Value-added services from MyFBAPrep
Do you know how many stores are on Shopify?
As the online selling world becomes increasingly crowded, some brands have learned a hack that gives them a much-needed edge. Efficient fulfillment.
But as a scaling brand, completing all the fulfillment-related tasks to a high standard consistently can be challenging. That’s where an experienced prep and pack service provider like MyFBAPrep takes the load off your shoulders and builds an optimized fulfillment process.
Many services fall under the “fulfillment” umbrella that can take your prep process and customer experience from good to great. In this post, we’ll cover why partnering with a fulfillment provider to secure value-added services is a worthwhile investment. We’ll also share some of the most impactful services for growing eCommerce brands and the rewards you stand to reap by using them.
Struggling to manage fulfillment in-house? Learn how MyFBAPrep makes outsourcing easy.
Why invest in fulfillment services?
From prep and pack services to prep to 3PL and 4PL solutions, investing in your fulfillment processes can pay huge dividends for years to come. Let’s take a look at some benefits you can get when you pick the right provider:
Enhance your end-to-end fulfillment with the perfect details
Whether you need items securely shrink-wrapped for transporting to your retail stores or want some finishing touches added to your show-stopping bundles, the right value-added service provider will be right on hand. As you polish your fulfillment, you can expect lightning-speed efficiency and productivity that’ll upgrade your eCommerce selling results.
Make your resources count
Time and money are two of the most important resources you can have as a growing eCommerce brand. Using fulfillment services will not only help you maximize your budget but it’ll also make your processes more streamlined and profitable.
Set a high bar for customer happiness to accelerate growth
One of the great things about using value-added services is that phenomenal customer experience will become your standard. As swift fulfillment becomes your signature and you can attract even more business into your store, boosting its growth.
Feeling overwhelmed by your fulfillment duties? Let MyFBAPrep do the heavy lifting.
Value-added services: Top picks for eCommerce brands
When it comes to value-added services, the world is your oyster. You can pick and choose from a wide variety of services whether you have a fixed or flexible logistics setup. As an eCommerce store, there are some core fulfillment services you should consider. Let’s break them down:
Re-labeling at scale
Relabelling involves taking products with premade labels, e.g., barcodes or printed packaging, and attaching new labels in line with the requirements of your sales channel.
If you have unlabelled goods from manufacturers and suppliers, you can also use this service to attach labels such as QR codes, Stock Keeping Units (SKU), or product name tags to your goods.
The perks of relabelling services
- Create compliant labels without exploding your workload: Sticking labels onto boxes may seem manageable, but as your order volumes and SKUs increase, it’s easy for things to go haywire. A relabelling service will ensure labels are accurate, organized, and uniform.
- Keep costs low: Relabelling can be a time-consuming and intricate process. If you depend on an eCommerce marketplace’s fulfillment service to carry out this task, you could be left with an eyewatering bill. Outsourcing this task to a 3PL will help keep your costs in check.
- Consistent labels no matter where your goods come from: When you use multiple manufacturers or suppliers, maintaining consistency in your labeling can be costly and get any safety or branded stickers added at scale.
How it’s done:
- MyFBAPrep works with brands to develop labeling and sticker guidelines to ensure uniformity in your labels every single time.
- Staff execute the labeling service based on the guidelines
- Relabelling work is inspected for quality and consistency before sign-off.
Co-packing involves taking goods from their raw and packaging them into finished products. While often used in the food industry, co-packing is also great for eCommerce brands with multiple SKUs and sales channels. Co-packing services can also include inventory management, packaging design and production, product assembly and warehousing, and distribution.
The perks of co-packing services
- Increase your supply chain output: Taking an item from freshly made to packaged products can be a messy labor of love, requiring expertise and space to get the job done efficiently. A co-packing service will help you access the necessary tools, space, and workers to maximize productivity.
- Prep goods fast no matter what: When you’ve got a small team working on everything from customer service to prep and fulfillment, it’s easy for important tasks like prep to get bumped down your to-do list. By using sorting and segregation, you can prep and send goods quickly no matter what your team’s obligations look like
- Slicken your prep process: By taking the prep and shipping off your hands, a co-packing service can help you gain more flow in your fulfillment process while executing multiple packaging specs. This will help you avoid issues like stockouts and non-compliant goods.
How’s it done:
- MyFBAPrep will work with you to craft product and shipment outer packaging guidelines for every product and sales channel.
- We will receive your goods in any state.
- We brief and assign team members to a station and task to speed up workflow.
For example, At MyFBAPrep, we recently received 50,000 dog bones that we needed to put on individual J-Hooks and hang tags. We made custom plywood tools to accelerate work output and keep our workstations and product handling hygienic.
Within 24 hours, we got the bones ready for sale with the right labels and packaging. We also boxed and palletized them to keep the shipment organized.
Bundling is when you batch similar products together to an offer. You can use them for promotions, holidays, and even as a way to shake up your existing product without creating new items.
The perks of bundling services
- Increase average order value: Bundling is one of the few services that can visibly impact your bottom line. Since you can earn more per order, bundling is a fantastic way to boost your store’s return and make your marketing campaigns more cost-effective.
- Optimize your items’ perceived value: Be it saving time, creating a memorable gift, or an easy kit, shoppers love bundles and the value they provide. For instance, by putting together products your customers often buy together at a discount, your offer can become more appealing despite not offering new products.
- Save space and simplify replenishment: With rising costs and continuing supply chain chaos, warehouse space is precious, and filling it with your most important goods is essential. Bundling helps you get goods into stock more easily and can even serve as backups for single product purchases by tearing them down when necessary.
How it’s done:
- MyFBAPrep can take individual items and package them as one unit.
- Alternatively, we can prep singular products into one order at the fulfillment stage.
Pallet bag packing
Pallet bag packing allows you to bundle and attach outbound shipments to a pallet in one swoop. Choose from different-sized bags and purchase in bulk to fit your need.
The perks of pallet bag packing
- Give your goods a safe ride to their destination: Pallet bag packing allows you to you lock the goods into one solid unit for transportation. This improves the pallet density and stability so you can ship them worry-free.
- Reduce inventory loss: With pallets secured using pallet bags, you can reduce the risk of product damage from things like mobile goods, dust, and moisture during transit and unloading and so protect your investment.
- Quick, easy, and cost-effective prep: If you’re looking for a fuss-free solution for your outbound shipments, pallet bag packing is the answer. You will add the finishing touches to your outbound shipments fast and easily without breaking the bank.
How’s it done:
A variety pack service allows you to package individual items into one unit. You can vary the assortment by size, product, or quantity.
The perks of variety pack services
- Switch up your offers to skyrocket sales: From assorted chips to face mask multiple packs, variety packs are a staple in the retail and eCommerce worlds. Using a variety pack service can help offer more choices to shoppers and increase conversions.
- Keep inventory costs manageable: As a growing business, it can be challenging to cover inventory costs with variety packs alongside your regular stock needs. Using a variety pack service will give you the option of creating variety packs on demand from one inventory pool.
- Hit the gas peddle on laggard items: Variety packs services offer you a great way to reposition slow-moving products to clear your inventory quickly and get higher margins per sale.
How’s it done:
Shrink wrap involves tightly wrapping boxes or products with a polymer plastic film that “shrinks” around the object.
The perks of shrink-wrapping services
- Save on product packaging: Not every product needs a box or a tag, sometimes shrink wrap will do the job. Using a shrink wrap service will help you keep costs packaging, storage, and shipping costs lower.
- Add an extra security layer to your shipments: Got a shipment of valuable goods? Shrink wrap can offer a layer of protection by making it harder to access its contents.
- Make your pallets more: As the saying goes, “there’s strength in numbers”. A shrink-wrapping service will help you tie boxes together, wrap shipments to pallets for more, and put individual items into one bundle for more sturdiness.
How’s it done:
Sort and segregation
Sort and segregation, a.k.a. sort and seg, involves your fulfillment provider handling unloading and sifting through shipments. This involves stock counting, quality inspection, packaging, and repacking.
The perks of sort and segregation services
- Get goods ready from sale easily: Purchased a liquidation pallet you want to rebrand? No problem! A sort and segregation service can help you prep goods for sale with minimal fuss.
- Get faster prep: Since you can send goods exactly as they are from your suppliers, you can speed up your prep and pack for faster restocking and fulfillment processes.
- Access specialized skills no matter your budget: Things like quality assurance and packaging take specific skills to execute, and with limited resources, it can be difficult to maintain high standards. A sort and segregation service will allow you to tap into these skills without needing to develop them in-house or sign up for lengthy contracts.
How’s it done:
- MyFBAPrep can handle the entire process from receiving goods from manufacturers to sorting and segregation of your SKUs according to your spec.
Get ahead with optimized fulfillment
Value-added services offer an excellent opportunity to streamline back-end processes and make your fulfillment hassle-free and cost-effective.
No matter your budget, product portfolio size, or packing requirements, there’s a service out there for you. So pick the areas you need help with the most now and get started.
The sooner you sharpen your fulfillment process, the faster you can start seeing results in your customer satisfaction and sales.
If you’re looking for a prep and pack partner, MyFBAPrep is ready and waiting with the services and tools needed to set your brand apart. Get in touch to learn more.
The Importance of eCommerce Inventory Insurance And How to Choose The Right Provider
Ever suffered a stock loss?
If so, you’re not alone. In 2020, 15% of US retailers experienced an inventory shrink of 3% or higher, and only 10% said they saw stock losses between 1% and 1.24%. These figures may not sound like much, but losses can rack up to eye-watering amounts when operating with high sales volume or selling expensive goods.
Not only is this experience painful, but your business will have to foot the hefty bill solo without a lifeline. Worse, the unrealized sales still impact your store’s profits and overall ROI, rubbing more salt into the already gaping wound.
Luckily, for an eCommerce business, that lifeline is inventory insurance.
In this post, we’ll explore what inventory insurance is and what it’s not. We’ll also share some perks of using this type of cover and tips on selecting the best insurer for your business.
Still nursing wounds from stock losses and damage. Learn how MyFBAPrep can keep your inventory safe.
What is inventory insurance?
Inventory insurance is protection you buy to cover physical stock in your business. While buying stock cover is a necessity for all eCommerce businesses, it becomes especially useful in scenarios such as:
- Brands experiencing fast growth
- Cross-border selling
- Selling items that are known to have high defect rates, e.g., electronics
- Retailing goods with a short shelf-life, e.g., consumables.
Costs can vary depending on the service level you choose along with factors like inventory spec, the type of cover you need, and your business’ claim history.
What does inventory insurance usually cover?
You can choose what issues and circumstances to cover by carefully vetting your provider and matching them to your store’s unique requirements. As a base, most insurers offer protection against issues like:
- Late dispatch/arrival
What inventory insurance doesn’t cover
Inventory insurance doesn’t cover assets or areas in your business besides stock. For example, if you want indemnity for operational ceasing, litigation, or employees, you’ll need to seek additional insurance policies.
