Mike Beckham Of Simple Modern On The Supply Chain and The Future Of Retail
An Interview With Martita Mestey
There are limitations to what money can do. However, teaching, equipping, and encouraging other people has asymmetric potential.
As part of our series about the future of retail, I had the pleasure of interviewing Mike Beckham.
Mike Beckham is co-founder and Chief Executive Officer of Simple Modern. Prior to founding Simple Modern, Mike helped found and operate several e-commerce businesses, which cumulatively generated more than $1 billion in revenue. Mike graduated with a degree from the University of Oklahoma Price College of Business, where he currently serves as the senior entrepreneur-in-residence.
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?
After I graduated with a finance degree from the University of Oklahoma in 2003, I worked in the nonprofit sector with the worldwide Christian ministry CRU. After working with CRU for nearly a decade and learning about healthy team culture, I felt that I could have a greater impact in the for-profit world. I transitioned out of the nonprofit sector and helped found and operate several e-commerce businesses, which cumulatively generated more than $1 billion in revenue.
In 2015, I was approached by two close friends, and together, we envisioned a company culture where relationships, excellence and generosity were a priority. We wanted everyone who interacted with the company to experience generosity: partners, employees, customers, and the local community. We didn’t know what product or service we would build the company around, but we knew what we wanted the company to be about: generosity and people.
We founded Simple Modern in 2015 and sold our first water bottle on Amazon in 2016. Fast forward to today, and we are category leaders for retail partners Amazon, Target, and Sam’s Club. We are also launching in Walmart stores nationwide in spring 2022. The experiences of the past six years have been a crazy ride, but they’ve brought us to where we are today and have positioned us to live out our mission: “We exist to give generously.”
Can you share the most interesting story that happened to you since you started your career?
When we founded Simple Modern, we were all still working full-time jobs for one of the e-commerce companies I founded with my brother. We bootstrapped Simple Modern, and all three of us essentially worked two full-time jobs to get the company up and running. In our first few months of selling, I had a one-year-old daughter, and the other two co-founders were expecting children of their own. It was hard, but by the end of our first 12 months running Simple Modern, we knew we had product market fit.
Another interesting story was from 2016 when we received our first major program at Sam’s Club. We wanted to sell collegiate sports licensed water bottles, but we didn’t have the licenses to do so. Our buyer at Sam’s Club took a leap of faith and believed in us. She said that if we could secure the licenses, then she would give us the program. We took that promise to collegiate sports teams, and we were able to secure the licenses we needed to get the Sam’s Club program. Simple Modern wasn’t even a year old at that point, but within two months, we had sold $8 million worth of products in Sam’s Clubs across the nation. Simple Modern owes a lot to this particular Sam’s Club buyer. She helped us launch our company to a new level and accelerated our company’s growth in ways we couldn’t have ever imagined.
Are you working on any new exciting projects now? How do you think that might help people?
Yes, we have a lot of exciting things happening at Simple Modern right now. The growth we’ve seen at Target last year and going into this year has been explosive, and we have a new lineup of Target exclusive products that will be released this summer. I also mentioned that Simple Modern is launching in Walmart stores nationwide this spring, which is another major milestone for our company.
At the beginning of this year, Simple Modern also announced our plans to begin domestic manufacturing for select products in Oklahoma City. We secured the manufacturing facility in January 2022, and we expect to start manufacturing in the second half of 2022 with the goal of producing 1 million units of drinkware in year one. There are not a lot of CPG companies here in Oklahoma, much less CPG companies who are domestically manufacturing their own products. We are excited for what this new endeavor means for our company and our home state.
The last thing I would mention is that we have 4–5 new products scheduled to be released digitally on our website and on Amazon over the course of 2022. We are constantly innovating and looking for ways to improve products, so we are excited to share these new items with our customers.
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?
When I think about people who helped me get where I am, two people come to mind. The first is Shawn McGrath, the University of Oklahoma CRU director when I was on staff. Shawn taught me a lot about healthy team culture; how to work through conflict and keep short accounts; the necessity of communicating your mission, vision, and values to your team; and the importance of character and authenticity. All of these qualities have directly influenced how I approach leadership and lead our team at Simple Modern.
The second person that helped get me where I am today is my younger brother, Matt. Being an entrepreneur requires confidence and tenacity. My brother Matt has both of those qualities. Before I ever entered the business world, I watched my 27-year-old brother start his own company. I learned a lot by watching Matt and learning from his experience. His initiative gave me the confidence that I could be an entrepreneur.
How have you used your success to bring goodness to the world?
Over the course of the 13 years that I’ve been involved in the for-profit world, I have accumulated a lot of knowledge and skills, and I’ve been fortunate to receive many opportunities that most people don’t get. As a result, I am motivated to be generous with the things that I have learned and share them with others. Currently I serve as the senior entrepreneur-in-residence at the University of Oklahoma. This role allows me the opportunity to help develop the next generation of entrepreneurs and to be a voice of encouragement. The desire to share this knowledge has also become the main focus of the content I share on social media through Twitter and LinkedIn.
