How to Find the Profit That’s Already in Your Inventory
Talea Bader, Founder of SKUTOPIA, sits down with Nathan Bush to explain why fulfilment, not marketing, is the biggest profit lever most ecommerce brands are ignoring, and how a $700 million business turned losses into tens of
WHY MOST ECOMMERCE BRANDS GET FULFILMENT WRONG (AND WHAT IT’S COSTING THEM)
Most ecommerce operators treat fulfilment as something to get sorted, then stop thinking about it. Talea Bader built one of Australia’s most advanced logistics networks and argues that’s the most expensive mistake a growing brand can make.
Talea co-founded Workit Spaces, a co-working hub built specifically for ecommerce businesses. Running it put him closer to the operational reality of hundreds of Australian merchants than almost anyone else in the industry. The single biggest pain point he kept hearing was fulfilment, specifically the moment brands hit real order volume and their current setup stopped working.
That problem led him to build SKUTOPIA, an AI-powered, robotics-led fulfilment network now operating out of Sydney and Melbourne, serving hundreds of merchants from early-stage brands through to enterprise. He’s spent eight years figuring out what separates the ecommerce brands that scale from the ones that stall.
“Inventory management is super manual, spreadsheet based, driven by buyers, driven by ego, and never by science. If you’re starting today, do your own pick and pack first. Feel the pain and be as close as possible to your customer.”
A few things from this conversation worth taking into your own business: Your delivery promise is directly affecting your conversion rate, whether you know it or not Inventory management is the most underestimated profit lever in ecommerce there’s a right time to use a 3PL, and most brands move too early.
YOUR DELIVERY PROMISE IS A CONVERSION TOOL, NOT A LOGISTICS METRIC
Most operators think about delivery speed in terms of customer satisfaction. Talea’s argument is that it belongs in your conversion rate conversation instead.
The distinction he draws is between speed and certainty. A customer who sees “usually ships in 2 days” at checkout is getting an average. A customer who sees “order by 2pm, receive today” is getting a commitment. That difference changes buying behaviour. His position is that the more reliably you can make and keep a delivery promise, the higher your conversion rate should be..
“When we promise you something, there’s a very high chance, 99.99%, that we’re going to deliver on that promise. Then you should have a substantially higher conversion rate.”
The question for your business isn’t whether you’re shipping quickly. It’s whether you can make a delivery promise at checkout with enough confidence to actually put it there. Worth thinking about what you’re currently telling customers to expect, and whether there’s a gap between that and what’s actually happening in your warehouse.
INVENTORY MANAGEMENT IS WHERE YOU GO FROM LOSING MONEY TO MAKING IT
Ask most operators to name their biggest profit lever and they’ll say margins or marketing efficiency. Talea’s answer is inventory, and the data he’s seen working with merchants at every scale backs it up.
He describes working with a $700 million retailer that moved from substantial losses to tens of millions in profit. Not through new products. Not through better advertising. Through inventory discipline: reducing weeks on hand, distributing stock closer to where customers actually are, and making buying decisions based on data rather than instinct.
That’ll be recognisable to a lot of operators. Stock decisions get made by the same person who’s also managing suppliers, marketing, and customer service. The number of weeks of inventory to hold is often a gut call, not a calculated one.
The starting point Talea recommends is simple: understand what a healthy weeks-on-hand figure looks like for your category. Any stock sitting beyond that threshold isn’t safety stock. It’s cash that’s been converted into a storage cost.
START WITH PICK AND PACK. HERE’S WHEN TO STOP.
Talea’s most counterintuitive advice, coming from someone who runs a 3PL: if you’re just starting out, don’t use one.
Do your own pick and pack first. Feel what it costs in time and money. Understand what a customer experiences when they open a box you packed. Be as close as possible to that moment before you hand it to someone else.
The reason is practical. Brands that outsource too early hand over a process they don’t fully understand to a partner they can’t properly evaluate. They have no baseline to measure against. By the time something goes wrong, they’ve lost months of learning they can’t get back.
The right time to move to a 3PL is when in-house fulfilment is costing you more than outsourcing it would, and when you understand your own operation well enough to hold a partner accountable. At that point, a good 3PL stops being a supplier and starts being a genuine accelerator. The test Talea suggests when evaluating a partner: are they ever going to be your bottleneck? If the answer is yes, or even maybe, keep looking.
Fulfilment is where a lot of ecommerce operators stop thinking strategically. They get it working and move on. The brands growing fastest are the ones who kept asking whether fulfilment could do more: sharper delivery promises, tighter inventory, a 3PL relationship built on accountability rather than convenience. The operational side of ecommerce isn’t glamorous. It’s often where the money is.
THE TAKEAWAY
Every version of this story has the same pattern. The brands that come through move toward the hard thing, not away from it.
