folk, they have successfully established one of the leading fulfillment companies in the fashion and apparel industry. In this episode, Courtney takes us on a deep dive into handling seemingly impossible tasks and shares her insights on what it means to bring relief. Let’s dive in. And we are live.

Courtney Folk:
Wow. Fun times.

Mark Taylor:
Absolutely. Joining me today, it’s Courtney Folk of Renewal Logistics.

Courtney Folk:
Hi. Great to be here. So happy to be here.

Mark Taylor:
Likewise. I really appreciate you taking the time. You’ve got one of the people I know, everybody’s busy, but you’re one of the people I’m like, she’s really busy.

Courtney Folk:
Sorry. I need to hire an assistant.

Mark Taylor:
No, no, no, no, no, no apology necessary. I meant that to just, I’m grateful that you gave me the time.

Courtney Folk:
For sure. Glad to do it.

Mark Taylor:
Absolutely. Well, why don’t you introduce yourself, and I know you’ve done several podcasts, so give me the things that you want to talk about. I think your background and your origin story is just so cool. So how about we start there?

Courtney Folk:
Okay, well, thank you. So Courtney Folk, Renewal Logistics, we are the fulfillment company for the fashion industry.

Mark Taylor:
I like the tagline.

Courtney Folk:
Thank you. We help companies that, generally it’s apparel, but it can really be anything. Our basic premise is that we are able to push product out as fast as some of the super large companies. But for apparel companies where there’s a lot of complexity and usually that’s so hard to do that they have to keep it internalized to be able to control the quality. We try to give apparel companies the opportunity to take the warehousing and fulfillment and distribution off of their balance sheet, which is, like I said, generally that’s not really an option for apparel companies because it gets tricky.

Mark Taylor:
It does, highs SKUs, highs SKU turnover. There’s a lot of things. I think saying that it’s complex is putting it lightly.

Courtney Folk:
Well, you had asked about my origin story. I don’t know how far back you want me to go, but you have an idea?

Mark Taylor:
However far back you want to go. I understand that you went to Charleston College and you guys lived in, you are in business with your husband, correct?

Courtney Folk:
Yes.

Mark Taylor:
Okay. And you guys grew up in the same town?

Courtney Folk:
So went to Charleston Southern. He actually went to USC. I grew up in the middle of the state in a place called Camden, South Carolina. He grew up in Chapin, South Carolina, which it’s claim to fame is where Lake Murray is, which is this super fun, awesome lake in South Carolina. Lots of fun. We actually met in a singles group at Baptist Church. I’m from the south. Everybody when you’re in your teens and 20s, you’re part of a Sunday school class.

Mark Taylor:
That was the original dating app by the way.

Courtney Folk:
Yes, exactly. It totally was. Oh my gosh. There’s a whole story there too, but I’ll keep it simple. We both knew without knowing each other and we went on one date and my husband the next day said that we’re going to get married. And I was scared to death of that, but I felt like it was too. We actually never spent another day apart after that. We hung out together every day and we work together and we’re together 24/7. It’s just a really fun relationship. Now, it has its ups and downs. The good times are fantastic, and then the bad times are super tough because you can’t get away from it, but I wouldn’t want it any other way. And so graduated college in Charleston Southern, came back to Columbia, worked for Alltel, which is now Verizon, and was one of 10 or 15 salespeople that came and went. I was the one that lasted.
And the way I lasted was I figured out that our solution was really suited for a particular industry, which was the mechanical contracting industry. And so within the first year I was there, I sold just about every mechanical contracting company in Columbia. And I realized that you hear it now a lot on social media, but if you niche down, you can really gain a lot of traction. I thought that was a good example of how true that really is. And then we got engaged. The next Monday I went and told my boss that I’m leaving and I’m going to work for the family business. And his parents had four small dry cleaning stores. They had had a very, very large dry cleaning business and sold it to the Johnson group, and they got back in it a few years later.
And so when we got in, it was still fairly small, they were rebuilding. And within a year of Brian being in the business, it was like the second largest in Columbia again. And then I came in to work on the insurance restoration side, which was basically helping customers who’ve had house fires, get their lives back together after a fire by cleaning all of their clothing and apparel and bed linens and window treatments and rugs and things like that.

Mark Taylor:
One question I always, and you’re a very detail oriented person, so how often do house fires happen? How big is that customer set?

Courtney Folk:
It’s about a $40 billion industry.

Mark Taylor:
That’s nationwide?

Courtney Folk:
Mm-hmm (affirmative).

Mark Taylor:
Okay.

Courtney Folk:
It’s not huge. In any given market there’s two or three companies that do the same thing that we do.

Mark Taylor:
Got it. Which would indicate that it’s popular. Fires happen often enough that it can support two to three businesses or at least two to three for a little bit before the least performer goes out of business, and then it healthily supports two.

Courtney Folk:
Yes, for sure.

Mark Taylor:
Okay. Which city is this in?

Courtney Folk:
Columbia, South Carolina.

Mark Taylor:
Okay. So this is in Columbia. And how big of a city is Columbia?

Courtney Folk:
The whole state of South Carolina when we lived there had about four million in population. And Columbia was the third-largest city I think. I don’t know exactly, but that should give you context. Small.

Mark Taylor:
It seems similar to Oklahoma in that about the same population with two primary cities and then a smaller third city. So once you saturated, not saturated, but once you started to really own that market in Columbia for fire restoration stuff, is that something that you can go outside and take from the second-largest city and then the first largest city? How do you expand or we actually need to physically set up another location?

Courtney Folk:
That’s a great question. We found that you can service about a four-hour radius from one location comfortably and meet the customer SLAs very well. What we did was we looked at the industry and we said, who are the movers and shakers in this business? Who are the ones that we think are built to last? And SERVPRO, yes, I’m sure you’ve heard of them.

Mark Taylor:
Mm-hmm (affirmative).

Courtney Folk:
We targeted SERVPRO and we said, you know what, these guys, they have the community, they have the training, they have the marketing, they have it all. So we want to hitch our star to their wagon. I just went after all the SERVPROs. It took two years to get that company to a place to where it was really sellable. If we executed on a claim, it was perfect. Execution has always been super important to me. I’m not going to sell somebody something that we’re not going to do 100% of what we say we’re going to do. That’s probably kept us smaller than we could have been. But I also feel like it, we hardly ever lose customers. I’ve got 20-year relationships. I just think it’s important from an integrity standpoint.
But we targeted all the SERVPROs, South Carolina and North Carolina and Georgia, and it was literally a year, maybe a year and a half later, and we had them, all of them. And it caused a lot of ruffled feathers in the marketplace. I think it was 2008. So five years into the process. The first two or three we spent just building the business. And then it was a couple of marketing, very hard. But by 2008 we’d actually opened a Georgia, like an Atlanta location, closed down all of our retail. We’d sold off what we could sell off, and then the economy crashed. And we were so thankful that we had gotten rid of all of that retail at that point. Because no one was doing dry cleaning, no one had any money.
So long story short, we really became dominant in the southeast. And we knew, right now I could go out tomorrow, open up locations across the US for that business, sell it and could deliver. But it just seemed very, very capital intensive and training intensive and maintaining the quality seemed like it would be a challenge and I just didn’t have the skillset at that point to figure out how to actually do that. We started treating it like a lifestyle business at that point. And had a great lifestyle. And then in 2013, we were approached by one of the top five apparel companies in the US. They had a problem that they could not find anyone else to solve anywhere in the US, abroad, anywhere. Basically they had 300,000 pairs of jeans that were to go to the largest, or one of the largest big box wholesalers, wholesale clubs in the US.
And on the slow boat coming over, they actually were covered in mold. They were packed during the rainy season in Asia. So they were going to lose that account, which was $100 million account, if they didn’t figure out a solution to be able to ship these goods on time and in full. So one of the Asian factory reps that sold the product to our client found us online and was like, I see you clean mold. And we’re like, we sure do. And he was like, well, we’ve got 300,000 pairs. And we’re like, is this a joke? And we were like, well, we can do it. And he’s like, okay, well how are you going to get these items from their location owners? Well, we’ve got trucks. We’ll pick them up. Oh wait, you have tractor trailers? No, we don’t.

