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Ep. 32 - Bringing Transparency & Ease to Product Sourcing with Nathan Resnick

Nathan Resnick is the founder of Sourcify, the fastest growing sourcing platform that helps hundreds of companies manufacture products around the world. In the past, Nathan has brought dozens of products to market, ran three ecommerce companies (sold one), and has been a part of projects on Kickstarter that raised over seven figures. He writes for media outlets like Entrepreneur, The Next Web, Business.com, and more. Nathan also used to live in China and speaks Mandarin.

Nathan’s goal with Sourcify is to bring a level of transparency to sourcing that makes it clear what you are paying for your product and simple to use.

To learn more, visit: https://electriceye.io/podcast

In This Conversation We Discuss:

  • [2:32] Learning a new language through immersion
  • [4:30] The details people overlook when sourcing products
  • [8:10] What sets apart the biggest ecommerce brands from the rest
  • [11:30] Expanding across product categories
  • [12:32] When you should start thinking about expanding your manufacturing
  • [16:31] Thinking about the numbers
  • [20:39] Raising your prices
  • [23:04] Shopify fulfillment centers


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Nathan Resnick  

If I were to launch an Ecommerce business today, it would need to have a subscription part of that business, and that's what I'm focused on. I focus all my acquisition efforts on that subscription side of the business.


Annette Grant  

Welcome to Honest Ecommerce where we are dedicated to cutting through the BS and finding actionable advice for online store owners.


Chase Clymer  

I'm your host, Chase Clymer


Annette Grant  

And I'm your host, Annette Grant.


Chase Clymer  

And we believe running an online business does not have to be complicated or a guessing game.


Chase Clymer  

And let's get on with the show. 


On today's episode of Honest Ecommerce, we welcome Nathan Resnick. Nathan is the founder of Sourcify and we discuss sourcing, manufacturing, and all things Ecommerce


Hey everybody, welcome back to another episode of Honest Ecommerce. I am Chase Clymer. And today we are welcoming to the show, the first guest that I got at Unite. I definitely picked up a lot of new friends at Shopify Unite two weeks ago. 


So today, we welcome to the show, Nathan Resnick. Nathan is the CEO of Sourcify, and I'll let him tell you what that does. But first, we're gonna go back way before Sourcify. What were you doing then?


Nathan Resnick  

Totally. Yeah. Chase, thanks so much for having me on. Super excited to be here. My background actually stems from China. So, 10 years ago, I lived over in Beijing as a foreign exchange student with a host family that didn't speak English. (I was) attending a local Chinese school. 


And that was for a full year when I just became so captivated by the culture, the language, and also the power of these factories and how products are produced. So 10 years ago, I started importing my own products and selling them on eBay and Amazon. I became really just captivated by products and how products are produced. 


I realized that in manufacturing and in the supply chain, everyone has to ask, "How do I find the right factory? And how do I manage production?" 

And right now, pretty much every company does that over email and Excel spreadsheets. So we've got some pretty badass software that brings a supply chain online to enable you to understand what's going on and have fun in the time being of doing so. So, (I'm) really excited to be here and dive in and let's take it from there. 


Chase Clymer  

Absolutely. Cool. So let's talk about culture shock. Getting dropped into China as a foreign exchange student. I've heard (that) that's the best way to learn a foreign language? 


Nathan Resnick  

Totally. Yeah. What I realized... I started studying Mandarin (during) my freshman year of high school, and (I) just became so interested in the language. My mom had heard of this program. Shout out to School Year Abroad. It's what the program is called. They do homestays around the world. And my neighbor had done a homestay before me and just came back with such an amazing experience. 


So, she basically told me, "Hey you should apply to this. I got in and was sent over to live with the host family for a year." And so it was so eye-opening. This was 2010 where (we are)  really trying to add in Ecom as globalized as it is now. 


So people would really look at you just in the interest of what you're doing as a foreigner and it was such a fast pace. And it still is such a fast-paced country that grows so much. 


So, it was such an interesting dynamic. I'd come home from school some days and be like "Hey, mom. --to my host mom-- What's for dinner?" (And she'd be like) "Oh, check the sink." And they'd be live fish in the sink. I'm like, "Alright, guess we got fresh fish or whatever it may be." 


