The best & worst thing to happen to Q4?
In this episode, we discuss the global supply chain disruption affecting US store shelves.
Turns out the mega ship got stuck in the Suez Canal was nothing compared to this.
Why are limits on toilet paper back in stores?
How many container ships are sitting in the water outside of Long Beach right now?
Why does Amazon want to legalize weed?
Turns out all of these things are related to supply chain disruptions.
That's one epic traffic jam and it shows no signs of letting up before the holidays.
As ecommerce professionals, what are we gonna do about it?
The Unofficial Shopify Podcast
10/5/2021
Paul Reda: Please make sure I’m being recorded at a reasonable volume, because as I recall last time, I wasn’t on the first 30 seconds of the recording.
Kurt Elster: I have the slider up. I can see. Yes. I can see the bars moving. Have you been to the store lately?
Paul Reda: Just the food store.
Kurt Elster: And-
Paul Reda: To get food for my food hole.
Kurt Elster: Okay. And while perusing food to slop your trough with there, buddy, did you notice… Did the shelves seem bare or a little emptier than usual?
Paul Reda: No. Not at the food store.
Kurt Elster: No?
Paul Reda: No.
Kurt Elster: I heard people saying that. I noticed like the snack aisle at my local Jewel-Osco seemed a little sparse, but nothing that scared me.
Paul Reda: All right, so Blue Diamond nuts, they’re going crazy. They just got almonds of every single flavor now.
Kurt Elster: Oh yeah?
Paul Reda: They’re like going hard into flavored almonds. They got these salt and vinegar almonds, and I am super into them.
Kurt Elster: I love salt and vinegar as a flavor profile.
Paul Reda: They’re the best. I pound them. My wife decided that was too much sodium for me, so now I have to cut my salt and vinegar almonds half with regular almonds. But the salt and vinegar is so powerful, it evens out.
Kurt Elster: I was gonna say, I laugh, but that’s really not a crazy idea.
Paul Reda: It’s a little too plain for me. You might have to go like two thirds salt and vinegar, one third normal almonds.
Kurt Elster: But you already have the tolerance to the salt and vinegar almonds. If I was starting clean, then maybe I do 50-50.
Paul Reda: I’m like a real punch me in the face with flavor kind of guy.
Kurt Elster: How did you suck me into this? I know how. I like snacks and I definitely like salt and vinegar. So, have you had trouble buying anything?
Paul Reda: No, because I don’t buy anything.
Kurt Elster: Oh. eCommerce professional, doesn’t buy anything.
Paul Reda: I only buy food and digital goods. I don’t buy anything physical.
Kurt Elster: And that is the nice part about digital goods. No inventory, which means they’re like 99% profit.
Paul Reda: I don’t know. I heard there’s a bunch of containers full of bits off the coast of Long Beach and they can’t get the bits in.
Kurt Elster: That’s not actually how Bitcoin works. You gotta stop listening to the internet. No, so I keep… I have seen with my own eyes people freaking out. I have seen photos of empty store shelves. There’s... Some purchasing restrictions are back, like toilet paper, et cetera. And certainly, we have heard that moving container ships into the U.S. is suddenly difficult and very expensive, like 10X more expensive than 12 to 24 months ago.
Paul Reda: Yeah. I know a guy that works for Fisher Nuts, and Fisher Nuts… They do like all the nuts. Obviously, not my beloved Blue Diamond salt and vinegar almonds, but they white label a ton of nuts, and he… They get a lot of their nuts from South America. And he’s having problems getting nuts into America, and his container costs have gone up 6X in the last year. So, no nuts.
Kurt Elster: No nuts. And national news has been covering this, and so I went to the LEGO Store over the weekend at our local… What do you call those stores? Those malls? The discount mall? Outlet. Thank you. So, I went to the LEGO Store at our local outlet mall and normally there’s nobody there. There’s like three people and me browsing.
Paul Reda: There’s outlet LEGOs?
Kurt Elster: Yeah. Which is bizarre because it’s exactly the same cost except they have a sale section.
Paul Reda: Yeah, that’s my thing, is that like LEGOs never go on sale.
Kurt Elster: Is that really an outlet store?
Paul Reda: Yeah. I want outlet LEGOs.
Kurt Elster: It’s a LEGO store that just happens to be in the outlet mall. Anyway, they had a line to get in. It was at capacity, which I had not seen, and there were several stores like this, whereas a month ago, this was definitely not the case. So, national news running those stories about supply shortages, I think people are starting to do Christmas shopping early.
