How Ecommerce Businesses Can Thrive In Today's Economy — Olivier Grinda | How Tariffs Eat Into Your Profits, How Passing Costs Hurts Loyalty, How Shipyard Taxes Disrupt Shipping, How To Split Tariff Costs, Why “Wait And See” Is A Risky Decision (#399)

In this episode, we dive into the impact of tariffs on e-commerce brands.

Olivier Grinda, Chief Operating Officer at Clearco, shares insights on how these extra costs can hurt profit margins and offers practical strategies for handling the situation. He explains what tariffs are, how they affect brand profits, and why waiting for market conditions to stabilize might be riskier than taking immediate action. 

Olivier provides valuable advice on financing options that can help businesses weather these challenging times.

Topics discussed in this episode: 

• How tariffs cut into your e-commerce profits. 
• Why grasping protectionism’s past is key to judging tariffs. 
• How passing costs to customers can hurt demand and loyalty. 
• How to share tariff costs with manufacturers. 
• Why shifting production to Vietnam or Cambodia is so hard. 
• How new shipyard taxes on Chinese vessels will disrupt shipping. 
• What dangers come from “waiting and seeing” during trade shifts. 
• How Clearco’s revenue financing can stabilize your cash flow. 
• Why underwriters use margins, reserves, and trends to set rates. 
• What it means to be “mindfully aggressive” in a tariff crisis. 
  
  

Links & Resources 

Website: https://clear.co/
LinkedIn: https://www.linkedin.com/company/getclearco/
X/Twitter: https://x.com/getclearco
Facebook: https://www.facebook.com/getclearco

Get access to more free resources by visiting the show notes at
https://tinyurl.com/usakn83j

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Transcript

[00:00:00] This episode is sponsored by ahrefs, the All-in-one marketing intelligence platform, trusted by SEO professionals, content creators, and digital marketers around the world. Whether you're doing keyword research, checking back links, or analyzing competitors, ahrefs gives you the tools to make smarter marketing decisions.

Explore what ahrefs can do at ahrefs.com. 

[00:00:20] Hello and welcome to another episode of the E-Commerce Coffee Break podcast. Today we're diving into a topic that's on everyone's list, and that quietly eats up into profits of many e-commerce brands. We want to talk about terrorists, so if you're importing products specifically from countries like.

China or Vietnam. These extra costs can seriously hurt your margins. We wanna dive into [00:00:40] this and find out how you can handle the situation best for this. Joining me on the show today is Olivier Grinda. He is the Chief operating Officer at Clearco. He has built and scaled four companies, raised over 60 million, and had two successful exits with experience across FinTech, health tech, and marketplaces.

He has led teams from startups to 200 millions in sales and [00:01:00] advised over 100 companies along the way. So he has vast experience when it comes to these topics. R would like to welcome to the show. Hi Olivier, how are you today? Hi Claus. I'm very well. Thank you very much for having me on the show.

Let's start simple. For founders that are in the loop with global trade, what are exactly our terras and why should e-commerce brands care [00:01:20] about it? Absolutely. So tariff is not something that's actually new. It's something that's always been happening in between countries who are trying to either regulate or create a form of income for the government to between countries.

So let's say that you wanna import. Goods from China even [00:01:40] before all the current massive inflection in tariff. So it was always tariff in on goods from China's where about 20%. And what would what would happen is that at the point of entry as a person who made the purchase would basically pay an extra 20% on the goods, and very often also on the services that was given to [00:02:00] deliver the goods.

Now you said there were always tariffs. Can you gimme a simple example on how tariff work and change a brand's profit at the end of a day? Yeah, abso absolutely. So tariff are being u used by government in different ways. For a long time when you, when it was in the [00:02:20] sixties and eighties, it was done with protectionism, was trying to protect industries.

And the way it would happen is, let's say Brazil would tax a. The importation of goods on industries that would compete on their on what they felt was national national companies or [00:02:40] national industries. And for example, if you were to import diapers from the us, something that would have been $10 to import.

