Flash Back Friday: MATT’S CHATS Webinar | Navigating Tariffs: Drawbacks & International Fulfillment Strategies
Welcome to Third Person’s Flash Back Friday series, where we take a look back at previous episodes of our webinar series, MATT’S CHATS.
MATT’S CHATS is a webinar series bringing together supply chain experts, e-commerce brands, and tech professionals for a dynamic panel discussion on the latest news in logistics, fulfillment, and beyond. Moderated by Matt Hertz, the founder and CEO of Third Person, each panel features one leader from a 3PL, brand, and tech company.
In this FBF webinar, Matt was joined by Jack Hackett (Co-Founder & Managing Director of Accelerated Global Solutions (AGS) Europe), Justin Sherlock (Co-Founder & CEO of Caspian), and Daniel Pike (President of Advanced Derm Solutions LLC). They discussed navigating tariffs: the drawbacks & international fulfillment strategies.
Dive into the transcript below, or watch the episode on YouTube @ThirdPersonCo.
Matt Hertz: There we go, we got Daniel, we got Justin… Let's see if Jack, makes it over. There's Jack. Alright, we got the four amigos here. We are… live, we'll give… we'll give maybe just a minute or two, for others to join. I know it takes a minute just to accept it or to join, so… Give it a minute, and then we will get started here.
Justin Sherlock: Matt, when are you gonna get some, some pumpkin patch content on your, on your, on your LinkedIn?
Matt Hertz: Yeah, tis the season, right?
Justin Sherlock: The orange… you got the orange background, you got the orange theme.
Matt Hertz: Oh, yeah, that's right. We do got a couple pumpkins outside in the front, but they're, like, melting because it's still 90 degrees here in Nashville. They're getting all, like, sure. Yeah, it's, it's pretty sad. But, all right, well, let's get started. People can kind of trickle in as, as, as they, as they join here. But, yeah, in the interest of time, we will, we'll get started. So thanks, everyone, for joining, for this month's Matt's Chats. Really excited to have 3 friends here, and 3 leaders in e-commerce and logistics, Jack Hackett. the co-founder and managing director of AGS, Accelerated Global Solutions Europe. We have Justin Sherlock, the co-founder and CEO of Caspian, and then Daniel Pike, the president of Advanced Derm Solutions, also known as the makers of Dermaleve. Did I? Dermaleve.
Matt Hertz: What's that?
Daniel Pike: Dermeleve.
Matt Hertz: Dermeleve, Dermeleve, Apologies, I completely butchered that. Dermaleave. Really excited to have the three of you here and, you know, dig into some conversations on kind of what's going on in the market, both here in the U.S. Really excited to have Jack here, just given his exposure to European markets and Asian markets, non-U.S. markets, and obviously Justin, you know, with the work that he's doing with duty dropbacks is, you know, of particular interest here. So, without further ado, would love for the three of you just to introduce yourselves. Daniel will do a better job introducing the name of his flagship brand, a little bit about your backgrounds and, you know, what you're working… Hang on. So, maybe we'll, we'll start with Daniel, and then go Justin and Jack.
Daniel Pike: Great. Nice to… nice to meet all you guys and see… all your names in the audience, I guess. So yeah, Dermeleve, I'm the co-founder and president of Dermeleve. We don't have a CEO, I didn't want to be CEO, but, I guess I'm the boss. we've been in the market for a little under 4 years. Company's about 5 years old. We sell, consumer products in the dermatology space. So, skincare, we have… we have two products right now. We have an anti-itch cream, and we have a scalp itch serum. It's like a liquid for scalp. And, they're very good products, and we have 6 or so new formulas that we're… we're rushing to sort of try to get out the door, so we're… we're really hoping soon to go from 2 formulas to, you know, 7 or 8. We, we've been through the journey of using 3PLs, like, we started with ShipBob, we're on Shopify, we went to ShipMonk, I can talk about our decisions there, and now we went on to Amazon storefront about a year ago, and very quickly, about 90% of our business is now coming in through Amazon, so we're now using FBA, of course, and we also use Amazon for MCF, so Amazon fulfills our… our e-comm Shopify orders as well. We have a… We have a small number of dermatology offices or private equity groups that buy wholesale from us, that we fulfill directly to, and a couple of small… of e-commerce… dermatology e-commerce stores that also we sell wholesale to that, you know. list our products there. We did do a fair amount of sampling to dermatology offices in the last two… two or three years. We've dialed that back because it's been very costly, but… and, you know, with not a great payback, we'd like to do that again when we have, you know, more marketing, cash flow, but fulfilling that was quite an effort, you know, shipping out cases of samples. So we do have a… we're based in Tampa, Florida. We have a small warehouse where we pack and kit and do certain things, to get, obviously, our pallets into Amazon. And also, you know, support our doctor offices, and And, sampling and all those sorts of things. Some of the unique, I guess, things is, obviously, we're an OTC drug. So we do have expiration dates on our products. There's some intricacies there with, particularly with Amazon. They don't allow us to use our UPC code. We have to over-sticker our UPC code for… with the Amazon FSN or ASIN barcode stickers, so that's been a manual process for us. I'd love to… Hear, if anybody has any ideas or anything there, we're looking at offloading that, and also the kidding. So, as you guys probably know, the pick fees on Amazon are very expensive. Our price points, by the way, are about $25 for our smaller tube and our scalp, and then we have one larger size of our cream, which is about $40, to give an idea of kind of, like, where our margins are, you know, the… Amazon fulfillment and… and, their, platform fees and marketing and all that stuff. We've got, you know, we've got 25 bucks. to maybe 40 bucks. Alright, some of our new products will be a little more expensive, so we'll have a little bit more room there to be comfortable and margin-wise. So, we're also… we're only selling in the US now, so it's something maybe in a year I might have some more experience, to comment on internationally. There's obviously regulatory issues with drugs, OTC drugs. That we have to deal with, on top of all the logistics, customs, and all that stuff, so… but I don't… we haven't really dipped our toes into the international, fulfillment yet. Hope that was concise enough.