5 Tempting benefits of inventory insurance
By now, you probably have a few different policies in your eCommerce business and are questioning whether the extra financial commitment to inventory insurance is worth it. In short, it is! Let’s run through a few reasons why purchasing cover for your stock is always a good idea:
1. Security when disaster strikes
Whether it’s flood damage to inventory during peak season or a warehousing blip that leads to large stockpiles expiring, disasters happen. Getting inventory cover will ensure you can get back on track sooner by reducing your risk exposure, so you can rest easy at night.
2. Protect yourself from known issues
It’s easy to worry about the unknown sneaking up on you and neglect the stock-related problems you often encounter, that can derail your progress. For example, if you sell fragile goods or operate in an area where inventory theft is common, you could frequently find yourself with stock-related losses.
Buying inventory insurance can help you stay steps ahead of the common problem you encounter to minimize damage.
3. Get access to essential eCommerce services
For many services and solutions, insurance is a right of passage to do business. So, if you want to work with a fulfillment house, 3PL, or multiple carriers, inventory insurance comes in handy. You’ll have peace of mind knowing if anything happens to your goods while in their care, your insurance will kick in to save the day.
4. Show investors their cash is in safe hands
Nobody likes to lose money, not even investors. Inventory insurance can help reassure your investors their cash won’t go up in flames if you experience stock loss. It’ll also give them more confidence that your business can remain agile and recover in the event of stock losses.
5. Maintain a good buyer experience
Even when things go wrong, inventory insurance will give you the cash flow to fix problems for your buyers. As a result, your buyer experience can escape unscathed, protecting your brand reputation and future sales.
What to look for from your inventory insurance provider
To get the best provider and insurance cover, it’s critical to vet providers carefully. There are many questions you can ask and traits to require to whittle down the list of viable insurance options. Here are a few characteristics to look out for:
- Fair terms, service levels, and rates. Whether you opt for the premium or basic cover, insurance that gives you your money’s worth is essential for solid ROI. Your provider should also offer fair terms and rates, with the option to upgrade or downgrade your plan.
- Flexible policy periods and extensions. eCommerce is constantly changing, and your policy should be too. Opt for a plan that allows you to adjust its setup when needed. For example, switching from yearly to monthly payments is hassle-free.
- Satisfactory claim windows. Ensure your plan offers reasonable terms on when you can begin claiming once signed up and the timeframe for making a claim when catastrophe strikes. This will help avoid stressful rushing to claim during peak seasons.
- Low to no charges to make a claim and hikes following a claim submission. Choose plans with affordable claim charges that won’t punish you financially for making claims by imposing larger premiums. Depending on the big claim, a small hike in the premium price may be feasible.
- Complete reimbursement for eligible claims. Buy insurance that will payout 100% of the cost of the goods when damaged to ensure you aren’t left out of pocket.
- Multi-site coverage. Look for insurance covering multiple locations and territories where your inventory is stored and sold.
Is your store scaling fast? Get the right fulfillment solutions for the journey.
Tips for picking the right inventory insurance plan
Now we know what to look for in an inventory insurer, it’s important to craft a strategy to choose the right service and know when to tweak it for optimal cover.
Let’s dive into the steps to take.
Record which items need insuring
First up on the inventory insurance to-do list is to create a physical asset list and decide which items need coverage. Use this list to set the budget and service level you require. Your stock list should include information such as:
- Product name and a short description
- Price and manufacturing dates
- Current number of units in stock (per SKU)
- The average number of units in stock per month (per SKU)
- Item cost
- Product recommended retail price (RRP)
- Serial numbers
Tip: Take note of important details such as inventory location(s), the time it takes to produce each product, and the Units you sell per month to give insurers. This information will help them advise on the most suitable plan for your business.
No matter how good the deal may look, never take the first offer. Explore different options and seek advice from multiple companies on the type of cover you should procure.
Obtain quotes, compare prices, and use them to get even deal quotes. It may seem like a lot of work upfront, but since your inventory will be an ongoing expense, it’s worth the extra time and effort to secure the best rates and services.
Only work with reliable and experienced providers
Make sure your inventory insurance plan is legitimate, and the issuing company is trustworthy and experienced to avoid issues later down the line. A few things to look for in your inventory insurance provider include:
- A solid track record for dealing with cases justly
- Overall positive reviews and testimonials
- Good payout rate
- Quick response rate
- Excellent communication
Conduct annual reviews
As your business matures, its inventory may change along with its required cover. So keep your stock list updated for easy monitoring and track your claims frequency, reasons, and success rate. Also, make a note to re-evaluate your inventory insurance needs to guarantee it continues to meet your business needs. Some areas to consider when reassessing your inventory insurance are:
- Portfolio size
- Product complexity
- Territories traded in
- Number of claims that year
Have a cash buffer
Sadly, not all claims will be eligible for a payout like “acts of God” unless your policy outright says it’s covered. So, have sufficient emergency cash reserves to protect your business. This amount can vary depending on your product costs. However, aim to have enough cash to meet your minimum required stock units for your top products, manufacturing minimum order quantities, and funds for expedited shipping.
Need a hand managing inventory? Learn how MyFBAPrep can help.
Wrapping up — Strengthen your defenses with inventory insurance
Stock loss poses a real threat to eCommerce sellers’ and retailers’ long-term success. Inventory insurance creates invisible, ironclad walls around your eCommerce business to ensure it thrives come rain or shine.
Understand your business needs, research the best inventory insurance providers in your territory, and evaluate multiple quotes to find the best fit. Keep an eye on your business’s changing needs and adjust your insurance plan accordingly to ensure you don’t get left out of pocket when something goes wrong with your inventory.
Take these steps, and soon, you’ll have inventory insurance that protects investments and helps your store grow through the highs and lows of eCommerce.
Don’t let stock losses dull your store’s shine. MYFBAPrep can help you manage inventory with ease.
How to Manage Backorders
Demand is high. Orders are rolling in. Yet, stock levels are at zero and the warehouse shelves are empty. What do you do? Sell through and ship items later, or put all orders on hold until stock levels are replenished?
Selling products when you don’t have inventory can be a risky retail strategy. Implement a backorder strategy the right way and you’ll be able to successfully keep order numbers rising while waiting for stock to arrive.
Let’s explore everything you need to know about backorders: what they are, why they happen, and how to efficiently manage backorders and leverage their secret power for your eCommerce business.
What is a backorder?
Backorders refer to products that are temporarily out of stock and due to be replenished soon.
Selling products on backorder means you can capture a sale with the promise that customers will receive the goods as soon as stock levels have been replenished.
Backorders can happen for a variety of reasons (which we’ll dive into shortly) from unexpected demand to supplier delays.
Keeping track of your backorder rate is a great way to monitor the health of your inventory levels.
Calculate your backorder rate by dividing the number of undeliverable orders (due to temporary stock shortages) by the total number of orders, then multiplying the result by 100.
A high backorder rate indicates that demand often outweighs product availability, while a low backorder rate shows that you consistently have enough inventory to fulfill orders. Having some products on backorder can be a smart retail strategy for your store if managed efficiently. You’ve just got to find that sweet spot — too many backorders will upset your customers.
Backorders vs out-of-stock products: What’s the difference?
While backorders are products that are temporarily out of stock, the term backorder shouldn’t be confused with “out of stock”.
Products that are out of stock often don’t have a determined date for resupply. Out-of-stock products may be due to be replenished or they may be discontinued, never to grace your warehouse shelves (or customers’ orders) again. On the flip side, backordered products do have an expected restock date. This restock date is usually shared with customers so they know when to expect their order.
- Out of stock = not currently in stock with no set replenishment date
- Backorder = not currently in stock but has an expected replenishment data
Backorder vs backlog: What’s the difference?
The difference between backorders and backlogs is slightly more complex as backorders can be part of a backlog.
A backlog covers the total number of orders you have received but not yet shipped to customers. As you can see, this would include any orders that are on hold due to backorder.
Let’s say a customer places an order on the first day of the month, but it isn’t shipped until the last day of the month. That order will be placed on your backlog on the days in between ordering and delivery.
We know backorders happen due to products being ordered while temporarily out of stock. Meanwhile, backlogs refer to all orders that haven’t yet been shipped. This could be due to a myriad of reasons such as customers requesting later shipping dates, slower order fulfillment due to increased demand, or having products on backorder.
The risks and benefits of backorders
While it seems like a lucrative opportunity, retailers offering backorders need to tread carefully.
Lean inventory can be great for minimizing costs, waste, and resources. Go too lean with your inventory levels and you run the risk of stockouts, lost sales, and damaged customer relationships. You only have to look at the recent COVID-19 pandemic to know that retailers using just-in-time (JIT) inventory management were hit hard by supply and demand shocks.
As well as putting yourself at risk of supply and demand shocks, backorders can also impact customer relationships. Longer than expected lead times could lead to order cancellations, damaging customer trust and driving them into the arms of your competitors. Order cancellations due to backorders could then lead to overstocks where you have more inventory than demand.
Backorders shouldn’t form the backbone of your eCommerce business. Rather, they should be strategically used to maintain order demand, even when you don’t have enough stock on hand.
Backorders are great when managed correctly. An efficient backorder strategy can support customer retention by allowing people to place orders while you’re in between stock. Backorders also maintain product hype by demonstrating demand. Add these factors to the ability to sell products before you have inventory, and you’re well on the way to increasing revenue with a well-managed backorder strategy.
Effectively managing backorders requires a careful balancing act of finding the optimal replenishment levels and frequency.
What causes backorders?
There are a number of reasons why backorders might occur. A supply chain delay is the overarching cause of backorder. Broken down, these supply chain delays could be caused by:
- Products selling better than expected – It can be hard to judge which products will perform best. If products sell better than expected, you may find yourself facing stock shortages while you replenish inventory.
- Supplier issues – Not everything is in your control. Supplier issues might happen due to natural disasters, material shortages, strikes, shipping issues, or compliance errors — to name a few reasons. These issues can also cause stock delays leading to backorders.
- Inefficient inventory processes – Not all inventory processes are made equal and some put you at higher risk of stockouts. Using inefficient inventory processes such as just-in-time inventory management could cause backorders due to understocking products.
- Unexpected product demand – Products can peak in demand for numerous reasons. Whether it’s due to a high sales period such as Black Friday and the holiday season or your product went viral on social media, unexpected product demand could lead to backorders if demand outweighs stock levels.
- Low safety stock levels – Safety stock levels are minimum stock levels designed to protect against stockouts. Miscalculating safety stock levels could cause that safety level to be lower than actual demand and, in turn, may lead to backorders.
Whatever the cause of backorders may be, it’s crucial you have strong backorder management processes in place.
