Taking your brand global without tying up cash

Izzy, we've known each other for, man, how many years now? I think since right before Portless was announced, right? Yeah. Was it named something else right before as well? Yeah, we ran a brand called Browze. And I think when we met, Portless didn't even exist yet. It was built on top of my previous business. Yeah. So, we got to meet a few years ago, and I was just so blown away by the thought of this, of what Portless could do, which is kind of like factory to consumer shipping, but not in a way where you're cutting the brand out or, you know, giving the factory the advantage to, you know, take over your customer.

More so like, oh, wow, logistics actually just became a lot easier. You can skip the entire 3PL in the U.S. and all the costs that come associated with that, and basically go from factory to a consumer in, I think, six days was when we first met, the number that you were saying. And, you know, I was mind blown. And so, I ended up investing in the seed as well. And yeah, since then, it's just been amazing to watch the growth. I think you guys have grown insanely fast.

But yeah, we've had a great relationship, and it's been fun to see brands also jump on board and kind of see and take advantage of what Portless has to offer as well.

And before we even talk about Browze, can you just quickly give like a easy-to-understand explanation of the direct-from-Asia supply chain that you've built? Because I'll tell you the thing that like really made my brain turn initially was when I ordered something from a Portless brand. And as a consumer, I had no idea that this package came from Asia. It showed up for the first time on my tracking as a customer in LA or Miami. And then, you know, it was like two days to my door and six days from, you know, when I placed the order.

So, could you just give a quick understanding of how that works? Yeah, absolutely. There's three common myths when someone says, oh, something was shipped from near the factory or from China or Vietnam to the customer. So, the first common myth is going to be like, oh, it's going to be a horrible brand experience. I'm going to see Mandarin on the label. I'm going to see Chinese tracking number. That has been solved like eight years ago. Now, when a customer makes an order within 24 hours of getting a USPS tracking number, five days later at their front door, delivered with a local label, custom packaging, and, you know, the driver that you recognize that does all your packages.

So, from an experience, it is fast, it is localized, and a consumer thinks you have facilities in really five hubs around the US, LA, Chicago, New York, Dallas, and Miami. Because those are basically the entry points, right? Those are the entry points. If you think about how long does it take to fly from China to the US, it's about 15 hours. Meaning, theoretically, you get an order. It could be in the US within 24 hours and you're zone skipping, right? That means once you inject it in zone one, zone two, it's a two-day delivery.

We see three-day deliveries all the time. The P50, the P90 might be a little longer. Like, the P50 would be five days. And I think the P90 now is seven days. But fully localized, if you're one of the major cities, you're getting an extremely fast localized delivery. So, that's a classic myth people think, like, oh, it can't be. Maybe because you bought from Temu and AliExpress. [phrase unclear]. We localize the entire experience. The next thing is, you know, the people that use this model must be selling crap.

Nope, absolutely not. Like, we'll talk about Quince later. Quince built a $10 billion business, high-end cashmere sweaters built on this model. And now we do hundreds of brands built on this model. Quality depends on the brand. We will give the consumer an amazing delivery experience. The brand owns the quality of the good. The next classic is, like, okay, but then it's going to be really expensive. Then we're going to say, oh, you're probably thinking of, like, DHL. Again, we love Global-e. We partner with Global-e. But if you use very often Global-e out of the United States, you're using DHL.

So, a customer gets a checkout, $30, $25. You can't do performance marketing around that, right? Because you're just killing it. For us, our shipping starts at $5. $5, think about, like, a T-shirt or, like, an accessory. Obviously, it goes up as it scales in the weight or dimensional way. But for $5, starting at $5, end-to-end delivery, localized experience, fast delivery, and now you could access, and we'll talk about it soon, 81 countries around the world. It's a big world. There are billions of people out there.

You want to do more like Meta, CPMs are cheaper in Australia, United Kingdom compared to the United States. So, I think at a high level, that's what we do. Those are the common myths, and really giving a today localized experience as if you're in a local ShipBob to your customer while gaining massive cash flow advantages in the Portless model. And obviously, we'll break down different parts of that. Yeah, I think for today, two of the big topics is one is obviously using Portless and Portless logistics to open up new markets without opening new warehouses.

And I think the other one, which you nailed on the head, and what I want to start with is how we keep kind of cash flow moving.

And specifically, like, you know, how do you tie what you do with your inventory to, you know, cash flow in terms of customers purchasing, but also your own spend as a brand. Now, I feel like when I first heard about Portless or we started talking about it, I didn't understand the cash piece of it. But, you know, I understood more of the logistics and the ability to accelerate logistics globally. But can you just give a quick background of Browze, maybe, and kind of how, like, what you were doing there, how you were operating and what that led to, or kind of like how that led you to basically create this, you know, model for yourself before figuring out how to make it for everybody else?

Absolutely. So, I ran a brand for 10 years. The first two years, that brand was called Browze. It was kind of home and kitchen, you know, curated home and kitchen products. That was the model. The first two years of that business, we did, the first year was like $100,000 in revenue. The second year was $200,000 in revenue. But not because I had any issue in demand. I had tons of demand. But in every business, no matter how big you are, that you have a specific amount of cash you could work with.

And in the early stages of my business, I would invest, wait, wait, wait, because I got to wait. Production, 60 days on water. And I need to do it six months ahead of time, because you always need buffer inventory. So, I was constantly putting out cash, waiting, waiting, waiting, waiting, finally getting the goods, then selling it. And when it sold out, all right, I got to start again. Supply chain, new PO, new lead time, new 60 days on water, then selling again. So, it was like not even that much revenue, but never had cash in the bank.