Matt Hertz: Yeah, that's great. No, thanks, Daniel. Yeah, I'm sure you and Jack can have some conversations, either today or offline, about expanding overseas. He's got quite a bit of experience there. But yeah, I appreciate that, Daniel. Justin?
Justin Sherlock: Cool. Hey, thanks, Matt, and thanks, Daniel, for the detailed intro. I'm Justin Sherlock, I'm the co-founder and CEO. I am CEO, Daniel. of Caspian, which is a… we're building the first automated trade advisor. So we're an AI-native, drawback platform. We're also expanding the product pretty rapidly, just based on the issues that we're seeing U.S. importers are facing with tariff expense. I started the company about 18 months ago. We're… we are a fully licensed customs broker. We're also a CBP-approved integrated software vendor, so we can transmit claims directly to customs, and entries directly to customs. Through our software. Prior to Caspian, I was… At Flexport, where I ran their trade finance, group and worked closely with, with the, with the trade advisory teams there. And then, prior to that, I come from New York area. I grew up… I grew up basically in the finance industry. I was in finance, in my first couple of jobs before I moved over to the supply chain world, about 7 or 8 years ago. So… so yeah, the only other thing I'd add is that, fall is my… my favorite season, and we get a little bit of it in the Bay Area here, where I am. But I love… I love traveling to the East Coast where my family is, so I can get… Get some foliage in apples and maple syrup. But yeah, that's a little bit about me.
Matt Hertz: There you go, that's why we, we got that orange background for you there, Justin, as you were suggesting earlier. So, you're welcome. Jack, do they have… do they have a normal fall in the UK?
Jack Hackett: I mean we kind of don't take Halloween as serious, I think. I mean, it's not really a fall, I mean… sometimes fall is the same as summer without the leaves, I guess, you know, so, but yeah, no, it's, we've had a good summer here in the UK, so, but yeah, it's… it can be nice, but as you know, in the UK, the weather's pretty unpredictable, so… But yeah, so, yeah, I'm Jack Hackett. I'm the, co-founder and managing director of, AGS in Europe. They're a… New York, headquartered business, only 5 years old, very heavily focused on end-to-end solutions, particularly in e-commerce. We have a sister company called SpeedX, which is rapidly growing in the US, which is a final mile carrier. In terms of a bit about me, I've actually only, moving, and starting AGS in Europe. Was, something new for me. I was at Seco Logistics for 15 years, so, and hadn't worked for anyone else. This is kind of something new for me. Prior to that, so I was… the last 6 years, I've actually been based in the US. And I joined AGS, and the founder, Chris, said to me, could I come back and open Europe? So I'm kind of on a… On a… on a trip back to… back to the UK and back to homeland to open up, the… the European division of AGS. But yeah, they do, everything from, global freight forwarding, fulfillment, cross-border, and, domestic services. So, yeah, basically, we are… we are pretty end-to-end, but we do a hell of a lot, which is interesting, I think, for this conversation. We do a lot of cross-border parcels into our final mile network, and I mean, I'll save some of this for later, but… We… we have a lot of, importers in… in that realm that do Type A1, B2B2C, who are from a country of origin, China. So, we've kind of had to have our act together since early May. I can see Justin nodding his head there, so, yeah, I feel like, we've got a lot of good experience, and, I think we've got… I've got a lot of takeaways. So although… although I am based in Europe, I've just, you know, just moved, back to the UK temporarily, but have been in the US for the last 6 years, so I feel like, it's been a little bit of a… my first 6 to 8 months have been very much getting back into the European market. I mean, the last 6 years in the US have just been so crazy that it's been hard to think about anywhere else around the world, so… That's definitely been new for me, so, definitely still got my… US hat on with the fact that we are a US company, and if you think I moved back in April and, What's been going on since… April to now has been, yeah, Pretty crazy. So, yeah, that's me.
