Alex Royzen is the Director of Supply Chain Management at Ecentria, OpticsPlanet, and CampSaver. He is an expert at supply chain management and has been part of OpticsPlanet’s growth from $60 million in sales a year to $300 million.
He is an experienced leader with brand, product, and project management background, using data to drive the decisions he makes for the companies that he works for.
Alex Royzen is the Director of Supply Chain Management at Ecentria, OpticsPlanet, and CampSaver. His expertise is in optimizing the supply chain of eCommerce companies and he has helped his companies grow by several millions of dollars.
In this episode, we talk about how to compete with Amazon and where the eCommerce giant is failing, giving small business owners a chance to take their customers. We also talk about developing supplier relationships, how to turn your customer service representatives into experts of your products, and how to forecast your inventory.
This is The Lean Commerce Podcast.
What is supply chain management?
0:53 In the eCommerce industry, it’s a very ambiguous term. It can range from warehouse operations to inventory management. In my world, it’s inventory management. We’re not intimately involved in the warehouse side of things, that’s a totally separate operation that we don’t touch.
How did you get into eCommerce?
2:24 I studied economics in college and it was the first subject I ever felt really passionate about. Microeconomics just clicked in my brain. After college, I ended up in the mining industry in Milwaukee. After a year, I decided to leave and come home to Chicago, where I had grown up. I heard about a company called OpticsPlanet, an online retailer, that needed somebody in their merchandising department. I applied, got the job, and now I’ve been here for ten years. I’ve watched OpticsPlanet grow from $60 million in sales to $300 million.
What are some of the main levers that you look at to improve the supply chain of a business?
9:13 The first thing I do is evaluate the inventory they have. A lot of companies lack detailed reporting and access to data. This is crucial information to know. The top three elements to understand and be working on are: inventory quality, inventory strategy, and supplier relationships.
How can you develop a supplier relationship?
10:29 It’s really a personal thing. For example, we have a team of buyers and they manage the relationships with our suppliers. In the long term, we develop personal relationships that go beyond business with our suppliers—we go on vacation together, they come to our holiday parties, and our families spend time together.
13:24 Especially in eCommerce, the most important thing a supplier can give you is priority in terms of allocation of products, shipping, results, issues, and their time. Also, if they can give you data, and do so by going above and beyond, you’ll be in a really good place.
14:50 Each relationship is case by case so I can’t necessarily give a one size fits all template for creating this relationship.
What kind of competitive advantage do you see available to eCommerce companies selling products that other companies are already selling?
18:06 It comes down to, How do you compete with Amazon? There are two ways that people search for eCommerce products, they Google it or they search it on Amazon. 50% of product searches are on Amazon. What makes our companies successful is that they are niche markets and they aren’t everyday products or products that every person needs. For example, CampSaver is specific to the outdoor market, similar to REI. People willing to spend $600 on a jacket are not your typical consumers and that niche market gives you advantage.
20:57 Where Amazon fails is that you can’t ask them a question—trying to talk to somebody on Amazon is a struggle. With us, and other smaller companies, we have a knowledgeable customer service team that can answer your questions and give advice.
How are you able to take new customer service representatives and make them competent on 1,000’s of products?
25:33 On a monthly basis, we have supplier visits where they come and train our customer service reps. We also have a Product Intelligence Team that is the point of escalation for our reps, these people are ex-army, police officers, former gun shop owners, etc..
What do marketers get wrong about supply chain?
31:58 The biggest problems we have with marketing is they think we have a larger amount of leverage over the supply chain than we really do. For example, even if we are the largest retailer for a company and they come out with a new product—that company still has to give that new product to other companies. They can’t only favor us.
What is the inventory forecasting process?
40:22 This is very much category dependent. For example, OpticsPlanet sells hard goods—products available year round, that don’t often change, and are physically hard products. Soft goods are apparel and footwear—products that have seasonal changes, shorter product life cycles, and a prediction of how colors and styles will sell.
42:41 There is no need for us to bring in ninety-days of product. Instead, I can churn twenty days of product and not get stuck with having too much money stuck in inventory.
Where do you see eCommerce going in the future?
49:13 It’s obvious that eCommerce is going to continue to grow. My personal opinion is that there will be consolidation in the industry. I’m predicting that Amazon is going to buy CostCo. As for small business owners who can’t afford Google Ads or an SEO strategy, they can win by niching down and creating a relationship with their clients in a way that Amazon just cannot.
Resources Mentioned in the Podcast: