Just Do It: Revving eCommerce for Brands and Manufacturers with Jack Ampuja of Supply Chain Optimizers

For our eCommerce audience, I think the appropriate thing to share is that I've worked in eCommerce for a couple of big companies, but I spent the last 20 years teaching and consulting, primarily in the eCommerce field. I've worked with many big firms: companies like Toys "R" Us, Office Depot, Walmart, Target. Those are some of the companies that I've crossed paths with in this arena.

About 10 years ago, my alma mater, the University of Massachusetts, asked if I would teach for them based on my background. I said, "I'd be interested in doing that. What do you have in mind?" And they said, "You tell us anything you want to teach, we're willing to run it."

So, with that invitation, I created what may be the country's only MBA course on the logistics of eCommerce. The reason that I went in that direction is that the logistics piece of eCommerce is the Achilles heel for almost everybody. They don't really struggle with the website, pricing, return policy, things like that, product offering—but everybody has the holy grail: "How can I get one parcel delivered to one door for no higher cost than having someone go to a retail store?" No one has uncovered that yet. So that's the magic that everyone's looking for.

So, I teach in that program. I teach that course. My students have been in places like Mexico, Brazil, Dominican Republic, all up and down the United States. The UMass online course, the MBA program (not my course, but the program as a whole) is ranked among the top five in the world, so I get terrific students. And for me, it's joyful to be involved with them.

Aaron Sheehan: That's fantastic, and a lot of good experience! A lot of our customers at Oro and a lot of the people that I've worked with over the years, you know, a lot of manufacturers, for instance, they're used to selling through to a distributor network, perhaps. They're used to functioning in that role. They think, "We could sell directly to consumers," or maybe "There's a particular product line that we could sell directly to consumers."

There's also a pretty fair amount of the market where eCommerce for manufacturers and distributors is the portal by which their suppliers and wholesalers are ordering from them. Which is also eCommerce, right? But it's eCommerce usually in larger than a single parcel, right? It may be LTL (Less Than Truckload) or full truckload, or a full container. It's all, it's all eCommerce at the end, I think that it would be pretty fair to say.

eCommerce is pretty well known in the direct consumer world, thanks to a lot of the brand names that you've mentioned who have had websites who sell directly to consumers for some time, or they operate marketplaces now, like Walmart does also in addition to their brick and mortar stores. But in the B2B world, it's much less well known. There's still an awful lot of faxes flying back and forth from, you know, an office somewhere to somebody's desk somewhere else.

I am curious to get your opinion on something: I think eCommerce is still a foreign language to a lot of folks in the manufacturing and distribution world because the old way of doing things—I pick up the phone and call my rep, right? My rep shows up at my facility. He's got the catalog, he's got the sheet, he's got, you know, whatever I need to place the order. The idea of going online and doing it, we're still a little behind there.

So I am curious to get your perspective: why do you think that is? Why, why has eCommerce been so slow to be adopted in the business-to-business world, relative to how early it's penetrated the consumer world?

Jack Ampuja: Yeah, it's an interesting observation. I hadn't really thought of eCommerce in the perspective that you've laid out, but I think it's a very accurate telling of what's going on. My view is that the system that exists, the B2B system, has worked pretty well. People are used to it, it's reliable. I can get what I need. If it's not broken, why would I fix it?

You really need a call to action: that either there's a competitive threat ("I have to do something because I'm going to get displaced"), or you get customers that say, "You need to do something or I'm going to go elsewhere." There hasn't been that kind of call to action. Both sides are satisfied with the current situation, it's working okay.

I think the opposite has happened in the consumer world, where consumers have been very, very quick to gravitate to technology. Almost everybody's got a smartphone, they've got computers. They don't like the hassle of going out and standing in line. I went to Walmart yesterday, stood in line for many minutes to return a product. And you have to drive there, and so on. If it's one thing you really want, to go outside for one item...

So, the convenience of being able to order from home has really triggered that thing. It's become such a common way of life for most of us that it's just accepted. That has not happened yet in the B2B. That needs somebody to drive it—if there's an innovator. For example, if Amazon or somebody big like that starts to offer a B2B offering (and they do, in some arenas). When you see that kind of competitive threat, it's "change or go out of existence," or get badly damaged at that point. Then there is that call to action, and something will happen.

