Founder On a recent Masters of Scale Podcast they told the story of a video game company called Tiny Speck that absolutely abhorred email. As a highly collaborative, fast-moving team, email wasn’t good enough for the internal communication of their projects. The Tiny Speck team developed their own application to streamline communication and support their organization’s scale. They shared it with other entrepreneurs and the collective feedback was that this app solved a huge problem. The application was called Slack—and now it’s a mainstream verb.
The lesson behind the Slack story is an incredible one. A start-up is almost never a lightning strike of brilliance. Rather, it’s an evolutionary process in which you listen to customers, solve problems, and stay on your grind until the product market fit smacks you in the face. In the case of Slack, their business turned from making video games into creating a collaborative hub to help people communicate.
I love sharing this story because it’s the best way to describe how my co-founder, Kameron Norwood, and I created PackDash, an e-commerce fulfillment provider supporting the rapid growth of incredible brands. Within less than six months of PackDash’s creation we were able to generate multi-million dollar valuations and exponential growth without spending a dollar on marketing. The story goes like this:
In 2018 we launched Half Day CBD—a CBD brand devoted to helping people ease that “not quite normal” feeling. We hustled our asses off. We were at every Chicago street festival, we were sold in 40 retail locations, and when COVID hit, we grew our e-commerce business—starting around a humble 20 orders per day. We established ourselves as a player in the CBD world with shout-outs in Forbes, BuzzFeed and Golf Magazine.
COVID brought an unexpected explosion in our online business. As the world was locking down and freaking out, CBD became a natural comfort to people with anxiety, insomnia, and a number of other issues that the pandemic was amplifying. Twenty orders per day turned into 200 orders per day. It was super exciting, but our e-commerce fulfillment vendor, the one storing and shipping our product, was not ready. The issues were simply unacceptable:
- 50% of orders took longer than two weeks to deliver
- The unit price of shipping each item increased by 300%
- 10% of orders were completely wrong (some of our customers even received items from other brands!)
- Hundreds of orders just never arrived and required refunds
- Our account manager was laid off and replaced with a call center in India that operated on a 48-72 hour response time
- The intake period for getting more product into their warehouse was a full week–during which time we missed out on valuable sales
We were on the ropes. For a company that prided itself on customer service, my mornings were dedicated to apologies with “I’ll try to get you an answer in a couple days” as the best explanation I could offer. We were losing our minds. We needed an e-commerce fulfillment center to scale, but the more orders we would get, the more angry customers we created. (If you are a Half Day customer who stuck with us during this time, THANK YOU).
After a disastrous month with no signs of improvement, I started shopping my request for proposal to any 3PL I could find. To my surprise, no one wanted my business. My order volume was too small. Even at ~5,000 shipments per month I was getting the cold shoulder and no one was interested in working with me. It was perplexing. My business had reached new heights and I was still getting the cold shoulder. The response from all of these 3PL’s was consistent. “Until you’re doing around 10,000 shipments per month, we’re really not interested.”
We were too small to get dedicated support, but too hot to be someone else’s afterthought. I called up an old high school buddy who works in shipping and logistics and his advice to me was straightforward, “You don’t have a choice, you either have to do it yourself or just stop caring about how long it takes to get there.” Accepting mediocrity was unacceptable. So we had to roll up our sleeves and build fulfillment into the business. We would just need to solve one problem at a time.
Problem #1: Where are we doing this?
While we painfully fulfilled everything out of basements, apartments and storage lockers, we started looking around for a warehouse. In case you didn’t know, industrial property is super hot right now. Warehouses are filling up and the price per sq foot is a tough pill to swallow because they are all massive floorplans. If you want 10,000 square feet (which is a very small warehouse) you’re looking at $25,000/month in rent. For Half Day, 6 months’ worth of tinctures can fit into about 30 cubic feet. What the hell were we going to do with the other 9,900 square feet in this place? Plus the space needed to be temperature controlled. Also, $25,000 per month was way more than we were willing to pay to fulfill our orders, and a five-year lease was out of the question.
