In this episode, listen in as Marcus Chung, Chief Operating Officer, Coyuchi and Drew Taranto, Vice President, Product Management (eCommerce & Returns), DHL Supply Chain, discuss Coyuchi’s growth within the last ten years, recommerce, sustainability and more.
In this episode, listen in as Marcus Chung, Chief Operating Officer, Coyuchi and Drew Taranto, Vice President, Product Management (eCommerce & Returns), DHL Supply Chain, discuss Coyuchi’s growth within the last ten years, recommerce, sustainability and more.
Speaker 1 (00:09):
Welcome to All Business Know Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. I'm your host, will Haywood. This is a place for in-depth discussions about the supply chain challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. Today's episode is an intentional approach to commerce, delivering practical sustainability in the supply chain. Our guests are Marcus Chung, chief operating officer at Coyuchi, and Drew Toronto, senior director of strategy DHL Supply Chain. Let's dive in. Speaker 2 (00:42):
Alright, welcome to you both. I'm really glad you're joining us today. I've been looking forward to this episode. We'll start like we always do. I'd like you each to introduce yourself, your name, your company, and your role there, and then we'll dive into the conversation. So Marcus, could you kick us off? Speaker 3 (01:00):
Yep, I will. I'm Marcus Chung. I'm CO at Coyuchi. For those who don't know, Coyuchi is a sustainable bedding and bath brand. So we make home textiles. We are omnichannel, we are primarily through our own D two c e-commerce channel coyuchi.com, but also sold in many boutiques around the us, a few different majors. And we have one store that's in California, Northern California. Speaker 2 (01:28):
And that's where you're based, right? Speaker 3 (01:30):
We are, yes. Speaker 2 (01:31):
Yeah, good. Okay. Drew? Speaker 4 (01:33):
Yeah, so Drew Toronto. I'm a senior director of strategy and product development for DHL Supply chain. Really responsible for our growth strategy within e-commerce. So where we're growing from a business, but tied in very closely with our customers and in learning more about what's going on in the market and supporting them in their growth initiatives. So happy to be here Will. Speaker 2 (01:54):
Okay, so Marcus Coyuchi sustainable bed company. When we talked before, it's an older company than I thought it was. Can you give us the history? Speaker 3 (02:05):
Yeah, so we were founded in 1991 and our founder was really focused on trying to build an organic supply chain. Back then that was before organic was popular or at all in fashion. And she found that it was really challenging but rewarding to figure out how can we create organic cotton products. And the motivation she had was to be able to encourage more farmers around the world to convert their practices to organic, which she believed is better for the planet. So it was really a mission-driven founding of the company. And from there have really grown to be able to create distinctive beautiful products in the home textiles category. Speaker 2 (02:48):
I know it's attracted the attention of a lot of our marketing team, your products. You also mentioned that there's been rapid growth in the last five, 10 years. What are some of the factors that have driven that? Speaker 3 (03:03):
I think there's a few different factors. I think there's some macroeconomic factors. Just the consumer is more interested in sustainable product than before. So the awareness of what you're buying, what you're using, and the impact it has on not only your own health and wellness, but on the planet as well. So that trend I think really helped with Kochi. I think the other is just we really embraced e-commerce and going digital first. So as you can imagine, when we were first founded, we mostly were sold through wholesale accounts and e-commerce a thing back in the nineties. And as eCommerce as we built out our e-commerce site and put more effort into that channel, it really just has become our primary channel and has grown tremendously. Speaker 2 (03:53):
Got it. Okay. So that's a nice see to you Drew. Can you talk a little bit about DHL's e-commerce business? I'll note Coyuchi is not a customer of ours yet, but we seem to have a lot in common in terms of what we've been doing for other customers. Speaker 4 (04:11):
So the DHL supply chain story is quite interesting in the e-commerce space. We've been doing it for almost two decades now. I think Marcus's comment, nothing was e-commerce in the nineties and in the early days we were helping kind of pioneer for a few key customers and getting in the e-commerce space. And we've really grown since then. I think what's been really interesting in our journey is you look at really the traditional categories, apparel, fashion, consumer electronics being kind of those key areas of e-commerce that have been kind of the staples. But more and more of our customers now over the past five years, have really started to embrace e-commerce, mainly because they've been pushed into it, into this omnichannel world now, the pressures that are coming out in the marketplace that you have to have ways to get to the customer, not just through brick and retail, brick and mortar, but through the parcel direct to the doorstep. So we're now supporting everything from direct to consumer fertilizer to coffee machines, to car tires, name the product category. We're all over the place now and continue to grow in both that e-commerce and omnichannel space. So it's been an exciting journey and we do not hit slowing down anytime soon. Speaker 2 (05:21):