Matt Hertz: Yeah, thanks, Jack. Yeah, interesting timing for you to move back, for sure. I won't give, much of a background on myself as I, I, looking through the attendees, I think most, we, we, most, most of the attendees know who I am. The only thing I will say is, and I'm gonna put it here in the chat, and… and the chat is open, so if you have anything to share there. We also have a Q&A function on the bottom of your Zoom screen, so if you have any questions, put it in the chat or put it in the Q&A, and we can try to get to them in real time or towards the end of the session. But just one quick PSA, and I am putting it in the chat right now, but I… also looking through the attendee list, I know that a few of you were actually at the retreat that Third Person hosted a few weeks ago here in Nashville. I know Justin and Jack will be at next year's retreat, our second retreat, which will be in March. Daniel, I hope you will be there too. I have the link there, applications are open, it's a completely free, two-day experience, well, kind of two and a half day experience, free for brands. So, companies like Daniels, don't have to pay a nickel. Including a two-night stay at the Soho House here in Nashville. Unfortunately, Jack and Justin do have to pay a few nickels, but it's a really great experience, and, encourage everyone attending this call to, to apply, for next year's retreat, a really great, sort of intentional networking event. We do limit it to about 45 people, so it's going to be unlike some of those larger events that I think you've all been to, that, you sort of get lost in it. So, yeah, I appreciate, Jennifer, your… your words there to apply now. She was… she was there last year, or sorry, last… last… last time, a couple weeks ago, and had a really great unboxing. video on her LinkedIn social feed, if you're connected to her. So, just a PSA there. So. Yeah, thanks, thanks guys for your intros as well. Maybe we'll, we'll kind of get started with, I might, I might pick on Jack first. Apologies, Jack, but, you know, I am, I am very interested, to get your perspective on, you know, when U.S. brands come to you, looking to enter, European markets, and, you know, maybe this is in your past life with Seco, or maybe you're seeing this now with. you know, the new business that you started with, with AGS, but I'm curious when, you know, given that most of the attendees are U.S.-based. when U.S. brands, and maybe Daniel next year, or in a couple years, as he kind of evaluates potentially expanding overseas, what's, like, the number one mistake that U.S. brands make in sort of planning that move or launch, overseas?
Jack Hackett: I think there's a couple of things there, Matt, really. I think it's easy to make a mistake around entities and physical representation and things like that. I, I… I don't see many… I wouldn't say that's… I think that's an easy mistake to make, but I don't see many people doing it, because I think it's maybe sometimes one of the first things that you worry about is… Okay, can I… can I do this? Can I actually trade in that area before I think about setting up something out there?
I think I see, a lot of brands, particularly, like, in the UK, and obviously that's, you know, where I've had a lot of my focus in my career, but let's say the UK… I find a lot of brands sometimes automatically think, that their product would work exactly the same, like, for a UK consumer, or a European consumer. I think that's one of the mistakes they make, and then subsequently, they often then kind of go very all-in on it, because I think… You know, it's, I think the UK market and European market, I mean. we've… we've always liked to buy online, and I think it's natural to think, oh, okay, you know, lead times from… You can have a DC in Europe and fulfill all around Europe very quickly with, you know, at a relatively low cost when you think about it, right?
But I think a lot of people just then put stock in those areas, and I think there's probably not enough thought around… the actual types of products, right? I won't drop any names here, but I was talking to a brand recently, a golf brand, and they… they thought, and I just… I'm… I'm a… previous teaching professional, I wasn't anywhere near the tour, but I… I, you know, golf in the US and golf in the UK is two different things, and not to get too into it, but, you know, like, I love golf in the US because, you know what, like, it's so much more relaxed, you can listen to music, you can… you know, it's just… I feel like… You know, people are just there to have fun, it's a lot less serious. So, you know, you just think about the types of products that you have, being a, you know, in that market anyway. I don't want to get into too much detail, but you can think about the things that, like, the speaker for the golf cart, right? you know, golf carts don't… you know, actually, a lot of UK golf courses and European golf courses, they don't really have that many golf carts you walk.
So, anyway, I think… I think there's that. I think it's… but taking it back, Matt, I think people do go very deep in with a lot of stock, when actually, you know what, you can start with a pretty small stock pool, get yourself set up with the right entities, with the right representation, so I think that's one of the mistakes that they make.
Matt Hertz: Yeah, it's great. I love the golf analogy. I didn't realize that the game was, I mean… I'm, yeah, I don't play golf. I think it's… I think it's boring to play. I love watching it. Ironically. I love watching it. I don't like playing it. Maybe it's because I'm not good, and I've never taken a lesson. So, it's like watching me play pickup basketball, right? You know, it's… it's a struggle. I like sitting on my stationary Peloton bike, and I'm pretty good at that, so… But anyways, enough about sports.
