Shopify stores sold a record $2.9 billion on Black Friday... now to ship it.
According to Shopify sales data, "merchants on Shopify generated peak sales of nearly $3.1 million per minute at 12:02 PM EST on Black Friday, and merchants crossed $1 billion in sales by 4:00am EST, four hours earlier than Black Friday in 2020."
Now we have to get all that product delivered. In 2020, that was a problem. Is it an issue this year?
CMO of ShipBob, Casey Armstrong, joins to tell us. The global 3PL ships millions of orders per month for over 7,000 brands across a network of 30 fulfillment centers worldwide. They track and publish carrier fulfillment data which they'll share with us in this episode.
After a BFCM breakdown, we discuss common questions around outsourcing fulfillment, and the future of fulfillment.
The Unofficial Shopify Podcast
Casey Armstrong
Kurt Elster: Today, on The Unofficial Shopify Podcast, we are going to discuss sending boxes from one place to another place. Yes, we are talking about fulfillment because in eCommerce, there are no gods but shipping, so I say blasphemously to the sky, and in this episode we are going to discuss what’s going on with Black Friday, Cyber Monday, shipping volumes. We have a gentleman here who knows these things well. And then we’ll get into a discussion about 3PLs, fulfillment in general, and when you should consider those, and what some of the advantages and perhaps disadvantages are there.
Joining me to discuss it is Casey Armstrong from ShipBob. I’m your host, Kurt Elster.
Ezra Firestone Sound Board Clip: Tech Nasty!
Kurt Elster: And Casey, welcome. How are you doing?
Casey Armstrong: I’m doing great. I need that kind of energy to start every day, Kurt, so I’m glad to be here.
Kurt Elster: Well, you know, on Monday really is when I’m like really riled up for the week, and I can’t bring that level of energy every time, but I suppose we both got lucky today.
Casey Armstrong: There we go. All future pods, we’ll do on Mondays then.
Kurt Elster: Monday is the… Yeah, people don’t realize that. Monday’s like I’m shot out of a cannon. So, tell me, what the heck is a ShipBob?
Casey Armstrong: ShipBob, we’re a global fulfillment platform. We have now over 30 fulfillment centers around the world, all across the U.S., we’ve got Canada, we have the U.K., Australia, and mainland Europe.
Kurt Elster: And how many Black Fridays do you have under your belt at this point?
Casey Armstrong: With ShipBob, this is my fourth.
Kurt Elster: And with this most recent Black Friday, since you’ve got four in memory to think about, I want to ask you a few questions about Black Friday, Cyber Monday. And I’m gonna give the date we’re recording this so that we don’t date ourselves weirdly. Monday, December 6th, so this is a fresh and recent memory. One of the interesting things about Black Friday this year, in 2021, was everyone… It seemed like a lot of them happened in early November. We even had people saying, “This is the death of Black Friday,” because it was happening early. Tell me, did you see this? Did you see more volume in the first half of November as compared to years prior?
Casey Armstrong: We did. So, we’ve actually historically seen Halloween, around Halloween do pretty well, but the week of Halloween, so it was… I know it’s on the 31st, but the week of October 30th is when we saw volume really start to pick up noticeably week over week. And just for reference, I mentioned our fulfillment center count. We work with over 7,000 brands, so we’re seeing this at a pretty strong scale, and so that’s when we started to see things pick up, and that was baked into our forecast from both a hiring and like a revenue forecast perspective.
But you know, you never know until things really play out, and so we were curious to see how Black Friday, Cyber Monday would work. Like you mentioned, people were saying the death of Black Friday, and it just continues to start earlier in the year and get more spread out, but that’s not what we saw with Black Friday. It went bonkers. So, our week-over-week volume from the Friday prior to Black Friday was 3X week over week, meaning Black Friday had three times as many orders coming in than the Friday prior.
And again, that’s across 7,000 merchants, so this is not a small sample size.
Kurt Elster: So, the death of Black Friday has been wildly exaggerated is what I’m hearing.
Casey Armstrong: I love the death of stories because that’s never the case. It’s like I have a lot of marketing background. People would always be like, “The death of SEO.” I love those posts because if it takes my competitors’ or anybody else’s eye off the ball, like that’s just more benefit for me. The death of email. How many death of emails?
