This episode of the Ecommerce Coffee Break Podcast features a conversation with Manish Chowdhary, founder and CEO of Cahoot.ai. In our discussion, we explore the potential of a peer-to-peer order fulfillment network in empowering merchants to provide profitable nationwide free shipping options to customers within one or two days.
On the Show Today You’ll Learn:
- How do merchants encounter and overcome the biggest obstacles and mistakes in shipping and order fulfillment
- Why is multi-channel fulfillment important, and how does it work
- What are the top three factors merchants should consider when searching for a 3PL company
- How much data is necessary to determine the optimal distribution of stock across different warehouses
- What are the differences between a traditional or standard 3PL
Links & Resources
Shopify App Store: https://www.cahoot.ai/order-fulfillment-integration-partners/shopify-order-fulfillment-services-how-to-free-shipping/
About Our Podcast Guest: Manish Chowdhary
Manish is the founder and CEO of Cahoot, the world’s first peer-to-peer order fulfillment network that enables merchants to offer profitable one-day and two-day free shipping to customers nationwide. He has founded multiple industry-leading companies starting from his dorm room at the University of Bridgeport, CT. Manish’s specialties include e-commerce strategy, business methods innovation, supply chain, and logistics optimization, and he holds 10 U.S. patents for his inventions.
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Claus Lauter: Hello and welcome to another episode of the E-Commerce Coffee Break Podcast. One more very important topic that applies to every merchant out there is fulfillment and shipping. Now, there is 1,000,001 different versions on how you can do this, but the most important part is you do it quickly, you do it fast, you do it reliable, because that obviously is the one thing that makes a customer very, very happy.
Now one of the biggest competitors in the market that you have as a Shopify merchant, is delivery done by Amazon. And obviously this fulfillment is very fast, but there might be a better option for you as a merchant, and that's something we want to talk about today. With me on the show. I have Manish Chowdhary, he is the founder and CEO of cahoot.ai, the world first peer-to-peer order fulfillment network.
So what that is, we will dive into a second. Manish has founded multiple industry leading companies, starting from his dorm room at the University of Bridgeport, Connecticut. He specialize in e-commerce strategy, business method innovation, supply chain and logistic optimization. And he holds 10 US patents for his inventions and hold also a honorary doctorate the I honor of his ama mater of the University of Bridgeport.
So let's welcome Manish. Hi. How are you today?
Manish Chowdhary: It's a pleasure to be here. Thanks for having me.
Claus Lauter: Let's talk about order fulfillment and shipping. what do you see are the biggest obstacles and mistakes merchants make in this area?
Manish Chowdhary: Well, that's a very interesting question, Claus. It really depends on the stage of the merchant.
If you're talking about a large Shopify Plus merchant, it's a different set of challenges versus somebody who's just getting started. Suffice to say that half your shopping experience today is your shipping experience, Sellers don't make any mistake. You can hide the best agency and get everything looking beautiful, and you get the order in order to succeed.
Today as a Shopify brand, as a DTC brand, it is all about customer lifetime value. Even the most loved brands like the Allbirds of the world are failing miserably. Casper. 10 years ago, five years ago, they were rah, rah, rah, this is the greatest thing on the planet. And today they are struggling financially.
Because they could not crack the code of profitable customer acquisition. So shipping and fulfillment is not to be taken a back seat. This is not a back office conversation. It is half your shopping experience. I can dive into detail Cloud as you like, but it really applies to different stages of growth.
Where are you in your growth journey, if you will?
Claus Lauter: A hundred percent agree ultrafast order fulfillment is one of the key elements and I think customer support, one of the most asked questions is where is my order? You wanna avoid that and you wanna be transparent with that. Now, one of the ways that came up in the last couple of years, and I think Shopify was going the same route, is, fulfilled by Amazon.
With a Amazon warehouse distribution. Now Amazon might not be the best option for emergent. First of all, it's not, cheap. Secondly, you give a lot of control out of your hands, and I understand s kahu.ai, you came up with a solution that might be a better for you to tell me a little bit
Manish Chowdhary: about it.
Yes, absolutely. Kahoot is the world's first peer-to-peer order fulfillment network. So Kahoot, manages about over a hundred different warehouses in the US and soon in Mexico and Canada. So we have the geographic footprint of what I would call close to Amazon. Nobody beats Amazon. Today, but Katas has a very large and extensive network.
And what that means for sellers is they have the ability to distribute their inventory closer to. Their consumer. This is the same strategy that Amazon employs. However, kata is faster and in most cases cheaper. Faster as in faster receiving time. Anybody who's shipping inventory to Amazon knows that there's no certainty.
