Bonus: How Cavela Uses AI to Cut Sourcing Costs by 40%—Even Amid Rising Tariffs

Summary

DTC Podcast - Bonus Episode: How Cavela Uses AI to Cut Sourcing Costs by 40%—Even Amid Rising Tariffs

Release Date: April 9, 2025

In this bonus episode of the DTC Podcast, host Eric Dick engages in an in-depth conversation with Anthony, a key figure behind Cavela, a pioneering company leveraging artificial intelligence (AI) to revolutionize the sourcing process for direct-to-consumer (DTC) ecommerce brands. The discussion delves into the challenges of traditional sourcing, the transformative power of AI, the impact of rising tariffs, and the future landscape of ecommerce sourcing.

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1. Diversifying Supply Chains with AI

Anthony opens the conversation by emphasizing the importance of supply chain diversification for brands. He shares a compelling case where Cavela assisted a workwear brand in transitioning from a long-term supplier in China to a higher-quality, lower-cost alternative. This shift was facilitated by Cavela's AI agents, which simultaneously engaged with hundreds of suppliers to secure competitive quotes.

Anthony [00:00]: "We can do this because our AI agents are speaking with hundreds of suppliers at once, so we can get many more competitive quotes."

This strategic move not only reduced production costs by 40% but also helped the brand navigate the complexities introduced by new tariffs, ultimately lowering their costs below pre-tariff levels.

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2. The Genesis of Cavela: Merging Trade and AI

Eric welcomes Anthony to the podcast, highlighting the timeliness of their discussion amidst the evolving trade landscape influenced by recent tariff implementations.

Anthony provides a background of his expertise, rooted in three generations of family trade experience in Southeast Asia and a strong foundation in computational statistics and AI. Cavela emerged from the intersection of these two realms, aiming to streamline the often convoluted and time-consuming process of product manufacturing.

Anthony [01:20]: "Cavella came from the idea that we could actually help anyone, anywhere, make anything. And that would solve a huge pain point for a lot of brand owners out there."

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3. The Inefficiencies of Traditional Sourcing

The duo explores the traditional challenges brands face in sourcing products, such as the tedious process of finding reliable suppliers, extensive communication via emails and messaging platforms, and multiple rounds of sampling. Anthony underscores the inefficiency inherent in these methods, which often result in prolonged timelines and elevated costs.

Anthony [03:24]: "Finding reliable suppliers, vetting suppliers, but then the entire process itself... it's just a very time-consuming and convoluted process."

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4. Cavela’s AI-Powered Sourcing Solution

Cavela introduces its solution as a virtual sourcing agent powered by AI, designed to automate and optimize the entire sourcing workflow. Anthony explains how brands interact with Cavela's AI to define their product needs, after which the AI scours a vast database of 200,000 suppliers across 40 countries to identify and vet the best matches based on cost, quality, and reliability.

Anthony [04:11]: "Cabela is a virtual sourcing agent that automates how brands and businesses find the best suppliers and make their products."

The AI handles every aspect from sample shipping and quality assurance to managing imports, tariffs, and delivery logistics, thereby reducing production costs by an average of 40% and slashing the manual effort required by 95%.

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5. Navigating Tariffs and Supply Chain Volatility

With the backdrop of fluctuating tariffs, Eric inquires about how Cavela aids brands in mitigating the financial strain caused by these changes. Anthony discusses how Cavela's AI continuously sources from diverse locations, allowing brands to adapt swiftly to tariff adjustments without committing to a single manufacturing base.

Anthony [07:17]: "We’re giving small and mid-sized businesses access to an enterprise-grade sourcing team that fits in your pocket, basically."

This flexibility is crucial as tariffs can change rapidly, making it difficult for brands to invest heavily in any single sourcing region.

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6. Case Study: Achieving Cost Efficiency Amid Tariffs

A standout example provided is the workwear brand that benefited from Cavela's sourcing capabilities. Previously reliant on a Chinese supplier, the brand transitioned to a more competitive supplier identified by Cavela's AI. Despite the imposition of tariffs, this shift resulted in lower production costs than six months prior, showcasing the effectiveness of AI-driven sourcing in volatile economic conditions.

Anthony [05:21]: "We cut their costs dramatically... he might be the only brand in his entire category whose costs are actually lower now than they were six months ago."

