Jared Ward: 0:03

70% of all e-commerce companies, post covid outsource their fulfillment to a 3PL. So you gotta think about that. Of those 70% more than half are with 3PLs that don't use a common WMS. So more than half of those 70% of e-commerce companies are having trouble pulling in their inventory numbers. They, they have to manually log in, export, throw it into their forecast. So that's, that's a nightmare

Tom Raftery: 0:34

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain Podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi everyone. Welcome to the Digital Supply Chain Podcast. My name is Tom Raftery, and with me on the show today, I have my special guest, Jared. Jared, welcome to the podcast. Would you like to introduce yourself?

Jared Ward: 0:59

Hey guys, how's it going? Nice to, nice to be on the podcast here with Tom. I am a, I'm a Utah native. I live in Salt Lake City, Utah. So right around this time is when the, the mountains start to get snow capped. I'm an avid outdoors person, so you know, Utah is, is one of the best places to be in the world. A h, It's amazing for hikes in the winter you can go skiing. It's the, the best powder in the world. But I am father of two and I like to say father of three. Luminous is my third baby. So Luminous is is my software company. We are inventory management and supply chain management for the modern e-commerce company. But yeah, it's a little bit about me.

Tom Raftery: 1:49

Lovely, lovely. Never been to Utah. You're selling it well, so I must try head out some time. But tell me a little bit about Luminous, luminous and e-commerce. I guess start off with backstory. Why why luminous? Why e-commerce? What made you decide to start this company to do what?

Jared Ward: 2:13

Yeah, sure. I, my background is in e-commerce and supply chain, so, I was CEO of a $20 million a year direct to consumer brand. You know, they're a great representation of the modern e-commerce business and how they evolve and the challenges that they face. And when I was running that company, it was particularly difficult to implement an inventory system and I noticed a gap in the market where you know, it's, what I call it is like basically between SAP and ShipStation. There's, there's a lot of point solutions, but there's not a go-to all-in-one that feels like it was made for the problems that e-commerce companies run into. It, it really feels like when you're running a company that size in, in the e-commerce world, If you have a certain mix of problems, it'll feel like, man, I need to like get Acumatica or NetSuite or SAP. And it's just the tho those platforms are too big for fast, fast-growing e-commerce companies. And yeah, that's ultimately why I started Luminous is, I believe that a system that can understand the modern e-commerce business better than the big ERPs is going to win in the end because they can purpose build something for, for the culture in e-commerce, you know, they're a lot more scrappy, a lot less organized. They do everything ad hoc. You know, whereas NetSuite or SAP it's, it's built typically for very big organizations and there there's, you have to have a lot of hands running that thing. Whereas Luminous, our, how we build is you know, oh, this inventory management. Most systems, you know, you need to have like six, seven different roles to be able to keep your inventory accurate. With Luminous, it's like, how can we just have one person run everything from your purchasing to your forecasting, to transfers, to auto depletions, like we build it to be simple and have way less steps so that an e-commerce company can actually upkeep it.

Tom Raftery: 4:33

Okay. What is the difference in inventory management between an e-commerce company and any other company in supply chain, you know, in terms of how is it that you can make it so simple for e-commerce companies that it doesn't work for companies that are not in e-commerce?

Jared Ward: 4:53

So there's two things there. First we have to, we have to put e-commerce companies into two buckets. If you use a 3PL to outsource fulfillment, so a third party logistics service. Or if you don't. So let's, let's dive into e-commerce companies that use 3PLs. So, there's, there's a massive issue even needing an inventory system if you have a 3PL, is actually a massive issue when you grow to say 15, 20, 30 million. It, it, it gets to a point where forecasting is almost impossible because if I can't plug into my 3PLs, WMS or inventory system, in other words, pull in their live data so that I can have a live forecast, it becomes really difficult. So most systems on the markets you know, upscale ERPs like NetSuite or SAP or even mid-market ERPs or inventory management systems, they typically the, they'll plug into the top WMSs like a Ship Hero or SKU Vault or like, you know, some of the more industry leading inventory solutions. But other than that, they, they can't pull in your live inventory numbers and 70% of all e-commerce companies post covid outsource their fulfillment to a 3PL. So you gotta think about that. Of those 70% more than half are with, are with 3PLs that don't use a common WMS. So more than half of those 70% of e-commerce companies are having trouble pulling in their inventory numbers. They, they have to manually log in, export, throw it into their forecast. So that's, that's a nightmare. So Luminous, we we're able to plug into basically every single WMS in the market. And it's through a partnership that we have with another company, but that's, that's how we can solve that. Now, the, now the second bucket, which is, An e-commerce company that decides to do in-house fulfillment. Though I don't know if you've ever been to an e-commerce company in their warehouse, say, say they're doing like sub $3 million in revenue.

