Tried-and-true EDI (Electronic Data Interchange) has existed for decades, allowing big-name retailers and emerging brands to work together seamlessly. But this automated standard comes at a price – it typically works best with an older operating system. The new era of APIs (Application Programming Interfaces) allows for greater connectivity between entrepreneurs and their partners, and prompts a looming question… is the old-school server dead? What does this mean for EDI? We’re chatting with Stuart Pick, VP of Strategic Partnerships at Brightpearl to get his insiders’ take.
Timestamps:
00:42 Meet our guest: Stuart Pick from Brightpearl
02:36 EDI vs. API and the need to modernize the tech stack
04:44 The need to modernize the tech stack
06:14 OMS. ERP. ROS. What makes the most sense for a scaling business?
10:25 The pain points of replenishment and how to strategize
13:26 Is the server dead? Should brands go cloud-based?
17:48 The modern tech stack and the end consumer: customer experience
20:30 The impact of scalable technology and what’s to come
Transcript
Brian Weinstein: Welcome, everybody, to Sippin’ & Shippin’. I’m your host, Brian Weinstein. We’ll be kicking it here every other Friday, quenching your thirst for an insider’s take to enhance your customer experience. So grab your drink of choice. Kick back. It’s Sippin’ & Shippin’ time. All right, everybody. Welcome to another episode of Sippin’ & Shippin’. I’m your host, Brian Weinstein. I am here today. Every show, every episode, keeping me protected and safe, Caitlin Postel.
Caitlin Postel: Brian, how are you today?
Brian Weinstein: Good. You had no response to that. I love that look on your face.
Caitlin Postel: Keeping you away from the shameless plugs, maybe.
Brian Weinstein: Exactly. Exactly right. And we have our very special guest today, Stuart Pick from Brightpearl. Good morning, Stuart.
Stuart Pick: Yeah. Oh. Good afternoon.
Brian Weinstein: Good afternoon for you.
Caitlin Postel: Good afternoon, Stuart.
Stuart Pick: Good to see you.
Brian Weinstein: Appreciate you coming on. Where are you exactly in the world?
Stuart Pick: I’m in Bristol. And if you haven’t heard of Bristol, it’s about two hours west of London.
Brian Weinstein: Okay. Good. How’s the day going so far?
Stuart Pick: Yeah. It’s good. It’s sunny here, which is unusual for the British weather. But yeah, no, it’s going great.
Brian Weinstein: Your British weather is still here right now. It’s rainy. It’s cold.
Caitlin Postel: [inaudible 00:01:16] climate’s.
Brian Weinstein: Yes. Exactly.
Stuart Pick: Oh. We like to share it. Yeah.
Brian Weinstein: So Stuart, give us a little bit of background on yourself so we know who you are and what your background is. And maybe give us a little bit of Brightpearl.
Stuart Pick: Yeah. Sure. Well, I often say that my background is Brightpearl because I’ve been here for almost 11 years now. But I’ve worked in technology, mostly cloud businesses my whole career. So I started Brightpearl way back in August 2011. We were a much smaller organization back then. But currently, today, I run partnerships. So I’m responsible for the ecosystem of partners both technologies which extend the capabilities of Brightpearl. So we have integrations and e-commerce platforms. We have fulfillment partners like yourselves. We’ve got payments and shipping and a whole host of technologies that help our merchants to grow.
And then we have service and solution partners which also help our merchants to grow through digital marketing and other optimization services and things like that. So yeah. And then for anyone that doesn’t know Brightpearl, Brightpearl is a retail operations platform. And essentially, we fix the growing pains that merchants face as they scale through automation of the back office.
Brian Weinstein: Awesome. Awesome. So you can’t tell because my office is dimly lit, but I’m not as youthful as I appear thanks to the dim lighting. So I go way, way back. And I remember the days when EDI was like that was the thing, and all the retailers adopted it, and you had to adopt it. And that’s just the way the world went. Is that dead?