No, no, I appreciate that response, Jack. Daniel, I want to go back to you, because you were kind of digging into sort of what your supply chain looks like, you know, a couple things that sort of stuck out. You said that you're only in the U.S. market today. It sounds like you're interested in potentially expanding internationally, and I can certainly appreciate that your product is a little bit more challenging, given that it's a… you know, topical, ointment, you know, OTC drug, essentially, right? You're not selling candles or t-shirts that are presumably a lot easier than medical-grade products like yours, so… I appreciate that. It sounds like you've, you've worked with other 3PLs in the past, so, you know, I think I heard you say Shipbob, maybe Shipmonk as well, and it sounds like now you're, you're, you're using Amazon, both for, you know, FBA, you know, sort of, Amazon.com, orders, as well as, the multi-channel fulfillment. I think you said MCF. So you probably have your Shopify store, I think you said, and all those, you know, all your inventory sitting in Amazon, and Amazon doing everything for you. That's really fascinating. I'd say it's not… yeah, it's mostly uncommon, but I don't mean that in a bad way. I think there's, like, a lot of brands out there that are kind of fearing Amazon, right? And they don't want to put all their eggs in one basket, and… they want a little bit of, you know, contingency. I'm curious, you know, particularly as I continue to hear a lot about Amazon's shipping service, you know, I think it's called, Amazon… what is it? It's something simple like Amazon Shipping, or…
Daniel Pike: fulfillment, I think.
Matt Hertz: Yeah, yeah, yeah, exactly, yeah. So yeah, yeah, I mean, I'm curious, you know, obviously you have a perspective on, like, how is Amazon? Is that, like, end-to-end supply chain partner for not just your Amazon orders, but your non-Amazon orders.
Daniel Pike: I mean, it's been… it's been great, and that's one of the things that I actually am interested in learning about in this… in this forum. I realize Amazon may be a dirty word here, but, you know, the… the sort of perspective I have is Amazon's eating… eating this… eating the world, right? Or they're… that's their goal. They're obviously… very quick to get products to consumers, with Amazon Prime. And… So, it's been… it's been a logical step for us to not have two two providers. Again, I mentioned our… right now, our e-com is only 10% of our business, Amazon is 90%, so… But, you know, they do… we did actually, this year, have some… inventory sort of squeeze. We… we ran low on inventory, we were changing our supplier, there were some delays, and so we had to sort of dial back, you know, pull our ads down. And they definitely prioritized their own inventory, right, the Amazon.com inventories. We had a stock on our Shopify, it was a big… A big nightmare, big headache.
We're also going to go into Walmart, which is interesting, Walmart, actually, you're allowed to use MCF to fulfill Walmart, but if it comes in any kind of Amazon-labeled envelope or box, you know, they will come to your house and kill your family. So, you know, there are a lot of intricacies. We're eventually going to ship into Walmart directly, too. So some of the… the things as well that I like to learn, and issues that we're dealing with. So, because, you know, the PIC fees are starting at, you know, I think $5… I have the schedule here somewhere in front of me, you know, $5, The rate card, so… The first… the first… item is $7 to deliver. If they pick a second one, so if someone orders two tubes, they add another $5. So it doubles the fulfillment cost just for them to put another tube in the box, and then it goes down to $4 for the third one.
So we've built 2-packs and 3-packs. You know, you notice a lot of products that are cheaper on Amazon, you can only buy them in a 3-pack, and that's, you know, most likely the reason. So we're now assembling those in our warehouse, which is very inefficient. Obviously, we get all the inventory from our manufacturer, and then we have people standing at their tables, loading them into 2-packs and bags, and we have to sticker over the single barcode with the 2-pack barcode so that Amazon employees don't accidentally scan the wrong barcode, which then screws up, you know, their system. Or delivers the wrong product, so that's something we're… That's just an inefficiency that, you know, we're looking to address, with their ASINs, and again, as I mentioned, they will not… we cannot register and use our UPC barcode, as the Amazon sticker, which you can do for non… expiration date products, so that's a bit of a hassle. We're looking at actually producing new boxes that have the Amazon barcode printed on the artwork instead of our UPC barcodes. We have a separate SKU specifically for the Amazon channels. Which just is another, you know, another item, and another complexity, another thing to… track and keep track of.
So, yeah, we're, you know, we're… I'd love to learn, you know, what alternatives are out there. We've been happy in general. One other thing I'll mention is we had a call this week with AWD, their warehouse… their new, sort of, warehousing business. I don't know if you guys are… have that on your radar, but they're basically turning on the Sort of a… an inbound, larger volume, inbound warehousing system where you ship in larger quantities, pallets, and so forth. And then that feeds into the FBA distribution center locations. The benefit, and I'm sort of surprised, it takes… their charge for us to open a case and take a case with FBA is, like, $14 up to $18 for a case of, call it 45 or 50 units. That goes down to $4, which is a tremendous savings, and then they manage the fulfillment internally from their AWD warehouse into their FBA facilities. You have a little bit more… you have an extra week of time to fulfill the channels, but the, you know, the feedback in the… out in the world is that it's… it's awful. You know, there's… the reviews are terrible. And they said, well, that was from when we had 4 warehouses, now we have 10 warehouses, and we're adding more, and etc. But, you know, I've gotten… I've gotten this mixed review that it's… that it's… It's not a seamless, you know, ordeal that you have to really stay on top of it, to make sure that everything gets in place and time. So we're gonna… we're gonna go… we're gonna do it, but, you know, we're gonna do it very cautiously, given that feedback. So, again, I don't have anything to report on that. We just had that call this week. Yeah, I see someone else commenting that they've only heard negative things. So, yeah, that'll remain… remain to be seen. Sorry, I don't know if I'm answering any… any questions.