Paul Reda: Yeah. I feel like two, three weeks ago, all the container ships are trapped off of LA and there’s all these shipping problems, I feel like that was a lot in the B2B type news, like if you were in some sort of industry directly affected by it you were hearing about it, but not normal people were hearing about it. But in the last week, I feel like it’s definitely become a sort of nationwide media type story, where it’s on CNN, it’s on CBS, it’s in all those kind of places.
Kurt Elster: No, absolutely. So, today, on The Unofficial Shopify Podcast, that’s our topic. We are discussing the global supply chain disruption, which is like Shipageddon, but bigger and potentially scarier. I don’t know if I necessarily want to say worse. Different. It’s definitely not good. Anyway, I’m your host, Kurt Elster, A.K.A:
Ezra Firestone Sound Board Clip: Tech Nasty!
Kurt Elster: I’m joined by my business partner and lead developer of many years, Paul Reda, and it turns out that that mega ship that got stuck in the Suez Canal, nothing compared to this. We’re freaking out about that when it happened.
Paul Reda: You just gotta go the long way.
Kurt Elster: Yeah.
Paul Reda: You could still go. It’s just gonna take a couple extra weeks.
Kurt Elster: It’s just now you just can’t get the stuff in the doors. And there’s some other issues going on too with the supply chain, like Amazon wants… Amazon is lobbying to federally legalize weed. Did you hear this?
Paul Reda: I saw something about that. Yeah.
Kurt Elster: Do you know why?
Paul Reda: Probably so people can pass drug tests? I don’t get it.
Kurt Elster: Yeah. It’s so people with CDLs can smoke weed and still pass a drug test. That’s what they’re going for. Because they can’t get enough drivers.
Paul Reda: But where… Who’s doing this drug testing?
Kurt Elster: We’ve already reached the depths of my knowledge.
Paul Reda: Because the answer to this is Amazon should just not drug test people.
Kurt Elster: Well, I think with the CDL, it’s the state. That’s my suspicion.
Paul Reda: You think for like a CDL you have to pass a drug test?
Kurt Elster: For a CDL, you’re definitely getting drug tested. Hold on, I’ll Google it.
Paul Reda: Okay. Sorry I asked a question to glean more information.
Kurt Elster: The DOT mandates drug tests that use urine samples. Employers of CDL drivers test for marijuana, cocaine, amphetamines, opiates, and PCP.
Paul Reda: And you have to do it like once. How often do you gotta do it?
Kurt Elster: Excellent question. Quarterly and occasionally random.
Paul Reda: All right, so yeah. Yeah. And the military I read is also trying to do that. Because they need more people in the military.
Kurt Elster: And then on top of that, how many boats do we have sitting outside of Los Angeles just doing nothing?
Paul Reda: I don’t know. How many? You track this every day.
Kurt Elster: I do. All right, so it’s about… Currently, so this is reported two hours ago by CBS Los Angeles. Half a million shipping containers, total, across all these boats. So, that’s not the total number of boats, but it’s our total number of shipping containers on all these boats.
Paul Reda: Just sitting there waiting to get unloaded at the port.
Kurt Elster: Yes. And there’s so many that they’re so far out into the water that they can’t even actually anchor down. They’re just adrift out there.
Paul Reda: Yeah.
Kurt Elster: Last I checked, it was over 70. Which, previously, in the summer, they hit 44 in the late summer and freaked out. Oh my gosh, that’s the most that’s ever been out there! Now we’re gonna close in on potentially doubling that number. Just keep setting new records for just a backup of ships bringing containers of stuff into the U.S. that then they struggle to distribute because we can’t get enough drivers and we don’t have enough hands to unload the stuff.
Paul Reda: Yeah. And then on the flipside of it, there’s a bunch of reports that came out in the last 72 hours I saw that China, because they’re hosting the Winter Olympics in February, is like, “Oh, we can’t have horrendous, terrible air quality during the Olympics, because all the camera shots are gonna look bad and everyone’s gonna get lung diseases while trying to exert themselves, so we need to ramp down coal production,” which is a large percentage of China’s power. And because we’re essentially rationing energy, now various factories around the country can only work four days a week.
Kurt Elster: Oh, geez.