Mark Taylor:
We’ve got pickups.

Courtney Folk:
On a line bands. And he is like, it’s nine tractor trailers of jeans. And we were like, wow, I don’t think we had an idea or a concept of the scale. And so we’re like, well, we’ll figure it out. And he was like, okay, well meet with me and my client tomorrow morning in Atlanta at eight o’clock on Monday, and if you sell them, then you’ve got the business. Brian and I we’re these two little 34 year old kids, and we walk into this room and it’s like 18 suits around this huge conference table and this massive building. We didn’t know what we were doing there, but we said, look, we have to flex in our business all the time because we’re in the emergency disaster business and hurricanes come through and you went from one claim yesterday to 35 claims in a day, and we have to figure out how to make it happen.
And I think that those skills will translate here. We have the system, we have the apparel knowledge and expertise, and we want to handle this for you. And they were like, the reign of the blank company will come down on you and destroy you if you F this up. They were sweating themselves. My husband’s over here totally stress sweating. He is ready to implode. And I’m like, no, we’re going to do this. We can do this. We will do this and you’ll be happy at the end. And meanwhile he’s over there texting our warehouse manager, okay, here’s coming. We have to figure this, this and this out. And so he’s handling the logistics quietly while I’m trying to focus on selling the room.

Mark Taylor:
And this is before you even had a signature on a contract?

Courtney Folk:
Oh yeah. We never had a signature. Our signature on the contract for that was a whiteboard that we took a picture of, that said, this company will pay you these dollars for each unit and these are the terms. That project cost a lot of money. If we would’ve failed on that, it would’ve probably put us out of business. Or maybe not. I think I had done the math before and decided it might really sideline us for quite a long time, but it wouldn’t fully kill us. We were okay to take the risk. But we were bored and we needed something new to do. So it was perfect timing.

Mark Taylor:
Great lifestyles were overrated anyway.

Courtney Folk:
We had built our dream house and we have 650 feet of lakefront space. And this project came, we did it. We were successful and we never went back home. Literally I think we’ve been back there maybe 15 times in the last 10 years, because we’re so busy after that from this client. So they are, great lifestyles are overrated. If you’re one of those people and you need a mental boost all the time sitting around and looking at the water, it’s fun for a minute, but it’s not for us all the time.

Mark Taylor:
That makes sense. I’ve heard you talk about this before and you had such a quiet confidence that you guys could execute that. What was the closest you had done to that throughput? Because I’ve heard you say it’s about 27,000 units a day. Because the one thing I don’t think you have said yet is that they had to do it in two weeks.

Courtney Folk:
Oh yes. Two weeks. Yep. Two weeks.

Mark Taylor:
So with that said, 27,000 units a day. What was your previous best day throughput before this contract?

Courtney Folk:
Man, that’s a great question. So our average units per day before this was probably 2,500, biggest day ever was probably 5,000.

Mark Taylor:
Okay. So 11 times. No problem. We can do it. Hats off because the confidence to say that not only can we do it, but we’re doing it. We’ve never come within 11 times of this on a day. So what was the most mean, obviously aside from the actual feat itself, what was the most challenging aspect that you didn’t previously think about?

Courtney Folk:
Well, we learned a lot on that job. There was all of this, well, you’re in FBA prep, so you know you have stickers on clothing, you have hang tags, all that stuff had to come off and be put back on properly. We were dealing with pre-pack cases, which means there was 10 or 12 different sizes in different colors in one case, and they had to be packed a certain way. And the complexity was insane. So basically what happened was we had a 25,000 square foot building in our neighborhood that we knew of. And our landlord, we had a great relationship with our landlord. And I think the key to being able to do what we did was just relationships. We just never meet a stranger and we keep relationships for our whole life. And so we had this great relationship with our landlord. We were like, hey, we need a building immediately.
And so we took our key that we had that was a master key for several properties, showed our customer this building, and it was large enough. We had our friends come in from the restoration industry and build racking for us overnight. Literally we had an agreement on a Monday afternoon, Tuesday morning they were in their building racks and rails for us. By Wednesday we actually had a COI think. We had just built relationships with the vendors in our market. We’d never worked with temp workers before. And Tuesday afternoon we did 7,000 units that day. Wednesday we had two shifts of 200 workers in there, and we hit the number on the second day of production.
And so I think in terms of what was a surprise about it, we did a pretty thorough job, even though it was really one call, one meeting, we saw the product, we saw the issue, we tested our process in our building that afternoon, and then we had someone, we kept asking questions and they ultimately sent someone to just be on site with us to make sure that the processing was going to be to their standard. And we just really leveraged the resources that were available to us.

Mark Taylor:
Absolutely. Right.

Courtney Folk:
A customer knows what they need way better than we are.

Mark Taylor:
Of course.

Courtney Folk:
We’re in the business and yes we’re experts in it, but they’re experts in their product. It was really just leaning on that. And I think, and this was like the ghetto in Atlanta. We had prostitutes that were in there and we had drug dealers. But I love that. Right? That’s my heart, serving the underserved. It gave them a job. It gave a lot of people a lot of pride for that two weeks because we told them what was going on and we told them what this meant to this company and that they were a part of saving this company’s relationship with this number one customer. And so everybody was really juiced. It also happened over the 4th of July weekend, and so you think no one’s going to show up, what are you going to do?
We had a ton of people. We were like, we’re going to do a pizza party on these couple days. And it was hot. Oh my God, we spent $10,000 in bottled water for that project. It was so hot. But people showed up and they wanted to be a part of something special and they felt like it was special.

Mark Taylor:
That is special. And if you compare, I would never say never. But if you think about how tight the labor market is today, and you said that was the first time you’d ever worked with temp employees, and to be able to forge, so not only you said you built everything and it was like you’re able to do it because of your relationships, but with your relationships also reputation’s going to precede you. And so getting these temp agencies to even come on and say, all right, we’ll send you 200 people and we just expect you’re going to pay. That’s a big.

Courtney Folk:
Now I can’t believe that even happened.

Mark Taylor:
I know.

Courtney Folk:
That was divine intervention. I look at that project a lot and I think that there was divine intervention all over it, because you’re right, usually it’s this contract negotiation process. But we ran across this girl who’d been calling on our GM for a while. We are so the same in that humility is a huge part of her character and our character, and she just caress about serving people and taking care of people. And we told her the story. Her dad owned the company, and so they were like, we’ll take a chance on you. And so they provided a ton of workers and for them it was like they were the ones who really, they didn’t have the high quality workers that had been drug tested and screened. Who knows in that case? I’m sure there were people in there that had drugs in their system, honestly.
But it didn’t matter because we weren’t doing anything that was dangerous or they couldn’t cut themselves, no one was driving a forklift. This was all so manual. And we had an inspection process before, as they came in the building, they had certain things they were allowed, as they left the building they were inspected. We had a lot of surveillance. That was another interesting thing. So security. We realized after the first day we really needed to have some really great security in here. We’d never worked with a security company. The company that actually did most of the security for Atlanta during the Olympics, we just happened to call them out of the phone book. They were the ones, and they were like, we’ll be there right now. And they came and they created a perimeter. They had the whole system for how you manage security. It all just lined up.
And then the owners sons, and they had this family, they were I guess professional basketball players, but they had this whole family of boys that were like six, seven massive guys. And they were standing around these different posts in this location looking down over everything. It was amazing. The security there was just as good as our building now when we’ve got tons of cameras and a FOB system and whatever. It was a little crazy.

