E143: Q4 Sales Are Wild!

In short

OPERATORS Podcast Episode Summary

Episode Title

E143: Q4 Sales Are Wild!

Overview In this episode, the hosts of the Operators Podcast analyze their actual results from Black Friday and Cyber Monday (BFCM), discussing variances in brand performance, consumer behavior shifts between the U.S. and Canada, and holiday strategies. They dive into the implications of inflation on consumer spending, the rise of "Buy Now, Pay Later" (BNPL) services, and tactics for managing returns and preventing e-commerce fraud.

Key Themes and Discussions

BFCM Results and Early Sales Trends
Earlier Sales Start: Many brands started promotions earlier in November, resulting in record revenue growth.
Performance Analysis: Hosts observed a significant rise in sales volume, particularly noting that their brands experienced double-digit growth in contribution margin.
Comparison of Strategies:
Some brands saw less growth due to a saturated customer base, emphasizing the challenge of increasing Average Order Value (AOV) from existing customers.

Regional Sales Trends
U.S. vs Canadian Markets:
Disparities in sales performance were noted between U.S. and Canadian markets during the holiday season.
The U.S. market showed signs of underperformance post-Thanksgiving, while Canadian brands thrived during the same period.

Inflation's Impact on Consumer Behavior
Inflation appears to be directing consumer spending back toward durable goods instead of experiences.
Consumers are becoming more value-conscious, leading to a rise in demand for affordable products.

The Rise of Buy Now, Pay Later (BNPL)
Increasing Adoption: BNPL services have gained traction, with substantial consumer usage during the holiday season.
Risks of Consumer Debt: Discussion on the potential pitfalls of increasing reliance on BNPL leading to higher consumer debt levels and default risks.

Post-Holiday Returns Management
Return Rates: Insights into maintaining low return rates and effective strategies for managing returns.
Scams and Fraud Prevention: Discussion on how to handle fraudulent returns and the importance of a stringent return policy to mitigate losses.

Key Takeaways

Early Sales Strategy: Brands should consider starting their holiday sales earlier to capitalize on lower advertising costs and increased consumer shopping behavior.
Targeted Marketing: Focus on conversion rates and customer intent, adjusting marketing spend accordingly during peak periods.
Consumer Spending Trends: Brands need to be cautious of inflation’s impact on consumer purchasing power and adapt strategies to ensure competitiveness.
Managing Returns and Fraud: Establishing a structured return process while maintaining customer satisfaction is crucial; educating customers about return policies can prevent losses.

Conclusion The Operators Podcast episode provides valuable insights into navigating the complexities of eCommerce during the holiday season, emphasizing adaptability in marketing strategies, understanding consumer behavior changes, and managing operational challenges effectively. The hosts encourage brands to remain vigilant and strategic as they head into the new year.

Chapters

00:00:00 - Introduction
00:02:35 - BFCM Recap
00:18:36 - Regional Sales Trends
00:30:52 - Inflation's Impact
00:40:39 - Buy Now Pay Later
00:53:45 - Returns Management

Transcript

Automatic transcript. May contain errors.

0:00Black Friday, what I saw is sales started earlier and they were hotter. Our mer was up double digits. So that compounding effect on contribution margin was really, really good. This is where you should be harvesting as much profit as possible. And the easiest way to bring that profit is to just overspend on app. We've still for the next like two, three weeks, we're going for like max NER for sure. Where the buy now, pay later companies got like what would happen. And it's like, well, it would have a really chilling effect on sales. Welcome to the Operators Podcast. It is December. We are talking peak sales month for most brands, and we're going to be talking about what we saw at our brands.

0:40In addition, we're going to be starting to talk about, hey, where all the things comes with that? Customer service, returns, how do you protect your brand, plus some fun stories from each of our hosts. But before we get started with today's episode, I want to thank the six sponsors that make this podcast possible. Fulfill, Northbeam, Sarah's Postscript, Revo, Emrich panel. Could not do the show without you. Here we go.

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2:18They're our number one sponsor. I use them, Kutz uses them, HexCloud uses them, Groons uses them, everybody uses them. Mention the Operators Podcast and you can use them too. Thank you so much for being the number one sponsor. Thank you, listener, for listening and I'll talk to you later, goodbye.

2:34Welcome to the Operators Podcast. You survived Black Friday, you are in peak holiday. We're here to support you. We're gonna talk about what we're seeing, what we're feeling, what we're hearing in the bowels, the depths of e-commerce in D2C on Shopify. We're here, we're doing it. how are you guys doing? And Jason, Matt, Michael Jordan later, as soon as he figures out how computers work, they are new to Oklahoma. So he's got to figure out how to log on. He's busy running on, walking on his gubernatorial campaign right now, or, or talking to the coach of the Sooners, or maybe it's the funder. I forget.

3:07I'm not sure which one of that is. Though somebody just sold him some magic beans and he's all excited about them, but okay. so i'll kick it off and i'll start black friday i know this feels like an ancient memory right it was a couple weeks ago but we were there we were in the moment we're we're living live what i saw is sales started earlier and they were hotter we started our sale way way earlier like 11 6 and november ended up being our biggest growth months of the year um and as soon as Thanksgiving hit multi-million dollar days and that ripped all the way through the weekend. So I think I'm more of the outlier here.

3:45I talked about this a couple podcasts ago. I started my sale earlier. I leaned in to value, to discounting all sorts of stuff and we had a crusher November. Yeah, Sean, I want to talk to you about that because when you mentioned this first, I was like, why is he starting early? It's just going to pull forward demand. But the one thing that you said, which made a lot of sense to me was that CPMs are going to be lower earlier, right? So you'd rather get them at a lower CPM. I wonder if there's a way that we can kind of dive into that data at some point because that makes sense. We always start two weeks before, two Fridays before.

4:21We've been doing that since I got here and it worked really well for us.

4:30We felt really good about what we did over the Cyber 5. You know, we were impressed. We actually grew faster over the Cyber 5. We actually grew faster for the November 1 to December 1 period than we did earlier in the year for the rest, right? So, and like we talked about throughout this year, we did reduce our spend. And so we grew more than double digits and our MER was up double digits. So that compounding effect on contribution margin was really, really good. At our scale, it gets harder and harder to grow at the numbers we want. Like we had two budgets. We had a kind of finance budget and a stretch budget.

5:20And we pretty much hit the stretch budget, which was really, really nice. And we were talking about like an extra 15 mil or 12 mil over November. Dude, put it in the bank. So I want to talk about two things. First, I have a friend who is a men's basics business and they do about$80 million over Black Friday, Cyber Monday at an$80 AOV. So do the math on that. It's a million customers coming to that business. And his growth wasn't good. He did not grow that much year over year. And what I was trying to explain to him is it's very hard to grow from a million customers. You have to grow AOV in that instance, because there's just not that many people waiting around to buy your stuff, right?

