This as-told-to essay is based on a conversation with Brendan Heegan, the 45-year-old founder of Boxzooka. Insider has verified his business' growth with documentation. The following has been edited for length and clarity. *Please note this article is written by Jenny Powers and is originally featured on Business Insider.
My logistics company operates warehouses in 2 of the sector's hottest markets. We made 8 figures in revenue last year thanks to the boom in e-commerce.
As a third-party logistics- and fulfillment-service provider, Boxzooka was deemed by government bodies to be an essential business at the onset of the coronavirus pandemic, which proved to be both a blessing and a challenge.
We partner with retailers, wholesalers, and subscription-box companies to provide logistics services, which include everything from inventory management to fulfilling deliveries and returns of goods for customers around the world.
Our business boomed during the pandemic — our business has grown by 194% from where it was in 2019 — and it's made me value our team and clients more now than ever before.
After 20 years of working in transportation and third-party logistics distribution for organizations like Airborne Express and DHL, I started Boxzooka in 2014. In 2015, we opened a 40,000-square-foot fulfillment center in Secaucus, New Jersey, and in 2019 we opened a 140,000-square-foot facility in Harrisburg, Pennsylvania.
We have 125 full-time employees on payroll plus anywhere from 40 to 80 temporary workers at any given time.
During the pandemic, some clients had to close their brick-and-mortar stores, but they also saw a boom in e-commerce business
When COVID-19 hit, we could do nothing but watch as we lost some of our major retail clients, who struggled to pay rent on their brick-and-mortar stores and eventually had to shut down. At the same time, stay-at-home orders resulted in consumers turning to online shopping, which led to a significant boom for our e-commerce clients.
Because of this influx, our business has grown substantially. Last year, we hit the mid-eight-figure-earnings mark in annual revenue.
As we got busier, we focused on improving employee benefits and retention strategies
Just as client and consumer demand increased, we saw spikes in turnover like never before. We had employees leave work because they or someone they knew got sick. They never returned to the job, and then later we saw them claiming unemployment benefits as if we had terminated their employment.
To combat this, over the past two years we've raised wages, increased our retirement-savings contributions and health-benefit plans, and improved our training processes.
We recently overhauled our health-insurance program to offer employees full-coverage medical insurance for less than $15 a paycheck and added both dental and vision coverage for less than a dollar more.
We've added more employee-engagement activities, like team breakfasts, employee-of-the-month contests, and health-and-wellness programs, like weight-loss and smoking-cessation classes, on-site flu shots, and biometric health screenings. We also offer staff paid time to volunteer in their communities and English-as-a-second-language, leadership-development, and financial-literacy classes.
At the end of the day, we know taking care of our employees is fundamental to our success, so these have been welcome improvements, and hiring has gotten better over the past six to nine months. On top of hiring more, we've extended our business hours to keep up with demand. As of April 2022, we increased operations to 10 hours a day, from eight, and transitioned from a six-day workweek to a seven-day workweek to keep up with demand.
Because of the pandemic, shipping delays, and backlogs, all of our costs have gone up
On average, we receive and ship out 100,000 units of merchandise every day. Everything just costs more now. Our labor costs alone have gone up 20 to 25% so we stay competitive and attract workers.
But we didn't want to increase costs to clients and haven't at all in the past two years. Instead, we brought on consultants to help analyze ways we could cut down on business expenses.
We partner primarily with mature brands that sell on their own websites — rather than marketplaces like Amazon and Etsy — and have small products with an average order value of more than $100. For these reasons, we work with a lot of fashion and cosmetic brands.
We've leased multiple spaces in the last 7 years
We first leased space in Secaucus in 2015. When we were up for our first renewal in Secaucus in 2020, the landlord wanted to double the rent for the fair-market value. They wouldn't even change out the carpet, put a fresh coat of paint on our offices, or fix anything at all, so we went back to the market, found a newer space for about the same asking price as the renewal on our old place, and moved. To ensure we didn't end up in the same predicament again, I negotiated a second five-year term at the lease's standard annual increase so in 2025 we won't have to deal with whatever fair-market value will be then.
When we leased the Harrisburg space, the market was just starting to warm up, but nothing like Secaucus. There was still enough vacant space available in the area to negotiate a favorable deal, and since we didn't need the entirety of the space on day one, we were able to negotiate an economic phase-in where we paid a certain percentage of the total space at increasing intervals over the first year or two before paying for the entirety of the space. Now, rents appear to be up 20 to 30% since 2019, but we aren't concerned right now.
Right now, I split my time each week between the two warehouses. I make my rounds, walk the floor, and make sure I know everything that's going on.
Article written by Jenny Powers
Originally published on Business Insider