Mark Taylor:
That’s awesome. So after that, that was a three-week sprint, I’m sure you went home and slept for two days straight. And then all of a sudden these people are like, okay, you did this. Now, how long was it before everybody else took note and then the floodgates opened of people asking for these impossible deals?

Courtney Folk:
We didn’t get two days. What happened was it went to the customer, I keep wanting to say their name, but I really don’t want to. So the wholesaler, the wholesale club received the goods. What they said was, okay, well you got it done on time, but now we’re sure we’re going to end up with these crazy chargebacks, right? We’re sure that we’re going to end up spending more than your bill. It’s still going to kill us. We crossed the first hurdle, but we’ll see what happens next. Well, zero complaints. We were in a room with these guys when they were talking about it, and you could just see the look on their face, shock. Their mouths were hanging open whenever this came through. But because of the fact that we had, this was such a big problem for them, and there was so much visibility.
I told you that when we walked in, there were all these very important people that had flown in from all over the world to solve this problem. We just made an immediate mark.

Mark Taylor:
Absolutely.

Courtney Folk:
And they were like, we’ve hated 3pls. We’ve tried working with 3pls before, it’s never worked, but you guys are different. And so we want a tight relationship with you, so we’re just going to send you anything that we don’t want to do in our building. And the next day they had a 1.7 million unit bra rebranding project that all the product had to go to Target. Something was wrong with their brand label and it had to be swapped out. It was like we didn’t have a break at all and just continued like that.

Mark Taylor:
Was that first deal profitable for you guys?

Courtney Folk:
It was. Have you ever heard me talk about this before?

Mark Taylor:
No.

Courtney Folk:
That’s a whole nother. I don’t know how much you want to talk about this. So if I start getting long-winded, you tell me.

Mark Taylor:
No, this is great.

Courtney Folk:
So here’s what was interesting about the profitability component there. We had negotiated one price and then decided that it wasn’t going to work at that price, we were going to lose money. And that was our rookie mistake. That is the one thing we did do wrong in this, and we’ve really learned about that ever since. And so the Chinese manufacturer that’s not in the US, is who’s going to pay us. And that was scary in itself. We don’t tend to work with people who aren’t US based. And so we had a price agreement. We had to go back on that. We talked to our Chinese friends and said, look, it’s just not going to work at this price. We’ve $10,000 in water. You wouldn’t believe all the other things that had gone on at the same time.
And so they were like, well, we agreed to that price. And I said, well, we’re going to shut our doors then. And so we had to get our customer involved. We had to get our main client who bought the jeans involved, and the same guy that told us that X company is going to rain down fire on you if you F it up, went to them and said, you’re going to pay them what they F-ing want to get paid. You caused this problem for us. It could kill a part of our business. You’re going to pay them. And so we had this huge negotiation process. And in that process, we found out later that this guy was an accountant as well as an attorney that we were dealing with. We didn’t know that at the time.

Mark Taylor:
Your Chinese counterpart or the guy who speaks in hyperbole?

Courtney Folk:
The Chinese counterpart.

Mark Taylor:
Okay.

Courtney Folk:
And so we kept telling him, wait, we have to go up on our price. And he kept trying to whittle our price down. I finally said, Brian, who’s my husband? I said, we’re out of our depth. We can’t negotiate with these guys. We’re going to have to call in reinforcements. And I was like, I’m going to call my stepdad. My stepdad was a managing partner for Ernst & Young in New York and New Jersey. I called them on whatever day it was, five o’clock in the afternoon. And they were like, all right, we’ll get in the car and come on down. So then they were there the next morning, eight in the morning. So rather than being on the floor, supervising production, making sure this is going right, Brian, I and my stepdad, Mike, and these three Chinese folks were sitting in a room hashing out these numbers.
And as soon as we got an agreement from them, which it took 15 minutes to get that agreement, my stepdad killed it. He’s the best. He is like, look, I don’t care what the cost factor is, it’s the value of what you’re providing over time, and they’re taking a financial risk and they need to get paid for that too. And so they’re there for the rest of that day. They load up the next morning and leave. The next morning the Chinese folks were like, no, we’re not paying that. That’s when our friend from our customer’s office who speaks in her hyperbole, had to go and set them straight. At that point they agreed to it. And then a couple weeks after we did the project, they paid it. It was high stakes and high adrenaline for two weeks.

Mark Taylor:
So now you’ve got, not the whole world, but your whole world is watching after you’ve done this deal, and they say, okay, look, we’re giving you everything we can. Which is a scary thing anyway. If you hadn’t have just done this 300,000 pair jeans situation, it’s like now you’ve got lots of other considerations, you’ve got space considerations, you’ve got all these sorts of things. How do you grow to it? So what do the next couple years look like for you guys?

Courtney Folk:
That’s a great question. We started doing all of these repricing, all these kidding projects. We ultimately took over a lease for that space that I had told you about, that we’d gotten on a whim. A few months after that, we realized that it just wasn’t sustainable to be working out of two different locations, well, three. We had our South Carolina location as well. We started shopping properties. We found a building that was like 50,000 square feet. We went from 10,000 square feet where we were before we did this project to overnight 50,000 square feet, which was a big jump for us at the time. And the building had room to grow. It had 85,000 total square feet.
We moved into that property two or three months after we started this relationship with this client. And then Brian, my husband, is a genius when it comes to certain things like mechanically and process, he’s just so smart. And so he actually transferred and moved all of the equipment from our dry cleaning facility in Atlanta. It’s a couple million dollars worth of equipment and set it all up himself, organized it and had a couple people come in and pipe it. But he did most of the engineering on that location. It’s in one corner. The rest of it was production space for these projects and holding space for the product before and after it was complete. We did that for a long time, until 2018. And we loved it. It was close to our house. It was just simple. We always had warm hearts because we were helping all these people who really needed it. And seeing them grow as individuals was just so cool.
Anyway, so that’s what we did for a long time. And then our client was like, look, we’ve been asking you for a long time to put a facility right next to ours, and now we’re not asking anymore, we’re telling you. And we’re like, oh, you know what, that’s a great idea. We were just thinking about doing that.

Mark Taylor:
We were coming here to tell you.

Courtney Folk:
And so they wanted to close down their returns location. So they were going through a change management process in their business where they wanted to consolidate locations and get into better labor markets. They were behind in volume on their returns management. And also they had a dying labor pool. It was in the middle of the country where there’s no workers. The building was old. They wanted to just sell it instead of having to up bid it. And the other big thing that moving it into our business rather than them handling themselves was that it was no longer on their bottom line. They didn’t have a long-term liability. It was now they were paying a unit price. Every time they had a return that came through, it was a certain amount, and so they could manage their costs a lot more effectively.
We started with returns, but we said, look, the cost of the building that you’re looking for us to move into, these are really nice buildings. These are high class buildings, right? We have a very nice building, but it was in a lower area. So anyway, we were like, for us to be able to support this cost, we’re going to have to find a lot of other things we can do for you that go beyond just return. So what else do you have in your building that’s a pain point? And they were like, well, we have three different temp agencies that are supposed to be managed by one, but it’s not really working out very well. And I said, well, why don’t you just let us do all of that? Any work that you were going to have temp workers do in your building, just send it to us. We’re right next door. We can shuttle it back and forth for you.
All you have to do is get it to the dock. We can handle it from there. And that’s been our arrangement, and it’s been a great arrangement. We have a unit volume per week that we’ve got an agreement on, and we’re here for them when they have really, really busy times. They ship out a tremendous amount to retail stores. So they’ve got a big, a lot of wholesale programs, and so we’re really busy pre peak season. And then if we have slow times, it’s not a big deal, because most of our labor bases temp workers, but for the most part, we just make sure we have a dollar amount that covers our cost and hits our profit target that we told them, look, for us to come over here, we got to get paid. We’re not going to do it for free. We love you, but we have to be able to make a decent profit off of this to make it make sense.
And so it’s just been one of those relationships where they’re honest with us about what their needs are, we’re honest with them, and we try really hard to keep our cost aligned with what it would be in their building so that it’s never a situation where it’s actually costing them money to do business with us.

