Growing Your Business Through Proper Inventory Management with Chad Rubin of Skubana

Guillaume: Welcome everyone, Guillaume Le Tual here host of the e-commerce Wizard Podcast where I feature top leaders in business and e-commerce. Today we have Chad Rubin, the CEO and Co-Founder of Skubana. He also has experience running his own e-commerce store. Today we will be talking about inventory management or more specifically tactics, strategies to tackle multi-channel, multi-warehouse and other e-commerce challenges for B2B, B2C, and D2C.

Before we get started, here’s our sponsorship message. This episode is brought to you by MageMontreal. If a business wants a powerful e-commerce store that will increase their sales or to move piled up dormant inventory to free up cash reserves or to automate business process to gain efficiency and reduce human errors, our company MageMontreal can do that.

We’ve been helping e-commerce stores for over a decade. Here’s the catch. We are specialized and only work on the Adobe Magento commerce platform. Even if a site doesn’t have Magento site, we’ve covered lots of site over, we do everything Magento related. Know someone who needs design development, maintenance, training, support, debugging, or performance analysis for their e-commerce store, we got their back. Email our team support at magemontreal.com or go to magemontreal.com. Alright Chad, pleasure to have you here with us.

Chad: Thanks Guillaume for having me.

Guillaume: All right. So, you have an interesting story here to tell, you created that company Skubana but it came out of a need in your own experience. Can you tell us a bit about that?

Chad: Yeah, absolutely. I started my own e-commerce business when it was really the Wild Wild West, this was back in 2007. I started manufacturing and selling vacuum cleaner parts and accessories online. And after running the pain of that business…

Guillaume: That’s a good one.

Chad: I mean, it was definitely painful, right? So, we were selling across multiple different channels, we were fulfilling ourselves, I was running this massive warehouse. And I needed an operation system, I couldn’t find one. So, the way I characterize an operation system is that on the front end, let’s just say it’s Magento and on the back end, it’s your finance, like QuickBooks or NetSuite. The messy middle is really what I needed. It’s where the company operates. It’s everything you need, from a day-to-day operation, it’s mission critical to get those orders out the door.

So, BS Before Skubana it was like you needed a point shipping software, and then you needed a point inventory software, and then you don’t have centralized analytics to make decisions on. So, we started Skubana as a purpose-built modern-day version of NetSuite without the bloat without the pain, to plug and play to all different carriers to plug and play all the different three pls, we have an app store. It’s all out of the box, it’s pretty awesome. I’ve been living that pain, and we started a business to solve that pain and to solve that problem.

Guillaume: Right. Let’s say that inventory management software that you’ve built, let’s start to define that a bit more, when does a business need one? And what are the symptoms and the sign that they do need one?

Chad: If you’re on one channel, and you have one skew, you probably can use some of the rudimentary tools that are available to you out of the box in some of these e-commerce platforms. But as complexity increases, as your business makes more money… I love rap, and so Mase had a song with Biggy that was like, Mo money Mo problems. As the company is scaling and growing, and you’re making more money, that’s where the problems happen, scaling challenges that you never actually thought would exist. And that’s really where Skubana comes in. Typically, it’s probably the cost of like a 2 or 3 million dollar number, and goes all the way up from there, 100 million and beyond.

Guillaume: Do you want to give some examples, perhaps the stories of the first few pain points that you’ve lived like this with?

Chad: There’s so many different sets, that’s the interesting thing about our software, it’s that people come to us and we’re sort of like doctors, we prescribe the medication based on the pain that they actually are experiencing. In my case, I can speak from experience, I couldn’t find a software that can handle my quarter volume. That wasn’t going to be a seven-figure deployment, and a year and a half of agony, getting that implementation with resellers and consultants in the mix. And I was like, there has to be a better way. And there has to be a way where you have the point of order of the entry of the order plus inventory plus forecasting all together in one system.

Because if everybody in your team is speaking in different languages, there’s no alignment, and there’s no intelligence that you can garner to run the business better. Another example, which is a case study on our website, just as an example, would be something like Tushy, when the pandemic happened, there was a run on toilet paper. And the days skyrocketed because people couldn’t get toilet paper. So Tushy’s business blew up in a positive way and they needed to actually be nimble and be quick to essentially start shipping from another warehouse, shipping direct to consumer from China in Asia. If they were using a bloated system or an old school system or legacy system, they wouldn’t have been able to actually create those rules, get that new warehouse off the ground and getting them fulfilling on their behalf in literally minutes.

