Month: May 2022
How to Optimize Fulfillment Efforts Across Retail and Online
This is a guest post from Alex Senn. Alex is the CEO of SKUSavvy, a mobile warehouse and fulfillment management platform for modern brands to maintain inventory, streamline fulfillment, and continually push the envelope of what a small to medium-sized brand can do within their fulfillment centers.
For most merchants, it’s easy to operate in one channel and achieve success. The challenge comes when you attempt to optimize your fulfillment efforts through your retail store, online store, and any other channels and marketplaces you maintain. This is a complex task, and finding the right solutions to address the challenges involved requires diligent research.
According to Multi-Channel Merchant, up to 91% of merchants follow an omnichannel approach in their retail business. This means a majority sell on multiple channels. Since so many merchants in the retail category are relatively new to selling across retail and online channels, it’s no surprise optimizing for those channels has them scratching their heads.
In this post, we’ll look at a few ways store owners can take advantage of their physical space to get more out of fulfilling orders from multiple channels. Since around 2010, we’ve seen a steady rise in “buy online, pick up in store” offerings, fulfillment from stores, and online order fulfillment infrastructures used to supplement store stock. These concepts are more complicated than they seem though.
Running multiple channels, but want someone else to optimize the fulfillment? Go with MyFBAPrep for nationwide 2-day fulfillment.
Fulfillment methods you can adopt
With consumer preferences shifting toward having more options, we’ve listed some fulfillment methods you should consider providing your customers. Each one is appropriate for different situations and brings varying advantages. If you don’t offer one or more of these services, consider introducing them with the right software, such as SKUSavvy.
Traditional fulfillment center
At the heart of an online-focused eCommerce business is its fulfillment center. Most eCommerce fulfillment centers have a layout that uses a storage area with pallet racking, a pick area with shelves accessible to pickers, fulfillment stations that package orders and attach shipping labels with the correct items inside, and inbound/outbound areas for product and order staging.
Given this traditional layout, it is clear to see why you would want to optimize your fulfillment center first. It’s also possible your retail store will send stock to your fulfillment center for getting those orders out, as the setup makes it far easier to do this than out of a back-room in the store.
This happens in cases that the fulfillment center doesn’t have stock but your storefront does and rather than splitting the fulfillment in two, a brand will opt to cross-dock inventory to their fulfillment center so the order can go out as a complete shipment.
It can get expensive to maintain a large warehouse for in-house fulfillment, so it’s understandable why many large-format retailers are converting a portion of their store into what has become known as a micro-fulfillment center.
In this fulfillment strategy, you operate a traditional retail store and also have the ability to route orders from online channels to this location for fulfillment. The store has a similar, though smaller warehouse layout, but your processes will still be more efficient than if you went into the store to pick orders. It’s a popular method to optimize your fulfillment efforts across retail and online due to the speed of shipment and the reduced costs.
Utilize this method when you have your fulfillment warehouse centrally located across the country and your retail store located in a dense urban area. The fulfillment center will cover the majority of your orders while the retail store will handle online orders who choose to pick up at the store, or if you are going to offer your own local delivery from the store, or to route the orders within a certain radius from the store to lower shipping costs.
Buy online, pick up in store (BOPIS)
In this fulfillment method, a consumer makes an order through your online store and selects a retail location within driving distance (set according to your availability) to pick it up.
You receive the order at the store location, and the store will pick and pack the order, then alert the customer that it’s available for pickup.
This has become a popular method for fulfillment for the convenience it offers customers. That said, it is complex and requires an advanced eCommerce system to set it up. In addition, if your store maintains a healthy volume of orders, it can add extra work to get them ready for fulfillment.
Another relatively new concept in retail is local delivery. This has become popular thanks to the software systems Shopify and other order routing companies offer, so it’s feasible to pursue this method without relying on UPS or FedEx. However, it’s more complex than BOPIS or regular fulfillment because there are more elements that need to come together to make it happen.
For perishable goods or an active market within the local region, this can be a great way to connect directly with customers and cut down on shipping costs (assuming you can cover the costs of a truck and a delivery driver).
Start with a robust warehouse management solution (WMS), which will save you countless hours in fulfillment. You’ll need to differentiate local delivery orders, pickup orders, and order shipments.
Then, you’ll need to pick and pack according to the delivery route, so your picking should be based on zip code or city, then picked so the last order is loaded first, and you need to establish a way to prove delivery.
All of these add complexity. Fortunately, there are ways to optimize the fulfillment process even with local delivery routes as part of your retail options or fulfillment center offering.
An increasingly popular method of fulfilling orders is to use a third-party logistics (3PL) provider. In this method, you send products to a fulfillment center to store the goods, accept orders, pick and pack, and ship those orders. As a helpful tip, make sure your partnered service offers an app that connects with your channels so that orders you don’t plan to fulfill yourself are routed to your 3PL.
If you’re considering a 3PL but don’t know where to start, we have tons of resources in this blog. You can also reach out to 3PL experts to receive a quote and work together to come up with the right program according to your products, packaging, and shipping schedule.
Optimize fulfillment for simplicity
In this section we’ll go through a few ways you can optimize your fulfillment for simplicity while selling across retail and online channels.
Doing the simplification across retail and your fulfillment warehouse can be thought of as the physical part such as warehouse layout, store fulfillment shelving, fulfillment station optimization, and the software/metrics side of things. The software side might involve slightly different order routing rules, switching the most important metric to optimize for, and utilizing other systems to accomplish specific tasks easier.
Although it sounds challenging, adjusting your warehouse layout, or creating that micro-fulfillment center in the back of your store can go a long way toward optimizing your fulfillment.
Typically, you’ll get the most bang for your buck by centralizing operations at the fulfillment center. Here a business will use its fulfillment center to handle almost all order fulfillment and leverage its retail stores as the face of its brand. Here are a few ways to centralize operations:
1. Batch similar tasks
Batching improves efficiency by putting similar tasks together to avoid switching costs associated with different tasks. You can batch tasks such as checking in products, putting items away, order picking, and fulfillment.
2. Data access
You can save a lot of time by having one system manage data for multiple business aspects to limit movement across systems.
For instance, if you are using a WMS such as SKUSavvy it should hold all information related to inventory and warehouse operations as opposed to relying on say Quickbooks for some product location information and SKUSavvy for other product location information. Keeping data centralized, even if you have multiple pools of data will help streamline employee operations and provide structure for which data should be accessed and changed within that system.
3. Employee roles
Similar to batching tasks, make sure individual employees focus on one task within one area of the warehouse. One of the biggest enemies of warehouse productivity is employees having to walk around large sections of the warehouse in search of items to pack. So, centralize tasks in a specific area to gain large efficiencies.
For instance, in a small warehouse, you should have one employee focused solely on product replenishment whose only job is to make sure the pick bins are always filled with product. Another employee should only be focused on picking, and a third group will only be focused on put-away instead of having these three groups go back and forth between these tasks.
The layout of your warehouse is important to optimize your fulfillment efforts across retail and online channels. Thankfully, there are entire organizations dedicated to warehouse setup and optimization. At MyFBAPrep, we’ve already done the work of setting up an optimized warehouse network. If you run your own warehouse, however, here are some tips we use to ensure smooth operations.
1. Use appropriate racking & shelf units
Many companies skimp on proper racking, which ends up causing problems. If you invest in quality racks and shelving, you won’t have to take inventory off shelves, move shelves, then move inventory back onto shelves. Here are some general tips about storage units:
- You should have enough storage rack to hold a minimum of a full lead time’s worth of your best-selling items. So, by the time an order placed with a vendor arrives, your holding stock should be almost zero. This is more important for your top 20% of items by sales volume and less important for B- or C-grade items that only make up 5%–10% or less of your sales.
- Design a layout that leverages the space and encourages simplicity of movement. For example, you might have your holding stock racks closest to the inbound area so items can be checked in quickly and allocated to racks. You should have your top 20% products as close to the pick racks as possible so it takes less time to replenish the pick stock bins.
- The flying V warehouse layout generally works best for a space, as it offers clear visibility of each aisle from one central point.
- Set up replenishment from bin to bin so that, as you pick through the oldest stock in the easiest accessible locations, you’ll automatically be alerted to bring over holding stock to a certain pick bin so that picking flows remain uninterrupted.
- If you have a product that can flow on racks as a single unit, invest in flow tracks that sit next to the fulfillment stations. This works well for low-SKU-count businesses and those with small products.
2. Use larger labels, QR codes, and bright signage
This is a simple, but important recommendation. If you have bins with tiny labels, products that lack barcodes or rows, and aisles with illegible numbers to identify them, you need to make a change to eliminate mistakes.
Make it easy to scan the bin label with large bin barcodes. If one is scraped off, alert your team immediately to fix it so the warehouse remains clean and efficient.
Bright, big signs within aisles will help new and current employees by clearly displaying where to go.
MyFBAPrep uses the latest in barcoding and sign recognition through our WMS to optimize warehouse operations. When using a WMS like SKUSavvy, you receive a mapped layout within the system to facilitate location navigation and printing of signage.
3. Keep fulfillment stations simple and concentrated
Your packers should have everything they need within easy reach. Try to limit the box sizes you package with. This makes it easier to select the correct box, and reduces the number of packaging materials you have to stock.
Printers, tape, barcode scanners, and other necessary tools should be in close proximity to the fulfillment stations. A good WMS will provide box size suggestions and shipping options to determine the correct size for your business.
Route orders efficiently based on location
If you operate across both a retail and a warehouse environment (or multiple), you need to be able to route orders efficiently to their respective fulfillment locations.
Buy online, pick up in store orders should be sent to the closest location with a pick ticket and packaging so it can be assembled and wait at the correct location.
You can allocate orders within Shopify or on the WMS side of it to see where the order is expected to be fulfilled.
When you optimize your fulfillment effort across retail and online, you’ll likely run into scenarios where the product is available in only one channel or location, or one location has part but not all of the order in stock.
These issues extend to fulfillment as well: For example, “buy online, pick up in store” may be offered for a product at a certain location, but not others. This requires strategic order routing to prevent bottlenecks and ensure prompt delivery to customers. Routing orders according to location avoids incorrect deliveries and negative reviews from buyers — both of which incur heavy costs to your business.
Some ways we’ve seen orders routed include:
- Scenario 1
- Online order + shipping = fulfillment center order routing
- Scenario 2
- Online order + shipping and missing a product at the fulfillment location
- For large items 16 and over inches, hold until the rest of the inventory is in stock
- For small items, two shipments
- Cross-dock from another fulfillment center overnight
- Online order + shipping and missing a product at the fulfillment location
- Scenario 3
- BOPIS order missing product at the fulfillment location
- If the second location (FC) with a missing product is not within the set radius, it’s not allowed on the storefront
- BOPIS order missing product at the fulfillment location
- Scenario 4
- Online order for five units, with three available in one place and two in another
- Under 16 inches, the order is split and fulfilled from two different locations, depleting the respective inventory amounts at each location
- Online order for five units, with three available in one place and two in another
Wrapping up – Optimize your fulfillment efforts for retail and online sales
With the right strategy and some elbow grease, you can optimize your fulfillment efforts across retail and online sales channels. The methods we’ve discussed combined with helpful software and tooling will lessen the challenge.
The more you invest in learning how to operate and streamline these channels, the easier it will be to keep up with the industry standard, stay competitive, and increase profitability. Take the simple steps so you and your team can optimize the fulfillment process across different channels and fulfillment methods, leading to lower costs, satisfied customers, and overall more revenue.
SKUSavvy connects with your order channels and other software systems to keep track of each bin location, product barcode, and shipping setting, as well as to facilitate your pick-pack-ship process to maintain efficient pick routes, and order batching and routing, as well as replenishment. Start with your first 50 orders free, then pay just $0.10–$0.19 per order. Add unlimited employees, channels, warehouses, products, and customers with a faster time to implement than other systems and a lower cost of ownership.
Popular Manufacturing Hubs in China
This is a guest post from Leeline sourcing. Leeline Sourcing is a sourcing partner that can help eCommerce merchants tap into valuable Chinese markets and suppliers with faster, more effective results.
After joining the World Trade Organization (WTO), China became the world’s largest manufacturer. It’s not wrong to call China the “world’s factory.”
China remains one of the best locations for manufacturing eCommerce goods thanks to favorable local policies, abundant labor resources, and a number of other factors that favor the manufacturing industries.
The value-added industrial output in China has ongoingly increased. In fact, 28.7% of the world’s manufacturing output has taken place in China. Many international companies tap the Chinese workforce to produce their products, including Apple, Volkswagen, Bright Food, Tesla, Baosteel Group, Fosun Group, Yotex Apparel, and General Motors.
In this article, we will discuss popular manufacturing hubs in China and which area they specialize in.
Top 8 manufacturing hubs in China
Let’s talk about the 8 main manufacturing hubs across China;
Shanghai is China’s most critical economic center-point area. It has become the busiest port in the world, with more than 2,000 container ships leave the port each month, delivering cars, electronics, and clothes to the world.