6:07My second point ties to this. The reason we need an earlier sale, and I really encourage everybody next year to start some sale as early as possible, is people don't wait to shop anymore, right? The whole idea of Black Friday is that's when sales were going to be. Nobody does sales all year. They're going to wait outside a Best Buy or a Target to get this doorbuster. That just doesn't exist in the modern era. People are shopping all the time, and there are people who are going to start their shopping in October. You should capture them. You have to have something for them. There are people who are going to wait for Black Friday, Cyber Monday, but it's half the population, not 90 % of the population.

6:42So you just leave money on the table if you don't start that as early as possible. And then we talk about the CPM point. This week, there's a lot of debates and go listen to marketing operators. They're going to talk about the incrementality of spending and acquiring customers for Black Friday, Cyber Monday. Conversion rates are the highest, but the feed is the busiest. So it should not be the time that you're actually going out there and conquesting customers. You can start that funnel out earlier. It's bottom of funnel. Just to get a little more into that, we have a group chat going, just like five of us at HexCloud, including our media buyer, Connor, our head of growth, our director of paid.

7:20And we're just sort of texting each other all day long. And we were making on the fly decisions of about, I would say, a million bucks over the five days that we saved, like that we just chose not to spend that was in the budget. Because we're just sitting here saying like, there's no sense putting more gas on it. Like this is bottom of funnel now. We did the work all throughout the year. It's always really tempting to try to, oh, like let's scale our MER is this or our ROAS is this. All the media buyers want to scale. I'm very thankful that we have a media buyer that's the opposite because he comes from the David Herman school.

8:01And so like, that was really, that was really a nice, a nice thing. So I agree with everything you just said, Sean. I wonder, Jason, if this is the Super Bowl commercial kind of fully coming to fruition that, you know, like you, you guys invested really heavily in Top of Funnel almost a year ago. And that it seems like, I don't know all of your numbers, but it seems like you probably had the most outperformance right now during gift buying. And that would be kind of a classic manifestation of what we talk about that you sow seeds that aren't going to sprout immediately. And you guys really put in the work top of funnel.

8:41And I know that wasn't the only top of funnel thing you guys were doing throughout the year. You do a bunch of different things, but I do find it more than coincidental that the year you decided to go really big with a Superbowl commercial, there was a point in the summer where you were like, ah, growth's okay. You know, there's some real challenges. And then you guys just crushed it during holiday. Do you think those were connected? Yeah, for sure. It is. We, first of all, we got, we could see the lift of Superbowl all throughout the year, which actually was nice. So we felt like it really paid for itself way in advance, but you have to, the, the brand awareness, the, the brand flywheel Superbowl is a big part of it, obviously.

9:18Jason, can you leak? Is there a new Superbowl ad coming out for, for 2026? No, no. We're going to wait until Fox has a Super Bowl again. Okay, cool. Yeah. Then we'll do it. Smart to line that up. I want to talk about overspending over the holidays. This is relevant for people right now. Ridge runs at a 2X MER. Almost half of our money goes to marketing a lot of the time, except for these peak holiday moments. This is where you should be harvesting as much profit as possible. And the easiest way to burn that profit is to just overspend on advertising. So it is a great time. The numbers look good.

9:52The dashboards look green. It's giving you every single to lean into it. But you should also just take a step back and be like, how incremental is an extra$100 ,000 on a Black Friday, right? Our best MER day of the entire year is Black Friday. Then it's Cyber Monday. Then it's these two weeks right now when you're listening to this podcast where we're going into shipping cutoff. And that is peak gift giving for us too. All of these days for us are basically as big as Cyber Monday. You have to think about that. But like, this is like, if you're a gift giving product, this is where you can harvest a ton of demand.

10:27This is actually a great topic that leading into like the rest of the year, because we can actually help people, right? Because you're done with the Cyber 5 and now you just go into peak holiday. And one of the things that we talk about, and this is kind of like Danny's old school, really smart old school marketing. It's like the closer we get to the holidays, people need to buy gifts, right? People need to buy gifts. So like, what do you do in terms of pricing and spend at that point? I think you might ramp spend a little bit, but at least hold the line on pricing. There's an argument to say that do neither, right?

11:07Keep pricing pretty solid. You know, people love to feel like they're getting a deal, but you just don't have to go very deep. And then the question is, like, what do you where do you think about how do you think about spend versus, say, the cyber five and before? I'm really glad we're talking about this because we literally have been having this conversation internally. I hear two different themes. One is, should your MER be higher or lower during heavy when your customer is most looking to spend? And then the second question, which kind of I think you're alluding to, Jason, which is how do you handle pricing when you have a product where a lot of the demand is in a short number of days?

11:44For us, we're more of an everyday product, so we're not nearly as crazy on these holidays as I think HexCloud or Ridge is. But we do have a licensed product business, NFL, collegiate, and licensing is incredibly seasonal. It's basically like 80 % of the demand is right around Father's Day and Christmas because people are buying it as gifts for their husband or their boyfriend or whatever. And so we've kind of internally debated, do you show a higher price throughout the year on your licensed product and take less sales so that you can run discounts and deals during these, you know, whatever, four weeks where 80 % of the demand gets harvested?

12:25But it's kind of the same question in different forms, which is how does your strategy change versus your peak periods versus your non-peak periods? And we've actually flip-flopped a bunch on this, so I'm really curious to hear. I mean, Sean, you're basically advocating that on a MER basis, your MER should be highest when consumer intent is the highest and it should be low when consumer intent is low. Is that right? Yeah. And if we're in the hot take alert section, as hot as e-commerce takes can be, I posted that if you're listening to this, your December should be bigger than your November. And everyone was like, what are you talking about, Sean?

13:04And what I mean by that is that this time of year, this is coming out on 1210, you have basically 10 days for shipping cutoff. This is when conversion rate is the absolute highest. This is when Wallis are the most open. The American consumer will spend trillions of dollars for Christmas, for gift giving, for holiday. And you just got to be there to capture that demand. You have to be in the ad auction. So if you're Ridge and you're a high growth, meta-dependent brand who's built our business and half our money goes to marketing, this is the year where we actually harvest all of that demand. So we will end December at a 3.5X MER, which for us means tens of millions of dollars in profit.

13:52This is where we make all of our money. Now, if you're a different type of brand, if you run the year at a 4X MER normally, then you should probably come down to a 2.75 in December because this is when people are going to purchase. Without a doubt, conversion on your website will be the highest right now. And it is just getting traffic to your website so people actually purchase. That is my hot take. Yeah, we're closer to that, Sean. Like we're, the case business is more, it's like Mike. Like we're just an everyday buy. We don't see the massive spikes that you guys do for gifting. Like my, my cyber five is like four times our typical sales, not 10 in, in a, you know, typical five day period.

14:35Um, so, but we still treat it as like a max profit window. Like we, we still, for the next like two, three weeks, we're going for like max MER for sure. Are you guys more focused on returning or new customers during this period? Returning for us. So like we would all year, I don't know what you guys do, Sean and Jason, but like all year, a typical day or week, a month, whatever, would be like 65 % of our revenues coming from net new customers and 35 to 38, somewhere in there is like returning. Basically starting November 1st, we flipped to 50-50. It's just like, it's all returning. We actually, this year, our net new customer acquisition over Cyber 5 was flat.