Right. Good. So e-commerce is a hot trend and sustainability is also a hot trend. And Marcus, I think you made the good point that you guys were a little bit ahead of the curve on that, but when you guys think about supply chain sustainability, what does that mean? How do you bring that to bear in your day-to-day business? Speaker 3 (05:48):
Yeah, we think about that in a few different ways. So we are very focused on sustainability in almost everything that we do. We still are very focused on organic and working with farmers. We can trace back our supply chain all the way to the farm level, which I think very few brands can do. We've also been working with farmers on regenerative agriculture, which we think has the potential to have an impact on climate change in a way that organic doesn't. Although there's no certification for that, it is something we're piloting with. Speaker 2 (06:22):
And what does regenerative agriculture mean? Speaker 3 (06:25):
Yeah, so regenerative agriculture is really thinking through soil health and being able to introduce farming practices like crop rotation, cover crops that really protect the health of the soil. And through that there's studies that show that we can sequester carbon out of the atmosphere and back into the earth. So combating some of the negative effects of industrial farming and other practices that have contributed to climate change. Speaker 2 (06:56):
Gotcha, gotcha. Drew, from the DHL side, we want to talk a little bit about, I know you're not the expert on sustainability, but it does impact our operations across all of our sectors. How does it come to life in the e-commerce world? Speaker 4 (07:12):
In the e-commerce space? It's quite interesting, especially when you look at the growth obviously in e-commerce and the amount of parcels that are going through. So you've added a lot more transportation into the mix and creating a lot more emissions to that process. So when you really look at it, especially in the DHL end with e-commerce, it's really about being more efficient with less. And when it comes into things like packaging materials that we look at when we're packing out orders, how are we being as efficient as possible with the materials that we're using? How do we look at the movement of parcels so we're not sending stuff all the way across the country? How do we start shortening things up? So we've got a lot of small wins that we've got to build up to from a sustainability lens in the e-commerce space. We're a long ways from it, but I think we need to start looking at it that way as opportunities arise. And then I think one of the really big emerging areas that I know we're probably going to talk about a little bit is on the reco space, and I might want to save that one a little bit because I know that's part of the story that we want to talk about a little bit. I know, Marcus, you've got some interesting things on your end. Speaker 3 (08:19):
Sure, yeah, Speaker 2 (08:21):
Yeah. Marcus, why don't you tell us about some of the programs you have on the secondhand or commerce front? Speaker 3 (08:27):
Yeah, so we launched our eCommerce program in 2017. I think we were the first home brand to introduce a program like this. So we offer the opportunity to our customers to take back old Coyuchi product when it reaches toward the end of life or when they're ready to refresh their bedding or bath. We take that product back in with a partner, goes through an industrial cleaning and refurbishment, and then is resold on our second home renewed site. So that offers the opportunity for customers who are interested in eCommerce to be able to purchase Coyuchi product that is really in great condition, but we know that there's a customer who values the lower price point or really values not buying anything new. So we have that opportunity for that customer. Speaker 2 (09:20):
And is that a trend, people wanting secondhand things or not wanting to buy new things? Speaker 3 (09:28):
I think it is a trend. I mean, secondhand has been around for decades, so it's not a new concept, but I do think that there is an awareness that, especially in apparel and soft goods, that there's too much stuff and that we don't need to be producing and going through stuff as quickly as we do and trying to be a more conscious consumer. Part of that is are there ways to buy things that already exist so you don't have to use new and natural resources to create something that really doesn't have a reason for being. So I do think that there's a consumer out there who's really focused on buying with her values and not buying new is a movement that we've seen emerging among a subset of customers. Speaker 2 (10:16):
Interesting. And the website that you mentioned, how would a listener find that? Speaker 3 (10:22):
Yeah, so our commerce site, let me look it up actually. So Speaker 2 (10:28):
You're Speaker 3 (10:28):
Doing that While you're Speaker 2 (10:30):
Doing that, drew, we've got some action in commerce as well, don't we? Speaker 4 (10:35):
Yeah, I think just kind of building off of Marcus's point, I think it's really funny when you think about commerce, it's not like new, right? So we talk about this as a tread, but it's not new. I always reflect on my experiences in commerce was going to the thrift store with my mom to get clothes or going with my grandma Saturday mornings to garage sales or buy toys. So we've always, as consumers found secondhand goods. And this recom trend is really starting to get interesting with what we call the brand led eCommerce, kind of what Marcus is referring to, where we're seeing a lot of our customers and brands say, look, my product is getting sold elsewhere, and I have no control over that. And quite frankly, I've got sustainability goals of exactly to Marcus's point of reducing carbon emissions and really just the amount of available resources to make things.