Mark Taylor:
Right. But almost like your stepfather was saying, it’s like, okay, there’s also a premium associated with them taking this kind of a risk, there’s a premium associated with you making it easy and turnkey for them as well. There has to be.

Courtney Folk:
100%.

Mark Taylor:
So they can say, well, look, we know what it’s consistently going to cost us, but we also, they don’t have to go through the process of figuring out what all those little attributable costs are to their returns program because it’s just a very clean line item.

Courtney Folk:
Yep. 100%.

Mark Taylor:
That’s interesting. Clearly they’ve been one of your biggest clients, if not your biggest client. Have you diversified or has the word gotten out in the apparel industry that you guys are the guys?

Courtney Folk:
Yeah, it has. And it’s funny, people leave their company and go somewhere else, and then the next day we get calls. And it’s not even just apparel, it’s any company that needs a lot of handling value added services. We’ve got one of the largest companies that sells into Walmart for craft supplies. They do 12 programs a year where they do end cap displays. And it’s like these huge programs. It’s 1.7 million units per program has to be kitted and shipped out. We do all of the kitting and the shipping to the Walmarts for them. And so that’s a great example. Carter’s is a baby clothes company that’s here in Georgia. We’ve got an awesome relationship with them. A lot of other apparel companies that are those large global brands that need this type of distribution support. We work with those guys, a lot of those very often.
We do still need to, so when COVID hit, our largest client sold off some of their brands, and we had gotten that business too, to a point where it was a lifestyle brand. We didn’t really have to be that involved anymore. We were pretty comfortable for a while with that. But when COVID hit, we realized that we really had to start really making efforts to change our model just a little bit. We’re providing a service that companies need. I don’t think that’s ever going to change, but you never know if, someone can get bought or sold and everything can change immediately. So we started looking at how do we start providing solutions and services that will help medium-sized companies and small companies?
And that’s when we really realized that fulfillment for apparel companies is something that most other big 3pls don’t want, and it just doesn’t necessarily go that well. So wholesale fulfillment’s easy, but the B2C and the store replenishment and that stuff is very hard for traditional 3pls to do because it takes up three to four times the space that a normal, you’re dealing with, the shirt you’re wearing probably comes in four different sizes, or maybe 10 if it’s a woven. So for that one item to sell to the masses, you’ve got 10 different SKU pick locations rather than one. And when you’re trying to push out a lot of volume during peak season, all of the systems that work really well for companies who have small SKU density.
You can have Keurig coffee pots and all the different types of coffee in a line, and you can just go straight down a line and pick that very easily. If you only have 10 SKUs, if you’ve got 2,500 SKUs, the whole system changes. We really looked at that and we looked at, we’ve got a customer right now, they came to us because they needed a solution for returns refurbishment, they were a 500 or so dollar price point customer, and people will buy four dresses in different sizes for prom. There’s a six-week peak season for that. And if you’re going to buy four units, then all of a sudden, we did the math on it, if it was taking their current vendor 10 days to get that back into stock, they were buying 25% more product than they actually needed for the same sales.

Mark Taylor:
Wow.

Courtney Folk:
So huge amount of money there. And also lost sales, if you’re only buying two or three of a SKU and someone’s they’re sitting in a return pal somewhere-

Mark Taylor:
Sorry to cut you off, but just for clarification, that 10 days is from the time they put it in their shopping cart and click purchase, shipping, try it on, ship it back, you’ve already at potentially six or eight days, right?

Courtney Folk:
Actually then 16 to 18 days because it was 10 days from when it was received. Is how long their vendor was taking to get it back in stock. And that’s because if you’ve tried something on, you have to refold it, never looks back refresh again. You have to inspect it. I got a dress the other day that came from Amazon, and it had a big grease stain on the front.

Mark Taylor:
So you’re two and a half weeks out of a six-week period, and that’s if the customer buys it on day one of the six-week period?

Courtney Folk:
Yep.

Mark Taylor:
Wow.

Courtney Folk:
That’s a good point. That’s a very good point.

Mark Taylor:
Anyway, please.

Courtney Folk:
And so our special offering to that customer is we’ve got this big dry cleaning business. We’re the largest restoration dry cleaning company in the US still, that’s not like a franchise. We’ve got this big dry cleaning location with all this capacity. They were having 5% of their returns were actually damaged to the point they couldn’t be sold again. There’s huge money in this returns process for them. And so we have the ability to get it back to factory fresh by either dry cleaning it if needed or just steaming it, but knowing how to fold it the right way. We also have alterations people on staff so we can actually fix any loose threads or hems that have come out or whatever the case may be. So for them, those two things translated into an extra 7% profit margin. So if they were at 15%, they’re now at 22%.

Mark Taylor:
Which is massive.

Courtney Folk:
So to us, we are always looking at, our number one core value is bring relief. We’re not a good fit for you if we’re just doing the same thing that you can find someone down the street to do. We want to be invested in our customer success. We want to see that we are actually bringing them relief. And we talk about that on the floor to our workers every day. And our whole concept behind bringing relief is we’re bringing relief to our customers, our customers are bringing relief to us. We take care of them, they pay us on time. And so we have conversations like that with our customers too, like we’re going to go all in for you, but you have to go all in for us too. This has to be a real relationship.
And same thing, so as an employee, my employees, their job is to bring relief to me. I’m not going to hire you unless you’re actually doing something that’s really beneficial for my company. And at the same time, I’m here to bring relief to you. I’m here to be a good manager to you. Make sure you have the tools and the training you need to be successful. Make sure that your environment is good, and that the culture here is solid and you’re happy to come to work every day. So that bring in relief concept is really important to us. But we saw in the apparel space that there’s just this huge total addressable market that no one wanted to touch because it was really hard and we could be a complete solution for these companies. So we’re still fairly early in getting the word out.
And that’s why you’re talking about, you’ve seen me on a lot of podcasts and just putting ourselves out there a lot more. That’s why. Because we’re so excited about-

Mark Taylor:
You’re evangelizing.

Courtney Folk:
And I just think if we could do that for every apparel company that really had that need, what else could they do with that money? What else? How big could their business grow if they had that much extra fuel to put back in the fire? I just think it’s really fun, it’s fun to be needed and to really do something that matters to a customer. You’re not just moving a widget from one place to another. You’re not moving it from one rack to a truck. Nobody cares. And then that’s the price game. But if I’m providing millions and millions and millions of dollar in value, and I’m asking for 10 cents more a unit than the other guys, no one’s ever going to question my extra 10 cents a unit. I have enough I can reinvest to make the culture awesome and put in the new training programs.
And one thing we didn’t talk about is, so I told you the story about how we said yes to that jean job. Well, the reason we felt comfortable saying yes to that gene job is because we’d just gone through a year of crazy dramatic trauma. Our son was born and we had no idea it was coming, but he started having seizures. He had like 100 seizures a day.

