Podcast: The True Cost of Fulfillment: How to Protect Margins Amid Rising Carrier Rates

Episode Summary

In this episode of the Free to Grow CFO podcast, Jon Blair and Tony Runyan discuss the current challenges in the logistics and e-commerce sectors, focusing on tariffs, mid-year carrier rate changes, and strategies for managing cash flow and inventory. They explore the implications of bonded warehousing and the importance of understanding the total cost of fulfillment. The discussion highlights the need for brands to adapt to ongoing uncertainties and optimize their operations to maintain profitability.

Key Takeaways

  • Mid-year rate increases are occurring despite lower package volumes.

  • Bonded warehousing can defer tariff payments but has complexities.

  • Uncertainty in tariffs is affecting budgeting for brands.

Meet Tony Runyan

Tony, CCO of Red Stag, is a strategic client relationship leader with over 15 years of experience helping businesses scale effectively. His passion for working with entrepreneurs shines through in his approach to client partnerships, where he combines deep operational expertise with genuine enthusiasm for helping ecommerce brands overcome complex fulfillment challenges.

He oversees all client-facing operations and manages strategic relationships with parcel shipping partners. He thrives on being a critical component in enabling brands to scale, finding deep satisfaction in watching entrepreneurs transform their visions into successful businesses.

Tony’s leadership journey at Red Stag began nearly seven years ago as VP of Client Success, where he built and led a team of over 20 professionals across onboarding, client support, and client success functions. Under his guidance, the client services department developed robust processes that helped hundreds of ecommerce brands navigate their growth challenges while maintaining exceptional customer experiences.

Before joining Red Stag, Tony spent nearly a decade at Voices Heard Media as SVP of Business Development and Operations, where he honed his skills in strategic relationship building and operational excellence. His career also includes executive leadership as VP of Business Development and Digital Marketing at BigWheel, where he developed expertise in helping businesses establish and optimize their digital presence to drive growth.

Since 2014, Tony has served as an Adjunct Professor of Business at Carson-Newman University, teaching future business leaders how to analyze complex situations and develop practical solution.

Tony holds an MBA from the University of Tennessee, Knoxville, and a Bachelor’s degree in Business Management from Carson-Newman University.




Transcript

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00:00 Introduction and Overview of Current Challenges

03:00 Navigating Tariffs and Uncertainty

05:59 Strategies for Cash Flow Management

09:01 Understanding Bonded Warehousing

12:03 Mid-Year Carrier Rate Changes

16:58 Impact of COVID on Shipping Dynamics

20:10 Adapting to Rate Changes

20:45 Optimizing Inventory Load Balancing

28:08 Conclusion and Future Considerations




Jon Blair (00:00)

Tariffs are on, no they're off, wait, they're on again. And now carriers like UPS and FedEx are raising their rates mid-year, what should you do? Today's guest is gonna help you decide. Hey everyone, welcome back to another episode of the Free to Grow CFO podcast, where we dive deep into conversations about scaling a profitable D T C brand. I'm your host, Jon Blair, founder of Free to Grow CFO.

We are the go-to outsource finance and accounting firm for eight and nine figure D T C brands.

Alright, today I'm here with my buddy Tony Runyan again.

Last time's conversation was awesome. For those of you who haven't heard the first time Tony was on the show several months back, definitely recommend searching for that if you haven't. We got really into like the, I mean, I think we got pretty deep into like understanding how shipping rates really work. Today we're gonna talk about more, I don't know, I guess I'll call it, I'm gonna call it advanced strategies. Beyond just like how the rates.

for these different carriers work. for those of you who don't know, Tony, Chief Client Officer at Red Stag Fulfillment, been there a long time. We also have a lot in common. He's also a father of three and a musician and a follower of Jesus. So we've got several things that our lives are aligned on. But today we're gonna be talking about several things from tariffs to mid-year carrier rate changes to inventory load balancing. But before we get into any of that, I'm just curious, Tony, like,

Tony Runyan (01:10)

Yeah. ⁓

Jon Blair (01:27)

If someone were to walk up to you and say, man, you being in the 3PL business for several years and being an executive at a very well established ecom focused 3PL, what are you, what are kind of like the things right now that you're seeing are top of mind for brands right now,