How to manage backorders?
Make backorders a revenue-driving force for your eCommerce store by following our best practices for efficient backorder management.
Decide whether to offer backorders
First, decide whether you want to offer backorders. Selling products on backorder sounds like a dream retail strategy — customers can still purchase while you wait for the products to come in. In reality, it requires astute attention to detail and strong organizational skills.
When deciding whether to offer backorders, ask yourself if you have the capacity to stay on top of backorder processes. Make sure your inventory and order systems are able to handle backorders. Having a reliable method for keeping track of backorders will help prevent order delays, cancellations, or even forgetting to ship backorders to customers.
You’ll need to have a pulse on accurate product restock dates and product demand too. Offering backorders is a numbers game where you balance incoming and outgoing stock against current and expected orders. You will also need to run a tight fulfillment and replenishment strategy to keep up with backorder demands.
Estimate the lead time for backorders
You shouldn’t offer backorders if you can’t accurately predict when the orders will be shipped.
Backorders are ideal for maintaining order volume while waiting for supplier inventory restocks. But, your customers aren’t going to wait forever. Selling products on backorder without an estimated lead time can be frustrating for customers. If they’re buying something online, they want to know when they’ll receive the goods.
Work with your suppliers to calculate the expected lead times for products. You can then decide whether it’s worthwhile offering backorders on a product-by-product basis. People may be willing to wait longer for investment items such as a new sofa or a designer handbag. These products could have back order lead times of 12 weeks or more. However, they may be less willing to wait for impulse purchases. Offering long lead times on impulse purchase items could result in high order cancellation or returns rates.
Estimate the lead time for all products in your inventory and determine if it’s a viable strategy before letting customers order products on backorder.
Anticipate order demand
Order demand ebbs and flows. Some products may sell consistently throughout the year while others experience peaks and troughs. Winter woolies, for example, will experience increased demand in the colder months.
Understanding the expected order demand throughout the year allows you to carefully forecast high purchase periods. You can then work out when you might need to put a strong backorder strategy in place. Offering backorders helps you handle spikes in order demand, especially unexpected ones. You’ll be able to retain customer orders, knowing that they’ll be shipped out on longer lead times.
Anticipating order demand throughout the year also helps you maintain accurate safety stock levels. You can adjust safety stock levels depending on the expected order volume. That way, you only need to offer backorders when you receive an unexpected increase in orders.
Prepare for backorders
There are a few things you can do to prepare for backorders and ensure your backorder strategy only kicks it when absolutely necessary.
We always recommend diversifying your supplier network. Having more suppliers you can pull from for product replenishment can reduce your chance of backorders. If you do need to offer backorders, you can contact your suppliers to see who can fulfill the backorders in the shortest turnaround time. Be mindful of the increased cost implication of smaller order volumes from backup suppliers.
Offering alternative shipping methods can also offer protection in the event of backorders. Let customers split their order so in-stock items are shipped immediately while they wait for backordered products to arrive at a later date. This minimizes frustration by ensuring customers still get the rest of their order. However, retailers offering split-shipping will incur two separate shipping costs which they can choose to absorb or pass on to customers.
Increasing production is another way you can prepare for backorders by keeping unexpected stockouts at bay. Make sure you have a sufficient amount of inventory to cover high-demand sales periods. That way, you can keep backorders to a minimum. After all, every purchase on backorder adds additional strain to your eCommerce fulfillment processes.
Add any backorder information to product listings
Be upfront about backordered products by adding backorder information to product listings. Transparency creates trust with your customers and prevents avoidable friction and frustration.
Add the expected lead time for backorder products on product listings. Make sure it’s easy for customers to see which products are available for immediate shipment and which ones will have longer lead times due to backorders.
Keep customers informed
Keep customers informed about their order status with emails and SMS messages. Send them order update emails and messages letting them know when they can expect to receive their orders.
This could include notifications letting them know:
- The expected delivery window for their order
- The arrival date of the products in the warehouse
- When the order has been processed for delivery
- The order is out for delivery
- An updated expected delivery time
Keeping customers informed every step of the way protects your relationship with the customer, building a circle of trust.
Making sure your customers know when to expect their orders also helps mitigate the negative effects of order delays. Delivery issues are the leading cause of customers detracting from brands. So, keep delivery woes at bay by keeping customers in the loop at all times.
Maintain accurate inventory records
Streamline inventory processes and keep real-time records of all inventory operations. Keep tabs on everything from current inventory levels to order backlogs. You need to know how much inventory you have available versus how much inventory you need to fulfill current and expected customer orders.
Accurate inventory records allow you to keep on top of all incoming orders, making sure you have enough stock to fulfill purchases. You can also check inventory records to see when you need to re-order stock from suppliers to cover backorders or maintain safety stock levels. Every backorder you receive is another unfulfilled order you need to manage. If you want to effectively offer backorders, you need to run a tight ship.
You can also use inventory records to forecast future stock demands and explore your current backorder rate. Analyzing your inventory records lets you optimize processes moving forward.
Optimize fulfillment operations
Don’t let your backorder strategy fail at the last hurdle. Ensure your fulfillment operations are equipped to handle backorders.
Backorders can result in periods where you have a large influx of orders that are put on hold until a set date. As soon as inventory is available, those orders in the backlog will need efficiently fulfilling to make sure they reach customers in the anticipated delivery window.
Fulfilling backorders can be a time and resource-exhaustive task. You may need to bring on extra warehouse staff to support with backorder fulfillment or outsource fulfillment to an experienced third-party fulfillment partner.
At MyFBAPrep, we’re ready to support retailers with our seamless fulfillment services. Simply send your inventory to us and we’ll handle the order fulfillment from start to end. You’ll even get real-time insights into inventory and orders.
Wrapping up — learn how to handle backorders and avoid losing customers
Backorders can be a lucrative revenue driver for your store but only when handled with care. When implemented correctly, backorders can maintain the flow of incoming orders and boost customer satisfaction with transparent communication.
Fail to finetune your backorder management operations and you run the risk of upsetting customers and putting strain on your inventory, fulfillment, and accounting. It’s a dangerous situation for any retailer to be in.
Create a clear action plan for handling backorders and you’ll be able to retain customers and keep them satisfied. Preparation really is the key to survival when managing backorders.
If you need a helping hand with backorder fulfillment, reach out to see how we can support you with our well-connected warehouse and fulfillment network.
A Practical Guide to Switching 3PLs
The secret is out — eCommerce is on the up. Digital buyers have soared from 1.3 billion in 2014 to 2.14 billion in 2021, and sales are set to reach $7.3 trillion by 2025. But a lesser-known fact is that supporting services like 3PLs are also expanding and elevating, with the 3PL industry set to reach $1.78 billion by 2027.
Put the strengths of these two expanding industries together, and you have the materials to build an online selling powerhouse. But as you traverse the eCommerce road, there may come a time when changing 3PLs is the best move.
We’ll admit there’s much to plan and execute to make a 3PL switch successful, but don’t despair. We’ve compiled everything you need to know about making a seamless jump and up-leveling your fulfillment services.
In this guide, we’ll:
- Uncover the top scenarios jumping ship from one 3PL to the next makes sense.
- Explore the fulfillment choices available and how to set the stage for success.
- Reveal some things to watch out for along the way to help your business stay on track.
In the market for a new fulfillment service? Look no further than MyFBAPrep.
7 Eye-opening signs it’s time to switch 3PLs
If you’re questioning whether it’s the right season to move on from your 3PL or if their actions warrant such drastic action, you’re not alone. Timing and objective reasoning are essential to making the right decision. To help answer the burning questions on whether it’s time to cut ties with your 3PL, let’s explore some common issues eCommerce entrepreneurs have encountered that inspired them to pull the plug:
1) Constant inventory and shipping errors and inaccuracies
Did you know great customer experience is so important that 86% of shoppers are willing to pay more to get it? If your 3PL’s lack of service negatively impacts your brand experience and reputation, causing one too many sleepless nights, change is imminent. Without shift action, loyal customers may turn elsewhere and, worse still, tell their friends about their poor experience.
2) Fast yet unsupported business growth
Say your business has exceeded its growth targets and shows no signs of slowing down. It’s a great scenario, except your 3PL can’t cope with your growth rate. Their internal processes become overwhelmed with no remedy. If this sounds like the challenge your business is experiencing, it could be time to say goodbye.
3) A need for increased efficiency
As your eCommerce business scales, you may notice inefficiencies holding back its profitability, productivity, and smooth running. If your 3PL isn’t trying to upgrade their services and performance, you’ll soon outgrow them, dampening your business’ potential.
4) Your logistics and fulfillment are too expensive
Perhaps your 3PL has had a few price hikes; warehousing has become more expensive in the network your 3PL uses, or a change in couriers has caused charges to shoot up. Either way, it could be time to go if the margins no longer make financial sense.
5) Lack of technology-enabled solutions
In today’s digitized, hyper-competitive market, basic systems, and old-school technology hold your brand back from its potential. Soon, missed opportunities and threats, haywire order management, and lack of supply chain visibility become the norm, wiping away your competitive edge. So, if it feels like you’re running your eCommerce business’ operations in the dark ages, it’s time to move on.
6) Poor communication
Does your fulfillment provider disappear for days and sometimes weeks, only to reach out in a panic with an emergency? This setup puts your business on a fast track to costly disasters that will obliterate all of your hard work and progress. Don’t wait for issues to arise; get out while you still can.
7) Limited services stifling growth and expansion
Perhaps you run an international store and ship orders around the clock, yet your 3PL only has 8 hours of customer support at one timezone. While this may seem harmless on a good day, when issues arise outside of these service hours, you’ll be left to fend for yourself, which could spell huge trouble for your business.
Fulfillment and logistics: What are my options?
Once you’ve decided to part ways with your existing 3PL, the next task is to examine the replacement fulfillment options available. Let’s cover some of the best services for a growing eCommerce store along with their advantages and drawbacks:
1) Choose another traditional 3PL
A 3PL takes over the management of critical tasks in your supply chain to drive optimal productivity and efficiency rates. While the 3PL assists your store with fulfillment-related tasks, you’ll maintain control of your supply chain. Such tasks include:
- Stock distribution
- Inventor management
- Fulfillment (picking, packing, and shipping)
There are 3 kinds of 3PLs you can explore (note some 3PLs may combine these services):
- Distribution/warehousing-driven 3PL: Concentrates on storing inventory, shipping, and managing returns.
- Transportation-centered 3PL: Focuses on the movement of goods for your store. E.g., shipping the stock from manufacturers to warehouses and from storage facilities to customers.
- Data/finance-focused 3PL: Assesses your industry’s trends and helps you optimize operations and finances accordingly. Some services they offer include cost accounting, inventory management, and freight auditing.