Mark Taylor:
Oh my gosh.

Courtney Folk:
We had to sign a DNR. We had to fly him, medevac him to hospitals. It was so scary for so long, and it was just so hard. And we actually got him on the ketogenic diet and it changed his life. He went from having all those seizures to no seizures overnight. It was like a miracle. It was like, I say all the time, the Lord kisses us on the cheek and I really do believe that sometimes. But we had just gone through this crazy drama and it was like at that point nothing was ever going to be that hard again. So this idea of doing all this really hard stuff, if our prior selves before this would’ve happened, we never would’ve said yes to that, because our risk tolerance was so low because we’d not gone through this.
But at this point we were finished with all this adrenaline, we’d gone through this negative adrenaline, and now we’re looking for some positive adrenaline because we’d gotten used to it. And we were like, well, if we can deal with that, we can definitely deal with this. Nothing’s ever going to be that hard again.

Mark Taylor:
A couple points I want to address here. First of all, no, entrepreneur’s risk tolerance is low, from that perspective, but what your risk tolerance is post that situation verses pre that situation. I’ll give you that.

Courtney Folk:
That’s true. That’s a good point.

Mark Taylor:
But just the courage to go out there and start a business, take a chance on yourself, most people look at that and they can’t imagine. I think you had a high risk tolerance, but now you’ve got a really high risk tolerance.

Courtney Folk:
Maybe so. I think you’re right.

Mark Taylor:
And the other thing I’ve heard a lot of people long before I’ve done the podcast, I’ve read a lot of people’s mottos and core value and things like that. And this is the first time I’ve ever heard bring relief. And I really like it because of the symbiotic nature it represents of everybody basically coming together to make the pie larger. It’s a very thoughtful core value I think.

Courtney Folk:
Thank you.

Mark Taylor:
So it’s very cool. This is an incredible story.

Courtney Folk:
Thank you.

Mark Taylor:
This has been incredible. I’m going to shift gears a little bit, so you’re dealing in all these returns and what are some of your thoughts related to, because a lot of our issues in logistics that we’re fixing, especially as it comes to the returns piece of it, is they would be solved if people just bought a little bit more thoughtfully or if we didn’t consume quite as much. There’s the environmental aspect or the output of we’re putting all these resources to work on things that we buy and then end up in a landfill, that kind of thing. I believe that the more sophisticated returns programs, refurbishment programs, renewal programs that we’ve got out there, I think that’s really doing probably the most to alleviate our impact.
The concept of ESG has been very politicized and taking the political aspect out of it. How much of the manufacturers and the customers are you working with, are focusing on basically having more with less and that kind of thing?

Courtney Folk:
That’s a great question. I think the company that really does it the best, you never hear them talking about it. And the only way I know about it is because of some friends in design school that were telling me about it. But Carter’s, the baby clothes company, all of their product is in one fabric. And it’s easy for them because they’re babies and babies don’t say that they look fat in an outfit. It’s all about comfort, right?

Mark Taylor:
Right.

Courtney Folk:
But literally that one fabric, they buy in bulk and then they print small runs for each design. Their designs are pretty consistent. And so they can be very precise about the flow of their goods, I think that’s a great example of someone who’s doing it really smart. Another company that does it really smart, Calvin Klein and Tommy Hilfiger do it really, really, really smart. I’ve never seen a company have as good of an omni approach as they do. So they have multiple channels. They have store, they have their own stores, they have partner stores, like partner retailers. They have e-comm, have Amazon, and they bring in goods in a universally packaged good. And so there’s either a store destination, so it needs to be on a hanger or there’s like a packaged destination like it’s going to be shipped through e-comm.
But they’re always looking at their, what’s selling best, through which channel. And as soon as they can see they’ve got fire in one channel, they’re converting product. So maybe they thought they were going to sell a ton of this product in a store, but they found out it’s sold a lot better online. They’re moving that product through the channels to sell online, and it’s daily. They’re looking at that dynamic shift daily. I think that’s a company that the smaller companies, they’re playing 4D chess when everyone else is playing checkers from that standpoint. And that’s where, yes, you can definitely improve your returns process if you buy less and you buy smarter.
But really getting rid of what you have is important and being able to move it in a way where you’re not losing money. They don’t send everything through T.J. Maxx. I think a lot of the smaller brands look at it like, okay, if it doesn’t sell, I’m going to put it in a trunk show, or I’m going to sell it on whatever. It doesn’t have to be that way if you can be really thoughtful about watching your inventory every day and looking at where can you actually, what channel is selling best and how do you add more to that? I think that’s a neat story.

Mark Taylor:
Almost like load shifting. You see the one channel really catches, then it’s like you just start adding your resources to really fuel the success of that channel.

Courtney Folk:
Yes, 100%.

Mark Taylor:
So are they, for instance, let’s say they’ve sent 20% of their inventory to their own personal stores or their privately held stores, and then the e-comm section starts going bonkers. Are they then repurposing and starting to turn their personal stores, their private stores into fulfillment centers as well? So they’ll just start fulfilling directly from the store? Is that part of how they’re doing that?

Courtney Folk:
I don’t know enough about what happens in their retail environments. I do think a lot of companies do have some capacity for that. But I think what they do is they are very careful to, they ship a few units to each store of each. They have one major push of wholesale to go to the stores, and then they do fulfillment replenishment regularly to them. They have a few distribution centers that are their big hubs, and most of the product that goes out is all done from their hubs. I just don’t have enough visibility into their storefronts. What I’m seeing a lot of stores do though, that’s really interesting, have you seen the 2D barcode? A lot of companies are really getting, like Puma has this really cool thing they’re doing where if you scan a 2D barcode inside their store, you get a different read than if it’s inside of another store.
So they have all this geofencing happening, and they have all of their retail stores applying those 2D barcodes rather than having that done at the distribution center, or even they are getting some of it done at the source and their factories, wherever their factories are, but that’s how they’re utilizing their store employees, is waiting for the product to actually arrive there and then putting the 2D barcodes on it when needed. But most companies do have, most of their employees and retail stores are set up to be able to do the whole pushing goods from a store to a customer. I think it’s SAP. Honestly, I don’t want to start talking about this because I don’t think I have enough knowledge about it, and I’m going to end up saying something wrong.

Mark Taylor:
No, no, no, no, totally.

Courtney Folk:
But it’s all systems driven if they can do that or not.

Mark Taylor:
Have you ever looked at what Patagonia does with, they do a lot of, they’ll pull back a lot of used items, they’ll resell items, they’ve got a secondary marketplace that they’ve pushed for a long time?

Courtney Folk:
Recommerce?

Mark Taylor:
Yeah.

Courtney Folk:
That’s awesome. A lot of the sustainability programs that these large companies are doing. So in that case, and there’s several other companies that are also doing that as well. Levi’s is doing that. Madewell has a thing where if you send in a pair of jeans, if you just bring them a pair of jeans, they’ll give you a $10 credit to your next pair that you buy. And then they have, if they can be sold again, they’ll put them on a recommerce site. If they can’t they’ll actually be turned into insulation for homes, for Habitat for Humanity.

Mark Taylor:
Oh, cool.

