Scaling down a business is not as fun as scaling up. The issues might be similar, but the process is different.
The last two years have been tough for Beardbrand, my D2C men’s grooming company. I’ve described our challenges repeatedly in this podcast in the hopes of helping other merchants. I’ve covered our just concluded ADA lawsuit, persevering amid declining sales, resetting the business, and more.
In this week’s episode, I’ll address Beardbrand’s recent experience of changing 3PLs — third-party logistics providers. I review it in full in the embedded audio below. The transcript is edited for clarity and length.
Less Volume
Our fulfillment partner was a good fit when we supplied Target. But we no longer work with Target and its large wholesale demands. We needed a smaller, less costly partner.
Switching warehouses was a necessary hassle. We had excess inventory that wasn’t moving. Much of it was unsalable. Unlike scaling up, where there’s a clear path forward, scaling down means figuring out what’s left over. We had hundreds of pallets of products we didn’t want to liquidate through discount stores because of their shelf life. I wanted to control the customer experience and ensure they only got the best products, even as we looked to offload inventory. Ultimately, it wasn’t feasible to keep storing these items, so we destroyed a significant portion of it — around $200,000 in 2024 alone and about $500,000 last year.
Our next step was finding a new fulfillment partner. After evaluating several options, we eventually settled on a warehouse in Milwaukee. It had more space and quoted reasonable prices. It looked like a good fit, and they offered to cover some of our shipping costs for the transition from Texas. We followed our standard practice of sending half of our inventory to the new warehouse while continuing to fulfill orders from the old one.
A New 3PL
However, things quickly went south with the new 3PL. Initially, everything seemed great, but problems cropped up when they began shipping. Customers complained about delayed deliveries, which was unusual for us. Then came the invoice. We had expected to reduce our average shipping cost per order to around $10 based on the quote. We had been paying $13; we thought moving would save a few dollars. Instead, the cost jumped to $14.50. We investigated the details and found that our 3PL had started charging extra fees and marked-up shipping rates. They also used oversized boxes, which inflated shipping costs for smaller items.
We addressed the packaging issues, but the invoice didn’t match the initial quote. We discovered that the 3PL had edited the Google Sheet quote without telling us. Thankfully, my operations manager had printed the original quote, and comparing it to the updated one made it clear there had been changes. The warehouse staff disregarded our concerns, leading us to seek another option.
Back to Texas
Moving warehouses again wasn’t ideal, but we had no choice. Luckily, a friend with a warehouse in Texas accommodated us. That allowed us to return closer to our manufacturer and work with someone who understands our brand. We transitioned in phases again, with half of the inventory moved to Texas while the rest stayed in Wisconsin until we could complete the switch. However, the issues persisted with the Wisconsin partner, who continued mishandling orders and shipping.
The final shipment from Wisconsin was a mess, showing little care in the packaging. We’ve learned from the experience, and now our operations manager frequently visits the Texas warehouse to oversee the setup and work with the staff on how we package and ship. We’re a few weeks into the partnership, and things are running more smoothly. Our costs are now below the initial $10 estimate, and the customer feedback has been positive.
The new Texas setup is going well. We have regained control over the shipping experience, packaging, and customer satisfaction. My operations manager has been invaluable, ensuring we provide a high-quality experience while managing costs. This transition back to Texas could finally put us on the path to profitability, turning Beardbrand from a business that was breaking even to one now sustainable.
Lessons Learned
The experience with the Wisconsin 3PL taught me valuable lessons about vetting new partners and being hands-on during onboarding. I should have spent more time on-site during the transition to catch potential issues early on. I can’t expect a fulfillment partner to care about Beardbrand as much as I do. I must set clear standards and ensure they’re met.
I learned that moving to a new warehouse is more than saving money — it’s about finding a partner that aligns with our values. Beardbrand emphasizes freedom, hunger, and trust. Our new Texas provider shares that ethos in a way our previous one didn’t.
My bookkeeper and I agree that this shift in operations could secure our future. The cost-cutting and improvements in customer experience allow us to make more than we spend. There will always be unexpected challenges — damaged products, for example — but we now have a path to profitability and growth.
Nothing is permanent in business. Stay present and take one day at a time. The Wisconsin chapter was rough, but we’re moving forward. We all have the power to implement changes. If something isn’t working, take the steps to fix it. Learn as you go and become a stronger business.
via https://www.aiupnow.com
Eric Bandholz, Khareem Sudlow