It was always out in the market, always in product, either on water or the facility. Then, in 2015, we moved, or late 14 into 15, we moved to this cross-border model. And I got lucky because I met a bunch of ex-Alibaba executives that kind of became early advisors to teach me how to run this model. We went from $200,000 to $2.5 million. And we grew 100% year after that. $2.5 million, $5 million, $11 million, $22 million, then roughly $50 million. And we're on the next year on track to $100 million.

And really, nothing changed. Demand didn't change. It was the same demand. What changed was, if you could evolve how you use your cash, and you could get your inventory out of factories and start selling it 24 hours after it's done production, everything changes. Right? Like, you know, all of a sudden, you don't need lines of credit. You could have, you could reinvest your capital. You don't need to put a million dollars at a time into inventory. So that was how I experienced Browze, this model under my business, Browze, for the first, call it, eight years once we started doing this.

Eventually, you know, we hit, you know, iOS 14 attribution year, which was a chaotic year in 2022. Yeah. We ended up shifting more to Portless. And that's when I met you, I guess, almost five years ago. And to B2B, where we just helped now hundreds of brands leverage that model. But people understand cash flow is what put companies into bankruptcy, not your profit margin. And you can still maintain profit margin. You can have great, you know, our ship rates start at five bucks. But if you could unlock cash flow, if you have a great product, and you could sell your goods now to 80 countries around the world and reinvest your profit very fast, there is nothing stopping you go from zero to 100 million, literally in one to two years.

And we have examples that we'll talk about later on. But that is reality. That is the world we live in. Yeah. I remember a few years ago, reading this Medium post, you've probably read it too, is from the Gymshark founder talking about the negative cash conversion cycle. And that was basically the secret to how Gymshark grew. Like, they had advertising dollars to spend that no competitor had, because of essentially, very similar playbook to this. And, yeah, it's actually pretty amazing. Because when you lay it out that way, it's like almost instantly now, your cash is not tied up and sitting somewhere.

It's constantly flowing. It's constantly moving. And if, like you said, you can start selling right as your production run is done, you're grabbing the money before you might even have to pay your shipping vendor, you know, to sell it out. So, that is such a good Medium post. And I think it's worth taking a second to unpacking that. So, negative cash conversion cycles, if anyone doesn't know, is you are getting paid from your customer prior to you need to pay your vendors. That is a crazy concept and very hard.

Because if you do that, basically, your customers are your investors. You don't need [financing term unclear]. You don't need to go and get crazy lines of credit from the, you know, the Wayflyer of the world. Really, if you optimize supply chain, which is what SHEIN and Temu and Quince [phrase unclear]. Totally. You are running an extremely powerful business. And that's part of the example. So, A, put less money into inventory in this model, like Gymshark. Two, could you negotiate better terms in this type of model? And the answer is yes.

So, Portless has, and we'll learn soon, we have a supply chain service company, right? Logistics is one aspect, right? A carrier is a piece of logistics, is a piece of supply chain. But we help brands negotiate better terms. And the mission is, the Portless mission is, we want every brand running at negative cash conversion cycles. And that is hard to do on your own if you're not big. But if you have a different model, you're shipping differently, your goods are staying in China, there's different conversations you could have with your vendors that will literally change the game the way you run your business.

So, yeah, mission is to put the cash advance businesses out of business. And let you leverage supply chain sophistication to run a healthier business. Yeah, one of the brands that I think is kind of unsuspecting, but really did this playbook well with you guys is Hello Nancy. Could you talk a little bit about kind of their success? Yeah. [name unclear] and her brother are literally one of the most impressive operators I have ever met. And we met them three years ago, and they didn't have a brand.

Like actually today, we don't take businesses under a million. But back then, we were, I guess, a little more open. And we just met them like, these people are monsters, like amazing operators. And what happens when you take an amazing operator, a great product, and know how to do marketing, and you leverage the Portless model, they went from zero to now north of 100 million within three years. And you cannot do that. Like physics will not allow you to do that unless you had a billion in the bank kind of within three years ago.

Most of the third, fourth, you know, half of that just gets tied up. Tied up in inventory. So what they were doing is they were doing small-batch production, selling it, taking the cash, reproduction. And they just scaled around the world day one, and they just nailed it. And to me, that is like an early indicator of what I think the next thousand merchants will look like, the next thousand brands will look like. If you are a strong operator, and I talk about this often, you follow Shopify's stock, it's going up, right?

Their stock is crushing. What does that mean? Consumers love brands. Consumers love buying from brands. Sure, Amazon exists, but Amazon is not a storyteller. Amazon is not a brand. So brands are only getting stronger. So when there is demand, there'll be supply. But in today's supply, it is hard. It is hard to be a merchant. You've got to find tons of cash. You've got to lay it out. You've got to wait so long. But what if the future of e-commerce is actually closer to SaaS business, where you can learn how to have most of your money being paid from customers in advance, or much less money put into inventory?

Now you're running an incredible business. And now you can be the next Hello Nancy. You can run to $100 million, $200 million of revenue in a faster time frame than anyone has ever seen in e-commerce before. So yeah, that is one example. I think they're one of the most impressive operators. We are proud to be their partner. And there's hundreds of other brands that are like them or becoming like them in this new era of e-commerce.