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7. The Ongoing Role of AI in Sourcing

Eric probes whether Cavela's AI agents operate on a continuous basis or as a one-time solution. Anthony clarifies that Cavela maintains an ongoing relationship with brands, continuously monitoring and optimizing their supply chains to respond to real-time market dynamics.

Anthony [14:21]: "It's kind of an ongoing way... we can source your product today when you're only producing 500 or 1000 of your item. But once you've scaled... you've now unlocked a new suite of suppliers."

This persistent optimization ensures that as brands grow, their sourcing strategies evolve in tandem, unlocking new opportunities and cost efficiencies.

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8. Democratizing Product Design and Future Innovations

Beyond sourcing, Anthony touches upon the broader implications of AI in ecommerce, particularly in product design. He highlights recent advancements in image generation AI, which democratizes design by enabling users to visualize and iterate on product ideas without extensive design expertise.

Anthony [18:34]: "Generative AI do the full design... there are some things that we can incorporate that help you make these tweaks to your design to sort of iterate on your product with every order."

Looking forward, Cavela aims to integrate AI further into the product development lifecycle, enhancing both design and sourcing processes.

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9. The Evolving Role of Brands in a Competitive Landscape

As sourcing becomes more accessible and efficient, Anthony predicts a shift in how brands differentiate themselves. With suppliers becoming more commoditized, brand identity and marketing prowess will become the primary differentiators.

Anthony [26:44]: "If you have a really compelling brand and people are willing to pay no matter what, even if it's more expensive than buying from an excellent supplier who's making an excellent product, then you've really hit jackpot."

This evolution compels brands to invest more in building strong identities and loyal customer bases to stand out in a marketplace where product quality is increasingly standardized.

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10. Closing Insights: The Future of AI in Ecommerce

In concluding their discussion, Anthony shares his optimistic vision for AI's role in ecommerce. He likens the current AI revolution to the democratization of digital content creation, predicting that AI will similarly empower individual brands to compete effectively against larger players by optimizing their sourcing and operational efficiencies.

Anthony [21:28]: "The next decade will be about physical content... you have means of production is still very difficult. But I think in the long run, you're going to see brands are going to be individuals."

Eric echoes this sentiment, highlighting the potential for AI to decentralize and democratize various aspects of ecommerce, from sourcing to product design and beyond.

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Conclusion

This episode of the DTC Podcast underscores the transformative impact of AI on the sourcing landscape for DTC brands. Cavela's innovative approach not only streamlines the traditionally cumbersome sourcing process but also offers strategic resilience against economic volatilities like tariffs. As AI continues to evolve, its integration into ecommerce promises to empower brands of all sizes, fostering a more competitive and efficient marketplace.

For listeners interested in leveraging Cavela's AI-powered sourcing solutions, Anthony extends a special offer:

Anthony [34:31]: "For that specific Link, we're giving 50% off the first sample."

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Stay tuned for more insightful discussions on the DTC Podcast, where disruptive ecommerce brands share their journeys and strategies for scaling in today's dynamic market.

Transcript

[Anthony]

My recommendation for brands in general is looking to diversify your supply chain to the best of your ability. One of our brands, they do workwear, gloves, shirts, and all the rest. They've been sourcing in China for many, many years. And we came in and we found them a supplier that could make the same products at a higher quality at the dramatically lower cost. We can do this because our AI agents are speaking with hundreds of suppliers at once, so we can get many more competitive quotes. I actually got a text from the owner this morning. He did the calculus. His costs of production, the tariffs with Cabela was lower than his cost of production six months ago with his original supplier before the tariffs. He might be the only brand in his entire category whose costs are actually lower now than they were six months ago.

[Eric]

Anthony, I want to welcome you to the DTC podcast. We were just saying this could not be a more topical moment to be having this conversation. At the time of recording, it is April 3, dealing with the fallout of Trump's day of liberation that's happening here. So welcome to the D2C podcast, man. I'm excited to talk to you a little bit about CA and the. The fallouts from this.

[Anthony]

Likewise, Eric. Thanks for having us on.

[Eric]

Well, why don't you start with why? Would love to start with the reason why. Why did you build ca?

[Anthony]

Yeah. So look, a little bit of background on myself. I grew up in Southeast Asia. My family's been there for three generations.

[Eric]

Traders.

[Anthony]

I was born in Malaysia.

[Eric]

We lived in Malaysia. Cool.

[Anthony]

Thailand, Singapore, kind of.