Tony Runyan (01:48)

Yeah. And I'll try not to go too deep into any of them, but just kind of some of the broad strokes. Tariffs, obviously that's a big one, right? And we'll mix de minimis and tariffs together in this. for Red Stag think for us specifically working with big and bulky quite a bit in addition to some of the other ecom volume, I think we're seeing that for these companies who are

manufacturing overseas, which are many of the companies that we work with or that are manufacturing the big and bulky type items. This has created a lot of uncertainty. And as a result, when you're trying to plan your budget for the quarter, for the year, et cetera, this not knowing if you're going to pay a 10 % tariff, a 40 % tariff, a 145 % tariff is a big one. Now you add to that what we've seen with

shipping and I mean like shipping containers right from overseas and then as well as the transportation once it gets to port and hey what's going to happen there are we going to see a surge in cost there which another uncertainty so uncertainty is kind of the name of the game right now and I would say that you know in general demand seems to be softer in the parcel networks as well which is counterintuitive to what we're seeing in the market.

with what parcel carriers are doing, which is increasing prices, right? At least the major ones. I would say predictability, consistency is a lot of what we're seeing brands are looking for, trying to grab it wherever they can.

Jon Blair (03:23)

Yeah, yeah, for sure, man. Uncertainty definitely is the name of the game right now. It's a challenging, challenging time and we're not even sure what to plan for at any given point in time. Like we're helping brands on the CFO side who are the most impacted by tariffs and them changing so frequently. We're like having to go, hey, let's see what the worst case looks like and then let's walk from worst case to best case in iterations to see what.

financial projections look like to just get a sense of like the range of possibilities and have a loose kind of rough plan of what we would do in any of those instances. What, what are you in, in, the, three 3PL world, what are some of the strategies or tactics that you're either helping brands with, or you're seeing brands implement to try to stabilize their business as much.

as possible amidst all of this uncertainty.

Tony Runyan (04:24)

Yeah, so I'll try to fire off a few and really one I'll put back to you at some point, which is cashflow management with inventory. Like how are they, you know, how do we plan for that? So that's, we're trying to help in some of those conversations, but in reality is why we've pulled you in or, you know, your expertise in some of those conversations to help guide those decisions on how do we, you know, make sure we're not exposing ourselves to too much risk on the cashflow side. that's one, I would say that where we're trying to help

Jon Blair (04:31)

Mmm. Yeah.

Tony Runyan (04:54)

really is there's certain areas under our control within, if you're a fulfillment center, whether it be storage, labor costs, et cetera, we're also evaluating each of those points within ours. Now in reality, some of those like are gonna go up due to what's going on, but we're trying to meet brands where they are and help them, whether that be through a temporary reprieve of some sort.

⁓ or just planning from the perspective of how do we continue to work with our parcel carriers to sharpen things on the shipping side and help there. those areas, but then what we're also seeing, of course, is diversifying where you're sourcing. ⁓ We're having conversations about bonded warehouses and free trade zones and that sort of thing, and just learning more about that to see, is it a good option?

Jon Blair (05:35)

Holy.

Tony Runyan (05:46)

for clients and will that be a long-term option or is this more of the flavor of the week due to what Trump's doing? So that's just some of the high points I think we're hearing about and discussing with clients. And some of that too, I guess I'll mention is we're looking through SKU like are there certain SKUs that it doesn't make sense for you to produce at all during this time, right? It may be that you kill a product line or two for a period of time, depending upon how it moves, where the margins are and that sort of thing.

Jon Blair (06:04)

Mmm.

Tony Runyan (06:15)

or maybe a combination of SKUs meaning in the past maybe something that ships separately, you try to combine and have it shipped together as a way to push it out.

Jon Blair (06:28)

Interesting. The bonded warehouse thing is obviously something that we have been asked about a lot and has been kind of like a hot topic for those of you that maybe don't know a lot about this or, I haven't heard about it at all. There's effectively, there's a few different, I'll call it classes of, there's a few segments of like strategies that people are going after. There's like,

There's a tariff deferment, tax deferment, right? There's a HTS code engineering or reevaluation. And then there's just like supplier negotiation to try to get permanent or indefinite cost decreases, right? I'd say those are the three major buckets. What Tony was talking about with the bonded logistics zones, these are special zones that are set up where you can import product

Tony Runyan (06:56)

Mm-hmm.