That’s just another example. But for us, it’s from anywhere you ship from whether you actually fulfill yourself or you have a three PL multiple different warehouses, or as many channels as you have that you’re selling on, we run and orchestrate those orders, we manage the inventory so you have visibility, we do all the forecasting and demand planning, we automate a lot of the process so that your team can be doing higher impact activities.

Guillaume: So, you go beyond from what I’m hearing, just inventory management, you even go to the shipping aspect to handle that and to take on a solution like ShipStation or ShipperHQ, I guess in a way you’d be replacing them as well.

Chad: So ShipperHQ I think feeds in shipping rates into the e-commerce platform. But I think you’re spot on with ShipStation. ShipStation is a point system that only focuses on shipping. So, imagine a world where you have everything you want about ShipStation but everything else you need to run your business all in one unified platform with an app store that helps you add strength to the platform on top of it. That’s really what we’ve built.

Guillaume: Alright, what’s your philosophy because any software that you develop, obviously, you’ll have an end goal, a vision, and that will make you do different decision as you build that platform and you will have a totally different product. So, what is the philosophy driving all this?

Chad: The philosophy driving Skubana? Initially, the philosophy was I needed an inventory system, my business partner and the CTO was like, ‘hey, we need orders plus inventory together’ and the scope dramatically increased. If I had to put a philosophy on this, my philosophy has changed tremendously since when we started Skubana which was seven years later, which you can see with the hair loss on top. But the philosophy now is like what’s going to be the feature that’s going to make our customers and ourselves the highest amount of ROI?

Because we add features all the time, everybody wants features. Everybody wants more things in the platform, especially as we’ve been able to ladder up into bigger, better brands that sell direct to consumer. Everybody has requests, so how do you pursue those requests? Really, it comes down to number one, what’s going to be the ROI for our customers for the entire customer base plus ourselves and plus our investors. And then on top of that, we want to allow our brands to remove friction on the platform so that we can unlock nonlinear growth for them.

If we can make a small tweak, there’s a saying, small hinges swing big doors. So, if we make a small tweak, and that can unlock nonlinear growth, and exponential growth for our customers, and we want to be part of that.

Guillaume: Pretty awesome. I’m seeing, for example, auto appeals or purchase orders. It’s always reordered right amount. That seems like a very interesting automation. It’s something that I have heard lots of Magento merchants ask for. That’s pretty interesting. Is there any other kind of scenarios of automation that you’d like to talk about?

Chad: Firstly, I’m a huge fan of automation, trying to find technology to automate manual labor to augment the team so that my team can be working on higher impact activities. I think the auto PO is a great example of one. And a lot of companies say they have auto POs, but not in the way that we do it. Typically, if you’re a merchant or a brand that’s selling online, and you’re selling many different channels, you need to go through and look at all the velocity reports, how many do we sell on this channel? How many do we sell from this warehouse and from that warehouse, and then you essentially have to do v lookups, and H lookups, put all the information together. Now you can make your decision and it takes weeks to put it together. And by the time you make that decision, you’re already behind the curve, meaning you have to go and readjust your numbers again.

Instead, we’re like wait, why don’t we just take technology? Let our system figure out, it already knows your velocity, it already has mapped all the skews together. It has your lead time, it has your means on the vendor side. So why don’t you actually have Skubana become a 24/7, 365 employee? It’s constantly working in the background, to make decisions, when to buy, how many to buy, coming to buy with what vendor at what cost based on a specific lead time. We take all that information, and we constantly are adjusting a purchase order for you and putting a nice bow on top. And then you as the brand or merchant have permissions to authorize a purchase order, since a PO is a legally binding document, you as the merchant or brand have to have the keys to actually authorize that purchase order.

So that’s one example of automation, right? I’m just telling you what Skubana does. The idea of this is to just open up doors of perception for people to figure out what they can be automating in their business. This was an example for us of what we had done. Another example in Skubana is that we have order bots. It’s something that we’ve trademarked, which are if then statements that take the thinking out of fulfillment.

So, if you have three warehouses in the United States, and you want to order orchestrate those orders and balance inventory appropriately across those warehouses. Skubana is automatically figuring out what warehouse something should ship from, and it’s actually going to be the cheapest shipping for your team and for your company. We have rate shopping in the background happening automatically across all the main domestic carriers. Those are two examples.

Guillaume: Pretty cool. Are there some specific strategies or tactics that you’d like to recommend to merchants? Best practices and so on to put in place when they want to deploy some inventory management?

