James Peacock Of SKU Distribution On The Supply Chain And The Future Of Retail

An Interview With Martita Mestey

Make the return of items accessible and the return shipping labels easily generated for the consumer, whether you’re emailing them a shipping label or generating it online during the returns process. Consider the use of return apps like Returnly or Narvar.

As part of our series about the future of retail, I had the pleasure of interviewing James Peacock, CEO of SKU Distribution.

James Peacock’s personal goals bleed into his professional goals as a small business owner. Growing up in Wyoming, he didn’t have a lot of money, and now that he’s married with three boys, he strives to provide them with the opportunities he didn’t have. Having worked for small and large businesses in the past, James has a deep conviction and desire to create a workplace that encourages and empowers employees. As CEO of SKU Distribution (https://skudistribution.com) in Chandler, AZ, James’ biggest priority is to cultivate a culture where everyone has a say.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

I owned an international shipping company for almost a decade. I was the first to market with a DHL Express check-out app for Shopify that allowed our clients to display their discounted shipping rates to overseas consumers online. I started noticing my larger shipping clients were leaving and going to fulfillment companies. I knew at that point what my next company was going to be. I sold that business in 2016 and started SKU Distribution in February of 2017. I knew the name of the company and the design of the logo immediately after coming to this conclusion. I wanted to do it better than anyone else in the market and give the small to mid-market companies the attention the more prominent fulfillment companies were not. I made many mistakes initially, but I quickly learned from each one of them and kept my head down. We have been operating at 99.9% accuracy for the last three years, which is best in class in this industry.

Can you share the most exciting story with you since you started your career?

My most interesting story would have to be when I started SKU Distribution. I had the website completed, warehouse management software purchased, and shipping carriers lined up, but I didn’t have a warehouse. I became very good at online marketing with my last company and wanted to see if it would transfer over from international shipping to warehousing and fulfillment. I ran my first minimal marketing campaign in February 2017, knowing I didn’t have a warehouse. I didn’t think I needed one yet. Within hours of launching that campaign, my phone started ringing. I remember sitting at my counter eating Chick-fil-A (a number 1 with non-sweet ice tea). I was just sitting there talking with my wife, and the phone rang.

The first call came in, and I stood up from the chair in a panic and asked my wife, “what am I going to say?” I winged the first few calls, and by March 2017, we had our first three clients. I immediately had to get a warehouse. Fortunately for me, a friend of mine had 14k sqft available. Within three months, we outgrew the 14k sqft and moved into 19k sqft. Within ten months, we outgrew that building and moved into 40k sqft. I learned a lot in that process and am still learning today. Five years later, we are occupying 175k sqft and employing over 20 full-time staff.

Are you working on any new exciting projects now? How do you think that might help people?

We are constantly working on ways to be more efficient in every aspect of our business. We get ideas from employees and our management staff and implement processes to make them faster, efficient, and more accurate. We achieve this through workflows in our software. We want to make our employee’s jobs as easy as possible. The more accessible and more efficient they are, the happier they are. No one likes to go through useless time-consuming steps. It’s annoying ☺

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

It’s hard to pick one person because I’ve had a lot of help from friends along the way. I must acknowledge that my faith in God is essential to my success. My wife has been my rock and has hung in there through all the sleepless nights and that fine line of nearly becoming bankrupt. She stood by me through it all. She’s a fantastic person, wife, and mom.

In 2019, I had spent all the money from the sale of the business. We were 30 days out from not being able to pay rent and not pay the staff. We got a 90-day deferral on the lease of our building, and I started making calls to friends who might know of anyone who wanted to partner with us on the east coast. I hoped to find an east coast shipping company trying to get into warehousing and would like to partner and inject some cash. I called Cathy Battreall, who lived in Florida and purchased my last company. I had stayed in contact with Cathy ever since the sale. I asked her who she might know in Florida because she was in the shipping business. After about 30–45 minutes, she said, “Let’s do this.” I wasn’t sure what she meant at first. She said, “I believe in you,” and “let’s do this together.” The business was losing money each month because we were growing too fast. She took a more considerable risk than anyone ever had and jumped in with both feet. She injected over $1MM in the first year. By the second year, she was paid back. She’s the best partner I could have ever asked for. Her strengths are my weaknesses.

How have you used your success to bring goodness to the world?

I’d like to think we are improving our employees’ lives through our culture and philosophy of paying our employees very well. We are very concerned with our employees’ lives outside of work, and we step in and help whenever we can. If we hear an employee is struggling, we try to step in when appropriate and help. A lot of times, that’s financial. Other times it’s time off with pay when they have no PTO left. We care about our employees and have a deep conviction of wanting their quality of life to be better once they start working at SKU Distribution. It has been my pleasure to assist many employees over the years. I do this because it’s the right thing to do by giving back to our team, not for any special recognition. We request that our acts of kindness not be shared with other staff members.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

The most obvious is the need for 3rd party warehouse and fulfillment. Since there’s a massive decline in foot traffic in retail stores, the retailers are forced to outsource more warehouse space and find companies capable of accommodating all aspects of fulfillment, whether that’s direct-to-consumer fulfillment or shipping directly to retail or their distribution centers. We’ve had some substantial companies reach out to us who need help storing their goods to keep up with demand. We’re now sending their products to the consumers and their retail stores on-demand. One of our clients consolidated their inventory in our warehouse and is now operating out of one location. Less inventory is required because you do not have to spread it out over multiple warehouses. That won’t work for some retailers but will be necessary for smaller ones.