When we first started selling online, we actually went to these markets in Beijing like the Silk Market or Pearl Market and honestly, we would just buy knockoff products. All sorts of polos, all sorts of apparel. 


We did the Beats by Dr. Dre headphones and our margins would crush it. Selling and reselling those products online. Obviously, it was illegal, but we were in high school and didn't know better. It wasn't until college --until university-- that I really began to understand the power of creating your own brand and private labeling and creating your own products.


So, that's really what we focus on nowadays. But for me, it's just been a learning process. Step by step. Understanding the culture, the country, how products are produced. I think, really, the craziest part of a product that most people overlook is the pieces that go into the components that go into it. 


When people come to us and they say, "Hey, I want to produce t-shirts." I could ask them 100 questions about what kind of t-shirt they're trying to produce. I'm talking about the fabric, the trend, the cut, the Pantone... 


There is so much information and detail that go to a product that's often overlooked. So, we try to simplify that for a lot of people at Sourcify. 


But at the same time, it's something that I've just been so interested in the past 10 years. And then the other part of it is transparency. 


There's no transparency in production right now. If Company A and Company B were to go to the same factory trying to produce the same product, with the same quantity levels, they get back to different price points. 


And so for us, part of our mission is bringing transparency to the supply chain and enabling companies to understand how much they should actually be paying for their products.


Chase Clymer  

Awesome. Yeah. I haven't been to China. It's definitely one of those on my list. Definitely when I go, I'm gonna hit you up for a lot of recommendations.


Nathan Resnick  

Dude, you got to come with me. I was there nine times last year. I'll be there six times this year. I'm going in two weeks if you want to hop on the plane.


Chase Clymer 

I'm going the other direction to Hawaii in two weeks.


Nathan Resnick  

Oh. (laughs) Sounds nice too.


Chase Clymer

Yeah, absolutely. Alright. Cool. So let's talk about those. That high school, doing the eBay thing. Did you guys ever build up your own Shopify store or something else? Are you guys really capitalizing on those other markets, places like...


Nathan Resnick  

Yeah. At that time we were just capitalizing on the other markets. I think I first launched my Shopify, my first Shopify site when I was 19. I did just over $100,000 in the first year. I think this must have been 2015 maybe? 2016? 


And it was when Instagram was just starting to take off, so there's so much organic traffic and reach on there. Facebook still had a lot of organic traffic, so it wasn't as hard. You don't have to spend as much money to acquire customers, which is awesome. 


And influencers would be like "Yeah. Send me the products. I'd be super happy to post about it." Whereas now they're like, "Hey, also pay me $10,000 or $20,000 and I'll take some photos." You're like, "Alright. Wow. It's a bit more expensive." So those were the days. 


And I started launching my own hats, watches, sunglasses, backpacks... Pretty much any fashion and fashion accessories, we were doing (that). 


And then I became really close and helped launch some pretty big brands now like Original Grain Watches or Vincero that do some awesome volume. And it's really amazing to see those companies hit that mid-eight-figure mark there and revenue.


Chase Clymer

Cool. So are you now focused on just Sourcify or do you still have some of those smaller Ecom brands that you launched?


Nathan Resnick  

With the amount of moving parts we've got going on at Sourcify, it's my complete focus. It takes up more than enough of my life, I would say.


And though I love Ecommerce, and would be really interested in growing and launching my own brands, I think number one, it's a bit of a conflict of interest in some sense. Because at Sourcify, we're producing over 300 different product categories. 


So if I were to launch my own brand, I don't want to step on any of our customers. And I have complete respect. We've got non-disclosures with a lot of our customers, too. 


So, it's just not something that's in my ballpark right now. But at the same time, I came from the Ecommerce world. That's how I got into this. (However, I)was mostly focused on the supply chain side. 


I think it's so interesting because when I talked to a lot of Ecommerce founders, everyone stems from the marketing side of the business. They came from the digital marketing world or the paid acquisition world. And that's definitely a crucial part of your business. 


But let me tell you this. If you look at the billion-dollar-plus valued Ecommerce companies, --let's look at Harry’s. Let's look at Allbirds-- what sets them apart is their supply chain. They are actually owning their supply chain. 


Harry's initially raised money to buy a razor factory and Allbirds is completely vertically integrated with two Korean shoe factories. 