Kurt Elster: I was gonna say, the death of email marketing is the one I think of.
Casey Armstrong: Yeah. That one’s amazing. It’s like yes, email is… I love promoting those. Email is dead, so let me continue to work email strong. Yeah, just like with Black Friday. These holidays are here and people, they… Majority of our volume, it’s supporting direct to consumer. We also do a lot of B2B, but these are my direct-to-consumer numbers, and they were through the roof.
Kurt Elster: So, tell me about individual days, like I would imagine Black Friday is the big one. But of course, people start earlier. There’s Thanksgiving, Black Friday, Cyber Monday, and then the following day I believe is Giving Tuesday. We’re just making stuff up at this point.
Casey Armstrong: They do. So, historically we’ve always seen it kind of flip flop back and forth between Black Friday and Cyber Monday. They’re always very close. And then obviously, last year with COVID, we had no clue what to expect from between Black Friday and Cyber Monday, but they were by far the two biggest days. I don’t recall which one was bigger. I think it was Black Friday by a hair.
This year, for the first time ever, we actually saw Tuesday, so giving Tuesday, the day after Cyber Monday, beat out Cyber Monday, which was very unexpected, and so that was huge. And so, I’m not sure if that was more like Cyber Monday waning a little bit and everybody spending heavily on Black Friday, or if that’s with I’d say the zeitgeist towards giving and being more conscious socially has influenced Giving Tuesday a bit more, but yes, we saw Giving Tuesday for the first time ever beat out Cyber Monday.
Kurt Elster: Interesting. Okay. And so, if people… I think people love novelty. I think it’s human nature. Maybe it’s we gave up, we got so used to Cyber Monday that like Giving Tuesday is the new thing, or maybe we just don’t pay attention to screens on that Monday following Thanksgiving and Black Friday. We’re just in a turkey coma and Tuesday is the new Monday. I don’t know. I’m throwing ideas out here.
Casey Armstrong: Yeah. I don’t know if that’s the case. So, another thing that I found interesting, or I always find interesting, so that I’ve seen at ShipBob and then at BigCommerce, where I was prior to ShipBob, is Monday is always the largest buying day throughout the year. And I think that’s people’s maybe therapy for starting the work week again. But-
Kurt Elster: Isn’t it true, aren’t most eCommerce dollars spent at work?
Casey Armstrong: They definitely are. So, again, historically, Saturdays and Sundays are always when the least money is spent through our systems, and the most, it’s on average it’s always on Monday. And so, again, that’s another reason why I was pretty surprised to see the Monday numbers drop compared to Tuesday. They were actually still ahead of our projections, which we like to see, but Tuesday just went through the roof.
Kurt Elster: All right, so I wasn’t planning on asking more questions about this, but you are such a wealth of data here, I can’t resist. So, typically what other holidays, or what other days in December do you see as big shipping days or big volume days for eCommerce? Like obviously, Cyber Monday, Giving Tuesday, are there others?
Casey Armstrong: I’ll try to pull up some while we talk. There are none that really stand out. It’s pretty consistent leading up to honestly even Christmas Eve. We push out, and I’ll pull up these dates. We push out pretty much like the last call dates for us to get, per carrier, for us to get products to your customers in time for Christmas, but it’s really a couple days and maybe even up to Christmas Eve people are still spending pretty strong.
Kurt Elster: Okay, so it goes December stays strong and consistent. You mentioned the shipping cutoff dates. Are those different this year than last year? I mean, like last year was Shipageddon. What do our shipping cutoff dates look like this year?
Casey Armstrong: Yeah, so it depends on the carrier, and obviously the method of shipment, and so with UPS SurePost, and FedEx SmartPost, we’ve got a pretty early cutoff date of like December 9th, whereas on the other end, for USPS Priority Mail and First Class, we push it all the way out to December 17th.
Kurt Elster: Okay. Cutting it a little tight. And then I just wonder, like if someone were to send out a shipping cutoff date email, do you think that creates an urgency, any spike, or is it by that point you’re either gonna buy or not and it doesn’t really matter what any of us do?