This hub plays a crucial role in China’s industry, especially in the automotive market. Shanghai is home to the country’s biggest companies, Volkswagen and General Motors, all located their plants here.
Shanghai is also the headquarters for multinational corporations’ China operations: Apple, L’Oreal, Samsung Electronics, P&G, L’Oreal, LVMH, Nike, Panasonic, Philips, Johnson & Johnson, and General Electric. In Shanghai, you can see a famous brand factory of any major in every blink.
Since the 1980s, Shenzhen has developed into one of China’s main hubs of the electronics market. It ranks as the second busiest port, right after Shanghai.
The world’s most popular brands, LG, Huawei, and ZTE, utilize their manufacturing in Shenzhen. At the same time, giants like Walmart have a headquarters and global procurement center here.
Here you can also find telecommunications and computer plants. And if you have ever heard of Shenzhen, you might know the term “China’s Silicon Valley” for this area.
3. Hong Kong
Besides its popularity for tourism, Hong Kong is a significant manufacturing and financial hub in the country.
There’s no doubt Hong Kong, the city that never sleeps, still retains its “throne” in China’s economic growth till these days.
Hong Kong is well known for textile and clothing production and electronics such as medical equipment and other innovative technology.
South of Shanghai, Ningbo has enjoyed rapid growth thanks to its location. Its unique location allows you to move easily between busy ports. It’s now remembered as one of China’s national logistic hubs. As a result, Ningbo Port is one of the busiest ports in the world and certainly the most crowded.
The Ningbo region furthermore specializes in producing a variety of chemicals, electrical machinery, telecom equipment production, and IT devices.
This city also has many manufacturers producing stationary and domestic electronic items.
Qingdao lies around the eastern Shandong Province, near the Yellow sea coast, making it one of China’s most important harbor cities. The manufacturers in Qingdao mainly focus on producing electronic appliances, garments and textile machinery.
Qingdao is also one of China’s major economic engines with diverse manufacturing in biopharmaceuticals, fine chemicals, petrochemicals, automobiles, building materials, and metallurgy.
Guangzhou in Southern China, or the ‘Canton City,’ hosts the most significant international trade fair each year. Although there’s no direct sea entrance, Guangzhou has still become a central national economic hub thanks to its crucial location. This capital city owns one of China’s large ports and offers a direct route to Taiwan, conveniently accessible to various significant highways or railways.
Guangzhou is a place to consider if your business involves auto parts, mobile accessories, toys, petrochemical, electronics, or apparel. Leading automotive brands like Honda, Nissan, Sony, Panasonic, and Toyota have manufacturing plants in Guangzhou.
Moving to the East, Hangzhou is emerging as a competitive manufacturing hub in the country. It hosts many exhibitions, including the World Leisure Expo every year.
Hangzhou is home to Alibaba, the biggest eCommerce giant in China. Many textile industries are well-established here.
Tianjin, a city in Northern China, is one of the booming industrial cities where the mechanical and textile industries are flourishing. It is also leading in aerospace & aviation and alternative energy products
Benefits of manufacturing in China
1. Lower cost of living = lower wages
The wages in China remain low compared to Western standards thanks to a lower cost of living, along with a greater supply of workers than demand.
Major industrial cities have a giant workforce that encompasses many roles and talents. As a result, the vast labor pool in China helps to produce in bulk and can adapt to sudden rises in the schedule.
2. A growing business ecosystem
In the last 30 years, the business ecosystem in China has grown enormously. To see the evidence of this, take a look at Shenzhen, which has developed as a hub for the electronics industry.
The region has nurtured an ecosystem to support the manufacturing supply chain, including component manufacturers, low-cost workers, a technical workforce, assembly suppliers, and customers.
For example, Foxconn Technology Group takes advantage of that by having multiple suppliers and manufacturers of components at nearby locations. This Taiwan-based manufacturer of electronics successfully keeps costs low and margins high.
3. Access to materials
The geographically large country of China is rich in not just talent, but also resources. Thanks to a wealth of land, it becomes easier to acquire raw materials that may require more space – for example, growing the plants needed to create textiles. This provides an advantage in sourcing and helps to ensure supply.
4. Taxes and duties
In 1985, the China government enacted the export tax reduction policy, totally banning the double taxation on exported goods. Exported goods enjoyed a VAT exemption or a good rebate. This low export rate is a great way to make China stand out among competitors.
Another deal, consumer products don’t need to account for the import taxes. This policy was born to attract investors and companies looking to produce low-cost goods. And it also helps to keep the cost of production low.
China artificially pushed the value of its yuan to provide an edge for its exports against competitors.
In 2019, China’s central bank lowered the yuan to 7.0205 per dollar, the weakest level since 2008. The weaker yuan makes Chinese exports look more attractive.
Common FAQs about manufacturing in China
Below we’ll discuss some of the most common questions we get about manufacturing in China.
How is China coping financially after the pandemic?
The COVID-19 pandemic hit triggered another massive global supply chain shake-up, beginning with China’s shutdown. The pandemic also created shock waves across many multinational companies. They discovered how much they depended on Chinese manufacturing, from raw materials to production facilities and supply chain. They spend all their effort prompting many to start looking for alternative locations.
Stay or go is the biggest question. And it isn’t easy to answer. Business leaders will need to evaluate the supply chain and the company’s financial standing and ability to invest. Ensure that a robust supply chain strategy is in place given the significant investment and against the risk involved. The timing on whether to be the first mover or to adopt a wait-and-see approach will also play a crucial role in business leaders’ decisions.
Will China still be the place to be a decade from now? And if not, what’s next?
With the amount of resources and infrastructure set up, equipping China to be the manufacturing hub of the world, it makes logical sense that the country will continue to maintain a strong position within global markets.
However, be sure to research your specific product and manufacturing needs to determine the best course for your unique business.
What does China mainly produce?
China is always ahead in the manufacturing of various products. Mining and ore mining is one of the major industries of China. Iron, steel, aluminum, concrete, toys, hardware, rail vehicles, and boats are also China manufacturing’s strengths.
Which industries are booming in China?
The top three sectors driving growth for China include the services industry, manufacturing, and technology.
Software and internet services are the “young but gold” today. Statistics show there were 147,781 software development businesses in China as of January 2022. As COVID-19 continues, software and internet demands are getting bigger and bigger.
What is the most industrial region in China?
Hong Kong, Shanghai, and Beijing place in the first three ranks of the most industrial hubs in the ranking.
The Bottom Line
Among the global trade wars, China has a strengthening position as the world’s leading manufacturing hub. Thanks to low production costs, access to materials, large labor and talent pools, and a growing business ecosystem, China will remain a go-to for manufacturing across the world.
Acknowledge the potential manufacturers in China but haven’t known where to start yet? Leeline sourcing can help you pay minimum time and money. From years of experience, our professionals know where is best for manufacturing your product in China. Contact us.
Dropshipping 101: How to Start a Dropshipping Business
Projected to reach a market size of $557.9 billion by 2025, dropshipping is an eCommerce strategy taking the world by storm…and it isn’t slowing down anytime soon. Whether you actively run an eCommerce business or you’re just looking to get started, you may benefit from jumping on the dropshipping bandwagon.
Starting a dropshipping business is simple enough, but succeeding with this tactic requires careful consideration and planning.
In this dropshipping 101 introduction, we’ll uncover the key components of starting a dropshipping business to help you set yours up for success.
What is dropshipping?
Dropshipping is an eCommerce fulfillment strategy that lets retailers sell products without the need to manage, store, or ship inventory.
When you sell products via dropshipping, you’ll never need to hold any physical stock of the products you sell. Instead, your supplier will ship products directly to your customers for you.
The dropshipping process has five fundamental steps:
- Your customer places an order through your online store
- Your store processes the order and automatically sends it to your dropshipping supplier
- Your dropshipping supplier prepares the order
- Your dropshipping supplier ships the order directly to your customer
- Your customer receives their order
This hands-off style of fulfillment means it only works for eCommerce businesses, not traditional brick-and-mortar stores.
Dropshipping is often seen as a get-rich-quick scheme. Yet, just like any other business model, it requires significant dedication and hard work to build a successful dropshipping store. In fact, dropshippers from around the world estimate less than 20% of dropshipping businesses succeed.
Familiarizing yourself with the benefits and risks of dropshipping will help your store thrive and prosper.
Benefits of dropshipping
Many retailers are understandably tempted to adopt a dropshipping platform. The idea of being able to sell products online without ever having to hold any stock is extremely appealing.
Let’s look more specifically at the key benefits of dropshipping.
1) Lower startup costs
One of the main advantages of dropshipping is its low startup costs compared to running a traditional eCommerce business.
When starting an eCommerce store, retailers typically need to save for and purchase inventory based on how many units they expect to sell. They then need to find a way to store this inventory, which often means renting storage space. Buy too much stock when you first launch your store and you may end up operating at a loss as you try to sell off the surplus.
Dropshippers don’t need to worry about renting storage space or paying for inventory up front — two major costs that can impede new retailers. Because you only need to pay for inventory as you sell it, you can forgo the costs of holding excess stock.
The lower startup costs of dropshipping make it far easier to get your business off the ground.
2) Scalable and flexible
A dropshipping business can allow you to scale or adapt your business more easily.
As a dropshipper, you aren’t tied to one physical location. You can sell from and to anywhere in the whole world if you want — as long as your supplier ships there. If your supplier doesn’t ship to a certain place, you can source local dropshipping suppliers in other countries to expand the global reach of your online store.
As your business grows, you can continue to feed orders to your network of suppliers, rather than having to expand your team or premises.
The scalability of dropshipping can also help you ride the waves of fluctuating sale periods, such as the winter holiday season, when online orders may drastically outweigh your average monthly sales.
As well as being scalable, dropshipping serves as a flexible eCommerce fulfillment strategy. Since you don’t hold stock, it’s easier to pivot your business and explore new niches. You can easily adapt your product offerings to keep up with changing market preferences.
3) No need to hold stock
Not having to hold stock is a top dropshipping benefit. As a dropshipper, your supplier handles every aspect of inventory management from storage to shipping.
Because your supplier manages the inventory, you’re free to focus on marketing your store and developing new product lines. You can double-down on expanding your store without ever having to touch any physical stock until you’re ready to expand beyond the capabilities of dropshipping.
The removal of inventory management also makes it easier for you to expand your product offerings through dropshipping. You can trial new product lines and increase the number of offerings without having to consider storage options. Not having to hold stock opens up new windows of opportunity for your dropshipping business.
Risks of dropshipping
We’re sure most eCommerce owners’ eyes light up at the idea of not having to manage their stock, hold inventory, or process customer orders. However, running a dropshipping business isn’t without its risks.
Before you start a dropshipping business, make sure you’re aware of the following potential risks and how to navigate these.
1) No control over quality
With a dropshipping business, you have no control over the quality of your products or customer orders. As a result, dropshippers need to have complete trust in their suppliers.
Although you are responsible for any issues, you’re unable to oversee the quality of goods received. You also won’t know if your supplier is adding self-promotional inserts into customer orders in an attempt to get buyers to shop with them directly next time. Products could be damaged during the packing process, or they may not look as described online.
You need to be certain your customers receive high-quality goods. One way is to ensure this is by ordering product samples from your supplier. You could also work with a trusted third-party fulfillment center that will inspect the items before they’re sent to the buyer.
2) Unpredictable shipping times
Unpredictable shipping times are one of the toughest challenges dropshippers will face. Although not having to hold or manage stock saves on startup costs, those savings can be eaten up if supply chain issues arise.
As a dropshipper, you rely on your suppliers and manufacturers. You could process a customer order only to find out some items are out of stock and have been put on back order for months. These product availability issues impact delivery estimates, delaying the time for customers to receive their orders. The only other alternative is to cancel your orders and lose revenue. In both instances, your brand reputation takes a hit.
If you sell products through a marketplace, such as Amazon, uncertain shipping times can also impact your seller performance. If your seller performance starts to slip, you may face fines or penalties for failing to meet customer satisfaction requirements.
To navigate unpredictable shipping times, you can work with local fulfillment centers near your supplier to reduce lead times. Alternatively, you could build a network of suppliers that offer the same product lines to ensure you always have a backup supplier on hand for times when your original is experiencing back-order issues.
Communication is key for every business, and yet, miscommunication is a common occurrence in the dropshipping industry.
The beauty of dropshipping is that it presents a hands-off opportunity to build an eCommerce business. However, “hands-off” doesn’t mean you can be 100% removed from the logistics of your business.
Miscommunication between yourself and your supplier can easily lead to customer order errors. If you fail to provide suppliers with the correct order information, they may send customers the wrong items, or may not send their order at all. Similarly, supplier miscommunication could also result in you completely missing logistical issues that arise.
Your customer service team will need to maintain close contact with your supplier to make sure everything operates as expected. By doing this, your team proactively navigates any potential issues, which protects the integrity of your brand while minimizing customer complaints. A clear line of communication with your dropshipping partner will cause fewer headaches for your customer service team.
