Interview: Dan Wells of Bases Loaded

Parag: This video is being recorded as part of our series where we’re talking to business owners in retail on the impact that the coronavirus has had on their business. We get a first-hand look at the actions they’re taking, and get real advice that can help you beat this crisis. If you have any questions you’d like to ask future guests, we’re going to post a bunch of social media links and details on our site, but without much further ado, I’d like to introduce today our guest who’s Dan Wells, runs a omnichannel business and has been around for 23 plus years, but I’ll let Dan introduce himself. Tell us a little bit about, Dan, your business, and just dive right in and, of course, tell us how you’re doing.

Dan Wells: Sounds good. Thanks for having us. My name’s Dan wells, CEO of Bases Loaded. As you said, we’re an omnichannel retailer, been in business 23 years as of April 1st, which looks like we’re going to make it, so we’re really excited for that. We true omnichannel retailer, we operate a 30,000 square foot retail store, open seven days a week, 361 days a year, also sell on marketplaces, seven different market places as well as e-commerce sites. We do all of our fulfillment and basically, have a promise that we make to our customers if they order same day by 3:00 PM, we guarantee them that we will always ship that out and we have never missed that promise, including during these difficult times that we’ve had over the last few weeks. Challenges we’re having today-

Parag: A lot of retail space there Dan. I believe there you’ve got a location out in Rancho Cordova, has had been on lockdown?

Dan: Yes, we got a notification from State of California about two weeks ago to start to streamline some hours, do some things like that, and then we got the official notification last Thursday that we had to be closed Thursday at midnight. At that point, our retail location closed. We are now doing minimum staff that’s required by law that is basically still fulfilling all of our online orders as well as marketplace. Online and marketplace, we’re still open for business.

Volume’s down pretty drastically compared to what it normally is this time of the year, down by, the last calculation, almost 80%. We’re still shipping out averaging 250 to 300 orders a day, but this time of year, we’d normally be at somewhere around 2,000. We’re non-essential items even though we think we’re essential items. Baseball and softball fans across the country, they play the sport and coach the sport are still buying, so we’re still here doing fulfillment with a skeleton staff.

Parag: I can tell you right off the bat that even with an 80% decline in business, you seem to be in great spirit. You’ve got to tell us what’s the recipe for that enthusiasm. There’s definitely a lot to be negative about, but sounds like you’re holding it quite well.

Dan: The last two and half weeks have been really tough. I think I’m done with all my anger, and tears, and crying, and everything else. I’ve really put forth a strategy in our company here the last two days that we’re finished with everything we can do in terms of doomsday prepping. We’ve got plenty of toilet paper and plenty of paper towels. Now, we’re just really focused on the things that we can control.

We’re focused on the future. We did have to do a pretty significant layoff on last Monday as well as last Thursday, which were two of the more difficult days I’ve ever had in my professional career, very, very longtime employees, some of our newest employees have been with us two years, and our longtime employees have been with us 10 plus years. That was very, very difficult. The skeleton staff we’re running with is about six people. They’re my key people. It will allow us to be focused on really what I talked about, the future.

We’re trying to build out, what are those next projects? What are those next processes? What are those next tactics that we want to try to get into that can make a difference for us in the future? We’re doubled down on some marketing strategies that we’ve always wanted to work on and never had an ability to work on it because we have been a very fast-growing company over the last 10 years. Sometimes, when you’re growing fast, which I know you’re familiar with, you don’t always get to work on everything you want to work on, and sometimes you’re in the business as opposed to working on the business.

This is an opportunity we’ve never really had to sit back and say, “What do we really want to do?” We’re launching a couple of new sites over the next month and a half to two months. We’re launching two new marketing initiatives we’ve been wanting to do for a year and a half. It’s really what I have my people focused on. I do have a little bit of pep in my step because I know there’s going to be a tomorrow even though today looks pretty bad. That’s the direction we’re trying to head in and that’s where all my people are at too.