Pros of traditional 3PLs
- Maintain flexibility: Unlike a fixed logistics setup, most 3PLs allow you to scale services up or down quickly without much trouble, helping your brand stay nimble. So, whether your store has slow seasons that require reduced fulfillment operations temporarily, or has plans to expand overseas, a 3PL can help.
- Improve specific fulfillment tasks: Since you can cherry-pick which fulfillment tasks you hand over to a 3PL, you have the opportunity to optimize select parts of your supply chain. This way, you can maintain any strategies or processes that produce positive results, while upgrading any underperforming areas.
- Track inventory easily: One of a 3PLs greatest strengths is inventory tracking. From the moment your stock enters the 3PL’s ecosystem, you can get (sometimes live) information on where the product is. This trait is especially beneficial if your store holds many SKUs or high volumes.
- Going pro can lead to quicker growth: Access to professional help from an experienced and reliable 3PL allows you to focus on your core competencies and scale faster. In other words, you’ll get the chance to work “on” instead of “in” the business.
Cons of traditional 3PLs
- Costs may rack up: Depending on your business’ size, you’ll spend significant cash during the switch. This is due to things like needing a new order processing set up, backorders, and admin.
- 3PLs are restricted to optimizing logistical operations: You can’t depend on a 3PL to optimize your entire supply chain and may have restrictions in their tech capabilities. You’ll need to seek additional fulfillment solutions elsewhere to boost productivity and efficiency.
- It can be difficult to distinguish between different 3PL services: When you’ve been burned by 3PLs promising stellar results with similar services but don’t deliver, it can be challenging to know what solutions will work for your business and who you can trust.
2) Opt for a modern, all-inclusive fulfillment service
Modern fulfillment services offer everything 3PLs provide and more. Some call themselves 4PLs, while others opt for names like an all-inclusive fulfillment solutions provider, helping you to execute your supply chain and fulfillment quickly and easily.
These service providers have expansive warehousing and fulfillment networks, allowing them to offer ancillary services from marketplace prep services to freight forwarding for direct-to-consumer and B2B retail goods.
Most modern fulfillment providers’ tech-backed structure enables them to compile large data pools. These help them spot potential threats and opportunities in your supply chain and global markets.
Pros of modern fulfillment providers
- Access to more growth-fuelling solutions: Modern fulfillment services offer a wider selection of services than typical 3PL providers. These allow you to uplevel your whole supply chain instead of just operations involving packing and shipping goods to customers. For example, you can get help with tasks like customs clearance, access to warehouses in key locations, shipping networks, and faster, more cost-effective transportation.
- Optimize operations to fit your brand mission and goals: The possibilities are endless when you team up with a modern fulfillment provider. For example, if customer satisfaction is your top priority, you could work with the fulfillment provider to offer services like paperless returns, same-day shipping, and pick-up. In short, you’ll get all benefits from a 3PL plus more.
- Keep your store in everyone’s good books: From Wish to Amazon, selling on marketplace platforms comes with specific requirements and strict rules. These duties tally up to a considerable amount of work for a fledgling eCommerce business. Handing over the reins to a fulfillment house will help you avoid mishaps and provide exceptional service to customers.
Cons of modern fulfillment providers
- May not be cost-effective for low volumes: Many modern fulfillment providers have high minimums for fulfillment services to ensure their services make financial sense for their business. As a result, even the lowest service tier may be unprofitable if you can’t guarantee your brand will hit the minimum units you sign up for.
- Cutting ties is no easy feat: It can be challenging and expensive to move on from a 4PL because they weave into your entire supply chain, and you hand over oversight of key supply chain management duties.
- Loss of control: While you will have strategic input and overall power since modern fulfillment services take over the management in key areas in your supply chain, you’ll lose the ability to make day-to-day decisions on your inventory, transportation, and fulfillment.
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How to switch fulfillment services seamlessly
While changing your fulfillment solution can be a long and winding road, you can still ensure the process runs smoothly. For this, you’ll need a plan and a can-do attitude to execute it. Here are the steps to take:
Understand your business needs
No eCommerce has the same circumstances. So, gaining clarity on your store’s existing and upcoming needs is critical. So, examine how the following areas impact your fulfillment requirements:
- Monthly orders: Crunch your numbers to find an average order amount. This number will help you filter through the set order minimums from fulfillment providers.
- Seasonality: Do sales drop suddenly in the summer? Or maybe you experience accelerated sales velocity in the fall? Map out your sales peaks and valleys to understand how much fulfillment supports your store’s needs and when.
- Supplier relationships: Take note of which suppliers are easy to work with as well as the unreliable ones that need replacing to make a switch over successful.
- Manufacturing timelines: Jot down how long it takes to create and package each SKU and how this impacts restocking times and shipping options.
- Growth projects: Compile all of the projects you have underway or in the works that will help your business scale, e.g., cross-border expansion and going multichannel.
- Scaling goals: Define where your store will be in the next 1-5 years and the revenue goals you intend. Observe how many units you’ll need to hit these targets to share with potential fulfillment partners.
- Marketing: If you have any seasoned ad or influencer campaigns that generate large orders, observe how many orders they produce and how it’ll impact your inventory and fulfillment needs.
- Sales channel(s): Understand how the results each store you have produces each quarter, and the setup needed to maintain fulfillment speed, cost-effectiveness, and customer satisfaction.
Tip: Distinguish between nice-to-haves and essential services to keep solutions and costs lean.
Define your obligations under your existing 3PL contract
Legal troubles can slow down your 3PL switch over or even bring it to a screeching halt. Checking your duties to your current 3PL is essential to avoid legal disputes. Some questions to ask include:
- Does it make more financial sense to cancel the contract or see it through to completion?
- Will we need help from a lawyer to terminate the contract early?
- How much will it cost to enlist, and how long will it take?
- Does your contract require the services to end immediately, or is there a defined handover period?
Vet potential fulfillment providers
Once you know where your business stands strategically and legally, it’s time to sift through fulfillment providers to find your match. While no solution will be perfect, the right provider will tick the right boxes, considering your business goals, needs, and circumstances. Some traits to look for in your fulfillment provider include:
Your new fulfillment provider should have the knowledge and skills needed to serve fast-scaling online stores and facilitate the necessary pivots you’ll undertake. They should also know how to handle the products you stock or intend to carry, and the channels you plan to sell on.
It’s essential your fulfillment provider has high-spec technology that sharpens your execution in key tasks from order delivery to cost minimization. For example, it has tech tools that allow for budget preservation through shipment bundling and shipping box optimization. These solutions will help you maintain a competitive advantage and boost ROI.
Full supply chain visibility
Having a fulfillment partner that allows you to monitor your supply chain from end to end is a must-have for long-term success. It’s also helpful if they can provide alerts on any potential issues or needs, e.g., restocking and shipping delay alerts.
From pricing to processes, transparency should be part of your prospective fulfillment providers’ culture. This information will help you keep operations profitable and effective.
Nobody likes surprises on their monthly invoice from costly fulfillment services. Big bills can not only wipe away your margins but can also cause you to dip into budgets set aside for growth-related projects. However, it’s also not a great idea to opt for the cheapest solution, leaving you questioning what you should do. The answer is to work with a fulfillment provider whose service quality matches their pricing and doesn’t leave your business operating with slim returns.
An expansive fulfillment partner network
Fulfillment doesn’t exist in a vacuum. Your provider will need to lean on other providers for things like warehousing, freight services, couriers, and more. So, they should make a continuous effort to improve and expand their network.
Varied and expanding capabilities
eCommerce is constantly changing, and as a result, your store needs to stay ahead of the curve with its tech stack and strategy. Consider each potential 3PL or 4PLs best skills and how they fit into your eCommerce business plans. For example, say you run a coffee-growing business and want to launch a new product collection each quarter in different countries. Your chosen fulfillment provider would need to:
- Have temperature and moisture control storage and shipping
- Adequate warehouse availability in key regions within each country
- Enough staff to serve orders on the existing and new products
Reviews and references
No matter how accomplished a fulfillment provider appears, always do your due diligence. Obtain references and recommendations from trusted sources such as people in your network and trade journals. This approach will help weed out fulfillment providers that are a poor fit, lackluster performers, or scammers. Don’t forget to look at their disaster recovery plans to make sure they have the procedures to stay operational if trouble strikes.
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Create a realistic transition plan
To ensure your store switches successfully while maintaining good operations, establish the project scope in terms of time, cost, and effort required. You should also consider how you will monitor the budget, key milestones, and deliverables to stay on track. As a guide, some tasks to complete during your handover are to:
- Conduct internal risk assessment
- Create a detailed project plan, including each phase and target launch date (plus time buffers)
- Schedule meetings with a potential solution provider
- Conduct an onsite analysis
- Share product profiles
- Sell off overstocks
- Write off and dispose of deadstock
- Pack stock for relocation
- Arrange transport for stock removal
- Ensure adequate stock distribution for each key location
- Test run your potential fulfillment providers with one location or product
- Test your systems
- Ensure equal service quality across locations
- Confirm onboarding targets with the new fulfillment provider
- Validate Statement of Work agreement details with your new fulfillment providers
- Understand billing requirements and put them into the new contract
- Negotiate your billing schedule to maximize your cash flow
- Move stock from your existing to the new solution
- Communicate with customers that there may be some backorders and delays as you switch
Top tip: Don’t clear out your entire stock from your existing fulfillment provider as you make the switch. Keep enough units per SKU to avoid stockouts during the transition period (plus a few additional pieces as a buffer).
6 Things to watch when switching 3PLs
With global supply chain issues, changing customer preferences, and evolving market trends, it’s important to stay in the know on the latest information to keep your new 3PL partnership on track as you change over. Here are some scenarios to consider:
1) How changes in service requirements impact fulfillment costs
Most eCommerce businesses don’t stay with the same strategy they started out with. However, a turnaround in your product type, shipping carrier preferences, or market can cause pricing to fluctuate. So, monitoring how adjustment impact will impact your fulfillment profitability is vital.
2) How communication impacts inventory protection during transportation
To protect your stock investment, it’s critical you communicate the transportation and storage requirements for every SKU in your product portfolio. Highlight any items that require temperature control, gentle handling (e.g. fragile and flammable items) along with any specific dunnage, boxing, and unloading required to get your plan together for the safe transportation of your stock.
3) The time needed for adequate tech and systems syncing
Your dashboards must be properly configured to share sales data and supply chain information accurately. So, you’ll need to think about how long it will take to onboard each product SKU and ASIN. Also, you’ll require time estimates for integrating your 3PL or 4PL’s warehouse, inventory, and transportation management systems with your supply chain’s tech solutions.
