Izzy Rosenzweig
It is a little funny how I didn't expect it. I started an industry that took manufacturing off the map. And I think this is where I'm now, an industry that could totally, let's say put boats and ports, reduce the need of them for DTC brands.
Chase Clymer
Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game.
On this podcast, we interview founders and experts who are putting in the work and creating real results.
I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.
Let's get on with the show.
Hello everybody. Welcome back to a bonus episode of Honest Ecommerce.
Today I'm welcoming to the show Izzy Rosenzweig. He's the founder and CEO of Portless.
They help DTC and Ecommerce brands ship orders directly from China right to their customers' doorsteps.
Welcome to the show Izzy.
Izzy Rosenzweig
Super excited to be here, Chase. Thanks so much for having me.
Chase Clymer
Awesome. You got a pretty great one liner there. But can you quickly... What's the elevator pitch for Portless?
Tell me a little bit more about what the business actually does.
Izzy Rosenzweig
Yeah. Fundamentally, if you think about DTC brands in the traditional way they do things, let's say they manufacture 10,000 t-shirts, they put on a boat, they can sell that inventory for 60 days stuck on the water.
It comes over to the border, they're paying import duties because you're buying a lot at a time. Then you're bringing it to the warehouse and then you're shipping to your customers and paying all the shipping fees.
In our model, our fulfillment center is in China. So we can get your inventory two days after production.
We could deliver it to your customers' front door within six days to the United States, fully local experience. Customer gets a USPS tracking number within one day.
Looks like it's coming from New York or L.A., but it gets delivered within six days to their front door, fully local experience.
So the customer has the same experience. But as a brand, your lead time went from 60 to 90 days to three days.
If your value of goods is under $100, it's duty free to the United States. No container cost and very competitive shipping rates starting at $4.49 to, let's say, a quarter pound, $5.86 for half a pound.
And yeah, so savings right out the front door, plus much better cash flow, game changing for DTC businesses.
Chase Clymer
Well, that's amazing. So talk to me, where did this idea come from? What was going on?
Izzy Rosenzweig
Yeah. So honestly, it was solving my own pain points. So I've been in Ecommerce for over 10 years, and doing cross border for most of that.
But what we saw when I started a consumer business called Browze. We were in the home kitchen space and a couple other categories. But when I started, it was painful.
I started by bringing containers, one container at a time. Money was stuck. Whenever we sold something, we had to buy more. So money came in, but the money went right back out.
And I couldn't convert that inventory for months at a time. And if something did really well, let's say I brought 1,000 units of a product during Christmas time, it sold out. I missed the season.
So there's just so much of these pain points that I saw as a brand. Then I got really lucky.
I met the former CFO of Alibaba. He became an advisor and an investor. He introduced me to this evolving space of cross border logistics.
Now that being said, in the early days, it wasn't a good experience.
The first seven years of me doing this, you're looking at two week delivery, there was Mandarin on the tracking number, customers got very confused about what's going on.
So it wasn't a great customer experience.
But in the last three years, because of the growth of this space, the efficiency has become incredible, right? Under six days to the United States, even faster to Europe.
Everything is a local experience. So we start doing that for ourselves.
We're like, holy crap. Not only having great crash flow, we're having better profit margins, but the customers have a great local experience.
It really is an everyone wins situation. And then eventually what happened was our investor said, “Hey, please start talking to other portfolio companies. They need better cash like you guys.”
And we saw after a bit was, to do what we did took us years of building infrastructure and legals. And we saw that there'll be a better opportunity for us to be the infrastructure play for thousands of DTC brands that manufacture in China.
So the brand owns the quality of goods, but the magic is in the supply chain. How fast can you turn inventory to cash and reduce inventory risk altogether?
Or it's November 3, you're sold your best product. You don't need to lose the season. Go to your factory. Two days later, we're shipping to your customer.
Chase Clymer
That's amazing. All right.
So I got to ask you, from just an entrepreneurial perspective, and just how you thought about your career, you're building a business, a pretty traditional direct consumer business.