Matt Hertz: I appreciate that, yeah. Yeah, yeah, no, it's, you know, I'm just curious, you know, given that so much of your distribution is with Amazon, you know, most… most of the brands that I've worked with, they have a portion of it, so it's… so it's interesting to kind of… since you're at the forefront, to kind of hear the… the good, the bad, and maybe some of the ugly. So, no, that's super helpful, Daniel. Justin, I wanna… I wanna go back to you, now. You know, for those who are less familiar with Caspian, I'm eager for you to kind of share, like, what gap in the market were you solving when you, you know, initially founded the company a couple years ago? And I think when you introduced yourself, you referred to Caspian as something that I hadn't heard you say before. What was that again?
Justin Sherlock: Oh, building the first automated trade advisor?
Matt Hertz: That's right, yeah, the first automated trade advisor. So, yeah, I'm curious, you know, given that you're sort of at the forefront of all this craziness out there with tariffs and whatnot, I'm sure that's keeping you busy. So, yeah, curious, you know, just to kind of understand some of the the challenges and pain points that, you set out to solve here at Caspian?
Justin Sherlock: Yeah, well, to dovetail on what Daniel was kind of sharing about his fulfillment model, I think it's interesting because I think in, you know, maybe in prior years. something that… maybe advice that a consultant or a 3PL or a tech provider might share is, like, well, why don't you try fulfillment from your factories via parcel? If you're doing all this, like, parcel creation in the U.S, you're importing in bulk, like, could you avoid duty by, like, just shipping the parcels directly from your manufacturer? And doing the kitting internationally, which is probably cheaper. And, like, that made sense for a lot of companies, and now, with everything that's happening, and with the de minimis provision going away, and then, of course, all these new tariffs, it's causing a lot of companies to have to rethink how they source and manufacture and assemble, and then ultimately deliver products. The customers, and it's really… it's really complex, and there's no, like, one-size-fits-all playbook. Every… there's kind of a bunch of different… different playbooks, depending on the type of product and the country that you're manufacturing in and where you sell. And the type of customer experience you need to provide, like, how close does your inventory need to live to your customers? There's all these different considerations, and at least on the tariff side, I felt like there hadn't really been an easy-to-use product that would help you figure out what to do.
And I work… when I was working with brands and manufacturers, I had a couple hundred clients that… that I worked with at Flexport, in our… in our lending division, back when I was… when I was there several years ago. And, I think just getting your arms around your total tariff exposure. what types of tariffs you're exposed to, the tariffs that are coming up, the newly proposed tariffs, and how those will impact your planning, was something that it was difficult for most, you know, SMBs and middle market companies and even large enterprises to get access to the right advice. And so that's why we… why we built Caspian. we always have wanted to build more than Duty Drawback. Duty Drawback is the first kind of tariff refund that we're unlocking. It's a really onerous process. It's only relevant for companies that export or destroy products from the U.S, so it's not a, you know, it's not for every single brand. It's a, you know, a smaller portion of brands and manufacturers that it's relevant for. But I think it's pretty… pretty untapped and underutilized because it's… it's so complex, and there isn't really any… any good software off the shelf for it. So that's a little bit of the… of the story there.
I think as far as, like, what's happening right now with tariffs. You know, there's, not to get, you know, too far ahead of the questions, but, you know, there's a lot going on in the news with the legal cases. There's also new tariff investigations that are ongoing right now. So, Section 232, which are product-focused tariffs. And Section 301, which are country-focused tariffs. Those are all, set to expand pretty rapidly. The 232s have already been… there's all sorts of new, you know, I'm sure you've seen, like, cabinets and furniture, and there's, you know, of course, automobiles were much earlier in the year, but there's been a number of new categories that keep getting added. Pharmaceuticals looks like it's on deck. Unfortunately for… for Daniel. And so it… it's like, how do you plan… plan around that? Is, is a tough question. How do you know what, what, what, what is… your margin going to look like when you're buying inventory, and then you have another, you know, maybe 6 months until that inventory all is gonna sell, is a difficult question. So that's some of the problems that we're helping companies with at Caspian once we, get into, you know, into their data for the drawback process. So… so yeah, that's… that's a quick overview, Matt.