Yeah. Another thing that comes to mind too is, you know, when you run out of product, or like in your case of Browze, where you had, you know, products being sold, and then boom, you're out of stock. Like what happens to all the ads that you're running, all the marketing you're pushing, you know, influencer campaigns, you might have email campaigns going out. All that kind of becomes a waste if people then go to your PDP and there's nothing to buy. 100%. And I talk about this.

We work a lot with like fractional CFOs to, you know, give guidance to their merchants. You know, if anyone's familiar with a P&L, you'd be like, okay, what were my sales? What was my cost? What was my profit? What you don't see on a P&L is out of stock. It's not on your P&L. Yeah. It's missing revenue. But what happens when you're out of stock, winners, your best performing products is the driver of your business. And if you're out of stock, you're losing that revenue. And we've seen on average, once you go to the Portless model, your revenue will simply increase by 30% by being more agile and how fast you can restock.

And that is revenue. That is contribution margin. And you're doing all the same work, right? You did all the design planning. You did all the marketing testing and the branding. So out of stock is you're losing revenue. Your competitors will get that click instead of you. And to your side, there's repercussions across the board. First of all, your factory gets less POs from you, so you're less important. Your ads now have to be paused. And I spent years in meta marketing when I ran the Browze business.

You pause a high performance ad. Like, good luck reengaging that. And like, you know, agency marketing. Like, when you have momentum, you do not want to stop momentum. [phrase unclear] be out of stock. That sucks. Yeah, it's funny you say that. Like, I remember even, you know, 2017, early days of direct to consumer, I remember our CFO would be like, okay, well, you know, how many page views are you going to forecast on this date? How much ad spend are you going to forecast on this date?

I'm like, what are you talking about? It's all based on momentum. You know, if we have good momentum, we're spending as much as we possibly can. We might wake up and spend, you know, $200,000 in a day when we normally spend $70,000 just because the momentum's there. Like, you kind of have to follow it. And if your ops aren't there to, you know, be able to keep up with that, then, you know, what good is it to have, like, killer marketers on the team as well?

And by the way, that is the difference of, like, old world versus new world. So the old world, if you talk to, like, either a CFO or someone planning your inventory, you're like, okay, you have a retail store. We kind of know on average how many people come because only certain people live in your vicinity. So you can make some pretty informed bets and decisions. But when we talk to some of the software providers in helping you predict inventory, I'm like, it is almost impossible. In the modern world where you could scale in meta, and meta has billions of people on their network, you want to scale that as hard as you can if your ad is working.

But you cannot predict that. Good luck predicting in your inventory that you're going to need instead of 1,000 units, 25,000 units. Forget it. Yeah, exactly. That means you're pausing your ad. You lost the revenue. You're literally got to wait till next Black Friday. Also, like, they would just look at you and be like, you're crazy to think that you're going to go 5,000 to 25,000, you know? But it exists, right? Totally. On the marketing side, you have a good CAC. You have a good CPM. Your ad is working.

Nothing is stopping you. By the way, add multiple countries around that. Add another [amount unclear]. But if your supply chain cannot match the same agility as your digital distribution, you're going to get stuck all the time. So on the back end, you know, you're still running supply chain like your retail store. On the front end, you're running a digital, true digital business. So build a true direct-to-consumer. When you say direct-to-consumer, it is not true today. Direct is factory direct because that's where you have the agility.

That's where you're taking away a lot of the cost. You're opening up cash flow. In the traditional direct-to-supply chain, you're basically a retail store that happens to store it in a warehouse. So yeah, if you match the modern digital distribution, the modern way of selling, which is digital marketing, which could scale in the most agile ways, and you match that to an agile supply chain, you could scale like crazy. You could get to 100 million within a couple years if you have two sides of agility.

Now, it's still atoms. You're still moving production, but you could take away 90% of the delays and the inefficiencies when you look at models like this. Well, also, it's like if you can still get the same product to the customer with the same quality much faster, not have to deal with sea freight and any delays that come with sea freight and, you know, all the customs, like why wouldn't you? A hundred percent. And then add the global aspect to that. And this to me, you know what we have on our list, but like brands used to say like, hey, when is right to go global?

Again, if you're using a shipping container, you're bringing all your goods to let's say a Vegas facility or Atlanta facility, and then you're selling the world, you're selling around the US. And it's like, huh, when should I ship to the UK? When should I ship to Australia? Well, right now I'll use Global-e, meaning I will import in traditional. Again, we're partners with Global-e and we do outbound China with them. So we're big fans. But if you use outbound USA, you're paying import tax. By the way, you pay import tax in advance.

In traditional model, you bring in a million dollars of t-shirts, you're paying 350 grand to the CBP. You haven't sold the t-shirt yet. In the modern supply chain model, you're not paying any import tax until you sell it. And only once you sell it across the border, then you pay the import tax. So you have tax deferment. But in the traditional model, you're paying the import tax, you're storing it locally, you bring it halfway across the world, and then you're shipping it back by DHL Express.

That'll cost you 30 bucks to the UK. Like, that's dumb. Or you're going to open up a 3PL in a new market and like, good luck. What if it doesn't work? Now you got to figure out what's with your dead inventory. So like, again, the modern way of running supply chain will be the difference of you winning against your competitors. And if you don't do it, or you don't get educated on it, like you said with Gymshark, someone else will. And Gymshark's advantage of negative cash flow cycles is how they won the market.