Jon Blair (07:21)

and hold it in a warehouse in a bonded logistics zone where you don't pay the, this zone is technically quote, uncleared outside of the U S right? So you have not cleared through customs yet. You clear through customs when you leave that zone and move into the U S from there. And that has been these bonded logistics zones have been kind of

This strategy is popping up so that brands can defer paying the tariff and kind of the thinking is it's, it's not a P&L improvement. Okay. Generally speaking, you're still paying the tariff. It's a cashflow. It's a cashflow engineering strategy, which basically you can hold off on paying the tariffs until if you can, if you're able to fulfill directly from that bonded logistics zone, straight to the consumer or move shipments to a 3PL.

Tony Runyan (07:48)

Yeah.

Jon Blair (08:15)

a little bit at a time that's gonna fulfill for you, you're deferring the payment, the cash flow of paying those tariffs until it's closer to when you're actually like selling the order. Is there anything you would add to that Tony or anything else you're hearing people like trying to do with that strategy?

Tony Runyan (08:30)

Yeah, what I'll say is we actually had, of course, everybody was kind of looking at every opportunity they could ⁓ once the tariffs were announced. So, okay, hey, how do we do this? So all of sudden we start hearing a lot about bonded warehousing when we haven't heard about it, you know, since maybe Trump's first term and even then it wasn't a ton. Yeah. And so, but what we're finding is that really like that strategy seems to play better if you're looking at buying a lot of inventory.

Jon Blair (08:46)

For sure. Yeah, totally.

Tony Runyan (08:58)

that you're gonna store for a pretty long period of time. Because if you have fast moving SKUs and you're pretty good with your turn ratio and inventory management, you're not, yeah, maybe it delays the payment for 30 to 60 days, right? But if you're really moving that inventory out quickly, it's not a whole lot of a deferment. Still is, but just not big. So the question is, is the effort and the additional costs associated with it, does it pay off in the end if the cash flow?

Jon Blair (09:02)

Totally.

Tony Runyan (09:28)

that you're helping expand, isn't more than 60 days or 30 days or whatever? Yeah.

Jon Blair (09:30)

Yeah.

Yeah, yeah, well, I mean, because

there's potential, depending on the network model that, or where you're inserting that into your logistics network, you may be talking about incrementally higher warehousing fees. You may be talking about multiple moves where it goes into the bonded warehouse, and then at some point later into your 3PL instead of directly into 3PL. so as with, we're gonna talk about this more when we get into ⁓ load balancing across warehouses.

But you've gotta be very careful about calculating the full, from a finance perspective, it's called the marginal cost, meaning that you have to compare every, you have to compare the net of every incremental cost difference, both the cost savings and cost increases throughout the whole journey of the product to determine if it actually adds or subtracts from your bottom line.

And if it does subtract from your bottom line and that takes away from the cash flow, the addition to your cash flow, you have to weigh those against each other. So I think what Tony's getting at is like, it's a multi-dimensional math problem to analyze and so you don't want to over index for just one piece of the equation, right?

Tony Runyan (10:46)

That's act we and we call it the total cost of fulfillment because a lot of battles that we get into is if somebody is really hyper focus on one line item, two line items, that sort of thing. Well, somebody could present a line item that is a lot cheaper, right? Or shows, you know, this impact. But what they don't see is the impact for the other fees, you know, that are associated. And that, again, that's playing into the inventory balancing piece, too. In does it.

Is it worth it to pay the extra money to send it to another warehouse, et cetera? So again, the total cost of fulfillment is how we refer to it as well.

Jon Blair (11:17)

for sure.

So I want to shift gears now to talking about these carrier rate changes mid-year. So you had mentioned that there is, it seems that overall package volume is down, right? Yet we're counter-intuitively seeing mid-year rate increases, which kind of like, intermittent rate increases, historically, at least in the e-comm world, were typically

Tony Runyan (11:35)

Mm-hmm.

