The eCommerce industry is growing a stunning 43.7% year after year, which makes it one of the most exciting to be in … but also one of the most volatile. The more pressure and demand you place on the supply chains of a single industry, the more likely things are to break. We’ve seen it happen with the backups in the Port of LA that happened in Q1 and Q4 of 2021.
This won’t improve overnight, so to protect your eCommerce business, you need to be ready for:
- Disruptions to the supply chain
- Warehouse outages and lack of space
- Shipping carrier oversights
- Big-ticket events like the holidays
All of the points above compound in big ways almost every peak season, so don’t let them prevent you from selling or scaling.
Building resilience into your eCommerce operations and logistics helps prepare you for the unexpected, and keeps you flexible and profitable. This puts you in a strong position against thousands of competitors who aren’t putting the same effort into their processes.
This article will help you reinforce your eCommerce logistics so you can stay productive despite any supply chain surprises.
The importance of resilient eCommerce logistics
Resilient logistics allows you to generate profit under different supply and demand circumstances by:
- Balancing resources based on demand
- Being able to reduce overhead or expand operations flexibly
- Overcome and eventually leverage global supply chain challenges
- Quickly adapt your business model to a shifting industry
A number of factors threaten the supply chain, and there are many indications that the world as we knew it is not coming back any time soon.
Instead of waiting for things to “go back to normal,” smart eCommerce merchants should optimize their businesses to continue generating profits despite uncertainty and change. Eventually, this will help you turn uncertainty into action and opportunity.
5 Ways to build a resilient eCommerce business
You can build resilience into your logistics and operations strategy through a few smart steps.
1) Start selling omni-channel
The future of eCommerce is omni-channel. Selling on multiple marketplaces diversifies your income and revenue streams, which makes your entire business more resilient. It ensures you stay afloat even if one of the bigger marketplaces you sell on suddenly changes their policies and makes it more difficult to operate on their platform.
Multi-channel selling also strengthens brand recognition as you establish a presence across the sales and shopping channels your consumers frequent. The best place to acquire customers is your own direct-to-consumer website so you create a direct line to your customers, but being present on markets like Amazon also aids brand recall.
Finally, omni-channel selling improves your buyer experience. Being available wherever consumers want to shop makes your brand the most convenient and accessible for them, whether they have a giftcard they want to spend on Target, or a Prime account on Amazon.
2) Invest in a flexible fulfillment partner
Fulfillment is its own business model that most eCommerce business owners never signed up for. However, reliable fulfillment is a necessity for a successful business. How quickly and efficiently you deliver items determines how much you can sell, the types of reviews you get, whether or not you meet sales channel SLAs, and your buyer experience.
If you don’t want to lease warehouses, hire staff, or rent packaging equipment, find a flexible fulfillment partner who can grow and scale with your business. This partner should be able to fulfill across all your sales channels so you don’t have to deal with multiple fulfillment processes wherever you sell.
What to look for in a fulfillment partner
Here are a few things to look for in a fulfillment partner:
- Multi-channel: They can fulfill across all your sales channels to serve your customer base with a single network and inventory pool. You should be able to send your items into one fulfillment network and receive full coverage.
- Full list of services: They have all the eCommerce services you need and can stay flexible alongside your business. For example, adjusting to offer bundling and cold storage if you suddenly want to start an ice cream subscription box.
- Vast warehouse network: They have multiple warehouses so you can place your inventory as close as possible to your buyers. This shortens the travel time for your goods and results in faster, more affordable deliveries.
- Reliable service: You need a partner who can deliver items efficiently and on time. This improves your buyer experience and ensures you meet SLAs.
- Transparent pricing: Complex pricing structures are obsolete, and eCommerce merchants shouldn’t put up with hidden fees and confusing pricing that clouds their expense and revenue estimates.
- Fast shipping: Two-day shipping (or faster) is the new normal for consumers. eCommerce must be just as convenient, if not more so, than buying retail, with fast delivery and easy returns.
For example, MyFBAPrep has 50+ warehouses internationally, a giant list of comprehensive eCommerce services for Amazon, DTC, and other marketplace sellers. Merchants can use as much or as little warehousing space and facilities as they need. This enables the sellers who work with us to adjust their fulfillment volume quickly based on their needs.
