From a chiropractor of 20 years with a simple idea to a successful global e-commerce technology brand. Dr. Jason DePietropaolo of ChannelApe joins Sippin’ & Shippin’ and gives his insights on how he built an order management system (OMS) and tech company from the ground up – out of necessity. Jason and the S&S team discuss early development challenges and the power of an OMS not only to scale, but the significance it brings to the customer experience and ultimately, customer retention.
1:08 From doctor to entrepreneur – how it began
3:34 Finding a niche, scalable e-commerce solution
5:01 Intentions: Building from a need, not just to sell
6:13 Raising money as a first-time entrepreneur
7:50 When is bootstrapping the right play?
10:27 Going to market and scaling with customers
13:04 The relationship between an OMS and WMS
16:20 The power of an OMS: customer experience and bottom line
19:08 OMS vs ERP: What’s the difference
23.25 The future of the e-commerce tech stack
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.
Well all right, welcome everybody to another episode of Sippin’ & Shippin’. I am your host Brian Weinstein, and with me on the co-mic, my co-host Caitlin Postel.
Caitlin Postel: Brian, good morning. How are you today? You sound extra crispy on the fine fall morning.
Brian Weinstein: Exactly right. Exactly right. I’m starting to see the first signs of pumpkins. I shouldn’t date this podcast, but I’m starting to see those. Here we are in the fall.
Caitlin Postel: That’s right. Not spring, right? Fall. Fall into fall. We’re here. Pumpkins spice lattes, bring them on.
Brian Weinstein: Exactly right. Exactly right. And I think for the first time ever we are, I’m going to introduce our guest and this’ll be the first time I could say we have a doctor in the house, Dr. Jason DePietropaolo.
Jason DePietropaolo: Yes.
Brian Weinstein: Welcome.
Jason DePietropaolo: Thank you. Welcome. Thank you. Thanks for having me.
Brian Weinstein: No, no, it was great that you could join. Jason is with us from ChannelApe. So Jason, give us a little bit of background on you and where you come from, and I know it’s a great story.
Jason DePietropaolo: Yeah, a little bit different. Right now I’m the Head of Partnerships and one of the Co-Founders of ChannelApe. But to get there, kind of started in this weird scenario where I was a chiropractor for 20 years and practiced, and had multiple practices, and I was always interested in e-commerce. And from there, kind of had these bottles of vitamins on my shelf and said, “Hey, I wonder if these things would sell online,” and put them online and back in the early days of e-commerce and these bottles sold really quickly, and a light bulb went off on my head. And started to get further and further into the weeds in e-commerce and started out selling a little bit on Amazon, and then eBay, and then have my own website. And grew to the point where it was really, there was a lot of demand and it was really growing. And there was no way, there was no automation or any way really for us to or for me to take orders and then send them to my warehouse to be fulfilled.
I would actually, on Friday night, shut off the store and then manually transcribe order data into my warehouse’s, WMS to try to do that. So it was really hard. So kind of went out back then, probably back in 2013 or so and really said, “Hey, let’s look at what the market,” I had a great web developer who’s my co-founder, Mike Averto, and we sat down and said, “Hey, there’s nothing really out in the market.” We kind of kicked around some ideas and kicked around some different tools that were there at the time. It was back in the early stages of APIs and building APIs. So we said, “Hey, let’s just build our own.” So it was really born out of necessity. Built it for myself and it worked great and we had the idea of, “Hey, let’s put this out to market. It worked so well for me, I’m sure it’ll work for everybody,” and that’s not always necessarily true.
Brian Weinstein: Yeah.
Jason DePietropaolo: Kind of failed and fell apart and then we said, “Hey, let’s rebuild this to scale.” And that’s what we did. And here we are so many years later and solving the same challenges that we solved back for my vitamin business.
Brian Weinstein: Yeah. It’s interesting because I feel like I’m wearing out the tread a little bit on the cliche necessity as the mother of invention, but we speak to a lot of great entrepreneurs like yourself. We had the founder of Whiplash, James Marks, and he and I have had this conversation a lot, same sort of scenario. He had a need, he was starting out and they were doing t-shirt printing and then they started to get involved with some bands, some alt music in the alt music scene, and they had to store product and locate it. And so all of a sudden they were building this for their own use, very similar to yours. Was there a particular moment in time where you were like, “Hey, you know what, I can’t be the only one that needs something like this.” And then decided to maybe take it up a notch or two?
