Juan, welcome to the 2X eCommerce podcast. 

Thank you for having me.

I have to say that I’m pretty fascinated with what you’re doing at Grip. Given the fact that you’re a special logistics company that work with perishable products, we’re going to talk a lot about it. I want to get to the precursor to where you are now to Grip. What is the backstory? 

My personal back story which helps explain what we’ve built at Grip and what we’re doing now is I joined ButcherBox, a company that does frozen meat online, as part of the very early team. At ButcherBox, at first, it was all about marketing and branding. How could we get our product out there? How could we get people to understand that they can buy a box of frozen meat and get it delivered to their doorstep? That was the first few years of the company.

After that, we realized, “We’re selling thousands of these and we now have to deliver them all across the country.” As a bootstrap company, there’s almost no room for error when you’re operating at that scale and delivering boxes to your customers. Logistics, internally, quickly became one of the biggest focus as a company and then also the technology that paired that logistics for delivering boxes to people. ButcherBox was scaled from 0 to about $600 million in yearly revenue in the first six years as a company.

While doing that, we quickly realized that this logistics thing for perishable products in the mail, direct-to-consumer eCommerce, is not there where it needs to be. The market has exponentially grown and people now understand that they can buy frozen or perishable products in the mail but the infrastructure is not developed for that in the backend.

We started to see that, at ButcherBox, we were spending millions of dollars to keep up with technology internally. We’re still using some Excel for some of the day-to-day job and work. I started advising other companies in the space and I saw that everyone had the same problems. They would say, “I am wasting way too many efforts and resources in trying to figure out the logistics for my direct-to-consumer product. I could just be using those resources in other better-spent areas of the company, which could be the marketing and product development.”

When we saw that, it was clear that, with our experience at ButcherBox, it makes so much sense for us to build this solution and build this infrastructure to allow other brands and other products to focus on their branding and focus on their product development and we just send all the back-end of delivering products to people’s doorsteps.

You were the head of logistics at ButcherBox, a $600 million company for close to six years. You oversaw that growth from start to finish. You’re employee number. How did you get into logistics? 

I would say that only about 5% to 10% of people that end up in logistics think that they’re going to end up in logistics and get ready for ending up in logistics or go to school for something like that. The people that end up in logistics is usually people that like to solve problems and relentlessly improve programs. In logistics, you’re just never done.

There’s always something else that you can do to either improve service or reduce costs so that you can have positive impacts to the bottom line of the company. That just happens to be my personal idea of, “Let’s improve on stuff and keep working and understanding that things are just never perfect.” From that and seeing so much area of improvement at ButcherBox, I had also started another company before that in South America when we were trying to be the Amazon of South America when I was pretty young and ambitious.

I had some experience in the industry when we had to set up all the logistics infrastructure for that but I had moved away from it for the first year or so at ButcherBox when I was fully focused on getting people to understand that they can buy boxes or frozen meat online. It’s much more focused on the marketing and the messaging for the company. When logistics became a massive pain point for us, that’s when I started to solve some of those problems and ended up running the department there.

I’m super excited to learn more about Grip and the perishable logistics space. You can’t not have been six years in ButcherBox and we don’t talk about ButcherBox. Tell me the story. It’s incredible. I know it was like a Blue Ocean strategy first-to-market but they executed quite well, 0 to $600 million in six years or less. It’s an incredible story. Do you want to whittle it down into how you think they did it so it could inspire readers?

One of the major factors that are being left out here is that the company was bootstrapped.

It was bootstrapped to $600 million. 

That’s almost unheard of.

What do you think was the unfair advantage?

The team that we put together was extremely invested into the company with diverse backgrounds and problem solvers, “No BS. Let’s just get to work and advance this thing together.” The timing of it also was very good because people were starting to understand that the type of meat that you eat is very important. Also, people were starting to understand that they can buy products frozen or refrigerated and get them delivered to their houses. Pairing those things at the same time and then pair that with a ambitious and hardworking team, that’s a recipe for success for us early on.

A lot of work, of course, since day one. There’s a lot of different things that we were trying but. For example, with our marketing strategy, we saw that using affiliates and influencers that were heavy on the clean eating space and that were heavy on the food ecosystem. We identify these people and we partner with them on a win-win scenario where we help them sell ButcherBox and we would give them a commission and we will pay them based on how many boxes they were selling. A lot of them end up making $100,000-plus from selling ButcherBoxes as well.