15:14It was returning that just like way blew the doors off. That's what carried us. Yeah. So I have the exact opposite trend. This is interesting to talk about. Well, it's the gift item. You have a gift item. Yeah. Mine's not giftable. And there's got to be other variables, but yeah, totally. Yeah. So like, you know, all for three years, my number one North Star metric was how do we get up return and customer rate? We want to launch new products. So we activate tens of millions of customers who love their Ridge wallet, right? And we went from 10 % return and customer rate in 2022, we get to 40 % now, returning customer rate.

15:51Over the Cyber 5, our returning customer rate's like 20%. It's half of what it's been all year. And that's because we acquired over 100 ,000 net new customers over Cyber 5 on bridge.com. So it is a customer acquisition, new customers in the door, gift giving type event. So that's interesting, Matt. All right, folks, this episode is brought to you by our friends at Northbeam, the marketing attribution platform that every smart performance team should be using. Northbeam just dropped something game-changing. It's called clicks plus deterministic views, the world's first deterministic view-through attribution model.

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17:55That's the North Beam edge, clarity, accuracy, and confidence in your budget decisions. You'll know which channels are really moving the needle and which ones are just taking the credit. And yeah, the biggest brands are already using it. Manscaped, Dollar Shave Cloak, Hexclad, Grunz, and many more. So if you want to see what real deterministic view attribution looks like, go to northbeam.io slash demo to book a demo and tell them that we sent you. Because if you're still flying blind on clicks only, you're missing the full picture. Matt do you want to talk about what you what you're seeing what you're feeling what your strategy is yeah I mean so I was telling the guys Mike before the before we started November was weird for us so like we had a good cyber five like I'm happy with what we're seeing in numbers but I have strange patterns in the business that kind of had us looking at our numbers on the weekend sideways so my Friday and Monday were up Friday we were up about I think 6.79%.

18:59Monday, I was up 12.78%. Saturday and Sunday, 40, year over year. Now, all month, and so what we've, now we track everything by market, by everything. So we were looking then from November 1st until November 23rd, our average growth rate for the month was like 39 % year over year. On the 24th, and then my U.S. business, let's just isolate the U.S. business because that's the interesting part. My USD to C business, from the 1st to the 23rd, we were up 33 % on average in November. On the 24th, from the 24th all the way through till the 30th, the average was 8.8. Growth rate year over year. I didn't do anything different.

19:56Like it's, we were, and even from a media buying, we can get into the marketing nuance, but that's for the other show. But like, we're a cost cap to count. Yeah. We're manual bids. Like we don't, we're very tight on spend. The US just like way underperformed for us. Was it your conversion or were you just spending kind of like proportionally not spending as much, Matt? Conversion just wasn't there. Like I just spent more money. My MER was lower and just wasn't there. Now, my Canadian business, like, let me give you the average growth rate for my Canadian business for that exact same set of dates from the 24th to the 30th.

20:32Average 100.77%. Well, you're right in the, I would say, the eye of this U.S.-Canadian thing. And it's clearly become a thing like the way that the political environment and the tariffs have impacted the way that especially Canadian customers, it sounds like, are responding to U.S. and Canadian brands. I don't know. The U.S. stuff is weird. Those are amazing Canada growth numbers. The American thing, just really weird. We were strong all year up until the last eight days. Yeah. Well, you know, here's my general comment for you because you're an everyday item like me is like, I just don't think these days are that much proportionally that much more important for us.

21:16You know, like we've always seen that. You know, it's easy. Like, I mean, if you're selling wallets and it's a big gifting item, then like you need to crush it around Father's Day and you need to crush it around, you know, BFCM. But I don't know that that's the case for you and I. And I think that over the years, I've kind of learned to just not weight those as heavily, which is hard because everybody around me is like, you know, all hopped up on crack. and, you know, like the text messages, you know, and everybody wants to do their flexes, but it's like, it's... Dude, I was not flexing. Sean requested a screenshot.

21:54No, you... Jason, you're restrained. You are quite stoic. I mean, I would be... I don't know what I'd be doing if I had your numbers during that period. Buying the thunder. Yeah, that's right. But unspeakable things. But I just think that you have to kind of understand your business. And, you know, the other thing is none of this stuff happens in a vacuum. So you do – the more omni-channel you get and you guys are much more D2C focused. But, for example, with us, Amazon is a pretty significant part of our revenue. Jason and Sean, I know it's become that way with you guys' business. But, like, you know, Stanley ran their 40-ounce Tumblr at 50 % off.

22:37They just they ran a fire sale during that that period. And so it's like, OK, well, that's that's going to, you know, that when somebody when one of your competitors decides to do that and go into kind of like, I don't know, dump units slash customer acquisition at zero profit mode, then that maybe resets your expectations a little bit. So my advice is there's a lot of people listening to this that did not have an amazing experience, Black Friday, Cyber Monday. Unless you have a gift item, I don't know that that's that dire. And Matt, for your business, it's like, well, like, you know, who really cares?

23:16Yeah, we were good. I would look at November on the whole and say, how did you feel about November on the whole? Like that probably matters a lot more than that five or six days. The other thing is that like some people just come in and ramp their spend budgets. I mean, that probably is what, anyway, it's just, there's a lot of variables going on in a short period of time and we can really overweight on that. I just wouldn't overreact to it. Yeah. Look, category really matters. So Matt, there's a little thing called iPhone launch that happened in September that I'm sure was huge for you. September was awesome.

23:46Yeah. And then - You think that might be a tailwind for phone cases? Okay. Let me also tell you what Christmas looks like. Like I love Christmas Day through till January because like what does everybody get for Christmas gifts? Everybody gets phones as Christmas gifts if you're like a young kid. Young females is my customer and it turns out they get iPhones for Christmas. So, yes, it's all seasonal and it's all category dependent. Now, what's, yeah, so I was going to say my phone game business is the same, right? That's why being diversified is such a good hedge. Um, but look, Mike brought up, Hey, if you're not killing it like Ridge, uh, and things are a little bit tougher, like let's, let's talk about the actual data as it, as it flowed out.

24:26So on black Friday, summer Monday, I was on TBPN with our good friend, Harley, the CEO, president of Shopify, and they shared Shopify's data year over year, right? Every year they do it. And you can look at a five-year chart. It looked like Shopify sales were up 25 % year over year. Now Shopify has an amazing sales team. So that must mean that the same store sales must be lower than 25%. Now, with this backs up, NoCommerce tracks roughly, I think it's 3 % of all Shopify stores in their same store sales dashboard. And what they said was the average store was up 18 % year over year. And that's a new, Sean, on that, just a note.

25:04They're tracking a growing cohort, a cohort that was up year over year. And so what they did to get to that 18 percent number is they said, well, our stores were actually up, you know, whatever, 35 percent. But they they've been up 35 percent all year. And so we're going to kind of relativize the numbers and kind of get there from that. And so it's like it's always a little bit back of the envelope math, especially because Shopify doesn't break it out versus new and existing stores. And, you know, like there's a reason, like it's kind of like the U.S. deciding not to release GDP numbers for Q3.