Jason DePietropaolo: Yeah, definitely. I think at the point where it really worked and it was really scalable, and I used to joke that I could be sitting anywhere in the world on the beach on my phone and just watching orders coming in and pushing buttons and making sure orders were flowing to the warehouse and it was really easy. And then I watched my business grow, the revenue tripled because all that automation was in place. And I think that was the point where I was like, “Hey, if this works so well for me and I couldn’t find anything out there,” it was exciting not to find something out there because then we knew we could go ahead and build it. So I think that was a turning point, just knowing how well it worked for myself.
Brian Weinstein: So when you set out to create this, there was no thought in the back of your mind, or was there, that this could be bigger? Or did you just start out saying, “Hey, I just need to build something for myself,” and then it kind of clicked that this was a bigger deal?
Jason DePietropaolo: Yeah, I think the intention always was to kind of build it for myself, and build it exactly for my business and what my needs were. And I think at that point of having used it for a year and a half, two years, I think that was the point where we said, “Hey, it’s worked so well, let’s go out to the market and see if there’s a need for it. We’re not going to change anything. Let’s just throw it out there in the market and see what happens.” And we had a whole ton of signups within that first month and then we saw, it opened up the floodgates and then we saw a bunch of other issues that we didn’t realize because my business was so unique. But now we had other businesses using it, and requests for features, and we saw there was some excitement there, a new tool in the marketplace and we were on the Shopify app store and then just decided, “Hey, let’s go in even deeper, raise some money, VC money and go out there and really rebuild this.”
Caitlin Postel: Yeah, awesome segue there Jason. So I think Brian, it just is a sentiment that rings so true. You have a great idea and a great developer. And then now you pointed on investments. We had Eric from BRUNT Workwear who talked about his start, his background was a little different, but still kind of that same sentiment. But can you tell us a little bit about your experience in that investment community space? What was your experience there?
Jason DePietropaolo: It’s tough being, you’re a first time founder, even though I’ve had other businesses, it’s nothing where you’ve brought on money before, VC money. So being a first time entrepreneur going out and looking to raise money, it is a little bit of a challenge and not knowing. So I think having some people in our circle that had done it before and had that experience was really kind of critical in putting us in the right path. I mean even starting how are you going to raise money, whether it’s convertible notes, or equity-
Caitlin Postel: What do you mean? Just keep selling the pills? Just sell the pills.
Jason DePietropaolo: Yeah, exactly. So, there’s a lot there with raising money. And thankfully my co-founder, Mike, took on a lot of that and flying back and forth to San Francisco a lot. So he handled a lot of that aspect. And I think what we’re really looking for is we were looking to raise money from a VC firm, or a team, or a seed team where they had that experience with other direct to consumer brands and other businesses like ours. And I think that’s what’s critical is finding people that have done it before in our industry.
Brian Weinstein: Yeah, I was going to ask you that too about just how do you commercialize it when it’s not what your background was previously and then get out there? Was there any thoughts around bootstrapping it or did you just feel like that wasn’t an option for you?
Jason DePietropaolo: I don’t think it was an option. We see how fast the whole direct to consumer space is changing and how fast some of these brands are growing. And for us to bootstrap it, we knew we were going to get left behind. We just want to run really fast, take on money, solve the problem, and grow and scale. And I think the main reason we wanted to raise money was to get the right people in the right seats at our company. We didn’t have a whole ton of experience with a go to market strategy and scaling up a company like this, and B2B SaaS sales. So I think bringing in those right people was really critical. It really allowed us to really start the scale.
Caitlin Postel: It’s wild to think about it even back then, and I’m glad you shared the date, that was my curiosity. When did this all go down? 2013 things were already evolving at such a fast pace and now we fast forward and saw the growth that happened pre-pandemic and now, well hopefully, post-pandemic, but after that first push. And it’s just wild to see how that still maintains such a common theme in e-commerce, right? You’re either evolving or you’re going to be left behind. So I think it’s a great call out.
Jason DePietropaolo: Yeah, definitely.
Brian Weinstein: And I think it’s interesting too, and this is of maybe a little bit of two paths. If you’re an e-commerce brand, you probably can get away with trying to bootstrap it for a little while, but when you are on the tech side, like you were saying Jason, it changes that at a thousand miles an hour, you need that finance because there cannot be any delays. You have to be out in front or else somebody’s going to come in and fill that space before you can.