You're selling home goods, kitchenware, etc. Did you expect to become... To build a SaaS and to just completely pivot away from what you were doing?
Izzy Rosenzweig
You know what? To me, it was so much of a natural evolution and I didn't, right?
Didn't even think I was going to be in the cross-border business, right? I was originally starting as importing or bringing containers. Now, I'll give you a little funny context here.
I started by bringing containers by shipping containers. Interestingly enough, shipping containers actually disrupted manufacturing, which my family was in for 60 years.
My grandfather started a manufacturing business in the 1950s in Toronto, Canada. Everyone did really well those days.
Then shipping containers in the 1980s became very industrialized. You put everything in a container, they could load a container within a day, load a boat within a day or two.
All of a sudden, imports start becoming competitive. “Oh crap, what do we do?” So either factories went out of business, got very niche, which my grandfather did and went on for many more years, or they actually saw the curve and they invested or partnered with factories overseas.
So shipping containers disrupted manufacturing. And I got started with normal shipping containers.
I'm bringing one container at a time. I didn't expect to cross the border. But then I got introduced. I was lucky I met the right people.
I started getting into cross-border logistics for another 10 years. And then I'm like, one second, next stage, again, evolution happened on its own.
We should be doing this for everyone. Let's help everyone do this.
So it is a little funny how I didn't expect it. I started an industry that kind of took manufacturing off the map.
I think this is... I'm now in an industry that could totally, let's say put boats and ports, reduce the need for them for DTC brands.
Chase Clymer
Sounds like your guys' name might have a little bit to do with that. A little on the nose.
Izzy Rosenzweig
Yeah, a little bit. Less ports, more planes.
Chase Clymer
Awesome. All right.
So as you pivot towards solving this bigger problem and realizing there's potentially a bigger market here and a better use of your time, which is a very valuable resource. When did you guys start to go all in on this portless idea? And do you still own Browze? Did you exit Browze? What's going on there?
Izzy Rosenzweig
Great question.
So we went all in probably about 6 months ago when we went public with that. Prior to that, we got into reductions.
Now we shipped millions of shipments in our consumer business. So what we did for infrastructure, we did it at a crazy scale.
But we said, you know what, about 6 months ago, we're going to move from Browse to Portless. We're now essentially 100% Portless.
We do Browze now, a couple products just to test new channels, new countries. We actually have a small beta in Vietnam right now.
The idea is not China to consumer. It's factory to consumer.
So I don't care in the future if you're manufacturing in Thailand, Vietnam or China. We will have infrastructure there over the next little bit.
So we use it as a testing thing, just a couple products. And then we onboard our customers after we nailed it perfectly.
Chase Clymer
It sounds like a fantastic tool to have in your toolbox from a SaaS perspective to have a brand that has all the kinks worked out that you can pilot these things with and figure those things out.
Eat your own dog food, as they say.
Izzy Rosenzweig
Exactly. We got to solve it. Go with the pain through ourselves, and then onboard.
Chase Clymer
Awesome. All right.
So if I'm a brand out there and I'm listening to this show and I'm like, “This all sounds really good, but I don't know if it's for me.”
What are some telltale signs of what I'm doing for my business or types of products that I'm selling?
What makes a good fit for Portless, I guess?
Izzy Rosenzweig
Great question. So basically, A, manufacturing in China.
If the majority of your products are manufactured in China, we could bring stuff from Vietnam, India, Thailand into China for you, which is very fast by boat in a couple of days.
Let's just say manufacturing in China, products need to be on the lighter end.
The moment a product gets bulky or very heavy, this model doesn't really make sense. Because yes, they're efficient.
You don't have to cost for the containers. You don't have to cost for import duties for most brands that sell under $800 value.
But if it's bulky, for us to put it on planes gets very expensive. And the way this model works is, we buy airspace every single day to every major hub.
So it's going to London, Australia, Canada, and the US. As long as it's light, it goes in our pallets and we inject it into USPS.