Parag: It’s fantastic that you’re, in many ways, ahead of the game and already thinking about the future, I’m sure the lockdowns start to get into place in many cities and states across this country. We see obviously, the health impact that’s happening across the community. Small businesses, they’re going to be really heavily impacted by this. I’m really glad to hear that you’re starting to look ahead.

For those that maybe haven’t gotten that far ahead in the curve, I certainly don’t want to you relive those last couple of weeks, but any insights, Dan, that you can share in terms of how you went about thinking about the business, how did you think about prioritizing what matters, and what in your mind might seem like, I guess, a playbook for how one should really adapt or react to what is really unprecedented times has been, I don’t think any time in history that anybody would have seen this coming. It’s certainly news for everybody, so anything you can share would, I think, be really helpful for our viewers.

Dan: Sure. I think from our standpoint, we tried to tackle this really early on the first day as a traditional disaster recovery. We actually did have a document about how we would handle that, but our assumption is that there would be two feet of water in our building or the building would have burnt down and we’d be working on backup. This was a different type of disaster that I don’t think any of us were ever prepared for in a million years.

I think what we did is we tried to look at the business holistically and say, “If this goes on much longer than what anybody plans, what do we need to do to make sure that we’re here 60 days from now, 90 days from now, or even 180 days from now if this goes on much longer than anybody anticipates so that we can open our doors in the future and be an employer of choice in the future and a place for our customers.

What we really did is we started reaching out very, very early on, almost two and a half weeks ago, reaching out to our vendors, our partners, our manufacturers, our bankers, pretty much anybody that was in our entire financial ecosystem and explaining to them that we’ve been partners for 23 years, we’re going to get through this together, and here’s what we need to do to make sure we’re there tomorrow, and here’s what we need from you, and here’s what we’re willing to provide to you to do those type of things. I was very surprised because I could have swore that I would have been in line, but instead, everybody was answering the phone and they were literally all saying I was one of the first ones.

I was a little surprised by that, but it also made me feel good, except for the part where half of them I’m not sure were taking it as serious as they would take it if we weren’t having that first call today, they didn’t quite anticipate it. We’ve re-had some of those conversations again and the outcome’s been a little bit different. We basically told all of our vendors and our manufacturers that we buy direct from and said, “Look, I personally guarantee we’re going to take care of you, and we’re going to make sure that we always pay just like we always do today.”

We entered this three weeks ago debt-free, with zero debt. That’s not where we are today, and I’ll explain that in a minute, but we basically told them, “We’re going to make sure we pay, we just can’t pay you in the agreed-upon terms because we want to make sure that we’re here for you as a customer in the future. Most companies really understood that, and they’ve really partnered with us to try to extend some terms and things that were going to be coming due, but we’re really now starting to see that trickle through the environment.

Some of my bankers have reached out and said, “We want to delay some different things for you.” and stuff like that. Certain ones were saying that sounds good, other ones were not. One of the other things we did do is we took out of the playbook of the big boys. If you look at what everybody that’s all the billion-dollar companies are doing is they’re drawing down all their credit facilities that are available to them. That is something we learned in 2008, when in one week, we got three letters from our banks that all had zero balances on lines of credits. They all said, “Oh, we’re going to take your line down to zero, even though you don’t have anything on it.” Then, when you actually needed it, it wasn’t there. We’ve extended ourselves on some lines of credit that basically have been sitting at zero and that we haven’t used. We felt that it was a cheap insurance policy per se that if we do come out of this quicker than we think in two, three weeks, or four weeks, we paid basically some interest, we didn’t need to pay and we pay those lines back and we’re done.

We felt that was really important and it’s given us a nice large cushion to weather this storm regardless of how long it is. Whether this thing lasts well into the summer or even beyond, we’re going to be okay, and we’re going to be here, and we’re going to make sure that we’re open for business the day they allow us to open back up for business. That would be something I would strongly recommend is if you do have access to capital, I would access that capital immediately and understand that what you’re doing is you’re really just buying an insurance policy.