Working with a third-party logistics (3PL) and fulfillment provider can help you maintain customer satisfaction by tackling any potential logistics issues early on.
Top dropshipping strategies
Dropshipping is a great way to start out and test market fit with a minimum viable product. You can use dropshipping to establish your brand direction and see where the opportunities lie for further brand development.
Eventually, however, you need to go beyond basic dropshipping strategies if you want to scale your business.
As your business grows, you’ll want to have more control over your supply chain so you can control logistics and quality. You should also look to work with more than one manufacturer and have inventory in multiple places to improve scalability and competitiveness.
By carefully crafting a robust eCommerce model, you’ll build the resilience of your business.
1) Master your marketing strategy
A dropshipping business allows you to devote more time to marketing. Mastering your marketing strategy is critical for increasing your store traffic and converting visitors into customers. You can use a mix of marketing channels to widen your reach and get your brand in front of more potential customers.
According to data from Statista, 40% of online shoppers use search engines to search for products online, 38% of people use Amazon, and 35% use other marketplaces.
So, if you want your online store to be seen by the right people, you need to improve your store’s visibility across search engines and on any marketplaces you sell through. You can achieve boost exposure by investing in search engine optimization (SEO) and paid advertising.
When mastering your marketing strategy, take advantage of the power of social media and email marketing. These channels are powerful avenues to build consumer relationships and keep customers coming back to your store.
2) Know what to automate and what to control
Automating aspects of your dropshipping business makes it easier to grow and scale. Many tools are available to automate certain elements of your dropshipping business.
You could automate marketing tasks with the help of social media scheduling tools, email marketing platforms, and retargeting software. Marketing automation has been shown to increase business productivity by 20%, which, in turn, boosts revenue, secures faster conversions, and shortens the sales cycle.
Managing product pricing can be an arduous task as a dropshipper; you’ll need to monitor competitor prices and set your own prices accordingly.
If you run your dropshipping business through a marketplace channel, you can employ product repricing tools that automatically monitor and adjust your product prices for you.
MyFBAPrep helps online retailers streamline their operations by acting as their sole point of contact. We can manage multiple fulfillment networks, consolidate invoicing across partners, and help simplify your overheads. We can also assist you in adding new brands to your Amazon portfolio so you can scale your business with ease.
While automation is a key driver of success as a dropshipper, it’s critical to understand what to automate and what to maintain control over. Some areas require less of your time and attention, while others will need much more.
3) Find your niche
When starting out with dropshipping, it’s best to begin with a general store. By selling a wide range of products that aren’t constrained to one category, you can test multiple niches and discover the right fit for you.
Taking a generalist approach to dropshipping allows you to see what products your customers are most willing to pay for, which niches you enjoy the most, and what categories you excel in. As a beginner, general stores are easier to manage. However, as your skills and experience progress, you’ll soon find more opportunities in niches.
After a while, however, you should narrow your focus and build a more specialist product collection. A niche store allows you to serve an underrepresented market and build strong connections with a particular group of consumers. A single-track focus also means you can tailor your marketing efforts toward one niche so it’s easier to establish your brand as a leader within your chosen category.
While there are many arguments for and against niching as a dropshipper, the overall consensus is that you should niche down as you gain experience.
4) Build a network of suppliers
Overreliance on a single supplier could spell trouble for your dropshipping business. Instead, strengthen the resiliency of your online store by building a network of trusted suppliers.
Rather than relying on one partner, you should maintain a network of suppliers and manufacturers you can source products through at a lower cost or higher quality. Having multiple suppliers will also act as a safety net if your main supplier ever faces difficulties and can’t fill your orders.
Ideally, your store should also have a network of local suppliers and manufacturers near the locations where your shoppers are based. While local partners can be more costly, it pays to keep them in your network to offer support during times when your usual supplier may be unable to fulfill orders to the required standard or capacity.
Focus on building strong relationships with your suppliers and you’ll be able to better protect your business against potential bottlenecks or unexpected issues.
5) Incorporate an omnichannel sales strategy
Dropshipping can be a great way to get your eCommerce business off the ground. But if you want your store to reach its full potential, you need to combine dropshipping with other channels to create an omnichannel sales strategy.
Your omnichannel sales strategy should span multiple shopping fronts, including eCommerce, brick-and-mortar retail locations, marketplaces, and wholesale sources. Also, you can marry dropshipping with physical stock by maintaining stock in multiple locations. When you hold multi-location inventory, use logistics software to manage order fulfillment and inventory across all your locations.
Extending your brand through dropshipping and physical stock, as well as through various sales channels, will allow you to reach more people and protect its security to ensure longevity.
Wrapping up — Final thoughts on beginning a dropshipping business
Dropshipping can be a lucrative entry route to starting an eCommerce business. It also presents an opportunity to test market fit with minimal up-front risk.
However, if you want to grow your business significantly, you’ll eventually need to expand beyond operating only through dropshipping.
Ultimately, dropshipping isn’t the only method to rely on in eCommerce. You need to have alternative sales channels and stock sources if you want to build an eCommerce business that stands the test of time.
How to Write Winback Email Campaigns
Every brand has lapsed customers — people who once bought from them, only to disappear off the face of the earth and never interact with the company again.
However, those inactive customers aren’t a lost cause.
While capturing new customers is an essential business practice, maintaining their loyalty is where the real value lies.
Winback campaigns help you reengage inactive or former customers. With the right messaging, you can reverse churn and bring customers back for good using email marketing.
What is a winback email campaign?
Winback email campaigns focus on reengaging inactive subscribers or customers.
Inactive subscribers or customers are people who previously engaged with your brand — such as purchased from your store, signed up for your email list, or interacted with your social media content — but haven’t been active for a certain span of time.
The time period to determine whether someone is “inactive” varies from brand to brand and industry to industry. An eCommerce brand that sells monthly subscription boxes will have a shorter inactivity time frame than one selling seasonal gifts, for example. This period of inactivity is known as customer churn.
Let’s talk about churn
Before we dive into the ins and outs of building a powerful winback campaign, let’s first talk about churn.
It’s natural to lose customers as a brand.
Customer churn, also known as churn rate or rate of attrition, is the rate at which people stop using a brand’s products or services during a particular time period.
You can calculate churn by dividing the number of customers lost during a specific time span by the number of customers you had at the start of that period.
Let’s say you had 500 customers at the start of a six-month time period, but only had 420 by the end of it. The churn rate would be 16%, meaning you lost 16% of your customers.
Why churn rate matters
Understanding your churn rates allows you to see how many customers your brand is losing. While there’s no golden rule for what makes a “good” churn rate, you want yours to be as close to 0% as possible.
Monitoring your churn rate will give you a good indication of the sales and acquisition targets you need to meet to maintain your customer base. Your churn rate can also offer insight into customer satisfaction; a high churn rate is a warning sign that your customers aren’t happy about something.
Minimizing churn can increase your profits as well. After all, customer retention is 5–25 times cheaper than acquiring new ones. Rather than investing all of your time and money into new customer acquisition, you can retain existing customers with a much lower overhead.
Focus on reverse churn
Rather than getting stuck on customer acquisition costs, we recommend you focus on reversing churn through customer lifetime value (LTV).
Customer LTV helps you understand how valuable each customer is throughout their entire relationship with your brand. It hones in on how much a customer spends with you over the duration of their interaction with your brand, rather than measuring this value on a purchase-by-purchase basis.
Keeping a close eye on your customer LTV lets you carefully balance customer acquisition costs with the potential LTV. This will help you avoid overspending on attracting new customers.
You can calculate customer LTV using a few methods. The most simple formula is to take your average revenue per user (ARP U) and multiply it by a customer’s average lifetime.
To illustrate this, an average annual revenue per user of $185 over a lifespan of three years would return a customer LTV of $555.
Concentrating on customer LTV will also help your brand reverse churn. When you prioritize customer LTV, you prioritize the customer experience and, naturally, boost retention.
Your winback email campaigns can be a powerful tactic to increase customer LTV and reverse churn.
5 Critical elements of an effective winback campaign
Anyone can write a winback email, but knowing how to structure a strong winback campaign is what will bring old customers back.
Here are five elements every successful winback email campaign should include.
1) Add some personality
A boring, formulaic email won’t convince someone to shop with you again. But an email oozing with personality just might.
Show you’re human by adding a touch of individuality to your winback emails. This could take the form of humor, being witty, or using lighthearted, colloquial language.
Being helpful, honest, and human is the foundation for writing winback emails that encourage people to return to your brand.
Google Maps isn’t afraid to show off some personality with their reengagement communication. Cute dog, short, snappy headline, conversational copy — Google Maps’ reengagement email ticks all the boxes for writing with personality.
2) Provide a tangible incentive
Simply telling people to come back is unlikely to persuade them. You need to give people a compelling reason to shop with you again.
You can do this by offering a too-good-to-miss exclusive discount code. However, incentives don’t always have to be money-off vouchers. Other options you could offer are:
- Bonus gift
- Free shipping
- Free upgrades
- Sweepstakes or prizes
- Increased reward points
Alternatively, you could use the incentive email as an opportunity to drum up FOMO (fear of missing out) by showing inactive buyers what they’re missing out on. This could be, for example, a recap of your store’s benefits and what they gain as a customer.
When adding an incentive to your email, focus on providing something your customers actually want. There’s no point offering a bonus tote bag if they’re uninterested in it. Your incentive needs to be good enough to encourage them to revisit your store and make a purchase.
Don’t forget to inject urgency into your incentive by including an end date with the offer. Someone is more likely to take action if they only have one week to spend an exclusive discount, compared to if they had one month to redeem it.
3) Personalize the email
You’re not a robot, so your emails shouldn’t sound like they’re written by one.
If someone has engaged with your brand in the past, use their customer data to tailor your winback email to their specific interests, behaviors, and needs. Was your customer a fan of your sneakers? Make sure your winback email features the latest styles they’re missing out on. Emailing a customer who previously bought some cosmetics? Drop them a winback email checking to see if they’re ready to repurchase.
Whatever you do, move away from boilerplate email templates and use real customer data to personalize your email content.
- Image source: Harry’s “Checking in” email via Really Good Emails
Harry’s personalizes their winback emails by including product details about the customer’s previous order. They take this one step further by swapping the fancy template for a plain-text email from a “real human” for a truly personal feel.
4) Don’t stop at one email
Some customers may need a little more convincing than others. So, don’t just send one email and hope everyone comes rushing back.
Brands with a strong winback strategy send their customers a series of well-thought-out communications. These emails are carefully designed to tap into various customer motivations and behaviors to nudge them gently towards reengaging.
Your winback email series should, at a minimum, contain an initial “we miss you” email followed by a reminder check-in, a clean-up email, and, eventually, a request to unsubscribe. The exact structure of the series changes from one brand to the next brand, allowing you to tailor your winback email campaigns to your customers.
5) Keep things simple
Effective winback email campaigns all have one thing in common: They keep things simple.
When writing your emails, remember, less is more. Keep your email copy short and to the point, and steer clear of overcrowded designs.
Essentially, your email campaign should use minimalist design techniques to draw readers’ attention to what matters — reengaging with your brand. In line with the “keep things simple” principle, stick to one call-to-action per email so you don’t overwhelm people with too much choice.
- Image source: DuoLingo “We miss you” email via Really Good Emails
Duolingo does a great job of keeping its winback email simple by embracing white space, using a concise headline, and having a single CTA. They also use the email copy to ask a question and inspire action in just two sentences.
How to write winback emails that bring customers back
Now that you’re familiar with the key elements of a powerful winback campaign, let’s cover the tactics for writing emails that draw customers back in.
The rules governing your campaigns are just as important as the way your emails look. When devising winback emails, consider the following questions:
- What triggers will send someone a winback email?
- What should your winback emails say?
- How often should you send winback emails?
- How many emails should you send?
Answering these questions will help you determine your winback email sequence.
The trigger of your first winback email should relate to your average customer inactivity period.
Let’s say you calculate churn based on three months of customer inactivity. You could set up a rule where customers receive the first winback email if they haven’t made a purchase in three months.
You can be more strategic here and set up various rule-based triggers according to order frequency, recency, and value. You can then have numerous triggers to determine when a winback email is sent to someone based on whether they’re at a high risk of lapsing.
The copy is the meat of your winback email. Make use of the tips we’ve shared above and remember to tailor your winback email to your customers’ needs. It should focus on satisfying customers to keep their loyalty.
If your buyers value honesty and transparency, your winback emails have to communicate those values.
Similarly, if your customers find money-off vouchers enticing, consider including a monetary incentive in an emails.
Timing is everything with winback emails. However, there’s no one-size-fits-all when it comes to sending them out. A general rule is to avoid bombarding people with emails or coming across as desperate.
To determine the ideal cadence for your winback emails, analyze the typical customer cycle.
Use this information to predict how often your customers would like to receive emails and what an optimal cadence would be to encourage engagement.
