In 2009, a small e-commerce start-up launched and embarked on the uphill task of developing a user-friendly website and navigating the tangled world of Google Analytics and SEO, while developing key relationships with suppliers and supporting a growing customer base, all from a two-car garage.
As the company expanded and business grew, more office space was needed and they faced a lack of room due to a growing line of inventory. The start-up decided to outsource the warehousing, picking, packing and shipping to a small family-run fulfillment company in order for the personnel to focus on the core functions of the e-commerce business: web development, marketing, customer support and procurement.
Refocusing time and personnel on the core aspects of growing an e-commerce company meant that business grew, and grew rapidly. The small family-run fulfillment company was outgrown in a matter of months, which led to two subsequent moves to larger fulfillment providers over the next two years. Yet in 2012, the growing pains started to catch up.
With the wrong partners, even the best efforts fail
Despite the efforts of internal technical personnel, a creative marketing team, strong relationships with suppliers and a well-developed customer service unit, growth was stagnated.
They soon realized that the source of the stagnation wasn’t them, but poor service provided by the firm’s key partner: their fulfillment company. The pain created by the sub-par fulfillment company was the result of three main issues: a lack of reliability, an absence of security and an inability to foster fast growth.
It is often because of adversity and pain that we learn the most. It is from this experience that those same e-commerce entrepreneurs founded Red Stag Fulfillment.
“Essentially, our young e-commerce company had worked incredibly hard to gain a foothold in the market, but due to the inefficiencies of their 3PL (3rd party logistics provider) the value they were attempting to create was all being lost,” said Jake Rheude, Director of Business Development & Marketing at Red Stag Fulfillment.
What exactly does Red Stag Fulfillment do?
RSF performs the warehousing, picking, and packing operations on behalf of their e-commerce clients. What this does is it allows businesses based in Australia, the US, or anywhere is the world, be able to expand into new markets with a lot of ease.
“We’ve helped US companies operating out of a garage gain instant scalability by using our warehouses for their product fulfillment, or helped international companies in the UK or Australia or Brazil, gain access to the US market by being able to import their products directly into the US and fulfill US orders through our system,” Jake revealed.
Red Stag faces competition from various local 3PL service providers as well as Amazon but Jake pointed out to Anthill that their processes and software are what truly set them apart.
“In 2015 we averaged one error/late shipment for every 143,000 packages out the door. Our accuracy and on-time ratings are simply unmatched, so much so that if we do have a mis-pick, late shipment, or inaccurate inventory count, we write a $50 to that client.”
“We’re developing RSF to be the best enabler for e-commerce businesses,” he went on to tell us, about the company’s vision. “The e-commerce sector is only going to increase its growth over the coming decades. But as e-commerce grows, we want Red Stag to be the business solution that allows these e-commerce businesses to scale and achieve success in the market.”
How is Red Stag Fulfillment doing so far?
The company is doing very well. Its first warehouse launched in mid-2013 and a second was launched in Knoxville in late 2015. They are looking to launch the third on the west coast of the US later this year.
RSF does not have warehouses in Australia, but has worked with several Aussie clients looking to expand into the North American market, both the US and Canada as well as Mexico.
And all this growth is fueled only by private funding from the owner. “We have no debt, which should be very important question ecommerce businesses should ask about when looking for a 3PL,” says Jake.
There are a lot of reasons why debt is important for a fulfillment company, but the biggest is because they are in charge of managing another business’ assets.
Take Speed Commerce for example, they’re a fulfillment company that almost went bankrupt late last year. Speed Commerce performs all the fulfillment operations for big brands like Yankee Candle. If they had gone bankrupt, Yankee Candle would potentially lose tens of millions of dollars in inventory assets in Speed’s warehouses, and certainly be unable to deliver order to stores and customers until a new provider was put in place.
These things do happen, and they are very messy.
More Australian exporters should aim for the US
According to a recent survey from the Export Council of Australia and the University of Sydney, most Australian exporters are optimistic and ambitious in terms of their future expansion. The research found that more than 80 per cent plan to expand overseas over the next two years, but only 15 per cent are looking to spread their wings to the United States.
Many e-commerce businesses in particular tend to ignore the US market when looking to grow internationally, preferring to look to China, India and the rest of Asia.
However, the United States provides a compelling marketplace too especially given that Australian and US consumers and markets are culturally similar, meaning that if your product is big in Australia there is a pretty good chance it will do well in the US too, and Red Stag offers a smooth path in.