And so when you look at their growth, and you look at how they've been able to really take over their respective markets or at least grow significantly in their markets, I believe a lot of it stems from their supply chain. 


And yes, their branding, and paid acquisition, and all that is on point. It's a huge, huge part of their business. But I think what's overlooked really in (the) Ecommerce world a lot of times is that people focus so much on their online presence and their ads and they forget about sometimes investing in their products. 


Really creating amazing products and also supply chains they can rely on. I think the balance in an Ecommerce company comes down to cash flow. You either got too much money in inventory, or not enough money to spend on paid acquisition, and it sucks being in both worlds. 


You're either running out of inventory or "Crap, I can't get products in for another 60 days. What am I going to do? How are you gonna air freight products in?" "Well, I'm sorry. You didn't clean your inventory  well and you don't understand the lead times of your factory and other balances." 


Spending or having too much money in an inventory, that comes down to planning as well. And really, looking at the data. I love having conversations like this because, when I look at Ecommerce and when I look at some of these companies, I look at the full picture. 


I've come from having a supply chain background but also having to run my own Ecommerce businesses where I know what it takes to acquire customers across channels and to do so at scale. 


You've got to have the data in your supply chain to back that up. And that's what I think a lot of companies are lacking today.


Chase Clymer 

Absolutely. Actually... And so it's funny. On the way up to Toronto 2 weeks ago, I listened to a podcast, “How I Built This” that actually had Allbirds on it. 


And hearing that story and how long he had been working on that business before everyone else had heard about it, it's the one thing about the flywheel effect. 


Once things start to get going with these businesses, and then all of a sudden, there's this new, groundbreaking, disrupting business on the horizon. 


All you hear about is that, last nine months, where they've had that explosive growth. You don't listen... You don't hear about the last 10 years...


Nathan Resnick  



Chase Clymer  

...Prior to that when they were building that company, then and putting in that hard work.


Nathan Resnick  

Yeah. Even look at Jen Rubio from Away Luggage. She was on "How I Built This", too. And when they launched the reason why they launched and started with those travel books is because they didn't plan out production correctly. 


They didn't know it was going to take that long to get those suitcases and those pieces of luggage in. And so that's why they had to launch with these travel books, as pre-orders on suitcases. Was it pretty smarter than to do that looking back on that? I think so. But at the same time, they didn't plan to launch travel books when they first started. 


They just had supply chain issues. And I think too, looking at their company, I think there's a lot more that they could be doing if they had their supply chain completely under control. And you see the people that they've hired and that they're hiring. 


A lot of it is on the supply chain side of their business.  They're always going to become this lifestyle travel brand that doesn't just do luggage. They'll do apparel, they'll do all sorts of travel-oriented products. And that's, that's awesome. 


That's the direction I think they should take as a brand. But at the same time, if you're a company that wants to expand across product categories, you either need to hire up that expertise, --which is very expensive-- or you need to work with a company like Sourcify. So it's really a balance, I'd say. 


In an Ecom business, there are 2 main ways to grow, I would say. Because at the end of the day one product is not going to get you to a billion dollars in revenue, you typically have to diversify across SKU and different product categories. And so, you've got to be able to source products very fast and in an agile manner.


Chase Clymer

Absolutely. So let's talk about that. I know that a lot of the businesses that are listening to this podcast, they are in those early stages. They're finding their initial wins, they're finding their target demographic, their audience, they're getting those sales, getting that product-market fit


When should I start really thinking about taking my products out from being manufactured by my friend down the street --here locally-- to start thinking about more bulk orders, about custom fabrication, per se? When should I start thinking about that stuff and when is it good for me?


Nathan Resnick  

Yeah. It's a great question. Being completely honest, I would say you should never have your friend down the street manufacturing your products. 


If you really want to grow an Ecommerce business that does a few million dollars in revenue, or 10 M plus, or really something that you can live off of and do full time, I think you should always start with going overseas and investing some in products. 


You can do a minimum order production overseas of $3000 to $5,000. Is the price point going to be the most competitive? No, because it's such a small production run. But at the same time, is it going to set you up, to be able to grow and scale at the rate that you should be scaling? Yes. 


Is your buddy down the street gonna be able to make 10,000 units when you start to grow in the amount of time you want? Probably not. And then you're gonna have to figure out that hurdle then. It could be a barrier to growth. 