The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?

They are ordering more inventory from overseas and warehousing it. Since our start, SKU has specialized in D2C fulfillment and has expanded our capabilities to Direct to retail. We’ve seen an uptake in integrating with their order management systems and directly with their website. The focus has shifted to an online presence. That means order fulfillment needs to ship out the same day. It also means their inbound inventory needs to be received, put away, and ready to ship within 24 hours of receipt of goods. The pressure is on fulfillment companies to perform and have the staff required to make it happen. It’s stressing the entire industry.

How do you think we should reimagine our supply chain to prevent this from happening again in the future?

We are in this position because everyone’s inventory management strategy was Just In Time (JIT). When the global supply chain bottlenecked, that practice left retailers without inventory on hand. I think retailers are more open to looking outside China for sourcing their goods. Outside warehouse capacity is a new requirement for them because they can’t experience another global supply chain problem. The time it takes to get inventory from overseas has tripled, not to mention the cost has quadrupled. The landed price needs to be recalculated, and I think consumers will start to feel this. The demand for warehouse capacity is also strained. Arizona has only 4% capacity left, and most of the built warehouses are already spoken for. Company culture will play a huge role in employee retention and attracting new employees.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

Yes, I think retail stores will stay. People still like to try on clothes and go shopping. However, I think some retail spaces in malls will become mini-fulfillment outlets, where they store and ship goods from online orders. Rather than having a warehouse, they ship out of retail space. I don’t think this will be true for large metropolitan areas, but it seems like a good use of existing space that is currently not in use in some rural, less populated areas.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

The expectations for next-day shipping have been somewhat right-sized with the pandemic and the supply chain bottleneck. With that said, I would advise them to focus on same-day shipping with a goal of 2-day delivery. That’s not going to be achievable, especially around the holidays. FedEx, UPS, and USPS will exceed their volume capacity, and some packages will simply not be picked up the same day. My advice is to stay consistent with same-day shipping with a 2-day delivery goal. Focus on making the returns process as simple and easy as possible. It shouldn’t take the consumer too many clicks to return items with a shipping label they can print out during the return process. And offer free shipping. Remove that objection from the consumers whenever possible. That is usually when the consumer exits the site and impacts your conversion rates. Lastly, know your numbers. Know where potential consumers are leaving on your site, understand your conversion rates, and see why they’re going.

Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.

• Reduce your sku count and focus on the best-selling items.
• Make sure the check-out process is simple.
• Offer free shipping.
• Have a No-Hassel Return Policy and make sure it’s easily accessible to the shopper.
• Make the return of items accessible and the return shipping labels easily generated for the consumer, whether you’re emailing them a shipping label or generating it online during the returns process. Consider the use of return apps like Returnly or Narvar.

My particular experience is in the grocery retail industry, and I’m passionate about addressing food deserts and addressing food insecurity. Can you please share a few things that can be done by the retail industry to address the problem of food insecurity?

First and foremost retailers in Arizona should check out wastenotaz.com. They connect families to food that would otherwise go to waste. Second is Local First Arizona — they have many programs and they are currently focused on food insecurity. A local business we know had a vacant parcel as part of their business that they turned into a community garden and shared with other members of the community. Payment processor Square (sign up for the blog, it’s worth it) offers a couple of good suggestions such as food retailers minimizing the disruptions caused by out-of-stocks and steep price increases by steering consumers to alternative products that have a more dependable supply or are available at lower price points. This can be done with physical and online merchandising, such as placing items on prominent displays or featuring them on ad specials or in recipes.

E-commerce businesses can also do their part by allowing food-insecure families to purchase their groceries online using government-provided food stamps. Another option I’ve seen growing in popularity is the availability of surplus food boxes for purchase online and delivered to the consumer’s door. Since the global pandemic, the number of households affected by food insecurity has significantly increased. Ecommerce businesses can help alleviate this by creating new initiatives that make healthy food more accessible and affordable. Our technology is only becoming more advanced, and we need to use it for the greater good and deliver savings to food insecure customers.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I read a book called “The Dream Manager” by Matthew Kelly about 18 months ago. The book is about a janitorial service company that struggled to retain employees. They had a radical idea to hire a Dream Manager who would be part life coach and a part financial advisor to their staff. Their attrition rate went from 400% to 4%. The book describes how it helped employees achieve their dreams, such as buying a car, buying their first house, or going back to school. The Dream Manager helped each employee reach their goals by educating them and helping them understand finances, credit, etc. My thought is that if more companies focus more on their employees’ dreams, it would ultimately help them achieve theirs. It’s costly but worth it. It’s the best way I think an employer can give back to the people who serve them. That is my goal with my team at SKU. To always provide a space where their dreams can not only be realized but a space where they can come to fruition through resources and support available to them at SKU.

How can our readers further follow your work?

You can follow us on Linkedin, Facebook, and Instagram: SKU Distribution. On our website, you will learn more about what we do and the processes we use, but you will also find a complimentary buying guide. To celebrate our recent expansion, we came up with this guide, complete with the most important questions one should ask when considering any fulfillment provider. Regardless of whether you choose SKU as your Third-party Logistics (3PL) partner, we want to ensure you and your business partner with someone that believes in your success as much as you do.

This was very inspiring. Thank you so much for joining us!