Defining a clear marketing strategy and doubling down on what was working for us helped us through the first few years. The fact that we were bootstrapped also played a good role for us because that made us find solutions and think outside the box when it comes to what were other people not doing that could be some type of arbitrage opportunity for us and find value in those arbitrage opportunities. That’s when we decided to double down on somewhat unconventional marketing methods at the time. At the time, for example, it’s paying commission to affiliates and having them almost be part of the team and help them sell ButcherBox.

I was speaking to someone, a 25-year veteran in eCommerce, and he was like, “Affiliate marketing today has transitioned to influencer marketing. It’s evolved to influencer marketing.” Some of those principles still hold true, it’s just the way we refer it in the medium.

I was going to expand on that. It’s completely different nowadays. Influencers and affiliates work with you on a commission basis but most of them are expecting to be paid up front nowadays and that’s just how the industry has evolved. It will be hard to have that as your main marketing or acquisition channel if you have a bootstrap company.

You need that capital for influencers to test because there’s no guarantee that the collaboration will go well. A lot of people are still quite brand-focused from an influencer marketing standpoint rather than performance. What were your thoughts on that? 

It works if you have a bunch of capital to test and spend for that. The brand play is a long tail where you’re not necessarily getting a bunch of sales or return on investment early on but you see more of that when you start creating a name for the brand and people start to recognize it. You need multiple touch points through the life cycle of a customer to convert them if the first time that you’re getting a hold of them is through a brand plate.

Given the fact that you founded and you’re operating Grip, what is the landscape now for perishable products? I remember over the pandemic, I used to buy one of these low-calorie ice creams. Nine months after the pandemic, they wrote us a letter saying that they had to do what they had to do over the pandemic but it was not making commercial sense. They then directed us to the grocery stores, they stock it, and they haven’t come back online.

I’m not sure if that has changed yet but the last time I checked, that was the situation. In your view, what is the landscape, particularly in North America? I’m speaking to a British company. In North America, what is the landscape now with a perishable good space and people who are looking to launch products in CPG that need a certain cooling level of temperature?

The situation that you described, we have definitely seen it happen here in the US market as well where there are companies that have outstanding product and they have an audience that is ready to buy from them. Because they’re not logistics or operations company, they can’t figure out the back half after they sell the product, which is, “How do I get it to my consumer’s doorstep in a way that it makes sense from an operational cost and an ROI standpoint?”

More often than not, they can’t figure it out by themselves because it’s a complex problem, especially when you’re shipping perishables in the mail. We’ve seen that happen with some brands. Other brands, as an example, when they work with someone with us, they understand now that they can decrease their cost by almost 50% of what they were doing before and also increase the probability of success when delivering the box. We’ve seen them churn it back on, which is super exciting for us because the consumer is there.

The consumer behavior has changed. If you talk years ago, it was not that normal to get something frozen delivered to your doorstep and that’s what happened to us when we were getting started up. We first have to convince people that it was completely fine to get something delivered to a doorstep. Nowadays, it’s common knowledge and almost everybody knows it. If you ask around, almost everybody has gotten something refrigerated or frozen delivered to the houses. That consumer behavior, the market is there for that.

Now, we just have to pair the logistics capabilities of all these brands to meet where the consumer is, which is a much simpler and easier problem to solve. It’s still complex but much simpler than trying to convince the customer that getting it is fine. We’ve seen the market evolve where it’s much easier now to launch the products but you need to have a nailed down logistics and operations strategy and infrastructure and also mostly with technology to be able to meet the consumer where they are.

What is the process? I could sell phone cases and the phone cases could be in a warehouse for years. You don’t want to do that you want, you want to have a high-sell through or inventory turnover. How many days’ worth of inventory let’s say a brand selling ice cream want to have with the providers such as yourselves with Grip?

I’m going to split that into two different subcategories, one of them is refrigerated and the other one is frozen. Refrigerated products have a much shorter shelf life than the frozen products. Usually, brands that are selling refrigerated products can only have products in inventory for a week or two weeks at times. It’s almost like storing lettuce. If you’re storing lettuce, you can’t have lettuce seat for a bunch of days there because it’s going to go bad and you’re going to have a lot of shrink. That’s going to impact how much capital you need to be allocated to inventory.

On the frozen side, it’s much simpler because you can keep a product extremely cold at -5- or -10-degrees Fahrenheit and you can keep it in inventory for months. A lot of the products and companies only keep them in inventory for a few weeks or a month but that’s because they want to be efficient with their capital and also because storing frozen products is expensive. Using freezer space is expensive. A lot of companies are rotating inventory very fast.

On an inventory management side for frozen products, it’s much simpler than refrigerated. Sometimes people think that handling refrigerated products are simpler because it doesn’t have to be as cold. The problem with refrigerated is that there’s a range of temperature where you need to be. You can’t be above 40 degrees and you can’t be under 32 degrees. You only have 6 to 8 degrees of where you can be. With frozen product, as long as you are at frozen temperatures, you can keep it for a bunch of weeks.

Where are you seeing the demand? Where are CPG brands gravitating towards? Refrigerated or frozen?

Frozen is more sustainable. Pairing demand and supply internally is much simpler. If you are growing a company and you’re running a bunch of tests and promotions, you don’t have a great hold of what the demand is going to look like for the next week or the next four weeks because you might be running a promotion and you don’t know how it’s going to perform.

For that reason, with frozen, you can just keep it and you don’t sell. That way, you’re going to sell it the week after. In the refrigerated side, you can’t really do that. You have to stock up on the product. If the promotion doesn’t work, you’re going to have a bunch of excess inventory, which is going to end up being shrink. From a capital standpoint, the frozen is much more efficient. You see both. The refrigerated side is growing and the frozen side is growing as well.

Does this mean that there’s an opportunity for drinks? When you think about cans, cans can be stored at room temperature. When you open them, that’s when they need to have a certain temperature. That question goes out to the water.

We’ve seen also an increase in the market of drinks that need to be refrigerated because they have no service. You have natural drinks or juices that could be protein or natural juices or smoothies that need to be refrigerated. If you go to the supermarket aisles to the refrigerated area, you’ll now see drinks in there that are in regular plastic or glass bottles that were not there before.

What about the ready meal space? 

It’s also growing, subcategories as well. There are refrigerated localized deliveries but then you have the frozen where you can get nationwide since day one or you also have the refrigerated where you can also get nationwide. There’s a bunch of different strategies that you can do there from a logistics standpoint, which is running line holes directly into different sorting centers from carriers to expedite the shipments. If you have enough capital, then you can go and distribute inventory across multiple facilities so that you can get closer to where the customer is.

We see high-end, premium, and frozen ready-to-eat brands exponentially grow in the market. Some of them go towards the convenience and some of them go towards a specific diet or some of say, “This is nice food to have at my house that I would also get at a restaurant.” You have a bunch of different subcategories in there but it’s a market that is exponentially growing and it’s mostly because a consumer understood, “I can get these amazing meals that are produced in Minnesota, New York, or wherever and I can get them delivered in Florida to my house.”

It’s a very exciting time to be in CPG in the refrigerated space because the only play a few years ago was grocery stores.

That’s the evolution that we’ve seen on the market.

To clarify, was ButcherBox only frozen meat or did they have fresh meat?

Frozen and direct-to-consumer. To this date, the company is trying out a couple of retail place. To this date, it’s mostly direct-to-consumer and it is 100% frozen.

With regards to what you’re doing at Grip, you don’t need to mention names or if you’re allowed to mention names, that’s fine, could you describe the playbook of a customer of Grip that has done phenomenally well that surprised team as to the way they were able to execute their go-to market strategy and keep you busy and their customers happy?

We have different subcategories of products. As an example, we have human-grade pet food, which includes dogs and cats mostly. That market is doing phenomenally well. We see it all across the market and we see new brands pop up and we see brands still keeping up with growth. That’s a great market segment that has great retention as well because once your pet starts eating a specific type of food, you can’t take it away from them that easily. There’s been great results as well in terms of pet health and happiness of the pets when you switch them into a frozen or a fresh diet. That market is growing phenomenally well.

The other thing that you have is the specialty foods market, which is something that you would go to a specific store to get or could only buy from someone specific where you had to be physically in the space to buy it but you can now get it nationwide. As an example, there’s a specific cake that’s baked in New York City and you can now be in California and get it. If there’s some type of quesadilla product or tortilla product that is made in California, you can now be in New York City and get it.

We see brands that have a strong product or niche product that, years ago, is not possible to release. Now, with technology and having inventory distributed through a couple of cities, they can now get nationwide with it.  The frozen or fresh premium ready-to-eat brands is also an exponentially growing market because of the convenience factor and because of the specific products or some people like specific food so they go to their one provider where they get their products.

In terms of how that looks from a success story is, usually. when we start working with brands, when you look under the hood in terms of what they’re doing, it’s fragmented. They’re using multiple technology providers. They’re using multiple broken systems on Excel, Notion, or whatever spreadsheet they use internally. They’re also using multiple facilities or partners across the country that they don’t have connected within the same data flow or ecosystem.

How it looks for us is we simplify that whole thing. We basically say, “Wherever you sell the product, we’re basically going to grab the orders from there and then everything is going to live within the same ecosystem. We’re also going to do dynamic decisions based on how the network is looking right now in terms of temperatures, on time deliveries, major weather events, what type of product you’re shipping, what installation we can use, and what size of box.” We’re going to look at all those factors and we’re going to dynamically decide what’s the best way to ship your box from point A to point B.

Once you look at what they were doing before and what they can do now, that then allows them to shift the focus as a company and not spend that many or that much resources into logistics and operations and they don’t have to think about fulfillment. That gives them a lot of more resources to spend it in growing the brand, marketing, technology for the front end of the website, and in things that allow them to grow.

We’ve seen exponential growth with a lot of our customers where a lot of them have even 4X or 5X their companies even when it’s generally being a flat market for a lot of other brands and industries out there. There’s not a lot of capital going into some of these markets nowadays but you still can see these companies, when they gain efficiencies and they produce better margins, they can keep exponentially growing.

Them not having to think about the last mile for a perishable product is critical for them. It unlocks a lot of time and resources for them to grow the business, which makes a lot of sense. Marketplaces, has this opened up opportunity? What’s Amazon’s position here? Prior, you’ve not been able to buy frozen products apart from Amazon Fresh. What does Amazon look like given the fact that 50% of all eCommerce consumer transactions occur on Amazon?

Amazon does not touch the product when it comes to frozen or refrigerated other than Amazon Fresh so they don’t handle the logistics or the shipping of it for this type of product.

Can you list on Amazon and then fulfill through Grip?

Correct. That’s what we’re seeing in the market. We see brands that go in Amazon, they list the products, they sell them through Amazon, and then they do the fulfillment with our technology as well.

Are you Amazon Prime accredited? 

We’re not yet. It’s a process that we’re going through right now with a couple partners. We’re not yet Amazon Prime accredited. Regardless, you can meet all the delivery times in one day with connecting through us and working through us. For more context there, we get 60% of the country in one day time in transit and the remaining 39.2% is in two days and then 0.8% in three days. You get it anywhere across the country at under two days.

Where are your fulfillment centers?

We’re in Jersey, Texas, and the West Coast for the major ones and then we have another one in Florida as well.

At least, frozen is a category I’m familiar with. I’ve noticed for frozen and refrigerated that the specification for the boxes are thicker, much more sturdy, that they’re harder to compress. I’m a recycle guy and the dustbin guy in my house so I’m always clearing stuff out. They’re tougher to flatten. Do you want to speak to all of that or the more technical bits in that and what it costs for readers to have an understanding, please?

Shipping perishables in the mail is generally very expensive. It has a lot of fixed costs that goes into it, which is why we advise our customers and partners to always try to have the highest average order value that they can so that they can afford paying for all these expenses that you need to pay for when you’re trying to get a box or something frozen from point A to point B.

To expand on that, you have the cost of the box, which is generally a high-quality box and a decent size, you’re talking about 12 cube or maybe 16 cube box that goes out, you have the insulation, which is also expensive, and you have the refrigerant, which if it’s frozen, you’re generally dealing with dry ice. If it’s refrigerated, you’re dealing with gel packs. You have the fulfillment, which frozen and refrigerant warehouses are expensive. The real estate to be inside there is expensive. You also have the shipping costs, which you’re usually not doing a USPS or some other slow service because you need to be at your customer’s doorstep in 1, 2, or 3 days at most.

When you add all these, you’re looking at fixed expenses that if you add a few more items to that box or you increase your average order value, you’re not necessarily exponentially increasing the cost of getting that box out. Maybe you’re adding a few more picks to that box, which is going to cost some cents or adding a little bit more weight, which is going to cost more on the shipping cost side. A lot of the expenses are going to be there regardless.