3) Diversify your fulfillment
Although we just covered choosing a reliable fulfillment partner, it’s never wise to put all your eggs in one basket, whether it concerns manufacturers or 3PLs. To build resilient logistics, you need to diversify your fulfillment. This might mean relying largely on an outsourced fulfillment partner while maintaining some in-house logistics, or utilizing marketplace fulfillment options with a multi-channel 3PL as a backup.
For example, you can use Fulfillment by Amazon (FBA) for your Amazon orders, Walmart Fulfillment Services (WFS) for your Walmart orders, MyFBAPrep for DTC orders and as a backup for Walmart and Amazon, and a small in-house operation as a backup for your DTC orders. If anything happens to FBA, the MyFBAPrep network will kick in and deliver via FBM instead.
Protect yourself from surprise storage limitations, price increases, and network outages by layering your fulfillment and spreading out your inventory risk. This also gives you the added benefit of avoiding stockouts, because if you sell out of inventory in FBA, you can continue to accept orders and fulfill them via FBM and MyFBAPrep.
4) Ensure smart connectivity between your systems
All your systems need to connect and communicate with each other in real time. When someone buys a bundle from your Shopify store, your inventory pool should reflect it and pass those changes on to your available items on Amazon, Etsy, and anywhere else you sell.
Growing merchants may have only a small handful of sales channels and fulfillment options. For example, if you sell on Amazon, using FBA and Amazon Seller Central to oversee your inventory is a no-brainer. However, as you grow, you need to balance your inventory and business everywhere you sell, all the ways you fulfill, and everywhere your inventory is tracked.
For example, think of the following business growth:
- Small seller, starting out with some test items = Sells on Amazon with FBA
- Growing seller, expanding to Walmart with their best sellers = Sells on Amazon with FBA, and on Walmart with WFS.
- Established brand, building its own website = Sells on Amazon with FBA, on Walmart with WFS, and on Shopify with MyFBAPrep.
The above seller went from one dashboard to monitor their inventory, to at least six. All of those endpoints for data need to be accurate and up to date at all times to avoid, for example, confirming a sale of items you don’t have on your DTC website that were already sold on Amazon a few minutes ago.
Most enterprise businesses build their own tooling in the back end using an ERP (enterprise resource planning) tool. However, growing businesses can also consider connecting their systems with SaaS tools like Pipe17 or Quivers.
5) Diversify your supply chain
Let’s address the elephant in the room: supply chain management. The best fulfillment network and operations are useless if you don’t have any product to sell. So, how do you avoid getting stuck with no inventory?
Here’s a few things you can do to diversify your supply chain:
- Start working with multiple suppliers and manufacturers from different countries and regions. This helps you maintain a stream of inventory, even if one avenue becomes blocked.
- Look for local sources you can work with on a minimal basis. They may not be the most cost efficient, but you can increase your order if you need them to cover a lost or late international supplier.
- Forecast for demand and order months in advance, instead of utilizing “just-in-time” sourcing that has quick lead times and could leave you stuck without inventory.
Tip: When the worst happens and you sell out, offer your customers alternatives or the option to backorder products once you restock. This helps maintain the relationship despite not having the items they want.
What happens when your supply chain fails?
Our best advice is to stay transparent throughout the process and keep your customers in the loop. This helps you maintain the customer relationship, saving your CLV, and also provides more clarity for your shoppers.
According to Shopify’s Future of Commerce report, 66% of consumers are already aware of supply chain delays, “and they’re looking for transparency. Forty-five percent of shoppers are actively looking to shop from businesses that clearly show anticipated delivery times.”
Wrapping up — Build your business for the future by investing in resilient logistics today
eCommerce is evolving quickly, showing no signs of slowing down, and it will continue to go through rapid periods of change for years to come. There will always be curveballs, shifting trends, and supply chain surprises.
Building an eCommerce business with a foundation of resilient logistics and operations helps ensure you’re prepared for that future, no matter what it brings. It can affect the course of your success, give you an advantage over competitors, and help you weather any storm.