Aaron Sheehan: Yeah, I think that's exactly right. I think back to my experience, some of the early drivers: the Zoho and Granger, on the B2B side, from the distribution end of it, were very early adopters, you know? And you'll find those folks kind of all over the place in the B2B world now, talking about that eCommerce center of excellence.

That is the driving of the change, that is the challenging part. One of the conversations I'm regularly having with companies that are thinking about this is that nobody's driving it. From an execution side, it's no one person's job, or one team's job, eCommerce. I'd be curious to know if you had seen this on the consumer side as well, but eCommerce is often what I might call—what you might call—a "university and interdisciplinary program," meaning that it's a little marketing, it's a little IT, it's a little customer service, it's a little fulfillment.

As a program or a channel, of course, it serves multiple functions, but it often does not have a vested owner in it, at least not at first. It almost has to grow and be recognized as a channel that is worthy of having, sort of, you know, VP or C-level advocacy.
I'm curious if you have seen that as well, and maybe how you've seen companies successfully get that driver and that innovator to build such a program?

Jack Ampuja: Yeah, I think your observations are right on target. I had lunch today with a logistics consultant in the Buffalo area, where I live. He and a company I'm familiar with (one of my former clients), they're starting an eCommerce warehousing company. This is a typical approach: "I've got two accounts, I'm going to start an operation with them. I'll get a small building, it's very manual, but it gets me into the game."

Well, then the thing starts to grow. You add another account, they want additional services, it slowly grows. At what point do you stop the operation and say, "Hey, let's reconfigure this thing and really get efficient?" You don't, because, "Hey, it's working okay," so you just kind of keep building on that.

It's the same thing in the retail world, particularly. And then you touched on it already, Aaron, that it's a selling function. When I go in as a consultant, I like to see a multidisciplinary team because everyone's got an oar in the water, for good reason. If I'm dealing only with the supply chain VP, he can't make all the decisions. We need Finance involvement, we need Marketing in there. If there's a manufacturing piece, maybe Procurement. So, it's the multidisciplinary team approach that works.

To me, one of the bugaboos of this situation is that the typical approach is, "When it gets to a certain size, then we'll name a leader." Typically, it's not someone who has been well-versed in eCommerce, because we don't have that kind of person on board. So then we select somebody who's sort of a good up-and-comer—typically a sales manager. "Hey, we need growth, so let's get a sales manager in there!" and there's something that never occurs to this man or woman, because that's not their expertise.

So we kind of go off the track. I just finished writing an article about missed opportunities in eCommerce, and there's a ton of them. It's because of this phenomenon we're talking about: where it starts small and sort of starts to grow. Very few companies come in with a clean sheet of paper saying, "We're going to be really big, we need a million-square-foot warehouse, what kind of equipment, the layout," and so on. We don't go to that.

We start small, in a building, and then slowly start to convert. A building that's been set up for pallet deliveries or truckload deliveries is not geared for that kind of single-package, pick-and-pack. "So, I'll set up a little corner." It slowly starts to grow, but it's never really efficient because it hasn't been designed correctly from scratch. But on the other hand, I can't really afford to take the system down to fix it and get to where I want to be, so I just kind of keep building on this sort of loose network that—it's getting me there, but it's not really functioning the way I'd like to see it work long-haul.

Aaron Sheehan: That makes complete sense and mirrors a lot of the, uh, experience that I've had. Of course, in the B2B land, you know, that's less of a challenge. You're already delivering pallets and trucks, and so it's less about the fulfillment, often I've found, and more about the staffing and the organizational problem. Because it's a new channel that, to your point, isn't—nobody already knows how to do it. If there was somebody who knew how to do it, we would have already been doing it. It's a sort of catch-22.

It becomes somebody's side hustle almost, or, "Give it to Marketing," or, "Give it to a sales leader," or sometimes given to IT because, "Well, it's a website, so like, I don't know how hard can it be?"

One of the things that sort of jumped out at me here is the sort of the sales component of that. You mentioned a sales manager given this job. Do you ever see, or do you have a part of, sort of like, channel conflict conversations inside of sales organizations around eCommerce? Is there ever a fear that this is cannibalizing or otherwise there's sort of a zero-sum game, or it's a fixed pie, and like, "If we divert basically incoming sales to eCommerce, we are therefore effectively taking money away from other ends of the business."

Does that conversation ever happen in your consultation?

Jack Ampuja: I think it's a natural concern because it's an unknown area. "What's the gain? I don't want to go into something unless there's a substantive gain to be had. I'm going to get volume, I'm going to get profit, I'm going to get revenue. I've got to be getting some value for this."

"So, I really don't know what I'm going to get"—but many companies back into the eCommerce arena, saying, "Everybody else seems to be there. If we're not there, we're kind of missing the boat. At some point, it may be too late, so, kind of for self-preservation, let me back into it. And I really don't want to spend a lot of money up front because I don't know if the thing is really going to go, so I just need some kind of a germ of a start, and let's get some boxes in here, and let's start offering a few products. The website, obviously, needs to be constructed, and then let's kind of watch how it grows. But if if it's indicative of like the retail world, it's going to ramp up very, very quickly.

Then it becomes kind of a monster that I've opened the cage and this thing is already out there. The warehouse isn't set up for it, I'm really not used to doing that kind of thing, 'Who's going to manage it?', 'Where is it structured?'"

If you start with a clean sheet of paper, it's a lot easier, but most of us don't have that luxury. "I'm already in business, and this is kind of an add-on. At a certain point, it gets to the size where I have to staff up and I need a recognition—it needs to have its own business unit, need to start measuring."

If it's a couple of orders, a couple of orders a month, who cares? When it gets to be 2,000 orders a month, a whole bunch of people begin to care. Now I'm playing catch-up at that point.

Aaron Sheehan: In the manufacturing space, I'm curious about channel conflict, where a manufacturer, let's say, hasn't been traditionally selling through a distributor network and somebody comes up with the bright idea: "What if we bypass that and sold our product directly to consumers?" Obviously, there are the fulfillment challenges that you've talked about; it's a totally different persona that you're shipping to. But like, how do you see businesses actually navigate that successfully with making their distributors not spooked by the fact that the manufacturer is going direct to consumers? Have you been in the room for a conversation like that, where the manufacturer is trying to convince distributors or wholesalers, "Hey guys, no, this is actually better for you in the long run, if we sell direct to the customer?" I'm super curious how that conversation might go.

Jack Ampuja: Yeah, I have not been in the room during the conversation with the distributor, but I've been there during the conversations without the distributor: "What's that going to do for us?"

Let's just look at one of the big companies that I worked for many years ago: Procter & Gamble. Worldwide name, tremendous public recognition, quality. So the P&G recognition rides that. "If I put it out on the internet, people aren't going to wonder 'What is it?' They know almost every product, will want to order it."

But that raises a threat to the retailers. "What is the retailer going to say if I start taking volume away from him?" That's my brand, obviously, but I've already got an existing relationship with all the big retailers who are around the world. So, I better be pretty careful with that, that on the one hand, I want the direct connection to the consumer, because that's my lifeblood, and that's where the long-haul growth is going to come from. But I can't really afford to damage the retailer in the middle because they could hurt me very, very badly in the marketplace by dropping my product, for example, or giving me very bad positioning in the supermarket, or the retail store. That's a very tough line to walk. I don't know what the right answer is; every company is going to have to come up with their own conclusion.

I think you probably got some examples there and of, you know, companies that have said, "Yeah, we're going to go and do this ourselves." And then you find out how difficult it is. "We're really not geared up for it, it's something we're not used to." And the next thing, I'm calling a logistics company saying, "Hey, could you take this thing over for us? Because it's really out of our realm of expertise."

Even if I build that expertise, it's never going to be as valuable to me, or may not for years and years, be as valuable as the normal retail. So, the natural inclination is, "Let me be in charge of it to start with." Then very quickly, you find out it's like punching the old taffy bar, right? I get sucked in, it gets harder and harder to deal with, and I really find out I don't have the expertise. It is a different animal, and unless I really gear up for it, with systems and with people, I might be better off to either outsource it or somehow steer clear of it.