Parag: In terms of the tactical plan, once you started to look at the financial health, you started looking at your balance sheet and also the different expense line items you had, was there some approach that you could share about how you decided that here are the things that are most crucial to me, the things, cutting out, unfortunately, really to maybe cut muscle, but really try not to hit the bone. How did you go about thinking about that?

Dan: That’s a really good question. I think what we looked at is we had in our mind what we thought would be kind of a minimum time that this might last. Pretty early on, we saw that this was going to be something that we thought would be six to eight weeks at a minimum, which is a little bit longer than what we’re hearing in the marketplace. If this thing does last for two months, what do we need to do to strip out those costs that we really can’t afford to have for two months? What I realized pretty quickly that, unfortunately, a pretty sizable portion of our staff I just wasn’t going to have work for within a week or two.

We extended some vacations, extended some sick time, put some money in a bucket for some people, and had to make some really tough decisions. The idea was that it was we were just going to be back, and when we’re back, they’re the first phone calls we’re going to make. Our goal was to just say, “See you later,” not “Goodbye.” We made sure everybody knew that. Again, very difficult for us just like it is for anybody. I’ve had over a dozen conversations last week, week and a half with CEOs that I know across the country in all different industries beyond just sporting goods. A couple of manufacturing, a couple in technology, software company, consulting services, a food manufacturer.

Every single one, except for the food manufacturer, has had to have a layoff of at least 50% of their staffing. You can really see the impact this is having on our economy almost overnight is dramatic. It just really pales beyond, I think, what people are, even today, starting to comprehend. I think we’ll get probably even that very first look at it tomorrow when the unemployment number comes out. I think that unemployment number is going to be in excess of 5,000,000 or 6,000,000. I think it’s going to just really blow everybody’s expectations away.

Parag: Yes, that’s the word on the street. I’m afraid, we’re also seeing a pretty fascinating domino effect. It’s almost like parts of the country don’t know what’s happening in the rest of the country. You and I are both here in California. I’m here in San Mateo, and we’ve been in lockdown for about a week now. We started exercising precaution almost two weeks ago. There are many parts of the country there that are still not on lockdown. I’m afraid, as I’ve told my team, it’s only going to get a little worse before it starts to get better.

Given that you have a retail location and you’re stocking, I believe the last time we chatted, you said you had over 18,000 or so products on, so much in inventory. Talk to me about how you’re dealing with that. You’re not physically there. Are you still going in? Are you able to ship out of your retail location? How do you handle that?

Dan: Great question. Yes, we do stock almost 19,000 SKUs today. We do all of our own fulfillment out of our warehouse for the entire US, so no FBA business with Amazon, which is good and bad. Obviously, the good is we’re going to control what’s happening in the marketplace, which is great. I think the challenge that some people will have if they were over-reliant on either a third-party fulfillment company or if they were over-reliant on Amazon FBA, as everybody’s heard probably in the news by now, they will start to run into some issues, then at that point, you don’t control your environment. At least we can still ship today within the confines of the law.

We’re allowed to do very minimal people. I’ve got people basically sitting in four offices and all separated from each other and two shippers on either side of the fulfillment center. We’re practicing social distancing within our operation. Normally, this time of year, I’d have average about 25 to 30 employees on-site at any point in time. It’s a pretty dramatic difference. We would also be shipping this time of year, seven days a week, so our operation would flow every single day. Obviously, right now, we’re just shipping Monday through Friday because the volume’s not there and anything else.

The other thing we did do was about two weeks ago, we stopped purchasing. That obviously has that trickle back effect up into the supply chain where our manufacturers across the US are now not getting any orders, which means they’re not doing fulfillment in their warehouses, which means their employees are going to feel the effect of that. It just goes all the way back. I think the supply chain today is so tightly woven that when a consumer doesn’t buy something, a small item in the US, that trickle effect, and what that does, and wheels itself all the way back whether that’s to China or a US plant or something else. It just has a dramatic effect on everyone

Parag: It’s fascinating you bring up China. Did you have any reliance on manufacturers or suppliers from outside the US, or everything is from within the US for you?