[Eric]

I lived in Thailand for one year in my early in my life, and it was hugely formative for me. I just love it.

[Anthony]

Beautiful. Beautiful. Yeah. Thailand is definitely dear to my heart as well. Look, my family's been in trade for some time, mostly commodities, soft goods. But the other side of my of my life has been AI. So my background is in computational stats. I built various AI teams, different data science projects. And cavella was this realization that there is something to be done at the intersection of these two. So I was looking at the landscape of E commerce and I saw, look, E commerce has been largely automated. It's very easy today to sell something online. What is still missing is what I call the other side of the equation. So before you can sell something, you have to be able to make that thing. And making things is still very time consuming. It's very convoluted. It's not really clear how you can go about in an efficient way. And when I started building Cabela, the question was, well, does it have to be. I was seeing what was happening in the world. Suppliers are increasingly online and accessible. There is this, you know, this new technology language, models, chatgpt that is hitting the scene. I realized there was a lot of the service industry is going to change and I saw that in sourcing specifically. And the desire to make Covella came from this idea that we could actually help anyone, anywhere, make anything. And that would solve a huge pain point for a lot of brand owners out there.

[Eric]

I can see it. I've dabbled. I actually haven't launched any e commerce products, but I've gone through some sourcing research and it's pretty opaque, right? It's a pretty opaque process where you can probably find someone, if you go on Alibaba or whatever, you can find someone to make your product, but you have no idea if it's the best person or if it's a trustworthy person really. So I imagine that's, that's a big challenge.

[Anthony]

Absolutely. Finding reliable suppliers, vetting suppliers, but then the entire process itself. Right. When you're. This will be familiar to a lot of your listeners, but you know, when you're trying to make a product, you're searching online, going to trade fairs and swapping months of emails or messages on WhatsApp and WeChat and you're sampling multiple rounds and then finally placing an order. It's just a very time consuming and convoluted process.

[Eric]

I want to get into some of your thoughts on tariffs and how Cavella is actually like potentially helping brands navigate this. But just walk me through a little bit, just so I understand the product a little bit better. Understand like from. So say I'm a, I'm an entrepreneur. I've either I'm already made my product. Maybe, maybe it's for people that have already like, talk to me about the use case for Cavilla specifically.

[Anthony]

Absolutely. So it's very simple. Cabela is a virtual sourcing agent that automates how brands and businesses find the best suppliers and make their products. So we walked through what the normal creation process for products is. You, if you want to create a product, you search online, go to trade fairs, emails, messages, WhatsApp, WeChat, go to do rounds of sampling. Finally place an order. Anyone who's used Alibaba. This is all very familiar. So what we've done is that we've automated all of that. So how does it work with Cabela? You tell an AI agent and we can get into AI agents. You tell an AI agent what you want to make. It will Ask you questions, build out a product description with you, and then it, it'll search a database of 200,000 suppliers across 40 different countries and then contact vet those suppliers, get quotes from the ones that match your needs. And it even handles sample shipping, ordering, QA imports, tariffs, and delivery to your warehouse. So because we maintain a large premium network and automate most of this process, we can basically secure more competitive quotes from better suppliers. So we on average cut production costs by 40% and save you 95% of the work in the process.

[Eric]

That's wild. I was just talking about AI agents because I use ChatGPT every day. I've created a GPT actually for the podcast when it comes to launching it and putting out the, you know, the description and things like that. Basically from the transcript, it's all kind of automated, which is great. But the next, I haven't experimented with agents and all. And agents are essentially like having an employee. Like, that's basically one way to think about it.

[Anthony]

It's like having like an executive assistant that can do all of your tasks. So the, you know, the simple way to put this is that you, you know, you get an email from your boss who says, hey, can you schedule this meeting for this time? The AI agent will receive that email, interpret it, put something in the calendar, and, you know, respond, okay, yeah, sounds good. It's done. And that work has been done by someone and it didn't have to go through you. So how that applies to sourcing is that you could imagine assistant that helps you with every step of the sourcing process, right? So you tell the your assistant, hey, I'd like to start a new of candles. The assistant will say, okay, great, let's jot down exactly what you're looking for. What does this product look like? What are the attributes? And then the assistant will then go out, find all the suppliers that can make that product, and then contact them. Hey, what are your MOQs? Hey, you know, what are your lead times and all the rest? Get the quotes and then coordinate all the sampling, coordinate the qa, coordinating the ordering and sending to your warehouse. And that's what we've built.