4) The way product loading styles affect costs
Shipments requiring extra attention can become costly and slow to process. To keep your supply chain running efficiently, work with your manufacturers and suppliers to pack goods in a way that will avoid hefty unloading and processing charges. Some tactics to implement include are:
- Avoid floor-stacked containers. Opt for single or double-stacked pallets
- Separate boxes on a per SKU basis
- Ensure each product has a scannable barcode (unless you have requested prep services)
5) How new warehouse locations will impact fulfillment speed
It’s unlikely your new provider will have warehouses in the exact locations of your existing provider. Consequently, shipping speed can change from what you’re used to. Ensure your new warehousing and fulfillment sites can meet the service speed and quality levels your customers are accustomed to, map out new warehouses and distribution centers and formulate a plan to move goods. For example, suppose your new warehouse locations are further out than your existing 3PL or 4PL. In that case, you could pool top-selling goods in optimal areas within each warehouse and increase the number of delivery pickups for faster dispatch.
6) How adequately do your contract terms protect your business
Trust is important in any relationship, but when you consider things like inevitable management changes, market shifts, and business shakeups, it’s easy for responsibilities to become muddled without guidance outlined on paper. It’s wise to have detailed contracts outlining your 3PL or 4PL obligations and your store’s responsibilities. Some key information to add includes:
- Shipping targets (speed, accuracy, cost)
- Service terms and conditions
- Who will pay for damaged and lost goods
- Insurance coverage given
- Product safety and quality assurances
Wrapping up – Changing 3PLs the right way
When you’ve become comfortable with a 3PL, yet its results start to wane, it’s easy to go back and forth on whether switching will harm or hinder your progress. However, when done correctly, moving on from a 3PL can supercharge growth, customer satisfaction, and financial rewards.
Making the switch will take hard work, strategic planning, capital, and detective-like vetting of prospective service providers. Take the opportunity to implement new services that will help you grow and be prepared to stay the course to iron out any kinks in your new partnerships. Soon, fulfillment issues will be headaches of the past, and your store will have a 3PL partnership it can rely on for its next growth phase and beyond.
It’s never too late to upgrade your fulfillment services. Discover how MyFBAPrep can set you up for success.
eBay Fulfillment: Everything You Need to Know
Debating an eBay debut for your brand? If so, it’s easy to see why. With over 159 million users and 19 million sellers plus $10.4 billion in revenue in 2021, eBay holds a world of opportunity for ambitious eCommerce entrepreneurs.
When competing in such an expansive marketplace, it’s vital to stand out and make a memorable impact in your target customer’s world. That’s where your fulfillment setup comes in. With the right approach, your brand can wow its customers and rise to the top as one of eBay’s top performers.
But how do you go about crafting an effective fulfillment strategy? In this post, we’ll dive into eBay’s latest fulfillment service and share some simple tips for huge success on this titan marketplace.
Want to scale your eBay store? Learn how MyFBAPrep can help.
Does eBay have a fulfillment service?
If you’ve never heard of eBay’s fulfillment service, you’re not alone. Despite being tipped to be a rival to Amazon FBA, the service has flown under the radar.
The fulfillment solution called eBay Fulfillment by Orange Connex is a relatively new service. It launched in the US in July 2019 before expanding services in Germany in 2020 and adding a fulfillment option for the UK in late July 2021, and Australia in February 2022.
This isn’t eBay’s first rodeo in a fulfillment-related project. In 2019, eBay created a fulfillment service called Managed Delivery but shut it down shortly after in 2020. These days eBay acts as a broker with a select few delivery partners, combining their prep and shipping services with eBay’s tech tools.
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eBay Fulfillment by OrangeConnex services and fees: How it works
Like most prep and shipping providers, eBay Fulfillment by OrangeConnex has rules, processes, and fees you’ll need to get accustomed to for a successful partnership. Let’s explore some essential details:
To get accepted and enrolled in the eBay Fulfillment by OrangeConnex program, some steps you’ll need include:
- Sign up to register your interest in the service, and an eBay rep will call to discuss your fulfillment needs.
- Choose a fulfillment partner from the lineup.
- Prep goods for shipping into the warehouse or request assistance with this task.
- Send goods to the specified warehouse.
Storage and shipping processes
Once your goods are in eBay’s fulfillment network, you’re ready to start shipping goods. The partner fulfillment company will take responsibility for tasks such as:
- Picking, packing, and shipping
- Providing delivery updates
- Processing returns
eBay will invoice your business according to the fulfillment services you use. Fees for eBay’s fulfillment service consist of 3 parts:
- Fulfillment service fee: a flat fee for each order according to the package weight, and if it has more than 1 item, you’ll incur an extra charge per piece
- Storage fee: For every cubic meter your products require, you’ll be charged daily
- Additional services charges: From product labeling to disposal, you can pass on prep-related tasks and will incur charges depending on what service you use.
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Pros and Cons of eBay Fulfillment by Orange Connex
For many brands, eBay Fulfillment by Orange Connex will be a much-anticipated saving grace. However, the service isn’t perfect. To help decide whether eBay’s fulfillment partnership is right for you, let’s examine some of its pros and cons:
Benefits of eBay Fulfillment by Orange Connex
- Attractive, customer-focused shipping perks: Late cut-off times, same-day handling, international shipping, next day, and same-day delivery options are just a few perks eBay Fulfillment by Orange Connex offers. These benefits can positively impact your customer experience and boost conversions.
- End-to-end inventory management: From the moment you send goods to eBay Fulfillment by Orange Connex, you’ll have full visibility of your stock’s whereabouts. As a result, you’ll have more peace of mind and the ability to plan stock purchases with greater accuracy.
- Seller protection on errors: No more worrying about costly fulfillment errors. If eBay’s service is at fault, your brand won’t be penalized and will reimburse your business. You’ll also get performance-related boosts when you sign up. For example, eBay will wipe all “Item Not Received” notes on your account.
- Multichannel fulfillment capabilities: eBay Fulfillment by Orange Connex allows you to fulfill orders on other platforms using your stock in their warehouses. This perk will reduce the capital and time investment your brand needs to sell across channels.
- Gain shoppers’ trust with transparent delivery updates: eBay shares its service delivery up-to-date tracking and delivery information on orders. You can pass this on to customers to drum up excitement and reassurance.
Drawbacks of eBay Fulfillment by Orange Connex
- Service quality could vary: The broker-like setup of eBay Fulfillment by Orange Connex could mean shipping service quality varies depending on your chosen delivery partner. This makes it difficult to know what service level your customers will experience.
- Storage fees could rack up quickly, impacting your ROI: Since this program charges storage fees daily, you could end up with huge bills, especially if you send high volumes to the warehouse or have bulky items.
- Your items may not be eligible for the service: Some items are prohibited by Orange Connex, which could render you unable to use their service. Some forbidden products include:
- strong poisons
- Explosive items
- Flammable liquids
- Natural resources, e.g. plants
- Fertilizer and raw materials
4 Tips for success on eBay
Whether you have a new store or have been selling on the eBay marketplace for years, there are some timeless and strategic moves you can make to improve your results. To get started, let’s break down a few:
1) Pick the right products
Your product selection can make or break your conversion rates on eBay. Therefore, it pays to keep a catalog that meets your target customer’s needs and reflects growing trends. Some steps you can take to uplevel your product portfolio:
- Conduct research to find attractive goods your target customer is looking for.
- Select items with high-profit margins to accommodate shipping and ad costs.
- Monitor and adjust your prices according to market rates with a pricing tool to stay competitive.
- Test different product bundles
2) Select the best fulfillment provider for the job
Getting your fulfillment processes right plays a huge role in success on eBay. But to ensure you have a profitable system, it’s vital your fulfillment provider is the best fit. So, assess your options against your business’ current growth stage and goals. Some additional pointers on what the ”best” fulfillment service looks like are:
- Experience in eBay selling
- Capacity to scale services up and down (fast)
- Offers services that complement your targets
- Is fairly priced
Top tip: Excellent shipping and return options combined with fantastic products can help you achieve the highly coveted and profit-boosting “Top Rated Seller” status.
3) Make your listing stand out
Your listings are your products’ stage. Ensure they don’t fade into the background by improving key aspects of your listings and splitting testing for continuous improvement. For some pointers, here are steps to take:
- Optimize your listings: Combine SEO with high-quality images and product descriptions to display your items in the best light and make buying from your brand the best option. Also, test different listing formats, e.g. auction and fixed price, to find the optimal blend for your product portfolio.
- Offer free shipping to attract shoppers: eBay states winning over hesitant shoppers and business growth as just a snippet of the benefits you can experience with free shipping. So, tweak your pricing to make free shipping possible and impress shoppers with fast options. Also, provide a generous returns policy to decrease friction in the buying process.
- Price products low when launching products: To gain sales velocity and reviews, aim to price your new offers 10-33% lower than your intended future selling price and your competitors’ current asking price.
- Drive your own traffic: To get more engagement on your listing, tap into organic traffic with social media and experiment with influencer campaigns and paid ads. Then split test with eBay’s promoted listing campaign. Nearly 16% of products on eBay have promoted listings, leaving many opportunities for your brand to get noticed.
- Use good reviews to drive more sales: Utilize user-generated content in your social media and email marketing campaigns to attract shoppers to your listing.
4) Encourage buyer reviews
A review is so powerful it can determine whether a shopper buys from your brand or your competitor. So, make it a priority to secure reviews from buyers by providing an outstanding product and service, delivering on your promises, and shipping goods promptly.
You can also request an honest review from buyers via the eBay platform, and package inserts encourage buyers to contact you if they have any issues or concerns. Also, appeal negative reviews you can’t resolve with the customer. For example, say you ship the right product and the buyer mistakenly believes they received the wrong item and won’t remove the review, even after you’ve contacted them. You can contact eBay to request they remove the review.
Build a successful eBay fulfillment strategy
From handling shipping in-house to outsourcing fulfillment services, many options are available to take your eBay fulfillment from good to great. But to maintain customer satisfaction and a healthy bottom line, you must explore what fees your business can handle compared to the service level it requires and use it to guide your fulfillment strategy. Stay updated on your store’s fulfillment requirements as it scales, and be ready to upgrade when needed. Follow these tips and tricks, and it won’t be long before your brand outdoes its competitors and thrives.
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What MOQ Means For eCommerce Sellers And Using it to Your Advantage
If you work with suppliers or buy stock from manufacturers, you probably have experience with minimum order quantities (MOQs).
eCommerce sellers are often faced with MOQs when working with suppliers. Whether ordering boxes for shipments or restocking your product lines, suppliers often set MOQs you need to reach before ordering.
However minimum order quantities aren’t only reserved for supplier-seller relationships? You could set a MOQ for your customers too. Setting a MOQ for your eCommerce products could boost average order values, present wholesale opportunities, and get slow-stock moving.
Discover how you can use MOQs to your advantage as an eCommerce seller from both a supplier-seller and a seller-customer perspective.
What is MOQ?