Stuart Pick: It’s definitely not dead. The world of EDI is definitely still here and fuels a lot of business growth through a lot of merchants. And so the majority of our integrations are API-driven and standardized connectors that we build and support ourselves. But EDI is absolutely a part of e-commerce, especially when you’re dealing with the big-box retailers. Seems to be more so in the US versus the UK for some reason, but I couldn’t really put my finger on exactly why that is. But yeah, no, we definitely work with a lot of trading partners.
Brian Weinstein: Yeah. So it’s an interesting because of the way EDI… And I probably know just enough about this to be conversational on it, but it’s such a structured format, and then you go to open APIs, which seem different. How do those two pieces of technology play together?
Stuart Pick: I mean, the way that we do it is we work with a preferred EDI partner. So it’s a single integration into that particular partner. I don’t know if I’m allowed to name them. But yeah, they literally are the floodgates to all of the different partners out there, whether you’re buying or selling, whether you’re dealing with some of the really big players out there. It really opens up the market. If you’re a small growing merchant, maybe you’re doing a couple of million online, something like that, you can still trade with some of the biggest brands on the planet. And we do that through a single integration to our preferred partner.
Brian Weinstein: Interesting. So around the EDI technology. So there was obviously a rise or a need to get away. Necessity is the mother of invention. And so EDI of must have created some sort of limitations that said, “Okay. Let’s modernize the tech stack.” Where are the advantages, I guess, from getting away from EDI? Obviously it’s there for those that have it, but now, for running your brand, what’s the advantages to going to a more modern tech stack?
Stuart Pick: I mean, most technologies that we come across out there, they use standardized APIs. Brightpearl ourselves, we have an open API, which is available for any developer to write integrations using the standardized developer languages. And I think that’s really the advantage. Our system talks the same language as every other e-commerce technology out there. And so connectivity has become so important for merchants in order to reach their consumers, to use different technologies, depending on where they are in their stage of growth. And so really, APIs have opened up and allowed even relatively small businesses to connect to big platforms and access technologies that maybe 10, 15 years ago were only available to some of the world’s largest brands with pretty deep pockets.
Brian Weinstein: Right.
Caitlin Postel: So we have the acronyms flowing this morning, this afternoon. We got our EDI. We have our API. So we work with a lot of emerging brands, some startups in some cases, who are familiar with their standard e-com platforms. We have our Shopifys, Magentos, WooCommerces of the world. And then as they start to get more sophisticated, or even as we have that initial conversation, folks are already forward-thinking to now OMS, ERP, ROS. So what can you tell us about when it makes sense for at least a digitally native brand to start to get into those other sneaky acronyms that may otherwise be interpreted as a retail functioning type of platform?
Stuart Pick: Yeah. I mean, we don’t get too hung up on the terminology because I think depending on where you cast your net, depending on what you’re looking for, we get called a wide variety of different terminology here and acronyms. The one that we landed on that we like-
Caitlin Postel: Us too.
Stuart Pick: Yeah. Absolutely. Yeah. And so we’re not offended. You can kind of, relatively speaking, call us what we like. The one we’ve landed on is retail operations system because that seems to fit in the most accurate way. If I’m going to be nuanced about it then, we try and separate ourselves from the pure order management systems. We look at order management systems as more of an entry-level system. So if you’re a fast-growing business, I would refer to an order management system that pretty much just performs that function. It will take in an inventory and a sales order feed from different channels, manage that stock between the channels, and pretty much do that. Typically aimed at smallish businesses, sub-million. They’re often pretty low cost, typically monthly rolling contracts, self-serve implementation, that kind of thing.
And then at the top end of the market, you’ve got what we refer to as the ERP, which is often a pretty scary term depending on your background and your experience with these kind of technologies. ERP is not really designed to work with retail and e-commerce. So we think of ERPs, or at least the traditional ERPs, as being more suited to lots of different industries and sectors. They’ll serve not-for-profits and healthcare and transportation and professional services. And really these platforms are heavily customized in order to meet the workflows of those particular businesses.
So the reason we came up with retail operations platform or system is because we’re built like an ERP that’s built specifically for e-commerce and direct-to-consumer businesses, effectively, and we run the operations part of the business. So yeah, it depends where you come from, what you’re looking for, but that’s the reason why we came up with the retail operations system.