[Eric]

Is there something that already exists like this where you'd have a whole team of people doing this? Are there businesses already out there that maybe don't have the AI, but are using people to do this? Is that one of the big innovations or does this kind of business not really exist?

[Anthony]

I mean, this is what large businesses do when they hire dedicated procurement teams, right? So one way to solve this problem is to throw a bunch of money at it and hire a large procurement sourcing team that will do all this work for you. And what we're doing is we're giving small and mid sized businesses access to an enterprise grade sourcing team that fits in your pocket, basically.

[Eric]

So we've talked about the use case of like whether when you're starting a product, but the same thing could be used to sort of like gut check whether you are currently working with the best supplier, the best, you know, manufacturer.

[Anthony]

Yeah, exactly right. And that's especially important now, right, with the tariffs where you have products that you're making and you'd like to say, well look, I'm now paying 30, 40, 50% more of my products. Can I get a more competitive quote? So yeah, this applies for both.

[Eric]

So you mentioned in the little pre interview we did that you're fielding a lot of inbound requests at this moment. In the heat of these issues. What are the problems and what are the kind of messages that you're fielding right now?

[Anthony]

First of all, there's a lot of confusion out there. People are not really knowing what to do. They're seeing their costs suddenly skyrocket, their production costs are going to go up with tariffs. They don't really know what to do about it. The tariff landscape is changing on a daily basis. Tariffs are being applied, they're being repealed, they're being threatened. People don't really know what to do. And so first of all, it's just how do I navigate that? And so, you know, that's part of what we do, which is we, we know that there is always one best solution out there. What Cabela does is it just finds that best solution for you so you don't have to worry about it. But then people are just trying to figure out, well, like, you know, how can I optimize my business in the wake of these tariffs? Should I be sourcing in the United States, Should I be doing this in Latin America, should I be doing this in Asia? And what we've done is we've just built something that allows you to not really have to worry about any of that. Because what we're going to do is we're going to source in all these different areas and do so on sort of a semi continuous basis. So all you have to worry about is the other side of your business.

[Eric]

Do you think one of the stated reasons for these tariffs is to try to build the manufacturing base backup in the US and to an extent it will probably, it probably already has Started that process. It's going to take a lot longer than I think people want it to. It's all my question to you is, like, has someone who's sourced extensively overseas, like, is it a realistic solution to have a lot of products be made in the US or will it always be cheaper, even with tariffs, to get things made overseas?

[Anthony]

It depends. Look, the reality is there's a lot of factors here. It takes a long time to source a product, right? So if you're going to move your manufacturing base from Asia to the US That's a huge investment. And so when the landscape of tariffs changes with the speed at which it has. I mean, there have been like over 20 major tariff events in the last three months of this administration. It kind of, you know, put some pause in your decision to actually invest heavily in the U.S. now, if things remain stable for a very long time. I can absolutely see that. But look, you have to. Just looking at, for instance, Covid, right? During COVID the supply chains kind of shut down for what was, what, two years? And look how long it took to get that machine back up and running. That was two years. Think about how long it'll take to get the machine up and running when it's been off for 50 years, which has been the case with the United States. So I think that there are. There is a path forward where there's a lot of manufacturing there, terms of the states, but I don't think it's going to happen that quickly.

[Eric]

And are there. Again, I am just, you know, reading and reacting to this now and like, looking at the charts of where all the tariffs are happening. Is there. Does your. Do your agents take into account, for instance, where the highest tariffs are and are actually looking to factor that into the decision about where things are made?

[Anthony]

Absolutely, yeah. So we've been helping brands anticipate some of these tariffs for a while now. You know, we're helping strategize to a certain extent. What's tricky in this case is that, you know, brands were looking at what was happening in China, and they're like, oh, I want to source in Vietnam or Cambodia. And you can see just, you know, yesterday those countries got hit with some pretty hard tariffs. So to the extent that you can anticipate some of these things, you're kind of. It's. It's tough. But what we're doing is that we're trying to give a lot of options. So we source across many different countries, and we have brands that are essentially diversified their supply chain across many different countries. We have brands that are producing one product in China, but another in Bangladesh, another in Mexico. And the idea is that by diversifying their supply base, they are essentially mitigating the risks. And so they lose a little bit more here, but they win there and it kind of averages out. And we also have some brands that have multiple suppliers for the same product. And so they have one supplier that's ready to go in China and they have another supplier that's ready to go in Pakistan. And the idea is that they'll pull the trigger on wherever makes the most sense in the moment.