Ended up being actually a hundred percent taxed, so say, ended up being $20 to import. And that the economical idea of it was if we build it with the [00:03:00] Brazilian brands, people will have now not have to compete with international brand. Then we'll buy the Brazilian brands.

The reality of it. Is it Often protectionism doesn't work because of supply chain optimization throughout the world. It is often much better to compete on things that you have true differentiators, trying to [00:03:20] then trying to compete on every single industry where you might not be well suited to, to do and in many ways what we're currently trying to do is a form of protectionism today where. We're hoping that by taxing countries like China and and Vietnam and so forth, we will bring industries [00:03:40] that are currently being displaced there back into the US with the idea that without the competition from international, you'd be able to produce it in in the us.

So what's the best way for e-commerce brands that were importing a lot to handle these extra costs? So unfortunately there is not really a lot of of of [00:04:00] great solution. When there is extra cost, somebody's gonna have to pay. There is the most logical solution as you pass it along to your customers.

But the reality is that passing along the cost of your to your customer might put you at a point where there is no more demand for your for your product. So the other way is to [00:04:20] eat the cost, but that actually suspect implies. You have enough margin to eat the cost and you're gonna be able to still sell the product.

So third one, which is recommended and currently being used by a lot of people is asking the the manufacturer. To [00:04:40] actually help out on their margin. The manufacturers are very often very keen on helping pass this current moment where taxation are very high, particularly for small goods.

And I think we'll talk a little bit up towards, on the minis low hold that is just, that just got closed. But. They're very keen on on helping [00:05:00] out their clients because if they lose their key clients, the man, the manufacturers are gonna have real real big challenges. And and so this is really the three key ways of doing it.

Now, there is a fourth way, which is bigger challenges move. Where you're manufacturing your, where you're man manufacturing from, which is [00:05:20] in many ways what the US government would like you to do is they would like you to move to us manufacturers. Quite realistically, in the short term, this is not a reality.

You're not, probably not gonna be able to manufacture the same goods because those industries don't exist. So you're probably gonna have to look at Cambodia. You're probably have to look at Vietnam. You're gonna have to look at other [00:05:40] countries who have similar cost structure. But keep in mind, they haven't optimized their industries for those.

So probably it's still gonna be a little bit more expensive. The reality is you're gonna have to look at a flurry of all three. You're probably gonna have to. Pressure your manufacturer. Look for other option, eat a little bit in your margin, [00:06:00] and pass along some of the cost to your customers. That is very likely the reality.

Now. I like that you gave a really good overview there, and obviously this topic is changing by the minute. I have the feeling right now when we look at shipping, and I think that's a big part of the game. How is that influenced and are there any ways around it? There are quite frankly, [00:06:20] really just two solution.

Either you're ship by boat or you're ship by plane. Now one of the things that is happening that I think people are underestimating. Is that we are taxing right now ships that were built from the, from China and it is their origin of their, the shipyard that actually counts [00:06:40] and that will actually have a knock on effect because what will end up happening when.

Chinese companies are gonna realize realize that like they're gonna be tax on boats that were built in the, in China, but they also own boats that were not built in China. Now, typically their Chinese built flee fleet [00:07:00] serves the US and they're non-Chinese built fleet serve Europe. What they're gonna do is they're gonna swap.

And that is actually a disaster. And the reason this is a disaster is because a, nobody's gonna make any money, but in terms of supply chain issue, it's gonna be absolutely massive. A couple of years ago there was a supply chain issue that [00:07:20] like, had a ripple effect throughout the entire indu industry.

This will have the same kind of kind of issue. And this is really a zero sum game where everybody lose, where you're basically taxing. Ships on their shipyard origin makes absolutely no sense if for what you're trying to do. That's really gonna be I think an [00:07:40] unforeseen challenge.

So that actually will have another impact that I think consumers and e-commerce are underestimating, which is. Shipping and logistics is about to get not only more expensive, but also much much delayed. And for two things [00:08:00] intuitively, your instinct would be if a shipping container is not full, then it's gonna actually cost me less.