Jon Blair (11:47)

used to seeing when the systems that UPS and FedEx and the carriers run are kind of maxed out with capacity. So they, they, they bring in these like peak rates. And I remember during the COVID rush that coincided with holiday, was that 2020? Was that the holiday year of 2020? Or was it 21? I can't remember which one, it all bleeds together. I mean, we were working with you guys then at, at Guardian Bikes, but either way,

Tony Runyan (12:04)

Yeah, it would have been, yeah, maybe it'd been 2021 actually, 21. Yeah. Yeah.

Jon Blair (12:15)

they had instituted indefinitely these peak surcharges that were above and beyond what we typically would see during the holiday. And I remember you telling me, Jon we're not sure how long they're going to be around. And we're also not sure if they're just going to become permanent afterwards. And so ⁓ tell us a little bit about.

Tony Runyan (12:30)

Right. The spoiler alert,

they became permanent.

Jon Blair (12:35)

Yeah, exactly. Exactly. It's kind of like new taxes.

Like it's usually when the tax like it will this new temporary tax become permanent. I think there's a good chance. ⁓ but anyways, like tell us a little bit about the, the, mid year, carrier rate changes that have, that, that are happening right now.

Tony Runyan (12:45)

Yeah. Yeah.

Yeah. And you know, what I would say is surprising. Yes. And surprising. No. And I say that because we have seen a lot of things happen within, let's zoom out, look at national carriers, right? UPS and FedEx and USPS. One thing that has happened across all three of those are like major shakeups within their networks. And what I mean by that is like USPS doing a ton of consolidation.

right within their networks, working on this ground advantage program, delivering for America, et cetera. We've got UPS who had the big teamsters agreement. Now they're increasing what they're paying. They made all these additional commitments. They were definitely going for the better, not bigger sort of mentality. Also doing lots of consolidation. News is out now that they're looking for buyouts for some of the teamster employees, et cetera.

FedEx, same thing. They're shuttering tons of facilities, consolidating, right? Trying to reduce costs. So they're doing all they can to get costs out and they're not shutting down facilities because volume's so high, right? It's because there's less. And especially they had this capacity built out for this like all time high capacity that was happening during COVID. So they're trying to pull back and reduce costs. Now you throw in the tariffs.

⁓ and the uncertainty there that I think actually softened parcel volume even more. ⁓ So everything points to like, hey, they should be trying to get all the volume they can, right? ⁓ But I think that in addition to that, what they really care about is what's the revenue per piece? If I'm shipping everything that's very low revenue or margin per piece, then how much does that matter? How much does that impact the stock price?

Jon Blair (14:17)

Mm-hmm.

Yeah.

Tony Runyan (14:39)

you know, et cetera, as we shift. So that being said, what we saw this year was UPS having, you know, announcing this mid-year change, not only a rate increase to certain zones, and I think what they're trying to do is they're trying to align, you know, the cost of shipping something further away, right, especially the bigger the package and the heavier it is with the costs associated with servicing it.

Jon Blair (14:40)

Yeah.

Tony Runyan (15:03)

But then they also completely changed the methodology for how they determine if a package gets hit with additional handling or oversize. Something that they alluded to last year that they were going to do, but they didn't actually do until this year. So that happens in August. And then of course you had FedEx a few weeks later follow behind and say, also here's some increases for us as well. These weren't like for FedEx, these weren't like massive changes in methodology. It was more of a few.

you know, points of surcharges that we're going to increase. The other thing we've seen though is fuel surcharge going up while the cost of fuel goes down, right? And we see a huge expansion of the number of zip codes that are, that get applied for what's called the extended area surcharge or delivery area surcharge. So I don't know. You just kind of imagine the finance guys like in the rooms at UPS FedEx, like if I turn this knob,

Jon Blair (15:56)

Yeah.

Tony Runyan (15:59)

you know, what does that get me if I turn it this way? So, so surprising. And I would say for for our clients, you're thrown this curveball about tariffs, there's a lot of uncertainty. And now you see mid year rate increases, USPS as well, I forgot to mention they there's went into effect today, I think. So these on top of the uncertainty of tariffs now, now how many times a year are you going to increase shipping, you know, prices so

Jon Blair (16:00)

Totally. Yeah.

Totally.