Dan: Everything is from within the US for the most part. All of our manufacturers that we buy from are primarily US companies. They are companies like Nike, Adidas, Under Armour, Wilson, Easton, companies like that. They all have manufactured overseas, but they are the entity in the US and warehouse in the US. We’ve obviously been dealing with tariffs the last 12 to 18 months which has had a significant impact I think on everybody’s business, including ours.

We’ve had some products that have had tariffs as high as %37, which has a dramatic impact on how you price that to consumers and try to work with your manufacturers to build that in. That’s been very complex, to begin with, and then you put that on top of this. We were having a banner year again. This was our 10th year in a row of plus 25% to 30% growth year over a year. Before that-

Parag: I know you’ve been in a phenomenal run, Dan. You’re featured in the Inc. 5000 for what, four years, three years in a row?

Dan: Five years in a row.

Parag: Wow.

Dan: Five years in a row. We’re really very proud of that accomplishment. This year, before this all started, I think it was on March 8th, I think we were at 24% over last year. We were just really having a great year and this is really our peak time, which is unfortunate. At this point, you have to look that there’s, I know it sounds crazy to say, you being the CEO of a company, and the founder, me being the CEO, but there are more important things in life than business and money.

We’re trying to have a little more humble approach in terms of what the bigger outcome of this is. This is more about people and the impact this is having on people’s lives. What we’re trying to do is whatever we can to keep people employed and keep people on health insurance and try to take care of family and do the right thing. We’re starting to have a little more focus on that now than anything else.

Parag: We do certainly need to start looking forward as well. Certainly, a lot of lessons to be learned and ways that we can tackle difficult times in our business. Speaking about looking ahead, you mentioned there were some new sights you were starting. You had some marketing ideas. Tell me a little about those. I guess what is it about now that’s– Is it just that you have some time available? Is it trying to find ways to use your creative staff? What are some of those ideas, and what are the motivations behind them?

Dan: I’ll be really honest, it’s capacity. We actually have now capacity to be focused on working on top of the business and focusing on those things that we’ve had on that list of would love to do if we had extra time. Those are what we’re doing right now. We relaunched our main websites, October 1st and our new platforms. We did a re-platform, which was difficult after 15 years. It’s been very, very successful for us. Our conversion rate’s up about almost 45% from October 1 through March 1. All that hard work and everything we did really paid huge dividends for us.

Now, one of the reasons we did do a re-platform is we had a goal of launching some additional e-commerce sites that were, I won’t call the vanity sites, but they were just really, really narrowly focused niches that we’re on the periphery of now. We really see it as a really good time for us to double down on some of these strategies that have worked for us the last few years, make some incremental investments because we do have to be cautious about spending too many dollars, some development dollars and things like that, be ready to go in a month and a half or two months and launch some new pieces.

It’s not really trying to recreate our business per se, it’s just really having the time, which is probably one of the best pieces of capital that a company can have is time to work on the business and things, which sometimes you just can’t do. My people are very motivated right now, and we’re just focused on the things we can control. That’s our mantra that we’ve been working on the last two weeks. There’s only so many things we can’t control. We can’t sit around and cry about it. It’s not going to make it better. We’re just focused on tomorrow.

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Parag: I can share a little bit of insight on our business the way that I described to our team is, “We have to think about defense and offense.” Our defensive game is really, first and foremost about protecting our team, protecting our company and our revenue. Then, once the defenses are in line, we need to start thinking about offense. One of the strategies you just mentioned is new websites, really a way of expanding your target market.

