← Supply Chain Now
Supply Chain Now
More Orders, Less Profit. What's Going On?
00:56:40
In this episode of Supply Chain Now, Scott W. Luton and Tevon Taylor are joined by Lori Boyer, Head of Content Marketing at EasyPost and host of Unboxing Logistics. They explore how to protect margins by moving away from broad averages and toward customer precision and AI-driven routing strategies.
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- [00:01]
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- [00:30]
Lori Boyer
The headline number is, as we know, E commerce sales. E Commerce brands are selling more orders. Those have grown in the last year. So if we're just talking in the last year, about 10% more orders over the last year. But revenue is not keeping up. So revenue is like 4 to 5% growth. So it's still growth. We love growth, but it's not growing at the rate it should be.
- [00:56]
Supply Chain Now Narrator
Welcome to supply chain now, the number one voice of supply chain. Join us as we share critical news, key insights and real supply chain leadership from across the globe, one conversation at a time.
- [01:08]
Scott Luton
Hey, hey. Good morning, good afternoon, good evening, wherever you may be. Scott Luton and sheriff Tevin E. Taylor here with you on Supply Chain now. Tevin, how you doing today?
- [01:17]
Tevin E. Taylor
I'm doing great, Scott. How are you?
- [01:19]
Scott Luton
I'm doing fantastic. Fantastic. We got a great show here today, folks. We're bringing back one of our faves here today as we dive into a compelling topic. Orders are up, profits are down. But as the legendary Marvin Gaye would ask, what's going on, Tevin? We're diving into all that here today. I'm not gonna sing for y' all, folks, not gonna ruin your day. But we're gonna be unpacking why E Commerce growth today leaves a lot less room for operational mistakes. We're gonna be sharing some of the assumptions that might be costing your team and your organization and we're gonna be sharing what leading organizations are doing and changing right now to protect margin delight customers all without slowing down growth. All of that and much, much more, folks, this is going to be one of your most practical, practical and actionable hours of the day. Now, Tevin, given your proven track record of making stuff happen in global supply chain, especially logistics, warehousing, transportation, technology, I'm looking forward to your insights here today. Should be a good one, huh?
- [02:23]
Tevin E. Taylor
I'm looking forward to sharing them. And of course, with Lori, it's going to be an amazing conversation.
- [02:28]
Scott Luton
It always is one of my favorite hours of each month. So let's get to work welcoming in the one and only Laurie Boyer, director of content marketing with easypost. Also host of a wonderful podcast called unboxing logistics. Make sure you add that to your, to your iPhone or smart device because Lori always brings the heat and has that been there, done that perspective. So get your thinking caps on, folks. Folks, let's welcome in Lori. Hey, Lori, how you doing today?
- [02:59]
Lori Boyer
So good. Great to see you both. Two of my favorites. I'm really excited.
- [03:05]
Scott Luton
Same all the way around. And we had a great pre show session. Very lively as always. And hey, want to say hello to Avisha. Great to have you back with us. Let us know what part of the world you are tuned in from and look forward to your perspective. But Lori and Tevin, a couple things here. Let's start with a fun Mormon question. And I want to start by recognizing it's Bunker Hill day, right? It is global garbage professional day. We got to celebrate those folks that all of us depend on every day. And then I'm gonna, I'm gonna wrap on this one here. It is national eat your vegetables day. So Lori and Tevin, we're really gonna create some friction here, I'm afraid. I want to know your favorite vegetable and your least favorite vegetable. So, Lori, and we're going to start with you, putting you on the spot. Your thoughts?
- [03:55]
Lori Boyer
Oh. So in my family, broccoli is beloved. It is so loved. Once when my daughter was about two years old, I was in the store and pushing her around and she was like, mommy, I want broccoli. Broccoli. And I was like, no, no broccoli. We already had broccoli at home. And she's like, broccoli. And some lady was like, wow, I wish I could get my kids to beg for broccoli. So broccoli is very popular. Eating a little tree makes everyone happy, right? But I hate brussels sprouts. They're so bitter and gross and just so disgusting. So if you say brussels sprouts, Tevin, I'm seeing it in your eyes. You're in a fight.
- [04:37]
Scott Luton
So let's lean into that challenge. Tevin, your favorite and your least favorite.
- [04:42]
Tevin E. Taylor
I mean, I do like brussels sprouts. It's not my favorite. The easiest is a potato. Like, who doesn't love potatoes? Almost hard to call it a vegetable, but, you know, I like french fries, so I like potatoes. But the least favorite by far, onions. I won't eat anything with onions. If it has onions in it, you got to take it out. I'll pick it out. My in laws make fun of me because they can't cook what they want. Because I'm like, I don't want onions. So.
- [05:09]
Lori Boyer
No.
- [05:09]
Scott Luton
Interesting.
- [05:10]
Tevin E. Taylor
Yeah.
- [05:10]
Scott Luton
Okay. I thought I loved you, Tevin, until you break in my heart with that. You know, I wasn't a big fan of brussels sprouts either, Lori, until Amanda starts making them with. With balsamic and bacon. And they are really, really good.
- [05:27]
Lori Boyer
You're saying if you can make them not taste like Brussels sprouts, okay, then they're good. Is that what I'm hearing from you?
- [05:35]
Scott Luton
All right, well, it's great to see everybody. And Lori, let's do this. I know you're, you're climbing up the appearance charts here, and we really enjoy these conversations. It helps a lot of people. We get lots of feedback. But for our new audience members, let's level set a bit. Tell us about yourself and what EasyPost does in a nutshell.
- [05:50]
Lori Boyer
You bet. I'm Lori Boyer. I oversee all the content at easypost. Basically, my whole life is spent just figuring I'm the biggest nerd you'll ever meet. So I spent way too much time reading data and trends and there's something about seeing changes in the world and what's happening and what's exciting in shipping and logistics. My husband's like, that sounds so boring. But we all know it's super interesting. So that's what I do. And I work at easypost, so easy post if you don't know us. We're a shipping technology platform, basically the infrastructure layer that would connect E commerce, logistics shipping to a hundred plus carriers through just one API. So instead of managing all those integrations one by one, you connect just to the one. We handle the complexity. We also use AI these days because AI is sweet, but we have billions of records. And so you're able to use AI to kind of see which shippers you should use when which lanes, kind of at the actual label level. So that's where we're at. And I'm so excited about this new, interesting data that's come out that we get to talk about today.
