ICYMI: Building a Logistics Empire From the Ground Up

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0:41Let's create smarter business. IBM. What if you could have even more and more and more help to pursue your goals? At LPL Financial, we offer more ways for advisors and their clients to thrive. So, what if you could? Paid advertisement investing involves risk including potential loss of principal. LPL Financial LLC member FINRA SIPC. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. Happy Friday, everyone. I'm Nora Melinda here with Tim Stenevec. I'm in for Carol Masser today. Tim, let's talk logistics.

1:21I love talking logistics. Okay. It's Omer Tariqs. He's a specialty for this. This is his specialty. He's the founder and CEO of cart.com. That's a logistics firm based in Houston, Texas, and it provides services for B2C and B2B companies. Think about online store management, fulfillment, marketing, and customer support. He's joining us now from Houston. Omer, talk to us a little bit about cart.com. Seems like you all have done a lot over the past four years since your inception. What exactly is cart.com, and what inspired you to launch it? Thanks for having me, first of all. Look, we started the company to build the world's largest infrastructure as a service.

2:01The problem we're trying to solve is we have billions and billions of dollars of GMV flowing through our operational infrastructure. We power the technology, services, and operational capabilities for brands of all sizes. About half a billion dollars in revenue, about$10 billion of GMV, 1 ,200 employees globally, and we're just four years old. wow okay that's pretty impressive stuff omar one of the reasons we like to talk about people like you is because you have a good idea of what's happening in the economy right now based on your customers what you're seeing on the b2b and b2c level have you seen a significant difference in order fulfillment uh given the uncertainty around tariffs post april 2nd Yeah, I mean, look, there has been a volatility of things going up and things going down for the last two years.

2:52Consumer sentiment has been shifting almost every quarter. The last couple of quarters, we've definitely seen a couple of very interesting trends. The first was in Q1, we actually saw a pretty big influx of consumers buying to get ahead of the tariffs, and the retailers kind of build up the warehouses to have the inventory to take care of the consumers that are shopping. Q2, as the sentiment sort of continues to be around inflation and tariffs and uncertainty, there's a little bit of slowdown that we're seeing across the retail landscape. Omer, bring us into the boardroom. What are conversations like right now?

3:25What types of changes are you all having to implement given the uncertainty? Yeah, I mean, look, I think in times like this, we are doubling down because if you think about it, right, scale is something that's going to become so much more important as you think about economies that these brands are now looking for. The larger we are, the faster capabilities that we can provide to the brands we work with, the better off they're going to be by working with us. So we're actually, you know, we've just announced a couple of acquisitions in the last nine months, and we're actually going to announce a couple of more acquisitions in the next six to nine months.

4:00So we're going both organic and inorganically pretty aggressively towards the next couple of years. Who would you say when you were building this company, when you founded this company, what was the problem that existed that wasn't being solved? Think about a company called Janie and Jack. They make beautiful dresses for girls. And if you think about them selling through their website, selling through their stores, and their end consumer continuously shopping in other channels outside of just online in their stores. So think TikTok, think Amazon, think eBay, think Walmart, think Nordstrom, everywhere the consumer is going.

4:39For a mid-market retailer to be able to provide their product catalogs, their inventory, their pricing across multiple channels across a pretty complex permutation of product categories is really hard, especially when you don't have billions and billions of revenue and scale to kind of fulfill that, right? So what cart.com does is makes that easy. If you're a brand wanting to sell in every channel in the world, we enable that technologically and operationally. And, you know, today we're obviously North America focused, but very soon we're going to be international where if you want to add Italy or France as an international market, you can just come to cart.com and within 24 hours, you can start selling there.

5:16Omer, you mentioned acquisitions. What types of companies are you targeting? What comes to mind when you guys are thinking about the companies that you'd like to acquire? Yeah, I mean, look, I think we're looking for very interesting categories that are growing really fast. You know, logistics companies, software companies, services companies. Look, the thing about cart.com is that we're known as a logistics company, but we're really the broadest infrastructure company and the deepest infrastructure company as a service in the world today. We do logistics, we do order management, we do services.

5:50So when we think about acquisition targets, we're looking at categories, not just product categories, but companies that are doing software, companies that are doing services, and companies that are going to help augment our operational infrastructure and scale. So we're very, very broad. We're essentially trying to replicate the infrastructure that Amazon has built, except in a not marketplace format where we're partners with them, not competitors. So speaking of scaling, where are you all currently positioned and what are you thinking about in terms of regions that you could potentially scale in?

6:23Yeah, look, I mean, today we're, you know, we're shipping about 350 million units a year. That's our last year numbers in the U.S. alone. You know, we're looking at the UK, we're looking at Europe, we're looking at the Middle East and Asia and LATAM. So in that order, right? So the idea is to sort of start moving eastwards into one geography at a time over the next couple of years. What are some of the challenges that come with expanding into international markets, especially given the volatility right now and the uncertainty regarding tariffs? Yeah, look, we're in the business of making it easy for the mid-market brands that we work with, which means that we have to do the hard work.