How do you get more reach for your products? Finding those interesting pockets of your catalog or certain types of customer categories, where you can expand with a new domain, have a more focused approach to that catalog. That’s really great. You mentioned a re-platform, so I’m certainly going to ask the question, where were you? What have you switched to?

Dan: Sure. We were a long, long time customer on Yahoo Stores platform, which was really—

Parag: Yes, I recall.

Dan: —which is really the beginning of the internet. You’d have to go back to, Yahoo bought a small company in 1998 that had a web platform-building tool. At one point, I want to say there was 200 of the internet 500 largest companies were running on Yahoo’s platform, believe it or not. Unfortunately, Yahoo just lost focus over the years and just didn’t invest in the platform the way they should happen. There was a core group of people that were still running on Yahoo, but over time, it’s just continuing to invest money in a platform that we didn’t see investing at the same levels as we were just didn’t make sense.

We went out on a search, looked at everybody, and really settled on BigCommerce Enterprise. What a great move for us? Just been really, really great. We accelerated our project. We built a 90-day timeline to go live into a full platform migration, signed contracts July 1st, and went live October 7th.

Parag: Well done.

Dan: We officially missed our target by six days, but that was a pretty aggressive target based on what we have with 18,000 SKUs, custom configurators on our side, all kinds of different stuff. We really hit that hard. Everybody worked really hard in our organization as well as our external developers. We’re really proud of what we accomplished in the numbers, and the revenue increase, and the conversion increase, and the pageviews increase. Everything that we measure our business on, it was very successful for us. Now, we’ve got a platform that allows us to really do those next-level things that we weren’t able to do before.

Parag: I know you had a lot of customizations and very complex workflows. Taking that initial step of, “How do I unplug all of this? Is it even possible to recreate?”

Dan: I think it’s interesting though. It’s not a plug for you guys, but, of course, it is a plug for you guys because I’m a big fan of what you do and the support we get. Everything we looked at, we wanted to make sure that, Webgility was at the heart of that decision because you guys are the middleware that keeps everything glued together, whether it’s our ERP systems, the marketplaces, our website, shipping, just everything. We knew that whatever it was had to really fit with what you do. If you remember me reaching out to you in the spring of last year and going, “Here’s where we’re leaning. What do you think? so that was a much easier decision for us because there’s other middleware tools we’ve looked at over the years. We’ve been a customer with you guys for seven or eight years now-

Parag: Nine and counting.

Dan: Oh my gosh. Nine years. Wow. Nothing compares to what you guys do. It still is.

Parag: Thank you. Appreciate it.

Dan: You’re a really strategic part of what we do and our success. You’re saying nine years. We’ve had nine years in a row of growth over 25%. I wonder if there’s a common thread there perhaps.

Parag: Yes, I hope. You’re very kind as always. I know it’s a tough time and this video is by no means meant to be a plug for Webgibiliy, but we really, really appreciate it. I just want to take a few more minutes. I know you’ve got a lot going on there and a lot of things you need to tackle. Just a few things. One, we just heard the stimulus plan, the big bill that’s going to be approved here anytime now. There’s a number of SBA loan grants for small businesses. Have you looked at that, any thoughts on that? Do you think it’s going to be helpful for you or other retailers?

Dan: Yes, that’s a really good question. Talking about the capital that we talked about before and my advice to other business owners that they have access to advance that. When the president came out, I think it was two Thursdays ago, he announced the very first $50 billion SBA Disaster Backing Loan. I immediately went to the SBA site. I open an SBA account, which is very easy to do. I went to go apply for an SBA Disaster Loan because I just wanted to have everything in my arsenal that I possibly could. Unfortunately, I think I was a little quicker than the president and the staff was because you could open an SBA account, but there was no disaster in California, New York, or anywhere else in the United States.