- [06:58]
Scott Luton
Well, you bring it each time and I love the data factoids that you always bring with you. And Tevin, I'm not the only one, right?
- [07:06]
Tevin E. Taylor
No, you're not the only one. Hey, I'm a nerd in supply chain as well. So, Lori, I'm excited to hear about the data and hopefully benefit from it as well.
- [07:14]
Lori Boyer
Those are. Right.
- [07:16]
Scott Luton
Well, so let's dive in. And I want to start with what I shared, kind of on the opener. Right. E Commerce has grown, continues to grow, but Profits, it's not the same story. So what's going on here, Laura?
- [07:28]
Lori Boyer
Okay, so for me, I think this is something, as I've talked to people, that a lot of operators are kind of feeling in their gut. They just haven't been able to kind of put words to it. So the headline number is, as we know, E Commerce sales, E Commerce brands are selling more orders. Those have grown in the last year. So if we're just talking in the last year, about 10% more orders over the last year. But revenue is not keeping up. So revenue is like 4 to 5% growth. So it's still growth. We love growth, but it's not growing at the rate it should be. So for some, some of the people I've talked to, margin is barely moving at all. So you kind of have this weird situation where like business is technically growing, the team's working harder than ever, more volume showing up in the business, but the financial reward is not what it needs to be. So that's kind of where we're at and what we want to talk about. How to kind of avoid some of the pitfalls of just let's work more but not actually make that much more money.
- [08:30]
Scott Luton
Yeah, what a great way to tee it up. And are you seeing the similar thing out there, Tevin?
- [08:35]
Tevin E. Taylor
Yeah, it's, it's similar. I mean look there, your order volume can go up, but the cost behind that order, they're also going up. But there are other things that are related to profitability that I'm sure we'll discuss. But you know, I'm seeing it in 3 PL space. Volume doesn't necessarily make up for sends of the cost going up as well.
- [08:56]
Scott Luton
Right, right. Okay, so it begs a question, Lori, you know, is this really different from say, you know, five years ago or kind of kind of playing off what we heard there from Tevin, the same old cost her up story. Your thoughts?
- [09:12]
Lori Boyer
Right? That's such a great question. And this is one of the areas I'm always paying close attention to because sometimes in the news you'll be like, whoa, massive issue. But then you're like, oh wait, this is the same issue we had like 10 years ago. But this one is genuinely different. Okay, so five years ago, of course we're hitting kind of just a little bit post Covid now these days. But five years ago you could grow even though you would have inefficiencies. But we are no longer seeing that anymore. This is a. More orders back then meant more revenue, meant more margin. The math was forgiving and if the cost did creep up a little bit, volume typically covered it, growth offset it. The model was kind of correcting. But these days, in the last five years, our CAC, our customer acquisition costs are up 60%. That's a really, really big jump in how much it costs to just get a new customer. And then the cost of meeting the customer's expectations from, you know, free shipping, two day delivery returns, all of that used to be kind of a competitive advantage and it's now the baseline requirements. So when we're talking about customer expectations, what used to seem like awesome is now the standard. And then you throw in all the complexity of, you know, you've got more carriers, more SKUs, more markets, your warehouses are having to work hard, you're getting all this extra operational kind of tax that nobody budgeted for because you just didn't expect it. So yeah, five years ago you could totally just kind of paper over a lot of your growth. But today it's becoming a lot more of a challenge.
- [10:52]
Scott Luton
Yep. You know, paper, paper mache would come in handy those five years ago. Now it's a whole different game. And you know, complexity costs money that Lori is sharing there. And one other quick point before I get you, weigh in. Tevin. You know, interesting these customer acquisition costs. Cac, as Lori mentioned, it really varies from sector to sector. Fashion could be 90 to 120 bucks per new customer. Electronics could be 100 to over, you know, approaching 400 bucks plus, plus per customer pet care little easier, 68 to 90 based on different research out there. But Tevin, your thoughts on the differences from say five years ago to now?
- [11:29]
Tevin E. Taylor
Yeah, Lori's right. You know, more volume generally meant that you had better economics, better P and L. I mean, today com complexity is that tax she talks about. It's a hidden tax on growth. So, you know, growth used to be there to help create efficiencies. Now it's unmanaged. Growth really often creates a complexity and it shows up in labor exceptions, customer service, delivery failures, all that, all that wrapped into the warehouse. So those costs kind of elevate. And that complexity is really why you're seeing a margin hit.
- [12:01]
Scott Luton
And let's make no mistake about it. Customers nor team members like that list of headaches that Tevin just shared with us.
- [12:07]
Lori Boyer
Hopefully they don't turn that video into what they listen to while they're trying to fall asleep at night.
- [12:14]
Scott Luton
All right, so Laurie, big question here, right? Why is all this happening? Tell us more.
- [12:21]
Lori Boyer
Oh, Scott, the honest answer is that everyone's Working really hard, the effort's real, but the model has really changed underneath us. So, and I don't mean that as a criticism, I mean it like literally. The operating assumptions that made E Commerce so profitable a few years ago are starting to actually work against us. So I guess here's a good way to think about it. I'd say if you talk to most E Commerce people, they're going to tell you that they're doing everything right. They're adding channels, they're growing their SKU catalog, they're expanding to new markets, they're meeting customer expectations. When it comes to speed, when it comes to returns, all of it's true. And you're doing all the right things. But. But they all just cost a lot more. So what I would like to say and where I recommend here of what's going on is that we need to stop thinking about how do we grow faster and start looking at what parts of our growth or which parts of our business are actually the really profitable parts. You know, every time you add a new carrier, you got complexity. Every time you add a new channel and you're, you know, needing to put out more ad money, all of that. So we, we need to be starting to pay attention not just to growth, but to what is profitable. They're very, very different questions. And right now there's not very many people who are really focused on that second one.