Aaron Sheehan: Yeah, I think that's fair. I think this is where, at this point, uh, Jeff Bezos comes knocking in (well, it's not Jeff anymore), and says, "Hey, FBA, why don't you sell it to me? Sure, don't worry about it, we'll take care of it. All you want is your customer data, the margins, and the IP, and it'll be an excellent win-win situation for you. What could go wrong?"

I think that's exactly right. I'd be curious to know... So again, because OroCommerce is, of course, a B2B platform, and our customers are the manufacturers and distributors, which is why the live questioning is, sort of, like, going in this direction. Have you ever helped anybody implement, uh, something like eCommerce for, let's say, a manufacturer selling to a distributor, or a distributor selling to a retailer? Have you seen it done ever well? Or maybe have you ever seen it done poorly? Because you just gave a pretty good, I think, picture of what can happen in the DTC (direct-to-consumer) kind of eCommerce world—the taffy bar analogy.

I'd be curious to know if you've seen anything like that on the business-to-business side.

Jack Ampuja: On the business-to-business side, I have been in with some really big players to kind of talk to them about “I work on packaging optimization: how many boxes you need, and so on” Whether you're a retail or whether you're a B2B, you're going to have that same issue.

So, I've been in to talk to them about it, and it makes a little more sense to the retail-oriented crowd because of their orientation toward the individual product, and the coloring of it, and the sizes, and so on. Whereas in the B2B world, it's much more of a commodity, if you will. I don't need the same flashiness. I don't invest in the same kind of product marketing. It’s a different kind of world.

But I think many companies, again, as I mentioned earlier, they fall back on that: "I have to be in the game."

But the advantage for a distributor, in the B2B world, is that they're already dealing with a lot of small things, a lot of individual picks of all kinds of SKUs. That's the world that they've lived in for years.

To take Kellogg's, for example. For them, it's huge volume, a lot of SKUs, but limited compared to a traditional distributor. A distributor will have thousands of products, so they're already in that world, so we're not giving them something new.

But it's my experience that most people looking at this dilemma of, "Should I be in the game, or shouldn't I?" it depends on their customers. If the customer says, "Hey, I need you to be in that game. I want to start ordering online, and we have to do business like that." If I get that customer call, that's going to start the wheels churning. Until I hear customers...

There are some things like working together: a customer and a manufacturer, and I'll a private-brand manufacturer: "I'm making your label." When I go and talk to the manufacturer, he says, "Hey, well, I make a product for 29 different companies. I put a slightly different label on it, but it's the same stuff. Nobody has complained, so why would I want to do anything different? There's no reason to rock the boat."

I go out, and I talk to the individual distributors who then are getting those products. Distributor one says, "I'm only one of 29 people, I can't move the manufacturer! I'm so small in his whole world." Then, one by one, they all kind of beg off, saying, "The other side wants to move on this issue."

Yet I see opportunity galore if they could get around the table and say, "How do we work together to skin this cat, and we can all be more efficient?" There's opportunity, but getting somebody to take the first step is very difficult.

Aaron Sheehan: I completely agree. You mentioned at the outset that one of the drivers for this is competitive pressure, certainly. One of the things that I have seen many times is, what drives that collaboration is: you'll have a, let's say, a distributor who is losing share to a competitor who has an eCommerce strategy, meaning that their buyers are able to self-serve, buy products when and where they want, without having to wait for someone to pick up the phone.

This assumes that none of the players involved are big enough to just have it all automated through EDI because, at a certain level—the Kellogg's, the P&Gs, the Nestle's of the world, et cetera, obviously your big-box retail to the manufacturer and distributor—those are going over the wire as EDI transactions, for the most part.

I'm talking about the sort of the glorious mid-market that makes up the majority of the business here. This is where, you know, I'll be in conversations with someone to say, "You know, there's still accounts with us, but we're seeing less revenue per account because they're starting to flirt with the competition because they're seeing that it is easier to do business with the newer competition, because they can buy, they can reorder, they can get ahold of somebody online, and they're not waiting for stuff."

What's fascinating is: I was just having a conversation with a large manufacturer last week, who was talking about, "You know, we have buyers who only buy a small portion of our catalog, and they don't even know this, like, we do all this stuff! Here is our massive, multi-vertical, multi-industry catalog!

They're buying the same 20 or 30 things over and over and over again, which is great, but we don't have an effective way of getting in front of them with the other things, because the reps are just taking the order that was given to them. There's no upselling, there's no cross-selling, there's no education." And this is the kind of stuff that I see, where it's, "Maybe we're not losing customers, but we're losing revenue per account because those customers are buying stuff from other people that they could be getting from us, but they don't know that we sell it," right?

Jack Ampuja: Yeah, yeah! That would appear to be a terrific entry point for eCommerce, to get a word out into the industry that, "Hey, we've got this platform!" Start looking at that as a new source of revenue, to go after business that we haven't had before, because it's got to be punishing for any company to realize, "I've got products that this customer of mine could be buying, if only we could make that connection." It's only lack of knowledge that's causing me to lose that business. So how do I fix that?

Aaron Sheehan: That's exactly right. You know, there's so much merger and acquisition activity in this space that oftentimes, when that customer, that account got onboarded, maybe you only sold a few thousand things. But you've picked up four more distributors and another manufacturer since, and now your catalog is much larger, but nobody ever told that story back to your existing accounts. I love this.

Jack Ampuja: I was going to say that the issue is for everybody, that even if we are a new company, and we make an entry or we're an existing distributor, but we make an entry into eCommerce, how many customers will take the time to start scrolling through our website and try to find products? They'll go to the website, they'll continue to order the same things.

We've got to get some kind of flash in there, or some kind of notification: "Hey, we've got this deal, or we've got this product!" Or scrutinize their orders to say, "Hey, if you had added this product, we've also got a complimentary product." Certainly, the good websites can do that kind of thing. Once you've got somebody on the website, that's your opportunity to make the presentation.

You don't want them to just buy the same stuff and you miss an opportunity: "Hey, if you order now, I'll give you this discount. Or, if you order these two things together, I can do something as an add-on." Because you don't want to miss that opportunity, it doesn't come by that often.

Aaron Sheehan: Yeah, that's exactly right. I'd be remiss, I guess, then in mentioning that OroCommerce has the ability to cross-sell and upsell, recommend products to customers based on both manual assignment (you can create a segment), or we now have an integration with Google AI to be able to suggest recommended products. This is exactly why, because you want that flash that you're talking about.

Jack Ampuja: It's a huge value-added opportunity! You want to take advantage of every one of those opportunities when you've got a customer on your website. The most maddening thing for everyone is shopping cart abandonment, right? Somebody's already started an order, and they've put a couple of things into the cart, and the next thing, they disappear.

Well, you need to know, "Why am I losing that opportunity? If the guy was serious enough to get on the website, start placing an order, and then I lose them…” There's something that went wrong during the process, because that shouldn't happen.

Aaron Sheehan: Yeah, I completely agree. Let me ask you one last formal question, then I'll ask you an informal question at the end, which is: what's one piece of supply chain or logistics advice you'd give a company that's contemplating adding eCommerce as a channel?

Jack Ampuja: I would say, "Think very carefully." I think you need to be in the game—that anyone at this point who's wondering whether eCommerce is viable, and, "Should we get on that horse?"—that horse is already running, so you need to be in the game. But you also need to think through, because you don't want to make a mistake on it, and go into it badly and then sort of have to backtrack.

So the idea about starting slow, even if it's not the most efficient way—start slowly. You can always make corrections. But don't wait too long, thinking, "I need the perfect situation to get into it," because others are already doing things around you, and the longer you wait, the more difficult it's going to be to crack into it and become a player.

So, get started! In fact, I guess one of the analogies I can offer here is that: I worked with a guy that had a speech impediment. A lot of speech impediments are related to nervousness—the more nervous you get, the harder it is to reach for a word. This guy that worked for me, he was trained during his sessions to just say something to get started. So, you'd pick up the phone and call him, and he'd go, "Merry Christmas," for example, in July, because as soon as he said something, then he was rolling at that point. But if he got hung up on that word, nothing came out.

So the idea is: just get started, because you can make corrections once you're started. If you're not in the game, you can be so far behind once you get into it—the rules have already been made, you're just an afterthought at that point. So that, to me, is the biggest thing: that you need to be there and get started, and then work on making it better as time goes along.