Paul Reda: So, that I feel like is kind of an opposite problem, because everyone’s freaking out about that, so on the one end we’re freaking out because there’s too much stuff coming, and then on the other end we’re also freaking out because they’re not making as much stuff. So, that feels like that evens out.
Kurt Elster: Yeah. Maybe the limitation on production should help clear this glut.
Paul Reda: Yeah, like what should they do, just keep pumping out stuff so the line gets longer?
Kurt Elster: That they can’t ship. The other thing I don’t get is we have everything piled up at one port. Are there other ports they can go to? I read that it doesn’t work that way, but I did not understand the explanation.
Paul Reda: I’m guessing it doesn’t work that way given the size of the boats, and like the machinery needed, and like the training stuff with the longshoremen that do it. You know, Frank Sobotka’s out there.
Kurt Elster: And so, why are the ships backed up? Why are they just sitting, waiting outside of LA?
Paul Reda: See, that I don’t know, because I feel like again, as Season 2 of The Wire taught me, these longshoremen are kind of starved for work and they need more hours, and I also learned that from watching On the Waterfront, so isn’t the answer then just all these guys get to work now, and we unload all the boats? Or maybe there’s just like a certain point where you just reach diminishing returns, like we can only unload four boats at a time no matter… and then throwing more guys at it won’t make it go any faster.
Kurt Elster: So, all right, ignoring film noir movies as our source of truth here, and I like that, the Wall Street Journal has an article about it from the last week, and essentially everybody’s pointing fingers, which means’ it’s like really, it’s no one…
Paul Reda: Ten things each got 10% worse and now it’s awful.
Kurt Elster: Yeah. And so, and that happening, then it’s kind of compounded. So, here’s the quote from the Wall Street Journal. Some exciting reading. “Participants in each link in the U.S., chain shipping lines, port workers, truckers, warehouse operators, railways and retailers blame each other for the imbalances and disagree on whether 24/7 operations will help them catch up. All of them are struggling with a shortage of workers.”
Okay, so this was the solution, one of the solutions that the Port Authority, I believe, said, “This is what we’re gonna do.” And they said previously they did not work nights and weekends. They said, “Guess what? We’re running 24/7 now.” But you can’t… They’ve yet to actually do it, so there’s an article in Wall Street Journal from just four days ago. It says, “California port’s 24-hour operation going unused. This pilot program hasn’t attracted any truckers in the more than two weeks since they started it.”
Paul Reda: Well, and so I can explain part of that is… My brother works for a company that has to do a lot of deliveries all around the city of Chicago, and they are having a terrible time getting truck drivers, because here are your two choices. You can be a long-haul trucker that drives a container across the Interstate on very regular hours working for Amazon or UPS or whoever, and when you unload it, you back up to a loading dock and someone unloads your truck while you sit there and do nothing. Whereas his company, you have to take that truck, drive it around the city of Chicago, and make deliveries where you get out of the truck and do the delivery into the place, and so everyone’s just like, “Well, screw that. I’m gonna do the easier job.”
And so, I’m sure this is part of it, is that there’s such starving for interstate trucking that guys that gotta do the harder jobs, like I gotta drive down to the docks, and then maybe take it to a different loading area in City of Industry, California, or something like that, it’s like, “Well, screw that job. I’m not gonna do that one. I’m gonna do the one that is easier for me to do.”
Kurt Elster: So, that Wall Street Journal article has another great pull quote in here about truckers and the shipping and port executives just blaming each other.
Paul Reda: Yeah.
Kurt Elster: The quote is, “Truck drivers often don’t show up at scheduled appointments to pick up boxes at the inundated container yards to make space for the next load to come in.” Okay, so that’s our shipping and port executives blaming the truckers. Then the truckers say, “Terminal congestion delays at the appointment cause them to miss the next and that the shipping lines aren’t doing enough to clear out the towers of empty containers taking up space at the docks,” so they don’t want to go because it costs them money, just completely screws up their schedule. It wrecks their day.
Paul Reda: They blow the whole day waiting for one container.
Kurt Elster: That never appears.
Paul Reda: Yeah.
Kurt Elster: And so, no one wants to deal with it, and so it sounds like the truckers are avoiding the thing. We don’t have enough people. It’s backing up. And then even like… There’s also some space in the yard is taken up by some businesses that were essentially leaving stuff in these container yards as storage. So, you’ve got some inventory just sitting that’s not gonna go anywhere but it’s eating up space at a bad time for it.