And if their competitor would have done it as well, maybe there would be equal size competitors to them in their space that are equally as new as them. And no one did. So yeah, getting educated, understanding this market, you like owe it to yourself if you want to compete over the next five years. Yeah, I think the key there reminds me of the old Mark Cuban quote, which is like, you know, somebody is already working 24 hours a day harder than you to try to out-compete you, something like that.

A hundred percent. And it's kind of the same thing here, which is like, look, if you're not going to do it, your competitor is going to do it.

So absolutely. Yeah, I guess what, what does that kind of going more into, like, you know, is a brand even ready for this? What are some parameters you see to qualify a brand to be ready for international growth? And actually, maybe before we get into that, one thing I wanted to ask was also like, if you're a brand that only sells in the US, like, is this type of a solution still relevant and helpful? A hundred percent. Most of our business actually is helping brands service the core market.

Because like, think about it. We have now on a P50, a five-day delivery. Our average is a five-day delivery. We are very similar to almost any average 3PL United States. So your customer, like the way you said it, there is zero downside to the merchant experience, to the customer experience. They get their items delivered on average five days, local label, local tracking number. It could be non-branded poly or branded poly or box, whatever, you know, will help brands, you know, make that decision if they want it.

So a customer gets no difference on their end. And then you as a merchant, you could go from a million dollars out the door day one for your inventory, being stuck for six months, to a hundred grand, right? Yeah, it means $900,000 in this example to run your business, do marketing, hire people, expand your product collection. That is game-changing. And not only are you putting less money in, you're not waiting three months to sell your first good. Once it's done production, 24, 48 hours later, you're selling it.

You're getting cash out faster. It was literally one to two days from the, you know, the outside of the factory. Yeah. To being in a 3PL ready to ship. Literally, your Guangzhou, it's three hours. Your Shenzhen, it's an hour. Your North, you know, your Shanghai, you're talking about one day. So, you know, Northwest, you're talking about two days. Northwest China. So like, you're talking about 48 hours, you're done production. What you would have now have to wait for like the port to pick up your truck.

Portless is picking up your goods. It's in our facility, 24, 48 hours. Zero kind of complexity, zero headache. You're not working with your freight forward and customs broker. We're dealing with all of that. Yeah. No containers waiting at customs. No, no backlog at ports that move very slowly. That goes away. Wow. And I guess like from a product standpoint, are there products that are better fits than others for this type of a model? Yeah, absolutely. So, so we say we're not made for everyone. If you run, let's say a home, a kitchen appliance business, you're selling refrigerators, not gonna be good for you.

Why? Because end of the day, Portless uses, you know, dozens of freight forwarders and air cargo providers to ship goods around the world. You know, 81 countries, many different lines, your battery product, a cosmetic product, a regular product. So we, again, we, we build that complexity in-house and we simplify it for the merchants. But in order for that to work, it's gotta be under, I would say, under three pounds, it's apple to apple shipping rate. So if you're currently paying in, in the U.S., six bucks an order, by us, it will be around six bucks an order, call it around a pound.

Under, under a pound, it gets even cheaper. Again, it starts around five bucks. But once you're above three to five pounds, then the efficiency goes down, the cost efficiency, of course, cashflow is great. But then your P&L will get more impacted. You'll pay more for shipping. But if you're in the apparel space, you're in the accessory space, electronic space, cosmetic space, jewelry space, like any of those, you know, types of accessories, toy space, this is probably up your alley. I would say like 60% e-commerce is this should crush if you look into it and get a bit of understanding of it.

Amazing. And then for, oh, sorry, go ahead. I was going to say, tying into your original question, which is, who is the right profile to go global? So the first I would answer, like the first thing, first question is, really focus on core market. How do you massively change the way you run your supply chain, customers have the same experience and you have major cashflow, [phrase unclear]. We have brands in the US and we first run their US logistics. We have brands in Australia, run their Australian brands, UK, Canada, Europe, et cetera.

But now we say is on average, I'll give you a stat. On average, within seven months, majority of the brands we onboard usually came in with one country they're doing business in and they are in nine countries seven months later. And since we've helped brands go global, not a single brand has pulled back a country. And on average, again, it ranges from higher to lower. We see brands in that a 30 to 40% of additional revenue are from outside of their core market. So if you used to have a hundred, let's call it a $10 million business in the United States, within nine months, you usually have $14 million and that 4 million is very often a mix of either scaling quicker or in net new markets.

And that's why you are diversified. That is a great diversification and a great low hanging fruit expansion to your business. And then when is the right time? I would say like, if you're under a million, you're under even two to 3 million, you're really just getting your business rocking and rolling. And that's why for Portless specifically, like under a million GMV, it's not the right fit. We think we would say you're a little early, but when you're at a million and a kind of million plus, going global, it should be almost a default because you don't have to do anything new in the Portless model or in the modern supply chain model.

So honestly, where it used to be wait to 50 million was like the guidance. I think that's the old world. The new entrepreneurs we work with, it's really day one. Again, I don't mean day one under a million. I mean, you're above a million. It's like basically post-product market fit. You've got your product supply chain in place. Exactly. You know, you've got this set up. It's like you might as well turn it on and test it. Your CPMs are going to be much lower in international markets, especially if you've got native speaking English markets like the UK or Australia or Canada.