Holding inventory that isn’t moving is commercially painful. Vic Gigliottiat Muscle Republicsat on a full tights range for four months because the fabric wasn’t right. He did it anyway. Ecosa scrapped an entire earplug production run after it failed real-world testing before launch. Costly decisions. They took them. In both cases, absorbing the short-term hit protected the customer relationship long-term.
There’s a simpler everyday version of this. AtBudgy Smuggler, any time a customer reaches out even slightly disgruntled, the team calls rather than emails. A phone call signals you’re not hiding. That signal, in the moment when a customer decides whether to stay or go, matters more than anything you say.
A recall is this principle at its highest stakes. The brands that come through are the ones that moved first, before they had all the answers. The ones that waited until they could explain it perfectly mostly found there was nobody left to explain it to.
What is the hardest thing your business is currently avoiding? That’s probably also the thing most likely to become a crisis.
Frequently Asked Questions
How does delivery speed affect ecommerce conversion rate?
The relationship isn’t just about speed, it’s about certainty. Customers who see a specific, reliable delivery commitment at checkout convert at higher rates than those who see a range or estimate. Same-day and next-day delivery is a proven conversion driver across Australian ecommerce, but adoption still sits well below where most operators assume it does.
When should an ecommerce brand move to a 3PL?
Not at the start. Talea Bader’s advice is to do your own pick and pack first so you understand the process, the real cost, and what customers experience. The right time to move is when in-house fulfilment is costing more than it’s worth in time and cash, and when you know enough about your operation to evaluate a partner properly and hold them accountable.
How does inventory management affect ecommerce profitability?
Carrying more stock than your sales velocity justifies ties up cash, increases storage costs, and creates write-down risk. Talea Bader has seen a $700 million retailer move from significant losses to tens of millions in profit primarily through reducing weeks on hand and making buying decisions based on data rather than habit.
What should ecommerce operators look for in a 3PL?
Beyond price and location, the key question is whether the partner can make and keep specific delivery promises, not just averages. A 3PL that gives you reliable delivery certainty at checkout becomes a conversion tool. Ask what happens when things go wrong, and how they measure and report on quality.
In this Playbook:
Your delivery promise belongs in your conversion rate conversation, not just your logistics review.
Inventory is the biggest profit lever most ecommerce brands aren’t pulling.
Do your own pick and pack before you ever hand it to a 3PL.
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Nathan Bush: business needs to grow profit, the first conversation is almost always about marketing. More spend better creative higher conversion. Sometimes the conversation is about conversion. Fix the site, improve the funnel, recover the abandoned carts. Both conversion and marketing are definitely worth working on. However, the biggest lever is almost always inventory. Most businesses struggling with profitability aren't spending too much on ads, they're holding too much stock. The wrong stock, stock that is bought on gut feel six months ago. That's sitting in a warehouse tying up cash that could be doing something useful. Talia Bada is the co founder of Skewtopia, an Australian fulfillment operation that's been building its own AI and robotics platform for eight years. They run fulfillment for hundreds of businesses from early stage brands all the way through to enterprise. That vantage point gives him a view of what's actually happening in inside those businesses. This is what the data shows. He's seen a business turning over $700 million move from significant losses to tens of millions of dollars in profit. Not by changing their marketing, not by redesigning their website, by changing the way they manage their inventory. And the fix wasn't complicated. They started making decisions with data instead of gut feel and holding weeks of stock instead of months. Let's hear it directly from Thalia. From the conversations you're having, where are you seeing people go wrong with inventory management?
Talia Bada: I think basically people don't understand the impact of inventory in their P and L and they don't understand that this is one of the most important things where you can actually make a change business from being loss making to a profitable business. So we're in discussions with a $700 million business that moved from a massive loss making business to making substantial. I can't say numbers obviously, but many millions, tens of millions in profit purely through better inventory Management and moving into having weeks on hand in inventory rather than months. So we basically through our experience working with many different retailers, both B2B, B2C omnichannel retailers and so on, we figured out what is the golden standard of inventory management and now we systemize that and we're basically about to offer that to everyone to have this as the guideline. So basically don't order too much. If you have already 10 weeks of inventory of a specific item, you shouldn't be ordering more. Or what is the specific level of inventory for your industry, for your category that you need to be holding in your warehouses and how do you distribute that and where does this inventory sit in a long term storage into a big phase. How do we make sure that you're not paying too much storage for this inventory as well and so on.
Nathan Bush: And are you finding that inventory reordering process, are many brands doing it in an automated way or is it still very manual?
Talia Bada: Super manual spreadsheet based and driven by buyers and driven by ego and never by science. So that's basically what we are about to release to change this.
Nathan Bush: And would that be automated?