Courtney Folk:
So there’s a lot of cool use cases that are happening for that. But in terms of recommerce, what these companies are finding is really cool. Man, the best case study on this is actually not an apparel brand. It’s Best Buy. Best Buy has turned their recommerce program into a strategic weapon. It’s amazing what they’ve done. They’ve opened up a bunch of outlets and they’re reselling their own product that was returned, and they found that, actually I think it was 10 or 15% of their customers that are coming there, are brand new customers that have never bought from them otherwise. And so all these companies have been so worried about diluting their value and their-

Mark Taylor:
It’s two separate customers.

Courtney Folk:
Exactly.

Mark Taylor:
The person that’s buying new is not typically the same person that’s buying used.

Courtney Folk:
Exactly. So cool. And it gives people access, right? If you’re a high value brand, Tory Burch, let’s say you bought a pair of Tory Burch shoes, or you’ve always wanted to buy a pair of $350 Tory Burch shoes, and having a recommerce program, all of a sudden, maybe it’s not perfect, maybe that’s why you’re getting it for $100. But all of a sudden, these people who have always wanted to aspire to own these products now do, and then they love it, and then they’re willing to put the money out there for the $350 item the next time around. I think there’s a tremendous amount of value to it if it’s done right. Those programs they do require a lot more for setup. You have to have a really solid disposition program on the backside. So you receive the returns, then you sort them based on, can it be sold as new? Does it have to be refolded? Does it need any cleaning?
And then what category is it going to go in based on these things? What level of damage does it have? You have to grade it. So then you have to have some program or algorithm, even though it’s usually done by hand a lot of times, but some system for determining how many dollars can you put back into this item to get it refurbished so that it can be sold again. So you can’t spend 10 bucks on a $25 item, but you can spend 10 bucks on a $200 item, and having a system for that so that a judgment call doesn’t have to be made every time that someone receives a return. Those are very cool programs. I think that they have, with the economy falling off, a lot of those programs have actually been cut by, not necessarily recommerce programs, but sustainability programs.
A lot of them with apparel companies have been cut because they just don’t have the money for it. But I think once things level out, again, that’s going to be the next big thing, because apparel is one of the top offenders when it comes to environmental damage. You look at statistics on the amount of wastewater that comes from denim, it’s incredible. So you were asking about what can you do at the source to make smarter decisions while people are doing a lot of printing now, digital printing, for the coloration of denim rather than the dying process that they’ve done before. There’s a lot of cool new technology that’s happening in that space.

Mark Taylor:
Have you had any experience with those?

Courtney Folk:
Yeah, we run the sustainability programs for some of the largest, well, a couple, it’s five or six of the largest brands that are in the US. And that’s been really interesting. It’s been not only looking at how can they resell those goods, but also what tweaks can be made. So I heard someone say, if something didn’t sell, figure out why it wasn’t cool and fix that. And maybe it’s adding some lace, maybe it’s making an alteration to the silhouette.

Mark Taylor:
What I think is also a little bit interesting is we’re also starting to get to, Gen Z is now growing into their buying power, their buying capacity. And so the trends that we’ve come to know in love with all the millennials, and before that, gen Xers and Generation Y and whatnot. I guess generation Y or millennials, I think. Anyway.

Courtney Folk:
I have no idea.

Mark Taylor:
I might have totally messed that up, anyway. But millennials have held for the last several years most of the buying capacity. And then as that starts to come up with Gen Z, who knows how they’re going to buy. I think as I see articles, I’m not an expert on it or anything like that, I’ll see articles where it’s like their buying behavior is much different. So that will also shape how these companies approach the future. Anyway.

Courtney Folk:
So what I heard recently from, I did an interview with the founder of, what is the name of that bar soap that you use for your hair? Dry bar? No, it’s not Dry Bar. Her name’s Nora. God, I wish I could remember. I’ll have to let you know. You can put in the fact check or whatever. But she said that the 12-year-old girls are the ones that are now driving the economy and they’re the ones to watch, at least in her product category. But I think that going back to the commerce, your social story, why people should buy from you, that is where it’s all at. Don’t you think? It’s all about responsibility. It’s all about doing the right thing. And so those recommerce programs give you that social story, but it’s also how do you treat your people and how are you just being mindful of every element in your business?

Mark Taylor:
If you were going to give some advice to some of the smaller and medium-sized apparel companies and companies that require a lot of the type of work that you guys specialize in this, value add service and that kind of a thing, what are some of the things that you would really wish that every great customer came in with the knowledge of?

Courtney Folk:
That’s a great question.

Mark Taylor:
It’s a big one. So you can focus on it however you wish. I should have been a little bit more precise in that one.

Courtney Folk:
No, no, it’s a great question. I think it’s just a matter of being self-aware, right? So if you have a lot of SKUs and you are looking for the right fit, number one, be in a right size 3pl. A lot of times companies think it’s a badge of honor to be with these huge global companies, to be in their buildings, but really what happens is a lot of times they get in there and then they are deprioritized. I have a lot of customers that will be like, we were deprioritized in December for peak, and we finally were able in a place where we could make money and it didn’t work, because our products were too complicated for them to build a really efficient flow to get them out the door. There’s so many 3pls out there, pick one that has the right values, pick one that has the right product mix and the right type of focus.
If you’re all about efficiency and automation, that’s like the products that are best for those are the ones that are square and tiny and fit in a bread basket because they are very easy to convey from one place to another. Products that don’t fit within that idea or that concept, a super automated facility is not for you. I think it’s just really having a true understanding of what your handling is going to require. Okay, I have an apparel brand that was at another 3pl, and she was like, I just sent my stuff into them, I’m so excited. I had just met her at this point and I was like, what do you like about them? And she’s like, well, I just really like that I don’t have to handle it anymore. And I was like, okay, cool. That’s great.

Mark Taylor:
Good luck with that.

Courtney Folk:
And then two months later she’s texting me at 11 o’clock at night and she’s like, can you please help me? I sent my stuff in. It’s not gone well. They double shipped orders to my wholesale account. So now I don’t have enough product to be able to ship to my B2C customers. So we’re out of stock, and they’re telling me it’s my fault, man. She used the term mansplaining. She’s like, the 60-year-old guy is like, well, we’ve been in business for 30 years doing this. And she’s like, well, I don’t care when it was being done out of my basement, it was going out right. I think from a values perspective, making sure, it’s almost like a marriage, this is one of the most important decisions that a company can make, is who’s handling their product? Because we’re filling a customer’s brand promise, right?
And so another facility down the street, they were private equity backed and they were selling everything at a super low price that was way below market. Do your numbers. If someone’s giving you a price that’s too low, you know the going rate for labor, if the number is too low than what you’re being offered, then they’re being supported by more capital from someone else. And what happens when that capital runs out? Pick a sustainable solid, just like a business that really runs by the fundamentals. Go into the facility, look and see what the morale looks like. Are people happy there? How clean is the building? A lot of that’s easy if you were here, but it’s also sometimes people aren’t going to make the decision to go check the place out. And I think it’s worth it to spend the money to do that.

Mark Taylor:
I think it’s definitely worth it. And what I find interesting is that you have to tour a couple warehouses before you realize what’s a clean warehouse versus what’s a not clean warehouse. Because I’ve seen, I’ve walked into warehouses that are returns warehouses where I’m like, wow, this is incredibly clean. But if that were just a firsthand container to pallet to shelf and then out, it would look like an absolute mess. I feel like the more warehouses I get to walk around, the better context I have for it. I think customers are going to get a great feel, but to your point, you have to be on the ground. You have to go out there and do a walk around.
Another thing, commenting on your friend that reached out at 11:00 PM, you get to a place where it’s like when you go from your basement to working with somebody a 3pl or somebody, a logistics business, managing that as a different skillset and it’s never just going to be like, oh yeah, set it and forget it. That just doesn’t happen. And one of the things I would like to add to what you were saying earlier is automation, the more exceptions you have, the less likely it’s going to be that automation’s going to be your answer.