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25:39Like if somebody won't release a number, there's a reason why they won't release it. And it's because sometimes it probably doesn't say what they want it to say. So I don't know. I think 18 % might even be optimistic if you look at some of the other numbers, the credit card data and some of that stuff. But it definitely was a growth year, somewhere between 10 and 18%, it seems like. Yeah. Jeremiah also said from NoCommerce, their customers, he's like, you have to discount them because they tend to be high growth brands. I would even say that that's probably true for like most of the tools that we all use.

26:11Like your Northbeam, Triple Whales, NoCommerce. These are all like a cohort of brands are probably pretty high growth. Yeah, you're not buying that stuff, right? Yeah, exactly. So I think there's a selection bias and it's just worth mentioning that. Yeah, and Kohl's.com is not using NoCommerce. You know what I mean? Like if you're if you're. And that's a great point, Sean, because that's still a lot of volume, you know, like a bunch of these legacy target dot coms not using, you know, and those are going to bring those numbers down. So, like, I think this idea of 18 percent growth across digital sales, that's clearly not true.

26:46The other number that I saw was nine or 10 percent. Like that makes sense. But also that's being pulled down by walmart dot com and target dot com and these big behemoths that are probably not a good comp for your business. Did you guys see data on like item or unit volume versus revenue? So the data says pretty clearly that the number of orders was basically not up year over year. That on the like when you aggregate all the digital stuff, that the growth was almost always almost all AOV related or basically like inflation. Inflation was the growth and it was almost 8 percent or at least some of the data that I saw that you had something like negative 1 percent on purchases.

27:26but you had positive 7 % or 8 % on dollar volume. And I can't remember if that was just digital or across everything. And they attributed it basically to inflation. Most brands are leaving money on the table with SMS, not us at Ridge. SMS is our number one revenue driver and PostScript is the reason why. Here's the deal. SMS is an email. If you treat it like email, you're doing it wrong. PostScript gets it. They help brands like ours turn SMS into a high margin, high ROI channel. And here is five reasons why PostScript prints money for us. They stole the five reasons why landing page from all the DTC operators, but here you go.

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29:48and the results. For Ridge in 2024, we had a million opt-ins. We had 500 ,000 new subscribers. Revenue was$37 million, grew 100 % year over year just on SMS. The ROI, 108x. This is 151 % increase year over year. We had 106 % increase in revenue, 108x ROI, and close to 500 ,000 new subs. SMS is killing it for Ridge. We think PostScript is the way to go. We think PostScript is the best name in SMS. They have five reasons why. They're not going to waste money on sends. They're not going to leave your customers out to dry. You're going to get more subscribers. They're going to instantly convert them with AI.

30:29They have auto-optimization for profit. They're going to keep you compliant. I think SMS is still the frontier of messaging to customers, and PostScript's the best name in it. Ridge did$40 million in SMS last year. this year will probably double again,$100 million in SMS probably because of PostScript. Thank you for sponsoring this podcast. Thank you guys. Talk to you later. Okay. So this is a game tape episode. That's what the title is going to be, game tape with the operators. Because I'm very open. Things went very good this year. Other years, things have been bad. Last Q4 met us up. I barely grew last year over or seven per five.

31:12I'm growing this year. And you have to look at each of those being like, why did I suck? And why are things going good right now? And we have a big, I mean, me and Con have a list of like 20 things that we don't know why things are going really well. And we should go through and try to identify it because I would love to repeat the things that are going really well. You brought up inflation. Here's a theory. This is the Sean Frank hot take corner for the second time that inflation is actually now good for D2C brands. And let me explain that. I agree. Have you guys been to a concert recently? Have you guys been to a sports game?

31:46It's obscene. Guys, I just had to, I just got the invoice from my Thunder courtside ticket. This is resonating with me, Sean. Yeah. I'm taking, my executives are in town and taking them, seven of us to a Clippers game. The Clippers suck. Okay. Dude, it's going to be$800. They do. OKC has their draft pick. So we're actively rooting for them to suck. Yeah. So, I mean, we're$800 seconds to see the worst team in a stadium that's not sold out. And it's like, that's just everything. Go to a restaurant now and things are expensive. Now, so inflation's hurting consumers, but then by comparison, a Ridgewell looks like a good deal.

32:25And we pulled up the Big Mac index. In 2021, it was like 12 Big Macs to a Ridgewallet. And now it's like seven Big Macs to a Ridgewallet. It's so crazy. There's a lot of good restaurants here in the Arch District where Headclad is. And we have a, but not many are open for lunch. There's only, there's one really great pasta place that's open for lunch. And Danny and I go there twice a week. It's 33 bucks for the pasta that I get there. 33 bucks. It's like for a little bowl of delicious pasta. It's like, we're just recognizing, we pay it, you know, we love these guys. and it's our opportunity. We're kind of a captive audience, but it's crazy what it costs to go to a restaurant in a real major city.

33:07Yeah, and we haven't, so what I'm saying is we haven't really inflation adjusted our products since this latest shock. I mean, I think real inflation's up probably 10 % this year. I think we're really getting into like the stagflation, hyperinflation side of the economy. And like, I haven't raised my price 10%. So like, just by comparison, we are now a more affordable good and we're soaking up more of those sales. So that is one theory why things are going so good. But Jason, you're on team. Things are good. Why do you think things went so well this year outside of Super Bowl? I do want to say, Sean, like just to double click on your point in e-commerce, the percentage of revenue, the percentage of revenue that's going to shipping.

33:44That's a big part of the cost. Like for you guys, it might not be a huge one, but that's one way that inflation really helps. The higher I mean, just in general, the higher the AOV, the better the margin structure in e-commerce because you have this kind of fixed cost of the shipment to the customer. So that makes a lot of sense to me what you're saying. Yeah, for us, I think it's two things. It's the investment in, well, it's many things, but there's a couple big ones. You know, the investment in our brand over the years and kind of maintaining our market position. And I think cookware in general has done well.

34:15My understanding is that some of the other D2C cookware companies have done real well. And we actually like to joke around and say that cookware is recession proof in some respects. And whether we're in a recession or not, we understand that the consumer is under pressure and that's what that is. And so, you know, when you have a lot of money, you go spend it. When you don't have a lot of money, you stay at home. And, you know, investing in a good experience in your home is worth doing. So we, Danny's been in the cookware industry for like 30 years. And he's been saying that since the day I decided to join, that cookware is recession proof.

34:51I think this is a good data point to show it. So, Sean, basically what you're talking about is a rotation of spend. So there's so many discretionary dollars in the market and that we've had probably two or three years now post-COVID of a lot of discretionary dollars going into experience type spending. And your theory is that that is just so bloody expensive now that we're going to see some amount of rotation into goods, which I think I agree. Yeah. Undeniably, there was revenge traveling happening in 2021 and 2022. I think that cycle has now just peaked and it's on the way down. Go to Disney World.