I have learned that generosity isn’t strictly about how we use our money. It’s about being openhanded with everything valuable that we have been given. There are limitations to what money can do. However, teaching, equipping, and encouraging other people has asymmetric potential. As I lead Simple Modern, I want our company to be an example — an exporter — of healthy workplace culture, and that can only come through generously sharing information and resources with others.
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?
There is no doubt that the pandemic has altered the way that consumers shop. Especially during the height of the pandemic, consumers shifted to shopping almost exclusively online, and the future of retail was uncertain in many people’s minds. Since then, we’ve seen a return to historical trends with physical retail shopping, and you see leading brands taking an omnichannel distribution approach. I’ve studied this a lot with our retail partners Amazon, Walmart, and Target.
For example, prior to the pandemic, Amazon operated almost exclusively as an e-commerce retailer. Now you see Amazon building their physical retail presence through their purchase of Whole Foods and their new Amazon GO stores. Physical retail is clearly part of Amazon’s omnichannel strategy.
During the pandemic, Walmart implemented processes to allow customers to buy groceries online and have their orders delivered. There are approximately 5,400 Walmart stores nationwide, and with this omnichannel strategy, each of these individual Walmart stores serves as an individual fulfillment center.
The pandemic also prompted Target to offer customers the opportunity to purchase their orders online and then pick up their orders in-person at the store. 35% of Simple Modern kids water bottles sold at Target last year were ordered online and then picked up in-store. In other words, Target used e-commerce to bolster its physical retail presence.
At Simple Modern, we are constantly asking how we can be a good partner to each of these retailers as they embrace and execute their unique omnichannel distribution strategies.
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?
The current supply chain crisis we are experiencing is the result of a series of cascading failures in our international supply infrastructure. At the beginning of the pandemic, there was a period of shipments slowing to a crawl due to uncertainty, public health precautions, and cautious inventory buying. Then there was a sudden spike in demand for imports spurred by unprecedented amounts of government stimulus. This has created a massive traffic jam in the global supply chain leading to inflation and increased prices. The global supply chain was simply not prepared for an event that was so far outside of historical norms.
Based on my analysis of the current supply chain issues, I’ve seen three main trends emerge as retailers try to pivot. First, retailers and brands are increasing the amount of inventory they hold to stay in stock. It is very difficult to predict when shipments will arrive in today’s environment. In our world at Simple Modern, this means carrying 5–6 months of inventory on hand instead of 3–4 months. There is inherent risk that comes with strategically buying inventory that far out. For example, if we enter a recession, that excess inventory suddenly becomes an obstacle that ties up the company’s working capital.
Second, retailers have increasingly turned to direct import to secure more products. Not only does direct import reduce risk for retailers, but it also offers them more control and insight into shipping delays and product arrivals.
Finally, brands and retailers are eager to create solutions that will allow them to bypass the international supply chain. This has made many companies, including Simple Modern, take a fresh look at domestically manufacturing some of its products. Supply chain issues may cause significant delays on products manufactured overseas, and domestic manufacturing is creating new opportunities for brands to partner with retailers. Brands who manufacture domestically can get product to retailers much quicker and fill retail shelves that would otherwise sit empty.
How do you think we should reimagine our supply chain to prevent this from happening again in the future?
There is a principle that the more optimized something is, the more fragile it becomes. In other words, high optimization is great until it breaks, and then it is a nightmare. Our current supply chain is highly optimized, and there’s very little room for error. As we have seen the past several months, when the supply chain breaks, the United States does not have adequate systems and infrastructure in place to address the issue, and everyone is negatively impacted as a result. This is a macro-level, national infrastructure issue, and more private and public capital needs to be invested into creating excess capacity in the supply chain. The United States needs to have world-class ports and infrastructure, and there is significant room for improvement.
A more micro-level solution to the supply chain issues is increasing domestic manufacturing and moving production closer to the end consumer. In the midst of the logistics crises, we are also in a period of increased international tariffs, and the ability to manufacture products domestically eliminates those costs. Domestic manufacturing also means that less capital sits in inventory, which reduces storage costs and alleviates some of the risk associated with trendy, perishable, or depreciating products.
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?
If you think about all the different purchases that you make in a week, you realize just how many different priorities exist when you shop. Depending on the item I am purchasing, I might be optimizing for quality, speed, price, brand, freshness, discovery, or several other dimensions. There are many times that I know what I need; I’ve bought it before; or I just want something high-quality, and I don’t need it immediately. Amazon is a great solution in these cases. There are other times where I need what I am looking for right now. In these cases, e-commerce cannot meet my immediate needs in the same way that physical retail can, even with next-day delivery.