Jason DePietropaolo: No doubt. And it’s a whole different world when you’re looking at a direct to consumer brand selling sweatshirts and t-shirts. There’s a lot of things you can do there to scale really, really fast and bootstrap, whether it’s influencers or Instagram or ad spend, and you just hit something where now your brand takes off. Where B2B SaaS sales, especially in the space that we’re in, enterprise sales, sales cycles are long. It takes a longer time. Touch points are long, sales cycles are long, so you don’t grow as fast as one of those direct to consumer brands that might just get influencers and somebody wears their t-shirts on TV and next thing you know they’re exploding with orders.
Brian Weinstein: Right, right. Yeah, exactly. Exactly right. So tell us a little bit about the evolution of, you get your finance, I’m sure you stepped up and ramped up around product development and designing. And so tell us a little bit about the next step of where you were, how you commercialized the product.
Jason DePietropaolo: So we went out, we had an app on the Shopify app store and we got a lot of small businesses to use our app and really gain some feedback there. And then I think we had a few brands that were a little bit smaller at the time jump on our platform, and then those brands exploded and I think that’s what helped us-
Caitlin Postel: No better story than that. Right?
Brian Weinstein: Exactly right.
Jason DePietropaolo: And that’s what helped us scale because the brands that we had on our platform that were small, that suddenly exploded to massive brands, they were kind of helping us push the product along. They were doing things that other direct to consumer brands aren’t going to be doing for six months to a year later. So we really were able to take their suggestions and what features they needed in our product and really productize that on our platform, almost like funded development. These brands were paying us to build features for them that we knew that other brands were going to use down the road. So we really got lucky there with that.
Brian Weinstein: I think there’s also that when you have brands like that, it’s their opportunity. They have that one chance to shine and they need to get out in front of it. So they’re challenging themselves and you as a partner, and obviously a good partner with them, they’re challenging you too, and they’re saying, “Hey, we need you to keep up with us.” And one of two things can happen, either you trip and you fall and you hold them back, or you do whatever it takes to get there. And it can really help both brands, or both partners in that scenario significantly.
Jason DePietropaolo: Yeah, no doubt. And the brands that we had in the beginning and still have to this day, some very awesome brands, I think they were really understanding of the fact that we were building a platform so they would give us ideas and they had input. So I think that’s what they got with us where they maybe wouldn’t have gotten with a bigger company at that time. They got input into our roadmap and we would take their suggestions to heart and really build exactly what they needed. Like I said, knowing that other brands were going to need the same features and same kind of product and scalability.
Caitlin Postel: It’s so refreshing to hear these younger brands were so invested and saw the power and how to leverage in an OMS, an order management system. I feel like sometimes folks come late to the game. What were some challenges that those early development features were overcoming for these startups?
Jason DePietropaolo: I think a lot of brands come in and think that they have a whole bunch of feature requests and they assume that the WMS system can do that and there’s limitations. And the WMS system really is a system that is within the four walls of the warehouse, where the OMS layer is the layer above that connects to the WMS. So I think there’s a lot of features in there, whether it’s business logic, split shipping, and distributed order management, things as simple as maturation periods, gestation periods, where the orders can mature, so if there’s any changes for those orders.
So I think that, and just really back then in the early days, it was basic functionality, taking your order from Shopify or from your sales channel and making sure it got to your warehouse and then that fulfillment data got from the warehouse back to Shopify in a timely fashion. And then that your inventory was accurate so that way you weren’t creating back orders or overselling, which we know affects your NPS score. So I think that was just basic functionality there. “Hey, let’s start with that. We just need the basics.” And then from there it’s just like, let’s build on it. Now we’re opening multiple warehouses and multiple geos and multiple nodes within the United States, and now it gets more complicated. Now we’re going to add an ERP system. So I think that’s where the complexity gets to.
Caitlin Postel: But why not start with those fundamental concepts, right? Let’s start from the beginning. Very simple things that you’re alluding to that can really make or break a business in the beginning stages.
Jason DePietropaolo: Exactly. When you boil it down, what do customers want? They want to order your goods, they want to order that hoodie or t-shirt, and they want to know when it’s shipped, and then they want to know when it’s going to arrive. And they want everything to be really easy. And that’s the basics of making sure that the customer’s happy. And then that allows your brand to, I think that’s why the brands that we had in the beginning, and still have, I think that’s why they scaled so quickly is because they were really attuned to the customer experience.
Brian Weinstein: It’s critical. And one of the things that you didn’t mention is that when a customer orders it online that they’re not going to get a note the next day saying, “We’re out of that product.” [inaudible 00:15:37]
Jason DePietropaolo: That’s the worst.
Brian Weinstein: Exactly right.