Number of emails
Similar to cadence, there’s no hard-and-fast rule for how many emails you should send as part of your winback campaign.
A report by Klaviyo revealed that eCommerce brands generated more revenue when they sent a series of two or three cart recovery emails. We recommend applying a similar rule to your winback email series.
Start with devising a series of five emails as we mentioned earlier.
These emails should cover:
- Initial reengagement – The first email in the series should be a simple reminder to check in with lapsed customers and encourage them to visit your shop.
- Incentive – After the initial communication, consider sending an incentive email to anyone who still hasn’t engaged. This incentive should be enticing enough to encourage them to shop with you again.
- Feedback request – For anyone who still hasn’t returned to your store, focus your third winback email on gaining customer feedback. This helps you support your buyers, solve any problems they might have, and improve LTV for other customers.
- Clean-up – If people still aren’t engaging, it could be time to clean up your emails. Use the fourth email to offer customers the chance to reduce their email frequency or to clean up the types of emails they receive from your brand.
- Unsubscribe – Finally, close out your winback email campaign by giving any lingering inactive customers the opportunity to unsubscribe from future communications. This lets you declutter your email list so you only contact customers who are still relevant and interested in your brand.
Above all else, test different email series and learn which format works best for your brand.
3 Email marketing tools to create winback campaigns
A quick online search will reveal several email marketing tools that can help you create awesome winback campaigns. Three of our favorites are Klaviyo, Campaign Monitor, and ActiveCampaign.
Klaviyo helps eCommerce brands get more out of email marketing with powerful targeting and automation options. You can set up seamless triggers to make sure your winback emails are delivered to the people who are most at risk of inactivity.
Their ready-to-use email automation capabilities and integration with other eCommerce tools allow you to develop strategic emails that convert customer data into higher customer LTV.
Campaign Monitor prides itself on being an easy-to-use email marketing platform for creating beautifully designed campaigns.
Their intuitive visual journey designer lets you craft timely emails personalized to your users.
If you want a powerful winback email campaign without spending hours designing a unique email sequence, ActiveCampaign has a free, pre-built winback email template you can use for your brand. All you have to do is log in, import the framework, and watch it work its magic.
ActiveCampaign’s email marketing platform has a whole host of features for eCommerce businesses. Along with their pre-built email template, you can use their email marketing tools to build personalized winback email funnels that reengage your inactive customers.
Wrapping up — Compose winback email campaigns that bear fruit
That’s it — you now have the knowledge and resources to create a winback email campaign your customers will love.
A good campaign, though, will need to be tweaked and adjusted as time goes by. Monitoring the success of your email campaigns and making informed changes based on user behavior, interests, and needs is a surefire way to make sure they always drive ROI for your brand.
Remember, your customers are human, so your emails should sound human. Use the tips in this article to construct a winback email campaign that builds trust and encourages inactive customers to return to the fold.
A Guide to Amazon Seller Fees
Becoming an Amazon seller lets you tap into the platform’s 300 million customers. Also, opting in to the company’s FBA program gives you access to its many benefits that go beyond fulfillment. However, joining this circle means you’ll have to contend with Amazon’s multitude of fees.
In this guide, we’ll help you navigate through them, share some ways to minimize the charges you incur, and introduce a few tools to monitor your expenses easily.
Core Amazon selling fees
We’ll first discuss the core fees every Amazon seller will incur throughout their time on the platform. It’s important to note each one is charged once your customer’s order ships.
Amazon automatically deducts a referral fee percentage, which is calculated based on your item’s total sales price. The total sales price, or the full amount your buyer pays, includes:
- Your product’s price
- Delivery charges
- Gift wrapping charges
Take note, however, that it excludes taxes calculated via Amazon’s tax calculation services.
Depending on the product category, referral fee rates can range from 3% to 45%. Oftentimes, a $0.30 or $2.00 per unit minimum also applies:
- Amazon Device Accessories: 45% rate; $0.30 minimum fee
- Amazon Explore: 30% rate for Experiences; $2.00 minimum fee
- Gift Cards: 20% rate; no minimum fee
- Watches: 16% for the portion of the total sales price up to $1,500.00 and 3% for any portion of the total sales price greater than $1,500.00; $0.30 minimum fee
Let’s say you sold something under the Amazon Device Accessories category for $50.00 at $5.00 shipping and $1.00 gift wrapping. Your total sales price is $56.00 with a $25.20 referral fee. As a result, you’ll be paid $30.80 while Amazon keeps the rest.
Meanwhile, if you sell an order with a referral fee that’s less than the minimum, you’ll have to pay $0.30.
Selling plan fees
You pay a fixed rate of $0.99 for every sold item, charged once your customer’s order is shipped. For example, selling three items earns you a $2.97 fee.
You pay a flat $39.99 per month, which Amazon bills starting from the date of your subscription and on the same day for subsequent months.
So, if you enroll on the 15th of the month, you’ll always be charged on the 15th. But if you cancel on the 15th, you’ll be charged for that entire month before it stops.
Amazon also charges a flat rate of $1.80 per media item you sell in addition to any other applicable fees. Closing fees pertain to the following categories:
- Software & Computer/Video Games
- Video Game Consoles
- Video Game Accessories
Core FBA fees
For those who sign up for FBA, you’ll incur the following charges in addition to Amazon’s core seller fees.
FBA’s fulfillment fees are the primary expenses you sustain as a member of the program. They’re charged per unit once your customer’s orders are shipped, and they vary based on your item’s product category, size, and weight.
How fulfillment fees are calculated
Here’s a step-by-step guide for determining your expenses.
Step 1: Check your product’s category
Since Amazon handles rates according to its various product categories, before starting your computations, make sure you:
- Check Amazon’s fee category guidelines to see if your product is considered apparel
- See if your item should be sold through FBA’s Dangerous Goods program by checking the identification guide
Step 2: Determine your item’s size tier
Product size tier is a measurement category based on your items:
- Unit weight
- Dimensional weight*
Determine these measurements first, then use the table below. Select the row where its values are not exceeded by your item’s weight or dimensions. Also, to find the girth, add the shortest and median sides and multiply the result by two.
*Use unit weight for standard-size products that weigh 0.75 lbs or less and special oversize products. Use the larger measurement between single unit weight or dimensional weight for all other products.
Step 3: Calculate your item’s shipping weight
This is your item’s rounded weight. It’s calculated using either your product’s unit weight or dimensional weight, and determining which one to include is based on your product’s size tier:
- For small standard-size and special oversize: Use unit weight. Items weighing less than 1 lb are also calculated by rounding up to the nearest whole ounce.
- For remaining size tiers: Use either unit weight or dimensional weight*, whichever is larger. These apply to apparel items that weigh more than 0.75 lb and all non-apparel items. You’ll also compute by rounding up to the nearest whole pound.
*To find dimensional weight, calculate your item’s volume (length x width x height) and divide it by 139. For oversized items, assume a minimum width and height of 2 inches.
Step 4: Find your rates
Imagine you sold a mobile device case with these specifications:
- Dimensions: 12 x 8 x 0.5 inches
- Unit weight: 2.75 oz
- Rounded shipping weight: 3 oz
This item would fall under Most products, the Small standard size tier, and the 6 oz or less shipping weight. Your resulting fee for that unit would be $2.92.
Let’s say your customer ordered a television — which is considered a Non-dangerous good — with these characteristics:
- Dimensions: 57 x 36 x 4 inches
- Length + girth: 137 inches
- Dimensional weight: 59.05 lb
- Unit weight: 51 lb
- Rounded shipping weight: 60 lb
The above specifications mean the TV would fall under the Large oversize tier and the 150 lb or less shipping weight. Since it doesn’t exceed 90 lb, the resulting per-unit fulfillment would be $82.58.
Monthly inventory storage fees
These are charges for the space your inventory occupies in Amazon’s fulfillment centers. Your monthly inventory storage fees, which are typically billed between the 7th and 15th day of the month following when the fees were incurred, are based on:
- Your daily average volume in cubic feet, which depends on your product’s size when properly packaged and ready to ship
- Your product’s size tier and the time of year
If your inventory is classified as dangerous goods, your fees will be assessed differently.
Amazon uses this formula to calculate your fee per product: Average daily units x volume per unit x applicable rate.
So, imagine your product has these characteristics:
- Classification: Non-dangerous good
- Current month: October
- Size tier: Oversize
- Average daily units in storage: 3
- Volume per unit: 20 cubic feet
Your calculation will be 3 average daily units x 20 cubic feet per unit x $1.20 per cubic foot in October, which totals to $72.00 in monthly storage fees.
Long-term storage fees
You incur these charges in addition to the previously mentioned monthly fee if you have any inventory sitting in Amazon’s fulfillment centers for more than 365 days. Long-term storage fees are calculated per unit stored and are based on whichever is greater: volume ($6.90 per cubic foot) or a flat rate ($0.15 per unit).
We’ll use the toy example. Here’s how you get the applicable cubic-foot fee:
- Calculate your item’s volume: 11 x 8 x 2 inches = 176 cubic inches.
- Divide it by 1,728 to convert it to cubic feet.
- Multiply your answer by the “$6.90 per cubic foot” fee.
- You’ll then get your applicable cubic-foot fee per unit, which is $0.70.
The applicable per-unit fee is simply the $0.15 flat rate. Then, Amazon will bill the larger of the two values. The same principle applies for the book example.
Every 15th of the month, Amazon assesses your long-term storage fees through an inventory snapshot. They’re also usually charged between the 18th and the 22nd.
FBA also computes your inventory age on a first-in, first-out basis. So, if you sell or remove an item, no matter which unit it was, it’s deducted from your inventory that’s been in Amazon’s fulfillment network the longest.
FBA disposal order fees
These are charged when you request Amazon to dispose of items in your FBA inventory that are stored in its fulfillment centers. Your FBA disposal order fee depends on your product’s size tier and shipping weight. It’s also charged per unit disposed.
*Special handling items may include apparel, shoes, watches, jewelry, and dangerous goods.
Here are some sample computations for the two size tiers.
Standard size item
Let’s say you request for the disposal of three standard-sized units, each having a shipping weight of 1.76 lb.
Each unit’s shipping weight will be rounded up to 1.80 lb, which falls in the 1.0+ to 2.0 lb row.
This results in a $1.14 per-unit disposal fee, so your total fee will be $3.42.
Imagine you requested the disposal of two oversized units, each with a shipping weight of 11.4 lb.
Each unit’s shipping weight will be rounded up to 12.0 lb and classified in the “More than 10.0 lb” row.
You’d calculate your per-unit disposal fee as $7.25 (for the first 10 lb) plus $1.26 (for the extra 2 lb).
Each unit would be charged $8.51, resulting in a total fee of $17.02.
Now, we’ll introduce expenses you can possibly incur on top of the core Amazon selling and FBA fees.
Refund administration fee
This is charged when you refund your customer for an order where you’ve already been paid. Amazon will reimburse the referral fee, but will also deduct an applicable refund administration fee.
It’s charged per unit returned, and its rate is either a percentage of the transaction refunded or a flat rate.
Note: Before referring to the table below, see if your product is under the Book, Music, Video, or DVD category. Amazon handles the fee for these items differently. Also, for all other product types, the maximum refund administration fee is $5.
Special handling fee
Amazon’s special handling fee specifically applies to televisions with 42-inch or larger screens. However, smaller TVs could also possibly incur this fee (due to factors like weight and fragility).
A single fixed rate of $40.00 is charged per unit, incurred once your customer’s order is fulfilled. Also, your screen’s dimensions are measured diagonally between opposing corners.
Rental book service fee
This is a simple fee where you pay a fixed rate of $5.00 for each book you rent to a customer.
Lithium batteries fee
You’ll be charged an $0.11 per-unit fee for lithium batteries and all FBA items that contain or are sold with them. If, for example, you sold four LED flashlights that include lithium batteries, a lithium battery fee of $0.11 would be applied per unit, meaning you’d pay a total of $0.44 for the fee.
Returns processing fee
The returns processing fee applies to product categories where Amazon offers free return shipping. It’s charged for each customer-returned item in the Apparel and Shoes categories, but not for items returned in Watches, Jewelry, Luggage, or Handbags & Sunglasses.
After being returned to Amazon’s fulfillment center, the item’s condition is assessed. Once that’s done, the fee incurred is based on the table below.
High-volume listing fee
Amazon charges this fee to cover costs associated with cataloging and maintaining a large number of SKUs.
The high-volume listing fee is simple: Amazon charges a fixed rate of $0.001 per active SKU over 1.5 million. Let’s say you have 1,750,000 active SKUs. Your fee will be calculated as 250,000 x $0.001 = $250.00.
If your total number of active SKUs is less than or equal to 1.5 million, you don’t pay a fee. It’s charged on every first day of the month and is based on the highest number of active SKUs from the 5th to the 31st.
FBA removal order fee
You’re charged a one-time FBA removal order fee for every unit of inventory you request to be withdrawn from Amazon’s fulfillment centers. The fee, which is based on your item’s size and weight, is incurred once the removal order is complete*.