I actually believe that it's gonna be the reverse. So is actually they're not gonna, is, they're not gonna go and send a shipment at a loss. So they're actually either gonna charge more per empty container [00:08:20] or they're just not gonna ship at all. Either way, it's gonna be either more expensive or it's gonna be massively delayed, which is also why one of the advice I have for our customers is don't wait.

One of the one of the natural, instincts that people are having right now is I'm gonna wait and see what happens. And I totally get [00:08:40] it. I have a chronograph of all of the tariff change from March 4th to May 2nd, and it is mind-boggling of how many changes has been happening in such a short period of time.

And on top of that flip flopping is just making things very uncertain. When this happened naturally. As an eCommerce, you're [00:09:00] like I'm gonna wait and see where it all shakes out. That's a very risky. Proposition, I believe that people are underestimating because by the time it all shakes out, it is very likely that by the time you make your manufacturing ordering, by the time you get it received, not only will there still be tariff, but on top of that, it might be too late for you to be [00:09:20] able to turn over your inventory and you might go under.

I would make the best of a bad situation and actually pulls the trigger. Now while. What, doing what I said about the cost on passing it on to your customer, to your manufacturer and eating a little bit into your margin. And actually try to, when everybody's retracting, [00:09:40] be the customer visa, be's there for your customer and actually offer services when everybody's retracting.

There will be winners in that category, and I would, it will be the people who actually pull the trigger, not the people who wait and see. Let's take a moment to thank HRES for the free web analytics tool, a free privacy first analytics [00:10:00] platform. It gives you a clear picture of your website activity, doesn't use cookies, and won't weight down your pages.

It's incredible, fast, easy to set up, and built by the same team behind one of the most trusted SEO tools in the world. Best of all, it's completely free and included in HRES Webmaster Tools. Plan, head over to hres.com/awt to sign up. You [00:10:20] will find the link also in the show notes. Yeah, if everyone zigs, then you're like, oh, what's the saying?

And I think that makes perfect sense. And with every change, and a lot of brands and entrepreneurs out there are used to changes as they come and go and they just adopt. And that makes you successful. Now I want to dive a little bit in what you guys do. What are the lever, the [00:10:40] triggers that you really need to keep an eye on to keep your business afloat now?

Yeah, clearco specialize in financing, inventory and and marketing. We offer those services with Mercer Cash Advance offering four to four, five, and six months increment. But it's capped so you never, if your company grows very fast, you never pay us back [00:11:00] faster. So it's really easy to have working cap to to manage your working capital.

However, we don't underwrite every person. We look at what is their margin? We look at how much cash they have left. We look at what is their revenue trends. We've adapted our underwriting policies [00:11:20] based on tariff as well, meaning Hey, how much are you gonna be impacted? But also we take in account that it is likely that your revenue has been down because of tariff as well.

So all of this gets in gets taken into account and. You know, financing your inventory and your marketing, again, when everybody's retracting, is a good way to extend your [00:11:40] cash flow, give you some breezing room, and being able to keep on operating even at a lower margin and being able to kind of like weathers a storm, if you will.

No, I like that. And you do this on different levels, so it's not only products, it's also marketing. I understand. Talk me through it. How does it work? Yeah, abso, absolutely. So our product is [00:12:00] really meant to be financing high return on investment features, meaning. If you are doing an invent, if you're having an inventory purchase and you purchase it for a hundred thousand dollars and then you sell it for $300,000, you'd have a 200,000 margin, a $200,000 margin.

However, you might not have the initial a hundred thousand to [00:12:20] be able to make that purchase. This is where we come in, we make that, we make that purchase on your behalf, and then you pay us a fee. The fee can go from four and a half percent all the way to 20%. Let's say it's an average of 10. And in the example I was giving instead of doing.