Well, yeah. And mean, especially if like some of the pricing is, like you bring up that deliver delivery area surcharge, that's not like super simple to forecast the impact on your average freight out cost. Right. And so like when you have these rate increases that are not like, it's different when they just change your discount or the base rate goes up or, or something like that, something that like you formulaically can

Tony Runyan (16:41)

not.

Rough.

Jon Blair (16:53)

roll it across your rates pretty easily, right? But some of these other mechanisms they're using are not that easy to forecast and assess. Like, what is this gonna do to my margin? And what is this gonna do to my business? You know what I was thinking while you were talking though? When I was thinking through the cause and effect kind of relationships of things that have happened since COVID, and first I was thinking like, man, it's crazy, it's 2025.

halfway through 2025, and we still all talk about the latent impacts of COVID on our industry and e-comm, and it still has not, the market still has not fully corrected from that. And the massive amounts of over-investments, not just brands in the inventory they purchased, right? Like that's almost, that's kind of corrected itself by now, but all of these other investments, like the fulfillment networks for these big carriers,

Tony Runyan (17:30)

Yeah.

Yeah.

Jon Blair (17:50)

having to correct. And you know what I was thinking? I was gonna ask you this, because I don't remember. Was Amazon shipping through FedEx and UPS during COVID?

Tony Runyan (18:01)

So yes, through UPS, I think FedEx as well, FedEx and Amazon had a little breakup, right? And now they're back together and UPS is now on the out. I would say that, yeah, so what we were, and I think that's one of the reasons we were also seeing, they were trying to take on the volume that was also spiking there, which is why all these rate or these trailer caps came out for all the big shippers.

Jon Blair (18:07)

No, I know.

Tony Runyan (18:26)

Hey, you normally have 10 trailers, not today, you get six. And they were trying to limit that while they built out capacity.

Jon Blair (18:33)

It's interesting because I was just thinking to myself, I wonder how much of the volume going down post COVID is because Amazon keeps growing their fleet, right? And so like it's the Amazon network that's growing, but not the FedEx and UPS network that's growing. And it's got to be at least part of it, right? Because like there used to be a lot more volume several years ago that was going through FedEx and or UPS, you know, before the whole like breakup.

Tony Runyan (18:48)

think that's a part of it. I think it's a part of it for sure.

Mm-hmm.

Jon Blair (19:02)

between FedEx and Amazon, there was volume going through both of those carriers on the Amazon side. But anyways, that's fascinating, man. What are you, how are you guys, with these rate changes and some of the rate changes being more complex than others to forecast and assess impact, how are you advising brands on what they should do to like,

what analyses they should do, what steps they should take to try to understand how they're specifically gonna get impacted.

Tony Runyan (19:32)

Yeah, so for our existing clients, it's a little bit easier to model out because we can look at a particular brand's zip code distribution, for example, or any other costs and say, OK, based on every package you shipped over the last 90 days, Like, your charge would have gone from X to Y. Like, that's one that's a little bit easier to forecast as a result. For newer brands that we're talking to, a lot of what we'll do is use the data that we have to say,

Okay, in general, what percentage of these packages get hit with delivery area surcharge or get hit with remote area, whatever it is. And if that's a percentage of total, like, okay, we see on average 15 % of someone's shipments get hit with these, et cetera. We can look into that. Now, where that gets out of whack is, you, do you ship super regionally? Like, hey, most of our volume goes to the Northeast. Well,

If that's the case, that could shift as far as that goes, those numbers. But really it's modeling of the packages that they shipped last quarter and let's layer that now, the new fees on top of it and see what does that do.

Jon Blair (20:39)

Interesting, interesting. I wanna talk next about inventory balancing or like we'll call it load balancing across warehouses because I think that in the wake of carrier rates going up, tariff uncertainty, one place where a brand may be able to improve its margin is improve its warehouse balancing in a multi warehouse network. I think a lot of brands are much more suboptimal than they realize they are and so,

You know, even with rates going up, if you get the right inventory placed in the right warehouse, it can bring your average zone down substantially, which brings your average cost per package down substantially. But it comes with complexity, comes with caveats, comes with like you mentioned, understanding the total cost of fulfillment. So if a brand comes to you and is like, Hey Tony, I want to improve my inventory load balancing. Like what are some of the first things that come to mind?

Tony Runyan (21:22)

Mm-hmm.