Caitlin Postel: Womp, womp. It’s the worst.
Jason DePietropaolo: Yeah, I think that’s one of the critical things we solve for. And we hear brands say they have a lot of back orders, they have overselling. Sometimes brands don’t understand how critical of an event that is. We talk to brands, they’re like, “Oh yeah, it happens all the time. We just email the customer and tell them it’s out of stock.” But now you just lost that customer. You spent a ton of money to acquire that customer and now you just lost that customer. And we all know, we’ve all heard that it’s much cheaper to retain customers than to acquire them. And it’s simple. Make sure that your inventory is accurate so that way you’re not creating those back orders.
Brian Weinstein: I will tell you, you hit it on the head and I would say to a brand, every single one of the successful brands that we fulfill for manage that customer experience, and really make sure every I is dotted, T is crossed. And that experience is one where no one ever thinks twice about going back and ordering again.
Jason DePietropaolo: Exactly. And I think brands are really focusing on that fulfillment experience. Making sure that the order ships within the day when it’s placed, it’s getting to the customer within two to three days. There’s a nice unboxing event where it’s branded, it has your logo on it, and I think it’s something that it was taken for granted in the early days. My vitamin business, hey, I’m throwing a bottle on a manila envelope and sending it out. That’s it. But now it’s like there’s much more you can do with that fulfillment experience.
Caitlin Postel: And that’s kind of where I was going to go. Everyone focuses on post-purchase experience, but if you don’t have that order management system driving it appropriately to where it needs to go, it may not even arrive. There might not even be in unboxing because to your point, Brian, the product was out of stock or now it’s taking a lifetime because you just distributed out of the wrong distribution point. So I think the OMS, just that overarching theme of the power of the OMS is just fantastic.
Brian Weinstein: And it’s like we’ve talked about, I’ve talked about this with a couple of our returns partners. I’m old enough to remember back in the day where the concept was, “Let’s make it as difficult as possible to return the product to discourage returns.” And what you did was you discouraged a repeat buyer is really what was happening. So then it went the complete opposite. It’s like, “Let’s make this as easy and painless as possible.” And people appreciate that because well, we deal with a lot of fashion companies and you’re talking 20+% is coming back in a return. So if you made that very, if there was a lot of friction there, people are just not going to, they’re just not going to order. So the experience has to be pretty seamless and fluid.
Jason DePietropaolo: Yeah, no doubt. You hit it on the head there. It’s got to be as easy as possible for that customer to return it.
Brian Weinstein: Yep.
Jason DePietropaolo: Yeah, I think as far as the OMS, I like to think of the OMS as that brain layer, that command center, where orders are coming in and there’s a whole bunch of data there and there’s actionable insights and error reporting. So it really gives our customers an insight into those order and inventory activities, making sure they can be proactive. If a customer is not going to receive it, they can be proactive and reach out to that customer.
Brian Weinstein: And Jason, can you just explain a little bit to those who might not understand, what is the difference between an OMS and an ERP?
Jason DePietropaolo: Yeah, so an OMS really handles advanced order management and real time inventory management. Sometimes that can be done in an ERP, but I really like to split it up where ERP handles your financials and the OMS and IMS handles inventories and orders. We have connectors to NetSuite, so we play very nicely with NetSuite. But what we’ve seen brands do is they’ll attempt to do the advanced order management and IMS in NetSuite, but sometimes some of those tools were built in the ’90s for B2B sales, and they haven’t really evolved to the point where they’re purpose built for direct to consumer brands.
And I think that’s sometimes what an OMS, a cloud-based serverless OMS, where it just can scale up infinitely, because you want to make sure that inventory data and order data flows in real time. ERP data, the financial data, end of month, end of day, end of quarter. It doesn’t need to be there in real time. So I think that’s what the difference is. Most of the OMSs today are really built for those fast growing, high skew count apparel, footwear brands that are really going to need an OMS layer.
Brian Weinstein: Interesting. So it’s more nimble I guess, than really getting involved with an ERP?
Jason DePietropaolo: Yeah, I think the setup is easier, it’s more nimble, it’s scalable, it’s probably going to be more cost effective than setting all this up in an ERP. And I think it’s just easier because the modern day OMSs also have integrations to the best in class tools that you’re already using. If you’re using a forecasting tool or you’re using a help desk, like Gorgias, our systems connect to all those so that way we can make sure all that data is flowing to the customer using our platform. So just easier connections and easier set up, and you don’t need somebody maintaining a whole NetSuite instance or an ERP instance, SAP, NetSuite, any of those big monolithic ERP systems.