What are some of the other good places that brands usually start? You know, they can kind of do similar marketing maybe to what they've done, maybe a little bit of localization, but then also, you know, they're speaking English, so they're able to kind of speak that same way. Absolutely. So the classic is, and to your point, it is so easy. Like you're on Facebook today. It used to be you have to translate your ads. AI's got that. It's done. It's a solved problem. Yeah. It's built in ads manager.

It's built in, right? Tax complexity. I don't want to create tax IDs. You don't need to create tax IDs, right? You know, we work at all the major ones from OpenBorder to Global-e to Numeral to Reach. These are great providers. They will solve your taxes. You don't need to think about it. Logistics. Well, I don't want to set up goods around the world. You don't need to. You have one hub. You're servicing 80 countries. Every customer thinks it's a local experience. Royal Mail, Australia Post, Canada Post.

So, and then returns. Well, Portless has 19 return facilities around the world. We can inbound a few. We can inspect it for you. We're rolling out [logistics term unclear]. You could ship it to the next customer in those markets. So really, that's cool. Yeah, that honestly was something we've been working for a very long time. And it's part of our overall Portless services. And in these services, Portless doesn't make money. We're just here to build a modern, like you need the rails to run a global business.

Yeah. Portless is building the rails in any area that is necessary. So yeah, it was a problem. Like, hey, how do you want me to ship to UK if I can't have returns? No, we got you. You have returns. We'll inspect it. We'll send you pictures. We'll get you guys. You'll give us guidance of what's good and what's bad. Do you want to liquidate it? Do you want to donate it? But now that the rails exist on just a few partners, like we say, go global right away.

But if you want it really easy, sure. Start with the UK. Start with Australia. Start with Canada. Nothing changes. You go into Shopify Markets. You turn on local currency. You go into meta. You add the countries. You set up with us. Call it within two to four weeks. You're done the full setup. You're now added incredible markets. And remember today, not every brand is doing this. So all of a sudden, an Australian brand, an Australian consumer is discovering a new brand. You got a little hanging fruit.

It's a great quality product. Now, I would say it doesn't mean you should start manufacturing your goods with the Australian consumer mind yet. I think you can still do it in your core market. You're manufacturing for the US market. It's in English. You have English packaging. That's great. And what you do is you start expanding it and that will convert in the English language. It's nothing. It'll convert right away. And then beyond that, you know, customers start doing Europe and then customers start doing APAC. And again, consumers are everywhere.

CPMs are cheap. As long as your product is great, buyers will buy it. And these are brands they could not have bought in from you. Call it three months ago or prior to launching.

I think that's cool for so many reasons. One, especially being like if you're the opposite, right? If you're a brand that is outside the U.S., you can actually use Now Portless to get into the U.S. and attack, you know, maybe arguably one of the biggest e-commerce markets in the world. That's pretty cool. The peer-to-peer returns is really cool. I thought that was only like a concept. I didn't know that that's actually possible. But how do you scale other brand ops around that? So you think about customer service as probably the biggest one that I can think of.

But, you know, privacy policies, terms of service, like the legal aspect, how does that all scale around as well? Yeah, and again, most of these are solved problems today. So a lot of the legal aspects the compliance partner takes care of it. Language translation, et cetera. Even for a while, Global-e had localized customer support. But you really don't need it. You go on X today, you are reading amazing translated messages from people around the world. You didn't even notice they wrote it in Spanish and you're responding in English, right?

They had no idea. So CS, customer support, there's native, there's built-in solutions for translation. Not much, that's the point. Not much changes. Again, returns, we have that for you. Tax compliance, with one introduction, you have it live within seven to 10 days. That's it. And now you have a global audience and a cheaper marketing. And that's the mission of the modern brand. The old brands are, it was all about prior to 2022, it was all about top line. That theory is dead. You got to run a profitable business.

And there's no way running a good profitable business than expanding globally, cheaper markets, lower CAC, and running the best cash flow and supply chain model you can. Agreed. What does a small test look like for, you know, if a brand wants to go into a new country and, you know, it's like, okay, do we have to build out a full team to go attack a new country? Is there a small version of a test we can run? You know, like the way you're talking about it, it sounds like I could take 10 grand and go test a new market.

So, so I would say I put the countries in two buckets and I think you framed it well before, which is, if you want to test the English speaking countries, it's like a no brainer. It should be default. You go live, default five countries. Now, what happens when you want to test Europe? Well, now you have many different languages. You got France, you got all, even like France and, and different parts of Europe. As an American and I'm, as a Canadian, me as a Canadian, you think the checkout is like, oh, HST or sales tax is a separate line item.

Well, Germany doesn't work that way and Europe doesn't work that way. You actually need an all in VAT experience. But, in the early days, you're probably over optimizing. So, to go global in non-English speaking countries, add a couple countries, add all of Europe, see where you're getting demand signaling. You will still get conversion. Maybe not the best conversion rate that you would want, but you'll still get conversion rates. And then you're like, holy shit, Spain is crushing. We have a brand, actually, sorry, crushing in Italy.

It's an electronics product. Italy is their number one market. They are Australian founders. Like, why is Italy their number one? Right? But it is, right? And they have a really cool camera product. And so, once you see that, you're like, okay, let's go a little deeper. Hey, you know, OpenBorder. How should I [phrase unclear] my VAT? Hey, did I get local MOR services? So, if anyone doesn't know, MOR is called Merchant of Record. If you're a US brand incorporated in America and you sell into Italy, let's say, Stripe is using a, an American Merchant of Record ID and processing a payment in Italy.