Caitlin Postel: Yeah. That makes sense. So I guess it’s just not a one-size-fits-all or a certain threshold where it makes sense to go into that space. It just sounds like the ROS is more flexible and less of a broader spectrum, right?
Stuart Pick: Yeah. Absolutely. I mean, if we had to pick a profile of merchant… and Brightpearl’s very big on ICPs or ideal customer profiles, as we like to call them… typically, once businesses get to maybe $1 million, $2 million of turnover or revenue, that’s when there’s enough volume and complexity in that business and there’s enough sales orders and enough channels and complexity in the replenishment process that you really start to outgrow an order management system and you need something that’s a little bit more automated like a Brightpearl.
Caitlin Postel: Yeah. That makes sense. And I think that holds true with some of the prospects that I speak with on a day-to-day basis, that you can see that part of their business, it’s growing and they need those different functionalities that they may not otherwise get from your standard Shopify plug and play.
Stuart Pick: Exactly. And it’s not that order management systems are bad. They’re just designed for specific purpose at a particular point in time as you’re trying to grow your business. That’s really what they’re designed and optimized for.
Brian Weinstein: Yeah. And interestingly, you mentioned replenishment, which I think is critical to a business. Replenishing properly whether you’re underordering or overordering could be damaging to your business. What are some of those pain points that you find that brands are having right now?
Stuart Pick: Yeah. It’s an interesting one because order management systems, ERPs, they often have a pretty rudimentary way of handling replenishment. Typically, they will have a reorder quantity and a minimum order mark. And that’s okay if you’re a relatively small business, but once you get to… maybe you’ve got several hundred products and they’re all selling at different velocities on different channels, maybe different territories, that kind of thing, it can get out of hand pretty quickly.
Imagine your worst-performing SKU, maybe a really ugly pair of shoes in a terrible color that you just can’t sell, and the software says… And maybe you’ve been trying to sell these things for years. You finally get rid of them. You sell them at cost. And all of a sudden the software says, “Oh. You’ve got to your minimum five. You need to go and order another 50.” I mean, you’re back to square one.
Caitlin Postel: No. Pause.
Brian Weinstein: Right. Exactly.
Stuart Pick: Shelves full of ugly shoes again. So the name of the game and the skill in inventory forecasting is really to use the sales data as a way of predicting how much to reorder, when to reorder, what to reorder, depending on your goals. Those goals might be customer acquisition, profitability. It might be lots of different things. But that’s the real skill. And honestly, most people do this using spreadsheets and all sorts of complex formulas and things like that. And yeah, it’s quite easy to come unstuck.
And so the two things that normally happen, people are always overstocking or understocking. And if you’re overstocking, you’ve got cash tied up that could be better deployed on marketing campaigns or maybe better SKUs. And if you’re understocking, then you are missing out on opportunity. You’ve got customers that can’t purchase your products from you. And so both are not particularly good. Optimizing stock is an advantage.
Brian Weinstein: Yeah. So are these modern operating systems, are they starting to lean in on this predictive analytics?
Stuart Pick: On the whole, I would say no. So we are at a distinct advantage. I don’t mean this to sound like a plug, but we actually acquired a business back in August last year, a company that we’ve been working with for several years because it’s such a big opportunity for most merchants. On the whole, most systems, including Brightpearl, prior to our relationship with this organization, had a fairly rudimentary way of predicting replenishment. But yeah, it is a fairly industry wide problem for all the management systems and ERPs.
Brian Weinstein: Right. Yeah. I would imagine so. And that over and underselling and over and underpurchasing are definitely challenges, for sure. Is the server dead? Are most people cloud-based?
Stuart Pick: It’s been a long-
Brian Weinstein: Is there a reason to not be cloud-based? I mean, to me that seems like a no-brainer at this point.
Stuart Pick: Right. I remember some of the early conversations I had at Brightpearl back in 2011, which seems like a lifetime ago now I still remember conversations where we weren’t just trying to sell our own software. We were really trying to convince people that cloud was secure and all of the standard benefits. These days, we don’t have too many conversations around that. I think, I mean, obviously cloud is here to stay. We don’t see too many systems or competitors that offer on premise or a hybrid, although there are still some out there. I think it’s widely enough adopted by banks and social media and everything else, every other part of our lives. I think server is all but dead for merchants, at least anyway. Why would you want to run your own server estate and everything that that entails when really, what you should be doing is focusing on the customer? I don’t think in this sector, certainly not the businesses that we serve, I can’t imagine why you would have any desire to run your own software on premise.