Courtney Folk:
Yes. Great way to sum that up.

Mark Taylor:
Automation wants consistency no matter what. Your manufacturer better be hitting the right carton labels, everything has to be perfect. The more exceptions, the less likely it is that you’re going to be able to really have a good experience with automation.

Courtney Folk:
You just hit on something else too, so in the supply chain process, so the labels have to be right for it to work in your 3pl to get it out the door to your customers. Right? Well, labels also have to be in the right place when it leaves your 3pls doors and goes to your retailers 3pls doors or their distribution centers. So most of those operations like Kohl’s for instance, they have a cross dock operation where all the product that comes in is on a conveyor and it scanned in boxes, because they’re buying in bulk, they’re not buying singles. And if a case label is off or the case label has a wrinkle in it and it can’t be scanned, that’s an $800 chargeback for a customer. There’s grades. So if you’ve never failed in any of these before, you’re going to be an A player. But if you’re a D player, that means they’re inspecting more and your chargebacks are more expensive.
And so going to the value added services piece and how with certain businesses require more of that than others. But the consistency in making sure that stuff is done is important because if not, then like I was saying, you’re on a scale and as long as you stay A, you’re not paying that much and you have a small amount. So if you’re an A player, I think it’s like 0.5% is ever inspected. If you’re a D player, I think it’s something like 3% is inspected, so you’ve had a 6X increase of your inspection. And so it’s just very important for companies to stay at that highest level as possible. And that’s another place where it can really break you. Because a lot of 3pls do, we specialize in value services, but even ones that don’t specialize in value added services still have to do some of it.
So they still have to put labels on boxes. They still have to take items out and put labels on poly bags sometimes or add hang tags or whatever. If that’s not done right, if it’s a brand new relationship, let’s say someone is going and putting product in Dillard’s for the first time and it doesn’t go well and they’re not able to sell that product, they’re not going to get a repeat order. So it’s bad for that. But also if you think about it, let’s say that Dillard’s buys a million units from Calvin Klein and they come through and 30% of those units have a problem, the hang tag doesn’t match the sizer tag on the hanger or something. So every item has to be taken off a hanger and put on one that is the right size hanger.
So it says medium on the hang tag, and it says extra large on the actual hanger. You’re talking about days of time where that’s not going into a store. And all of a sudden, and they’re so careful with their volumes at these stores to where all of a sudden they have dead space in their stores because they’re not selling product and they’re losing sales. So it’s a huge cycle, and understanding where you fit in that and the why of why all these customers or these retailers that you’re selling to are asking for things to be done that way, I think is really important.

Mark Taylor:
If they recognize that let’s say 30% to your example is what’s wrong, they’re not going to go through and sort through and find the 30%, they’re just going to pull everything and send it back.

Courtney Folk:
Yep. Yep.

Mark Taylor:
So for any smaller brand thinking about this, that means that you now have to pay 100% of the cost for inspection, it’s not just a 30% cost to go and reinspect 30 of every 100 pairs of shirts or whatever it may be. You’re actually going to have to pay your 3pl or your partner, your value add service partner to basically go through, inspect every single one of them, and then additionally get the chargeback of relationship damage.

Courtney Folk:
Opportunity cost.

Mark Taylor:
Opportunity cost, everything. The stakes are very, very high. One of the things that we get requests for apparel, and most of the time we turn them down, because we’re just not set up for it. And what it is is we’ll have somebody come in and they’ll say, well, we’ve got 750 SKUs, but it’s only about 200 pallets worth of goods. We’re like, we’re not doing three, four SKUs per pallet, whatever it is. And it’s never evenly split like that. It’s usually there are 20 pallets that are single SKU pallets, and then the rest 180 of them are-

Courtney Folk:
Mixed SKU.

Mark Taylor:
Massive mixed SKU pallets. So in those sorts of situations, I think finding the right partner who is set up to do that, to really deal with that. Because if I take that business, we’re setting ourselves up for disaster and failure probably, because the amount you have to sort through a particular pallet just to find the SKU that you’re going to need is going to be at the very back of the pallet. You have to pull it out and it’s at the bottom box. And that’s not an efficient picking operation. What are some tips that you would give brands that have that really high complexity SKUs and maybe not, they’re not taking up a pallet per SKU type of thing?

Courtney Folk:
You’re right. Most 3pls don’t want that business for the exact thing you said. And even 750 with 200 pallets, that’s a lot of depth per SKU. Usually it’s a few boxes per SKU. So our operation’s going to be set up completely different than yours. You’re going to have a few guys who can pull pallets off a truck and locate them. We have to have a team of people who once the pallet’s off the truck, we have to break the pallet down, then we have to run it to the different locations. Completely different setup. And I think I just don’t like selling myself. I hate thinking about these things and feeling like it’s a commercial and a plug. So how do I say this without being like, well, you should call me, because? But the truth is, you should find someone who has an apparel background and who works with apparel a lot because their facility is going to be set up differently.
Not only are you going to have a different employee mix, but you’re going to have bookcases. You’re not going to have pallet locations, you’re going to have pick locations, small, medium and large. And you’re going to have flow racking so that you’re not having to do replenishment as often, moving product from a pallet to a pick location. There’s just a completely different setup that’s required. And it’s usually more expensive. It’s usually not going to be as cheap as the cheapest item where you can use automation. I’m trying to think what else would be a really big thing that someone would, do you have relationships with GS1? Are you familiar with GS1 at all?

Mark Taylor:
I don’t have any relationships with them, but I know who GS1 is, it’s the official SKU company.

Courtney Folk:
Yep, exactly.

Mark Taylor:
UPC company.

Courtney Folk:
The barcodes. And they provide a lot of standardization. And so we have a really tight relationship with them. And so companies that don’t have, a lot of times product will come over and it’ll be the style color, but it’s not the size. So then you have to like, okay, who’s going to come up with the barcodes for this? Are you providing those or are we providing those? Do you need us to assign SKUs? There’s a lot of handholding that happens with apparel companies that as you get larger those things aren’t as needed, but certainly in the mid-market and the smaller, you have a lot of that.

Mark Taylor:
If you ever want to be shocked, go and look at what it costs to buy a small number of SKUs from GS1.

Courtney Folk:
Oh yeah.

Mark Taylor:
I remember, the way I got started was we started as FBA sellers ourselves.

Courtney Folk:
Oh okay.

Mark Taylor:
And so we were doing e-commerce, and I looked at buying 10 or 100 SKUs, whatever it was, and I couldn’t believe it was over $1,000 or hundreds of dollars. And then I went to one of the US barcode.com, and you get 100 for 19.99, and you’re like, I’m going to go with that one. Well, we never expected to sell in Target. We never expected to sell into anywhere that was going to require GS1 SKUs. We were able to get away with that.

Courtney Folk:
So if you’re selling the specialty stores and boutiques and smaller operations, you can do that all day long, every day. But there’s a lot of, you can’t reuse the same SKU in three years. There’s so many things that are tricky about working with the large companies. So brands have to make a decision on whether they’re going to sell to those large companies or if they’re going to stay with the small companies. If you stay with the small companies, you’re dealing with maybe 100 units per order maybe, maybe it’s more like eight to 25. Where if you’re selling to the large ones, you’re selling thousands. So you can 10X your opportunity, 100X your opportunity. But there are more risk involved. And every time that you make a strategic move that’s an error, it’s going to cost on that side.
It’s extremely important to have people who can walk you through that process, not just 3pls that have an understanding of what those companies need, but also agents. And at the factory level you really have to have your game in order. You have to really have that detail down. And we’ve taken over programs for companies where they internally we’re handling their own value added services, and they were paying hundreds of thousands of dollars in chargebacks, and we were able to bring that to just a few thousand and taken from an F, we took one company from an F to a B in six months. But those companies have the money to spend on that kind of stuff.
If you’re a new company or a medium-sized company and you’re really just trying to get into that big box retail game, it’s really, I just can’t stress enough how important it is to have people who have been there before and done it, who can walk you through it.