7:04So when you enter a new market, you're not only thinking about localized supply chain, the mid-market challenges that occur, the regulatory challenges that are now being thrown because of tariffs. You also have to think about, OK, it's not just about procuring. It's also about selling. It's about increasing demand for these brands. So, you know, we sort of solve a three-part problem. One, we help consumers drive to these brands. Two, we make sure that they have the technology to basically sell in the languages and geographies that were enabling the infrastructure. And then three, we have to help with the procurement, which is the last mile delivery of those packages, right?

7:40So we are actually taking over the complexity of the problem so that the brands don't have to. Essentially, we do all the hard work around the complex infrastructure from technology to logistics. brands can just connect and integrate into our infrastructure and sell in these geographies. How are you thinking about artificial intelligence right now and implementing it into the work process? I mean, look, AI has been in our DNA from day one. One of the first three hires we made was the chief data scientist at card.com. We have been leveraging AI very significantly over the last four years in things like figuring out how to connect demand with inventory management.

8:18How do you predict demand? So if you think about it, right, the logistics problem actually starts with the consumer picking, yes, that they want to buy something. And if you can have very large data sets that connect the demand problem with a supply problem, then you're essentially optimizing the entire value chain. So we have forecasting models that are using and leveraging AI today. We predict demand before it occurs. And we're continuing to invest very heavily in that technology so that we can give the brands we work with a much upper hand. You know, there seems to still be this disconnection between what companies know about me.

8:53And look, I think consumers value privacy, no question. But I also think that it's like kind of weird when you're browsing the web and you get an ad for something that you just bought because the browser doesn't understand that you have just bought this good. Is there a way that your software and your solution can actually help companies understand consumers' online and offline behavior better? Yeah, absolutely. I mean, look, we're big believers of privacy and security and consumer preferences. So this is a very important topic that we talk about almost on a daily basis. we use very large anonymized data sets to, you know, do empower the analytics that we ultimately end up providing for the brands we work with.

9:42So, you know, once the consumer feels comfortable that, you know, the way their data is being used is only to help them not to invade their privacy, they then become more willing to actually have, you know, allow you access to it. The way we're connecting for these brands, the data, from the time that the consumer starts thinking about a product to the time the product actually shows up to their doorstep. We're the only company in the world that has that breadth of information, right? Because we sort of connect the demand side with marketing services and marketplace services. And we obviously have the operational infrastructure, you know, tens of millions of square feet of space.

10:17How do you think about sustainability as it relates to AI implementations? I mean, look, the first thing is that you have to prevent AI from running a NUC, right? You have to keep control and tabs of how artificial intelligence is being used. I think too many companies are either using AI as a buzzword and not really using it, or they're using it in a way that's maybe abrasive and not actually what consumers really want. So you have to find a sweet spot of using artificial intelligence in a way that you're optimizing for the profitability of these brands, for the growth of these brands. And obviously, there are lots of internal use cases that we're using AI for.

10:54But ultimately, what we're really trying to do is help these brands grow faster and make more money. Omer, how do you make it so that your order book grows? I mean, you mentioned a couple of your clients, Janie and Jack. Authentic Brands is also another. Tom's, PacSun, certainly brands that our audience is familiar with. How do you grow that number? Yeah, I mean, look, we're known as a company that does a lot of work in the B2C space for mid-market retailers. But the interesting story about Card.com is that about half of the business, half of our revenue is actually with B2B companies. So, you know, first of all, you've got virtually almost a trillion dollar addressable market in the mid-market retail segment.

11:39And then you've got another trillion and a half dollar addressable market on the B2B side. So we actually do a lot of work with B2B companies. Charismatics Brands is one example where they're the providers of scrubs for doctors. And they work with a large number of shops across the United States where small mom and pop shops where they provide their scrubs to and we're powering their order management and logistics platform. We actually do a lot of work with the federal and state government. So we are we're actually doing a lot of work in health and pharma. So when you think about the infrastructure that we've built for the BBC segment, that's only about one third of our overall customer segment.

12:18But, you know, the other one, you know, two thirds is actually B2B and the government. So growth is virtually unlimited when we think about the address of the market and what we're going after. That's why we have gotten so big so quickly. Omer Tariq, thanks for joining us. Really appreciate it. Founder and CEO of cart.com, the logistics firm, joining us from Houston. What if you could have even more and more and more help to pursue your goals? At LPL Financial, we offer more ways for advisors and their clients to thrive. So what if you could? Paid advertisement investing involves risk, including potential loss of principal.

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