4 minutes of eComm Wisdom: Matt Hertz from Third Person

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Yeah, I thinkwhat's interesting here isthis concept in the U.S. of like 'section 321'

I think it was really interesting. It's become like the hot topic du jour. It's often referred as the de minimis rule rule that allows US based brands to import orders into the United States for under $800 and they're not subject to the tariffs or the fees that that would otherwise be imposed. So what we're seeing with a lot of apparel brands or fashion footwear and apparel brands who source their product from overseas (typically in China, Vietnam, countries like that), where there are high tariffs to avoid paying what is often like 22-25% on their cost of goods sold: they actually import it into a port in the U.S. but then it gets sent down to Mexico or up to Canada on a bonded vehicle and those orders get actually fulfilled out of, say, a Mexico warehouse or warehouse in Canada. And because the value of that individual order is typically under $800, right (it's rare to have an ecommerce order that exceeds $800). Then, the company can avoid paying 22-25% on their cost of goods, which is like significant, right?

We've worked with a bunch of brands, you know, sock companies, men's dress shirt companies, um, you know, slippers or sneaker companies that have saved literally millions of dollars a year by avoiding paying what are also known as like The Trump tariffs',

So it's like a loophole. butmore like an arbitrage opportunity, but it's been really fascinating to see brands really take advantage of it.

I think I can answer that question in 2 ways. The first is maybe a moretactical response:Shipping: the actual, direct to consumer shipping, the FedEx, UPS,USPS shipping, DHL, whoever you use: That tends to be the leading driver and logistics spend for direct to consumer brands.

I mean, typically that's about, well, depending on what it is that you're actually selling. Obviously, it's different if it's a t shirt or a candle versus furniture, but typically it's about 60-70% of a brand's logistics spend is that kind of final mile shipping. So getting it from the warehouse to the customer's door.

So we certainly encourage brands to look at that line item. If they're working with a 3PL or fulfillment provider to reallymake sure that you're optimizing that shipping.

And if you any of you self fulfill, (if you fulfill it of your own warehouse), then you should certainly be negotiating that costregularly with the different carriers. And then just quickly, the second way I'll answer that question; and we could probably

talk about this for hours. But, in the interest of time:The cost of working with the wrong 3PL provider is extraordinary: The headaches, the missed shipments, the errors, frankly, the cost to switch, from one 3PL to another is, significant.

So,like we said before, making sure that you're marrying the right person or in the case of a brand, making sure that you're partnering with the right 3PL is so critical to ensuring success.

We've created Third Person to allow brands to ask the right questions. We know the right questions to ask we know how to really accelerate this 'dating period' period because we've worked with so many 3PLs and many brands. We know the right questions to help qualify brands for the right 3PLs, because there are literally 10, 000 3PLs in the United States, right?

It's a really fragmented market. Most of them say yes, we can do it, but very few can. So while we don't necessarily believe that there are bad 3PLs, we do believe that there are bad matches. So ensuring that a brand is able to qualify the 3PL, ask the right questions to discover them,

we think is really critical here.

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