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And did you also use these carriers for storing the items, or where was the inventory held?

When we evaluated the costs, we found that these third-party warehouses were cheaper in terms of both variable and fixed costs, especially when we were operating only five fulfillment centers. However, when we factored in the costs associated with damaged goods, the expenses were significantly higher. One critical aspect of handling large, heavy, bulky items is how they are managed in your system and throughout your supply chain. This led us to consider moving to our own infrastructure.

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I'm not sure about the scale of investment required to achieve this, but I assume it happened relatively quickly. It's likely that your fixed cost per unit also decreased compared to the third parties. Could you tell us where you think you ended up relative to the third-party costs of doing this, considering the entire end-to-end process, including the netting back of returns for damages and such?

At that point, our variable cost was at least 10% lower than the third parties, while our fixed cost was about 10% higher than the third-party carriers.

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