- [13:45]
Scott Luton
Laura, that's great advice already. And, and Tevin, she's right. You know, it's not like our. Our customer portfolio is not like going to our pantry and everything is a can of corn, which would be a very boring diet. But speak to what we heard there from Lori Tevin.
- [14:00]
Tevin E. Taylor
Yeah, I heard new, new, new, new. So new sales channels, new markets, new carriers, new delivery promises, all that bundled together. It doesn't show up on the P and L, but some reason you see that things aren't moving in the right direction. So stop expanding so much and so fast. Look at what's profitable and be more precise in your targets. So she's spot on. Precision, profitability, that's going to be the focus versus just, you know, the shotgun approach of trying to do everything in every channel.
- [14:29]
Scott Luton
I like it. I like it. All right, so question for you, Lori. Based on all the research and your massive customer portfolio and what you're seeing out in the industry are brands just getting priced out of customer acquisition.
- [14:42]
Lori Boyer
Yeah. I mean, some of them. Yeah. Genuinely. Yeah, I would say. Okay, so let me check my number. The average. Yeah, average retail customer acquisition cost Average. And we're talking average. And I actually want to talk about death of averages because actually looking at averages is one of our issues. But we'll come back to that. The average retail customer acquisition cost in 2024 was $226. That's gonna be totally different across industries. That's up 7% from the year over year, 60% from five years on. That was in 2025, sorry, not 2024. And that is all before you even factor in like returns. So if a first time customer returns their order, which happens 17% of the time, you've likely lost money on that new customer on that particular order. But the most important insight I think is that the what the data says about where the money actually is. Almost half of returns come because the product didn't match expectations. That's something that you can totally handle. Know content, promise someday we'll have to have a good return session because we can talk about that for 75 hours. But this is one thing I really want to say. Acquiring a new customer costs up to 25 times more than keeping 5 to 25. And your top five current. 5% of current customers, top 5% generate 35% of your revenue. Repeat customers are only 21% of your customer base. One in five, but they generate almost half of all orders. So the math is clear to me. Your profit is concentrated in kind of this small group of customers that you as a brand are often treating exactly the same as customers who are not profitable. So the brands that I feel like are really figuring this out are those who are putting the investment and their focus on those really high profit profitable customers. Looking at their post purchase experience, looking at their delivery experience, looking at all those things that are going to make them happy, keep them around, rather than just constantly trying to work to fill your funnel with new expensive customers all the time. And we did that a lot in the past. Like more and more and more and more, we need to be focusing where we're profitable.
- [17:05]
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- [18:33]
Scott Luton
Tevin in addition to Lori's data there, I recall a study from years ago, probably a decade ago, from Bain Co. And their findings showed that a 5% improvement in customer retention can increase profits according to their research, 25 to 95% depending on the industry. It the math is going to math. It pays to retain, not just gain. Your thoughts?
- [18:58]
Tevin E. Taylor
Devin yeah, that math seems worthwhile to me. I don't know, it's interesting we've had this conversation since I've been in the industry. It's I guess retention is not as exciting as going after new growth and new sales. Surely you'd think you want to spend more money retaining because the cost of acquiring is so much so the real economics behind not just E commerce, but all commerce should be driven by repeat purchases. You want to cover not only the acquisition costs, but really your company and everything you do is funded by the current customer. So let's make them happy, make that work, and then go after the right profitable growth from there. So love what you're saying. It just I think this is something. 30 years from now they're still going to be saying it's and I'm not sure why though.
- [19:43]
Lori Boyer
Maybe psychological. Tevin Right. Like because what you're saying, I get it. Like even here, all the companies I've worked for, there's channels celebrating the new sales, the new things that came in, but not so much of like oh, but this customer repurchased for the 600th time, right? It's a slight shiny new it's like
- [20:01]
Scott Luton
that McDonald's customer counter, right? They didn't count how many times they'd served the same customer because I bet that'd be a big number too. They, they always counted new customers, right? Customer served. All right, so you mentioned earlier in your response the death of averages. Yes. What does that mean?
- [20:19]
Lori Boyer
Okay, so this is where I think it's really important our dashboards are Lying to us. Honestly, they're polite, but they're lying to us. If we look at our average order value, the average shipping cost, the average return rate, those numbers are going to contain both the very best, those really profitable orders and your super unprofitable orders. But they're all kind of being treated as the same thing. So the problem is that our most profitable orders are, and the most destructive ones are both part of that average, but they make it so that you don't see them as well. So you're only looking at the average, I'd say. Okay, so let's look at it in practice. So let's say you've got this cohort of super loyal customers who are ordering frequently, they hardly ever return. These types of people spend 67% more than first time buyers. But then you've got this other cohort of first time buyers. You got them, you paid an ad to get them, they placed a $22 order, they returned it, it cost you 10 bucks in fulfillment, $7 in returning, and suddenly you didn't even make anything. But both of these are just averaged out and so you don't really see them. They both become a little bit invisible. But both of them influence your decisions. Like on, oh, what service level should I be doing, what carrier selection should I make, what should my return policy be, how much should I be spending on marketing? They're both impacting equally, even though they represent totally different profitability amounts. So we're making our decisions based on average because it's easy. I mean, obviously that makes sense. But what really, really matters is your contribution margin per order. What did this specific order actually give you? How much revenue did you make after you take into account the cost to acquire the customer, the cost to fulfill the order, the cost to ship it, the probability that it's to going, coming back. And most people just don't have that number. They, they know the revenue, they know the averages, they know their shipping costs in aggregate, they know their return rates, but they don't know how to connect it all. So, and it's, it's hard because they are typically sitting in different systems. But here's the thing, you guys, once you have that number, every other decision can change. You make different choices for different orders. You're going to identify which customers deserve the premium delivery, which ones need proactive communication, which ones need to make sure that they've got the perfect visibility. So yeah, at Easy Post we see this on like a massive scale because you know, across billions of shipments, it can make a Huge amount of money. We just need to make sure that we're individualizing the way we're treating different orders. But first you have to know what. What it is, what the contribution margin per order is.