And then on top, like to try and deal with this as a supply and demand problem, the cost of these containers went up dramatically. Like 10X.
Paul Reda: Yeah. 6X for nuts. I could tell you.
Kurt Elster: And then, so people said, “Well, I guess we can move the stuff via air.” Same thing happened. Once everybody started shifting over to air, then the price there went up dramatically and you can’t move as much when you do air shipping.
Paul Reda: How does this impact our listeners?
Kurt Elster: Yeah. Why do we care? Like it sounds bad.
Paul Reda: I think we care because if they’re trying to get stuff in from the Far East, when are they gonna get it? Are they gonna have inventory for the holidays? Or maybe if it’s not their finished product, maybe it’s pieces of their buying activity. I remember during the early days of the pandemic, what’s the name of the yeast? Is it’s Fleischmann’s Yeast?
Kurt Elster: Well, that’s the brand I buy.
Paul Reda: All right, so they had enough yeast, but the packaging that they sold the yeast in, that came from India and India was shut down and they couldn’t get it out during the early times of the pandemic, so they had to figure out a new packaging system in order to get the yeast out the door.
Kurt Elster: Geez.
Paul Reda: So, yeah, it’s just everyone’s trying to figure out what to do.
Kurt Elster: And normally, at this point, I had asked in our Facebook group. I said, “How’s this impacting you? How are you impacted by supply chain disruptions?” And I would then read these really interesting and insightful examples from people. And I can’t because Facebook has been down for the entire morning.
Paul Reda: Yeah. We’re recording this at the last minute. It’s Monday. And Facebook doesn’t exist. Judging by a comment I read on Reddit, so take that with a grain of salt, a guy who said he’s working on trying to fix the issue because he’s a sys admin at Facebook, someone screwed up their DNS records, so what that means is the internet pretty much doesn’t know that Facebook exists and can’t find any of the domains, and because of that, they can’t remotely login to administer the servers, so the only way to fix it is to physically go to every single Facebook server farm and manually reconfigure the server while standing next to it. Which feels like it’s gonna take a while.
Kurt Elster: Let’s take that one with a grain of salt. We’re gonna go with allegedly, according to a Reddit comment.
Paul Reda: Yeah. Allegedly, according to a Reddit comment.
Kurt Elster: But I do know for sure this thing is very much definitely down and unavailable for an unusually long time, the entire thing. It’s painful.
Paul Reda: It’s Instagram and WhatsApp, too.
Kurt Elster: Yeah. The whole thing.
Paul Reda: So, maybe people will become like 5% more sane over the next 24 hours.
Kurt Elster: But to highlight the impact… You’re right. Maybe Facebook going down is not the worst thing?
Paul Reda: Yeah.
Kurt Elster: But to highlight the impact, I do have a tweet thread from Conor Lewis. He’s not been on the show, but he did a Kickstarter over the summer called Get the Fort. The Fort is a magnetic pillow fort for kids. This guy raised millions on Kickstarter. He now has a Twitter thread from September entitled why bootstrapping a company and crowdfunding millions in 2021 created an impossible situation and how I know I’ll survive.
Okay, so he sells $3 million on Kickstarter for this product and that ends up being well over 10,000 units. And then he finds out that magnetic prices are spiking, and foam costs are going up and he thinks, “Well, I can handle that. It’s a 30% increase in cost of goods sold. We’re okay.” But he sold 75% of the product under COGS it turns out, and then has to get it here. And he manages to make full production. Wires millions of dollars. It’s gonna work.
But he’s $40 to $60 in the hole per unit and warnings about freight and shipping costs start coming in. Now, because of the shipping costs, he starts having to pay 70 bucks a unit just to get them here, so essentially what occurred here was he said, “I could sell this on Kickstarter. I know what my cost of goods sold is going to be. I know what it’s gonna cost to get it here.” He knew everything. The guy is not stupid. Did it and then immediately the supply chain constraints start to kick in, where first his material costs go up 30%, and then he’s got… Once he gets the stuff manufactured, he’s like, “All right, I’ll eat that cost.” And then he gets it manufactured. Well, now the cost to ship it here becomes dramatically more, and so now suddenly this very successful Kickstarter campaign, he’s losing money on every order he ships.
Paul Reda: Yeah, because he sold it at one price, and then as it turns out, he thought that price would be fine, but once the rubber actually hit the road, he found out the price needed to be way, way higher. But he agreed to sell it to all these people at the lower price.