Casey Armstrong: I think it provides multiple benefits. So, one is yes, it can… I always like to find ways to drive a sense of urgency when there’s like this backstop or third party that’s enforcing it, so it’s not like, “Buy my products because Kurt says so or because Casey says so.” It’s, “These are the carrier cutoff dates imposed by let’s say the carriers for you to get it there in time.” Also, I think it’s really beneficial for your customer base, because then they actually know. Because a lot of people have no idea, and they just assume. They just think in like Amazon’s world, which Amazon won’t even hit, like, “Oh, I can buy on the 23rd and it’ll be here on time, or I can buy on the 22nd, it’ll be here on time.” When that’s not the case. And then, honestly it’s kind of CYA, because you told them.
Kurt Elster: Right. That’s true. And I would like… No one wants to ruin someone’s Christmas gift, so I’d like the CYA aspect of it. Tell me about the carriers. Which one’s your favorite?
Casey Armstrong: They’re all my favorite, Kurt.
Kurt Elster: Of course. They’re all your favorite child.
Casey Armstrong: But it’s they’ve actually… Again, I’ve been very impressed with how the carriers have run this year. So, we work with all the major carriers. I’ll speak primarily around the U.S. We of course ship globally, as well. But we work with all the major carriers, but an area that we started investing in heavily last year were a lot of the regional carriers, and that was for a handful of reasons. One was just the volume that the major carriers could take throughout the entire year, but then as I’m sure many of us remember through Black Friday, Cyber Monday, and the holidays last year, a lot of the major carriers were setting limits and we heard some pretty bad horror stories where customers were trying to switch to us in the middle of December, which is fine. We take customers throughout the entire year. Where they were shipping out 1,000-plus orders a day and some of the major carriers would tell them, “Well, we can pick up 100 a day.”
Well, that doesn’t work. That’s 10% of my business. And they’re like, “Well, it is what it is.” And so, that’s where that’s one of the many reasons why we are so long on distributed inventory and working with a company like ShipBob, is because we can route orders around the country to get around this, and also work with a lot of different regional carriers. So, I’ll talk about some in a second.
So, FedEx Ground we saw at least from a performance perspective jumped quite a bit throughout November, but the others stayed pretty flat. So, UPS, we’ve seen pretty strong. Pretty strong shipping speeds. And it’s been pretty flat honestly since like July. We’ve not seen huge jumps. And again, this is barring that they’re also scanning everything, which is another story.
DHL is still above what we call like the pre-COVID shipping speeds, but we’ve seen it be pretty consistent since the summer months. We haven’t seen it really spike like we saw with FedEx. And same thing with USPS. Honestly, it’s been pretty flat since around May. It’s slightly above the pre-COVID levels, but not too far above, and again, it’s stayed pretty flat, which is good to see. Because at least then you’re in this kind of new norm and you have this consistency.
And then lastly, I’ll call out OSM, who we’ve been working with a lot, and we actually saw some slight improvements over the last couple weeks with them, as well. So-
Kurt Elster: OSM, what’s that?
Casey Armstrong: OSM?
Kurt Elster: Yeah. I’m not familiar.
Casey Armstrong: Okay. Check them out. OSM Worldwide. So, we work with them.
Kurt Elster: So, it’s just a new shipping carrier?
Casey Armstrong: Yeah. And they work with a lot of the other different carriers, so yeah, they’re a certified USPS shipping partner, and so yes, I would. And we work with a lot of the others throughout all the different regions within the U.S., like OnTrac and others.
Kurt Elster: You had mentioned, you said, “Well, this all assumes that they scan the package in properly.” And I have seen other people post about this on social media saying, “Oh, we’re seeing these issues where stuff is scanned as delivered, but it really wasn’t, or it never scans in and then shows up.” What are you seeing there?
Casey Armstrong: We see… So, we hear that to some extent, but I don’t have a lot of good data there, and I think that’s something that really the merchants start bringing up to us a little bit throughout December, but really come January because it’s really I think a full-on sprint throughout really kicking off on Black Friday and then through all of December. It’s heads down on getting orders out the door.
Kurt Elster: Makes sense. Any other thoughts on Black Friday, Cyber Monday? Sounds like we’re not gonna see the Shipageddon nightmare that we had last year. It seems like things are… Everyone learned from last year. Things aren’t going as badly. And I think it helps to have spread things out in November.
Casey Armstrong: Yeah. I don’t know if everybody learned, but yeah, so far it’s gone smoothly for us.