Talia Bada: 100% automated? Well, a buyer still need to do the buying, but you can't ignore it anymore. If I'm telling you you have X number of dollars dead cash and this is the number and everyone we're democrat access to the data as well. If the founders or the managers of this business want democratized access to the data, we can give access to data at a user level. If it's an administrator or finance or whatever that is across our business. For example, we release this product for our team internally for our business and we have full democracy on the data. Anyone can view anything at any time.
Nathan Bush: What Talia is describing here isn't necessarily a fulfillment story. It's a profit story. And the decisions that shape it get made every time someone places a stock order. Here are three things worth acting on to help maximize profit by managing your inventory better. Number one, inventory is your biggest P and L lever. Most businesses go looking for profit in the wrong place. When profit is under pressure, the instinct is to go upstream. Better marketing, higher conversion, new channels. The data almost always points back somewhere else into the warehouse. Every dollar of stock sitting unsold is cash that can't be reinvested. The holding cost compounds storage, working capital locked up, markdown, pressure building the longer that it sits. And the damage is often invisible from the top line. Revenue can look fine while the inventory quietly drains the business. The clearest example of this in the add to cart archive comes from Carla Pen Khan at Profit Peak, their own business. Before they started Profit Peak, they had their own business and they had a brand that they considered a bread and butter performer. Gross margin looked really strong. They'd been consistently putting marketing investment into it. But when they looked at delivered margin, what was left over after factoring in advertising spend and fulfillment costs, they discovered that they were barely making money on it. So they stopped investing. When they stopped investing, the profitability picture shifted almost immediately. The distinction worth understanding is gross margin versus delivered margin. Gross margin always flatters. Delivered margin usually reveals most buying decisions in most businesses are made off gross margin. But the number that actually tells you whether a product is worth backing is what's left after you've paid to get it here, to market it and to get it to the customer's door. If you don't know your delivered margin by product, you don't know which products are worth buying more of. That's the number one step to getting it right. Number two, the buying decision is the most important financial decision in a product business. Almost nobody makes these decisions with good data, which is a bit crazy. Super manual spreadsheet based, driven by buyers and driven by ego and never by science. That's how Thalia describes how most businesses manage inventory reordering. It's not a startup problem necessarily. Walk into most mid market operations and the process kind of looks the same. The planning method that actually works isn't complicated. Baseline sales with promotional uplifts layered on factoring in lead times. That's the core of it. At Sheet Society, the team built the business to significant scale before hiring their first merchandise planner. Hayley Worley said that looking back, they probably should have done it years earlier. The business ran on instinct for longer than it should have. At motto, the approach came from the other direction. Rather than trying to forecast perfectly. Lauren French accepted higher freight costs as deliberate insurance. Air freight rather than bulk sea freight means not being locked into large volume commitments months in advance. Her framing was very direct. It was a lot cheaper to air freight than to be overstocked with cash tied up and then having to mark it down. Very different methods, same principle. The cost of getting the buying decision wrong is higher than the cost of the operational fix. Whether you hire a planner, build a proper forecasting model or just adjust your supply chain to reduce commitment risk, the starting point is the same, except the gut feel. And last year's spreadsheets are probably not enough anymore. And number three, know your weeks on hand before it becomes a crisis. The number that tells you whether your inventory is healthy is weeks on hand by Skew. Most operators either don't track it or only look at it when something has already gone wrong. By that point, options are a bit limited. Idle stock accumulates cost faster than most operators realize. Smart in Planning's Susan Martin frames it really simply. Idle stock is is like fruit. If you're not moving it through quickly, it rots. Storage fees, working capital tied up, and the growing pressure to discount to clear it. Pure play operators are often slowest to mark down, partly out of brand concern, partly because clearing stock feels like admitting a mistake. But dead stock is stopping you from buying fresh, better performing stock, and that is the real problem. The markdown is the fix, not the failure. At Proud Poppy, the business hit one to two weeks of stock cover. When you're at that level, every decision becomes reactive. You're not managing the inventory, you are responding to it. The time to know this number is well before that moment. Build the habit now. Know your weeks on hand by Skew. Know what a healthy level looks like for your category and your lead times. Set the trigger. If you're holding more than X weeks on a skew, that's a conversation worth having before the next order goes in.
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Nathan Bush: Not when you're forced to. Talia's $700 million example is extreme in scale, but the principle isn't weeks of stock instead of months. Buying decisions based on data instead of a spreadsheet and a hunch. Most operations have a version of that same opportunity sitting in the warehouse right now. The question is whether the team can see it and act on it. If you're not already on the Add to Cart newsletter, we put out five E commerce stories every Friday. The things that are moving in the industry that you need to stay across to be the smartest person at the E Commerce table, sign up for free at add to cart.com au that is the playbook for this week. I'll see you next Friday.