35:34There's a million people there and they're all spending$10 ,000. It's like, I heard the economy's bad. What are all these people doing here? I think it's just that rotation is probably in motion. Bullish for consumer in the future. Well, I think that's the idea of if you're in consumer, you compete with services, you know, like you're on the good side, you're on the durable side, like you want the economy to slant towards people buying physical things over experiences. And so when experiences get more expensive, like that's bullish for us. Yeah. All right, guys. So that That was the holiday recap, the first 30 minutes of this podcast.

36:20We're talking holiday. It's the middle of December. Call out to you is this should be your highest MER and your highest revenue period of your entire business. If you have anything that even kind of looks like a gift, even if you don't have something that looks like a gift, make it into a gift. Have a under$99 section. Make bundles. Make it easy for people to come and do one-click shopping, right? My wife has every brand on earth in her cart right now, and she's cycling through trying to figure out what to purchase. So like, just make it easy for her to say yes and actually, you know, close that sale.

36:52Okay, that's the first half. The second half, Mike, what did you want to talk about today? Well, I think one of the things that's in the data that's interesting is there's this increasing use of buy now, pay later. And some of the stats coming out there are very eye-opening. So one thing that we could talk about is just debt and how much people are using debt, what that means for the future. And then the other thought I had is, You know, I remember maybe it was last year, Sean, you mentioned that like Ridge had a negative revenue day in January, like because of all the refunds. And it's like when you come down off the high, you have all of the stuff you've got to deal with for multi sales.

37:30You've got all the CX, you've got all the refunds, you've got picking up all the pieces from, you know, sometimes Jason, I know you've told stories of being in the warehouse shipping orders. Sean, you and I have had experiences with this, Matt, like just the craziness to actually deliver on this to the customer and then clean up the messes that are left over. So I thought both those could be good topics for us to jump into. Do you guys want a fun one that's really unique to our business? So Sean, you said that your shipping cutoff is like the 20th of the month in December. Okay, mine's like the 14th or 15th.

38:06And the reason for that is that we make everything on demand. Right. So like from an order to when we make and ship something, there's always a like a 24 to 72 hour lag depending on, you know, capacity. So we've consciously traded these handful of days that are really great. It's one of the things that we had to trade away to go to a pure just in time inventory business and have like negative working capital. Yeah. I don't know why I just thought of that. Yeah. I mean, so you leave probably five of the biggest shopping days on the table just by the nature of your business. Okay. I got to take a break and tell you a quick story from a few weeks ago.

38:49We were at e-commerce fuel live. This is Andrew's live event that he does once a year. It's like 200 brands. They do a great job. And this story is just too good not to share. So like bear with me while I tell it. And I'm at the opening night party. I'm talking with Ahmed, CEO of Rich Pal and one of the great sponsors of this podcast. And Amit and I are having a good chat. And beside me walks in Katie to say hi to Amit. And Amit looks up and I swear to God, this is true. He goes, hey, Matt, is this your EA? And before I could react, Katie absolutely tears him a new one and says, I am not Matt's EA.

39:25Matt is my EA. So if you ever wanted a lesson in how to stick your foot firmly in your own mouth, this is it. Amit could not catch a break the rest of this event, deservedly so, right? And by the end of it, I think she actually said, I will never switch to RichPanel unless you give me a 100 % discount. Now, I know this is a strange sponsor read, but I just needed to tell the story because I think it's kind of funny. So I don't think Katie's gonna get a 100 % discount, but honestly, I don't think you need it. Switching to RichPanel is gonna pay for itself anyway. They are genuinely one of the best teams to work with.

39:59I mean that. We work with them at our brands. They have more than paid for themselves, in their software. So if you want to reduce tickets by like 30 % or more, save on your SaaS bill, go into Black Friday without any chaos, give Rich Panel a shot. Just go to richpanel.com slash demo. And Amit, if you're listening, dude, that's just a terrible, terrible example of what you say to somebody when you meet them the first time. Oh, and Amit promised me there's actually a super special promo code. If you use SorryKaty, sorry k-a-t-y you'll get 20 off your subscription give it a shot i so sorry if i look dejected i'm trying to pull up the actual share of my business that is with installment payments so i think it's so interesting yeah mike mike just brought up are people doing buy now pay later i got the data in front of me and i'm gonna dive in here i'm gonna figure out actually how what percentage take a screenshot i'm sending to chat gpt and i'll tell you guys And then I'll look year over year.

41:01This sounds pretty interesting, right? Mike, when you look at this data, or Jason, you've been in this game a long time. I just assume that all holiday periods are heavy debt financed. They definitely are. And this is one of the reasons why, just to connect two ideas, once people kind of break the seal on spending money on their credit card, that doesn't really come due until January. And so they can spend and spend and spend and they're just less inhibited. The reason why I think this is a really interesting topic is that when consumers, consumers have basically shown over time that they will spend until they can't get access to more money.

41:45And that really the way that you prevent consumers getting into a bad place is by limiting the credit you give them. I mean, the great financial crisis was basically like, what if you allowed, you know, somebody working at a nightclub to take out five mortgages? What would happen? And it's like they would do it. You know, they would do it and try and get the equity appreciation in the house and then the whole system can kind of collapse. And so the companies, in fact, there's actually a related study that in markets that legalize gambling. Guess what happens to credit access for young men in markets that have legalized gambling?

42:23The credit companies restrict access to debt. You know why? Because the young guys will blow themselves up doing these 1 ,001 parlays. So anyway, really the credit companies have to kind of have good lending standards because the consumer is not going to basically be disciplined. And when the economy gets into a bad place, one of the signs is over leverage. What's interesting about the buy now, pay later is that it's not your traditional credit card companies. It's this different group. And some of the stats are really wild. Like some of the default rates that are being thrown around, I don't know how accurate they are.

43:03Like I saw a default rate of like, you know, in the 30 or 40 percent for some groups. And it's like, well, that's obviously really bad if people are taking out credit that they're going to default on 50 percent of the time. Like that's credit that shouldn't be getting extended. And so the one kind of like red flag and I guess we can kind of put a pin in this right now and we'll come back to this probably six or 12 months from now. But if things were to get really bad in the economy, we would one of the things that we would go back and look at is like, oh, well, the consumer was just using more and more money that they didn't have to continue to prop things up.

43:36And one of the data points that somebody shared over the weekend that I thought was interesting is that one of the all-time blowout Black Friday, Cyber Monday periods that we've ever seen in the country over the last 25 years was at the end of 2007. It was right before the great financial crisis, kind of chickens came home to roost. And you know what? It, not surprisingly, was debt-fueled. So, we look at sales and sales growth as like, how's the consumer doing? But that's not actually the best indicator of how the consumer is doing. It's really how much debt does the consumer have and how much are they growing their debt load?

44:15Because if they're growing their debt load to produce that growth, then it's not sustainable and it means rockier times might be ahead. Mike, are you going full doomer on us right now, dude? No, I'm just – I'm more just saying these things have cycles. Yeah, but if you look at the – they're always talking record growth. Of course it's record growth because you grew more than – when I hear record growth, oh, this BFCM record growth. Well, we hit new records. We hit new records. Of course, it's going to grow. It's going to grow every year. and like is the consumer is the consumer more indebted today than they were a year ago well like i said the thing that was concerning and some of the numbers that came out is that a lot of the growth came from buy now pay later that was one thing where it's like it seems to disproportionately be coming from lower forms of credit and the other thing that was really crazy is that they were showing that a certain percentage of customers are using buy now pay later on like groceries and stuff like, like everyday items.