*Processing the removal order for the shipment leaving the fulfillment center can take 90 days or more. Delivery by the carrier can take an additional two weeks.
If you want to boost your products’ visibility and sales on the platform, Amazon has different advertising options. The cost to promote your products within Amazon’s search varies depending on their categories. They’re also prone to seasonal fluctuations.
However, what’s most important to know is that advertising is calculated on a cost-per-click (CPC) basis. That means you only have to pay when your products are clicked.
How to lower your fees
When selling on Amazon, there are multiple strategies you can implement to lower your costs.
Choose the right selling account
Opt for an Individual selling plan if you sell less than 40 items a month. It takes more than 40 monthly Amazon sales to offset the Professional selling plan’s $39.99 subscription fee.
On the other hand, if your monthly sales exceed 40 items, having a Professional plan lets you avoid the $0.99 per-listing fee. You’ll also gain access to:
- A suite of order and inventory management tools
- The ability to promote your products and boost your profit
- The potential to unlock unlimited inventory storage as a Professional seller
Don’t exceed your storage limits
Stay on top of your inventory, as going over your storage limits subjects you to a monthly FBA inventory storage overage fee. This is based on your average daily volume at $10.00 per cubic foot, and is charged for any excess space your inventory occupies in Amazon’s fulfillment centers.
Minimize slow-moving inventory
This is an effective strategy for avoiding Amazon’s monthly inventory and long-term storage fees. Storing products with higher demand, like clothing and apparel, ensures you’ll seldom have items sitting in Amazon’s fulfillment centers for too long. Typically, fast-moving items also occupy less space.
You can still store slow-moving goods like expensive appliances and electronics. Just make sure to monitor your inventory turnover closely and keep a healthy mix of products in your inventory.
Curate your items or diversify your channels
Being strategic about what you sell on Amazon can reduce your referral fees as well as other expenses like closing, fulfillment, and monthly storage fees.
For example, you could sell items that incur lower fees on Amazon. Then, for products that accrue higher charges on the platform, you can try other marketplaces — like Walmart or eBay — where your expenses would potentially be lower.
Boost your sales
More sales doesn’t necessarily mean fewer expenses, but it does help offset them. Having a thriving Amazon business can easily make up for the platform’s numerous fees.
A helpful way to increase your profitability on Amazon is to opt in to Fulfillment by Amazon (FBA). According to the company’s 2021 Small Business Empowerment Report, sellers see a 20% to 25% increase in sales after joining the program.
Lastly, Amazon provides several useful tools to help its sellers traverse their fees.
- Revenue Calculator: Use this tool to estimate your fees and profit (it’s based on fulfillment channels).
- Fee Preview report: This shows your estimated selling and fulfillment fees for your current listings.
- Estimated fee per unit sold: This tool lets you preview your core selling and FBA fees when a specific SKU unit is sold.
- Referral Fee Preview report: With this report, you can view your estimated referral fee based on your current listed item price.
- GetMyFeesEstimate API: This API returns the selling and fulfillment fees for a given list of products.
Reviewing fees paid
- Amazon fees card: This displays the fees charged for a SKU over time.
- Payments summary: You can access information on various payments, including fees, on this summary page. Linked reports also provide a per-transaction breakdown of fees paid.
- Fee Explainer: This shows you how your selling fees for specific transactions were calculated.
- Monthly Storage Fees report: This lets you see estimates for each of your Amazon Standard Identification Numbers (ASINs).
- Long-Term Storage Fee report: With this report, you can view itemized charges for your inventory.
- Inventory Storage Overage Fees report: This report lists your estimated fees according to storage type.
Final thoughts on Amazon seller fees
Amazon’s myriad of fees can be overwhelming, but the company provides free tools to navigate them. If you’re worried about how expensive it is to sell on Amazon, there are many ways to minimize your costs (as we’ve shown).
By first learning about Amazon’s fees and how you can reduce them, and then utilizing the platform’s tools as you grow your business, your seller experience will be much smoother.
Amazon Aggregator Guide and What to Look For When Buying a Brand
With consumer spending on Amazon.com skyrocketing due to the pandemic and a firm like Thrasio raising billions, Amazon aggregators are taking the eCommerce world by storm. In fact, companies that have acquired flourishing Amazon brands have raised almost $15 billion in capital.
If you don’t know what Amazon aggregators are, this article will introduce them and what they do. We’ll also discuss examples of such companies and what characteristics they look for before making an acquisition.
What is an aggregator?
An aggregator is a company with a networking eCommerce business model that involves gathering information in one place about a specific product or service offered by competing providers. Then, these providers are made into the company’s partners.
An aggregator oftentimes banks on its ability to market its partners. This typically involves creating a single domain that offers standardized quality, pricing, and convenience to customers.
Because of this, the providers are required to supply products that meet those standards. But, at the end of the day, the aggregator’s efforts are usually a win-win for both the company and its suppliers. It should offer advantages that make it appealing to its potential partners.
Other features of an aggregator include:
- The goods or services it brings together come from the same industry, but the aggregator structures them under its own brand
- The providers are never the aggregator’s employees. They’re offered to sign a contract, which they can reject, and still maintain ownership of their businesses
- Most of its revenue is reinvested into developing and marketing its brand(s)
How aggregators make money
Normally, an aggregator generates revenue through commissions; since the company provides its partners with customers, the partners pay a percentage of their earnings. It’s a mutualistic business relationship.
How much they earn depends on the industry, season, and where the products are sold, among other factors. As for how the price is structured, the partners first quote a minimum price. Then, the aggregator quotes the total price to the final customer.
Aggregators may also make money from purchasing brands under their own umbrella, then managing them as the new brand owners. In this case, they will need to streamline and unify operations to be able to handle the different business models for profitability and efficiency.
What is an Amazon FBA aggregator?
An Amazon FBA aggregator purchases or markets multiple different brands on Amazon. They optimize listings and invest strategically in ads to boost sales. They then rely on FBA to handle the logistics, and streamline fulfillment.
As an example, imagine these four separate sellers:
- Brand 1 sells snowboards
- Brand 2 sells skis
- Brand 3 sells helmets and goggles
- Brand 4 sells boots and other winter apparel
Since these FBA businesses offer winter sports gear, the aggregator can potentially earn more by acquiring all of them and selling their products under a single entity.
The goal of an Amazon aggregator
FBA aggregators aim to scale their acquired brands to gain revenue for investors. As reported by Spencer Soper of Bloomberg, different investment entities support companies that position themselves to transform budding Amazon sellers into bigger brands.
To realize that goal, aggregators — which are normally piloted by people with eCommerce experience — actively look for partnerships with entrepreneurs to incubate Amazon brands.
Going beyond acquiring Amazon brands
Others, however, gather more than FBA brands under one roof. The Amazon aggregator Goja, for example, has a more hands-on approach to help its acquired businesses fully integrate and flourish. CEO and founder Walter Gonzalez explained Goja manages certain aspects like software, inventory, and marketing.
The company aims to create infrastructure, with the marketplace as its focal point, that allows them to manage eCommerce businesses seamlessly. To achieve this, Goja has teams and specialists that handle the following:
- Full-stack software development
- The integration of other people’s software
- Data science
- Product development
- SKU expansion
Amazon aggregator companies
To help you further understand how they work, here are some of the top amazon FBA aggregators — all based in different countries.
In the last three years, this Boston-based eCommerce group has acquired more than 100 Amazon sellers in various categories, including:
- Automotive parts
- Exercise equipment
- Home and decor
Composed of over 700 people, Thrasio’s teams of experts handle brand management, supply chain, and growth marketing. The company also made an estimated revenue of $1.4 billion in 2021 and, in 2022, is forecasted to surpass $3 billion in earnings.
Some of the notable brands Thrasio has acquired and scaled are:
- Angry Orange – Acquired in November 2018 and increased trailing 12-month revenue from $2.5 million to $23.1 million
- Beast Gear – Acquired in November 2019 and increased total revenue over 60% since acquisition
- Becky Cameron Home – Acquired in April 2020 and increased hero ASIN sales by 487% since acquisition
- Bonstato – A brand incubator in Germany, which is one of Thrasio’s latest acquisitions
U.K.: Alphagreen Group
Alphagreen Group is a global acquisition and incubation platform that focuses on acquiring high-quality, profitable brands in the health and wellness space. The company helps them scale through its distribution channels and omnichannel network consisting of:
- Alphagreen.io, the company’s own marketplace
- Other eCommerce channels like Amazon
- And more
The group’s agency NUOPTIMA, meanwhile, supports the growth of FBA brands with its SEO, performance marketing, and Amazon management capabilities. Through its existing tech infrastructure, partner network, and experienced team, Alphagreen uses data to qualify existing products, forecast the growth of its brands, and automate asset management.
A noteworthy brand in the company’s portfolio is Yawns, which offers natural sleep and energy supplements. Regarding its financial resources, Alphagreen has raised £3.5 million in pre-seed capital and even secured a debt facility for easier acquisitions.
Germany: Berlin Brands Group
This Berlin-based company is one of the first Amazon aggregators, founded in 2005. It boasts impressive numbers:
- 34 eCommerce brands, 14 of which are incubated while the remaining 20 are acquisitions the group has made since December of 2020
- Over 3,700 daily product sales
- Operations in 28 countries
- More than 100 channels
- Acquisition in 2021 of Orange Brands, founded by DTC experts Charles von Abercron and Marvin Amberg
The Berlin Brands Group manages Amazon businesses in various categories, including Home & Kitchen, Garden & DIY, Furniture and Tools, and Consumer Electronics. It also has specific criteria for the brands it acquires:
- Revenue should range from €1 million to €100 million
- An average Amazon rating of 4.5
- Preferably, the brand’s catalog should have less than 500 SKUs with top sellers and high-ranking SKUs
- More than 70% of the business’s revenue is generated through Amazon
The Luxembourg-based Amazon aggregator was founded by a team of former private equity, venture capital, and marketplace professionals. The company focuses on registered businesses in Europe and North America. It also dabbles in categories such as health, personal care, sports, and others similar to these.
factory14 is backed by experienced consumer-tech investors like VentureFriends, Victory Park Capital, and a few others. In 2021, the company raised $200 million for its Amazon acquisition efforts.
One of factory14’s significant acquisitions is Pro Bike Tool, a U.K.-based market leader in Amazon’s cycling category. Co-founder and CEO Guilherme Steinbruch even said it’s a premium-positioned brand they wished to partner and grow with.
Here are some characteristics the company looks for when acquiring a brand:
- Its revenue earnings should mostly be from Amazon FBA
- The business should have a minimum annual sales threshold of $500k
- Its year-on-year revenue growth should be positive, accompanied by strong profit margins
- The brand should be in operation for at least one full year
Merama places its focus on acquiring Latin American brands on Amazon. The company looks for leaders in various categories and accelerates their growth by investing millions in working capital. It operates with its team of experts in strategy and technology, some of whom are former employees of Facebook, Mercado Libre, and Amazon.
In terms of finances, Merama has raised $60 million in seed and $100 million in debt capital. It’s also backed by investors like SoftBank, MAYA Capital, and Advent International.
Amazon is also an aggregator
We included Amazon because it does pursue its own acquisitions. However, the eCommerce giant’s activities aren’t just for scaling the companies it buys; they also:
- Strengthen Amazon’s own competencies
- Diversify and expand into different industries
- Under its umbrella, make a wide range of products and services available
These activities have transformed Amazon into a marketplace for nearly everything. Some of the company’s important acquisitions include:
- Elemental Technologies – Amazon’s $500 million acquisition helped bolster its AWS cloud infrastructure services
- LOVEFiLM – Amazon Prime Video came to be thanks to the company’s 2011 acquisition of the “Netflix of Europe”
- Whole Foods Market – The $13.7 billion acquisition drove Amazon’s push into traditional retailing and also allowed the company to offer organic and healthy food
- Metro-Goldwyn-Mayer (MGM) – Amazon’s latest and second-largest acquisition integrates over 4,000 films and 17,000 TV shows into Prime Video
What Amazon aggregators should look for in a brand
Finally, we’ll discuss key factors aggregators should consider when searching for Amazon businesses to acquire.
1) Existing fulfillment infrastructure
FBA businesses are a plus because they’re easy to manage after acquisition. Thanks to Amazon’s fulfillment program, these brands already have an established shipping and logistics infrastructure that makes the transfer process simpler.
However, challenges can arise when the brands involved aren’t enrolled in FBA. Let’s say an Amazon aggregator wants to acquire a business that takes care of its own fulfillment, or that has a working relationship with a third-party logistics provider (3PL).
Inheriting an established infrastructure can make the transfer process more complicated. The aggregator has to ask itself the following questions prior to acquisition:
- Will our operations be able to handle this brand’s in-house fulfillment complexities?
- Will we be able to integrate the established relationships with the 3PLs properly?