Mark Taylor:
Because that could absolutely just crater your business if you step off on the wrong foot. Everybody might start at an A, but you quickly find yourself at a C, and then you realize that you’re not equipped to play the game anymore.

Courtney Folk:
Yep. Yep. Yep.

Mark Taylor:
And frankly that’s the biggest reason why when going and launching and saying, hey, these are my aspirations, I want to go into these large companies. You better really find a partner that knows what they’re doing. Look, don’t get me wrong, if I had a high priority client come in and they said, look, this is where we’re selling, I would download, I’d go to Dillard’s or whoever it may be, and I would read line by line every single word about their retail compliance, but it’s a whole lot better if you can find that partner that’s like, oh yeah, in this paragraph there’s this and we make sure you have to do this. What’s your solution for this?
It’s like the people that can ask the questions, not figuring it out together, which I can appreciate, look, because I’ve figured it out together with my clients in a lot of cases, but there’s just a chicken or the egg situation, because sometimes when you’re brand new you don’t get the opportunities to talk to the partners that know what they’re doing. But to the extent that you can really get out there and try to find that person that knows exactly who’s been there as you said.

Courtney Folk:
I bet for you in your FBA prep business, the knowledge that you gain from helping one customer, you can immediately and directly apply it to every other customer. So it’s compounding knowledge over time. And you’re right, not everybody is going to, if you’re a really tiny company, you’re going to have a harder time with that. But I just think in cases like that, just knowing which one of those large companies, for instance, Dillard’s, right? So here’s why I love Dillard’s. They will bring in a new brand and they’ll get chargebacks, but if they prove they can improve and they prove they fix those mistakes, they won’t actually make them pay it.

Mark Taylor:
Okay.

Courtney Folk:
So how nice is that? Right? They just have this values driven business that is just very much about family and, their employees, they’ve got so many employees who are like 30, 40 years have been there. It’s not just about making money, it’s about really doing the right thing and being great partners. And so that’s a great place for someone to start. That’s a small brand that wants to get into a big box.

Mark Taylor:
Kind of like Uline. Uline has those family values and the way they treat their employees as well.

Courtney Folk:
Oh really?

Mark Taylor:
Yeah, no, I don’t think they’re quite as forgiving with the people. I think they do a lot of their own vending, so it’s not a great comparison. But as soon as you said the family values, it made me think of Uline.

Courtney Folk:
Interesting. I’ll have to go back and research them.

Mark Taylor:
They’re a pretty interesting company. So as we start to wrap up here, it’s been about 10 years since the big break with the jeans. Knowing where you’re at today, what would you go back and visit your 2013 year self and say, what advice would you give?

Courtney Folk:
That’s a great question. I would say maybe there’s a couple things. I don’t think I really valued a network as much as I do now. I think that’s one thing that has just allowed us to grow exponentially recently. I would say focus more on the network, not just the moving parts of the company and building an internal business, but don’t be afraid to be on the radar because we always wanted to stay under the radar for whatever reason. And then the other thing I would say is that listen to other people’s advice, but don’t take it to heart. We for a long time never wanted to get into fulfillment, because we heard you’ve got to be do it this way, and you’ve got to be spend $20 million in automation to be able to do it well. But once we started looking into it and really understanding it, that wasn’t true at all. Right?
That was one person’s perception of what they knew. So listen to advice, but don’t internalize it. Do your own homework and don’t just like say, okay, well another great example, this is what I see all the time, is companies never want to, owners never want to give away any equity, they’re worried about what’s going to happen if you lose control of your business, but do you want 100% of a grape or do you want 5% of a watermelon? And not that we’re interested in giving away 95% of our equity at all, but I’m just saying there’s a lot of value that can come from leveraging other people’s money and other people’s knowledge. So not being too afraid of that, being cautious about it.

Mark Taylor:
I had a mentor once say, read everything you can and don’t believe a stinking thing that you read. And that’s exactly what you’re saying right there. The other thing I’ve found, and I’ve listened to you talk about it and on other podcasts was where when you found that partner with the jeans, they then almost took you under their wing and showed you lots of different components of the business that you didn’t previously have experience for. And they said, no, learn this, this is how this is done, how can you do it? That kind of thing. Is that accurate by the way?

Courtney Folk:
Oh yeah, 100%.

Mark Taylor:
Okay. Just wanted to make sure I didn’t imagine listening to that. But I think we focus on fine mentorship, as you somebody who’s going to mentor you, Courtney or somebody who’s going to mentor my me, Mark. But there’s something to be said for actual partnerships out there that are almost like a mentorship relationship where it’s a large organization almost mentoring a smaller organization.

Courtney Folk:
Boy, that is billion dollar advice right there. So SERVPRO, when we started doing business with them, we failed, not in a big way, never in a big way, but we failed all the time in terms of, so a great example, we used to, would pull a customer’s contents from their home, go ahead and start cleaning them for them. And then I had a customer who was like, you cannot ever do that again on my jobs ever. I’m not going to work with you until you have this in place. You have to have a document that says that they authorize you to take these out of your home and that they authorize you to start cleaning them. And then you also have to provide an invoice to the adjuster ahead of time and make sure they’ve seen it so that there’s no questions on this because you’re going to make me look bad if you get sued because of these things. They basically, and it was hard knocks, you don’t want to hear that, you don’t want to hear that negative feedback.

Mark Taylor:
Especially when you’re just trying to do the right thing.

Courtney Folk:
Exactly. But you need that all the time. Even employees, we say that in our business, we’re going to give you feedback and you have to be 100% comfortable taking feedback to work here, because you’re going to get it, and you’re going to get a lot of it. But you have to understand feedback as an investment in you. And for us, we had to look at it like, because like with our clients, in that job, with that really large company, we kept hearing how y’all are too small for us, you’re too small-time, or you can’t do this, you’re too small. It was a lot of this whole, you have to roll your eyes internally and swallow your pride, and they think you’re dumb, they know you’re not really dumb, but it just feels like at the moment they think you’re dumb. You have to put your ego aside. You can either have your ego and their money, it is one or the other.
So you have to put yourself in a position to be educated by your customer. And that comes from being very open to feedback. You’re not going to have that relationship if you’re not seeking it out and you’re not asking them, how can I get better? What can I do differently? How did you feel this went? If you did it inside your own building, how would it have looked versus the way that we did it? Talk to me. Tell me what’s going on. And we build relationships like that with all our clients. It’s just like a marriage, right? It’s constant negotiation. Are you happy? What do we have to do to make sure you’re happy? I’m not happy. Here’s what you have to do to make sure I’m happy. That’s the center of a relationship and you just have to be available and open to it and willing to do something with it.
Mark Taylor:
I can’t imagine a better place than right there to conclude. I think that’s sage advice, and the next time we talk I want to delve into how working with your significant other and how you guys make it work and all that kind of thing. But for now, I really, really appreciate you opening up and just telling the story.

Courtney Folk:
Absolutely. It was great.

Mark Taylor:
All right. Thank you very much.

Courtney Folk:
Thank you-

Mark Taylor:
Thanks everybody.