(11:27)
So we're seeing that brand led commerce kind of emerge in a different way. And as Marcus alluded to, it's attracting new customers for these brands, it's providing a new revenue source at a channel that wasn't there before. And ultimately it's helping divert things from landfill that might not have been able to, that could have gotten a second life that maybe shouldn't. So will. To your question on the HL side, that's really where we're focusing a lot of time and effort with my team is on that e-commerce space. We think there's a huge extension of taking obviously returned inventory that maybe can't go back into stock as new and finding ways to recover it and find that second life and help continue to drive those sustainability goals for our customers. But it just makes sense. It's just common sense the way it can kind of flow through. And I think there's a lot of opportunity there. And I think that's what we're most excited about is where this continues to go out into the future. We see brands that are kind of experimenting. I think there's a little bit of fear of what is this going to do to my business? But I think long-term, as Marcus alluded to, that the consumer is looking at other values. It's not always about what's my price point? It's what is this doing for the earth? And I think that's going to really drive a lot of this forward. Speaker 3 (12:43):
And if I could just add on to that, because I think you're right, drew, this space is so dynamic and we started our program seven years ago, and today there's so many more players and different ways of thinking about extending the life of product. So today, our second home site is a separate website, but I think by the time this podcast is actually released, we're in the process of integrating it into our main site. So it will be on our main navigation. There will be an opportunity to click in and purchase a renewed product that isn't available today, but that ability to integrate it into the main site was not available to us when we launched it in 2017. Speaker 2 (13:24):
Gotcha. So that's the answer to the website question. Yes. Speaker 3 (13:28):
Which is why I don't, Speaker 2 (13:30):
It was a timely question. And it turns out, drew, are you seeing the demand go up from customers or are we taking this out to them? Speaker 4 (13:39):
Yeah, it's really, we've been monitoring it for quite a while and we've been supporting customers on and off through this, but I think a lot of what we're seeing is customers are coming to us looking for solutions. And I think what they've seen in the marketplace today is that the commerce space is kind of unchartered lands, if you will, and trying to figure out how you launch a program that is secondhand goods, at the end of the day, it's different. So when you think about how do I set up a site that supports this, what's the consumer's brand experience going to be? Because now I'm not selling something new, I'm selling something that has potentially a small defect or something different. So how do you start to overcome a different piece there? So what we're talking with the customers a lot now is how do we help enable the recon program?
(14:23)
A lot of 'em understand that I need to set up all this website, but how do I on the supply chain set it up? In a lot of cases it gets unique will in the sense of a lot of items are then unique items. So from a supply chain perspective, how do you store unique items? How do you make sure you're selling the exact item that the consumer is expecting? And so it adds a bit more complexity from a distribution standpoint, but that's exactly what we're here to support and help with and help guide the brands through this process of learning of how these programs are going to start and how can they sustain them. Speaker 2 (14:54):
And Marcus mentioned it's a pretty dynamic market, and I know there are some emerging players. What kind of partners are Marcus you guys working with and drew you at the DHL side? Either you can go first. Speaker 3 (15:10):
As I mentioned, one of our initiatives is to integrate the front end into our main site. And there are a few players out there who are now enabling that ability, especially for brands that are on Shopify like we are. So we've chosen to partner with Recurate and they're helping us to do that integration because we don't have the technical expertise to figure out how do you marry these different individual skews into our main assortment. And fortunately they've figured that out for us. Speaker 2 (15:41):
Yeah. Drew, how about you? Speaker 4 (15:43):
Yeah, it's great. So the approach that we're taking right now is we are experts at moving boxes. As I tell people right inside these buildings, DHL, we do returns processing day in, day out. We do refurbishment tasks like sewing, ironing, and hammering that out. And what we've done in our approach with e-commerce is we've built an ecosystem of partners to work with so that ultimately our customers can choose the best eCommerce provider that best fits for them. So we're working with the teams at Archive arrive in Trove to better enable that process through their expertise on web development, commerce strategy, and we're on the backend supplying all the supply chain needs to bring that together. And it's been really exciting to work with these Speaker 2 (16:29):
Teams. Yeah, it is exciting because I think when we talk about sustainability oftentimes with our customers, the discussion immediately goes to how much is this going to cost me? And here's an opportunity to actually, as you said, drew, create an additional revenue stream while doing good on the sustainability front. So it'll be interesting to see how this continues into the future. Marcus, when we had our introductory call, you talked a little bit about I think some of the raw material, the sustainability angles that you've had in your r and d and development of products. Can you tell us a little bit about that? Speaker 3 (17:13):
Yeah, so I think one of the things that our designers think about is the end of life of a product and where does it go, because we try at all costs to avoid landfill. So some of the guiding principles that they think about is we should try to do a hundred percent single fiber product, so a hundred percent cotton or a hundred percent linen because it's really difficult to recycle blends like a cotton poly blend is harder to recycle than a hundred percent cotton. And that infrastructure of recycling is still very nascent in the us. And so I think that's sort of logistics question is how do you work to think through the recycling aspect of something that can't actually be resolved? Because as much as we are able to resell product, there's certainly some that falls out and just cannot be sold back to a customer. So we do recycle everything and we put it through a stream that actually we've created a new product called the full circle blanket that takes our own post-consumer waste that we recycle into new yarns into a new product. But it is extremely difficult to manage. The infrastructure and logistics are not where I'd like them to be. And so trying to do something innovative in this space creates all sorts of different challenges that may not exist yet. So that keeps the job fun. Speaker 2 (18:39):
And we could talk forever about returns, drew, but maybe just scratch the surface on some of the things that you've got on the go in terms of overall returns, which recycling is a component of, but how's DHL approaching that with customers? Speaker 4 (18:57):
Yeah, it's funny is I always refer to returns as the long neglected piece of the supply chain. It just kind of is there. And I think the traditional mind has been, it's a cost of doing business. And I think that the mind shift is starting to happen. And I think really where we're starting to help support is obviously cross categories. E-commerce obviously has been kind of the main headline grabber for returns, but there is still tons of returns happening both at the retail space as well and how do we best handle returns, but ultimately how do we help recover as much as possible so we're not generating additional waste. So in many cases, giving an example for us, especially in the apparel fashion space, which is a high return category within e-commerce, we see recovery rates around over 90%. And we really try to put a lot of effort into item recovery.