2) Income stream and profitability
An Amazon business that earns a healthy and consistent level of revenue is a principal component that aggregators should consider. It shows the brand has proven itself to be profitable, and further growth would lead to a win-win situation.
A business whose income mostly comes from Amazon.com is also a major plus. It not only shows that it’s thriving on the platform, but it also means the aggregator will inherit operations that have one marketplace as its focal point, which makes integration easier.
3) Expansion possibilities
Aggregators may look at whether or not a brand will do well in a multi-channel to omnichannel setup. Having a catalog that’s easily suited for both brick-and-mortar and eCommerce channels, for instance, is a strong appeal.
Similarly, aggregators should look at the brand footprint. Is the brand well-known internationally, or limited to a local buyer base?
4) Category performance
Some aggregators have their own areas of expertise and focus on certain product categories — like how Alphagreen’s cornerstone is the health and wellness space. A brand that naturally fits into an aggregator’s portfolio is a must-have.
However, dabbling in categories aggregators specialize in isn’t enough; being a category leader is also vital. This gives companies an inkling of the business’s present performance and future growth potential.
5) Product longevity
Another prime consideration is if the products are worth selling in the long run. By that, we mean the items aren’t subject to any volatile consumer trend whose popularity fizzles out fairly quickly.
Avoiding such products and opting for those with consistently strong sales provides an edge. Also, aggregators should be wary of seasonal items. Only consider them if, for instance, their earnings as short-term top-sellers can make up for the year’s sales.
Wrapping up — Long-term considerations are paramount
Whether it’s an established, high-performing FBA seller or a business — with a strong growth potential — that fits their niche, the one thing aggregators have in common is that they search for Amazon brands they deem worthy of possessing for a long period of time.
An Amazon aggregator may specialize in a chosen area or maintain a broader portfolio, and will have different requirements for finding the right acquisition. While specific criteria will vary, the general characteristics we’ve recommended are an excellent starting point.
Brand Sustainability: 5 Ways to Make Your eCommerce Brand More Sustainable
Brand sustainability should be one of the top priorities of your overall business strategy. Consumers’ rising concerns about climate change and their commitment to combating environmental issues are driving brands to adopt sustainable business practices.
More consumers than ever are actively buying from companies that design or source eco-friendly products. In fact, 44% of customers chose to purchase from brands that showed a clear commitment to sustainability.
The UN defines sustainability as “meets the needs of the present without compromising the ability of future generations to meet their own needs.” In business terms, think of corporate sustainability as using resources and delivering products and services in an environmentally ethical way that also supports economic growth.
In this article, we’ll cover five ways your brand can go green. But first, let’s discuss one eco pitfall to avoid.
The Greenwashing issue
We’ve all encountered greenwashing at some point (it may have even influenced your decision-making). Greenwashing is when a company makes its products or activities appear more sustainable than they actually are. It’s usually employed through a company’s marketing and advertising channels, where it’s easy to exaggerate or covertly lie.
Take, for example, McDonald’s straw debacle in 2019: As part of their new green initiative, the company switched from plastic to “100% recyclable,” eco-friendly paper straws — except the new straws weren’t recyclable at all. To add insult to injury, after tallying up all that non-recyclable waste, the company would have been better off keeping the plastic straws, which were recyclable and thus would have caused less environmental damage.
This is an extreme case, but it’s a powerful warning about environmental practices and transparency. Brands that want to call attention to the sustainable changes they’re adopting should comprehend explicitly what those changes are and the impact they have.
Something as seemingly inconsequential as not knowing the difference between recyclable and biodegradable materials could result in your team unknowingly using inaccurate language in a promotional video or on your website’s landing page.
Understanding your environmental actions is equally, if not more important than avoiding their over exaggeration.
High profile brands like Coca-Cola and H&M may easily recover from misleading advertising, but most start-ups or small businesses would feel a significant (negative) impact from such a reputation blow.
The main takeaway from this? Be transparent. Market your brand ethically, and maintain accurate messaging across your marketing, communications, and PR channels.
Transparency will help enhance your sustainability efforts and reveal where you can improve. Below, we dive into some eco-friendly solutions for your business.
5 Steps for a more sustainable brand
1) Reduce waste
As eCommerce continues to grow, one of the greatest pressures retailers face is to lessen the environmental impact from manufacturing.
You can do this by replacing plastic wrapping in your boxes with paper instead, reducing your packaging by prepping your items more efficiently so less filler is needed, redesigning your product for a longer life cycle by investing in higher quality materials, or through other creative avenues.
Although it may be an investment at first, reducing company waste helps the environment and your reputation.
One way to identify unnecessary refuse is by conducting a waste audit. Review all the materials you use and ask yourself: At which stage do we use an excessive amount? What’s being thrown away?
Here are some ways to cut down your excess:
- Invest in recyclable packaging throughout production
- Reduce plastic where possible
- Switch from paper invoicing to emails and encourage customers to opt for electronic receipts by offering discount rewards
- Evaluate shipping methods and find alternatives when possible
- Design with sustainability in mind — ask yourself if there are ways to increase your product life cycle
Tip: Invest in more efficient packaging, and less wasted space with a reliable prep service. Smaller, more compact boxes mean less in shipping fees and more secure products.
2) Increase your energy efficiency
Energy use is another area that would benefit from an audit. Increasing your energy efficiency can even go so far as improving your bottom line. A school in Arkansas turned solar savings into better teacher pay, and a Marriott hotel was able to save $49,000 annually with energy efficient tech.
If you have an office space, request an energy audit from your electricity provider. It’s a low-cost way to see where you’re using the most energy and hear about cost-saving and efficient alternatives.
You’d be surprised at the simple, but effective changes you can make, like switching to low-energy lighting or solar power, maintaining a consistent room temperature, or even unplugging appliances that aren’t in use or fully charged. These small changes can have long-term savings on your company’s energy costs as well as help the environment.
Another option is to switch from in-office to remote working. While many companies have had remote options in place due to the COVID-19 pandemic, increasing employee hybrid days or, if you can, going fully remote is a no-cost way to cut your company’s energy expenditure and office overhead while reducing carbon emissions from commuting.
3) Source local suppliers
As consumers, we’re frequently encouraged to “shop local,” but even eCommerce brands can benefit from sourcing local suppliers. In addition to contributing back to your local business community, nearby suppliers can be more reactive and flexible when it comes to requests.
They are also more familiar with other nearby options for your other needs (such as additional parts for your products, or packaging suppliers), reducing travel or import time for supplies.
For many brands, sourcing locally isn’t an option. In that case, we suggest selecting suppliers that have a green ethos aligned with your own, or that provide sustainable materials.
4) Contribute to an environmental initiative
Maybe adopting options 1—3 simply isn’t feasible for you at the moment. The costs to switch materials, planning logistics, or contracts with suppliers and manufacturers locking you in are all potentially limiting factors.
However, if you still want to send a message that you’re headed in the direction toward environmental change and supporting green initiatives, consider compensating for what you can’t avoid right now.
Collaborate with environmental initiatives in your area, like a local beach cleanup for instance. Or, donate to reputable environmental organizations to offset your shipping costs.
Internal changes may take longer to implement, and that’s okay if it’s something you’re working on while taking other environmental actions.
5) Implement a sustainability policy
A show of commitment to making your brand more sustainable is implementing a sustainability policy. This solidifies your stance and serves as a green road map for your company.
In your policy, you develop a sustainability mission aligned with your brand mission, determine key outputs, and set a phased timeline for adopting certain practices.
By putting a sustainability policy into place and disseminating it throughout your business (both internally and externally), you’ll involve your employees in the changes and send a clear message about your priorities shift to your customers.
Wrapping up — Every bit helps when it comes to brand sustainability
It might not be possible to implement everything we covered here. But if you can adopt one or two from the list, then you’re off to a good start. Small changes can make a significant difference, and as long as your brand remains transparent about the steps it’s taking (or avoiding), consumers will feel comfortable supporting your company and may even champion you for it.
The movement toward sustainable business practices will continue to gain momentum in the next few years as environmental concerns increase. Even if you’re not ready to make immediate changes, start asking what would be feasible for your brand and plan a kick-off date to get started. Committing to at least one goal is the first step toward a greener business.
How to Optimize Your Post-Purchase Experience to Delight Your Customers
Receiving a new order from a customer sparks your fulfillment process into action … but is that all? The customer journey doesn’t stop once someone places an order. If anything, the post-purchase experience is arguably its most valuable stage. Those moments after someone converts present an opportunity to turn one-time customers into loyal brand advocates.
To delight and secure your customers, you need to optimize your post-purchase experience.
The importance of the full buyer experience
Obviously, building brand awareness and transforming new visitors into customers is important. But making sure those buyers stick around and come back repeatedly is the real secret to growing a successful eCommerce business.
When someone shops with a brand, they typically go through three stages:
The conversion stage is when they make a purchase. However, the full buyer experience extends far beyond that initial purchase. After buying, the customer journey continues with two retention stages: loyalty and advocacy.
From the first time someone visits your website to those all-important post-checkout communications, every brand interaction is an opportunity to shape their perception. Produce a positive buyer experience, and you’ll increase customer lifetime value (CLV), foster loyalty, and encourage repeat purchases.
So, how can you optimize your customer experience?
The answer lies in the psychology of consumer behavior, particularly the “peak-end rule.”
The peak-end rule is a cognitive bias in which people recall an experience based on their emotions at their most intense and at the end of the event. In eCommerce, the peak-end rule uncovers the ways brands can create “peaks” of positivity during and at the end of the customer journey.
Peak moments could include the first experience someone has with a product, the post-sales care and support they receive, or other emotional interactions that spark intense consumer responses. The end goal is simple: to evoke genuine moments of delight for your customers and finish on a high point.
Another behavioral phenomenon that supports how critical the end of the customer journey is to the overall experience is the recency effect. This states the most recent information presented is remembered the best. In line with this effect, the last thought someone has of your brand can change their entire perception. So, make sure you leave a positive lasting impression in the post-purchase experience.
How to optimize your post-purchase experience
The post-purchase experience covers all interactions a customer has with your brand after they make a purchase. From the smallest details on a “thank you” page to providing outstanding after-sales support, crafting an excellent post-purchase experience involves multiple elements.
Let’s look at some ways you can create “peak moments” during the post-purchase journey to deliver a memorable experience for your customers.
Promptly provide tracking information
Post-purchase communications play a major role in influencing your customer experience after they’ve placed an order. You can use these communications to keep customers informed, pre-empty any questions, and avoid buyers feeling abandoned after they gave their credit card info.
One way to elevate customer opinion is to provide tracking information quickly. Online shoppers want to be kept in the loop. They like to know when their order will arrive — down to the minute. In fact, nearly one-quarter of online shoppers are extremely likely to return to a brand that offers real-time order tracking.
So, set up a real-time order tracking workflow that provides your customers with accurate and prompt order updates.
Deliver quickly, reliably, and on time
Telling your customers when their order is due to arrive isn’t enough. You need to stay true to your word and make sure that order arrives quickly and on time, every time.
63% of buyers consider delivery speed an important factor when shopping online. Slow delivery options are a sure-fire way to propel customers toward your competitors.
To optimize the post-purchase experience and keep customer emotions high, make sure you provide fast and reliable delivery.
Keep customers informed about any mishaps
Sometimes, things go wrong — orders get delayed, products go out of stock, or items are damaged during transit.
These errors can be costly to your online shop and not just from a commercial perspective; online order errors can drastically impact productivity, profitability, sales, and efficiency.
One way to reverse the potential negative impact of order errors is to keep customers informed with open honesty. Let them know as soon as something goes wrong and tell them exactly what you’re doing to rectify the problem. Be considerate in your approach and take ownership of the situation — it’s your duty to make amends after all. Be fast in your resolution as well.
Handle order errors effectively and you just may be able to transform a negative post-purchase experience into a positive one.
Help customers fully realize the product value
Offer product training or insights to show customers how to embrace the full value of your product.
You could include product inserts that educate customers on the best uses for their purchased product. Alternatively, you could direct customers to online product videos and demonstrations, send them emails with tips and tricks for getting the most out of their product, or refer them to an online manual.
You can get creative here to craft a unique customer experience that benefits both your buyers and your CLV.
Add branded touches
If you aren’t leveraging the unboxing experience for online orders, you’re missing out on an incredible opportunity to make a memorable impression.
Adding branded touches at the post-purchase stage allows you to tell your brand story. It influences customer perceptions and lets them know you’re a brand that truly cares about providing value to your customers, not just making sales.
Recent research shows the unboxing experience can sway customers’ expectations, emotions, and willingness to share their shopping venture both on and offline.
Elicit positive emotions and add value to the post-purchase experience by constructing an unforgettable unboxing experience. Consider adding a personal note, using a high-quality branded box, taking care with product presentation, and finding other unique ways to go the extra mile with branded touches.
Ensure customers have support even after purchase
Post-purchase customer support is key to making customers feel valued and helping them get the most out of their purchase.