[Eric]

Now is it? And I could see, I just envisioning like what a procurement team would look like for people trying to build that out. I could see how the costs could, could multiply in a hurry. So are you then more advising people to find better deals, like even sort of regardless of the tariffs? Is it more about just getting better deals with better producers rather than trying to move shops from country to country?

[Anthony]

I think that's exactly right. I mean, look, in order to optimize your supply chain, you kind of need things to remain stable for a little bit. It's really hard to optimize when the tariff landscape changes as frequently as it currently is. So my recommendation for brands in general is looking to diversify your supply chain to the best of your ability. And, you know, even if you are in countries that are impacted by high tariffs, try and find the supplier that is most cost effective. So I have an example here. We have one of our brands has. They do workwear, so workwear for, you know, gloves, workwear, shirts and all the rest. And we started working with them a couple months ago and they were sourcing in China, and they've been sourcing in China for many, many years. And we came in and we found them a supplier that could make the same products at a higher quality at the dramatically lower cost. And we can do this because, you know, our AI agents are speaking with hundreds of suppliers at once so we can get many more competitive quotes. So we cut their costs dramatically. And you know, I actually got a text from the owner this morning and he was saying he did the calculus. And his costs of production with the tariffs with Cabela was lower than his cost of production six months ago with his original supplier before the tariffs. So he might be the only brand in his entire category whose costs are actually lower now than they were six months ago simply because we found him a much more competitive supplier.

[Eric]

Is it something, is it like a. A one and done thing where you find your Supplier and, you know, like, or is it like, are these AI agents working in an ongoing way?

[Anthony]

It's kind of an ongoing way. So we're living in a world where the macroeconomic landscape is shifting pretty quickly. And so where it makes sense to source today might not make sense to source tomorrow. And this is kind of the thesis here that this, this old way of working where you have a long standing relationship with the Same supplier for 20 years makes sense in some cases, but it doesn't make sense for everybody. And, and we're now in a world with these automated tools and these suppliers are increasingly online where you can turn over a lot faster. And what that allows you to do is to tap into a more efficient market. The reason we're able to get much more cost effective sourcing options for brands is because sourcing is super inefficient right now. It's just terribly inefficient. You're a brand, you, you'll speak to maybe, you know, four, five, six different suppliers and you'll choose the one that is the most competitive in that moment with whom you have the most trust. In a world of automated sourcing, you're not speaking with, you know, five, six suppliers, you're speaking with a couple hundred at once. And so you're always going to get more competitive costs and you're always going to get a more agile supply chain that can turn at the drop of a hat when you need to. And that's what we're seeing right now, that we have all these brands that need to quickly review their sourcing solution and they just can't because everything is still handshakes and phone calls.

[Eric]

And then I guess everyone, especially for people starting out, everyone's looking for economies of scale, right? The more you can order, the lower you can get. The cost is something. Does Cavella help shortcut that at all or is that still a big part of the process? You still need to, with new vendors, you still need to order at a certain rate and then grow with economies of scale.

[Anthony]

What we do is we surface what's out there, right? So if you came in and said, look, look, I want to make this super complex product, I want to make 10 of them. If no suppliers are going to want to touch you, then there's very little that we can do. What we can do is that if there is a supplier out there that is willing to do that, we will find them. So that's, that's where Cabela can help. But what you've touched upon there too is this Idea that companies grow, businesses grow, and as your brand grows, you might grow out of your supplier and be able to grow into another. There are, there are excellent suppliers out there that have MOQs that are above what you're producing today, but they might be what you're producing tomorrow. And so that's what we provide. It's essentially we grow with the company so we can source your product today when you're only producing 500 or 1000 of your item. But once you've scaled and you're now producing 5,000, well, you've now unlocked a new suite of suppliers that we can contact. And that might have other advantages. Better unit cost, for instance, maybe more options, more customization. And so we can grow with the businesses. And so continuous sourcing allows us to take care of everything that is production and then you can worry about everything else in your brand.

[Eric]

I imagine your tool over the, over time is going to also have a lot of impact on the entire ecosystem. Just, you know, if we were in an environment before where you're getting 10 quotes on a product versus now when you're getting hundreds, like, it's also going to sort of democratize or level the playing field in some ways, I imagine among the producers and they're going to, it's going to create maybe more competition for people's business knowing that people are going to be able to survey so many different potential producers.