Kurt Elster: Okay, good. Well, good. I’m glad to hear it. Let’s see. So, I want to change gears. If I’m ship… I’ve got an eCommerce brand, I am doing my own fulfillment, but the stuff’s taking over my house. This is often the story we hear, is like, “These boxes have just moved into all of our house. It looks like a warehouse in here.” I think that’s when you know for sure, “Maybe we should outsource this.”
And so, tell me, before… Well, what’s the time where people know like, “All right, we gotta get this out of here. We need to outsource it and move to a 3PL.” Third party logistics like yourself.
Casey Armstrong: I think it’s earlier than people expect. Unless operations and logistics and fulfillment is your specialty as a founder, that’s your differentiator, that’s your superpower, I would look into it sooner than not. Because as you know, Kurt, as you grow your business, and we hear this all the time, you’re not gonna be shipping out fewer products today than you did yesterday or the day before that. You want to continue to grow your sales volume let’s just say every day, every week, every month, every year. And so, every day, you wake up with more orders than you had before, and it builds up pretty quickly, and what I’ve heard from a lot of customers of ours is it almost seeps in. There’s like this subconscious element that is having them inhibit their growth because they don’t want to pick, pack, and ship that many orders the next day.
And so, I would look into it sooner than not. I think there is benefit in doing it a little bit yourself because you can understand some of the processes, and what it takes, and also I think it helps you understand why it’s important to ship products to your fulfillment partner in a way that is clean and easy for them to receive. It helps you understand the importance of using certain types of packaging, or poly mailers, and not making things too complex.
Kurt Elster: Really, as soon as you’re thinking about it, the chances are you’re going to be shipping more the next day than today. It’s not a thing that slows down. It just gets worse and harder.
Casey Armstrong: Exactly. There are options out there that can allow you to more or less completely forget about it and really start getting those Amazon-level shipping experience for your end consumers. It’s also end consumer demands aren’t gonna wane. They just want their packages faster and faster. And I think what surprises a lot of people is with a solution like ShipBob, of course I’m biased, but with a solution like ShipBob, you actually have more visibility into what’s happening in your supply chain, in your fulfillment experience, than you do by yourself. You can see the volume coming in and out every day, the average zones that you’re shipping, the average costs, how can you start splitting your inventory to multiple fulfillment centers to improve both cost and speed, and so there are a lot of benefits to outsourcing it, as well.
Kurt Elster: I heard the magic word there, cost. My guess is that’s people’s resistance to outsourcing fulfillment largely is, “Hey, I can fulfill this stuff myself and it’s going to eat up my time, plus I gotta store, like there’s a lot I have to deal with, or I can have someone else to do it, or I can pay someone else to do it.” Keyword, pay. What is the cost there? And is it a cost savings and I’m just being myopic?
Casey Armstrong: There can be a cost savings and I think if people properly value their time, there’s always a cost savings. And so, the way we charge it’s on receiving, it’s on storage, and it’s on what we call the total fulfillment cost. And so, very often based off of our rates, we see customers come pretty close to break even what they were doing before, but again, they were getting a much better experience and they’re not doing it themselves.
Kurt Elster: And I think the other thing with outsourcing fulfillment, what limitations exist? I think everyone thinks like, “Well, my packages and products are very special, and they cannot be handled in normal ways by mere human hands.” Like what are some of the limitations that people get into with outsourcing? Maybe it’s like pack-ins, or I need some special box?
Casey Armstrong: That’s where before you even start doing the research I think you should write down what are the must haves and what are the nice to haves in your business, because that is true. For some products, you know what? Only like you said, mere mortals cannot handle my packaging. Maybe only you can do it yourself because you need a certain amount of glitter sprinkled on top in these tissues folded in this way and you’re using custom packaging tape, and you’re custom writing a handwritten note every single time. Maybe that’s the case with your business, but then you also have to think through what are the costs of all of those and the time.
Something that we focus on heavily, that’s one of the core pillars of our business, is really the customization layer. And so, that could be custom rules that you have built in that dictate how, and when, and where we ship, and that could be having Shopify or some of your other solutions talking to us, and the customization could also be on the package that’s getting shipped out, and so it could be custom marketing inserts. It could be a custom box. It could be a custom poly mailer. It could be gift notes, which we allow you to use. And so, again, it’s understanding what are your must haves and what are the nice to haves, and so then that way when you’re talking to some different fulfillment partner options you can see if they have those capabilities.