Offer customers omnichannel support to ensure they have access to help whenever they need it. Have customer support representatives available across email, SMS, live chat, social media channels, and more. Cover all bases and prominently display these communication avenues so your customers know how to reach out if they need help with their order.
Further emphasize post-purchase customer support by providing product demos, maintaining an easy-to-access knowledge base, and proactively reaching out to customers via email to see if they need any help.
Have a clear returns and warranty policy
Customer returns are expected in online selling, but they don’t have to be a bad thing.
Done right, your returns process presents a great opportunity to delight customers and enrich the post-purchase experience.
Review your returns and warranty policy and make changes to build trust, minimize frustration, and prioritize customer satisfaction. By making returns convenient, you can win your customers’ loyalty.
Few things are as frustrating as wanting to return a product, but having to jump through multiple hoops to do so: searching the website for a returns policy, filling out a form, printing out a label, taking the parcel to a delivery office, paying for the return, etc.
With a clear returns and warranty policy, you can minimize these hassles and ensure customers have a positive experience, even if they’re returning a product.
In your policy, you could offer customers free shipping and an extended returns window. Consider providing paid-for returns labels in every order and a warranty period to give customers peace of mind. Above all, explain your returns and warranty policy clearly on your website so customers understand exactly what it entails before they place an order.
Send personalized recommendations and replenishment reminders
The post-purchase phase is also your chance to turn buyers into repeat customers.
Send customers personalized recommendations based on their previous order history, or send them timely replenishment reminders when they might be running low on a previous product.
These post-purchase emails keep you top-of-mind with your customers while continuing to deliver premium customer service.
Timing is critical for these emails. For replenishment reminders, contact customers when you expect they’re running low on products.
Base the timing of personalized recommendation emails on how frequently customers make repeat purchases. If your customers typically order once a month, then make sure this email goes out three to four weeks after they placed an order.
To build customer loyalty, you need to give buyers a reason to come back.
Rewards and loyalty programs are powerful ways to reengage customers and build advocacy.
Go beyond the standard loyalty program by creating one based on advocacy. In advocacy-based loyalty programs, customers are rewarded for completing various activities, not just repurchasing products.
You could offer a discount or prize for signing up to your email list, tagging your brand in product photos on social media, or writing a review. This will strengthen your brand community and build a loyal customer base.
Gather customer feedback
Take advantage of the post-purchase journey to improve future customer experiences.
When a customer places an order with your brand, use that opportunity to talk to them and gain feedback on their experience. Let customers know you value their opinion and invite them to be honest about the product and their overall shopping experience. You can then use this information to fix any issues in your customer experience.
Just like other post-purchase emails, consider when would be the perfect time to ask customers for feedback. Retail brands could send feedback surveys just days after an order is received. Meanwhile, tech brands may want to wait a few weeks before asking customers for their thoughts. You want to give your customers enough time to try the product before soliciting their opinion.
You could even tie your feedback survey into your customer rewards program to increase uptake.
Wrapping up — Delight customers with a polished post-purchase experience
Gone are the days of getting as many one-time customers through the door as possible. Customer retention is the new gold standard.
If you want to increase customer retention and delight your customers, you need to optimize your post-purchase experience.
The options are nearly endless for providing customers with an unforgettable shopping experience, and the impact it can have on your business is undeniable. Nail the post-purchase experience, and you’ll earn loyal, life-long customers.
If you want to deliver an outstanding customer experience at every stage of the buyer journey, see how we can help.
The Ultimate List of Direct-To-Consumer (DTC) Brands
Direct-to-consumer (DTC) brands are experts at building unique, engaging buyer experiences. They understand the value of having a direct line to their customers, making an impression, and staying top-of-mind when it comes to consumer choice.
Even enterprise brands and established merchants can benefit from observing what their peers are doing to stand out. To that end, we’ve put together this list of 100+ direct-to-consumer brands to watch. We’ve organized this DTC brands list into categories so you can easily browse by industry.
The brands listed are all DTC-first, meaning they emerged as online brands. They’re trailblazers in the online space, so you’re going to want to keep these on your watchlist. After all, every brand needs some level of online DTC presence in today’s society.
Health, beauty, and skincare
Glossier creates skincare and beauty products designed with real beauty routines in mind.
Snow offers all-in-one LED-activated teeth-whitening kits guaranteed to make you smile.
With over 100 patents worldwide, Lashify is a pioneer of DIY lash extension technology.
The Quick Flick is a team of beauty innovators offering compact, time-saving, and multi-functional products such as their winged eyeliner stamp kits.
Tarte Cosmetics offers good-for-you, eco-friendly makeup and skincare products that are formulated with a blend of naturally derived ingredients.
Thrive Causemetics is a luxury beauty brand that donates money for every product purchased toward causes that help women thrive.
Lumin sells premium skincare products to help men take control of their daily skincare routine. Their products are formulated to combat dark circles, revive dull skin, fight wrinkles, and reduce acne scarring.
From razor blades to grooming products, Dollar Shave Club’s nifty subscription model automatically delivers everything you need in the bathroom straight to your doorstep.
Zimba’s teeth-whitening strips promise to whiten teeth at a 60% lower cost than other brands, using premium, natural, and reduced-sensitivity ingredients.
ColourPop Cosmetics are redefining luxury beauty with their collection of high-quality, cruelty-free cosmetic products at affordable prices.
Cocunat is a natural cosmetics brand that prides itself on being 100% toxic-free, sustainable, cruelty-free, and vegan.
Function of Beauty is known for their customizable, personalized haircare. They also offer skincare that can be tailored to your unique needs.
Famous for their pink clay mask, Alya Skin is on a mission to change the game for your skin by boosting your confidence with a problem-free complexion.
Glimmr’s journey started with a revolutionary hair mask and has evolved into a full collection of all-natural, affordable solutions to common beauty problems.
Offering a range of beauty care products and devices, Vanity Planet considers itself a one-stop shop for all things skin, hair, health, and well-being.
Nature Queen shampoo and conditioner contain a unique formula that provides essential oils from nine natural-healing herbs to refresh, nourish, and stimulate hair follicles.
Native has a wide array of all-natural personal care products, with their best-selling being their deodorant.
Supply fuses classic shaving and plant-based ingredients with modern science and engineering innovations to deliver high-performance products for personal grooming.
Billie offers personal care basics that are anything but basic, including their award-winning razor designed for Womankind, without the Pink Tax.
Love Wellness creates natural solutions for natural problems with its range of women’s wellness and personal care products.
Kinship is a cruelty-free skincare brand developed by scientists and industry experts.
Enjoy salon-quality hair at home with Verb’s range of hair care products and tools.
Get sustainable, clinically validated organic CBD tampons and ProViotics for vaginal health shipped straight to your door with Daye.
Give your skin an instant boost with Sand and Sky’s collection of Australian skincare products made with natural botanicals.
Boom by Cindy Joseph is the world’s first pro-age cosmetic and skincare line for women who want to reveal their genuine beauty with an honest and realistic approach.
Gleamin incorporates potent superfoods into their carefully formulated clean skincare products to enhance natural beauty.
Discover your personalized routine and transform your hair with Prose’s custom hair care products.
Coco & Eve sell a variety of award-winning hair care, body care, self-tanning and skin care products infused with tropical Balinese goodness.
Originating from Australia, Snow Fox is a high-performance, problem-solving skin care line.
Fashion and apparel
The 5th is a contemporary Melbourne-based watch company that offers timeless designs in small, limited runs.
Australia’s favorite oversized wearable blanket, The Oodie will keep you warm and cozy all year round.
Stuart & Lau draws from their urban experience to build purposeful bags and briefcases that are ultra-lightweight, waterproof, and engineered for effortless mobility.
Shapermint offers curated shapewear to make you look and feel confident in your own skin.
Step Footwear’s commitment to putting the “fun” in functional shines through in their collection of functional, yet fashionable footwear.
Vessi Footwear designs shoes that can be worn all day, every day no matter the weather, thanks to their 100% waterproof technology.
David Von aims to make luxury jewelry and watches accessible to everyone by passing on the cost savings from their direct partnership with a family-owned production house.
ROVE is a consciously made, feel-good fashion label that provides lighthearted holiday feels.
Firm believers that every body is a bikini body, Breezy Swim provides trendy swimwear at an affordable price for women of all shapes and sizes.
ModCloth reimagines women’s clothing with unique styles and original prints sized from 00–28 to empower all women to express themselves.
MeUndies believes your butt deserves to be comfy — that’s why they offer feel-good underwear, loungewear, and apparel with a satisfaction guarantee.
Lolli provides sweet swimwear and bikinis to make sure you’re always beach-ready.
Margaux is on a mission to make thoughtfully designed, versatile, and comfortable shoes that stand the test of time.
Thirdlove trades bad bras, sub-par workout gear, and lackluster sleepwear for pieces your body loves to be in.
Mott & Bow provides elevated, premium jeans, tees, and shirts at fair prices.
Rothy’s transforms eco-friendly materials into machine-washable wardrobe staples that look just as good as they feel.
Cuup offers modern, minimal, unlined bras built for all women that support and shape without excess materials.
Stitch Fix is a personal styling service for men and women curated to individual tastes, needs, and lifestyles.
Faherty is a family-run clothing brand fueled by purpose and optimism.
Feat started in 2015 as an idea to make incredibly comfortable athleisure for anything the day may bring.
Jewelry and Accessories
Luca + Danni craft meaningful, handmade jewelry that brings your story to life.
Founded in 2013, MVMT is on a mission to provide high-quality, desirable watches, eyewear, and accessories at affordable prices.
Buck Palmer offers handmade, rustic-luxe men’s jewelry that’s carefully crafted for the adventurous spirit.
At DIFF, they’re committed to making a DIFFerence by creating a world where everyone has access to the vision care they need.
As the global leader in the eyewear industry, Foster Grant recognized reading glasses can be just as stylish and contemporary as sunglasses.
Founded by rock climbing enthusiast Carlos Gannon, Topologie infuses an authentic climber spirit into accessories and emphasizes the quest for inner balance and self-exploration.
Designed and inspired by the historic American free-spirited soul, Degs & Sal offer handcrafted pieces made of 100% recycled sterling silver from Italy.
BREDA are purveyors of both subtle and striking timepieces.
NOMATIC creates minimalist products such as travel bags, backpacks, watches, and notepads to inspire people who live life on the move.
FC Goods repurposes old, forgotten baseball gloves into one-of-a-kind handcrafted leather products.
⚡ Tech and gadgets
Peel creates unobtrusive and minimalist phone cases so you can focus on what matters.
PhoneSoap helps people live healthier by defeating the daily germs and pollution we encounter, from microbes on our phones and other gear to the harmful viruses and particles in the air we breathe.
Born from the philosophy that less is more, The Ridge redefines everyday essentials — wallets, backpacks, and chargers — with minimalist designs that don’t sacrifice function.
Pela created the world’s first compostable phone case as a way to protect both your phone and the planet.
BrüMate was established based on a desire to push the boundaries of innovation in the drinkware industry.
Lume Cube is leading the revolution in portable, durable, and powerful lights for photo and video devices such as phones, cameras, and GoPros.
PolarPro designs and innovates filters and photography equipment. Their gear is built for rugged conditions and engineered to inspire you to get out and shoot.
Lilly Brush produces pet hair removal brushes and tools that are gentle on fabrics, but tough on fur.
Lovimals has developed a range of daily dog chews and supplements packed full of nutritional goodness to support the well-being of your furry friends.
Pop Your Pup lets you celebrate your pets with a selection of custom pet portraits.
PetJoy produces “human-grade,” veterinarian-approved supplements to support your pets’ nutritional health.
PrettyLitter is the creator of smart, color-changing cat litter that enables you to detect any potential health issues with your furry friend.
PetLab Co provides everything from vitamin supplements to grooming products to help your pets live healthier, happier lives.
Ryse provides workout supplements designed to fuel your greatness and empower you to be your best self.
Happy Mammoth sells natural gut and hormone health supplements to help you take control of your body, emotions, and overall well-being.
Athletic Greens aims to bring comprehensive and convenient daily nutrition to just about everybody with their formula packed with vitamins, minerals, superfoods, probiotics, and adaptogens.
Vital Proteins boasts being America’s top collagen brand, providing gummies, peptides, and more to help their shoppers feel at their best.
Persona Nutrition recognizes everybody is different, and that’s why they offer daily vitamin packs and superpositions tailored to your individual health needs.
Goli is an innovative health brand focused on making health simple and delicious with its range of health gummies.
More Labs offers a Morning Recovery supplement drink to reduce the negative effects of drinking alcohol.
Ritual provides science-backed, traceable essential vitamins and health supplements for women.
Tailored Athlete designs men’s clothing that’s scientifically designed and crafted to accentuate your physique.
MuscleBox is a motivational fitness and bodybuilding subscription box that encompasses everything from apparel to equipment to supplements.
Upright produces posture training devices to improve your posture and back health.
SHEFIT designs sports bras that work with your body, not against it.
Chirp is the creator of the Chirp Wheel — a unique yoga wheel that uses trigger point technology to target back pain and provide relief right where it aches.