[Anthony]

Definitely. I mean, there's a lot of market inefficiencies right now that make it. That's, that's why costs vary so much and why we're able to make so many cost savings is that we can find the best deals out there and pass them on to the users.

[Eric]

You know, I talk with companies that are finding AI solutions for e commerce problems all the time and I think customer service is a big one. Obviously there's a lot in data, you know, when it comes to your acquisition and, you know, improving your attribution and things like that. But I hadn't really thought of it as its application in the sourcing business. What are some other ways on your side of the aisle? Do you see AI impacting things in the future?

[Anthony]

I think there's a lot of innovation workflows that can be improved with the AI agents. I think that one area that is unrelated to agents that is quite interesting is the idea of product design. So another really big thing that's happened in the last week or two is the release of the new 4.0imagegen model.

[Eric]

From OpenAI, the Ghibli generator.

[Anthony]

Exactly. We've had Imagegen now for a couple of years, but it's definitely a big step up. And what that means is that we can get to maybe not complete high fidelity product definition, but we can at least get you a pretty good first attempt at a design. And now what that has done is it's essentially democratized design for users. You now no longer need to, you're no longer dealing with a sketchbook to get that first idea out there. You can do a sketch and then you can pass that to OpenAI and say like, hey, fill in the details and they can actually bring your idea to life. So that's one thing that I think is really interesting. There's limitations to it obviously. There's a lot that goes into the details of the fit of a shirt, for instance, that are going to be harder to capture there. But certainly for a lot of the design elements that can be captured by something like an image gen tool, this is a huge step forward.

[Eric]

So almost anyone in our audience that's feeling unsure, that has a brand is unsure or is facing the impacts of these tariffs, it's just probably smart for them to review their production and supply chain at this time. Whether they start manually, whether they go to Covella, it's like everyone has to take like it's a long night of the soul tonight to like look at where your products are coming from and how efficient they're being made, how efficient.

[Anthony]

They'Re being made and then look at other areas of your business. Like this is a game of just trying to squeeze out every efficiency that you can, you know, review which products are selling the best. There's, there's a lot of your optimized, a lot of optimization that has to go into your business. It's hard to optimize the sourcing. What we can do is find you the best, the lowest cost supplier in any given country and then you can you make a decision from there. But ultimately that, that's left up to the brand.

[Eric]

We're coming to this era where you can like speak almost like speak your dreams into existence. Like if you have a, you know, Shopify was a big part of the democratization of commerce to start to be able to make these stores. And now you can design Shopify stores by verbally telling, you know, AI kind of what you want it to be. You're democratizing the back end of this when it comes to product creation, product design, product sourcing. Where like, are you. I'm still bullish, very bullish on AI and on humanity's. Role at wielding it, Are you? How do you feel about humanity's role in this whole process in the long term?

[Anthony]

I'm super positive. The way I think about this for this space in particular, I think a good parallel is digital content creation, right? The last decade saw a radical shift for digital content where when you think about digital content, radio, TV shows, all that kind of stuff that used to be made by large teams of people with expensive production equipment and access to all these tools and networks. And what happened in the last decade is that digital content got democratized. Now suddenly you don't need a whole production team in order to put out any digital content. It's now, you know, podcasters are replacing entire news organizations. You have an entire industry of tiktokers who are creating video content that is, that is, that can be monetized. So you've moved from a world in digital content that has been largely dominated by groups and entities and is now run by individuals. And it created an entirely new economy. The economy of podcasts was unimaginable even, you know, what, 10 years ago. And I think that if the last decade was about digital content, the next decade will be about physical content. Because what allowed digital content to go from being made by groups to individuals was the democratization of the means of distribution, which is social media, and the means of production, which is your iPhone, camera and podcast, recording equipment and all that on the production side on physical products, it's. You have the same need. You need distribution, which is shopify, but you have means of production. Means of production is still very difficult. And so until means of production is democratized, then you're not going to be able to have individuals replace brands. But I think in the, in the long run, you're going to see brands are going to be individuals. You're going to have a one, two, three person team that is going to run circles around some of these larger brands simply because they have, you know, better marketing. They have all of. They have a better brand identity and they can. And they have good ideas that they can execute on that. Right now, only the larger brands are able to execute. But I think that I'm super bullish on this because I think that now you're going to see a world where physical products can be made by brands run by a couple. A couple people and they are going to do super well.