- [23:18]
Scott Luton
Right. Tevin, you used the word precision earlier.
- [23:22]
Tevin E. Taylor
Sure.
- [23:22]
Scott Luton
And there is a tremendous opportunity to follow Lori's proven advice that's based on data and industry and reality and apply precision customer by customer. Especially leaning into the state of technology these days. But your thoughts, what we heard there from Lori.
- [23:40]
Tevin E. Taylor
Yeah, I'll be a little long winded here, but, you know, averages are like, your head's in the oven, your foot's in an ice bucket, but your temperature is good. Right. So the thing about averages, like, let's say you're making a lot of money on a customer and then you're losing money on another customer. Those are both bad, by the way. If you're making too much money on a customer, you're going to lose that customer because you're probably priced too heavy. If you're not making any money, that customer is happy because they're getting the same service that everybody else is getting. So you've got to evaluate. I love the contribution margin, the precision of knowing where you are per client and where that profitability is. You want to protect the one maybe you're charging too much to because they will leave you and they will be so sad that you are charging them too much. And then the person that's not paying enough, they might be sad, but you're not making money on them anyway. So guess what? That's not a customer you want. Or you need to adjust what you're doing to make sure you are making money. And it helps your complete business model to look at it per customer. If you look at averages, on average, you think your business is doing well because you're looking at the wrong number.
- [24:44]
Scott Luton
All right, pardon my distraction, but I had to write that down. Let's see. Head in the oven, foot in the. I love that.
- [24:52]
Tevin E. Taylor
I love that.
- [24:53]
Scott Luton
I'm gonna steal that from you.
- [24:54]
Lori Boyer
So true. It's so true.
- [24:56]
Scott Luton
Lori, you've made clear that one of the things that we got to be looking at is contribution margin per order.
- [25:03]
Supply Chain Now Narrator
But what.
- [25:04]
Scott Luton
How else would you answer the question? What should folks be looking at?
- [25:07]
Lori Boyer
Okay. I mean, it's hard. Most people don't have that number. The contribution per order. I get it. I mean, it requires connecting data in three or four different systems. Maybe you've got your cac, your customer acquisition and marketing. You've got your fulfillment in your 3PL invoice. You've got your shipping spend in your carrier portal, like easypost. Your return might be in your oms. And stitching them together, it seems a little bit hard. But when you do, it is so, so worth it. So worth it. You might see like a specific product that has a 40% return rate and that's like killing you. Or you get, oh, this specific cohort of customers who are generating tons of revenue. What kind of experience should we be giving them? So it's really, really worth it. I'm going to say start. Everybody is going to shock. Start with a spreadsheet. I know we all love our technology, but listen, you don't have to have a platform. I'm sure you can get some. Start with a spreadsheet. Pull three months of your orders, add your cap by acquisition channel if you can. Or you can estimate it if you don't have it. Add fulfillment cost per order, add your shipping costs per label, add a return flag, and then calculate your margin per order. It's really, it's math. It's a spreadsheet, but you can sort by margin. What is your bottom 20%. What are you seeing? Exactly what Tevin was saying. Where are we losing money? We do not need to be spending extra to make those people have some sort of amazing experience. Where are your top. What are the orders? Especially look for commonalities. What are you seeing? Like, oh, wow, wait, maybe even just shipping in a certain zone is putting people really expensive. Or maybe, you know, certain marketing platforms are really killing it and you can bring in more customers there. You need to look for trends, similarities, and that's where the work really starts. So you don't need to get a fancy system to start.
- [27:06]
Scott Luton
All right, so, Lori, I love that, Frank. Keep it. Real advice. And I gotta keep. I gotta, I gotta.
- [27:13]
Lori Boyer
Not very often. I recommend spreadsheets. There's probably like 10 people dying right now.
- [27:17]
Scott Luton
Well, Tevin, your thoughts on the advice we heard there from Lori?
- [27:19]
Tevin E. Taylor
It's the KISS method. Keep it simple. Stupid, right? So it's like sometimes we do go too much. Like, why not just you? Well, sometimes it's just going back to the basics. I mean, the spreadsheet approach and what you're saying, it's really just the first step of giving visibility to a problem. You know, you don't need a massive system to do that. You can do it in simple terms and then you can figure out what to kind of bring in to fix the issues. But start with the simple. Bring crayons to the Meeting, everybody will be excited and then go from there, honestly.
- [27:48]
Lori Boyer
Because sometimes I think, we think, oh, I can't do it unless I have a fancy technology. It's almost like our justification, our excuse. Well, it would be nice if we could have visibility, but I can't. They don't connect. Right. We can't.
- [27:59]
Tevin E. Taylor
It hasn't given me the tools to figure out running.
- [28:02]
Lori Boyer
Sometimes it's back to the good old fashioned tools we've got.
- [28:06]
Tevin E. Taylor
There you go.
- [28:06]
Scott Luton
Right. And whatever powers knowledge and action. Right. For some that's going to be a spreadsheet. Lori and Tevin aren't saying, hey, run your billion dollar supply chain with spreadsheets. No one is saying that. I love Lori's practical advice here because it's a good gut check. So, all right, so once we can see which orders are profitable, Lori, what comes next?