And you get charged for it, like 1.5%, which is ridiculous, which is why Merchant of Record services exist. But what people don't realize, and I was talking to our partners at Global-e, is one of the main reasons, besides for saving money with Merchant of Record services, decline rates. If you're an American processing entity and you're getting a credit card from Italy, you're going to lose 13% to 14% of your transactions because the credit card, like, who is this American processing in Italy? Probably fraud. No, it's not fraud.

You're now a global business. So when you go deeper, here's another example. Again, these compliance partners have this services. You could activate local entities to do the processing for you, and then they deposit the money in your accounts. But that's just other ways of optimization. So English markets, it's a no-brainer, go live. Other English, non-English speaking countries,

test the market, do a small test, test Europe, see where you get bites, and then you double down on those markets. Amazing. Now, one thing that that I feel like I caught on to super early on with Portless was the idea of using the Portless's logistics to handle any kind of replenishment subscription orders because, you know, if you know that it takes five days to go from factory to consumer, and I know that my replacement filter comes on the 27th, then you can ship it out and, you know, in the cheapest way possible, get it to there on the day of exactly.

What are some other use cases that brands are using? Obviously, the cash conversion advantages, but like, what are other tactical things brands are able to do? Yeah, so first I'll frame that majority of our businesses are the typical e-commerce. They give us the inventory, we're warehousing, we store it, we pick and pack and we ship it. However, we saw, I would say, three interesting buckets of unique areas that have exploded over the last 12 to 18 months. One bucket, like you said, subscription, you know exactly what you're getting.

It is so easy to replenish and run a subscription business in our model. But I'll say the two ones that I kind of was like blown away by, the other two ones is pre-sell. If you're a business and back to negative cash conversion cycle, there is no better business in the world by pre-selling a new idea collection. And we do this, honestly, with some of the biggest enterprises in the world. We have a couple big enterprise contracts and there's no better business where you're like, hey, here's a new sweatshirt, a new bathing suit.

It's limited collection. It's around for seven days. It's one and done. So all of a sudden there is the kind of supreme experience where you only get a certain amount of this will be live. Maybe it's a drop with a partner, with a design partner. But what you do is you sell it pre-sell. And then once you get your orders, you close it and then you put into production, factory, let's say, depending on the item, let's say it's done in 10 days. And once it's done production, it's in the customer's hand six days later.

That means theoretically within a two-week cycle, you just did a pre-sell with a limited collection drop, zero risk, producing exactly what's needed once it's done. And then the customers get it two weeks later, meaning that when you authorize their card, you can actually charge it two to three weeks after this concept. So when brands started doing that, it was like, hey, let's test this concept. Now it's like a meaningful percent of their revenue, like 20% of their business is now this drop concept because if you could reduce how long it takes from idea to production to customers' hands, now that's an incredible drop experience.

So that was an evolving space we saw absolutely blow up. There is a similar version of that that is now also crushing is in the apparel space, there's a concept of made-to-order. Now made-to-order is very different for every apparel space. But let's say if you're in the dress business and you have a base dress with your factory and you say, you give the merchant the capability like, hey, you could pick your material, you could pick what pockets you want, you could pick design. And then, and what happens is they create these orders in the factories because they're working with a base design, they make little edits.

And by the way, you're charging more for this. And from a consumer perspective, like, holy crap, I just got a custom-made or a made-to-order dress or a made-to-order sweater. And now, traditionally, if you would have done that, you would produce it, you'd put on a boat, and it just like, or you put it in a plane and then you inject it to Vegas and then zone one through zone eight. We're like, no, factory's done production, we do factory pickups every day, it's in your customer's hands six days later, right?

So now, there's this explosion of brands that we start meeting and start testing and scaling it of these made-to-order concepts, which would be almost impossible to do without this model. So I think those are, you know, outside of our, you know, more typical brand that runs normal inventory stores at Picks and Packs, which is still majority of our business, the subscription, the pre-sell and made-to-order is just fascinating business evolutions that are scaling that just happens to be a great fit for this model. Yeah, you know, a few weeks ago, I was at an AI conference and one of the CEOs that was presenting talked about how he's now able to take his kind of core product and launch tons, hundreds of new designs every month on his site and then he just tests and sees what has a high click-through rate, what are the ones people are actually buying and within a week, he can decide which ones are now, you know, hitting the production and then being shipped out with this factory to consumer model and, you know, at the time, I saw that and I was like, okay, that's cool, you can do that with AI, but then how do you actually fulfill that?

But this seems like this is kind of the way to do it, the fulfillment piece. Absolutely. And I would say there's obviously different levels of extreme. Of course, SHEIN is famous for like 10,000 new designs a day. Now there's like a level of extreme and I wouldn't recommend to anybody, but on the other hand, your business, the difference between going from a $20 million brand to a $100 million brand is shots on goal. You've got to take it. You've got to come up with new ideas and new designs, new evolutions, but you've got to do it in a very cost-efficient and timely manner.

And that's it. That's that concept. You've got to take your shots on goal. You're not going to win every time, but the winners drive $10 million line items or business. Yeah. And yeah, I, you know,

again, sophisticated brands, the modern brands, the new kind of generation brands, that's what they're doing. Yeah. Now, I feel like we can't talk about factory to consumer without also mentioning data and privacy. You know, there was that super famous case, I think back in 2017 when I was first like really getting my teeth in e-commerce about Allbirds and Amazon when Allbirds decided to sell on Amazon and then Amazon comes out with a replicate product. What kind of information does the fulfillment partner in this case see?