So I would say from the get-go, you want to start looking at really scalable ways for production. But then when you're trying to expand your business... Let's say you've got that one product that's winning and you now want to grow revenue. But think about what ways you can expand revenue around that product. 


What kind of upsell or cross-sells can you have either pre-checkout or post-checkout for that product? And that's where you should start looking to grow (your) revenue first. 


Don't necessarily roll out completely different products right off the bat, but understand what kind of products fit into the customer demographic that you're targeting and see what would be a good fit for upsell or cross-sell. And that's a key component of launching that out. 


I wouldn't necessarily launch out a whole new category before having some products that you could upsell and cross-sell in the same product category. And like a great, really simple example... Maybe not as simple but, for example, let's say you run a watch brand. Well, you could add custom engraving to your watches.


Just buy an engraving machine that costs maybe a few thousand dollars. You sell a few hundred watches, all of a sudden you've paid back the machine and the rest is basically profit for engraving. It's super cheap to engrave a watch. Something like that. 


Figure out ways to really increase the order value, I think, right off the bat whether that be through adding more value to your existing products or through products that you can run as cross-sells or upsells.


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Nathan Resnick  

I know that your knowledge is everywhere, not just specifically sourcing though that's where you're really bringing it to the table. 


What are some other things that these younger entrepreneurs in their journey should definitely be thinking about as they go down this path and they want to hit that sustainable business where some of these people might just these might be side-hustlers that they're bringing into full-time or these might be their full-time jobs and they're not seeing the margins that they really want?

Nathan Resnick

Yeah, totally. It's a great question. I would say right off...  Think of numbers outside the brand and outside your online presence. Ecommerce is a numbers game. To be profitable your acquisition costs have to be under your margin. 


And I would say most high growth Ecommerce brands, they're running at 90+% gross margins. You look at MVMT Watches, they produce that classic, black and red watch that they really scaled up with, for under $10, --about $9.50 or so-- and they sell it for $100. It's a great margin to have. 


Strong acquisition built-in there. (They) have some operating costs, (they) have fulfillment costs, (they) have duty costs, there's a lot that goes into that all-in landed cost. And so you gotta have those margins in there to really have it makes sense for you. 

So I would say, at the end of the day, you've got to have a strong enough margin to grow. Because if you're running 30% gross margins where you're paying $70 for a product that you're selling for 100 bucks, you don't have enough margin in there to grow. 


And so I would aim for at least a 75% gross margin on all products that you're trying to sell or at least have a way to get there. (Let's) say "Okay. I know if I order 10,000 units in my third production where I'm going to get to a 75% gross margin, I'll be able to continue growing that margin as you increase production volume."


Chase Clymer  

Yeah, that's fantastic advice right there. I've seen a lot of businesses that we consulted with. Personally, here at Electric Eye or even other places that when we get into the numbers and we're just like, "You guys can't afford this."


Nathan Resnick  



Chase Clymer  

In general. And then it's like, "This isn't a conversation for an agency, this is a conversation for your business. You guys need to go talk about this..."


Nathan Resnick  



Chase Clymer  

"...and make some decisions."


Nathan Resnick  

Yeah. Yeah. Exactly. It takes... It doesn't take that much time really to sit down and understand your numbers. 


The simple math that you want to do is, okay, what's your gross margin? Which is basically what are you selling a product at minus what it costs to produce it then you might want to add the duty, you might want to add the freight costs, you might want to add the actual shipping costs from your 3PL


And then you've got to figure out "Okay, what's my range to acquire a customer? Is it going to cost me? Or if I spend $40 to acquire customers, am I going to be profitable on the front end?" And if you are, well then what's the lifetime value of your customer? How can you extend the reorder rate


Honestly, even looking at the Pura Vida Bracelets’ acquisition that happened two weeks ago, Pura Vida, they did $68 million in top-line revenue. They netted under $4 million on that $68 million in revenue. And it's like, "Wow, their net margin is so slim. And they sold for $75 million for a majority stake." I think all-in, maybe the founders will make, probably over $100 million which is awesome. 


For that business, it's fantastic. And it's a great exit for them. But at the same time, yeah. It's amazing to see that their revenue is pretty solid, but at the same time, their net is just so slim compared to their top-line growth or top-line revenue number. I think a lot of that is just around the amount of money that they're paying out the scale. 