Kurt Elster: Yeah. And so, what he did was come clean with the backers. He posted an update, told them what happened, and gave them the option. He said, “If you want, if you believe in it, you could pay 99 bucks extra, and that’s just to… You will receive your product knowing that it was not sold to you at a loss.”
Paul Reda: And then what was the other… The other one is if you want to stick at the lower price, guess what, you’re gonna wait?
Kurt Elster: Yes. So, they could choose to delay their shipment. But yeah, his hope then really was to try and make up for it and dig out of the hole by selling preorders at the appropriate price for the next run via his website.
Paul Reda: No offense to this guy, but if I bought something, it didn’t show up for a year, and then he came to me later and was like, “Hey, guess what? If you actually want it, you gotta give me another $100,” fuck you. No way.
Kurt Elster: Some people I’m sure thought that. Others paid the money. I think the important part was that he was honest.
Paul Reda: True.
Kurt Elster: He’s like, “Look, here’s what’s happening.” I feel bad for the guy.
Paul Reda: And that’s why I only sell digital goods.
Kurt Elster: Well, yeah. Digital goods, obviously there’s no inventory to it, so it doesn’t have this issue. Man, I wish I had access to these Facebook comments. They were so good. Should have copied and pasted it yesterday. Not knowing that Facebook was gonna go down for the entire morning.
Paul Reda: Our guest we were supposed to have last week postponed on us, so we’re just like whipping this out at the last minute, and Facebook’s down, so that’s good.
So, the point of your story about the LEGO Store, I think I might have derailed it, is the LEGO Store was absolutely packed.
Kurt Elster: When it normally is not.
Paul Reda: And there wasn’t any sort of like special sale going on, or there wasn’t an event, or anything special. It was just straight up packed.
Kurt Elster: Yeah.
Paul Reda: For no reason.
Kurt Elster: But it’s not no reason.
Paul Reda: Because people were doing holiday shopping.
Kurt Elster: Yeah.
Paul Reda: And so, they’re doing holiday shopping on October 3rd?
Kurt Elster: Yes. En masse.
Paul Reda: Yeah. So, I think two weeks ago or whenever I was last on, I mentioned the thought of, “Hey, don’t discount anything on Black Friday because it’s just sales that would have already happened anyway and you’re just doing the sale for less money now.” And now I feel much stronger about that.
Kurt Elster: Yes.
Paul Reda: I think with everything going on right now, don’t discount anything. Because people… If you have inventory. If you have inventory and you could sell stuff, and you’ll sell out all your inventory without discounting anything.
Kurt Elster: And the reason is what we’re discussing right now, thought we went industry focused and in depth on it, this is national news. I mean, those quotes I gave you were from the Wall Street Journal, and I’ve seen this covered on our local Chicago news. I’ve seen it covered on national news. So, people are aware of these supply chain shortages. They may not necessarily get the nitty gritty details and know the number of containers waiting in the water.
Paul Reda: They just know that stuff is not gonna be around for a while.
Kurt Elster: Yes. And we have in our recent memory what happened in March of 2020, when it was like, “Oh, you wanted toilet paper? That’s cute.” So, we’ve got that fresh in our minds. But I just… I Googled holiday shopping in Google News. Wired, two days ago. Tips to start your holiday shopping early. Supply chain problems haven’t improved. If you want to get something special, here’s how to plan ahead. Reuters, “Amid supply chain snarls, retailers pitch early holiday shopping.” And Target and Amazon launched their… They called them like, “Early Black Friday deals,” that kind of thing. They’re already running their holiday sales. They’ve already started if you’re listening to this.
Paul Reda: Yeah.
Kurt Elster: So, I think whether or not we get through the supply chain issues before the end of the year, which I don’t think we will.
Paul Reda: No. I don’t think so.
Kurt Elster: I know some people are saying, “Oh, industry insiders predict total supply chain collapse.” I think that’s-
Paul Reda: That’s ridiculous.
Kurt Elster: I do. Yeah. I don’t think that’s going to happen. There are still levers to pull, things to do to fix this. It is fixable. But it’s not getting fixed in time for Black Friday. It just isn’t. We’re already in October. And given the number of ships out there and how difficult it is to hire people to do this necessary work, I don’t think this gets resolved until next year.