The abbreviation MOQ stands for minimum order quantity. It’s the minimum number of units someone has to buy before they can complete their order.
As an eCommerce seller, this could be the MOQ you need to work with suppliers or it may be the MOQ you require from customers before they buy certain products. For example, your supplier might request that you purchase a minimum of 10 units when ordering.
The set MOQ could be applied to one product line or, in some cases, it could be redeemable against a variety of products. In the latter scenario, this is known as a minimum order value (MOV).
MOQs may be a set number based on units or price. Alternatively, MOQ may work on a tiered system whereby the more products you order, the more money you save.
You may set a MOQ of 10 units for one of your products but offer a percentage-based discount in increments of 50 units. So, buying 50 items would offer a cheaper cost-per-unit than buying 10 items.
eCommerce sellers can use MOQs to take advantage of buying products at scale. After all, the cost of mass-producing something is usually far cheaper than just producing one unit.
Setting product MOQs could also increase cart value. If your products have small profit margins, MOQs could ensure customer orders cover the product costs and provide healthier profit margins.
From a supplier-seller perspective, buying inventory items in bulk could reduce your individual product costs. MOQs can be a powerful tool for eCommerce sellers, as long as you know how to use them.
What MOQ means for eCommerce sellers
Setting a MOQ could be a game-changer for your eCommerce business. The most notable advantages of having a MOQ are that they offer a better price per unit and could result in an increased average order value.
Yet, that isn’t the only way MOQ impacts your business. As an eCommerce seller, MOQs can change the course of your business in more ways than one — making it more efficient and cost-effective.
On the other hand, complying with a MOQ from suppliers could result in higher up-front costs and a need for increased inventory space. Expecting customers to meet MOQ requirements could also turn some customers away if they only intend to buy one unit.
There are a lot of factors to consider when using MOQs as an eCommerce seller.
Here are some ways having a MOQ could impact your eCommerce business.
MOQs could influence which suppliers you order from as an eCommerce seller.
You might have to be more selective about your chosen suppliers if your eCommerce business has a limited budget for inventory purchases. ECommerce sellers with limited funds may be limited to working with suppliers that don’t have any MOQ requirements.
One way to get around the financial limitations associated with MOQs is to pass the MOQ on to your customers. Encouraging customers to buy products in larger quantities could make it easier for you to buy larger MOQs from your suppliers.
Let’s say you sell stationery products. If your supplier requires a MOQ of 100 units for pencils, you could pass this on to your customers by setting a MOQ of five units for those pencils. Therefore, you only need 20 orders to meet the supplier MOQ as opposed to 100 orders without a MOQ.
MOQs may impact the suppliers you have access to. By being smart and passing the MOQs onto customers, you could gain access to better supplier MOQs and open up the pool of suppliers you could work with.
Average order value
Establishing a MOQ strategy for your online store could encourage higher average order values (AOV). Rather than buying just one or two products, customers will buy a product in larger quantities and, as such, your AOV will increase.
For instance, a DTC drinks brand might choose to sell cans of soda at a MOQ of 12 units per order. This would encourage a higher AOV as consumers will buy a set of 12 cans at once, rather than a single can.
Increasing your average order value will also help offset the cost of packing and shipping orders, making this a double advantage of using MOQs.
Retail and wholesale partnerships
If your eCommerce store has only ever worked on a direct-to-consumer basis, setting MOQs introduces the potential to establish strong retail and wholesale partnerships. This diversifies your store earnings by adding another arm to your eCommerce business. Plus, it will offer greater brand visibility as you get your product on more shelves, marketplaces, and eCommerce stores.
You could set up a wholesale area on your eCommerce site where retail partners and wholesalers can access exclusive discounts when purchasing set MOQs. You can use this strategy to get your products into more sales channels.
When setting MOQs for new retail partners, offer an introductory MOQ that is lower for their first order. This helps secure new retailers and wholesalers by allowing them to test product performance with less risk.
Adding a wholesale channel to your eCommerce business will allow you to sell products at larger volumes. While this may come at a discounted rate, the increased volume will mean more money in your pocket.
If you sell products to wholesalers for $10 per unit when they buy a minimum of 100 units, you would make $1,000 in one wholesale order.
Compare this to selling the same product direct to consumers for $20. The end customer may only want to buy one unit at a time, which would mean you would need to secure 20 orders. But you don’t know how long it will take to secure those 20 orders.
The wholesale route offers greater control over product inventory and supply. This allows you to sell more products at once to receive a cash injection into your business.
Be mindful of product costs when calculating MOQs for retail partners and wholesalers. Make sure you are not selling products at a loss by calculating costs of goods (COGS), inventory costs, demand, and the break-even point.
Incentivize customers to buy higher product quantities by offering bulk order discounts. Offering bulk purchase discounts when customers buy higher quantities will also encourage larger order values making this a win-win strategy.
Presenting customers with multi-buy offers, bulk order options, and bundles is a smart way to introduce MOQs to your online store, without stating the obvious that it is a MOQ. Instead of seeing a product with a label that states “you must buy 10 units to order this item”, customers will see products that are already packaged up as a multi-buy offer.
A great example of this is Caveman Foods which offers nutrition bars in pre-determined bundles. There is no option to buy a single bar. Therefore customers have to buy the MOQ of 12 if they want to place an order.
Present multi-buy options as a way customers can save money. Offering a 20% discount when buying in bulk may be enough to incentivize customers to buy products with MOQs.
After all, your customers will get more products for their money, and you get more money from your customers.
Breathe new life into slow-moving SKUs by adding enticing MOQ offers.
Every retailer likely has some product lines that didn’t perform as expected. You launched a new product confident it would rake in sales and then… nothing. If you have products gathering dust as they sit on your warehouse shelves, you could use MOQs to sell those SKUs and create space for new products.
Using MOQs to sell products at a reduced price will be far more cost-effective for your eCommerce store than paying to keep those products in inventory.
Set up a promotional MOQ for retail partners and wholesalers as a way to clear this slow-moving stock. The wholesaler may sell these products easier due to having a better product-market fit. In this case, you both win as you get to move dead stock and they get great new products at a reduced rate.
Alternatively, you could set a customer-facing MOQ to encourage customers to buy the product in bulk and save money. This works best if your product is a slow-mover due to being something people tend to bulk-buy.
For example, a coffee brand might find some of their coffee filters don’t sell very often because people prefer to buy in bulk. Adding a MOQ to your coffee filter products will entice people to look toward you for bulk purchase savings. You get to clear your slow-moving products and your customers get to stock their cupboards.
Consider the reasons behind slow-moving stock when deciding whether to go down the wholesaler or customer route. A wholesale partnership may be your best option if stagnated stock is due to the product not being a good market fit for your store.
Working with MOQs means you will need more storage space for your inventory. Whether buying large MOQs from suppliers or planning to sell MOQ products to customers and retail partners, your inventory management process needs to be well-optimized.
Your inventory levels will naturally be high when working with MOQs as most of your revenue will be tied up in physical inventory assets. Purchasing products from suppliers at a high MOQ might result in you holding stock for longer, reducing your inventory turns.
Allocate adequate warehouse space for wholesalers and retail partners wanting to purchase high MOQs. Not having enough inventory space could result in products going out of stock due to not having enough inventory on hand.
Understand your demand and inventory reorder points and optimize inventory management accordingly. Appointing a third-party logistics (3PL) partner to support wholesale orders can minimize the risk of supply chain bottlenecks. Pass fulfillment to a DTC fulfillment partner so they can handle order prep while you focus on growing your eCommerce brand.
How to handle MOQs from suppliers
MOQ requests from suppliers can be daunting if you aren’t prepared to purchase large quantities of stock.
Many small eCommerce businesses are bootstrapped, meaning they don’t have a large footfall of cash to inject into inventory. If you are struggling with a supplier requesting high MOQs, research other potential suppliers and manufacturers to see if there is anyone with a lower barrier to entry.
There is also no harm in reaching out to the supplier to explain your situation. Let them know the MOQ you’re able to meet, your forecasted inventory turnover, and reorder frequency to see if there is room for negotiation on their requested MOQ.
Research your competitors to see which suppliers they engage. This is a great way to find suppliers that already operate within your niche. It may also give you access to a broader range of minimum order quantities.
Tools such as ImportGenius’ TradeBase let you tap into a database of US imports. This tool is great for seeing which suppliers US merchants have worked with.
Be mindful of cash flow when working with suppliers that require a MOQ. While it may be tempting to succumb to high MOQs to receive greater cost savings, it’s not worth risking your current financial positioning.
Buying stock with MOQs results in your eCommerce business being asset-rich but cash-poor. So, don’t order more than you can realistically move. Also, be aware of how tying your money up in stock might impact the future growth of your store.
Finally, see if suppliers will let you “mix and match” the MOQ across various products if you are struggling to meet the MOQ for a single product. Rather than buying 1,000 units of one product line, ask if they would let you split the MOQ across three or three product lines. You’ll get a greater variety of products to sell to consumers and the supplier can move 1,000 units of stock.
The best advice we can give to handling supplier MOQs is to simply talk to them. Have a chat with suppliers to see what they can offer to ensure you have a cooperative long-term relationship.
Wholesale implications of MOQs
Adding a MOQ to your online store opens up the possibility of working with wholesalers.
Establish wholesale relationships by setting MOQs on your eCommerce site. These MOQs will ensure wholesale partners buy a certain quantity of stock to then re-sell through their sales channels. It’s a lucrative opportunity to diversity your eCommerce store.
It’s important to be mindful of inventory turnover when working with wholesale partners. If you expect wholesale partners to frequently buy a large volume of units, ensure you have products in stock ready for them to order. Calculate your inventory turnover to help accurately forecast inventory demand. This will ensure you always have the right amount of inventory on hand.
Setting up wholesale partnerships can also be a great way to meet supplier MOQ requirements. Bulk buy stock from manufacturers as per their MOQ, then split these units across your sales channels and resell to wholesale in smaller quantities. You could, for example, buy products from a supplier with an MOQ of 1,000 units. You could put 250 units aside for your sales channels. Then, sell the remaining 750 through wholesale partners at an MOQ of 250 units.
In the above scenario, wholesalers will get access to product lines at lower MOQ. This means there is less risk involved and you get to leverage supplier MOQs without sitting on excessive inventory.
Wrapping up — Using MOQ to your advantage as an eCommerce seller
Minimum order quantities can offer a unique selling advantage to eCommerce brands. From encouraging larger cart sizes from online shoppers to developing wholesale partnerships, MOQs have the power to enhance your eCommerce store’s return on investment.
MOQ on the supplier-side needn’t be an issue either when you find strategic ways to handle them. See MOQs as an opportunity to grow your eCommerce business and soak up all the advantages they have to offer.