Tom Raftery: 7:03

Sure. I haven't just

Jared Ward: 7:04

it's like the wild west. It's like the wild west. There's typically little to no processes and you gotta think about the evolution. That's because, you know, Billy Bob Joe, the founder of this e-commerce company, he, he just started doing fulfillment of necessity. So in, instead of having like SOPs and, and clear pick and pack processes and rigid rules in place, it's just like, you know, he'll start out inventory, ordering inventory, putting it in his garage. He'll print off a shipping label directly from the channels, slap it on and throw it out. Like there's, there's no concept of like pick and pack or like bins or, so just imagine how that evolves when you become like a $10 million company. A lot of times you have pallet racking, you have bins, but there's typically not like a, there's not a, a set system on how to organize inventory and what, what generally happens, we run into a lot of e-commerce companies who are just keeping track of it on Google sheets and they're doing a manual depletion every month. That's sort of, that's inventory for e-commerce right there. If, if you're in one of those two buckets, that's generally how it looks.

Tom Raftery: 8:22

Right, and you are addressing it for the second one, how?

Jared Ward: 8:28

So we address for the second one by what what I see all the time. I've, I've seen NetSuite go into companies. I've seen other com competitors with big systems go into these e-commerce companies, and a lot of times they're unempathetic to their style of warehouse management. It's basically like, you are wrong. We're right. Our system does it this way 'cause it needs to be done that way. Whereas Luminous takes a different approach. We actually, we, we have the most flexible inventory and fulfillment flow on the market. You can do pick and pack if you want to. We also have a way to not do it. You can do QC verification scans if you want to. You also don't have to. There's a bunch of different settings for that. Like you can, you can print out your shipping label at the beginning of the process or the end of the process. You can, you can still use your OMS like ShipStation if you want to. You also don't have to. So it's, we come into a company and we're like, Hey, you are great at what you do. Yes, there are sometimes some standard operating procedures that they need to adopt with an inventory system, but more often than not, we can just put Luminous right on top of their existing processes and their existing systems. And it can work for them.

Tom Raftery: 9:54

Okay. And it's obviously web-based, cloud delivered. Is that the, the, the setup?

Jared Ward: 10:02

Correct? Yes, that's right.

Tom Raftery: 10:04

easy to deploy? What kind of deployment time are we talking about?

Jared Ward: 10:08

Yeah. So it depends on the size of the company and you know, how, how their complexity, how many modules they're gonna be utilizing. But right now we're seeing implementation time of between one and three weeks.

Tom Raftery: 10:22

Okay. And what about integration with other platforms? Is that I, I, I mean you, you mentioned already the WMSs, but you know, other ERP systems, other TMSs, other systems that are out there, how does that integration all tie together?

Jared Ward: 10:42

Yeah, so how that normally works, the integrations that matter for a system like us are number one, like existing software for e-commerce companies that is used in the warehouse. So a great example of that is it's called an OMS and order management system. So ShipStation is like the behemoth. They, they're massive. So we, we play very well with order management systems because it's the one thing that e-commerce companies can implement by themselves and effectively use. They're very good at implementing those. So instead of like forcing you to rip and replace. And instead we play it really well with OMSs in the market. So like that Ship Station or Ship Key or a Desktop Shipper. Other integrations that matter are direct channel integrations. So can Luminous push your inventory numbers to all of your channels? Yes, we can. So that's like Shopify, WooCommerce, BigCommerce, Amazon. Other integrations that matter are other WMSs. If you're an e-commerce company, you'll most likely use a 3PL. You'll likely use, need to pull in some sort of data from a distribution center that you use, and Luminous can do that. We link up with almost any 3PL in the market, or excuse me, their WMSs.