So, it’s a realistic… It’s a very real problem to deal with right now, and so, but I think in general, I think a lot of people are gonna shop early, and I think the people that wait, it’s going to be, “Hey, you’re gonna buy what’s still in stock.” Because you waited. So, I think for the first time, maybe we don’t have to lean on discounting, which… That was your point. 100% I’m on board with it.
Paul Reda: Oh. Good. And I think the point of it is you should lean into that, which is, “Hey,” usually all of the customer communication around Black Friday is, “Deals, deals, sale, deals, check it out.”
Kurt Elster: Deals and steals!
Paul Reda: Deals and steals!
Kurt Elster: Steals and deals!
Paul Reda: I think this year it’s, “In stock, ready to ship.”
Kurt Elster: Yes. Just keep screaming, “In stock, ready to ship.” Get badges for it on the collection grid.
Paul Reda: Everything on the collection grid that is in stock, ready to ship, say it’s in stock, ready to ship. You will receive this in four days. Or whatever you want to do. Figure out how long your stuff takes. And that is your value proposition. Not that you’re gonna save money, but that you’re just gonna get it.
Kurt Elster: Yeah.
Paul Reda: And I think people will pay for that.
Kurt Elster: And I think it’s already started.
Paul Reda: Yeah. It’s already started. Don’t discount anything. Make it clear to everyone you have stuff, and you are willing to sell it to them, and they will get it in a reasonable timeframe.
Kurt Elster: Seems pretty good to me.
Paul Reda: All right.
Kurt Elster: I want stuff in time.
Paul Reda: All right, so-
Kurt Elster: Well, and I remember last year, the fear was Shipageddon, which I think it’s gonna happen again.
Paul Reda: It depends on how you define it. I don’t think it’s gonna happen during the last mile. I don’t think it’s gonna be like-
Kurt Elster: Right. Last year it was last mile delivery we call it.
Paul Reda: Last year was last mile, was getting it from the warehouse to your house. The problem is going to be getting it from way earlier in the supply chain to the warehouse next to your house.
Kurt Elster: Yes.
Paul Reda: So, what do you do if you don’t have stuff? Uh oh. You’re supposed to have sales and have Black Friday and make all this money this quarter and you don’t have any stuff.
Kurt Elster: You don’t have the inventory. Or things go so well, you sell out of all your inventory at normal prices by Halloween. Then what? What do you do?
Paul Reda: What do you do?
Kurt Elster: Well, I really… All right, so if you’re listening to this you are an entrepreneur, and therefore pretty good at creative problem solving in these scenarios, and so I think your options are you’re gonna have to get creative. So, the one that I’ve seen a lot of people point to is, “Well, obviously you could sell gift cards.” And so, I think… I don’t think that’s a crazy thing to do, but people want their stuff, so presenting… I saw a screenshot on Twitter today where someone had put in a product form, the add to cart button had changed to sold out, and then below it, it said, “Gift this as a gift card,” or gift a gift card. So, you could let people gift the value of the card. That’s one method.
Selling preorders is another, but that’s problematic for gifting, especially if people misunderstand. And that’s common with preorders. We’ve got our own preorder app and it’s just a thing that happens, where people don’t… They see what they want to see. And then if you could sell digital goods, you don’t have this problem. And then I think if you’re lucky and you could find it, if you can locally source stuff, I think we’re gonna see a lot of North American manufacturing really take off in the next 12 months. But it may be too late at this point. I don’t know.
Paul Reda: I have two thoughts. One, for gift cards, I would offer gift cards that don’t become valid until after the new year and they get extra money on them. So, buy a $100 gift card, it’s actually worth $110 but it doesn’t work until January 1st. I don’t know how to do that. I don’t know if Shopify supports that. You worry about that. I’m just the idea man.
Kurt Elster: I like that idea. Shopify itself, I’m 99% sure will not do scheduled gift cards, but if you do a gift card app, it’ll do scheduled gift cards.
Paul Reda: Okay.
Kurt Elster: And doing a discount on the value of the gift card, that should be doable. So, yeah, it’s like, “Hey, buy a gift card for 2022. $100 gift card for 2022 for 80 bucks.” Or you go, “Hey, buy a $100 gift card, it’s actually worth $120.”
Paul Reda: Yeah.
Kurt Elster: However you want to phrase it. I don’t know.