Solution #1: Distressed Retail
For the first time, the empty strip mall that we drove by every day started to look appealing. The COVID lockdown put a laundromat, hair salon, and wig store all out of business (surely not to return) and a For Rent sign was posted on the properties. We called up the landlord and asked for a one-year lease and the promise that we would clean it up. You could hear the excitement in her voice because she realistically assumed COVID would doom this property and there would be no one moving in for years. We were thrilled with the terms and she was ecstatic to have us.
We secured the place, pulled a few all-nighters and had the place ready to start shipping in 9 days. Like most things we do, we were obsessed with having our facility be fast, efficient and inexpensive. We set out to build this world-class facility and hired consultants that have built fulfillment centers for Imperfect Produce, Shipt, Instacart and Amazon. We pulled the trigger on some robust Warehouse Management technology and built a lean, mean e-commerce fulfillment machine capable of delighting 100% of our customers. Sounds great, but it created a new and unexpected second problem.
Problem #2: We could fulfill all of our orders in under one hour with 2-day shipping guarantees.
This was a big accomplishment for us, but actually sprouted a problem. This type of speed and efficiency hurt our employees. We hired people to make this run and after one hour they were standing around asking what else they could do. After another hour or two of busy work we sent them home and felt terrible. All of these awesome, hard-working people with not enough work to fill their hours.
Solution #2: Get these people working full-time.
I started to call around to other entrepreneurs sharing the story you just read above. People were blown away. They too felt this pain and couldn’t take it anymore. It was the recurring theme that e-commerce businesses were growing wildly and you were either drowning in DIY fulfillment or you were stuck in an abusive relationship with a 3PL that avoided contact as much as possible. The best alternative was an uninspired, costly decision. This is where the Slack story started bouncing around my brain. We had built a collaboration hub for fast, efficient, and affordable shipping. Although my Shopify store was growing and profitable, we had uncovered a business within our business that had surging demand, barriers to entry, and a massive addressable market … the start-up trifecta.
We called our business PackDash, and over the months that followed we started recruiting great entrepreneurs to join us. We had the space, the team, and just needed more things to ship. However, we went into this with a specific promise. We would provide every entrepreneur within our walls the type of experience that we dreamed of as a Shopify business owner. Here is the dream list we made into reality at PackDash:
Dream #1: Collaborative communication
Every PackDash client gets a Slack channel dedicated to them. On this Slack channel they will be able to communicate with everyone in the warehouse … managers, pickers, packers, the whole crew. This automatically extends the size of an e-commerce customer success team by having a group of people ready to work collaboratively on your project.
Dream #2: Rapid delivery
We staff every warehouse to ensure we get every order that’s in before 11 am out the door by the end of the day. It’s a literal race to get these orders out as quickly as possible. People want their products ASAP. The warehouse should be the last person they are waiting on.
Dream #3: Affordable shipping
We have contracts with all the carriers. We have an impressive growth rate and the type of volume carriers love. We have moved into the “high-volume tiers” and are passing these discounts along to all of our customers.
Dream #4: Creative shipping solutions to support the unboxing experience
A generic product in a brown box is Amazon’s game. We specialize in providing unique brand experiences. Whether it’s special packaging, special unboxing instructions, marketing inserts, personalized customer instructions, hand written notes, or someone that packs the box labels facing up … we love all this stuff. The most successful DTC e-commerce companies create an experience with every shipment—we get this and support it, something that few 3PLs can live up to.
Dream #5: Work with people that legitimately care
We’re rooting for you. We work with brands we believe in and treat this like an incubator. Most 3PL’s force them into your process to be as standardized as possible which can be a brand killer. We have a conscious understanding that if you succeed, we succeed. A brand with escalating sales is the key to our success. We are going to provide our customers more resources and flexibility to make this happen. Whether it’s marketing expertise, speciality shipping needs (perishable foods or breakable items), shipping insurance, influencer campaigns, or specialized kitting … we got you. We like to say:
“You provide the inspiration, we’ll make ship happen.”
If any of this is exciting, refreshing or interesting please let me know.
We are hiring on all positions. Sales, Accounting, and Warehousing.
We are looking for partners, team members, customers, investors and warehousing space. Send us a note at hello@packdash.co and let’s talk.