- [28:29]
Lori Boyer
Okay, so I would then segment them. So again, not by a lot of the traditional segments. We had to be segment by demographics or by acquisition channel or whatever. No, segment them into their actual order economics. So who are the most profitable? What do those order profiles look like? What is their average order frequency? I'd look at their return rate, their shipping destination, what it costs to acquire them. And then once you can see that really clearly, you can start to identify new customers who are looking like those profitable ones but are just a little earlier in their relationship and really focus on keeping those. Those are going to be, you know, you got your ideal customer here. You see some who have that potential, really do well. And then I would say the second thing is to differentiate your service levels. Your top customers deserve a better delivery, promise more reliable carrier selection on specific lanes. They deserve proactive communication. They deserve quick returns. A loyalty customer in zone four who orders every three weeks is. You should have them routed differently than a first time buyer in zone seven on a ten buck order. You know, not to make it worse, just right sized. Right. The, the $10 order doesn't need to have overnight shipping and all this amazing stuff. Put your money into the customers that are really worth it. And I have one more thing, third thing I would say is use technology. Again, I'm not all spreadsheets use technology to make those decisions at scale without manual rules. Because that is true when we're in the shipping industry and there are a lot of stuff going on, you need to be able to do that. So when you segment your customers and build routing rules, it, it works until you have like 6,000 different profiles and 100 different rules and scares. This is where you need to use technology, AI to you make the decisions on what works and then you put them into place so that you can execute those, you know, at the shipment level, at the specific package level. There was a customer that I was working with recently that was doing something like this. They just let AI evaluate every single shipment against all of the different data that they'd brought in. And then their labels were being evaluated based on the rules they'd put in instead of those averages, that death by averages kind of thing. And the results, they were just getting cheaper, but also better. I feel like that's rare sometimes. Usually it's like if it's faster, then it's going to cost more and if it's cheaper, then your performance is going to be worse. But when you do use AI and technology, there, this is where it really, really works, is finding those areas where you can get both and get really accurate decisions. So, yeah, technology can absolutely help. But technology is only useful as a strategic, as the strategic question you're asking it to answer. So if you're not asking it the right things, if you're not looking at what's important, those really profitable orders, which order matters most? What is the right experience? Look for each different group. That's when you run into problems. Defaults of just across the board for everyone is going to make it so that your profit margins are getting smaller
- [31:49]
Scott Luton
and smaller and smaller, which is no bueno, just level set there. All right, two quick things, Tevin, that I love that Lori mentioned. One little clarification because I think she mentioned the LTV acronym. So just to make sure everybody's with us. Lifetime value, right? Lifetime value. Some folks, some organizations call that CLV or cltv, I believe. But just make sure everybody's with us. But more importantly to her point, on different decisions for different orders, folks, you take a cookie cutter approach at your own peril. And it's easier to not take a cookie cutter approach here in 2026. Tevin, what'd you hear there from?
- [32:26]
Tevin E. Taylor
Yeah, I mean, I'm staying in a Hilton Hotel because 26 years ago I started staying in Hilton and they were smart enough to get me hooked on Hilton Honor points. Right. I fly American Airlines because the loyalty program like they do segment you because they, you know, they treat me differently because of how much money I spend with their brand. The same is true in every commerce division. If you try to treat all customers equally, they'll switch brands very quickly because there's nothing tying you to that brand and that experience. If everybody gets the same experience Then there is no real experience. So I do like the AI key as well. So I mean AI is going to help make thousands of operational decisions and it's going to make things smoother and faster where you can focus on strategy and customer experience versus all the noise that happens in operations. So that's kind of my feedback on that topic.
- [33:17]
Scott Luton
I like it, I like it. And hey, let's apply AI to logistics. We don't need AI to make toast, right? Let's keep it simple.
- [33:25]
Lori Boyer
But we do need some AI toast.
- [33:28]
Scott Luton
Everybody, everybody is talking and doing using AI in logistics. And I'm curious. Lori Given, again, you got your finger on the pulse. A ministry like few do. What are you seeing that actually works right now?
- [33:41]
Lori Boyer
Okay, I think the AI story in logistics is actually a little bit boring and I think say that as a compliment. And you both know how much I love AI. But the reason I say boring is because the applications that are actually working and, and really making people profitable in the industry right now aren't like the science fiction sexy ones that you're like, holy crap, they turned all my data and da da da, right? They are the ones that just are taking the decisions your team has typically made manually a thousand times a day and making them better, faster. The clearest example I think I could think of is maybe I can point to like service level selection. Again, I live in the shipping world so I always think back to shipping, but at the moment of label creation, so we've seen in the past before AI, a lot of operations would pick a primary carrier, set the service level defaults and then just kind of move on. And the routing logic would run underneath it. All that's typically been static. It was built once. Maybe if they were being well behaved they would look at it quarterly and everything was kind of applied to the same label regardless of what the data would say. And again, obviously with 25,000 labels a day or however many those defaults would add really fast. With AI that has really changed and this is boring, it's underneath the line. But we had a customer recently which I think was super fasting. So they started using the AI tools to like look at their shipments. They were shipping with a certain carrier, they had multiple carriers, but one of their carriers that they used heavily, they weren't really happy with their rate, with the on time rate. It wasn't, they were having a lot of late packages, 25,000 labels a day, you know, it was a lot of packages run late every day. So they started looking into like they were, we were working with them at easypost to look into like what, what could AI find is, is there something else they could do? So they were using AI. They evaluated each shipment at the moment of label creation. They looked at the destination zone, the package profile, delivery window, the cost and the historical performance data across what they could do with this. What's interesting here is they actually did not switch this carrier. They kept the carrier as one of the big carriers. They didn't renegotiate a contract, they didn't change their packaging or fulfillment, they didn't add headcount, nothing like that. They just changed which service level was selected for each package, which zone they were using. They ended up improving. So they ended up saving $2 million a year simply in cost, which wasn't even what they were looking at, but also had about a quarter of a million fewer late deliveries over the year and they didn't even switch carriers. That was simply an AI working to say you're just making some label decisions wrong on which routes to use, which service levels to use. And then when you do that at scale, it's just so much easier than having a human do it 10 times a day. So that's where I see AI really working right now in specific use when there's a lot of unorganized data that you might be able to take advantage of. And kind of running below the scenes, that's where we're seeing it be really effective and not necessarily making our toast yet, which I, I'm still ready for that. I'm okay with the toast, but that's, that's the science fiction.
- [37:00]
Scott Luton
I love that and I, I hate that AI is going to make whole wheat toast and make me put marmalade on it. But anyway folks, it's going to optimize
- [37:07]
Lori Boyer
for your healthiest diet. Scott.