Paul Reda: And then my other thought, you do… All right, you do the preorder. You do the thing where it’s like, “We don’t have this. We’re not gonna have this for three months.” But your free gift with purchase that we talk about all the time, you still have that. And so, the stupid little pin or whatever the little tchotchke is, or you just invent little pins or little tchotchkes, that becomes the thing they could give as the gift. And with it comes a cool little note or note card that you design that says like, “Hey, this pin means you’re gonna be getting this product in three months and thank you for supporting us during this difficult time because of all the supply chain shortages.”
And so, at least you don’t have to provide the product for a couple months, but at least they got something, and they felt like they got something out of it.
Kurt Elster: I really like this idea. Yeah. It’s free gift with purchase plus the preorder or free gift with purchase plus the gift card.
Paul Reda: Yeah.
Kurt Elster: Yeah, so they get a physical thing. They get something.
Paul Reda: And attached to the physical thing you have information of like, “Here’s what happened. Here’s what you’ll be getting in the future at this time.”
Kurt Elster: Okay. Yeah, and so-
Paul Reda: And then you just fire it off to them when you have it. It shows up at their house.
Kurt Elster: We’re gonna take the Conor B. Lewis the Fort method of we’re just going to be honest about here’s what’s going on, like we were lucky to sell out of all our inventory. We were unlucky that we don’t have anything else, and we can’t get it right now, and we’re so sorry, and here’s what we’re gonna do instead.
Paul Reda: Yeah.
Kurt Elster: Okay. That seems like a good plan if you’re in that position. Otherwise, I’m gonna try to just not discount and just lean on, “I got the stuff, and I can ship it to you.” Suddenly, that becomes a really good selling proposition, doesn’t it?
Paul Reda: Yeah. If no one else can get stuff and you can get people stuff, you’re better than everyone else.
Kurt Elster: Yep. Well, so I ordered, we’re remodeling my basement. I’ve talked about this before. And we ordered flooring in June because we were fearful of not having it in time. And then we started the remodel in September. Guess what still hadn’t shown up? The flooring. And so, this woman I was working with who’s a family friend and interior designer, she shows up. She says, “Here, I’ve got this sample. This-“ And I said, “So, this isn’t-“ She said, “This is your alternative.” So, we could wait for the other stuff which still has no ETA, or we could try looking at alternatives.
Without even looking at the floor, I said, “Is it in stock and available? Can I get this to my house in the next 72 hours?” She said, “Yes.” I said, “This is my new favorite floor. I’ve never seen flooring more beautiful than this one. Just get it.” Because I could. And then on top of it, I had to pay extra for it just because it was like “Oh, well, between now and then prices on everything went up, buddy.” Like, “That’s great.”
I do feel bad for this small business that will take… At some point in the future, take hold of all this flooring that was meant for my basement that now they gotta sit on and wait for someone else to buy.
Paul Reda: Well, and yeah, you’re-
Kurt Elster: It was like a local independent place that I bought it from.
Paul Reda: You’re getting a refund on that flooring because they never produced it, so they had that money, then they lost it, and now they have a bunch of flooring they gotta get rid of.
Kurt Elster: Yeah. So, like the impact here and the effects, painful. It hurts cashflow, for sure. I wish we had the Facebook comments. Oh, well. I’m sorry we couldn’t include your comments. But essentially, it was a lot of stories similar to that, of like, “We ordered this stuff. I still can’t get it in. Just can’t get it into the United States to our warehouse, so it really doesn’t help us.”
I do have some housekeeping items we want to close on. Upcoming episodes this month, we’re gonna be talking Black Friday promos and marketing with Ezra Firestone, Kurt Bullock, and Chase Diamond, who is a… He’s not been on the show before but he’s like an email marketing wizard guru type, so he should be good.
Paul Reda: I don’t know why you’re having Ezra Firestone on when I just told you about Black Friday promos.
Kurt Elster: Yeah. It’s funny-
Paul Reda: Because I clearly am better than him.
Kurt Elster: You’re like, “Look, don’t discount anything. Just be like we have it; do you want it?” And it should sell out.
Paul Reda: Yeah.
Kurt Elster: At least the cashier at the LEGO Store was like, “Uh, by November,” he’s like, “I don’t think we’re gonna have anything.” Holy crap, the LEGO Store? You know that .gif?
Paul Reda: They gotta get that stuff from the Netherlands. Is it the Netherlands?
Kurt Elster: Isn’t it Denmark?
Paul Reda: I always screw up Denmark, the Netherlands, and Holland.