Jon Blair (21:35)

in terms of like, okay, well hold on. First we need to assess this and here's some of the gotchas. So let's make sure we do this right.

Tony Runyan (21:42)

Absolutely. So the first is like is it your SKU distribution? What like you look by SKU right? What locations and again, let's say this number one If it's a low if it's a slow moving SKU, maybe you don't need it in two Maybe that's it comes with added costs where you're have to buy more inventory It's gonna cost, know more money The other is what if there's particular SKUs that do happen to go to a specific region more often than the other region

Okay, you don't want all those, right? So what we try to do is we first look at, let's call it optimal zone distribution to say if you were perfectly optimized in both warehouses for every single order you shipped, what would that look like? We start there. And then as we look at that is let's say that, ⁓ we just recognize that's $7 per package in savings, right? But if you were able to perfectly optimize, well, then we have to look at what's the cost difference

of shipping that prompt to both warehouses, right? And good example from it, let's say that's it typically, let's say you're going to spend $1,500 more to get it to an East Coast facility than the West Coast one, right? Well, then what you're looking at is let's look at that container, like how many units are on it, divide it by 1,500. And let's say that it's three bucks a package. Well, there you still have $4 that you're playing with where there's a gain, right? So like,

Those are kind of what we start to shift into is what's the inbound costs associated with it? And then what is the optimal savings on outbound? And then the third piece then is like how quickly do these SKUs move and does it justify sending a full container to a warehouse or is it cheaper to send that container all to one location and then as needed maybe do, you know,

⁓ a split off of certain inventory to another warehouse.

Jon Blair (23:34)

Interesting. Yeah. Yeah. And so what I have found, I like what you're saying in terms of like, let's, let's first look at what's, what's perfectly optimal, which we're never going to get to. Right. But let's, let's look at it as a starting point and then let's kind of go in segments, right? Whether that's SKU segments or some other segment, let's segment down. It's kind of like using the 80 20 rule over and over again. Right. Let's, let's optimize the 20 % of SKUs first that drive 80 % of our

Tony Runyan (23:45)

Right. Yeah.

Jon Blair (24:04)

One, not just our sales, but the amount of inventory that we hold, right? And if we have a SKU that we're gonna choose to keep in the catalog, but it moves super slow, let's not worry about trying to optimize that one. So one thing I like to do on the CFO side is alongside this type of an analysis that the 3PL, like you guys can help do, is look at the dollar value of how much by SKU of inventory we hold at any point in time. Because at the end of the day,

Tony Runyan (24:05)

That's right.

Jon Blair (24:32)

The other piece of this is not just price per package on the outbound fulfillment or even just total fulfillment. It's also how much cash do we have tied up in this SKU, right? And so, and the reason why I like, one of the reasons I like to look at that is because I also try to work with the brand to understand, we think we need to hold more now that we're gonna start putting this SKU in two warehouses instead of one? And what we, even though it's an imperfect forecast, we should forecast how much our average inventory position is likely to be and see if the cash, the incremental cash we tie up is less than the savings over the same period of time. Because if you save less that like you might, let's say using your example, you said the seven minus four, you're saving three bucks a unit. If you figure out that it's a thousand units over a 90 day period, right?

Tony Runyan (25:13)

Man, you're nailing it. Yeah.

Jon Blair (25:27)

so that's $3,000, but you have to increase your inventory position 10K, you're actually losing 7K in cash and you have to decide at that point if you're willing to lose 7K in cash to make 3K on the P&L right? So there's a trade off.

Tony Runyan (25:40)

That's

totally, totally. I, I, I, I smile because this is when we get into these conversations of, well, we want three warehouses or we want five warehouses or we want nine locations, whatever it is, is the complexity and the costs. if you, if you have to carry 20 % additional, you know, inventory for one new location, what happens now with three, five, nine, you know, et cetera. And, and can you do it, you know, efficiently?

Like you certainly have to have someone who can keep their eye on it closely because then what you look at is if you stock out of one warehouse and someone orders SKU A that's stocked out and SKU B and now they're coming from two different locations, right? Instead of being shipped in the same box, those are the other costs that can sneak up and get you if you didn't have enough inventory on hand. So it's definitely complex. As you said, it's not just an easy, hey, go with the optimal.