45:18And, and there were some people saying like, Hey, that, that looks concerning. So I'm just saying it's kind of a cycle, you know, and really like to, to give people a little bit of the backstory history here, consumer, uh, like household savings got the highest that they've been basically in our lifetimes right around COVID because we just dumped a ton of stimulus money on people. And so there was this period where people's indebtedness, households indebtedness levels dropped to like the lowest level they've been at in a long time. And basically we've been on this uptick since. So it's, some of this is just kind of getting back to where we were.

45:58But we're also, households are taking on debt at a pretty rapid rate right now. I just dropped from 2000 to 2024 holiday, year over year holiday. So this is not just Black Friday sales data year over year into our chat. Because I think that's interesting, Mike, like what you were referencing was somebody pointed out Black Friday spending in 2007, right? Just before the crash. But if you kind of look at overall holiday spending, it really wasn't that remarkable. Like it was plus 2.7%. Well, and the related thing I'd say here, Matt, and we can share this with in the show notes for people. But the two biggest years of holiday spending growth that we have seen in the last 25 years happened in 2020 and 2021.

46:47And my point here is that this is the point where at a household level, people were the least indebted. And that makes sense, that if you have the least amount of debt, if you have the most surplus on a household level, then you're going to be the most uninhibited when it comes to holiday spending. And then the more debt you have, the less access to credit you have, the more you're going to kind of be looking for sales, the more you're going to watch your money during the holidays. Yeah. Okay. On buy now, pay later, you know, it's a new form of debt in that it doesn't affect your credit score.

47:23And it's purchase by purchase. So, like, instead of Amex giving you$10 ,000, it's like it runs your credit every single purchase. So I don't know if it's going to have the systematic risk of like a normal credit bubble. Like what ends up happening is like, okay, if there's really 40 % default rates, a firm is just going to go out of business, right? But they've already paid us. So I don't know how they're borrowing the money. I don't know who actually – whose capital is at risk, right? No, you're nailing it, Sean. I think that the risk – so do you guys remember – when was this? Was this a couple of years ago that a bunch of the people that were extending loans to e-commerce companies went under?

48:04Yeah, Clearco, all of them. So what was this two years ago? I can't remember when in the cycle this was. As soon as interest rates went up. Imagine this. Yeah, exactly. So imagine this is the inverse of that. That if you had a situation where the buy now, pay later companies got nuked, like what would happen? And it's like, well, it would have a really chilling effect on sales because you're just pulling credit out of the market that whatever percentage of sales that are going to buy now, pay later just don't happen, presumably, or, you know, a lot of them go away. And that's kind of the point is that you've got this form of credit that's available on the market, but it's kind of starting to look questionable how disciplined that credit's being run.

48:48Now, I haven't dug into their financials or whatever, so who knows? But if you have less credit, it'll hurt tips. Okay. Well, I have the actual rich data. We're sharing actual rich data on buy now, pay later. You guys got to hype this up, man. This is like a very boring episode. I don't find this boring at all. I'm learning. All right, man. Well, I hope you're the whole audience. 6 % of our sales were a buy now, pay later solution. This, I actually can't check on PayPal because it just says PayPal. PayPal has a quad payment thing. So it's without a doubt higher than the 6%, but it's 6 % is buy, not pay later.

49:25We did not have Shopify installments last year. So that's net new. And dude, Shopify installments was over a million dollars. Okay. A firm is up 40 % year over year, but it's a very small number, right? It's less than 2 % of our total revenue is at a firm number. But yeah, man. So it is up a lot. It is ripping. It's still not a huge percentage. Yeah, I was just looking, Klarna and Q3, their revenue was up 26 % year over year to 903 million, but they also lost$95 million. So it's definitely like Klarna is ripping. I saw something that they were up 40 % on Black Friday, Cyber Monday. The point just being that like in the growth, disproportionately it's coming from buy now, pay later and credit.

50:12And so interesting. We'll keep an eye on it. You know, one thing that you said, Mike, so I went digging on this whole BNPL thing and this idea that they don't hit your, like they don't actually hit your credit rating. So that's true, but several of them will send you to collections. I'm sure. So not all of them. Right. And as soon as you get sent to collections. You know, I just love the idea of Jason showing up on a ring camera like he's he's there to repossess your hex clad. Give me my pants. I'll do it. I did a whole post explaining how Buy Now Pay Later works for people because I think the financial consumer, it all feels kind of mysterious.

50:55They're like, why is there no interest rates? It's like, who's paying for this? It's like, we're paying for it. It's like Shopify Installments and Affirm and Klarna, they charge us 5 % payment processing fees for the access to their credit lending system. They would love to charge consumer credit, but they can't because then consumers will just use credit cards. right? So it is just debt by a different name. Yeah, it's just lower quality debt. That's all it is. It's lower quality debt. And lower quality debt gets nuked first if things go bad. That's all. Hey, you know what's important to your business?

51:29Understanding it. That's where Sarah Sinalatus comes in. Jason, what if I told you that our margins yesterday were about 30 %? But there's a big difference between saying you're about 30 % and saying you're 27.4%, right? Like that level of precision can only happen if your data is rock solid and in one place where you can actually pull it from. That's where Sarah's Analytics comes in for rich. So every single day I'm going in there, I'm looking at my contribution margin. I'm looking at my sales breakdown, my sales by product type. And it really just starts shining a light into like the black holes of your business.

52:01Jason, what have you gotten out of Sarah's Analytics? Honestly, everything is at my fingertips. Our dashboards pull in from everywhere, from Shopify, from Amazon, from our ERP, from Costco, every single channel. And we go to Sarah's Pulse and we get our daily contribution margin reporting. We get all of our marketing metrics by channel, by category, even down to the skew. Everything is pulled in automatically. I get an email report in the morning. I go check things during the day. My entire team lives in this thing. Yeah. And everyone knows the revenue yesterday. If you ask any brand, they'll tell you what the revenue was, maybe 20 % of brands can tell you their contribution margin and about 0 % of brands can tell you their profit for yesterday.

52:42And if you're not watching your profit on a daily or at least weekly basis, it can just get out from under you. To the Saris' team's credit, we have a daily growth dashboard sheet from probably 2018, and they're able to import all of that data. And the reason to do that is eventually sheets just breaks. We ended up having three or four full-time people maintaining this giant sheet. And Serious Analytics, by putting it into an actual database with actual data connectors and pipelines, it just makes it more future-proof. I'm going to give you guys a real world use case. So I just had to set 2026 financial budgets.