Caitlin Postel: And it sounds like that kind of antiquated thought process, “I’m growing up as a brand, I need to get on an ERP,” is just a thing of the past. Now folks are putting together top-notch technology from different spaces. They’re building out that tech stack, using the headless technology, just making sure that they’re able to diversify to continue to scale is what it sounds like.
Jason DePietropaolo: Yeah, no doubt. There’s no such thing as an all in one platform. I think we’ve all tried to find that unicorn out there and say, “Hey, I want a system that does and I have a whole list of features,” and there’s just not one system that does that. And I think brands today realize that and then instead are like, “Hey, I want to buy the best in class systems. I want to buy the best in class forecasting tool, the best in class OMS, best in class ERP. I want to make sure they all collaborate, talk to each other, integrate,” and then building out your tech stack. That’s what we see a lot of brands doing is, “Hey, we’re moving warehouses, we’ve outgrown our partner. We’re using this time when we’re moving warehouses to also look at rebuilding our tech stack, because we don’t want to have to do this again. We want something that we can plug and play. Now we need a more robust ERP, very easy to plug something else in there. We’re going to move from QuickBooks to NetSuite, easy plug and play.” So I think that’s what brands are looking for.
Caitlin Postel: And sometimes for us as fulfillment folks, that’s like the kiss of death. “Oh, we’re going to tackle the ERP first and then we’re going to consider switching.” I’m like, “Okay, see you in two years.”
Jason DePietropaolo: Exactly. And that’s why an OMS is much easier. It’s a much easier lift than spending two years to build out an ERP system, and then it’s still never right.
Brian Weinstein: Right.
Caitlin Postel: Right.
Jason DePietropaolo: You still have somebody that’s maintaining it and pulling their hair out and working in spreadsheets, and it still isn’t exactly what they’re looking for.
Brian Weinstein: No.
Caitlin Postel: Yeah, maybe you never make it to ERP land because you didn’t have the OMS driving those sales. So I think it’s not a one size fits all in the progress of adding or removing tech stacks, but it’s nice to hear that there are solutions out there that play nice with everybody.
Jason DePietropaolo: Yeah, definitely. I think that’s what the future is, is making sure that all your tech pieces collaborate, speak to each other. What’s more important than having your inventory and order data also lining up with your marketing data? So we’re seeing a lot of brands take the data. We have a whole BI tool in our system, but we’re actually seeing brands taking exports from our BI tool and then their marketing data, Google AdWords, help desk data, and putting it all together in a big data lake like Snowflake. And then having the ability to put BI on top of that so that way they can say, “Hey, we’re really heavy on blue sweatshirts in New York City, our distribution center in New York City, maybe we should increase ad spend on that blue hoodie because now it’s May and getting warm.” So I think those are the use cases that brands are really looking for is having all that data in one spot so they can make those data driven decisions.
Brian Weinstein: For a guy that comes out of being a chiropractor and vitamins, you certainly know a lot about tech now.
Jason DePietropaolo: Yeah, I do. Totally different world and totally different and yeah, it’s exciting. And I think that’s what you need sometimes. You do something for so many years and you’re like, “Hey, I’m getting brain-dead here, just doing the same thing over and over and saying the same thing every day,” and I’m like, “I just needed a change and a challenge and this was definitely the challenge and it’s perfect fit for me.”
Brian Weinstein: Yeah. Well you guys are doing a great job. ChannelApe has built quite a reputation in the market, so congrats to you guys on what you’ve built. And I know it’s only nine years ago and sometimes in the tech world that seems like forever ago, but you guys have done a tremendous amount in that period of time.
Jason DePietropaolo: Yeah.
Brian Weinstein: All right, so that was Dr. Jason DePietropaolo. Appreciate you coming on and talking to us about the entrepreneurial experience is always exciting for us, but just kind of giving some insight into the values of an OMS.
Jason DePietropaolo: Yeah, definitely. Thanks for having me and it was a great talk. I could sit here and talk about this all day, so anytime you want to have me, I’m available, so.
Brian Weinstein: No, appreciate that. All right, Caitlin, you want to take us out?
Caitlin Postel: Sure. Thank you Dr. Jason. I had to get one in there as well. Thank you everyone for tuning in. Make sure you check us out on your favorite podcast platform and we’ll see you soon. Thanks guys.
Brian Weinstein: Thanks everybody.
Jason DePietropaolo: Thanks.