Matt Hertz: Yeah, Daniel, do you, do you manufacture your product here in the U.S., or is it imported, or…
Daniel Pike: Yeah, we're made in USA. Our packaging does come from China, most of it. We have… our tube now is a US-made tube, but… so we're not terribly affected by the tariffs, you know? The packaging is 20 to 50 cents or something for each unit, so it hasn't been a big… big factor, and then, you know, the materials that go into the formulations themselves, those come from all over the place. An important one comes from… did come from China, we found another supplier, but those typically get handled by the chemical suppliers, and they're shipping your orders from the U.S., and the tariffs are… Sort of incorporated into their pricing, so it hasn't affected us a ton, to date, to be honest.
Matt Hertz: Yeah.
Justin Sherlock: That was great.
Matt Hertz: Yeah, you're lucky. Jack, curious, you know, what are you seeing… In terms of, you know, brands, I mean, we can pick on Europe, but, you know, maybe just anywhere, kind of, rest of the world, Asia, or else, you know, Australia, or elsewhere. Are you seeing these brands as a result of, kind of, the current, tariff environment here in the United States? Are you seeing… is there a trend of more of these brands? opening up, facilities in the U.S. to service the U.S. customer, given that de minimis is completely off the table now, are you seeing non-US brands, sort of avoid selling into the U.S.? Are you seeing U.S. brands move fulfillment outside the U.S. to service that local market? You know, what are… what are some of the sort of macro trends that you're seeing, sort of, you know, e-com distribution patterns you're seeing?
Justin Sherlock: Yeah, also the… sorry to jump in, Matt, but there's a good question from Marcus in the chat around… 3PL costs in Europe, which I would honestly be curious to learn about, too, from Jack.
Jack Hackett: Yeah, I'll cover your one first, Matt. In terms of, like, what we're seeing from brands, I mean, I don't know if… if us at, you know, AGS and SpeedX are incredibly lucky, but… a lot of the brands that we're servicing today… now, bear in mind, we service actual brands, we also service, cross-border providers, because we offer brokerage services and, obviously, final miles, so we work with a lot of cross-border providers that need that service. Actually, a bunch in the UK, actually. And we haven't seen volumes drop at all. If anything, now I… Could I tell you, I think every brand's taken it slightly differently. I mean, we have a lot of brands that ship from China. And, you know, they have very unique ways of… of looking at it. I think, you know, they're… that they've clearly found a way, whether absorbing cost or adding cost on, but still, the US consumer is finding it, that that's okay.
I found a lot of brands particularly in the last few weeks of the de minimis going, so, you know, kind of, in August. Panicking, in a sense of, rightly so, that… you know, we need to get fulfillment, and then actually realizing that they can totally get by with a Type 01 clearance, which a lot of people were calling the B2B2C, or the Type 11. Obviously, with the Type 01, you know, you have to remember you have to have a US entity, but… I would just say that, like, they're… It's just… I think people were adjusting, right? Like, just not to bring up COVID, but, like, we adjusted, and you… you find a way, and I think, you know, not to… use a phrase, and he's… he's actually Anthony Pizza, our… our head of SVP of Marketing, and… and kind of our brand management. I mean, when I first got him on a call with some of my UK brands that ship to the US, you know, I think his phrase was, it's, you know, it's not difficult, it's just tedious. And I think that's what… that's why people like Justin are doing what they're doing, because they are a… I think someone put it in a chat, a godsend for the business, because… You know, our world is so, you know, manual, and people just try to avoid it for that reason.
So, I think it's a mixed bag. I think people are doing a lot of both, Matt. I think people are setting up fulfillment, in, you know, in the US. They're certainly looking at. I know a lot of brands that are also looking at, you know, taking down space themselves as well. I mean, and looking at it from that way, because you know what? Like, that way, they can take 5 to 10,000, just an example, square feet, and it be their own problem, rather than, you know, getting into bed with a… with a, you know, a fulfillment partner, and… or, you know, marrying a fulfillment partner, and… and actually, like, having to sign up to volume, right? And all of that good stuff, which totally makes sense.
And then, I'll just quickly answer the European one. I think… it really does matter where you are in Europe, I mean… you know, Amsterdam can be super expensive, depending on where you are, but it's really similar to the US, whereby, you know, it depends… how long… that particular, 3PL took down their facility, right? Or took their facility. I mean, you know, when I was at Seco, we expanded really quickly, on the West Coast, for example, and signed a lot of deals during you know, the peak periods, which you can look at it either way. So it does really matter about that. I think a lot of people were getting… are thinking a little bit more outside the box. In Europe, and not thinking about the traditional places, like Germany, the Netherlands, UK. I mean, a lot of people are looking at Ireland now. I mean, Ireland's kind of unique. It's, it does open up some doors for people in a sense of, you know what, it does tick boxes.