53:18Serious Analytics made that data available in four clicks compared to 40 hours. It used to take me probably literally a week or two to figure out what my projections for the next year could be. With Serious Analytics, I got it done in an afternoon. So it's like AI for your business knowledge. And if you want to check out Sarasana Analytics, that is S-A-R-A-S and see how daily precise data can transform your profitability. Okay. Let's talk about what to do about returns, customer service, the last 18 minutes of the Operators Podcast. Yeah, dude. I mean, we get a bunch of returns in January. Who doesn't, right?

53:56Do you do anything to minimize that, Sean? Like, how do you minimize the damage from that? Do you have like save a sale kind of techniques? Like, what do you do? You know, we actually let it, we make it very easy for customers to buy, shop and return. We have a very low return rate. Okay. So across the whole business, across all of our categories, it'll be less than 5%, right? Consumer electronics is a really high return rate. If you go talk to a Best Buy of the world, that's, you know, in the tens percent, people come back to return something. The wallet business is very low. It's in the single digits.

54:32And then the rings have a really high return rate because of sizes. So our process was we're going to make it very easy to customers to buy, shop, and return. And that's because we're a customer acquisition focused business. If you're in apparel, I know the Reformation team, one time they told me 50 % of their stuff gets returned. It's like you can't run a business doing that, right? That is brutal just because of the return shipping. So we have been very lax. We know we're going to have big days. We pay for them later. But yeah, I mean, like we... Do you make people send it back? So like this is one of like the kind of classic debates is, do you make customers send in a return?

55:12Or do you just credit them? Or do you just send them the new product? Because if you make them send it back, and maybe with you guys, it makes sense, Sean, but it's like you're paying the return shipping. And on a lot of things like clothing, It just like the economics don't make any sense. But if you don't make people send it back, then the scammers come out. And so like it's it's kind of a classic catch 22. How do you guys handle that? Yeah. So we we have experimented with all of it. We now make everybody ship it back and we don't refund it until it's in our possession. So we used to do instant refunds.

55:45It's like there's a bunch of SaaS companies that came out. They're like, no, dude, your customers want instant refunds. It's going to make them happier, make them shop. What you end up getting is people never ship back. Or then we did, okay, we'll refund when we have the shipping label. But then scammers, we'll put a rock in the box or we'll - Oh man, you wouldn't believe some of the return boxes we get and the stuff that's in there. We have an entire lost and found of junk that people have shipped back other than the actual item. Yeah. Or a real bad one was somebody, there was a return ring that hacked into like USPS and And then they would change, like they'll ship the thing back and they'll reroute it back to themselves.

56:23So like they have like a whole exploit doing that. Wait, how does that work? Wait a minute. I don't know this one. Okay. So this was probably a year ago, maybe 18 months ago. They would, you would give them a USPS return label. They would put something in it and ship it to you. So it looks like it's being delivered. And then at a midway point before it's at a processing center, they were able to actually go down there and reroute the shipment back to themselves. So it's the worst of both worlds because now you're paying for the shipping label and they're getting their stuff back anyway and you've refunded them.

56:54So yeah, scammers will do a bunch of stuff. And then there's a whole scamming ring that came out. You can ask Stephen from Cuts about this. There's powerpuff.gg and there's Discord groups that do this. If people know you will refund before they ship it back, they will just, you'll get 800 orders. Yeah, they coordinated it. So we've had to get really, really tight on that. And we have a guy in our Arizona facility, our factory, who just does all the, he just refurbishes all the wallets. He makes them good enough to sell again. The power, like the speed that arbitrage spreads on the internet is really breathtaking.

57:32We had a, this was several years ago. It's like a random December day, maybe December 5th. And I check our sales and they're normal. I check them 10, 15 minutes later and they're just like, they just gone vertical on Amazon. Like what, what is going on? And our sales are just like, you know, it's literally like, I don't know, we were quite a bit smaller then, but it's like literally like we, we had like a hundred thousand dollar hour, you know, on Amazon. And it's like, well, that's very abnormal. And we're trying to figure out what's going on. And what we found after about two hours was that very, very early in the company, we had some kind of a promo code in Amazon that got a free Tumblr.

58:19And we had deactivated it or I thought we had deactivated it. And it's not clear if somebody that had Amazon access came in and reactivated it or if that code had still somehow been active and somebody figured it out. but literally we had something like 20 ,000 people use that code in like a two hour period before we realized it and turned it off and tried to shut down the shipment. But it's just like, that's how fast stuff spreads. You know, that like it gets posted in one of these forums. And like you said, Sean, if you leave yourself open to some kind of an arbitrage, some kind of a way for people to scam you out of free stuff, they're going to do it in an instant.

58:59It takes one viral TikTok being like, Like, guys, I just found free Simple Modern Tumblers, and it goes viral. Yeah, that's exactly right. Yeah. Anyway, we have a low return rate. We've had to get stricter over time. It makes more work for the team to actually go in there and make sure packages are received for actually issuing refunds. But it's what we've had to do in the modern era. Jason, Matt, how are you guys handling the frauds, the scammers? Yeah, we got hit with one of these big scam jobs a couple years ago. I remember it going down. We might have all talked about it at some point. Like, I don't even remember what we, we, we figured it out.

59:37Like we got, we went after people. It wasn't really like, it wasn't that big. We've got a 30 day return policy most of the year. We extend it during, you know, during holiday and we process our own returns. We do not destroy in the field. In fact, we've had some issues with Costco destroying the field a little bit where some, some people that like are doing it for Costco are literally just selling it. Like it's, it's pretty messed up. And we, we, I was, that, that was actually pretty recent. So you've got to always be on, on the lookout for that stuff. But I think we make people pay for the shipping to ship it back just because we're talking about 20 pound, 10 pound, three pound boxes that I actually don't even remember, But I'm pretty sure we do tell people, look, you're just going to have to pay for the shipping to ship it back.

1:00:30So there's a little bit of a disincentive to return. Yeah. There's no there's no perfect answer here, which is one of the reasons why I ask. Like the honest customers can kind of get penalized, but you just can't leave the loophole open or like, you know, people will take advantage of it. Yeah. And like if if it was just one percent of people scammed, it'd be fine. But if there's a loophole, every scammer on earth floods to it. And then 50 % of your orders end up being scam orders. That's the problem. We'd all tolerate a little bit of theft. We do. If you have a retail store, you tolerate a little bit of theft.

1:01:03But the flood of digital theft coming in is too high. Jason, you brought up people taking your stuff and selling it. So we work with a lot of photographers. We have a photographer we really like. And he does a lot of our shoots. and we let him keep the gear. And then he started giving it to his buddy and his buddy started selling it on eBay. And then we saw stuff that isn't out yet being sold on eBay. And it's so goddamn frustrating when people take your stuff and sell it on eBay. You guys have any stories about that? It happens to us all the time. We actually have like a healthy secondary market of Lomis on marketplaces.

1:01:43Dude, we have people buying, we've had this forever. People buy seven piece sets at Costco and we'll break them up and sell the individual pieces. And like the margins are razor thin. And we're like, why are they doing that? And they will go and sell that on Amazon or sell that on eBay and with the buy box sometimes. You know, it's like, it's whack-a-mole. Well, it's like, I mean, we can kind of be like, why would anybody go to all that work for$10? And it's like, because for a lot of people, getting an extra$10 is not, you know, is not easy. And especially when you get into international countries, is like$10 is a lot of money.