Aaron Sheehan: I couldn't agree more. I think I've given the exact same advice when I've asked this question before. One of my favorite quotes that I probably overuse is, "A good plan violently executed today is better than a perfect plan executed next week," which is a great approach because you only learn by doing it. You will never learn what your customers want and how your business actually functions until you actually start doing it.

Jack Ampuja: Yeah! And as a corollary to that, Aaron, I would offer a plug for Oro and other people who are in the space. Anyone who's new, you're not totally bereft of opportunity or talent on your own because there are companies that are already out there. They're tried-and-true, they've got experience, they've got connections.

So I always tell people, "Go and talk to the companies you're already doing business with and ask them, 'How can they help you?'" Whether it's UPS or FedEx, or whether it's Oro. If somebody is in the business, those people want to help you, because that's how they build their business! They're not going to cut you off, and they'd love to have you as a customer. Even if you're not a customer today, many of them will help you because you could be a customer tomorrow, or next week.

So there's a lot of opportunity. You don't have to start scouring the internet on your own and be the master of everything. Go to people that are already in the business, already in that channel, and say, "Hey, I want to get started. What can you do?" Many of them would be happy to do "lunch and learn" sessions, or Zoom things, to teach you. And again, get other people in the department and the company involved! If you're a "one-man band" trying to get us into eCommerce, that's almost a sure path for failure.

Aaron Sheehan: I've spent a lot of time with people who would self-identify as "one-man bands," or "one-woman bands," trying to get into eCommerce, and it is a lonely place. I would also say, maybe a plug for you is that, if they're trying to learn, there possibly is a place in a college class somewhere, if they live in the Northeast.

I have one sort of final, informal question for you. This is a question I ask all of the guests, you can take it as you like. I always ask people, "What is one book, or movie, or TV show, or magazine that you've read in the last few months that stuck out to you, that you enjoyed?" It does not have to be serious, it can be something that is pure enjoyment. It can also be something educational; it's completely your call. But one piece of media that you would recommend to other people.

Jack Ampuja: That's an interesting thing, because my wife is a librarian, and is a voracious reader and chides me that I don't read enough, although I find books that are interesting. I'm reading a best-selling murder mystery from Sweden that I happened to find.

My surname is a Nordic name, it's Finnish. I just happened to see this book, and I thought, "Gee, that sounds kind of interesting." So I had no particular reason to reach for it, but I spend so much time reading online, and magazines. I subscribe to all kinds of magazines, and I'm big fan of the business world, so I'm continually reading to see what other people are doing, and, "What's the new thing?" I'm intrigued as anything about artificial intelligence, because it's here now, it's going to change stuff every which way.

I don't think we even are conceiving yet of what's possible with artificial intelligence, but just some of the things I've read about, with the medical world, for example. That artificial intelligence can look at x-rays and find potential problems with people that any expert, or a group of experts, will look at, will not be able to see. I say, "Man, that's pretty phenomenal, that we've got computers to that kind of level."

I'm not personally concerned about many of us being replaced by computers—you're not going to be replaced by a computer, or neither am I. Um, what computers do is they make good people much better. Give gives us tools to be productive, and so on.

I go to movies for escapism, so stuff that's not connected to the real world. James Garner when he was a private private detective out on the West Coast, living in that trailer…

There are so many problems that come down in real life, whether intentional or unintentional, that when I read and so on, I like to get away from the real-world situation.

Aaron Sheehan: Got it. Was that "Rockford Files"? Is that what you're referencing?

Jack Ampuja: "Rockford Files," exactly! There you go. I've actually been plowing through "The Rockford Files" for about the past year because they're all—every episode is available, and I've seen almost every one of them. There are a number of them I haven't seen, and even if I've seen it before, you pick up nuances. I get such a chuckle out of him as a character.

Then, Angel Martinez, as a convict friend, is such a character! But that's the hallmark of every character, successful television series, or every company: it's not one rock star, you've got a whole bunch of really good people working together as a team. That's what really makes the magic.

Aaron Sheehan: You know what? That is a really excellent point, and it connects totally to the eCommerce point that we were making earlier: that interdisciplinary teams, eCommerce is an ensemble cast. It takes people representing every discipline and every part of the business, coming together and collaborating. That's also how you learn.

I really appreciate this. This was a lot of fun. I appreciate you sharing your experience with folks. We're going to leave it there, but thank you again for coming on!

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