It could take weeks, it could take months for that inventory to be received. and then once the inventory's in there you need to meet certain I p I inventory performance index in order to make sure that you are allowed to send more inventory to Amazon. Amazon, just like any other company, is facing massive headwinds right now.
The pandemic driven growth is over and Amazon is in cost cutting mode. And what cost cutting means primarily increasing fees in the Amazon terminology. Merchants, I know that they just even last week they made a big announcement that FBA is going from national fulfillment to regional fulfillment.
We don't really know what that really means because Amazon doesn't give our details. But one thing I can tell you that it only means bigger dollar sign for the seller no matter how you slice it. That's coming. So merchants have a choice to use one. You need a backup to Amazon. Amazon FBA is a good solution.
I don't mean to undermine them. They do a great job at what they do, but again, fulfilling your Shopify order from Amazon is what Amazon called multichannel fulfillment, which is anywhere between 30 to 50% and sometimes a hundred percent more expensive because obviously Amazon does not want to encourage sales on Shopify.
It goes against the grain of Amazon. Amazon wants more sales on Amazon, not on Shopify. Shopify acquired deliver does not provide Fbf forwarding services. So these are all platform centric solutions that do not work for sellers. Sellers need an independent solution like Kahoot that can handle their Amazon order, their Shopify order.
If you sell on Walmart, Wayfair, eBay, home Depot, Macy's. Wholesale retail. Gardners what international, even the Shopify acquisition of Deliver is only suitable what Shopify calls Shopify fulfillment. It's only good for small and light, but the reality is merchants need all don't decide to go on the business saying that I will only make small and light products.
such solutions are not scalable. And an independent solution like Kahoot is not only affordable, and I can explain how we make it affordable because there is a very secret or sauce, not so much a secret. But we have created this business model innovation to lower the cost unlike anything else on the market.
And our customers, our merchants are the beneficiary of that. And Shopify merchants have the maximum to gain. From a network like Kahoot.
Claus Lauter: For merchants obviously looking at the budget and with increasing ATCO becomes more expensive to, acquire new clients overall it's not getting easier specifically for small or medium enterprises.
So what are the top three things you would, , consider or you would recommend to merchants when they're looking for a three PL company? number
Manish Chowdhary: one, act with data. Know what kind of products, how many SKUs you have, sales velocity by sku. Look at your sales data. I often see a lot of sellers early on getting two ambitious.
I'll give you an example. They have 200 orders a month in sales and 600 SKUs. That's a disaster. That's a recipe for disaster, just because your brother-in-law thinks it's a great idea to create 200 versions of a t-shirt. you're not even in the t-shirt business because as a merchandise, those are bad strategies.
If you can't prove your business with your core product, product extension is a kiss of death. And I see that routinely in Shopify. Merchants trying to get over ambitious on, and that is problem from a fulfillment standpoint. How do you place 600 unique skews? When you have 200 orders a month in sales, or even 400, or even if you had 2000, that is on average is three units per skew per month, how do you distribute three units on in four locations?
I'll have to cut one into half. that's one of the biggest challenges that you have to prove your business with your core product. And if it is not succeeding, T-shirts and merchandiser, not the answer, let me tell you. That's one. Number two, make sure. the three pl or the fulfillment and logistics providers aligned with your product category, apparel, large density, large scale catalog, and you go to a big and bulky operation, they're not suited for that.
three, technology. You can always get a lower price on something from a provider that does not have technology or does not have robust technology. Then you're doing a lot of manual work. What might appear like a cost saving becomes a huge distraction, a huge time sink on your operation, on your slim staff, and you end up paying significantly more.
So be wisen, that decision. And number four, finally, scalability. And flexibility. Typically when I buy a house or you buy a house, you're not thinking what you need in the next three months or six months. You're thinking that you're going to live there for five years at least. Your horizon should be at least three to five years, not 20 years, but three to five years.
So you don't want to change your logistics and fulfillment provider. So it's about transparency, leading with data. Technology and scalability and flexibility. That is some of the things you should look for. Now I
Claus Lauter: totally agree that, you need to look into a longer term relationship with a three pl as you said ripping up this relationship and going to the next one.
That might hurt your business quite a lot because it's a integral part of your business. Now, you talked about data and how much kind of data do you need to have to make a decision on how to distribute your stock to different warehouses, or is that something you do?
Manish Chowdhary: Yes, Cahoot, makes it very easy for merchants to make that decision.
We can get an export out of Shopify. We can analyze the data, for our prospective merchant, and give them recommendation, because it's not just about placing your inventory. You need to be strategic in placing your inventory. So, for example, I see this often that a seller Has 40% of their orders going to the East Coast, New York, New Jersey, Pennsylvania, Connecticut, and their fulfillment center.
They're insisting on having a fulfillment center in Los Angeles. Because the inventory from China is coming to Los Angeles. What they don't recognize is that you're paying more for every order. So you might get a cheaper three PL in California and you're insisting on that, but you may win the battle and lose the war.
It's about total cost optimization, not about a leg of the overall supply chain or the journey.
Claus Lauter: That's a very good example. Now Kahoot is the world first peer-to-peer order fulfillment network. So explain to me, where's the difference to a traditional or standard three pl?
Manish Chowdhary: That's an excellent question, Klaus. I'm so glad you asked. Kahoot is the most merchant centric, collaboration platform, which what it means is, We want to enable brands and retailers to execute whatever fulfillment strategy that makes the most sense for our clients. Unlike the traditional three pl, which says, send me all your orders, I want to have it all.
Cahoot provides a technology platform where if a merchant has a warehouse of their own, they can plug their warehouse into our network. So that it can work in tandem with the Cahoot network. So essentially you don't have to lose your existing investments that you've made. You can coexist with Cahoot, and that's a massive boon.
Let's say you have a lot of excess inventory, you purchase. You got a great deal. Great. Good job. You can store that in your warehouse and you can drip some inventory to Kahoot or FBA as needed, but you still need that technology platform. So Kahoot provides the technology platform you can decide not to outsource fulfillment to Cahoot tomorrow and continue to operate in-house.
You may decide to close your warehouse and move everything to Cahoot, or you are in love with the three pl. That does a fantastic job. Then you can bring that three PL to the Cahoot network. This is the kind of stuff you never hear in the traditional three pl or even with some of our competitors.
Whether Shopify fulfillment network or deliver it is all about me versus you. What are you gonna send me and what are you gonna handle yourself? But from a merchant's perspective, they need it to be seamless. It's never me versus you. It's me and you, and that's why we have cahoots. Slogan is Power of Many.
Okay. Give me
Claus Lauter: a bit of an idea on the fulfillment times. What's the average order fulfillment and shipping that comes with cahoot?
Manish Chowdhary: Kahoot has the industry's highest service level agreement, highest standards, which means Kahoot supports programs like Amazon Seller, full Prime
full Prime is essentially getting the prime badge to a very select handful of merchants who have been approved from Amazon's extensive due diligence. So we need to maintain. The same standards, in fact, higher standards than Amazon Fulfillment centers, fulfillment six days a week, Monday through Saturday, 2:00 PM cutoff in the local time zone, which means any order that comes by 2:00 PM in the local time zone is fulfilled the same day, not the next day.
We'll fill the same day six days a week. Almost near zero defect, which means 99.8% on time shipping. That means, from an SLA perspective, that's the SLA we provide. Only two out of thousand orders could potentially ship late. Obviously we try to beat that. Those standards are non-existence clouds.
You can't get there anywhere else except for Cahoot and Amazon and obviously even Amazon screws up more often. But then they can erase their screw up by writing. This order was fulfilled by Amazon and therefore they cross out that negative review, which they don't allow other people to do.
Claus Lauter: , when it comes to the fulfillment itself, what's the technical flow once you have the Kahoot app installed into Shopify?
Manish Chowdhary: Fulfillment requires a lot of discussion. You can't just install an app and, inventory has to be sent to the cahoot warehouses, and that is more than bits and bytes, if you are somebody who's starting out, without any existing volume, , Kahoot may not be the right fit for you at this present time, but, so we need at least 200 to 250 orders a month of existing order volume for Kahoot to makes sense for them.
Once you are up there, please contact us. Just reach out to Cahoot. Go to cahoot.ai and fill out the contact form so we can have a consultation. We believe in providing the good advice, the right advice to our prospects, whether Cahoot is not the right fit. But hopefully they will learn something from that experience that they can use with whichever provider.
But if you have that volume, you're doing , several hundred orders a month, then Kahoot can not only save you money, but also delight your customers so that they can get an Amazon Prime like experience. And obviously you don't have to pay 15% commission to Amazon and you don't. You own that customer.
You have a relationship with that customer. Because Amazon customer is not your customer, even though you may think that way, you have zero ability to communicate, or it is very hard to influence that because Amazon customer would move on to something else the minute you stop advertising or the minute you stop doing something else.