Brian Weinstein: Right. Just give it to Amazon. They’ll put it in the cloud. In terms of building out a tech stack, so there’s obviously advantages as you continue to grow your business. The brands are so focused on the end consumer. What does that mean for the end consumer?
Stuart Pick: When most merchants start out… So bear in mind, our ICP, the target of businesses that we bring on and that we look for, they’ve got to 1 million or 2 million of turnover and they’re starting to grow and scale. And I think if you start a business tomorrow, we wouldn’t necessarily be thinking about the technologies we want to run our business in two years time, three years time. You make the best decisions at the time, normally to serve a purpose, meet the goals, whatever they might be. And that might just be pure survival, to be honest with you. And that might be to build out your customer base. Might be to just meet payroll, whatever it is.
And so a lot of businesses will start off with an e-com site. If we started a business tomorrow, we’d start off with an e-com site. We probably have to have an accounting package. Both of these things would’ve been pretty major investments 15 years ago, 20 years ago. We could access technologies now that would ideally be probably better than some of the technologies that were around them for a fraction of the cost. But I think when businesses start to think about building out their tech stack, not many merchants in my experience design that tech stack with the consumer in mind. You end up with this kind of Frankenstein cluster of technologies that were once suited to your goals at the time, that no longer really meet the needs of your consumer.
And really what that means is the technology’s not really talking together. You’ve got workflows that aren’t particularly automated. And often, when we speak to merchants, it’s at that point where they’re starting to get issues, things not turning up on time, things that are more manual than they should be. And they really start to think about, well, how do I design this process from end to end? Not just what you can see on the front end website. That is not the consumer experience. The consumer experience is everything from your acquisition channels all the way through to that item turning up at the door and beyond, returns and that whole experience as well.
And I think when you start to think about that customer journey from soup to nuts, from end to end, you really start to think about how do the different technologies talk to each other, and how do I optimize that for the customer experience? Yeah. That’s a difficult thing to do when you’re just starting out. You’re not really thinking about what does that look like in two years time, three years time? And you go through this evolution of technologies and swapping things out and consolidation.
Caitlin Postel: Yeah. I’m surprised to hear that, that in your experience, that merchants aren’t using the technology to drive that customer experience, like that’s an afterthought. And maybe it’s just in those beginning stages, but what are some tech mistakes that you see brands falling into or repeating? Because I would think that they would use these now with so much enhancements and being able to use automation in a big way to surprise and delight the end users that that’s where I would start. So what are those blunders?
Stuart Pick: I think it’s really just using technologies that were never really designed to scale. That’s honestly the thing that we see. And bear in mind, we don’t get inquiries from people that are perfectly happy with the way their operations are running. We are brought in to solve growing pains, and those growing pains are complexity, channels, volume. And I always say that volume kills manual processes. It’s mostly people using technologies that were not designed for the size and scale that they’ve become. It’s not that those are bad technologies. It’s just that they were never redesigned for a business of your shape and size. That’s honestly the biggest [inaudible 00:19:00].
Brian Weinstein: Caitlin, before you go ahead, I’m laughing a little bit because we run into that a lot with people choosing three 3PLs that they’re not bad for when they started, but they’re not someone that they can scale with. And unfortunately, a lot of times, as an e-commerce brand, everyone goes into it thinking that they’re going to be highly successful. But then they’ll choose a 3PL that can’t support high success. And so it sounds like it’s very similar on the tech side.
Caitlin Postel: Yeah. You read my mind, Brian, because I was thinking of when we go to site visits, and you go to a warehouse, and there’s this huge piece of automation. And you would think, “All right. There’s going to be flying orders going out the door,” and they’re using it to stack a box on, or it’s like a conveyor belt that someone’s just using as means to put tape on a box. And you’re like, wrong technology, maybe right technology, wrong time. I don’t know. I’m sure that that kind of parallels there.
