Photo by Kevin R. Wexler/NorthJersey.com
“We can do anything. We’re not in the ‘no’ business. Other third party logistics are in the no business.” — Brendan Heegan.
Not every business can be as big as Amazon.
And those niche mid-sized manufacturers and retailers need a way to get their goods from the warehouse to their customers.
Boxzooka, which is based in Secaucus, has made that process its specialty.
Now, Boxzooka is preparing to sell the technology it honed running its warehouse to other businesses about the country.
It plans to license warehouse management software it developed to other warehouses, a move that could have a big impact on one of America’s fastest growing industries — third-party logistics.
Third-party logistics is the unseen infrastructure that supports billions of dollars of online shopping. They are the businesses that warehouse the goods sold on the websites, pack and ship orders and handle returns.
The country’s biggest third-party logistics provider currently is Amazon Marketplace, the platform Amazon runs that allows businesses to sell directly to online customers through the Amazon website. Amazon chief Jeff Bezos reported this year that more than 300,000 U.S.-based small and medium business use Marketplace to sell their products.
But Boxzooka has targeted the niche market of manufacturers and retailers who want a more customized shipping experience, and with its software, the warehouses that serve them.
“Most of our customers are luxury fashion, brand-conscious retailers that want to sell on their website versus letting Amazon rule their world,” said Brendan Heegan, founder of Boxzooka.
Amazon Marketplace is the right fit for some retailers, Heegan said, and Boxzooka does fulfillment for some clients who sell there. But Amazon’s fees can cut into margins.
“So a retailer has to decide if they want to be brand-conscious and create a lifetime customer and sell directly on their website, or if they’re selling a commodity where they need high volume and the margin can be low,” he said.
The clients of mid-size third party logistics providers like Boxzooka typically are manufacturers and retailers that have grown too big to handle shipping and online orders themselves, but are too small to open their own corporate warehouses and shipping centers.
Boxzooka, offers a glimpse into how e-commerce operates, in that middle space between giants like Amazon and Walmart and startups where the chief executive does double duty as shipping and handling supervisor.
The business started as a software company, giving manufacturers and retailers the technology they needed to do currency conversions, and calculate taxes and duties on international e-commerce orders.
Then, as it began getting requests from clients to handle their fulfillment — a term that covers everything involved in getting an online order from a manufacturer to a consumer, and getting returns ready for resale — it opened its own warehouse in Secaucus in 2015.
Now, warehouse management software Boxzooka developed to use with its Secaucus operations could become its biggest source of growth, as it prepares to begin licensing the software to other warehouses this fall.
The software allows the Boxzooka warehouse to track online orders as they are received, packed, and shipped, and also lets Boxzooka’s clients monitor how much they are selling and who is buying or returning goods.
“We’ve been utilizing the software for the better part of the last three years,” Heegan said. “It’s taken us that long to make this perfect for us.”
Research firm IBISWorld reports that there are 14,385 third-party logistics businesses in the United States and forecasts that number will grow by an average of 3.6 percent a year over the next five years.
Most of those businesses, according to IBISWorld, are small to medium warehouse operations that serve specific regional markets, the group most likely to be customers of Boxzooka’s software.
Heegan says running a warehouse and fulfillment center has turned out to be a benefit as the company has developed that software. Seeing real time problems and needs his warehouse clients faced in filling orders has helped the company tweak and improve its workflow.
Having a warehouse with its own proprietary management software has been a boon to clients too, he said.
Brands that are growing “have to pivot all the time” Heegan said. “If you’re working with a third party logistics provider who has to outsource their technology and use another vendor, it’s very hard to accommodate those changes for the retailer when they need to pivot,” he said. “Having our technology in house means we can accommodate and be very fast and very nimble.”
An example of that was when one of the fashion brands that uses the Boxzooka warehouse got a rush order for Neiman Marcus with special shipping and labeling requirements that required on-site tech support. Boxzooka learned about the order on Wednesday and was able to ship it by Friday.
The Secaucus warehouse now has more than two dozen manufacturing and retail clients from New Jersey and New York as well as a number of international clients.
On a typical work day the warehouse handles between 6,000 to 10,000 units of merchandise. That number swells to 15,000 to 20,000 during peak seasons around holidays.
The company employs 22 to 25 people, including executive, administration, tech and warehouse employees.
IBISWorld, in its report, noted that in the highly competitive world of third-party logistics, warehouses and fulfillment centers that can offer custom services are more likely to succeed.
Boxzooka specializes in custom requests from clients. Some clients want orders shipped in their own branded boxes and wrapped with branded tissue paper or ribbon. Others want Boxzooka to procure the boxes and shipping materials for them.
Being a smaller warehouse means “we can do anything,” Heegan said. “We’re not in the ‘no’ business. Other third party logistics are in the no business.”
Heegan, who has close to 20 years experience in transportation and logistics-related companies, said when creating the Boxzooka warehouse in Secaucus he and his team wanted to learn from the mistakes and the successes of other warehouses.
One way they wanted their warehouse to be different was they wanted to make it a place their customers could visit anytime, or where they could come for the day, plug in their laptops, and get work done.
“Usually fulfillment centers don’t like to have customers come in and visit, Heegan said.
“They’ve got to tuck in their shirts. They’ve got to clean the place up. They’ve got to hide something they’re doing wrong. So we said let’s have a place that’s always clean. Our shirts may not always be tucked in, but we’ve got nothing to hide.”
The upper floor of the warehouse has a lounge area where clients can work and a space for photo shoots if a client needs new product images for its website.
How does a small retail e-commerce business know when it is time to stop doing their own shipping and outsource to a business like Boxzooka? “I ask people what is the cost of your time if you’re the owner of the company,” Heegan said. Does the CEO and top tech staff have to spend all day Monday scrambling to fill a backlog of orders that came in over the weekend? If that is the case, think about the cost of how those employees are spending their time, Heegan said.
“You have to find where that line is and know when to step over it and outsource,” he said.
Article written by Joan Verdon.
Read the full story here.
Watch this video of the Boxzooka operation in Secaucus, New Jersey.