Tom Raftery: 12:06

Okay. And let's, let's talk a bit about growth because we've seen huge growth in e-commerce, obviously given a kick in the ass by Covid, but even before that, it was, it was trending upwards. And since then it's, it's gone. You know, much, much, much, much higher. I gotta think. So if I am an e-commerce company today, starting out annual sales of 1 million, but I want to get to a hundred million in three years, can you handle that?

Jared Ward: 12:44

Yes. In fact, I, this might be backtracking just a little bit, but, so a really interesting trend in a really interesting trend after Covid was the rise in 3PL usage. So there's, there's a big rise in 3PLs opening in the emergence of Covid. Obviously you can guess why, but it something really interesting it it left a specific market after covid after boom in e-commerce in certain industries. There were certain industries that that boomed. And, and basically started their online presence from scratch that could not use a 3PL. And those are the types of companies that are seeing some massive growth right now. So like in the, like preservatives, animal products, the, these industries that historically had no direct consumer presence at all. They boom during covid, they can't use a 3PL. Like, so for example meat companies. We, we we signed on a client called REP, REP Provisions. And so basically they buy, they buy and slaughter, and cut, chicken and, and beef, and they sell it in like as a subscription box. There's tons of, of brands that popped up like this. So they, it's a good example of, of brands that man, they hit a million fast, like they boomed and they're well on their way to, you know, the 20, 30, $50 million. And the thing is, if you're a brand like that, who's that complex? You're gonna need bill of materials, you're gonna need to plug into your, your 3PL's WMS. You're gonna need a system that handles subscription. You need a system that can forecast, bill of materials and tell you how many cows you need to buy. So all, all those things I just listed

Tom Raftery: 15:12

mm-hmm.

Jared Ward: 15:13

to your point, like how do you go from one to a hundred million? You need a complex as f system when you're doing a million in revenue,'cause you're, you're a really complex company that really can't use a 3PL. So you have to have a lot of advanced modules and you're a million dollar company with three employees. So you definitely can't afford NetSuite or SAP and they're definitely not gonna understand how to implement you at, you know, a three person company. You can't use the seven different modules and you can't customize things to work. So that's where Luminous, we, we have a really unique value prop to, to companies like this where, hey, not only do we understand your specific problems as an e-commerce company, but we have the breadth of features that you need at an affordable cost, and we can actually grow with you. That's how our system was built. And yeah, that's what I would say is if you're an e-commerce company, there are very specific problems you're running into right now that are keeping you from getting to 50, 60, 80, 90, a hundred million, and a lot of it has to do with aggregating your wholesale and direct to consumer data, being able to forecast that out separately. You start selling big box retail, that's a common trend nowadays for e-commerce companies. They're, they're getting their shine in retail. How do you handle the EDI requirements there? How can you automate that?'cause it becomes really tricky, really fast. Plugging into other 3PLs. As, as basic as this sounds, how do you know you're accurately rep replenishing all of your all of your distribution points. If when you start doing FBA and when that's really important to you, you cannot go outta stock on FBA, it restarts all of your traction. You know how much, if you start doing east and west coast distribution, how do you know what to replenish? So the, these are the types of things, this is where Luminous shines and helps you start out at a million and, you know, grow with you to 50, a hundred million.

Tom Raftery: 17:17

Okay, and is that your sweet spot? At what point when I have an e-commerce store, should I consider moving to Luminous and at what point when I have a massive e-commerce business, should I consider moving off Luminous onto somebody else?