Kurt Elster: Okay. It makes sense. And I think in many cases, when you’re small and doing it yourself, there’s a lot of little extras you can do that feel nice but aren’t necessarily worth your time and having a hard and honest conversation with yourself about it is probably required. But to your point, really, it’s I often think to myself money is a tool to buy back your time, and I have never regretted a situation in which I bought back my time, and fulfillment I think is one of the biggest opportunities in an eCommerce business to get your time back. And so, that’s my attraction to outsourcing fulfillment.
Well, what do you think some of the misconceptions are about outsourcing fulfillment?
Casey Armstrong: Well, I think you nailed one of them, which is they can’t live up to my level of customization, and that’s not true, and maybe that’s because of some of the people that they’ve used in the past or some of their friends’ experiences. And so, I’d ask around. Another is, that we kind of touched on, as well, like I remember when I started my career in the technology space, that’s when cloud computing was not as widespread as it was. I don’t even hear people talk really about cloud computing anymore, but people were pretty wary about moving their entire business online. They’d be moving things from their computer, or localized within their office, into the internet. Because they were “giving away their baby.”
Well, within eCommerce, a lot of times there’s actually this tangible thing that you can hold and feel that’s your product, and it’s, again, your “baby.” And they don’t want to hand that off to a third party because they think that they’re gonna lose visibility and there won’t be that level of trust. But again, because depending on the partner you choose, you’ll probably have more visibility and become smarter about your own operations and logistics than you were prior because everything is probably just thrown into your garage, or your spare room, or maybe your living room, which we often see.
I always get a smile when I talk to prospects, and I can see just a bunch of packages in the background and it’s in their dining room.
Kurt Elster: Yeah. When you get on a Zoom call and you can see they’re just surrounded by boxes and you’re like, “Oh, gold!”
Casey Armstrong: Yes. And it’s, yeah, not uncommon. But again, you can have more visibility there into your business, and then it just helps you start getting smarter and connecting with other solutions to help you run a better business. And not just your eCommerce platform, but are you connecting in with the right inventory forecasting tools? We’ve been pushing hard in creating a much more streamlined experience with getting freight from overseas, connecting with companies like Gorgias on your customer support side of the business and so that they’re talking in real time. And so, there’s so many elements, or so much other software, or things you need to run your business, and how can you make them all talk to each other so that you’re running just a much more well-oiled machine and you don’t need to be a $1 million, $10 million, $100 million business. You can do that really early on.
Kurt Elster: So, it sounds like I’m adopting your economies of scale by outsourcing.
Casey Armstrong: Exactly.
Kurt Elster: There’s just a lot that you can do that I can’t, but I can essentially timeshare a small bit of that and really reap the benefits of it.
Casey Armstrong: Exactly. It’s just like with Shopify. Nobody, none of your listeners could go build a solution that is as strong as Shopify that can keep you 100% up time and have all the different payment options and integrations, but it’s the same thing. The economies of scale. Now you’re paying whatever X dollars per month, and you get to take advantage of all of that on day one.
Kurt Elster: Yes. No, absolutely. Okay. What else am I missing here? I want to close with the future of fulfillment, and I think we see news stories about drones and stuff like that, but what else am I missing, should I ask before then?
Casey Armstrong: So, I guess before even drones when we talk about the future is where are merchants heading and why, and so I think fulfillment is kind of lagging for some very valid reasons, but it’s kind of lagging the payments space by a few years because payments is more of a software issue to solve. And so, what was Stripe doing over the last few years? And they were really allowing people to sell internationally and allowing people to sell through different channels, and that’s really a huge focus area for us, and if you read Tobi over at Shopify when they do their quarterly earnings report, when you listen to Brent Bellm over at BigCommerce and he does his quarterly earnings report, what are they really calling out?
And it’s things such as international, and so that’s a huge thing, that this world’s getting smaller and while people do that with payments or with bits allowing their store to render all over the world, we want to do that with fulfillment. And so, how can you allow people around the world to buy your product as easy as it is selling within the city where you live? I’d say after that, it’s omnichannel, which I know is a very buzzy word we hear all the time, but there’s a reason why Google, and Facebook, and others continue to invest heavily there and partner with some of the biggest players in the space, like a Shopify, and a BigCommerce, and a ShipBob.
