In this episode, host Josh interviews Steve Simonsen, CEO of SYMO Global, about strategies for private label sellers and brands facing economic challenges like inflation, rising Amazon fees, and shrinking margins. Steve shares actionable advice on SKU-level profitability analysis, disciplined inventory management, negotiating with suppliers, and liquidating slow-moving products. He emphasizes the importance of understanding financial statements and maintaining financial discipline. The conversation offers practical tips for navigating uncertain demand and highlights the need for proactive, data-driven decision-making to thrive during tough economic times.
Chapters:
Introduction & Economic Context (00:00:00)
Josh introduces Steve Simonsen and sets the stage: inflation, rising Amazon fees, squeezed margins, and a pending recession.
State of the Economy & Inventory Focus (00:00:55)
Steve discusses the reality of the recession, economic slowdown, and the importance of managing inventory on the balance sheet.
SKU-Level Profitability & Declining Unit Sales (00:02:03)
Emphasis on granular SKU-level profitability analysis and the impact of declining unit sales despite higher top-line revenue.
Supplier Negotiations & Cost Control (00:04:04)
Strategies for negotiating with suppliers, leveraging currency shifts, and pushing back on costs to improve margins.
Inventory Valuation & Trash to Cash (00:05:58)
Advice on devaluing inventory, taking write-offs, and converting slow-moving inventory into cash.
Liquidation Strategies & Q4 Considerations (00:07:21)
How to liquidate inventory, use Q4 for retail-value sales, and categorize inventory for effective action.
Actionable Takeaways Recap (00:08:46)
Josh summarizes three actionable takeaways: SKU-level analysis, turning trash to cash, and cautious inventory forecasting.
Financial Discipline & Mindset (00:11:06)
Steve stresses the importance of understanding financials, cash flow, and developing discipline during tough economic times.
Closing Thoughts & Contact Info (00:13:44)
Final advice on mindset, encouragement for entrepreneurs, and where to follow or contact Steve.
Links and Mentions:
Tools and Websites
Parsimony
Additional Resources
Steve Simonsen on LinkedIn
Transcript:
Josh 00:00:00 Today I'm speaking with Steve Simonsen, owner and CEO of SYMO Global. Steve, you've got such great experience. You have. It sounds like a great network in terms of supplier relationships. Because of your vast experience with SYMO Global, you've already got so many different contacts in those different countries as we were in a difficult economic period right now. Right. We have inflation that's been going up. Amazon fees continue to go up, right. margins are getting squeezed. And then we have this pending recession on our hands where consumers are starting to pull back on some of the consumer spending. I think we're seeing that. I want to ask what you're seeing from your perspective. And then for our audience that are established brands that want to take it to the next level. What should they be doing? What strategies should they be employing over the next little while?
Steve 00:00:55 Gosh, yeah, that's there's a lot in there. And the truth is, like we're already in a recession, right? It doesn't matter what the politicians say.
Steve 00:01:04 It matters only what the numbers say. And the numbers are very clear, right? There is a slowdown, not just a slowdown, a reduction of economic output. And that doesn't mean the world's coming to an end. It just means there are some economic, reasonable laws that have to be dealt with. Right. It's like gravity. You can't argue whether gravity exists or not. It's there and you have to deal with it. So, what that means to us is like dealing with, you know, a reducing kind of economy and an increasing level of inflation. This is the ultimate squeeze. Nobody wants to see it, but where it's upon us. So we're we're we approached this from a very disciplined mathematics perspective. Like we especially we look at the balance sheet. It's like what is the biggest thing on the balance sheet we need to manage. And for private label sellers it's all about inventory, right? There's nothing bigger on your balance sheet typically that inventory. You know, maybe you got some cash here and there.
Steve 00:02:03 But if you're a growing business, inventory is dominating that balance sheet. And that means that inventory, which, you know, may exist as a single line item on your financials, I don't know. But we get granular. We want to know every line item. We want to know every Asin, every SKU. However you refer to it and we want to know its profitability. We want to know what people are going to do when it comes to crunch time, right. If demand goes down, I'm here's a little insider secret. It's already gone down, right? Yeah. Units sold are already down the the cost or the pricing. In other words, the sell through may be higher, but that's that's a misleading stat. Yeah. Even if sales are up 8%. You got inflation units are down for sure. Correct. It's not in every category but many categories are experiencing it. So we've got to get scrutiny to level ten on every, every line item on that inventory sheet.
Josh 00:02:57 Yeah, I think that's words of wisdom right there, because we are also seeing that from our perspective.
Josh 00:03:03 You know, a lot of our products are more in the, you know, consumer discretionary items here. And so they're not essential for people. But we have also started to see year over year sales declines in the number of units that are being sold. Now our, you know, top line revenue looks good. Well, that's because we've increased prices to make up for the increase in Amazon fees and inflation and all of that. So to your point like don't just look at you know, hey, this aggregate number amount of money that's being sold or whatever, you know, Washington wants to, you know, state publicly, you know, with, oh, things are just fine. Like, look at these numbers. At the end of the day, there are fewer numbers of fewer units being sold. you know, the consumers are starting to pull back. So, Steve, what is something that you do as you work with, you know, your suppliers? Is there a way that you can reduce, you know, whether it be your Cogs or reduce like your mocks for certain products.
Josh 00:04:04 Like how do you navigate this delicate balance of like, I don't know how big of a pullback this is going to be, but I don't want to just I'm not going to order and say, hey, whatever we did in 2021, let's let's do that because that's what's going to happen.
Steve 00:04:17 Well, it is it's the ultimate question, but it's it also just goes back to the most simple, basics. It's like, you know what? Every controllable variable you better push on. Right. So currency is wildly shifted year over year between China and the US as an example. You better take advantage of that and at least understand that many times if you try to just call your supplier and go, hey, great news. There's been a 10% shift in currency. That means I get a 10% discount on my products. Now they'll go, no, no, no, we had a cost increase of labor and the cost increase of Covid. You know, there are plenty of reasons they want to they want to fight against you.
Steve 00:04:54 but I'm telling you proactively that every point, whether it is the inputs of raw materials and checking those commodity prices, whether it's currency, like every piece of that puzzle you need to push back ...
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