- [37:09]
Scott Luton
I know, I know, but one of the, one, one of the things I think is exciting and, and maybe you know, talk about it a lot, but how AI is not only making decisions and decision making process easier, but it's eliminating the need for humans to make the decisions more and more. And of course that eliminates the need for meetings, for more meetings, for. I mean let's, let's, we don't have to meet on, on the hour, every hour, every day and all that's a beautiful thing.
- [37:38]
Lori Boyer
And it really slows things down. Right. Like you get into this meeting and suddenly you're spending two hours discussing what you should do when you could have just moved on.
- [37:45]
Scott Luton
Yeah, it could have been a slack, could have been email and in more and more cases, it doesn't have to be anything at all because technology is eliminating human oversight or human decisions in some cases. Tevin, that case study that Laurie shared, that dog will hunt, as they like to say here in Georgia. Your thoughts?
- [38:02]
Tevin E. Taylor
It absolutely. I've been using AI all wrong. I'm doing videos show dunking a basketball and the owner of my company send those videos to him on a random basis, which aggravates him, which is fun. But I mean, gone to the case study and gone everything you're seeing, logistics, it is a boring story right now, but it's a good story. To your point. It's. It's helping make decisions at scale, so selecting the right carrier, choosing the right service level, kind of predicting performance. It's doing all the optimizations that a lot of people are doing, but it's not replacing people. It's helping make the right decisions and putting people in positions to focus more on the customer. So I think that's the element people miss is, you know, it's kind of like meetings and PowerPoints. Now that you see that you can use AI, that time you are spending putting stuff together, you can focus more on how to make the customer experience better.
- [38:55]
Scott Luton
Lori, a lot of brands assume faster delivery is always better, but of course I've heard you push back because a lot of times we talk about that here. Why, why do you push back with both hands in all of your might against that dangerous assumption?
- [39:12]
Lori Boyer
This is again where we're going back and we're kind of operating on something that was true five years ago. Customers have really changed as we've gotten really used to, you know, online shopping and, and all of that really booming. What's interesting, I, I didn't look, I didn't look it up, but I'm pretty sure it was fourth place. So for years, speed was the number one concern of customers when it came to shipping. It's now like number four. It might be number five. So what they actually want today is reliability. So in some ways, a package that says it's coming on Tuesday and comes on Tuesday, a customer likes that better than even a package that said it's going to come on Tuesday and comes on Monday. You know, definitely not Thursday. We know if it's going to come late, they would much rather have known it was coming on Thursday and it came on Thursday than that you said it was going to come on Tuesday and it came on Thursday. Even though it arrived the same day, they're okay. So people don't care as much about fast shipping as we once did. They want to know that it's reliable, that it's going to show up. They want visibility. So you know, where's my order, what's going on? Customers need to know, wear their packages all the time. Those are both in the, in the categories of being more important than just being fast. And so I think that you've got to make sure that you know you've got reliable delivery. So that's another thing to look at. If you get a reliable carrier who's going to be coming in four days in that zone, in that area, in that package level, versus an unreliable one, you know, maybe who are having more of those late deliveries like I talked about with that other customer and it's two day delivery, that's probably not going to be worth it, even if it's the same cost. So data to make that you understand that is really important to look and see on each carrier, each route, each delivery, what is going to be better, faster is better if you can deliver it and it's not too expensive. The problem becomes doing it at scale and, and trying to think that you need to do it for everybody. We just won't anymore. That customer sentiment is actually shifting.
- [41:21]
Scott Luton
You know, I saw another data, a related data factoid and this is not going to sound new for folks that may have tuned in some of our previous conversations. Laurie and Tevin, some research shows that 98 of shoppers say the delivery experience highly influences brand loyalty. Now that shouldn't, that's probably not news to our smartest audience in all the world of global supply chain, but I think it's good to kind of put a data point on things like that. Tevin, your thoughts on Lori's perspective about some of those dangerous assumptions that companies out there are making?
- [41:56]
Tevin E. Taylor
Well, you know, customers are building their expectations around a promise. And so you don't have to be the fastest, but you need to be accurate and dependable. So what's the old saying, you know, under promise over deliver. So you know, it's not under promising, it's just don't stretch yourself, you know, make sure you actually hit the target you're trying to hit. Again, you don't have to be the fastest. I know people got kind of wrapped around the axle Amazon delivers to me in two hours. It's not the two hours that matters, it's if you say two hours, make it two hours. If it needs to be tomorrow, make it tomorrow. But don't miss that window because they're building everything around that Expectation.
- [42:32]
Scott Luton
I thought that old saying had something about a head in the oven and a foot in the icebox.
- [42:35]
Tevin E. Taylor
That's the other one.
- [42:36]
Scott Luton
Yeah, I love that one. All right, so in your previous response, Lori, you used one of my favorite words. You used optionality. So when, when you think about optionality in practice, what does that mean to you?
- [42:54]
Lori Boyer
Okay, traditionally, when we talk about carrier diversification, we talk cost only. You know, you're going to use multiple carriers because you'll have rate options and you can shop the best price and the best label.
- [43:07]
Tevin E. Taylor
And.
- [43:07]
Lori Boyer
And that's true. I mean, it still matters. Obviously, we need to save, but I think it's not necessarily the most interesting version of getting options. And so optionality to me means something bigger. It means, you know, when UPS implements a 5.9% rate increase, which they have done recently, or FedEx does, or anyone else, USPS did their first fuel surcharges, all of that, that you have some other options of where to go. We're seeing, especially with the biggest carriers, which I, whom I all love, they have a lot of surcharges going on and a lot of the, maybe smaller regional ones or some of the alternative carriers often have, you know, different options there. So if your carrier caps your delay, your daily pickup volume during peak season, which happens, we see too often with customers, you're not stuck with 3,000 orders. You can't move. And it means that if a regional carrier is outperforming your primary character in a specific zone by 2 days and 40 cents a label or something, you can actually act on it without having to have a big project. So single carrier is like a single stock. It's doing great until it's not doing great and then you don't really have a lot of options. So I, I think we need to. Look, the goal isn't just more carriers like in the example I shared earlier. It was just better decisions. So having access to five carriers isn't going to help if you're just doing the same old static routing logic that's, you know, treating everyone like an average and doing all of that. Optionality only has value when you're actually using it in the right way. So you got to turn your carrier strategy into a logistics tactic, into a margin strategy. It's got to be about margins.