Like, what do you, what do you guys see and how can a brand protect themselves? Absolutely. So A, from a data privacy perspective, like every contract we have, we say any data we have is only to use for fulfillment or the services of your product. And Portless specifically, like I ran a brand for 10 years, I shut down that brand because that brand had, you know, we were in kitchen, we were at home, we were originally, eventually we were expanding into like apparel, but intentionally I'm like, I want zero conflict of interest.

Browze got shut down, that business does not operate anymore and the only data we use is to deliver your goods to you. And as we roll out data analysis for our customers, we're using your data or outside data to kind of inform you like, hey, your product is cool, you might want to consider selling in Germany because that's a massive demand in Germany. So the only way we use the data is to fulfill your goods, service you as your customer and it doesn't leave kind of the [phrase unclear] of your merchant, of your brand itself.

In that case, like, are there risks if you're using a shipping or logistics partner internationally that is also a consumer brand itself? Yeah, I think there, I mean, I don't want to call it names, but like, there are logistics businesses that also own a brand and many of these brands depend on demand signaling in order to run their core, their core consumer business. So I would say there are brands that exist, logistics businesses that exist that also own brands. I'd be like, it's up to you to make that decision.

Like, if they are selling in your space, they will have your data. You cannot not have your data. You need [code type unclear], you need product information, you need COGS data, right? They'll know your COGS. You need to know, actually, as the China government is getting stricter, you actually have to know factory and MIDs, manufacturer IDs. You kind of need to know everything. So if a brand, if a logistics business also has a brand, and I'm not saying they'll do this on purpose, but kind of like Amazon with Allbirds or Amazon with anyone, they will naturally know your data and probably make decisions on that data.

And again, the intent is not, I don't think, a bad intent. It's just a fact. When you have a brand and you have logistics, there's just, as a merchant, you got to make that call, if that makes sense for you. Yeah. Yeah, no, it makes total sense. I think, too, the biggest thing you said is also like, you know, that might just be a carrier to take you from A to B, but Portless also kind of has all these things, you know, the 19 or 20 return facilities around the world, the factory pickup, the pick and pack abilities, the ability to do the made to order.

Yeah. So it's kind of a, I guess, really also just apples to oranges here. Exactly. And we're a fan. Again, there's lots of logistics providers out there. I think, you know, Quince is known to have logistics and I think they're great. They have great delivery times. I'm a huge fan, Sid, of Olivia, of Roman. I think great logistics. I mean, we use dozens of carrier partners. For a while, we were using QLS. One of our core internal lines are essentially the same delivery speed, so we don't use it today.

But we work with probably 24 different logistics carriers. One of them is like a QLS equivalent. But for us, and we're fans, like we're never, we're big fans of what they do and how fast they deliver. But on our end, we look at the opportunity maybe more holistic. Logistics is one aspect of this business. To do global business, you need global returns. To do this without a headache, you want a factory pickup. If you need, your products have quality control, with a click of a button, you can put quality control coming to our facilities and inspecting it.

You want us to negotiate on behalf of your factory, we have a full service team that will do that for you. We don't charge for it. It's part of our kind of ecosystem. We also have global nodes. So we have facilities in the US because eventually brand gets big, they need to wholesale. They need to express. We have UK and Europe opening up on January 1st. End of H2, H1, we'll have Australia and Canada. So our mission is in order to build a modern brand, you need a modern global supply chain.

And that's like a living ecosystem. And lots of things are needed. Logistics is one. And I think there's a lot of [word unclear] out there you know, we deliver very fast, right? We have a, our average is five days and it's only getting faster. But yeah, our mission is we want every single brand to be Gymshark. We want every single brand to run a modern supply chain with negative cash conversion cycles, selling globally, healthy cash flow and a healthy model. That's awesome. Yeah, I love that.

Okay, we got a few minutes left here. I want to open it up to anybody who's got questions in the audience. And while you guys type that, quick question. So you brought up, you know, we talked a lot about cash conversion cycle and just cash flow early on. What is it like if I'm a brand who's now holding inventory in China versus, you know, shipping it out to the US and I'm trying to negotiate better payment terms, what does that mean for me when I'm negotiating with a factory?

Do it, are they open to more favorable terms if you're holding your stuff in China versus shipping it all out? So this is a very exciting evolving space for me. And again, it's part of like my passion and my mission. So today, a factory does not look at a merchant differently if it's cross-border, local warehouse cross-border logistics versus bulk cross-border. And we're, the first injection of efficient cash flow will just come by being more agile in your inventory. So you'll go from a million dollar stock to probably a hundred grand or 200 grand in inventory at a time.

But we have a services team and one of the conversations we're having is, our brands, the merchants we service, they're not typical. In a typical supply chain, your goods go on a boat and it leaves China. So if a factory wants to get that back from you, good luck. Like they're not coming to Vegas to collect our goods. But when Portless is holding the inventory in China, that leaves a different conversation like, hey, these goods aren't leaving China. If anything goes wrong, pull it back. We can help you write a localized contract for that to negotiate maybe an extra 30 days, an extra 60 days.

And there's, and there's other, there's a whole actually project at Portless literally focused on how can we work with our, with our merchants to help them and guide them to negotiate better terms with their factories. So I'll say today, there's a little bit of blinders currently with factories like, oh, everyone's the same. And we're seeing early indicators of one second, not every merchant's the same. These goods aren't leaving China. They're buying less at a time. Our risk is lower. They're doing more small batches, which leads to a very different underwriting risk.