I checked in on Saturday. I checked it on Sunday. Sure enough, Monday morning, the US was a disaster. At that point, you could then show that it was an economic disaster. I personally spent about six and a half hours because the website crashing. They asked for massive financial documentation like if you were applying just for a traditional loan. Three years’ worth of tax returns, P&L, balance sheets, AP, AR, pretty much everything you can imagine. I finished that that Monday and submitted it. I did see that they pulled credit, so I know something’s happening. Even today, I just went to go check just to see and the website’s down for maintenance.

I could only imagine the number of applications they’re receiving, but the SBA has a very good reputation of staffing and beefing very, very quickly. During the Hurricanes, they were able to add 4,000 loan processors within a two-week period. My guess would be somebody would probably be reaching out to me in the next week or so to ask, “What are you looking for? How much? Here’s what we think you’re approved for.” and kind of there, but our, goal again, is the same thing, probably won’t need it.

I’m probably not going to need a penny of the lines of credits that we advanced, but having that, gives us the ability, I think, in the future to pivot quicker. When this recovery does come around, whatever that is, whether that’s in two weeks, two months, or two years, I’m going to make sure we’re super-positioned for that so I can bring back every one of those people and hopefully, add even more people to our staff and our company.

Parag: Nice. Then, lastly, in terms of, you mentioned multiple channels. You’ve got so many different sites. Are there certain channels, and you’re obviously in the sporting goods category, which is fascinating considered, I guess, non-essential, but you’re still seeing some volume. Are there certain channels that are working better for you than others? Is there any advice you would give for folks out there that maybe right now are just sitting on a brick and mortar business, that don’t have online presence? What advice would you give them to get started, and where should they proceed first to?

Dan: Sure. The first thing I’d say is, if you’re a brick and mortar business and don’t have an online presence, you have to get an online presence. It’s just part of who you should be in this day and age, regardless of what you’re selling, whether it’s products or services or anything. That’d be the first recommendation. The second recommendation I would make, even though we were narrowly focused in baseball and softball, we always felt like we were somewhat diversified.

What I mean by that, is our sales channels are diversified. Even though I’m selling the same group of 18,000 products, I wasn’t dependent on hoping that person walked through my front door or that person bought on my website, or that person went to my eBay store, or that person bought something from me on Amazon because my sales channels were all over the board. When somebody changed the rules on one of those, the other sales were still coming in. When eBay changed their fee structure, or Amazon did this, or retail was this way because a local league doesn’t allow this type of bat, it was going to be okay.

I learned that, obviously, I needed to be even more diversified. Now, I know out of sporting goods, I need to be in the toilet paper business, then I would’ve been fully protected. I didn’t have that hindsight, but that’s really what I would recommend to any type of retailer, whether you’re only an online retailer, or you’re just a brick and mortar, or you’re more like us that’s in between, is I would look into the future and say, “How can I be even more diversified in my sales channels?” because it’s really easy sometimes, I think, as a small company that when you have sales coming in from one area, you get so excited and you become so dependent on that.

The risks that you can do to your business by being so dependent on one sales channel can be just as bad as having one really, really large customer. My recommendation to folks is always to try to figure out how can you diversify your sales channels. That’s helping us a little bit today. It’s not where we want to be, but I have revenue coming into the company, which is outstanding, even though we’re closed. I don’t think I could ask to be any more lucky than that.

Parag: Then, 80% percent hit is not something that almost any business could handle, but it seems you’ve done incredibly well to try and react and you’re way ahead of the curve. Hopefully, through this video, some other folks out there that are thinking about what’s to come, or are facing the crisis, they can really take some advantage of all of your learnings. Again, Dan Wells from Bases Loaded. I won’t share your personal information, but certainly, if folks want to reach out, we’ll put a link up to your website, if they have any questions. Anything else you’d like to share, Dan?

Dan: No, just keep your head up and keep moving forward. I hope you and everybody at your company’s okay. Thank you.

Parag: Thank you so much, Dan. I really wish you all the best.

Dan: You too. Great. Good talking to you. Thanks so much.

Parag: Thanks, bye-bye.