- [44:51]
Scott Luton
So I want to say one of your key points there, louder for all the folks in the back and outside having picnics, you know, whatever is the goal is not more carriers. It's better decisions. And that's not theory that goes Back to the case study, Laura was talking about $2 million and over 270,000 less late deliveries. Those are much happier customers. And as we, we establish up front data driven, happier customers lead to repeat orders. And that's where the profit is.
- [45:21]
Supply Chain Now Narrator
Folks.
- [45:21]
Scott Luton
This is not, hey, if I could understand it, anyone can understand it. Tevin, what'd you hear there from Lori?
- [45:26]
Tevin E. Taylor
Yeah, I mean market shift, rates change, gris happen, capacities tightening. No single carrier is going to be your best solution for every shipment, for every geography, every zone, every objective. So this, this gives brands a flexibility to adapt quickly and it's not just for the sake of adding carriers because that does add complexity. But match that up to the fact that you can figure out, you know, which shipment needs to go to which geography and how it accomplishes what you want. So absolutely great for decision making and it helps you have flexibility with your clients.
- [46:03]
Scott Luton
That's right. It's a slam dunk. Hey, Tevin.
- [46:05]
Tevin E. Taylor
Hey.
- [46:07]
Scott Luton
All right, so bottom line, Lori, gotta get to the bottom line, right? You, I love how you bring it. The bottom line here. What separates those operators out there? Some are tuned in that are winning right now, really. They're finding success even in this, this highly disruptive era we're in versus those that are really just struggling.
- [46:27]
Lori Boyer
Yeah, I would say again, they are not optimizing just for volume, not for order volume, which was really what we focused on and we still focus on. I mean we want lots of people but we want good orders. So be optimizing for order quality and not just volume. The operators who are protecting their margin right now would know that the stat, the contribution margin per order or you're working towards it, actively be working towards it. These, the, the great operators are the ones who are treating delivery as a retention tool, not a cost center. Again, 76% of customers who have good delivery, they're going to come back. You should be building optionality in like we talked about so you're not held hostage every time a carrier raises a rate or capture volume or has just some storm issues or whatever's going on. The best operators have built systems to catch the exceptions before their customers do. A lot of orders go wrong and keeping an eye on that, being proactive about it and really just making the different decisions for different orders based on the priority and the revenue they're bringing in. Instead of applying the same service level, the same delivery promises the same fulfillment and post purchase to everything across the board. It's just, it's not magic, it's, it's not a Technology problem, at least not primarily. Technology is great. It's a question of what questions are you asking about your own business. We cannot anymore win just by getting more orders. More orders, more orders. Instead, we need to be getting the right orders, the profitable orders, and treating them differently. You don't have to have 17 different buckets of people, but at least three super profitable, super non profitable and everybody else. Start at least with that and make sure that you're treating them differently. So they'll all go to the Hilton like Tevin or like me. I am somebody's dream customer because I have seven kids and so I buy so much stuff. If I'm buying so much stuff from you, you know, treat me well and make sure that when I have a return that you're dealing with it. And because that's a lot of money that gets lost if I go somewhere else.
- [48:48]
Scott Luton
Can you imagine Kroger or Walmart or whomever when Lori walks in for the weekly grocery. Oh, man, they're laying out the red carpet, getting their calculators ready. I mean, they're delighted. But Tevin, what did you. I think we heard a lot of kidding aside, we heard a lot of grounded, actionable perspective in Lori's last response. Your thoughts?
- [49:12]
Tevin E. Taylor
Well, I'm, I'm wishing Lori's kids grew up when where I was because I'd have five kids and two on the bench just for a basketball game. That would have been awesome.
- [49:19]
Lori Boyer
But I love basketball, Tevin. I played all through high school.
- [49:22]
Scott Luton
So there you go.
- [49:23]
Lori Boyer
You got a full team tall.
- [49:27]
Tevin E. Taylor
So the best operator. She said it like, you know, you got to look at customers are profitable orders that are profitable, but understand the true cost of delivery. But really tie that all into viewing logistics as, you know, retention strategy. It's not just transportation expense. It is good for the business, it's good for your revenue, it's good for profitability. We already talked about flexibility quite a bit. But look, the success is of, of any brand is going to be getting profitable orders, delivering consistently and creating those customers who keep coming back again and
- [50:01]
Scott Luton
again, by the way, just to close the loop, make sure everybody's with us. We were implying this, but I don't think we mentioned it. Lori has a big, beautiful family. That's why the grocery stores are delighted. Tevin's ready to staff a whole basketball program. So. All right, Lori, for those operators out there, maybe they're listening or they're watching. Maybe they're on the replay, watching us over on YouTube or what have you on their podcast player. How does EasyPost actually help and where do people start?
- [50:32]
Lori Boyer
Okay, so EasyPost lies, as I've kind of mentioned in the shipping piece. That's my world. There are multiple phases to this and you want to hit all of them. Easy Post is in that shipping piece. It sounds narrow, but it's not really. Shipping is typically up to 15% of revenue and we see a lot of brands who are just kind of managing it on autopilot. There's a lot of ways you can, I would say with easypost, look at our, we have an Insights tool. So especially if you're an easypost customer, look at Luma AI Insights. It'll connect your shipping data, show you what you're actually spending by carrier, by lane, by service level, where the gaps are between what you're paying and what you could be paying. We find that most operators who go through that for the first time always find savings they didn't know existed. The cost is sitting there. It was just defaults right from there. I would say look at our AI Select Luma AI Select. It takes it a step further. It'll automate that carrier and service level decision in the moment of the label creation. So every shipment just gets routed based on performance data rather than just the static rule. That's where we see a lot of that kind of 15% cost savings coming in. And honestly, beyond just Easypost and getting that really good multi carrier strategy, multi decision route, look at your data. A lot of brands just haven't done that at an order level. We're looking at averages. We're running on rules that worked five years ago that really aren't. And get in at. Set up some time for yourself to do that. But if you are an Easy Post customer, please just reach out. We can help walk you through our loom AI tools are included with easypost so it's part of what you're already getting. Let's chat and make sure that you're saving as much as you can, at least on the shipping portion. That's where EasyPost comes in.