Jared Ward: 17:37

Yeah. The answer to that is it really depends on the, the type of business you are. So I actually have a video, I have a piece of content where I go over like, business archetypes. So, and, and it's like, what are your attributes as a business? Are you subscription based? Are you wholesale that does some direct to consumer? Are you you know, do you do manufacturing and kitting in house? Like, all of those questions matter on when you should implement a system of record like Luminous. But the, the short answer is the sweet spot is probably between $1 million and 5 million, that's, that's when you'll start feeling inventory pain. And it's like, it's when I go multi-channel, okay? Instead of just Shopify, I'm now selling on Amazon FBA, I have two replenishment points And to aggregate my order data. I need to clean stuff up. Or now I started selling some wholesale, some specialty wholesale. Man, all of a sudden I keep overselling my direct to consumer because when I do a wholesale order, it's not it's not catching that and pushing that to my channel so that I keep overselling and I'm wasting ad spend. It's, that's what it looks like. It's little things like that. Or yeah, or I just sold, I, I just got my first big box retail contract. Man, this EDI stuff is really annoying. It's, it's not going into my system. Like, it's just this thing happening on the side. Those, that's kind of what symptoms look like. But yeah.

Tom Raftery: 19:09

And at the other end.

Jared Ward: 19:13

Oh what do you mean?

Tom Raftery: 19:14

You know, when, when should I consider moving off onto one of the, the, the bigger platforms, the NetSuites, SAPs, et cetera that you mentioned earlier?

Jared Ward: 19:25

Yeah. Yeah. Great question. I would say it's moving to a big ERP. There has to be a certain level of complexity you're, you're reaching with financials or with hr, just like an employee docs and information and onboarding. I would say most e-commerce companies don't actually reach that point, even as, even a nine figure brand can be run super lean nowadays. I mean, Jolie is a good example. You know, they've exploded and it's like, four dudes and a three p. It's, so I, I do have a belief that most e-commerce companies, again, depending on the business attributes, you don't need a big ERP. But the attributes that make it where you, you might need an ERP is you have a lot of employees. You have like really, maybe you're in like the supplement space where traceability really matters. Where like, even Luminous, we could do a lot of tracking and we have full traceability, but there's a certain level of traceability that you need as like a supplement company that sometimes you just have to get with with, with SAP. So yeah, I would say like number of employees, or complexity of processes, probably a mix of both of those where it's just like, hmm, there are specific things that aren't, that Luminous, can't give me that like my industry needs. That's, that's kind of when I would make that decision.

Tom Raftery: 20:55

Okay. What about things like compliance? Because there's new legislation coming up in the EU, for example, the EU deforestry legislation, which is coming online, the end of this year, start of 2024, and there's the EU, oh, can I remember the name of it? Supply Chain Due Diligence Act. Which, you know, the Due Diligence Act requires that you make sure that there's no forced labor in your supply chain. The deforestation one requires that you make sure that nothing that you are selling has caused deforestation across seven categories of goods in where they were sourced in since December 31st, 2020. So, and the, the, the, the penalties for not adhering to these are quite strict and it is a percentage of global turnover, that kind of thing. So is, again, to your point, is that something that you'd need like an SAP for or is that something that you guys can handle?

Jared Ward: 21:58

That's something that we could handle. I, the question there is like, can we have traceability in like the purchasing of raw materials and like, you know, from a quotation and supplier and purchasing all the way into like selling the unit, can we, can we trace that and prove it? Yes, we can. I think where compliance starts, where compliance starts to matter a lot is in when you have certain regulations and, for example, if you get audited as a supplement company, you, you, you have to, like at every single step in manufacturing, you have to have either a digital signature or a physical signature. And when you get big enough that stuff really, that stuff really matters. So like that's, that, those are the types of things where it's like, yeah, Luminous, we're not that deep on the compliance and for manufacturing of supplement companies, you know? Will we, one day? Maybe. But that's, that's when it'd be like, eh, you probably just need a, a more niche ERP that handles that.