Jon Blair (26:22)

Mm-hmm.

Totally. Yeah. Well, I mean, it's really a game that becomes more feasible at higher volumes, right? And like, so if your brand is growing fast and order volume is growing fast, this is something that you should maybe look into, right? But go into it with an open hand saying, let me see what the analysis tells me. And let's look at the analysis of not just the P&L impacts, but the cashflow and balance sheet impacts.

And then let's also assess the, make sure that we do a good job of assessing like the 80-20 rule on, I would almost say like, like focus on the, if you think about, if you use like, you know, A, B and C to like score your inventory, right? Focus on the A's and get those optimized. And if you figure that out, assuming that you can get that figured out pretty well, then maybe look at the B's and maybe the C's you don't,

Tony Runyan (27:31)

You

Jon Blair (27:34)

ever do this with, right? Like

Tony Runyan (27:36)

No,

I take that spot on.

Jon Blair (27:39)

⁓ and do you have any advice about like how often a brand should consider analyzing their inventory load balancing? Cause I think too, too infrequently you may miss trends too frequently I think is an exercise in vanity in any, any advice you have about that.

Tony Runyan (27:51)

Yeah.

So what I'll say is like, you definitely don't wanna do less than annual, right? And we do QBR, so each quarter we will look at how are things trending, but like you said, you don't wanna make a rash decision based off of what happened that quarter, right? You wanna have enough data together. So I would say every other quarter, maybe enough time has passed in patterns to say, okay, should we make an adjustment and see what happens in the next two quarters? But like you said, you don't wanna go,

Jon Blair (28:12)

I'm

Tony Runyan (28:26)

You don't want to do it too quickly. So quarter might be too short of a time to actually make decisions, but you don't want to go longer than a year.

Jon Blair (28:33)

Totally, totally. think that's really, really good advice. Is there anything else as we kind of come to a close here, is there anything else you see going on in the marketplace that you're just like, you feel really strongly Red Stag is well positioned to be a resource to people who are listening to this episode?

Tony Runyan (28:51)

I mean, from our perspective, like we, we try to genuinely be an extension of a brand. So from, from our perspective, we're out there learning, you know, just like a lot of the brands are in terms of what are ways to, to help grow my business there. It never fails. As soon as you feel like you have your head wrapped around the challenges, like new ones enter, right. That happened this year with the tariffs. So we really see ourselves like as that consultant.

⁓ even if you wind up not using us to say, these are the areas you should watch out for. Here are ways that we think you can do it better. And whether that's inventory management on the shipping side, what particular networks you might use depending upon what packages you have. And then of course, we have a partnership network that we believe strongly in and that we connect our clients and partners with as well.

Jon Blair (29:48)

If people want to find more information about you or Red Stag where can they reach you?

Tony Runyan (29:53)

So for me, LinkedIn is a great place. I'm on there quite a bit to message me directly if you want to know more there. And then ⁓ of course, the website is a good place to learn more. Our marketing team has done a tremendous job explaining our value proposition specifically and how we work. And like I said, if it's a brand that's not a great fit for us, still reach out to us. ⁓ We've got a great set of partner companies that we would introduce you to as well.

Jon Blair (30:20)

Yeah, I highly recommend reaching out to Tony and his team if you're interested. Super genuine guys over there who know their stuff and will not take on a client that is not a good fit, but will definitely give you their best shot in terms of how they can earn your business if they do see that they can add value. And so yeah, man, well, this was an awesome, awesome chat. ⁓ I think it's chock full of a ton of like really actionable advice for founders. Appreciate you coming on again, man. ⁓

Tony Runyan (30:46)

Yeah, thanks

for having me on again, man. It's great to catch up as always.

Jon Blair (30:50)

Yeah, 100 % dude.

Don't forget, if you liked today's episode, please hit the subscribe button wherever you're listening and leave us a review. It helps us reach more people like you. Also, if you want more tips on scaling a profitable D T C brand, follow me, Jon Blair on LinkedIn. And if you're interested in learning more about how Free to Grow can help your brand increase profit and cash flows you scale,

Check us out at FreetoGrowCFO.com.

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The Leadership Practices of Elite DTC Brands