Chad: For me, I think it’s the sooner the better, I think it’s very important to have a foundation. And if you’re scaling a business that’s growing rapidly, if you don’t have a foundation, it’s going to fall apart. The second that you realize that you’re experiencing pressure and stress, as it relates to stock outs, running out of stock, or not having enough in stock or not being able to manage your vendors appropriately based on lead times to run just in time inventory, I would suggest getting a system in place right away. And then it comes down to budget, there’s a lot of entry level software’s out there. And then once you scale beyond the point that you thought, your software kind of becomes the ceiling for you. Do you want to re-platform again? Do you want to have to go through the pain of re-platforming over and over again? Or do you want to buy shoes that are bigger than what you need right now, but enough to go deeper down the rabbit hole?

I have a 19-month-old son. So, we don’t buy shoes of where he’s at today because his foot is growing so quickly. Let’s get him a few months older shoes, that’s like my example. It just depends on your time horizon and it depends on your budget. But I recommend getting a sophisticated advanced system in place sooner than later.

Guillaume: How does that work with many marketplaces? Because we’re talking multi-channel here, which channel would you support or recommend to expand to?

Chad: We support all of the major e-commerce platforms along with all the major marketplaces, and there’s a lot of longterm marketplaces out there as well. And those are available in our app store. But when you’re deciding on where to sell, the filtration process is imperative because you don’t want to be everywhere, and then be nothing to everybody. Picking and choosing your battles and picking which platforms where your customers live, where they spend their time, where they shop is most important.

As an example, before Skubana, which I still have my e-commerce business crucial.com, we manufacture and sell home appliance parts direct to consumer. Now we sell on Wayfair, Overstock, Home Depot. But I may not want to sell on [inaudible00:14:03] or maybe it’s not an opportunity for me to sell on Instagram, nobody wants to look at dirty filters or replacement parts on Instagram. Those are channels that we don’t currently serve or service because that’s not where our customer base lives. I think picking and choosing where you want to sell is super important.

For me, I think Amazon is big. People go to Amazon when they want to buy a commodity and I’m in the top 1000 brands on Amazon today, which is still in the in the top 1%. Although I think back in the day, when it was much more nascent, I was higher, but that’s a vanity metric, right? Most importantly, you need to make sure that you’re making money on Amazon. Amazon’s really good at telling you what you make, but they’re really bad at telling you what you keep. And that’s really what keeps the marketplace alive. That’s also what people find that’s useful on Skubana is that we actually pull in all these fees that are overstated, we pull in the reports and we give you this profitability report per skew per channel with every single fee associated with it to run the business.

Guillaume: Awesome, where does the scope of your software stop? Let’s say we’re talking about managing inventory, is it purely on the software side? What about the actual physical warehouse? Like we’re scanning a code bar or something like that entering stock, shipping stock?

Chad: That’s really where App Store comes in. We have a plug and play App Store, we have a pretty big ecosystem that we built and for us, we shake what our mama gave us. We focus on the core and then anything outside of this, the core is just a resource distraction. We use our app store as a way to not have to build out a WMS, to not have to build out barcoding software, to not have to build out business intelligence software. We encourage others to build into us to essentially pick up where Skubana leaves off.

The key piece here is that, when people think about ERPs, they think about big bloated systems and they think of companies like SAP or NetSuite. These companies started off with a ledger system and now have tried to build in an operational suite into their software. And these systems were built before there was another E and commerce. It’s hard to use last generation technology to build tools for the future, which is why they’re so nimble or why they’re not nimble, why a lot of these big incumbents can’t pivot as quickly as they’d like to pivot, or move into DTC. So Skubana doesn’t actually touch the ledger. We have a beautiful integration that we built to QuickBooks Online, where all the information is filtered. And on a daily, monthly or hourly basis can be thrown into QuickBooks, but we focus on really the basics of operations.

Guillaume: That covers pretty well. Is there any other topics about inventory management that you’d like to cover?

Chad: Topics of inventory? It’s such a broad topic. I think if you can get inventory management, right, that’s a key principle to succeeding in e-commerce. Because if you have no inventory to sell, then you can’t make money. And if you buy too much, and you have cash sitting, so it’s actually finding the optimal place, the optimal number across all of your skews. And doing that is actually very hard, especially as your business grows. I don’t really have anything else to share on inventory at this moment unless you see something I should be sharing.

Guillaume: That’s pretty good. I think we we’ve covered the topic. Thank you Chad for your insight and for being here today.

Chad: Thanks for having me.