But one mentioned that they really brought up and that some of the cool articles about that acquisition focused on was their subscription box. They've got this Pura Vida... I don't know what they exactly call it but it's a subscription box for their bracelets


It's $15 a month. You get a few bracelets. And not only does it enable them to have sustainable revenue, but it also enables them to forecast production. And when you're a company that's having to put money in the inventory like they are, it enables them to forecast that production spends so much more effectively. 


So, if I were to launch an Ecommerce business today, it would need to have a subscription part of that business. And that's what I'd focus on. I focus all my acquisition efforts on that subscription side of the business.


Chase Clymer  

Absolutely. I think that another thing to consider when you're talking about your top-line revenue and your margins is if they're not where they need to be, just raise your prices. 


Nathan Resnick  



Chase Clymer  

No one's saying you can't. I think a great example of that is Netflix. (Netflix) raises their prices every six months, it seems like and they publicly stated. We don't care. The people that want this service are going to stick around and they'll last three times in a row. 


I think they bet on themselves and did that. And they came out more profitable with losing people subscribing that day. But still, with the new rate, they're still net positive, which is... 


Nathan Resnick  



Chase Clymer  

...really curious. So that's a good example of just raising your rates. You might lose some customers...


Nathan Resnick  

Yeah. And I think in the Ecommerce world, it's such a balance because price doesn't always reflect quality in some sense and doesn't necessarily reflect the value. I mean, price should reflect the value of the brand. 


Look at luxury brands, that's why their products are priced so high. So if you want to create a luxury brand, you shouldn't be selling your product for a 10th of what LV, Gucci or whatever selling that. So, think about that too. 


And then think about the revenue numbers you want to hit. If you're increasing your pricing by X amount, well now maybe you only have to sell X amount of products because of that revenue mark. 


So it's definitely a balance that you should look at and I do think increasing pricing is a good way to grow.


Chase Clymer  

Yeah, but I wouldn't say trying to get a 99% margin is the best. If you have a terrible product, your reviews are going to state that and you're not going to see what you want in the long term. 


Nathan Resnick  

Totally. Yeah. And I mean, even Netflix, they're talking about reviews. There's that review platform, Yotpo. They've been increasing pricing left and right and now I think they focus on more  enterprise accounts. 

Yeah, it was a great business but there are a lot of companies out there that botch reviews. And even on Amazon, there are a lot of fake reviews out there, too. So there are ways to create perception online that make it so people see what they want to believe.


Chase Clymer  

Yeah. I would just always say like, "Don't do any of that black hat stuff. Always try to do it the right way. You're going to get caught and it's actually going to end up costing you more than the gain you made on skirting that." 


Nathan Resnick  

Yeah. Totally. 


Chase Clymer  

Cool. So you've been in this Ecommerce game for a while. What do you see on the horizon for 2019 - 2020. I know you were at Unite, and you saw someone there really cool announcements?


Nathan Resnick  

Yeah. Totally. I think the first thing that comes to mind is their (Shopify’s) fulfillment centers that they’re starting to launch. The numbers they presented at Unite are extremely bullish. 


I honestly don't necessarily know if I believe that they'll be able to pull those numbers off, especially if they want to grow a fulfillment network like that. They're basically saying that they're going to have 99.9% accuracy on pick and pack at scale which Amazon FBA does and they've been doing this for a few years. 


No fulfillment company in the world is able or is doing that. So we'll see what happens as they scale up. They say they ship 50,000 units, which is nothing. ShipBob and Shipmonk ship that in half a day or less. So it's something that's going to grow. 


I think it's a very smart move by Shopify. Don't get me wrong. I think it's a great move by them and I'm fully on board with it. But you know, at the same time, I just think some of the initial plans that they're making are really bullish and sets expectations very high which is maybe a bit of a marketing play but we'll see how it goes. 


And I also know our partners, you know, that run fulfillment companies like ShipBob and Shipmonk. I think I'm actually rocking the ShipBob hat right here, too. But it's such an interesting ecosystem and fulfillment is such a crucial part of an Ecommerce business, too because you don't want your customers to be waiting too long for your products. And you want to have a great fulfillment experience, too. 


And they say, with their fulfillment network, that they're going to create a partner fulfillment ecosystem where they'll be certain space dedicated Shopify at these fulfillment warehouses.