Benefits of a 3PL: Why To Outsource Your eCommerce Logistics
Over the past few years, with a pandemic thrown in the mix, consumers have heavily transitioned to online shipping. With large eCommerce businesses making shopping so convenient and enjoyable for the consumer, this transition is here to stay.
However, despite the bulk of orders being made online, the fulfilment of these orders still requires a notable element of physicality.
Along with many other moving parts, the ability to delegate systems and processes allows you to focus on the high-level tasks that elevate and grow your business. This is where third-party logistics (3PL) steps in.
In this article, we will share how a 3PL can benefit your eCommerce business.
What is a 3PL?
A 3PL provider, which stands for third-party logistics provider, refers to an outsourced partner that handles eCommerce logistics such as inventory management, fulfilment and warehousing.
This partnership can immensely help your business, especially as 84% of consumers won’t shop with a brand again following poor delivery service, even if all the other purchase points are spot on.
How a 3PL benefits your eCommerce business
In addition to customer satisfaction, a 3PL can benefit your eCommerce business by helping to…
1) Reduce your overhead costs
Partnering with a 3PL provides several cost-saving advantages that can benefit to your business.
For example, storage is one of the largest costs associated with retailers. With a 3PL, these overheads can be drastically reduced.
A 3PL removes the need to rent or buy warehouse space. This eliminates the cost and need to oversee operations, labor and technology associated with in-house fulfilment.
In addition, 3PLs use their expertise to streamline processes which leads to reduced expenses. For example, many 3PLs have multiple locations which enables them to ship from the location closest to the customer, reducing shipping costs.
Furthermore, 3PLs have partnerships with shipping carriers, resulting in discounted shipping prices which you can pass on to your customers.
In conclusion, the reduced costs by partnering with a 3PL, by eliminating the cost of overheads required to run an in-house fulfillment center, labor, management, technology and shipping costs, far outweigh the long-term savings compared to trying to tackle all of the above alone.
2) Broaden your reach
3PL partnerships can broaden and expand your business’ reach with their extensive network of both national and international fulfilment centers.
This distributed network is an important factor to note and compare when choosing your 3PL provider. Expanding your reach not only opens the flood gates to the global digital buying market, amounting to over 2 billion buyers, but it also opens up reduced shipping costs. This is particularly important for international orders.
On top of higher shipping costs, customs duties and taxes can be costly and add on extra transit time. The expansive network of centers helps keep costs down, shipping times fast and customers happy. The world really is your oyster.
3) Streamline growth
Growth and expansion is the goal of most businesses. However, to facilitate this growth, you need to ensure that you are equipped with the resources to sustain the demand.
3PLs are experts at handling logistics associated with company growth and, as mentioned above, can help your business broaden its reach with their extensive network of fulfilment centers.
In addition, outsourcing repeatable tasks, like fulfilment and inventory management, frees up time to allow you to focus on the tasks that will directly facilitate growth in your business.
4) Access industry expertise
With logistics and shipping professionals who are experts in their field and knowledgeable on the latest trends in the industry, 3PLs allow you to tap into their expert knowledge.
Not only do they have the expert knowledge, but they also have the partnerships, resources and networks required to constantly improve efficiency, reduce costs and optimize processes.
Factoring in decisions like business size and direction, pricing, warehouse locations, shipping requirements, product requirements, and business objectives, it’s important to carefully choose a 3PL that can meet and support your business goals.
The right partnership can excel your company’s growth, broaden your reach and drastically reduce your costs.
Learn more about how MyFBAPrep can make logistics your competitive advantage.
How to Use Section 321 in eCommerce: A Quick Guide
Improving your profitability by minimizing fulfillment costs and streamlining logistics is vital for any eCommerce business. On the other hand, when shipping your goods from overseas, such initiatives can become difficult.
These challenges can be attributed to customs duties and taxes, which make cross-border shipments much more costly. However, with Section 321, a law by the US Customs and Border Protection (CBP), these issues can be avoided.
What is Section 321?
To start, Section 321 is a law by the CBP that allows low-value shipments to be cleared through customs free of any taxes and duties, with less paperwork.
It states the de minimis value, which is the worth of a shipment of goods imported by a single person in one day that may enter the US free of any levies. This de minimis threshold was changed by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) from $200 to $800.
In short, Section 321 is a shipment type that allows your business to reduce the cost and increase the speed of cross-border shipping into the US, as long as it meets the following criteria:
- First, your imported items should have a fair retail value below $800.
- Next, your shipping country should be covered by Section 321.
- And lastly, all of your shipment’s paperwork should be in order.
Benefits of Section 321
As for its primary benefits, we’ll quickly walk you through them.
Reduced business expenses
As it allows you to import products from overseas into the US duty-free and tax-free, Section 321 greatly reduces your international shipping costs. It also benefits your business as a whole, since it makes it more practical to produce or source your items from countries where the costs are less.
Streamlined international shipping
International eCommerce is huge. 57% of consumers, in fact, say that they have made an international online purchase online in the past six months. With Section 321, shipping for such purchases will be better optimized.
Section 321 lets you import your items and have them cleared through customs with less paperwork. It speeds up the cross-border shipping process, minimizes delays, and allows you to get your products to customers quicker.
Having all of the necessary details ready, like proof of value and consignee information, for your shipment is one way of ensuring a smooth trip through customs. Section 321 is also able to streamline the shipping process thanks to its Entry Type 86 Test.
Entry Type 86 Test
This is a voluntary test that allows entries qualified for de minimis to be filed through an Automated Broker Interface (ABI). This ABI permits qualified participants to electronically file and import their data with CBP.
The advantages of the Entry Type 86 Test are:
- Predictable, same-day, automated customs clearance
- Data is provided through a manifest template via API or manual upload
- It’s ideal for low-value items (especially for imports from China)
- It has fewer requirements
- As long as they’re sent to a fulfillment center, your “unsold” DTC parcels under de minimis can be cleared without duties and taxes
Plus, with data and transactions being processed electronically, the Entry Type 86 Test accelerates the release of goods for its users. Messages about current information and issues are also sent to participants. Currently, more than 96% of all data entries are filed through ABI and it’s available to:
- Port authorities
- Independent service centers
The previous benefits allow you to easily cater to the US market. It won’t cost as much and, as you can also speed up cross-border shipping, you can provide your customers with more affordable and faster shipping options.
Limitations of Section 321
It’s important to note, that Section 321 has various restrictions you should be aware of.
Every person is limited to one shipment a day
This limitation means you can only claim one Section 321 shipment per day, but it doesn’t mean that you can’t receive more than one shipment on the same day. Just make sure, that if you’re doing in-house shipping, you or your freight partner don’t make multiple claims on the same day.
A key point you should also remember is that shipments to business addresses aren’t covered by Section 321, which means you can’t make claims for anything similar.
It doesn’t cover every item under $800
The exemptions to duties and taxes that Section 321 provides are for goods with a fair retail value of less than $800 in the country of shipment. However, some goods aren’t covered. Here are some examples:
- Products that are covered by Antidumping and Countervailing Duties (AD/CVD)
- Alcoholic beverages, cigarettes, and cigars
- Items that require customs inspections (Like harsh chemicals and agricultural products)
- Goods that are regulated by US government agencies (Such as the FDA, FSIS, USDA, NHTSA, and CPSA)
Don’t forget that you must provide proof of your products’ retail values. Also, to comply with Section 321, each shipment must also have consignee names and addresses.
Importing from China
Due to their economic trade war, the US has imposed import duties for products specifically from China. These Section 301 tariffs have increased levies on various items such as:
- Household products
- Sporting goods
- Food and beverages,
- Personal care items
However, your shipment can qualify to be covered by Section 321 and exempted from Section 301 tariffs, so long as your products meet the de minimis value.
How to use Section 321
As for how Section 321 can be utilized, we’ve outlined various examples below.
Offer affordable international shipping
Duty-free and tax-free customs clearance effectively reduces your cross-border shipping costs. This allows you to offer your customers cheaper shipping options, which is a vital aspect of eCommerce.
Provide faster shipping times
Section 321 shipments require less paperwork, minimizing any delays at customs. In turn, this means you are able to offer options where customers receive their orders much quicker, which can greatly benefit your business.
Speedy shipping also makes it easier for your business to land more online shoppers, especially with 27% of them saying they abandoned their online purchases because their orders wouldn’t be delivered quickly enough.
Minimize manufacturing or production costs
Not having to worry about duties and taxes allows you to manufacture or source your products overseas, for a lower price. In fact, compared to the US, manufacturing labor costs in countries like Mexico and China are significantly less.
Strategically locate fulfillment hubs
Doing this streamlines your supply chain, allowing you to move your items quicker. For example, you can locate your warehouses and distribution centers:
- Near your manufacturers
- Near your suppliers (for packaging or raw materials),
- In countries where manpower is abundant, yet cost-efficient
- In regions with less-congested ports
- Areas within reach of US borders (Like Canada or Mexico)
With fulfillment taking place over shorter distances and manufacturing in cost-effective regions, you significantly reduce your expenses and shipping times.
How to claim Section 321
Lastly, we’ll briefly take you through what a Section 321 claim typically looks like.
Step 1: Your US-based customer places an order
To be entitled to Section 321’s duties and taxes exemption, your customer’s order should have a fair retail value of $800 or less. Once their order is placed, it will be sent out for shipping.
Step 2: Then, their order is sent across the US border
If the shipment meets all of the requirements and has its details and paperwork in order, which the carrier will present to the border officer upon request, it should encounter no customs delays.
It should be able to enter duty-free, without formal entry, and will then be delivered to your customer’s chosen domestic carrier.
Step 3: Afterwards, the customer receives their purchase
Finally, the domestic carrier is then responsible for accomplishing the order’s delivery. Afterward, you should receive a confirmation once your customer has received it.
Wrapping it up — Experience seamless Section 321 shipping with SEKO Logistics and MyFBAPrep
Minimizing your costs and streamlining your shipping can make a huge impact on your business. Utilizing international shipping and trade laws like Section 321 is a great way of doing that.
It may get complicated, or sometimes daunting, but you don’t have to traverse it alone. MyFBAPrep works with SEKO Logistics to get our customers access to end-to-end services from Asia to the US — making Section 321 shipments so much easier.
MyFBAPrep customers can leverage Section 321 through SEKO thanks to the following:
- Its acquisition of AIRCITY Inc., a New York-based freight forwarder which is a leader in Entry Type 86 Customs
- Its US-customs-integrated SEKO-AIRCITY systems
- Its experience in Type 86 is a huge advantage for sellers and consolidators
What’s more, SEKO Logistics has a powerful compliance program at origin and destination. To learn more, get in touch!
Fixed vs. Flexible Logistics: How to Build Your Ops Strategy
Over the last two years, global supply chain chaos has upset world commerce. Very few came out unscathed, as 75% of businesses took major blows to their manufacturing, and managing logistics still remains a challenge.