1:02:19They're going to do it. Twitter's been dealing with this with their content creator payments. It's like, yeah, somebody like Sean getting whatever you get paid, Sean, $500,$1 ,000. It's like, okay. Millions, I get paid millions. Yeah, okay, sorry. I underestimated your importance to the Twitter ecosystem, the X ecosystem, sorry. But if you're in Bangladesh, it's like, listen, $1 ,000 monthly payment is unbelievable believable and you're going to do whatever you have to do to gain the algorithm or the system, you know, whatever kind of content farming you need to do to, to, to try and get eyeballs.

1:02:54And that, you know, our brands are, are the same. I, my, my hack that I haven't done, but I've thought about is like, we'll have products that pop off, you know, where it's like, Hey, we bought whatever 5 ,000 of them and you put it on sale and it's like, Oh, we're going to sell out in like two days. And, uh, and then like you said, Matt, there's a secondary market. And I've been like, what we should do is we should only sell 4 ,000 of them. and then we should go sell a thousand of them at twice the price on eBay, but we've never done that. Okay, so there's - That's actually an interesting idea.

1:03:22Yeah, so it's illegal, but -

1:03:27How many times on this podcast do we have to like - Okay, well, I'm about to say it's technically illegal, but it's a great idea. No, so a very famous streetwear brand, it's public, so I think I'll talk about it, Antisocial Social Club got busted doing that. They would do drops And then the founder would just sell it on eBay for way more money. So it's been done. Yeah, Mike, do you get a lot of returns at Simple Modern for your DTC business? Because if your business is like mine, I'm like, Sean, we're really low return rate. Like super low. The thing with our business is it's like percentage wise we're similar.

1:04:08It's just nominally it's just a lot of stuff. you know like when you sell whatever tens of millions of things then it's like a five percent return rate means like a lot like you know hundreds of thousands of bottles that are coming back and and uh so yeah like it it just ends up being that the volume is the volume is significant and yeah you you just refunds refunds just bleed you on your margins and and it's one of those areas where Like I'm curious, do you guys offer, Sean, you do cash back. One of the things that I've thought about on some things is that some refunds should just be like store credit.

1:04:47That it's like, oh, you ended up getting it. It wasn't that it was broken. It was that you didn't like A, B, or C. Well, that's fine. We'll actually be customer friendly, but you're going to do it in store credit where that money doesn't come out. That's a pretty big difference than, you know, refunding the cash. Yeah. And Rich Panel has a whole thing flow that if people want to do returns, you try to turn them to exchanges. And we probably have a 25 % save rate. We use a different software to actually process the returns. Who's not a paying sponsor? So Jason won't let me say their name. But yeah.

1:05:24It's still a business, Sean. But yeah, I think focusing on save rate, I think is really important. I want to go back to people doing stuff for small amounts of money. Got to remember, most jobs suck. So if somebody can make any money not working a job, they'll definitely do it. And one of my first jobs ever worked at Ralph Lauren, and we would run big sales at Ralph Lauren. And people would come in and they'd be like, yeah, I'm going to buy a bunch of stuff for my church. And they would just buy a bunch of polos and a bunch of sizes. and they'd be like, could I get a volume discount? And the managers would give them a volume discount.

1:05:59And it turns out this person was just selling stuff on eBay. And they would come in every week and drop like five grand on a bunch of these shirts. Well, they all watch Gary Vaynerchuk on whatever, doing his eBay deals, right? Selling all this crap. That's everybody just, it's a whole trend. Yeah, I get it. We had a period where one of the e-commerce properties we had years ago So we called it Tumble Deal. And the way it worked was like the price would start out at a certain place and then it would just decline. And there was a there was a kind of an end point where the auction would just end if nobody had bid on it.

1:06:36But we knew that and the customer didn't. Then you could kind of claim a claim a product at any point. So it's kind of like a declining auction model. But what we found really worked were like designer handbags. And so we built a ring of people that just all they did is went to coach outlets and these other outlets and bought up as much inventory as they possibly could. And I mean, we're talking at the height. I mean, it was like thousands of bags a day that we were going and buying from these outlets. So I've been on the other side of that, Sean, for sure. We eventually, I think, got blacklisted at all the coach outlets.

1:07:09Dude, those coach outlets do so much money. The one in my town did$100 million a year. So if you can sell a lot of stuff, man, people are going to buy it. All right. That seems like a good operators episode. We talked about actual Black Friday, Cyber Monday results. We talked about what you should be doing right now to drive revenue into your business. We talked about good old stories about our life. We talked about buy now, pay later. We talked about returns and customer service. And there's going to be more of that coming up on the next episode of the Operators Podcast. We're going to talk a lot about returns, customer service in January when that's the most important thing.

1:07:44But right now, get those sales. Enjoy your holidays. Parting words, guys. We'll go to Matt first. What do you want to say? I just want more MER. That's all I'm thinking about right now is Sean chirping in my ear for the next two weeks. MER. MER. So that's where my head's at. I'm going to call you the mermaid, Matt. All right, Mike. All I want for Christmas, Sean, is a Supreme Court ruling. That's all I want. Oh, yes. Yes. Every whole year has to go back to tariffs. All right, Jason. Don't overspend, people. You've been filling the funnel all year long, and the closer we get, people need to buy gifts.

1:08:24Don't overspend. There's no buy now, pay later for ads. You pay for it immediately. So Meta's not selling you that inventory on credit. They're going to take the money today. Okay. Thank you. Listen to the Operators Podcast. We have a newsletter. We have a partnership with EcomFuel. You're going to go ahead and join that forum if you want to talk about e-commerce with cool, awesome professionals. We have amazing sponsors like Revo. We have Northbeam. We have PostScript. We have Serious Analytics. We have Fulfill. We have Rich Panel. A bunch of great sponsors. We have spinoff shows, more stuff coming.

1:08:53We have Aaron, who is running the ship over here. Talk to you guys later. Goodbye.

From the publisher

In this episode the operators break down their actual results from Black Friday and Cyber Monday, analyzing why some brands experienced record growth while others saw shifts in consumer behavior between the US and Canadian markets. They debate critical holiday strategies, such as the benefits of starting sales early versus maximizing profit during high-intent windows, and explore the theory that inflation is driving consumers back toward durable goods over expensive experiences. The discussion also covers the increasing reliance on "Buy Now, Pay Later" services, the potential risks of mounting consumer debt, and essential tactics for managing post-holiday returns and preventing e-commerce fraud.

Chapters:

00:00:00 - Introduction

00:02:35 - BFCM Recap

00:18:36 - Regional Sales Trends

00:30:52 - Inflation's Impact

00:40:39 - Buy Now Pay Later

00:53:45 - Returns Management

Fulfil.io.

https://bit.ly/3pAp2vu

The Only Cloud ERP Designed to Efficiently Scale 8 and 9-Figure Brands.

Northbeam.

https://www.northbeam.io/