200 k of margin, it's 190 k of margin. But it works really if you have good [00:12:40] transparency on your return on investment, if you understand well, your inventory turnover. And it's the same thing in marketing. If you know that your marketing returns are anywhere between two to three, it's a no-brainer. You should take as much capital as you can keep on rolling it.

And when it gets to, economically, it would say if you, as long as you make a 1.1 return on one, [00:13:00] you should keep on doing it. Those are small margin. I would probably recommend go a little bit more like 1.5, but this is really how people are able to extend their cashflow because the reality is the biggest the most expensive, form of capital is equity. So if you end up having to go and raise equity to pay for your inventory or for your [00:13:20] marketing this end up being crazy expensive, but clearly, 'cause you have numerous inflection, let's say you have an inventory turnover of four times a year. So you'll have four times like massive inflection on your ca, on your cash reserves that if you take from equity, you're gonna have to raise every time you're gonna end up with a company where you don't own anything.

No, [00:13:40] totally. And a lot of brands out there, specifically D two C companies are pretty much cashflow driven. So for them, and with a lot of them, depending on the product, with very small profit margins. So it's a critical time for them to optimize. And I understand you not only provide the money, the capital to help them, but you also manage it.

Is that right? So what we do [00:14:00] is we. We do the underwriting not only on the original business, but also on the type of purchases. So this is why we'll go and look at the company, look at the company's financials, and make sure that we never over overburden, burdening them, creates issue for [00:14:20] absolutely everyone, for the customer, for us for the vendor.

There everyone. While we do not ma manage the financial of the customer, we are very keen on having a very good transparency on it. What we. Do, do, that's a kind of a weird sentence, but what we do do to help we partner with a number of other [00:14:40] companies in order to help them on whatever they need.

Where we don't specialize, for example we have a lot of fractional CFOs with whom we work with, that we're always very happy to recommend if people need help. It's not uncommon that people have it like. Great companies, but they, and they, and it grew really fast, but now they have to professionalize their financial department because it's never the first [00:15:00] department you build.

Very often you start by Hey, I have an idea. I have a product. I put on some marketing, and then I have to do logistics. Now it's working. I need a financial department. But we also help them with finding manufacturers. For example, we have a partnership with with a company called Vela, where they help people find new manufacturer, which is quite [00:15:20] relevant at this time.

And so we try to bring added value partners to our to our ecosystem as well. But our core focus is the financial health of our customer and offering financing a solution. To be able to to operate with solid cash flow. No, that makes perfect sense. And I think it's added value that you can connect them to experts that help them getting to the [00:15:40] next level and to optimize their business.

So who's your perfect customer? Our perfect customer is gonna be a D two C that does about a million dollars in revenue. The reality is that we help people who does from 10 K to 60 is to to, to $10 million of of revenue per month and beyond quite frankly. But our ICP is [00:16:00] really D two C doing $1 million per month if you're in fashion, if you're in apparel, if you're in wellness, those are really.

Our core strengths. We really have been working with a lot of brands that segment and if you on top of that, have. Clean books where, you know your balance sheet balances that you have a good p and l every, everything [00:16:20] is ready to go. We can underwrite in 24 hours, get everything connected in 24 hours.

You know exactly how much you're gonna you're gonna be able to draw and how much you're gonna be able to to fin to, to finance. And if you don't, it's okay. We have partners, we work we have partners to, to help out with that. Okay. Can you share some success stories or case studies of business that businesses that you [00:16:40] have worked with?

Yeah, abso absolutely. We have some really cool company near and dear to my heart, called La Rue. LA Rue is a fashion company. From a Brazilian from a Brazilian couple who has have their manufacturing actually also in Brazil. And funnily [00:17:00] enough, in my career, I've actually built a.

A fashion company in Brazil where we had factories that are actually very near to where they currently have their factories. And met the the founder called Ricardo. Great person, great success story where they're just growing like like crazy, bringing Brazilian fashion to the us. I think it's a good [00:17:20] concept that you have is helping people who are brands who are in a crisis, but overall in growth.