Gymshark is a fitness apparel brand that designs gym clothes and accessories with your progress and results in mind.
Peloton brings the community and excitement of boutique fitness into your home with its fitness technology and hardware.
Outer is passionate about creating the world’s most comfortable, durable, innovative, and sustainable outdoor furniture.
Miracle Brand produces bed sheets and towels made with anti-bacterial silver for cleaner, odor-free laundry.
Buffy uses earth-friendly materials to produce comforters and bedding that help you live comfortably, without making the Earth uncomfortable.
Casper is a sleep company that applied years of studying sleep science into creating innovative mattresses, beds, and sleep products.
Otherland candles are lovingly made with clean ingredients and refined fragrances to offer luxury home scents that both look and smell great.
Sunday offers everything you need to fight weeds, grow grass, and care for your lawn with its range of lawn care products and subscriptions.
Food and Beverages
Magic Spoon has reengineered the great taste of childhood cereals with grown-up ingredients for a nutritious and delicious breakfast.
HighKey makes delicious versions of your favorite snacks without all the extra sugar and carbs.
Get healthy snacks that actually taste good and are handpicked to suit your preferences with Graze’s healthy snack subscription boxes.
Trifecta is an organic meal delivery service that specializes in providing fresh, flavorful, and nutritious meals so you can eat well and do more.
Haus is a liquor brand that sources all organic ingredients with a focus on aperitifs.
Daily Harvest is a smoothie delivery service that makes it easier for you to get more fruit and vegetables into your diet.
Recess offers sparkling water drinks and powders infused with hemp and adaptogens to help you feel calm, cool, and collected.
Baby and Children
Mockingbird produces premium baby strollers that are both affordable and stylish.
Posh Peanut creates high-quality, beautifully designed and thoughtfully produced clothing for the whole family.
Rooted in the Scandinavian values of quality of life, honesty, and a love of nature’s beauty, LÍLLÉbaby’s mission is to empower families through comfortable, innovative products that inspire adventures and nurture the bond between parents and their children.
Lalo is focused on crafting kids’ furniture and toys to support the healthy development of babies and toddlers.
Realizing baby carriers were difficult to use, Lalabu was born to revolutionize babywearing products by offering pieces that give you the support and confidence you’re searching for as a parent.
Vices provides luxury subscription boxes containing curated collections of the finer things in life.
Give your outdoor toys the best cleaning experience possible with Slick’s range of cleaning products for off-road vehicles, bikes, watercrafts, and street vehicles.
Away believes the more we travel, the better we become, and that’s why they built travel products that are designed to last every trip.
Unleash your inner geek with Loot Crate’s exclusive monthly subscription boxes filled with the best pop culture, geek, and gaming gear.
Wrapping up — Look to DTC brands for inspiration
The DTC brands we covered above are some of the most popular on the market, consistently delivering experiences that keep consumers coming back for more. Learn from them, watch how they interact with their customers to build communities, and browse their websites to see what content they have front-and-center.
We hope this list provides a place for all merchants to draw inspiration when stuck in a rut, planning their marketing strategy, or just looking for interesting new trends.
How to Structure Your Returns Policy For Seamless Operations
Returns are inevitable, no matter how well you’ve researched product-market fit, tested and optimized your SKUs, and streamlined your operations.
They are also more prevalent in eCommerce. At least 30% of all eCommerce orders are returned, compared to less than 9% for brick-and-mortar stores.
Although that may sound high, returns don’t have to be the bane of your business. In fact, you can use your returns process to differentiate your brand, enhance your buyer experience, and boost customer lifetime value.
A strategic returns policy and process can turn returns into part of your sales strategy. Returns are an inevitable reality in eCommerce, and customers seek out brands that make their lives easier and more enjoyable. Therefore, having a flexible and easy-to-understand returns policy can make the difference between losing a sale and gaining a new, loyal customer.
Understanding customer behaviors and expectations
It’s important to understand the reasons why people return products in the first place.
Buying online is a completely different experience than buying in a retail store, and it comes with different risks to buyers as well.
Some of the reasons for eCommerce returns include:
- Item arrived damaged or defective (potential transit issue, potential manufacturing issue)
- Product wasn’t as expected
- Item not fit
- Change of heart
- Found a cheaper price elsewhere
There are plenty of reasons for eCommerce returns that don’t exist for retail. For example, shoppers aren’t able to touch and try items before making a purchase, which is one of the biggest reasons so many brands are turning to augmented reality and liveshopping to imitate the experience of in-store shopping.
The good news is 92% of customers will become repeat shoppers if returns are easy. Seventy nine percent of shoppers want free return shipping and more than half will check your returns page to review your policy before they make a purchase.
Here’s how to streamline your returns process and optimize your buyer experience.
1) Prevent returns before they happen
The best way to ensure your returns program runs without a hitch is to prevent returns in the first place. Ideally, they should account for very little of your business activity, with far more orders going out than coming back in.
There are a number of ways to prevent returns, and they start with setting clear expectations of your items upfront.
Be clear about your product offerings
An accurate product description plays a significant role in preventing returns. When crafting brand messaging and product descriptions, be clear about your offerings and service delivery standards which, in today’s market, are a product in and of themselves.
Your customer should know exactly what they’re buying and how it will be delivered to them long before they input their payment details. Maintain a positive buyer experience by proactively informing customers about your products and what to expect.
Optimize product pages
Every product page should present your buyers with all the information they need to understand exactly what they’re purchasing. An optimized product page will have:
- A clear and concise product description
- Rich media content, including photos and videos of the product
- Specifications, including size or weight
- Reviews or other social proof demonstrating the product quality
- Keywords in the headline, subheadline, and product descriptions
Deliver on time
Shipping delays can happen, but they should be kept to a minimum. Communicate your fulfillment timelines and shipping times clearly on your home page, product pages, your confirmation email, FAQ sections, and throughout checkout.
Customers have grown accustomed to fast shipping thanks to services like Amazon Prime. Even if you’re unable to meet these speedy delivery expectations, the important thing is to make sure you deliver within the time you promise.
Tip: Send tracking numbers via email and SMS once a package has gone out, along with a link to check the status of their delivery.
Give time to get accustomed
As a closing tip for this section, I’ve also heard of brands with liberal return policies that give customers more time with their items.
As a result, those customers end up better learning how to use their products, and getting used to them, then deciding not to return them after all.
2) Make it easy to find your return policy
Most repeat customers have one thing in common; they have all had overall positive experiences with your brand.
This includes customers who, for whatever reason, need to initiate a return.
Making it easy to find your return policy provides important support to consumers at a critical time in the customer life cycle.
Display your returns policy and process on your website. Link to your returns policy and describe it succinctly on your product pages and everywhere else your customers may go looking for it.
Considering 62% of shoppers will check a returns policy before choosing to buy, you need to make your it’s easy to find.
Simple messaging such as “Free and easy returns” or “No questions asked” give shoppers peace of mind knowing you stand behind your products and will work with them to find solutions.
Link to your returns policy in post-sale communications. When you send order confirmation, shipment notifications, and even a thank-you note to customers, be sure to include a link to your returns policy.
This reinforces the notion that their satisfaction is your priority and that you’ll do what it takes to make things right if they’re unhappy.
3) Use straightforward language
You’ve made it easy for customers to find your return policy — but have you made it easy to understand?
If your returns policy reads like a Latin textbook, you need to reconsider your approach. Keep the messaging clear and easy to read for your customers, and make sure to spell out the terms of your policy.
This should include:
- Timelines for returns
- Acceptable conditions for returned items (e.g., new with tags, never worn, unopened, etc.). This may vary based on product type, such as baby items
- Exceptions to your policy, such as personal care items or beauty products
- Method(s) of refund
- Any applicable return fees
- Other necessary stipulations
It’s also important to note the differences between returns, exchanges, and replacements via warranty.
4) Be customer service-centric
The best returns programs walk customers through the process from beginning to end with top-notch customer service.
Make it easy to get in touch
Your buyers should know how to get in touch with customer support in a pinch. Don’t hide your contact information or make it hard to open a support ticket.
Offer multiple options for communication, such as live chat, phone calls, and email, and commit to a maximum response waiting period.
Post your contact information visibly on your website and social media platforms, too, so customers don’t lose time searching for it.
When customers reach out regarding returns, offer to walk them through the process and identify the best solution for their situation.
Consider offering free returns
Consumers have grown to expect free returns. In fact, 76% of customers reported that free returns are an important factor when shopping online.
By employing a no-strings-attached policy that allows customers to send items back without hassle, you reassure them of your commitment to their satisfaction and that you stand behind your products.
5) Ask for feedback
Asking for feedback might not be your favorite activity, but it’s an important part of a strong and successful returns program.
As a best practice, when a customer initiates a return, you should ask the reason for it. Did the item arrive late or damaged? Is it the wrong size? Have they found a better price? This feedback reveals actionable insights and valuable data you can use to improve your business.
You can also ask yourself, based on their feedback, if the issue was avoidable. Customer feedback can be used to improve your products, store, and processes.
Look for solutions
If the issue comes down to a customer experience problem, ask yourself: Can you make it better?
For example, if an item arrived damaged, offer to send the customer a replacement at no charge. If a customer has found a better price, offer a price match or credit towards their next purchase.
This is where a customer-centric approach comes into play. For a fantastic returns process, look no further than Amazon.
When a customer initiates a return through the retail giant, they’re given a list of reasons for the return that run the full gamut from wrong item to missing pieces and more. Once a reason is selected, customers are given a few options:
- Chat with an Amazon Customer Service Representative (CSR)
- Get in touch with the manufacturer/merchant
- Proceed with returns and refund
By giving options and establishing paths for customers to take alternate actions, you can potentially avoid returns and improve customer experience by finding the best solution for everyone.
6) Review and update your policy as needed
Over time, your returns policy may fall out of alignment with your business needs, industry best practices, and even become a hindrance to your success. Like all aspects of your eCommerce business, your returns policy should be reviewed and updated regularly to ensure it fits your current situation.
Watch for trends in returns
Trends in returns can speak to underlying issues that you can address. For example, are you regularly receiving return requests for damaged or late items? If so, you might have to reconsider your fulfillment and logistics processes and partners. If returns are often related to a quality issue, you may need to find a new supplier.
But trends in returns can be even more granular than that. Do you have repeat-return customers? Frequently check for any signs of eCommerce fraud that may be occurring to protect your business and your customers.
Monitor business impact
If you offer free returns and are drowning as a result, it’s time to reevaluate your policy and how you handle returns.
Because returns can cut into your profits, it’s important to stay up to date on your profit margins while weighing those against industry best practices.
Your policy needs to make sense for your business while still allowing you to maintain a competitive edge.
Understanding warranties, returns, and replacements
Adjacent to returns, customers may request to send back an item that’s under a replacement or repair warranty. In these cases, you and your customer have several options, depending on what makes the most sense.
There’s a big difference between returning an item and replacing an item (or parts) via a warranty program, and these policies should be clearly differentiated and communicated to customers.
If someone initiates a return request for an item that’s under warranty, communicate the terms of the warranty and explain their options.
For example, if a customer has purchased a brand-name coffee machine from your store with a manufacturer’s warranty, you can connect your customer directly with the manufacturer’s customer service team.
The manufacturer can then offer to send replacement parts or items directly to your customer or send you a replacement that can be shipped to the customer on their behalf.
Replacements and refunds
Structuring programs for replacements and refunds will depend on your business, the products you sell, and even customer preferences. Having said that, it’s pretty common to have nuances between your warranty, returns, and replacements policies.
Let’s say a customer reaches out to initiate a return and you discover the product arrived damaged as a result of the shipping process. You have proof of the damage through photos the customer sent in, so you offer them a replacement item. The customer agrees, so you ship out the replacement item immediately. Depending on the condition and the type of item, you might tell your customer to keep it, discard it, or send it back.
However, if the customer requests a full refund, you may choose to have them send the item back (for free) before you issue a refund.
You’ll need to weigh the pros and cons of this. On one hand, you’re deterring returns fraud where a customer asks for a refund but will continue using the item. On the other hand, it will cost you more time and money to have the item shipped back so you can inspect it, and it’s unlikely you will be able to resell it as new.
If the item is “fixable,” you can mend it and sell it as a refurbished item in your catalog. If it’s not fixable and/or could be better used for parts, you can save it for future warranty or replacement part requests.
There’s no fool-proof formula for these policies. Each merchant must assess his or her business and build a policy according to their needs based on best practices, real-world experience, and their own product offerings.
Wrapping up — Refine your returns policy to enhance operations and your buyer experience
Offering your customers money-back guarantees and liberal returns policies increases their trust in your brand. In addition, it makes the entire shopping experience feel less risky so shoppers are more likely to try your products and join your customer base.
Although it may feel counterintuitive at first, having a strong and easily accessible return policy is a fantastic way to improve customer satisfaction and increase brand loyalty, helping you to grow your business through repeat customers.