Claus Lauter: think it's very important what you said, you own the data and I think that's one of the biggest drawbacks was Amazon, that you can't get access to the full customer data there. When it comes to the pricing structure, what's the average pricing or how much can I lower my cost with your
Manish Chowdhary: solution?
we routinely analyze data and what we find is, we are typically. Able to save anywhere between 15 to 30% over whatever other providers they may be using, like a traditional three pl. And this is achieved through technology, as I shared. In terms of pricing structure, it is very simple. It is very similar to how three pls charge so that merchants can understand that easily.
There's a pick and pack fee. There is a storage fee. And then there is the freight or postage, which is literally a pass through. It is essentially what we will pay to UPS and FedEx or US PS on your behalf. Otherwise, it's designed to be very simple we have the incredible technology solution that keeps you informed every step of the way.
Kahoot provides the maximum visibility compared to anything else on the market because again, we believe in transparency. We believe in having an open dialogue with our merchants because we are committed to excellence. So if there's a problem, we would rather know whoever can find that problem first.
More power to them. So that's just the way how we approach things.
Claus Lauter: I find it interesting that you also, have warehouses in Canada, and you said also opening in Mexico. How is that? Was cross-border deliveries or sending it to the warehouses?
Manish Chowdhary: those solutions are reserved for our enterprise customers only.
So we are still in the process of making that more widely available. So that is only applicable to very large sellers. , it is primarily designed for local fulfillment, meaning if you have lots of orders in Canada and you were previously shipping. Internationally from US to Canada, then you would benefit from a lower shipping cost and faster delivery by having an inventory in Canada.
Of course, there may be other implications related to customs and duties and taxes, depending on how the inventory is moving, whether it's going from US to Canada, or it's going straight from, say, China or Vietnam or India to Canada. So that leads into a very complicated. But we are planning on, rolling it out and making it more widely accessible.
Claus Lauter: Are there any specific industries that you do not work with, or is there any specific industries that you have the most customers coming
Manish Chowdhary: from? a very interesting question. Clause. right now Cahoot handles almost all. Nearly all different product categories, , including hazmat including items that need to be in temperature control.
Think of, health and beauty products that, of course cannot be exposed to sunlight, for example however, Cahoot at this present time, we do not handle anything frozen. We can only address. Shelf stable. Kahoot does well with larger, bulky items it's really about having a proven record of sales so that we can have long-term partnership.
So as long as that criteria is met, , and again, the previous point that you need to have a, handle on your product catalog because having a very long tail catalog. And fewer sales, creates a problem for three PL industry in general, irrespective of Kahoot. So that is one. One problem that we encourage our clients to, our prospects to look, this is just pure hygiene.
It is e-commerce. Best practice has nothing to do with Kahoot or any three PL, is just having a catalog that is easy to manage. Yeah,
Claus Lauter: no, totally. Right. What's the onboarding process? We spoke a little bit about it, or you spoke a little bit about it. what's the process to apply w Kahoot and from where does it go there?
Manish Chowdhary: , our onboarding process is very simple. Merchants can go live in as little as two weeks, and majority of the time is spent on moving that inventory from whatever the inventory might be to cahoot locations of fulfillment centers. Once the client or the seller, the brand agrees to the pricing structure, then , they fill out a form that or install the shop, Cahoot app on Shopify.
It's pretty simple from that point on. Now we provide them with, , training. There's a human based in the US that is available to guide them to make sure that they have the proper guidance and doing things the right way. and also there's digital training that's available on demand as the merchant grows and they bring on new staff, or if they have a turnover, there's always somebody.
You can refer to the content to ensure that we are using the tools and technologies in the right way to make things efficient for everyone and avoid frustration. But beyond that, inventory is received at Cahoot within two to three business days from arrival. And once the inventory is successfully received and is fully compliant, you can be live, as I said, in less than two weeks.
Okay. No, that's very
Claus Lauter: straightforward. , manage where people find out more about Kahoot.
Manish Chowdhary: The best place is our website, www kahoot ai. That's c a H o ot.ai. There's a ton of information resources, podcasts, webinars, recorded, and of course, please. Fill out the contact us form so we can have a chat.
We'd love to chat with any seller that is either, needs a new fulfillment service or wants to upgrade their solution, reduce their cost, or even just curious, if they're dealing with a problem, even if they're not immediately ready, we'd love to chat with them.
Claus Lauter: Yeah, I will put the links in the show notes as always than you just one click away.
Manage. Thanks so much for giving us an overview of your solution. I think looking into fulfillment and shipping is always, or should be very high on the list of every merchant. Obviously your benefits are clear, it's faster, it's cheaper, and you have happy clients at the end of the day and that's, is all about.
Thanks so much for your time today.
Manish Chowdhary: Thank you, Klaus. Thanks for having me.
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