That could be LAX or D or JFK. But if your stuff is bulky, it gets a little too expensive for this to make sense.
Chase Clymer
Gotcha. So I noticed you didn't give me a hard and fast number on the weight, which means that it depends on your margins, etc. I can read between the lines.
Izzy Rosenzweig
Exactly.
Chase Clymer
But what would you say is like a rough line in the sand?
Izzy Rosenzweig
I would say under 5 pounds, there's a lot of opportunity. Above 5 pounds, we have a few of them. But usually, their margins are really big.
The AOV is like 500 bucks, they can afford to pay higher dollars.
But on the lighter end, under 5. And as it gets lighter, it gets really good.
Under 3, even better. Under 2, even better. So apparel brands are great. Cosmetic brands, accessory products.
Those light products will crush this model.
Chase Clymer
Absolutely. And then you said it before, but I want to ask again to get some clarity out there.
You said something around the value of these products to help, not escape. but not get those import duty charges.
Yeah. So what's that number again?
Izzy Rosenzweig
Yeah, it's just not relevant to you. Yes.
It's called Section 321, the de minimis. And that's not only the United States, most countries in the world.
Australia, if you bring an individual package under a thousand Australian dollars, import duty free.
Europe, 150 euros. UK, 135 GBP.
So every country has their threshold. But if you're doing individual packages to your end customer, it is import duty free.
And that is just money to your bottom line.
So if your value of goods in the US is under $100, there's just opportunity, besides your better cash flow, to run a better margin business as well.
Chase Clymer
Awesome. So if you're listening to this, your AOV is under $800 and your total package weight is under $10, I think you need to hit up Izzy and his team just to have them pitch you.
See what they might be able to work out for you.
Alright. So I've got another question here.
So we're in the age of Amazon, Amazon Prime. Everybody's like, get this thing to my door in 3 days.
You know, how do you combat that? What are you seeing in the market?
How do you address that when I know it's a pain point during your sales process?
Izzy Rosenzweig
Great question.
So first of all, we look at two perspectives.
A, as a brand, there's a reason why you're selling on your own website and not on Amazon. Your product's a commodity, very often you put it on Amazon.
Now, if a product, if a brand for whatever reason does Amazon as well, we could do FBA injections. We can help you with FBA injections.
We don't do that as a core business. But if we have your logistics business, we will do injection for you.
So you never have to go to 3PL then Amazon. We could just send it through a fast boat or traditional boat right to Amazon itself.
But let's say your website, you want to offer Express and you want to offer Standard.
So what we've seen our customers do is they make it into a profit center.
They'll be like, hey, our standard is the $4.99, which is let's say a 3-7 day delivery. But our Express, which is whatever the next day delivery is, is $9.99.
And what they do is they keep a fraction of their inventory.
And I know from the brands that we see, usually it's about 10% that chooses Express. And you can make more money on that.
So you can be like Standard, either it's free, or it's $4.99.You can reduce your inventory from 100% to 10% and have less inventory needs locally, and fulfill that Express if that's what your customers want.
Chase Clymer
It amazes me when I have assumptions about business models and brands. So that's what I wrote down here.
I was like, is anybody doing a hybrid thing where they keep some of their stuff local and then you pay for faster shipping.
Izzy Rosenzweig
Exactly.
Chase Clymer
And then the rest of it goes through a slightly slower thing. And I think that's a fantastic way to approach it. It'd be like, can't wait.
I would say for most brands, you're gonna do free shipping at that longer threshold and say, can't wait, pay X dollars to get it in 3 days.
Izzy Rosenzweig
Exactly.
And then they're often, prior to that, they didn't have the slower option. I mean, tier 1 cities is 3 days.
But let's say 6 days, and all of a sudden, people are choosing... They're choosing their path.
And they're like, okay, I'll pay a little more. Profit center.
And there's one other area that we didn't tackle and I think is super important, which is globalization.
So historically, customers were like, hey, I got to put a container in every continent.