If they're doing well, they can even do better with having a partner like yours on the side. Now, you touched a little bit on the pricing structure. Can you give me a little bit more details on how that works? Yeah, absolutely. To give you a little bit of backstage idea of how it works is really [00:17:40] we. Any financial aid organization is gonna have a risk-based pricing.

So we're gonna be looking at what are the revenue trends? What are your cashflow trends? What are your debt to service ratios on and so forth, and understand. How much capital can we provide without the risk of not getting paid back or overburdening as a [00:18:00] company and putting it into trouble.

And then we also have to understand what are the other ca financial solution they have. They might have credit cards, they might have a SBA loan and on so forth. And so is less risky. The more mature, the cheaper the capital, the more risky, the less mature, the less [00:18:20] visibility we have it's more expensive.

It's just simply more expensive. And a very simple way to think about it is I talk about financials earlier. And imagine that you're a customer and you come in and you have your balance sheet as already your fin, your financial as the ready. You have, your last six banks bank statement, and your [00:18:40] revenue is a million dollar a month.

And then there is another company who's doing 1.5 million enough, but they have none of their financials. First, not only do they signal that the first company. Really have a very good handle on, on their financials, and therefore they're gonna be very mindful about how they handle their cash and they're not gonna run trouble.

Whereas the other one is [00:19:00] growing very fast and doesn't really have the time to look at cash flow. That could spell trouble. And therefore, even though it's a bigger company, they might actually have a more expensive price than the first one where we have full transparency and a lot of certainty over what, how much it can handle and not handle.

No, I totally can [00:19:20] understand that. I wouldn't invest into someone who's flying blind. So I think financial reports are quite important before our coffee breaks. Yeah. But to be fair, it is very hard to be a founder. It is very hard to have your company growing and you don't want to stop growing and then having to go and organize your books, but you didn't really build a [00:19:40] database to pull the books easily, so you now have to go and rebuild some of the database.

It's just very it's very often people know what's important, but they often prioritize what's urgent and. That's just the life of a, of an entrepreneur. So it's never really about our customer not wanting to, it's about, prioritization. Like always. [00:20:00] Yeah. I think a lot of listeners can relate to that and I have been there, so it's ex exciting as it is to be a founder.

There's so many moving things on your plate that is difficult to prioritize there. Olivier, before our coffee break comes to end today, is there anything you wanna share with our listeners that we haven't covered yet? Yeah, which is I think [00:20:20] two things. First, this time will pass, like the tariff challenges happened before in history.

It never really ended well for anyone. But but eventually you find an equilibrium that the market will correct itself. See, other thing is don't wait for this. People die [00:20:40] waiting. It just doesn't really work. Work within the environment that you're in, pull the trigger. Be the aggressive entrepreneur that you that brought you success.

The wait and see approach in a market where people are taught on cash cashflow, stopping the cashflow entirely will have more negative impact than anything [00:21:00] else. So be mindfully aggressive to move forward. Mindfully aggressive. I like that word. That sounds really good. But can people go and find out more about you guys?

Absolutely. They can find us on Clear Co. And completely selfer. But the reality is like we have an entire sales team that's also delighted to talk to anybody who's anybody who wants to talk to us. [00:21:20] Absolutely. I have your handled and I will put them in the show notes. As always, you will be just one click away.

Olivie, thanks so much for giving us an overview about this situation right now with Terrace and the positive outlook that you need to have as an entrepreneur to move forward. And I think with every sort of crisis, there's a little bit of light at the end of a tunnel that. Can make you more successful.

Thanks so much for your time today. [00:21:40] My pleasure. Thanks again to hres and hres Web Analytics for supporting the show. If you're looking for a clean, fast, and privacy focused analytics tool, try it for free at hres.com/awt. That's a hrs.com/a wt. You will also find the link in the show [00:22:00] notes.

Hey, Claus here. Thank you for joining me on another episode of the e-Commerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It'll also make it easier for others to discover the podcast.

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