- [52:25]
Scott Luton
Outstanding, Lori. And we've heard lots of feedback. You know, we've had quite a few conversations together and I love the conversations between the conversations, especially from folks that have worked with Easy Post. So folks, it's a massive opportunity. Tevin, I've got a the toughest question of the whole day that I'm opposed to you because Lori shared a lot of competing thought provoking moments and eureka moments and the like. But what is your top takeaway from today's conversation with The Lori Boyer.
- [52:59]
Tevin E. Taylor
I took a lot of notes here and chicken scratched over here. But I think the one liner that really is the future belongs to brands that understand profitability of every order. They use technology to make better logistics decisions and most importantly, they prioritize customer lifetime value over simply just acquiring more customers. That's, that's the summary. I kind of. You can't read my handwriting, but that's what I got.
- [53:27]
Scott Luton
I love that. I think you did the excellent job and I would just add to that. Folks, we talk all the time about what's within our control and what's without our outside of our control. And we how we ship is almost perfectly within our control. So we got to ship smarter and there's all sorts of ways we can do that. If you don't get help at Easy Post, get help somewhere as I like to say. But it's a tremendous opportunity here. So we got some resources here. We're gonna make sure folks know how to connect with. Lori Boyer. I want to share a couple of these resources, starting with this one here. Y' all got, y' all bring a whole tool belt. Lori, every time we get together, you're sharing more tools with me that are oftentimes free to use and access. Folks just like this one here. You know, check out how you can use this multi carrier strategy reference sheet to make much better decisions that will help your supply chain ecosystem. And then even better yet, and by the way, that's got five steps. Five steps, man, I can follow five steps.
- [54:29]
Lori Boyer
We can handle five.
- [54:31]
Scott Luton
Yeah, this other thing that we want to put more meat on the bone, so to speak. Because Lori brought this up and this is something I've been, I've been digging into for a couple weeks now. And that's this case study that she mentioned where that recommerce platform that ships over 25,000 orders a day. What leverage easy post Luma AI again save $2 million. But even better yet because I bet this, this, this saving over 200 or eliminating rather over 270 late deliveries. That bottom line is probably a bigger number than the 2 million. Not changing carriers, not renegotiation, renegotiating terms, not even adding headcount. That is impressive. And you can learn more via that case study right there or Lori, I know you welcome conversations, I know you get calls, LinkedIn, invites, emails, you name it. When you join us here, how can folks best connect with you? Laura Boyer.
- [55:28]
Lori Boyer
Yeah, please reach out. I'm on LinkedIn. I'll keep an eye for you there. You can email me l boyerzpulse.com but I let me know what questions you have. Like I said, my what I enjoy doing is figuring out what are new trends coming on, what challenges are you seeing? If you're having problems in certain areas, let me know. And I'm happy to gather the data and and be your. Your nerd friend who can help you see what you need to do and where you need to go. It doesn't need to be related to easypost at all. That's just something I'm really passionate about is helping people be successful. Because there are a lot of opportunities that we're often missing out on. So reach out. Happy to chat. Or you can join us again. My podcast, Unboxing Logistics. We have a great community over there as well. I could get a guest on that you're interested in hearing from, so just let me know.
- [56:21]
Scott Luton
Laura shared a couple different ways you can connect with her. Be sure to add Unboxing Logistics to your podcast player list. She's doing great work there. Okay, so Tevin Taylor.
- [56:32]
Tevin E. Taylor
Yes, sir.
- [56:33]
Scott Luton
Lori Boyer did not fake the funk on that nasty dunk here today, right? All I can think about is you slamming that basketball. Tevin, I gotta see the video.
- [56:44]
Lori Boyer
I need a dunking video.
- [56:46]
Scott Luton
I'm never gonna lie. Same man. I got like a 3 inch vertical, you know, I'll never dunk a basketball. Bring your questions big and small to Lori. Whether it's about the podcast, whether it's about taking advantage of massive opportunity to change how you ship and delight your customers even more, or anything we talked about here today. But I want to thank the one and only Lori Boyer with Easy Post. Lori, thank you so much for being here today.
- [57:10]
Lori Boyer
Oh, thank you. I love your community, I always say. I love work, chatting with you and Tevin here. Love this industry. We can be nerds and be happy and proud about it.
- [57:22]
Scott Luton
That's right. We need t shirts, shipping nerds. Well, the feelings mutual. So thanks for being here, Lori and Tevin E. Taylor, always a pleasure. Always learn something when you when you pop in and I co host these sessions with you. Thanks for being here, my friend.
- [57:38]
Tevin E. Taylor
Thank you for having me, folks.
- [57:40]
Scott Luton
Most importantly, thanks for all of our audience members out there. We appreciate all of the your support and the feedback that y' all keep sending us because feedback is a blessing. But you all know you got homework and Lori gave you lots of options. Back to optionality, right? Take one thing that Lori Boyer brought here today. Just one thing. And maybe half a thing from Tevin too. And do. Do something with it. Do something with it. Take action. Deeds, not words. And with that said, Scott Luton here on the behalf of the entire Supply Chain now team, do good. Give forward. Be the change that's needed. We'll see you next time right back here on Supply Chain Now.
- [58:17]
Tevin E. Taylor
Thanks, everybody.
- [58:19]
Supply Chain Now Narrator
Join the Supply Chain now community. For more supply chain perspectives, news and innovation, check out supply chain now dot com, subscribe to supply chain now on YouTube and follow and listen to Supply Chain now wherever you get your podcasts.