That's so painful. And we have customers that used to do that.
All of a sudden, instead of having products stuck in Australia, Canada, Europe, and the US, it's one inventory hub in our film center in China, and 40 virtual warehouses.
Every country we ship local experience. Royal Mail, Australia Post, Canada Post, DHL, Germany.
All local experiences. Customers never know what came from most of the country. They never pull out a credit card on delivery.
So then, there's those customers which are like, oh my gosh, that just simplified my supply chain.
Then there's other customers that never went outside the US and they're like, oh, it's scary. Well, why is it scary?
Well, shipping from the US to Australia is 30 bucks. That is a lot of money with us at seven.
How does it work with duties?
What if, let's say sales tax, we have a software that does all that for you. We'll calculate the right tax per country. You'll collect it, we'll invoice it, and we'll file for you.
You have to do nothing. You literally just have to turn Shopify markets and you're going international with literally no extra pain points on your end. Just better cash flow.
International should be 30% of your business.
Chase Clymer
Yeah, absolutely. And I was just talking to a prospect yesterday that might start working with our agency.
And we were talking about internationalization and what was that percentage of their business. And it was less than what you're saying where it should be now.
But it also got into the questions about creating more specific experiences.
And if you're creating a web experience that is, say, in German, the shipping experience matching that, I think just elevates everything across the board.
Izzy Rosezweig
Yeah, exactly. All of a sudden, you have normal shipping rates, you have a local translation experience.
But we see customers very often. They'll just open Shopify markets. They'll see where the data... CPMs are cheap in these countries. So marketing is efficient.
So they're starting to say, “Oh, wait, Germany's spiking.” Now let's invest into translation.
So there's a really good macro and micro approach to international parts.
Chase Clymer
Absolutely. That's exactly what I said. I was like, what's the best market? Just do a chart and 80-20.
Focus on the best one and then just start going down the list.
Izzy, we've touched on quite a lot today. Is there anything I didn't ask you about that you think would resonate with our audience?
Izzy Rosenzweig
I think one area that we see, currently our customers are really moving to us at very fast rates because we go on board a customer within days.
Like you reach out to us, there’s a Shopify app. Well, how do we integrate?
If you're on Shopify, we’ll have that Shopify and within 15 minutes you're integrated. It's based on your location. You map what products you want to send to us and you send products to us.
And then you're essentially live. So integration is about a 15-20 minute Shopify app download integration. We do it over Zoom. Everyone is English-speaking to your account manager, the people in China.
You're all in a Slack group. We do Slack Connect. You're talking like a text conversation during setup and then your support team to our support team if they need to ask us questions.
And then, integration is super, super easy. And for Q4, what we're seeing, which is really interesting, is that people are in production, but factory's delayed.
“Oh man, I'm gonna miss Christmas. I'm gonna miss Halloween.”
No, you don't need to miss Halloween. You can reach out, we can connect. Within 15 minutes, you're set up.
Two days later, we have your inventory. We're shipping to your customers.
So, or if you sell out, don't lose that opportunity. Sell out is actually lost revenue.
If you connect to us, within days, you could be live and you're factored back into production and capture the season.
Chase Clymer
That's amazing, Izzy. That's fantastic.
So I'm listening to this and you're like, “You know what, Chase? This is a great bonus episode. I actually learned something and I want to reach out to Izzy and the team at Portless.
What do I do? Where do I reach out?”
Izzy Rosenzweig
Awesome. portless.com. Go check out portless.com.
We got tons of information there, case studies, understanding more of how it works.
You can submit a form. You go right to our sales team. We'll book a call with you right away.
Plus, I'm on LinkedIn and Twitter. I'm always posting content around supply chain, cashflow, inventory management.
DM me there. We'll respond to you. I'll respond to you ASAP.
Chase Clymer
Awesome. Izzy, thank you so much for coming on the show today.
Izzy Rosenzweig
Thank you so much for having me, Chase. This was awesome.
We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes.
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