[Eric]

The other word there I want to think about podcasts is decentralization, which I love, where it's like every media source within 10 years of its creation was almost Fully centralized, owned by like a handful of corporations. Whereas podcasts are inherently decentralized. It's an RSS feed, they're very hard to censor. You could just, it's technology, just put it out there, the RSS feed picks it up and then anyone who wants to can listen to it. I can see that theme working through to production as well. When you're talking about these small teams.

[Anthony]

Absolutely. Yeah.

[Eric]

I did a podcast also with, at Shop Talk with Sheehan and they were talking a lot about their move towards on demand product creation as well. Because in traditional modes of E commerce you just have this like mass production which is always going to lead to some forms of waste. I imagine with this sort of decentralization and democratization of commerce, it leads to more opportunities to just create the products that are needed more on demand at smaller scales to create less waste.

[Anthony]

Absolutely. Yeah, that's, you know, we saw that and with T shirts and hats that are increasingly made at very low moqs and they're made based off of what you want. But we haven't seen that for many more complex products. Right. And I think that that will change as you have tighter integration between what customers want and what factories can do. And so, you know, to a large extent we've seen that as suppliers have become increasingly online, so you have, you know, factories, you know, 20 years ago they were just, they were just factories, but now they have a sales department, now they have an in house designer, now they have someone who speaks English who's, you know, handling the communication. And these suppliers are becoming standalone brands, like proto brands in a sense. And I think that that is something that's interesting, that's affecting the space. I think that, you know, in a world where an end consumer can buy directly from a supplier, I think that brands have to think very carefully about how they can still offer something that is compelling to an end consumer. Because, you know, if you're buying directly from the factory, it's always going to be cheaper. If you're, I give an example Yeti. Right. So Yeti, they make these tumblers. There are tumblers out there made by, that you can buy on Temu or Shein that are excellent and they don't cost as much as a yeti tumbler. So why would you buy a yeti tumbler and why would people buy from brands directly? Well, it's because Yeti is a brand. They love that brand identity. And I think that what you're going to see in a world where people can increasingly buy from suppliers that Brands are going to lean into this idea of brand identity. And so your differentiator as a brand is no longer going to be on your product offering. It's not going to be, hey, we're the best at this product because ultimately there's going to be a supplier out there who can do a very competitive product that will be able to, consumers can buy directly from. But if you have a really compelling brand and people are willing to pay no matter what, even if it's more expensive than buying from an excellent supplier who's making an excellent product, then you've really hit jackpot.

[Eric]

Do you feel we're headed into an era where it's going to be tougher for the mega companies like Temu and Shein?

[Anthony]

I mean they're definitely sweating right now because this remains to be confirmed, but it's seeming like the de minimis loophole that allowed consumers to, you know, buy from these suppliers directly and import basically goods duty free. As long as they were under a certain amount, it was duty free. And now that loophole is being closed. So it's going to be suddenly much more expensive to, to buy from them.

[Eric]

Yeah, you've built these agents for AI to, to solve this problem. Do you have designs on other aspects of the E commerce journey or other aspects within product and sourcing that you're going to be turning agents loose on in the future?

[Anthony]

We're focusing on the problem of sourcing for now. But what we are looking at early stages is trying to help with that initial side of product definition and design. You know, usually you're always looking to tweak your design a little bit. You want to see, okay, I have this product now can I make it and in a different color, Can I tweak this and that? And so there is some low hanging fruit in using AI to really visualize that and have those, those ideas come to life. So without having, you know, generative AI do the full design, I think that there are some things that we can incorporate that help you make these tweaks to your design to sort of iterate on your product with every order. And we're looking at that.

[Eric]

Yeah, anything in your personal life, anything you're using agents for in your personal life. So you make restaurant reservations or answer emails or anything like that.

[Anthony]

I'm looking at it for email automation. You know, obviously we've looked at that in depth for, for the, for Cabela. And I just realized, I think actually embarrassingly late that I could just apply this to my, to my own life. And it Definitely. I, you know, I always aspired to Inbox Zero and you know, I was always almost there, but not quite. And this has been the last little piece that really allowed me to do that. So I have it plugged into emails and it converts that to some calendar events and tasks as well.