I think we are experiencing a transition to the next wave of physical retail. This phase is going to be the era of omnichannel retail. Physical retail and e-commerce are coming together in new and unique ways. Walmart has 5,400 physical locations nationwide. These stores can now serve as retail outlets, pickup points for the customer, pickup points for a delivery service, and fulfilment centers for dropship orders. The key to success during the next phase is going to be using digital and physical shopping experiences to complement each other.
Some product categories will see their digital share of sales continue to increase dramatically while others will continue to rely primarily on in-person purchasing. There are some advantages of physical retail that are very difficult to replicate digitally. For example, physical retail lends itself to showrooming and provides customers with a sensory experience that isn’t possible online. In addition, we often shop without knowing exactly what we want to buy. Physical retail still serves as an excellent discovery mechanism.
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?
My number one piece of advice to both physical retail and e-commerce companies is focus on building a strong brand. We live in a unique time where anyone can source a top-notch product at a great price. It’s a poor strategy to try competing against China on price or quality alone. The most successful companies will be those who establish brand equity with their customers.
The internet has created unprecedented transparency, and companies need to use that to their advantage. You can speak directly to customers, cast a bold vision for why your company exists, and cultivate loyalty with customers who like your mission. These are core competencies in brand-building for this generation.
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.
First, physical retailers should use digital technology to complement the physical retail experience. Omnichannel is about the fusion of digital and physical so that they work together and enhance the experience.
Second, physical retail stores should plan to merchandise around common buyer motivations. Retail stores should offer an in-person solution for the most common buying motivations and a more expansive selection online. For example, the five bestselling colors of a product are available in-store, but all 15 colors of the product are available online.
Third, at the store level, physical retail stores should maintain a high level of organization and cleanliness to ensure a fantastic retail experience. When customers have the ability to shop in a variety of ways, retailers have to make the experience of going to a physical store as positive and enjoyable as possible.
Fourth, physical retail prices should always beat online prices for a similar item. If a product is available on Amazon for a more affordable price, and it can be delivered within one day, why should a customer purchase from a physical retail store? Physical retailers do not have the shipping costs that come with e-commerce orders and should be prepared to pass those savings on to the customer.
Finally, to create a fantastic retail experience, physical retail stores should offer highly curated collections of products as opposed to an abundance of options. With fewer yet more curated brand offerings, retailers communicate a clear brand voice to consumers, demonstrate that they stand behind these select products, and keep customers from feeling overwhelmed by the number of choices.
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?
Food deserts exist due to social and economic disparities, including lack of jobs, under-resourced schools, lack of affordable housing, and poor transportation solutions. When economic resources are removed from a community, the result is a cycle of poverty and inevitably food insecurity. To provide nourishment and hope to food deserts, there needs to be a model in place that prioritizes economic growth and sustainability. The entire community needs to be involved as well, including local and state governance, nonprofit organizations, residents, and retailers.
One of Simple Modern’s Giving Partners, RestoreOKC, is an excellent example of this model. Restore OKC is based in northeast Oklahoma City, which at times has been a food desert and a historically under-resourced community. In the last few years, the single grocery store servicing the entire area closed its doors unexpectedly, forcing some residents to travel for hours on mass transit to obtain food. To create sustainable solutions and address the issue of food insecurity, RestoreOKC developed an initiative called Restore Farms. The program includes partnering with schools to grow gardens that produce nutritious foods for the community. Simple Modern partnered with Restore Farms to build a greenhouse to produce additional food. But most notably, Restore Farms partnered with a grocery retailer to open a 7,000-square-foot grocery store, The Market at Eastpoint, filled with affordable, healthy foods. Not only that, but the grocery retailer also helped create new, sustainable jobs, benefitting the whole community. That is the power that retailers have. They can offer economic resources and opportunities and make an impact in underserved communities.
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. :-)
The most significant impact I can have on the most amount of people is teaching, equipping, and encouraging others. Whether that’s through my role at Simple Modern or my personal life, I strive to invest in people and leave a positive, redemptive impact on their lives. As I mentioned earlier, I want Simple Modern to be an example of generosity and an exporter of healthy workplace culture. I want to encourage people to think about business differently and show them that they can be radically generous while still growing a thriving business. At Simple Modern, we give away 10% of our annual profits to worthy nonprofit organizations. Imagine the impact on the world if every company gave away 10% of their annual profits and invested those resources in local communities. Like a ripple effect, the greatest good often starts with one individual, one company, and the goodness spreads out and touches the lives of others.
How can our readers further follow your work?
To keep up with me and the exciting things going on at Simple Modern, follow me on Twitter (@mikebeckhamsm) and LinkedIn. I also share content on my blog mikebeckhamblog.com, and you can stay up to date on Simple Modern by visiting simplemodern.com. Thanks for the opportunity to share my thoughts on the supply chain and the future of retail!
This was very inspiring. Thank you so much for joining us!