For example, we’ve seen that some of the companies that we start working with could have an average expense for operations and logistics of $40 to give an example of shipping that box with everything that it entails and we can bring it down to $30 or $25 depending on where the box is going. It’s so expensive that the amount that you can save if you’re doing things right equals life or death for a lot of these companies.

If you have an average order value of $100 and you bring that down from $40 to $30, that $10 dollars could be the 10% that’s going to kill your net margin. That could be the amount of money that you’re losing if you want to break even in your company. We see that it’s extremely important for all these brands to bring the cost down because of how expensive it is generally.

This is something that we were able to do at ButcherBox because of how focused we were on cost and how much technology we were also able to build there because of the shop component of the company. We’ve worked with brands where we flip the unit economic on its head and make them profitable when they were losing money on every shipment before.

It’s the volume if you can encourage customers to buy larger volumes than they used to for their freezers and their refrigerators. They need to buy more hence the reason why frozen is a better proposition most of the time I would think.

You don’t want to have a month worth of refrigerated products because it’s probably going to go bad.

Instacart to get their refrigerated products. For the frozen stock, they can get a good stuff for their frozen products. It makes a lot of sense. Do you have any tips? There will be a cross section of readers enjoying this conversation now who are already selling products. They’re selling non-refrigerated products or non-frozen products already and they’re looking to move in. What would you say their 90-day launch plan should look like if they’re trying to launch their refrigerated or frozen products online to start selling eCommerce profitably?

First, of course, figure out a product that people want to buy from you. Because they’re buying non-refrigerated stuff, it doesn’t necessarily mean that they’re going to buy the refrigerated stuff from the same brand. Validate that in the first couple of weeks. After that, I would define the strategy of the product being refrigerated or frozen, specifically, from this conversation, you can already tell that I definitely advise towards frozen versus refrigerated.

Refrigerated can also be done and it can be done profitably as well. I would understand where is the product produced and where I have to get it to get it closer to the customer and start fulfilling processes. Depending on the volume and how much capital you have for the inventory and if it’s frozen or refrigerated, I would advise towards one or a couple fulfillment centers to start with so that you get a handle of the inventory turnaround and all the shipping of the product to your final customer and how that works.

After that, once you understand where your specific buyers are, I will then going to further optimizing that by opening new sites or new facilities across the country that can then move you away from air shipments into ground shipments. With air shipments, it can be $40 to $50 average on the shipping cost. For ground, it can be $15 average on the shipping cost. It’s night and day when it comes to how much you’re paying to get the product to your customer, depending if you’re doing ground or air shipments.

I wouldn’t advise towards doing more than 3 days on the ground. Also, of course, depending on the product, if you’re doing something like meat, meat itself is very dense so you can have it frozen for longer than if you’re doing juice, smoothie, or fruit that defrosts faster than meat. Focus on defining what type of product is and then from there, you can define what the launch strategy is looking like when it comes to the logistics and fulfillment.

That sounds like a perfect plan. What do you think is the size of this opportunity for perishable goods DTC?

Massive. it’s exponentially growing and COVID helped accelerate that. For some brands, it came down after COVID. I’ll give you the ButcherBox example. ButcherBox grew 100% year over year in COVID. We were doing $200 million in yearly revenue before COVID and the year after COVID, we’re at $400 million analyzed revenue. The company kept most of those customers and the reason for that is because the consumer now understands that they can buy food online and it gets delivered to their houses.

Because everyone was at home, COVID helped accelerate that change of mindset. The change of mindset is here to stay because it’s an understanding of customers. They now understand that they can do this versus years ago. It’s bullish on the industry. When you take that and you pair it with what we build and the technology for shipping the actual products to the mail and making it sustainable, that’s a recipe for success for all these brands.

Juan, it’s been an absolute pleasure having you on the 2X eCommerce podcast. If you want to find out more about Grip Shipping, it’s GripShipping.com. Are you active on any social media platforms? 

I’m active on LinkedIn through my personal one and then the company is also active on LinkedIn. You can find at Juan Camilo Meisel on LinkedIn or the company. I reopened my Twitter account after years of not being in there. I’ve been doing some posting there as well.

It’s been insightful for me learning about this space and I’m sure the audience would have enjoyed it. I want to open up opportunities to people to widen the perspective on opportunities and this one is a special one. Thank you and best luck with Grip Shipping.

Thank you for having me and happy to be here.

Cheers.