(19:48)
So you can go back as new stock and the cases where we don't see it as going new stock, it's really about the process of what is the most, I guess, the best recomm channel or best disposition type to not only maximize value already losing money as we go through this process, but also how do we make sure we protect the brand depending upon what that channel looks like. So really helping support and guide our customers on those channel considerations, where to put that product based on the condition it is. So a lot of opportunity there. And I think will, the only other thing I would mention that's huge here is the data component of returns. And I think that's often been the missing link. I think for what I said, the neglected part of the supply chain is because we're not totally sure how big the problem is. We know the big numbers, but inherently what is the true issue there to really bring it to someone's attention to say, we got to do something better here. And I think we have an opportunity to continue to drive and use analytics to understand why things are being returned, what can we do to prevent the return from the first place? And I think that's going to really start making the meaningful impact and trying to kind of tackle this problem in a more proactive way. Speaker 2 (20:54):
And Marcus, I know beyond Coyuchi, you've had a long career in fashion and retail. What kinds of things have you seen either in your current spot or over your experience Speaker 3 (21:09):
With returns? Sorry? With Speaker 2 (21:10):
Returns, yes. Speaker 3 (21:11):
Yeah, I mean, I think this is just commerce, another area that is really dynamic and every day I feel like there's another startup that's getting involved in returns somehow. So at, we're really interested in optimizing and streamlining the returns process all the way from the front end with the customer being able to tell us as much as possible about what they're returning so that we can streamline that disposition process and make that more efficient. So I don't have answers, but this has evolved hugely from when I was at other companies and just starting to think about e-commerce returns. But I think Drew's right, this is an area that brands and companies are waking up to can be really costly and needs optimization and needs streamlining. Speaker 2 (21:59):
Yeah. Yeah. Good, good. Okay. So what's ahead for Coyuchi Marcus? What do you guys have in the works? Speaker 3 (22:07):
Yeah, so I think we're really excited about what commerce is going to look like once we integrate it into our site. I think there's a huge opportunity to make that a bigger part of the business. We're also excited about launching our second collection of the full circle blanket, which again takes post-consumer waste from ourselves and creates a new product. And that's launching in April as well. So we have a lot that's happening around Earth Month that's focused on building on our sustainability leadership in even more tangible ways. Speaker 2 (22:41):
Great. Great. And Drew, any insights into where DHL is going? Speaker 4 (22:47):
Yeah, I think to Marcus's point, we're hyperfocused on the returns piece and being as efficient and optimize as much as possible. I think that, like we talked about earlier, what I'm really excited about is the commerce piece. We've got some pilots lined up with some customers to bring the commerce program all encompassing in their dcs where we're going to support not only all of the refurbishment tasks, but helping with all of the fulfillment. So that's the exciting thing. I think we got ahead of us this year will, and looking forward to hopefully talking about it more here in the future. Speaker 2 (23:17):
Great. Great. We'll plan to check back in with you sometime down the road, but I think that'll do it for today. I want to thank you both, Marcus in particular for joining us on the podcast. Really interesting discussion and lots of dynamic stuff happening in the market that you guys are right in the middle of. So thanks for all of that. Speaker 3 (23:40):
Thank you. Speaker 4 (23:42):
Awesome. Thanks Marcus. Thanks Will. Speaker 5 (23:44):
Alright, care. If you enjoyed today's episode, be sure to rate us and subscribe to us on Apple Podcasts, Spotify, or wherever you get your podcast. You can also re-listen to our entire library of episodes on our website, dhl.com/ABNB podcast. See you next time.