Stuart Pick: Yeah. And it’s difficult as well because I think we’ve all seen those infographics, that MarTech diagram that shows how many technologies there were five years ago and how many there are now. It’s really difficult for merchants to choose the right technologies and differentiate between the two, which is why I love this world of partnerships so much. But yeah. It’s all about selecting the right technology at the right time for the job. Probably just the biggest blunder that we see.
Brian Weinstein: Yep. So what do you see coming? And again I know the tech side is moving at the speed of light right now, and it’s constantly changing. What do you see as some of the major changes that’ll be coming up in the not-so-distant future?
Stuart Pick: I mean, there’s been a lot of consolidation in our space. There’s a lot of acquisitions. There’s just so much consolidation everywhere you look. The competitors have similar businesses that we saw two or three years ago, they no longer exist. There’s been some fairly major ones. So I think we’ll continue to see more consolidation. Honestly, the biggest thing that we see and the most successful businesses that we see are the ones that are flexible and can adapt to different change in conditions. I think for me, that was the biggest lesson of the pandemic. You saw brands that could quickly switch on new channels, adopt different business models, switch on and plug in integrations. It’s that old cliche of it’s not the strongest of the species that survives. It’s the most adaptable to change. And that’s honestly where we see things going.
And so integrations plays a huge part of that. Again, there’s been consolidation in that market, lots of the IPAS providers getting acquired by some of our competitors and some of your competitors. So I think in integrations and access to different technologies, I think is key. And I think businesses just have to be ready for whatever’s next, however consumer habits change, whatever the shopping channels are of the next couple of years and things like that. I think it’s about remaining agile and being able to just adapt and pivot quickly when you need to.
Brian Weinstein: Right. So I would imagine it’s important for you to continue to partner with different technologies that can plug into yours, right?
Stuart Pick: Absolutely.
Brian Weinstein: And make it easy for a Brightpearl user, for example, to be able to plug in different items. And then if they want to unplug and replug a newer version or a different version or a different vendor, they can do all that.
Stuart Pick: 100%. One of our philosophies is about making sure our own customers have choice within the tech stack. If you want to use our proprietary technology, particular modules, great. If you outgrow that, we’ve got partners, and we’ve got two or three or five partners to choose from. So we want to make sure that there’s always that choice, that ability to plug and play, ultimately just deliver a great customer service as businesses grow. That’s pretty key.
Brian Weinstein: So Caitlin, is that headless commerce? Am I understanding headless commerce now for the first time?
Caitlin Postel: I think we’re getting close. I think with each conversation, we pick up a little gem here and there. We’re getting there. Definitely server’s dead. We know that. We know that
Brian Weinstein: Stuart knows and he’s not correcting us.
Caitlin Postel: He’s like, that’s not it.
Brian Weinstein: That’s not it. Try again. Excellent. All right. So Caitlin, anything that we didn’t ask, we didn’t cover?
Caitlin Postel: No. I think we hit a lot here. I think just the evolution and just how partnerships are so essential in this ecosystem, and our head of partnerships, Marco Polus, has been phenomenal and just really bringing tons of value to everyone and just being able to be that thought leader, and to your point, Stuart, to have choices for folks so when they are shopping for their next ROS or ERP, whatever the case may be, you can point them at a few different folks and let them have at it and make their own decision, which I think is really valuable in this space.
Stuart Pick: Trust is key. Trust is absolutely key. There’s just an overwhelming amount of technologies out there, and I don’t think people have got time to become experts. They want to use tried and trusted technologies and partners that have done the dance several times. And I would say for anyone that’s in a partnership role listening to this, definitely follow Marco. He’s got some great thoughts in this space and shares a lot of good content out there. So yeah.
Brian Weinstein: Absolutely does. All right. Stuart Pick, everybody from Brightpearl, really appreciate you coming on, Stuart. It’s a pleasure and thanks for the education.
Stuart Pick: Thanks. Thanks, Brian. Thanks, Caitlin.
Caitlin Postel: Thanks, Stuart. Thank you everybody for tuning in. Please check us out at sippinandshippin.com or on your favorite podcast platform. Thanks, everybody.
Brian Weinstein: Thank you.