So I just think… it's almost like, just to plug Third Person again, Matt, I mean, it's like the way that you… the way that you have the… the website set up with, you know, what do you need, right? Because I could give you a… so many different examples of different countries that… it's a whole different ballgame now. So, you know, where I would have recommended the UK to some people for, let's say, a particular fulfillment strategy, actually, there might be a lot better countries in and around Europe for that now. And I think it's all about the changing times, different regulations, the setup from the US and the risk you're willing to take. So, yeah, I think it's, it's really about specific scenarios to compare it to the US, but it's very similar to the US in many different ways.
Justin Sherlock: Matt, can I jump in with a question for Jack? I'm curious what categories, Jack, you're seeing are actually still doing well shipping from Europe to the U.S. What I'm hearing or seeing is just, like, a massive fall-off in interest from international companies to sell into the U.S. as a result of the tariffs and the de minimis going away, and so I'm curious what's still… what's still doing well, what, what, what, what, where, where are you, where are you, where are you seeing where there's still, still, still volume or growth in the market?
Jack Hackett: I think fashion retail is something that is still… if you're a brand and… you're like… you know, everyone wants to crack the US, right? Like, the US is… you know, just as a consumer, and thinking about how my wife shopped, and things like that, because when we lived, you know, when we were living in the US for 6 years, you know what, like, yeah, that, you know, buying clothing in the US is not cheap, whereas, you know, there's so many brands out there that, you know, they are pretty mid-market in these other countries, but actually they can sell in the US at double the price that… they are selling in, you know, in their in-country, and yet still be a really great price point for the US. So, obviously, rate of exchange makes a difference, and that's fluctuating a lot at the moment, but ultimately, yeah, I would say fashion. But yeah, I just think, yes, there's definitely just in some brands that are, like, kind of avoiding the situation, and… oh god, I, you know, I don't even want to think about that right now, but ultimately, the US is the US, and everyone wants to crack it, right? So, I just think it always comes back to that, and… I'm very proud to have, you know, I'm a green card holder and a permanent resident, and ultimately I will, you know, me and my family will move back eventually. But ultimately, like, yeah, it's… it's… it's… it's a big world out there, and a lot… a lot of different, areas to crack.
Justin Sherlock: Yeah, sorry, I have one follow-up, which is in the opposite direction. So, U.S. companies expanding internationally, obviously, like, everything we do at Caspian is to help companies grow their international sales, their exports, because that is… that increases the potential for tariff refunds through drawback. But one thing that I keep hearing anecdotally, and I haven't really seen it, and so I'm curious if you see it, is just the… how U.S. products are performing internationally, and obviously the whole rationale of the tariffs are that we're going to help U.S. producers and manufacturers expand internationally, expand sales, help businesses like Dermeleve to consider international sales, because the exchange rate's really favorable now, and there's, you know, they're protected from from, you know, Chinese competition that's, that's lower, lower, lower cost. You know, is that… starting to happen? Are U.S. products now, like, actually becoming more in demand? Obviously, Canada has… the Canadian consumer has said, like, we won't buy from U.S. companies, but in Europe, is there… are you seeing any growth there of companies having success going into Europe?
Jack Hackett: Yeah, I think it's too early to tell, Justin, to be honest. Like, I think it's, but my answer would be yes, because, like, just as someone who, you know, spent so much time focused on the US, and being around it, and seeing brands, and seeing things I've not seen before from, you know, most of my life living in UK and Europe. I was kind of shocked to see the amount of US brands you know, in the UK right now, right? Like, so that definitely… but my thing is, is they were kind of there before, so I think that's going to accelerate that, but in all honesty, it's too early to tell, because I think… but I definitely think it's gonna have a great impact, particularly, I think you touched on it, that the rate of exchange, I mean, yeah, that's certainly improved, right? And I think that's gonna create a hell of a lot of opportunity.
Matt Hertz: Yeah, that's great. Daniel, sort of on that note, like, what do you… and I realize we only have about a minute or two here, so just a quick one for you, Daniel, and then we can wrap, but, I realize your product is not exactly… well, I'm assuming, but, my assumption is that it's not that cyclical, right? It's not that seasonal, right? You're not selling swimsuits or, you know, other kind of seasonal, kind of highly giftable products, right? So I'm curious, like, what sort of trends have you seen, or, you know, maybe even talking to some of your other founder friends who run direct-to-consumer businesses, you know, given kind of the state of the economy today, which I think is rather strong, are you seeing, like, has your business been impacted, you know, adversely or favorably, you know, this year, given the changing of the guard in DC and some of the policies that have come with that?