Tom Raftery: 23:12

Or maybe Luminous goes into a partnership with somebody who supplies that

Jared Ward: 23:17

True. Yeah. Possibly if, if we feel the, if we feel the pull hard enough from an industry we would

Tom Raftery: 23:24

Okay. Fair enough. And so, If, again, if I am an e-commerce company and I am selling to my local market, that's straightforward enough. But what if I start doing transnational sales? I'm selling into Asia, I'm selling into Africa, selling into the EU, selling into North America. Again, is that that there's lots of different cross-border regulations, customs and things. Is that something that you can help with?

Jared Ward: 23:54

Mm-hmm.. Yeah, so we actually have a we have a client who sells across like Australia and China, and France and, yeah, Luminous, we handle all of their inventory management and their wholesale distribution in those countries. So we, we have our own B2B portal, like point of sale that links up with our inventory management system, and it just makes selling through, you know, international points or like really maybe just a different, a bunch of different points in the United States. A lot easier.

Tom Raftery: 24:31

Cool. Cool.. What about things like security, particularly data security, because, you know, there's, every year, every week there's a new story of a, a new threat or a new breach. You know, so how are you managing the data that's flowing through your system from being hacked, for want of a better word?

Jared Ward: 24:55

So that's, that's more of like a my CTO's conversation right there. But my CTO's, he is Brendan Bebe, super smart guy. He, he, he built a ERP, the number one ERP for the golf space called Four Up. Anyways. So he's in charge of all that. I mean, the, the basics is we, we have high quality code standards. We, you know, we house all of our data on AWS. So it's, we we're compliant with any, you know, any security laws. And we make sure that our, our customer's data is safe.

Tom Raftery: 25:31

Okay. Fair enough. And I mean, how do you manage then the relationships with clients to make sure that you know they're getting the best from your platform?

Jared Ward: 25:41

Yeah, so the, the best way we do that is it's actually how Luminous scales and our philosophy behind scaling as a system in this market. Most, most companies, you know, post Web 2.0 that just rebuilt NetSuite in the clouds. They went the route of, they, they basically pushed to like a free trial and expect 80, 90% to churn and 10% will stick around. And, you know, you might get an account manager hopping on a phone call with you. But it's like a thousand people will sign up that month for our competitors and, you know, maybe a hundred will stay around and use 40% in the system. We're very different. I don't, I don't believe in scaling that way. I believe in scaling slowly and intentionally and getting clients who use 100% of the system or at least the parts that they need use, utilizing it a hundred percent. So that's just our philosophy in scaling. Like we cost more than our competitors we're, we're double the cost of like a Cin7, which is a more down market inventory tool, but we give you certainty that it's gonna work because we're not trying to blow up, like get onboard a thousand users this month. No, I don't care. I, we're growing slowly and meaningfully. I will never sacrifice, you know, real account management for like dollar signs or more users. Never. It's, that's not in the books. So, you know, any, anytime, you ask anybody on Luminous, like, Hey, when was the last time your account manager and you talked? Or like, when was the last time he went to the warehouse and like did a count with you? It's like, he'll probably say like, within the last week, like yesterday, or no, like four days ago, Josh was there. That's, that's the level of service that we give.

Tom Raftery: 27:33

Wow. Okay. And with that in mind then, can you share a customer success story or customer success stories where you seriously impacted a a, a customer's success?

Jared Ward: 27:48

Yeah, so, actually very recent one. We onboarded a company called Renova Worldwide. I met them at a trade show. They, they, they had been through the ringer with softwares and so they had used, I think like a more down market tool. I can't remember. It was like either SKU Vault or Cin7. Wasn't working for 'em, didn't have the, some of the features that we were talking about before. So they're like same conundrum that I was in as a CEO, it's like, I guess we need NetSuite, so, so they onboarded NetSuite, you know, as like a five person company with a small warehouse and long story short, it did not go well. It was a botched implementation and they spent hundreds of, hundreds of thousands of dollars and it ended up just not working. And this is an example of NetSuite shoving a square peg into a round hole. Like they, they're going down market to these e-commerce companies when they really shouldn't be. They don't, they don't understand the market. But anyways, that, that's besides the point. So what happened was we got them after they had turned from NetSuite and they saw my content on YouTube. So I, I have, I have a video that's basically, I'm, the whole thesis of this implementing a big ERP would've killed my eCommerce business. And like, this is why I built Luminous. And so they saw that really resonated with it. And we were able to implement them for free in about a week and a half. And they're fully on our inventory system now. So, you know what took NetSuite like a year and $300,000 we did for free, and in a week and a half. And they're very happy right now. So that's, that was really cool to, know, sort of see like all of my thesises on the market, like come to fruition and, and really have proof.