And I think we're excited where we will take that in 27. So again, if, you know, if anyone wants a supply chain audit, happy to kind of give you a vision of where we're going with that.

Yeah, and we'll send out a link after, which has all of that. One question I see here. So, you know, the next 60 days are very crucial. We have Chinese New Year. We've got this January cash crunch that's approaching, you know, where nobody's now buying, but all your bills for the year are right there. You know, last year, going into Q1, it was a big stir around tariffs. And, you know, so many brands cut a bunch of costs. How should brands be thinking about this next two to three month period as they get ready for 2027?

Yeah, and I think for people that run traditional supply chain, like, this is probably the most exciting and hardest time in the entire year. So you have November, December, which will do a massive part of people's revenue. And because of that, brands, if you're not running a modern supply chain model, you're putting a ton of money into inventory. You're making a huge bet and it's coming in and your sales usually start scaling early November. So that means your money is tied up and you don't even have cash to make new POs come for 2027.

But also, if you look at Chinese New Year, Chinese New Year, I think is roughly February 6th. 30 days prior to Chinese New Year, factory shut down. Portless doesn't shut down at all. Portless operates right through Chinese New Year. Airlines operate through Chinese New Year. But factories, the people that make your goods, they're going to shut down around January 6th, which means you have now a very tight time frame to get money out of your investments and then create your POs to catch it before Chinese New Year because you need to be stacked.

You have 30 days shut down, there's ramp up period once they're back online, kind of Chinese New Year about 10 days, then they have ramp up period. This is the hardest part from a cash perspective. Now, again, fortunate for the hundreds of brands we service, they never tied up that much cash to begin with and they can make POs and restock really quickly. But if you're in the traditional supply chain, this is your toughest time. But at the same time, you always have to think of next year.

So you've got to think of your factories and when are they closing and creating POs. And yeah, and for our brands, like for the brands we [phrase unclear], like you've got to get creative. Either you're in the modern supply chain, you're doing well. If you're not, you've got to look at lines of credit. There are some really interesting new SaaS solutions I saw. One of them is like, I think it's called [service name unclear], where they can help you average your PO over time. So let's say if you have $100,000 PO, maybe you're paying 20k over five months.

I mean, you've got to get creative, really. Negotiate in terms of your factories, maybe buy the raw materials so they can produce it quicker. But you don't have to pay everything up front. Really go deep in there to unlock cash. But yeah, this is going to be a very tough three months for people in traditional supply chain. Yeah,

I couldn't agree more. Ending more on a positive note here, what is one thing you're very excited for looking forward to going into next year, either because of the evolution of Portless, or, you know, there's some new laws, international policy coming up that you're excited to take advantage of with customers? Yeah, I would think from the international policy side, I mean, the de minimis times are gone. U.S. has gone a long time ago. But I think it's good because brands are no longer saying like, oh, I'm going to save two bucks on de minimis.

Rather, I'm going to run a better supply chain model. So from a Portless perspective, we see very good future with President Xi and President Trump. I think Trump realized that China and U.S. are very interconnected. I mean, we have operations in Vietnam, but China continues to be the best place and most [word unclear] place and the highest quality place to produce. I think for us, that's on the supply side. On the go-to-market side, Portless now is going to have by, it already has in over the next six months, we'll have local nodes in all the major countries around the world.

So it used to be like a larger brand that had inventory sitting in the U.S. Like, hey, I want to use you guys. What do I do with my inventory? No problem. Come take a tour of our local facilities. You could transition your local inventory to those facilities so you have no downtime on your local inventory. New inventory come to us. And now for brands in the 50 to 250 range, you're running local logistics for Express or whatever you want. Then you have Portless, China being, you know, out of stock, net new collections and global markets.

And I think with Global Return Solution. So for me, 2027 is, we already have hundreds of brands, but I think we're very excited about brands, bigger brands with more sophisticated supply chain models and Portless being in a really unique place to service those brands. That's awesome. Yeah, even just as a, somebody close to the business, that gets me pretty excited because, you know, it's, it's been such a ride so far and now, now you're basically saddling up to play with the big dogs. Yeah. And Nik, you saw it way early, like, and I met you.

Oh yeah. And you like, it immediately and then years later now we have hundreds and hundreds of brands, but yeah. And you, you saw the future there when we met and people that we met back then. Yeah, likewise, man. Likewise. Cool. Izzy, where can people reach out to you? Uh, either reach out to you or somebody on your team. Where can they get that free supply chain audit? Obviously we'll have a link here in the show notes or, uh, as an email going out after, but, uh, yeah, any quick places to reach out, get questions answered.

There'll be a great place for specifically the, the supply chain audits in the chat. Now we'll send in the email. I would say in general, Portless.com has tons of content, case studies, videos, tours of our facility, um, calculators. It is tons of content on Portless.com. And then you can find me on LinkedIn and X, you know, I answer every DM. Um, I'm constantly posting, posting content, not about Portless, but overall the supply chain world and how there's a new modern supply chain evolving across the world.

Amazing. Izzy, thank you so much for spending and sharing that knowledge with us. This was like a value packed, uh, show today. This was awesome. Well, thank you for having me. And I'm a supply chain, I'm a proud supply chain nerd. So when it comes to supply chain, I go crazy. Amazing. Thank you, Izzy.