And then the third I’ll call out is B2B. That’s an area that I’m very excited about that we’ve really opened up a lot at ShipBob, where it’s not just supporting your direct-to-consumer sales, but it’s all of your B2B sales, and so that could be selling through let’s say an actual… the in-person store experience and shipping out B2B to all the different Targets, or I’ll say the Target distribution centers so that they can send it everywhere, or through Target.com. Or maybe you want to sell through Neiman Marcus or NeimanMarcus.com, and so there’s the B2B wholesale and then there’s B2B drop shipping. I think B2B drop shipping is gonna be huge and Target is one of the companies leading the way, and a lot of these other companies are seeing how well Target is doing here, but really nobody other than Target, and Walmart, and Amazon have the logistics capabilities that Target has, and so they’re gonna need to find the right partners to allow you to sell through the dot coms.
And so, I think that’s another huge area that brands need to focus on today. I know Chewy is a huge area of opportunity that some of our customers are taking advantage of, and I don’t know, there’s a pretty funny Twitter thread I saw going on yesterday where it was a very smart operator in the space is acting about Chewy, and then it’s really crickets, and it just shows the opportunity with some of these dot coms that people have to take advantage of these huge targeted audiences versus solely going to Amazon or Walmart, which are great options, as well, but that’s also where everybody is currently hunting today.
Kurt Elster: So, we have there’s DTC, where I’m gonna fulfill it myself on my own website, and I run my own store on Shopify. And then I could plug in marketplaces, which now it’s Amazon, Walmart, Etsy, eBay to a lesser extent, and then on top of it I’m also going… I could drop ship with Target, Chewy, other… These really large online or stores with large online presence who are now saying, “Hey, we can add more to our catalog.” But it’s done in a more curated fashion. Am I getting that right?
Casey Armstrong: Yes.
Kurt Elster: Okay.
Casey Armstrong: And you’re seeing people put their money where their mouth is with the retailer, so I don’t think it’s gone through, but like Macy’s and a handful of others looking to split their businesses from their actual stores and real estate footprint through their dot com, and they’re turning them into multiple different businesses, and they’re completely separate. That is allowing these dot coms to invest more into their eCommerce experience and continue to open up what I guess they would call their future marketplace, but I see that being a huge trend for next year.
Kurt Elster: That’s interesting. I hadn’t thought of that, but you’re right. Yeah, the online and the physical version of these larger stores, with a lot of retail space, has bifurcated. Especially if it’s like a traditional department store, like Macy’s.
Casey Armstrong: Yeah. They’re bifurcating. They’re bifurcating publicly. And they’re doing it as publicly traded companies and they’re having success of bifurcating and then the dot com is actually becoming more valuable in a publicly traded manner, which again, people putting their money where their mouth is, than the entire business was prior, and they still have the entire offline business, as well.
So, anyways, they’ll continue to invest more in there, and they need to partner with a lot of the up-and-coming brands. Again, Target, just walk around the Target and think about what Target was like a decade ago. They’ve done such a great job of that, and a lot of these other companies are taking notice.
Kurt Elster: Absolutely. Man, exciting time to be in eCommerce, certainly. And if I have a living room full of packages I want to put into your living room, how do I go about doing that?
Casey Armstrong: Yeah. ShipBob.com. You can email me, carmstrong@shipbob.com. I actually… I probably should have led with this story. I had a partner hit me up the Wednesday before Thanksgiving and he told me that he had a customer of his that had product on a plane, and they needed to find a home for it. And he went through our implementation on Black Friday, and they’ll be shipping… They started shipping with us a few days after that. And so, we can get people started pretty quickly once it hits our docks. Three days max and we’re running. So-
Kurt Elster: Yeah. If you’re onboarding on Black Friday, it’s hard not to be impressed by that.
Casey Armstrong: Yeah. They were happy. I’ll say that.
Kurt Elster: Casey Armstrong, ShipBob, this has been tremendous. Say hi to Bob for me. Thank you so much.
Casey Armstrong: Awesome. Thank you, Kurt.
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