Tom Raftery: 29:42

Cool, and where to next? What are your plans for Luminous for the next 3, 4, 5, 10 years?

Jared Ward: 29:50

Yeah. So, in short, for the next year and a half we're a company who's all in on content. I, I don't, I really don't like the old school way of scaling and like how our competitors do it, which is just blow out PPC and just go to events. I'm all about content and being loud on social media, like you, if you wanna get to know me as a person and my whole team like it's all over the internet. Like you can see my story, you can see what we're about. But in short, the goal is 3 million in ARR by the end of 2024, and 10 million within the next within the next three and a half years. And I think we are on pace to, to get there, ask me in a couple years. But So far like that meaningful scaling is, it's going very well,

Tom Raftery: 30:44

Okay. And in terms of functionality?

Jared Ward: 30:48

Functionality the number one inventory and supply chain tool for e-commerce companies, number one. And I think my goal is that every single module that is utilized, we have reviews that say like, man, so simple, or, wow, that was so easy to onboard, or wow. Luminous is the best support ever. Like it just works. We already have a good offering. I think the biggest thing, expansion of our offering is polishing off existing experiences for the modern e commerce company and adding in AI. That's, that's a big one, and we're already experimenting with that. So prompt based forecasting or just prompt based commands within our system. Once you get all the data, it's that, those are things we're experimenting with right now, but we'll only go to market with that once we have something compelling, like a compelling use case for it.

Tom Raftery: 31:39

Cool. Cool. Great.. We're coming towards the end of the podcast now, Jared, is there any question I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to think about?

Jared Ward: 31:54

No, I don't, I don't think so. I would say if, if you're interested at all in inventory management and it not even like some hard pitch on Luminous. Go and watch my content. I, I I post all the time. Not even about Luminous, it's just about, you know, how to choose a good inventory system. And that might not be us for somebody, and that's fine. But if you, if you ever need support on like, how to choose an inventory system or like understanding the market of supply chain tools better go and give my content a follow. So, yeah.

Tom Raftery: 32:31

Perfect. That leads me nicely into my final question, which is if people would like to know more about you or inventory management, or any of the topics we discussed on the podcast today, where would you have me direct them?

Jared Ward: 32:45

Yeah. So my, my YouTube channel is at Jared underscore Ward, j a r e d underscore w a r d LinkedIn search, search my name, Jared Ward.

Tom Raftery: 32:58

Shoot me

Jared Ward: 32:58

Also, I mean, big

Tom Raftery: 32:59

the links, Jared, and I'll put them in the show notes for people to find them.

Jared Ward: 33:04

yeah. The, i, I honestly, the easiest one, join luminous.com. Join luminous.com. You can actually find all of my content from there in the Ys and our media page. Oh, I also have a podcast as well. It's called Ops Un Filtered. So if you ever like,

Tom Raftery: 33:19

Ops Unfiltered. Perfect. Great. Superb, Jared.

Jared Ward: 33:25

So yeah.

Tom Raftery: 33:26

a million. Thanks a million for coming to the podcast today.

Jared Ward: 33:30

Yeah, no problem. It was nice. Nice meeting with you, Tom.

Tom Raftery: 33:34

Okay, thank you all for tuning in to this episode of the Digital Supply Chain Podcast with me, Tom Raftery. Each week, over 3, 000 supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose our guests or a personalized 30 second mid roll ad. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn or drop me an email to tomraftery at outlook. com. Together, let's shape the future of the digital supply chain. Thanks. Catch you all next time.