But I think that's going to really complex things quite a bit because it means it won't be under their control. I think what's really going to end up happening is they're going to invest more and more of their own warehouses and compete more with these other third-party logistics companies. So we'll see where it turns out. But yeah, I think that will really come to play more or so in 2020. 


Then they'll start to invest more and more than that. And then one of the most bullish kinds of estimates that I would see them rolling out with is honestly their own marketplace. If they control their own fulfillment, why wouldn't they create a marketplace for Shopify merchants as well, to compete directly with Amazon and the marketplace that they have there?


Chase Clymer  

Yeah, that'd be a wild one. I know that they're scaling, kind of those integrations on the back end, and really opening stuff up and making the platform a bit faster as well from a development standpoint. They're pushing everything towards GraphQL if that makes any sense to you. 


So it's definitely getting built out for fun. Actually, on the day of this recording though, I think Cloudflare went down this morning, and there are all sorts of stuff happening. So that was fun. But yeah, I think the fulfillment network was one of the biggest things that caught my attention because it was out of left field. I was not anticipating that at all. 


And then they finally let us edit orders which was a giant pain point for any actual merchant. That was a big pain point for 'em, which then became a headache for me saying, "Yeah, there's nothing you can do."


Nathan Resnick  

Right. Yeah. 


Chase Clymer  

I won't have that conversation anymore.


Nathan Resnick  

Yeah. Exactly. It's also cool to see how much innovation they're able to bring to the table at the scale that they're at. So they've really got a strong team there that's rolling out these features.


Chase Clymer  

Cool. Awesome. Well, first of all, Nathan, before I get to the last question here, I want to give you a minute to talk about Sourcify. Because you're giving us time to talk about all your knowledge. 


I want to let you talk about like, what's the best fit for you guys? If our listeners heard you talking just now and they think that they want to reach out to you, What kind of customers are you guys looking for?


Nathan Resnick  

Yeah, totally. We work across the board. That's the beauty of what we do. We work with some companies that are just doing a few hundred thousand dollars in revenue. 


We work with some, certainly some Fortune 500 like Anheuser-Busch doing some of their B2B merchandise. So it's all across the board. That's really the beauty of what we do. And our goal is to make sure you work with the right factory, giving you price visibility. So we typically get you 2 to 5 price quotes across Asia. 


We've got our own offices in China, Vietnam, India, and Pakistan. We run production in pretty much every country in Asia, which is a lot going on as you can imagine. And we bring your supply chain online. You don't have to use email and Excel. 


You can actually see what's happening in production and be data-driven in your supply chain. So it's been really fun just seeing all the products that are produced and helping companies grow. That's really what we do.


Chase Clymer  

Awesome. Fantastic. Cool. And then now, if anyone wants to get a hold of you specifically, or I know that they can read where you've been writing, what's the last thing that you've released?


Nathan Resnick  

Um, yeah, I mean, we publish a blog post every Tuesday and Thursday. Right now a lot of content has been on the production outside of China, especially right now with what's going on with these trade tariffs. There's a lot of instability in overseas production. So it's something that we've been keeping a close eye on.


Chase Clymer  

Awesome. Yeah. And just for everyone else, he's written for Entrepreneur as well, Business.com. so he knows what he's talking about.


Nathan Resnick  

Yeah. (Laughs) Yeah, yeah. I definitely write for some printing media outlets out there as well. And for us, everything we do from a content perspective and just, in general, is as educational as possible.


Chase Clymer  

Hey, that's why I started this podcast. 


Nathan Resnick  

There you go.


Chase Clymer  

Awesome with that. Is there anything else that you want to share with the audience?


Nathan Resnick  

Yeah, I mean, feel free to reach out. I'm always happy to answer questions. We're at Sourcify.com. You can find the most active on LinkedIn or Facebook. Just Nathan Resnick. And yeah. Feel free to hit me up.


Chase Clymer  

Awesome. Well, thank you so much for coming on the show. 


Nathan Resnick  

Thank you. 


Chase Clymer  

We can't thank our guests enough for coming on the show and sharing the truth. links and more will be available in the show notes. If you found any actionable advice in this podcast that you'd like to apply to your business, please reach out at electriceye.io/connect.


Annette Grant  

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