Competition has become stiffer in the post-COVID market as brands clamor to regain ground and scoop up their competitor’s market share. Whether you have established roots with physical stores or are staking your claim on the online turf, you can get ahead through an under-utilized move: upgrading your logistical operations strategy.
In this post, we’ll explore the ins and outs of flexible and fixed logistics, detailing who they serve and under what circumstances. We’ll also share our step-by-step formula for crafting a productive ops strategy, so you can gain the upper hand.
Need a hand managing your supply chain logistics? Discover how MyFBAPrep can help.
The scoop on fixed and flexible logistics
There are a few methods available to shake up your ops strategy and scale your business through uncertain times. The most popular are the fixed and flexible logistics approaches.
How fixed logistics work
Fixed logistics require considerable company-owned assets that allow a business to own its fulfillment network. For example, a store operating under the fixed logistics model could own or hold long-term leases for assets like shipping vessels, warehouses, fulfillment centers, and van fleets.
A business using this method will also have to lean on multiple paid tools to execute their strategy successfully, such as:
- Warehouse management software (WMS)
- Inventory management software (IMS)
- Enterprise resource planning (ERP) software
The commitments and expert help required to launch a fixed logistics strategy can add up quickly. It’s also not uncommon for the system implementation to take two to three months or longer.
Fixed logistics are best for…
A fixed logistics setup works best for high-volume businesses with complicated supply chains, and the budget to make a substantial financial and time investment without seeing an immediate return.
This model allows retailers to automate and customize processes for supply chain efficiency and customer satisfaction. For example, as a retailer, refunding orders as soon as a customer drops off their package gives them the “wow” factor and provides real-time insight into cash availability.
When operations run smoothly and market disruptions are minimal, fixed logistics give owners greater control over their supply chain and operational costs. The result is a robust supply chain and a strong competitive advantage.
How flexible logistics work
A flexible logistics setup typically features minimal assets and lacks lengthy leases, contracts, or set square footage allocations and locations. As a result, a supply chain with flexible logistics remains nimble and can respond to the ebbs and flows of a business cycle.
Instead of paying for multiple software to manage their supply chain, businesses that use the flexible logistics model gain access to these tools through their fulfillment services provider(s), without needing to fork over more cash.
However, this approach is less accommodating to unique fulfillment needs since it rarely offers automation or complex customizations. Instead, it oversees multiple businesses at once and streamlines operations. For example, under the flexible logistics model, your business could:
- Share warehouse space with various brands
- Work with different shipping carriers depending on customer demand and product type
- Purchase pick-and-pack services according to the season
Flexible logistics are best for…
Fast-growing brands, especially eCommerce businesses, benefit from the flexible logistics model to optimize their omnichannel selling and expand restocking and fulfillment capabilities.
This setup also allows brands to adjust to supply chain issues and market shifts faster, without incurring huge costs or losses. It’s relatively quick to implement with many businesses setting up their flexible logistics systems in about two weeks.
Blending fixed and flexible logistics
If you’re unsure which model to choose, we’ve got great news: You can get the best of both worlds with an outsourced logistics partner. This partner will apply the fixed logistics model to key territories and core product offerings with high volumes, and reserve the flexible approach for fast-scaling products, new offers, and volatile markets.
Companies like MyFBAPrep can provide custom logistics solutions to enterprise merchants who find flexible logistics too limiting. A great example of this blended approach in action is the Pacers Running’s story. The company was unable to leverage flexible logistics with a 3PL that tried to put them in a box. Pacers Running’s luck changed when they joined forces with MyFBAPrep, which worked with them to produce a tailored fulfillment strategy and customized their chosen location to accommodate it. In one instance, MyFBAPrep installed a rack system to ensure the company’s warehouse met Pacer Running’s specific needs.
An optimized ops strategy may be the missing piece to your commerce success. Learn how MyFBAPrep can help your business thrive.
5 Key commerce trends shaping ops strategy in 2022
Trends not only dictate consumer behavior — they also guide your ops strategy, influencing when it’s best to take a fixed or flexible logistics approach. To steer your logistics in the right direction, let’s hone in on some top commerce trends and how they could impact your brand.
1) Rising eCommerce orders
COVID-19 kick-started an online buying frenzy, with commerce sales estimated to reach nearly $7.4 trillion by 2025. However, the pandemic-fueled spending spree appears to be tapering off.
Whether you’re a brick-and-mortar retailer or own an eCommerce store, you’ll need to process inconsistent order volumes efficiently to stay profitable and maximize sales, customer happiness, and business growth. This makes a fulfillment house that can scale with your brand and provide consistent prices, a paramount asset to your brand.
2) Increasing consumer expectations for fulfillment options
Consumers lead busy lives. This lifestyle naturally fosters similar expectations, such as faster and smoother order delivery, more control over where their orders are sent, and how they conduct returns. To maintain customer loyalty, you’ll need to build a logistics strategy that can handle inbound and outbound packages from multiple sources quickly and without hassle.
3) AI is gaining a firm grip on commerce logistics
Gone are the days of number crunching with calculators and square paper; AI has taken over the logistics realm. From lightning-fast bucket systems that organize stock to clever robots sizing up packages for optimal delivery costs, AI is helping retailers worldwide make smarter choices about inventory purchasing, distribution, and fulfillment. To gain a competitive edge, inject AI into your store in a way that aligns with your core business areas and furthers your goals.
4) Omnichannel selling is going mainstream
As competition increases in commerce, many brands are leveraging marketplaces to delve into omnichannel selling. To set your brand apart, invest in technology, branding, and marketing that presents a unified shopping experience to customers from the start of their journey to the end. With this in mind, your fulfillment strategy will need to handle orders from multiple sources with accuracy and speed.
5) Supply chains are still unreliable
Global commerce is beginning to recover from COVID-19’s initial supply chain disruptions. However, the world is still struggling to regain the efficiency it previously enjoyed with unimpeded travel. Success in the post-pandemic market requires you to fortify your supply chain. This is especially important if you run a large enterprise, as even a 1% increase in demand could result in you requiring thousands of more products.
How to select between fixed or flexible logistics
Choosing the best ops strategy for your growing business can be a daunting task, especially if supply chain chaos has burned you in the past. That’s why we’re here to help. Let’s explore the steps that’ll ensure your logistical setup matches every season and trend.
Evaluate your business needs
It’s vital to assess where your business is currently and where it’s going to understand which strategies and tactics will help you get from point A, to point B most efficiently. Some questions to ask yourself include:
- How big is our business right now?
- What size do we want to scale to?
- How many SKUs do we carry?
- Are we planning to add more products? If so, when and how many?
- How many territories does our business cover?
- How quickly do things change?
- Is our fulfillment process complex?
Outline your deadlines and deliverables
The next task on your ops optimization to-do list is to establish deliverables and key performance indicators (KPIs). To ensure your team has solid targets to work towards and assess progress against, write and distribute the essential details of your end vision, such as:
- Mini goals you need to hit to reach your end target
- Exact steps to meet every mini goal
- Resources you require to hit your target
Learn what your competitors are offering and develop ways to surpass them. For example, stats show that 51% of retailers provide same-day shipping, and 65% intend to make it available within two years. You can rise above this standard by offering same-day redelivery to a selected address, if the shopper misses the first delivery attempt.
Logistics don’t need to be complicated. Learn how MyFBAPrep takes the hassle out of optimizing operations.
Tap into the right AI for your business size and ambitions
Digital transformation is sweeping through commerce, which means you no longer have to implement a specific approach manually at any given time. Instead, you can rely on AI technology to make accurate calculations on your business’s current logistical needs and adjust your ops setup accordingly.
For inspiration, look no further than the eCommerce behemoth, Amazon. Here are just a few ways Amazon combines technology with strategic logistical planning to supercharge its logistics:
- Increased its suburban delivery hubs to accommodate more same-day and next-day shipping.
- Uses route optimization software to reduce delivery mistakes and maximize work hours.
- Employs computer vision systems with AI-driven pods to categorize and track goods in their warehouses.
- Relies on AI-driven purchase forecasting to optimize item location within each warehouse.
- Uses an item categorizing system to reduce sorting errors.
- Implements random, itemized placement on shelves tracked through barcodes to save space.
The point is, no matter your business size, you can harness the power of AI to take your logistics to the next level. If you’re a small seller hoping to grow to a medium-sized business, you could tap into AI-backed Inventory forecasting and inventory optimization solutions. If you’re a medium-sized business aspiring to become a large enterprise, you could implement barcoding analysis and robotics-assisted sorting, picking, and packing.
Get your suppliers and carriers on board
Every contributor to your supply chain has to work efficiently and in unison to obtain the speed, cost savings, and agility you need for operations to run smoothly. Communicate your goals to your suppliers and carrier(s) and ask them what they need from you to fulfill their roles.
- Maintain clear, constant communication with all your partners to spot issues and opportunities early.
- Vet each supplier and carrier regularly and be ready to swap out unreliable partners.
- Maintain a 360-degree supply chain view to identify problems and alert the relevant parties in your network to prevent the issue(s) from spiraling.
Adopt the right tools and resources to facilitate growth
Whether you opt for fixed logistics, flexible logistics, or a blend of the two, you need to choose the right tools to streamline your operations and push your next growth stage. Some tools to implement or to ensure your fulfillment provider utilizes are:
- Demand forecasting solution
- Barcode printing, scanning, and monitoring equipment
- Inventory management software
- Distributed order fulfillment technology
- Warehouse management software
- Fleet management software
- Cloud-based file storage
- Compliance tool
- Analytics and reporting tools
Tip: Many solutions combine tools for more efficient logistics management. Get the most bang for your buck by researching the best solutions for your mission. Check out inventory optimization software if you need a starting point.
Data analysis is your best friend
The numbers don’t lie. Assess your figures from past periods, noting when your logistics strategy excelled and when it fell short. You can deduce what type of ops strategy fits certain scenarios, incorporate them into your current process, and draft action plans for future endeavors. Here are some data points to watch:
- Growth figures
- Delivery rate stats
- Customer feedback
Wrapping up — Power growth with strategic logistics planning
As the fixed versus flexible logistics debate continues, rest assured that you don’t have to pick a side; you can have the best of both worlds. Being agile with flexible logistics is more important than ever to dodge supply chain disruptions and adapt to market shifts. Meanwhile, fixed logistics pave the way for order and predictability as you scale.
To improve your ops strategy, implement technology to keep an eye on developing trends in your business, niche, and the global market. Then, tweak your ops strategy based on the most efficient setup that’ll help you achieve your goals.
With a robust strategy, you’ll build greater resilience into your brand, upping its productivity and value. So, don’t wait — begin your ops strategy optimization today. Your future self will thank you for it.
Technology and robust strategy create razor-sharp logistics. Learn how MyFBAPrep can hone your supply chain today.
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.