[Eric]

I'm still waiting. I still think the next big innovation will be just persistent AI butlers. Where we have these butlers who look after us, they know us better than maybe we know ourselves. They can, you put your input, your goals into these butlers and they can tell who in your life has your best interests at her, who doesn't, who's. They can, they can remind you maybe when you're not acting up to your own ideals, just like a stuffy butler would in the, you know, 1600s.

[Anthony]

I can see it. I mean like, honestly, you know, I'm, I'm in San Francisco right now and the, the number of different startups that you see being built, this is going so fast. I think that the world in five years is going to look very, very different. And we're going to look back at this era where it's, you know, AI is largely, you know, in most people's experience, just chat GPT, it's a chat interface that is a window. Exactly.

[Eric]

Single. Yeah.

[Anthony]

It's a chat window that can make Studio Ghibli images. We're going to look at this moment in history and be like, we, we didn't know what was coming 100 and.

[Eric]

I think agents are the next phase of that, which are very task specific. They can, they can create a string of tasks based on an objective. The next thing I guess is persistence where it's like you literally, I was asking my co founder today, like, how long until we have one or two or three persistent AI employees who fully understand every aspect of the business and are working, you know, on our behalf. And I feel like that's a year or two out kind of thing.

[Anthony]

I think. Yeah, it's definitely a year or two out. There's a lot of things to resolve first and you know, AI agents are still doing some, you know, there's a lot of straightforward tasks that need to be ironed out in different industries. Look, I think that we haven't scratched the surface yet. There's a lot that's going to happen. I think that what AI allows for is a couple of things. One just personalization is going to just skyrocket and the other is just a general shift in paradigm. I think about Google, right. Google is a fantastic product you type in any search term and then you get 10,000 search results, and they're ranked by how relevant they are to your. To your search. And that's great. But Chad GPT came and they realized that you're not looking for 10,000 search results. You're looking for one search result that's customized to you. And that's a fundamental shift in paradigm. We're no longer being in a world where the Internet and tech experiences are just. We're going to retrieve all the information and let you parse it. Now AI is parsing it for you. And that's kind of what we're building, for instance, with Cabela here, where Alibaba is that same idea. You type in custom water bottles on Alibaba and you get 10,000 suppliers who make 10,000 water bottles, but you're not looking for 10,000 suppliers, you're looking for one supplier. And so if Alibaba is to Google what Cabela is to chatgpt in that sense, and I think that what you're going to see, that shift from a Google world to a ChatGPT world is the same kind of shift you're going to see in a lot of different spaces in the next couple years, which.

[Eric]

Is going to be very destabilizing for a lot of companies like Google who have existed on this arbitrage between, like, this full list of 10,000 options when all you really want is the right one. Right. And if you can just. Maybe you'll just have to charge a lot more to serve the right one. Super interesting. What a brave new world we find ourselves in. I said, how lucky are we to have lived through the Internet, which, you know, like the advent of the Internet, which has changed things far more than, you know, our parents, our grandparents could have imagined. And I feel like whatever's coming next, this conversion convergence of AI quantum, perhaps, blockchain, all decentralizations, all these things are kind of converging at what appears to be very necessary time. So who knows how much more exponentially different things could look in the future.

[Anthony]

I think we're entering the most interesting of times.

[Eric]

I've said it for a long time, we're here for the show. But if you are in the DTC audience, you got to go to cabela.com, we actually have an affiliate link that we'll post in the show notes here. If you just go to covella.com make sure to tell them that that D2C sent you. But otherwise, yeah, I think, I think a lot of people are going to want to be having conversations with you in the next little while through dtc and just in general, as people are looking for options.

[Anthony]

Yeah, I'm at. I mean, look, this is a very timely conversation for this. As we said, the tariffs were announced yesterday. What we're trying to do is we're trying to make it possible for anyone to build their own brand, and part of that is having a viable sourcing option available, and that's what we're providing. So anyone who's listening and clicks on that affiliate link will have access to Covella. But also for that specific Link, we're giving 50% off the first sample. That's a little bit of an extra there.

[Eric]

Great offer. Well, thanks, Anthony. It was a really awesome chatting with you today. I look forward to maybe having a chat in the future as we enter this brave new world, because I think, yeah, you're on the cusp of some of some really big things. So that's awesome.

[Anthony]

Yeah, it's definitely exciting.

[Eric]

Thanks so much for listening to today's episode. If you're not a subscriber to our newsletter, you can do that right now at Direct to Consumer All One word co. I'm Eric Dick and this has been the DTC podcast. We'll see you next time.