Kurt Elster: I think it’s… We could all be wrong.
Paul Reda: I don’t know. Those three things, there could be three different things. One could be part of one the other ones. Someone speaks Dutch. Not sure who that is.
Kurt Elster: I even watched the LEGO documentary, and I don’t know. That’s why I’m tentatively like, “Denmark?” You know that .gif of a red Muppet, arms in the air, as flames rise around him in the back?
Paul Reda: Yes.
Kurt Elster: That’s how I feel. I am that Muppet. Because I’m simultaneously like, “Look, the supply chain’s about to explode and we’ve got all our stuff sitting in the ocean and we can’t get it to sell. People through a tragedy of the common scenario are going to just buy whatever is available on shelves this month and be done with Christmas shopping before Halloween.” Also, let me have three industry experts tell you how to sell the most stuff using various traditional holiday promotions.
I just feel like I may as well be screaming the end is nigh from our window.
Paul Reda: Well, and also, we’d be listening to Kurt Bullock, Facebook ads guru. Maybe Facebook doesn’t exist next week. Who even knows? They don’t have a website right now.
Kurt Elster: I’m sure Facebook will be back next week. I’m sure they’ll be back… Well, maybe. And I did notice Shopify added official support for SMS opt-ins at checkout last week, so I think that’s cool. Well, previously, if you wanted someone to opt-
Paul Reda: It was like an app, wasn’t it?
Kurt Elster: If you wanted someone to opt-into SMS, you had to have Shopify Plus so you could put it in the checkout, and-
Paul Reda: Oh, and so now every-
Kurt Elster: It was a widget. You had to have the app do it. And now it’s just a checkbox.
Paul Reda: Everyone just gets it?
Kurt Elster: Yeah. But I assume like okay, be sure that it’s connected, and working, and passing this information between whatever integration. Because with SMS, you don’t want to mess around. You need that timestamp of this is when they agreed.
Paul Reda: Yeah. The FTC will get you for that. They do not like spam texts.
Kurt Elster: Yeah. I forgot the name of that law but there’s a CAN-SPAM Act equivalent for SMS. TCPA, I think?
Paul Reda: I don’t know.
Kurt Elster: Our email guide will be released this month, I swear, and members of our Facebook group will get the first crack at it. Any other housekeeping updates? Anything you’d like to share with us, Mr. Reda?
Paul Reda: I watched Little Shop of Horrors last night, the musical version. It was so good. Love that.
Kurt Elster: The one with Rick Moranis.
Paul Reda: So good. I remember seeing it as a little kid and being like, “Oh, this is enjoyable.” And then I watched it now and I was like, “This is incredible!”
Kurt Elster: I wish I had any kind of sound drop from Little Shop of Horrors right now.
Paul Reda: Feed me!
Kurt Elster: Feed me, Seymour! I do… That’s on my… Halloween is very important to us.
Paul Reda: It’s very important to you.
Kurt Elster: October’s our anniversary month. I got married on Halloween.
Paul Reda: You got married on Halloween.
Kurt Elster: And so, we celebrate this with a lot of Halloween décor, trick or treating, and we watch… We have a list of Halloween movies, favorite Halloween movies, and it always starts with one of the Adams Family movies. But Little Shop of Horrors got added last year to the list, so…
Paul Reda: Should be on the list. Do you watch the classic Universal horror ones?
Kurt Elster: No, but I should. And I’m going to Universal for the first time in December. I wish… I want to go to Universal for Halloween. They do the craziest stuff and they’ve got the Universal movie monsters.
Paul Reda: I would at least watch the three James Whale-directed ones, which is Frankenstein, Bride of Frankenstein, and Invisible Man. They are… They super hold up. The Invisible Man special effects are like it’s 1932, so you’re like, “What?” They’re very enjoyable. And quick. They’re all like not even 70 minutes, I don’t think.
Kurt Elster: Oh, okay. Yeah, then definitely I am failing if I have not watched these movies.
Paul Reda: Correct.
Kurt Elster: All right. I agree with you. I would love to hear people’s thoughts on this episode. I want to hear how you’re being impacted or what you’re doing differently because of supply chain disruption, so please, join us in our Facebook group, The Unofficial Shopify Podcast Insiders on Facebook and talk to us. We would love to have you.
Let’s get out of here.
Paul Reda: Maybe we’ll see you on Facebook. Maybe we won’t.
Sound Board Robot: Oh my God.