Daniel Pike: We have… no, not… not really. I mean, obviously, I… we were talking about the tariffs that have impacted a lot of people, e-com brands that source from China, obviously, if there's a lot of trouble there. I haven't… seen too much. I mean, there's obviously… we… this is not on logistics, this is on the marketing side. Obviously, marketing gets way more expensive as the holidays get near, so we actually we sort of throttle down and actually don't compete then, because, like you said, we're not a gifting product. We do have some cyclical, like, in the Northeast, winter's itch affects people, so… and then the summer, there's, like, sunburn and the, you know, bug bites and things. We have sort of micro, what do you call it? Seasonal, adjustments, if you will, but, they are not… we've… we've entered the market, we're going for, like, chronic sufferers, so it's… it's, like you said, it's fairly steady. So, yeah, I don't… I don't… I haven't seen… I don't know too many examples of, you know, the DC affecting things, except for, obviously, some of the rah-rah, like, Go Magga brands, people have been able to capitalize on that, and but no, apart from the tariffs and just all the confusion, that's sort of been the only… the only, little sticking point that I've… that I've come across.
I did have one thing, I don't know if we have time, but one thing I did want to make sure as a brand, as a consumer of these services, I mean, like, one of these issues that was painful for us with, particularly with ShipBob, you know, ShipBob started to expand. They were, I think, going to try to IPO, so they started federating and using all these these mom-and-pop third-party locations, and so one of the issues that was the cons… well, two issues. One was transparency and pricing was a difficulty. You know, you'd get this rate card, and then you'd try to calculate what your cost would be. And it was difficult, surprisingly difficult, because their unpack fee and their storage of the bulk versus the storage of the unpacked products, you know, and then their pick fees, and then do you use your own box, or do they use their box? And then a lot of times, the package would come in a box that was, like, this big, you know, and your product in there, like, this big. And, you know, the delivery time would be 5 to 10 days, would every single time get there on the 10th or 11th day. So there was a lot of just… crap there that… that, you know, you're supposed to… supposed to be, you know, set and forget it, and… and you couldn't.
So that's… that's one sticking point out, if you have any… any comments on that, or any thoughts, or… on that kind of thing, the sort of the last mile, I guess. And I'm curious, do you guys… are your international customers… is it brands like us? Is it Shopify Ecom, or are you fulfilling to, like, wholesale, or is it a whole mix of everything? I assume it's probably everything, but I'm just curious, are you guys dealing more with you know, wholesale businesses going to retail, or e-com, or Amazon overseas. Sorry, that was, like, 10 questions in the last minute.
Justin Sherlock: Yes. I think… I think Jack and I could say yes. Yeah, we… I mean, we… we work with brands, you know, direct-to-consumer brands, we also work with, you know, retail brands and… and just omni-channel, you know, sellers. I think our products work independent of business… business model, revenue model, and then… and then also just supply chain model as well. So, like, you know, you're… you're importing raw material, whereas another competitor might be importing finished product. And… but there's… to us, or imports with, tariffs and… attached, and how do we get those down is the… is the key. So… so that's… that's how… that's how we… we look at it. We're kind of… sector agnostic in that way. I think, the challenge then is, like, you know, with each customer, like, how do you develop a good playbook for tariff reduction? I don't have a great sense on the fulfillment side. I guess I'll let Matt and Jack speak to that.
Matt Hertz: Yeah, Jack, do you want to take it?
Jack Hackett: I mean… and sorry, Daniel, tell me if I haven't answered the question, because you did ask a few, and I'm… I was thinking more about your last few, but in terms of, like, final mile to touch on that, I think, you know, I set up a lot of fulfillment operations in, you know, in Seco, and we also do fulfillment at AGS, and I think I think the good thing, that you've kind of just got to find is… I think making sure that, some of the fulfillment partners have thinking a little bit outside the box of some regional carriers, you know, and not just because AGS owns one. Actually, you know, SpeedX is kind of turning into much more of a… a US, you know, carrier with… with delivering there, but was set up as more of a regional carrier, for sure.
But I think there's so many great you know, great carriers out there that are really great in certain locations. So, it's just ensuring that the 3PL, because I think, you know, everyone can pick and pack, right? It just depends on how quickly, how much automation, all of that good stuff, you know, the level of complexity. But I think having some really good, you know, a network of carriers and the right transport management system to ensure that you can… change as well, and you can flux between, you know, you know, a regional carrier in certain areas, and then just making sure that you kind of use multiple carriers, really. I mean, not that that's the right solution for everyone, but… I think that really helps, because there's some great carriers out there that are really great in certain locations, and not in others, so I think, that certainly, you know, helps, diverse things, for sure. Did that answer your question?
Daniel Pike: Yeah, yeah, it sounds like you guys do that hard work and sort of go, you know, squashing out as many of those pain points that… a brand like ours would… would be facing, so thank you.
Matt Hertz: Well, great, no, I appreciate that, Jack. And, yeah, Daniel and Justin and Jack, appreciate you guys joining us. Thank you, to the three of you, and for those who watch today. This will be posted on our YouTube channels and be sent around, over email over the next, oh, probably later tonight, but certainly over the next day or two. So, for those who registered but couldn't make it, and for those who just want to watch it again, it'll be available. So, thanks everyone for joining, thanks to the other panelists, and, have a good rest of the week.
Daniel Pike: Thanks so much, guys, it was fun.
Matt Hertz: Thank you, guys.
