Retailers and ecommerce sites make an average of 30% of their yearly revenue during their self-defined peak seasons. But, while revenues are magnified during these busy periods, so are operational losses. Many e-tailers incorrectly assume that these losses are simply an unavoidable cost of doing business. In this post, we'll point out common loss leaders so you can prepare for them and make the most of your peak season.
Revenue losses stemming from overstocks, stock-outs, and returns all increase during peak season – especially if your inventory management operations are not prepared for the increased volume. The exact solution varies, but a 3PL provider can make customized recommendations for reducing these losses.
As shopping activity rises, fraud tends to rise right along with it. Before peak season, ensure that your fraud prevention systems are updated and running as early as possible.
Operational & workforce scaling
The ability to scale your operations quickly and cost-effectively can make all the difference in maximizing peak season revenues. For many e-tailers, outsourced fulfillment services provide the flexibility and scope needed to have a profitable peak season with minimal losses.
Expanding your ecommerce business by opening more distribution centers (DCs) can be a beneficial strategy for reducing shipping costs and delivery times. However, more isn't always better. The expenses associated with opening, operating, and integrating additional DCs can easily negate the cost savings and logistical advantages they provide. To figure out if the numbers will work in your favor, you should consider the following variables.
Number of SKUs vs. Order Volume
In general, the more SKUs you have, the more it will cost to coordinate with your suppliers to maintain inventory levels across multiple DCs. However, those costs can be offset if your order volume is high enough. As we previously mentioned, a new DC can reduce shipping costs (assuming it's closer to your customers, of course). The greater your order volume, the greater your savings on shipping. When determining the cost-effectiveness of acquiring a new DC, you'll want those shipping savings to exceed the added inventory and warehousing expenses.
Average Shipping Weight
The average dim weight of your orders should also be included in your cost/benefit analysis. Heavy orders will generate bigger cost savings when shipping from multiple DCs. Conversely, you may see minimal or no cost savings on lightweight orders.
Multiple systems may need to interface in order to properly count and route orders to the right distribution center. Can your order management system incorporate a new distribution center?
Improving your distribution network's size and efficiency by opening new centers can be a solid strategy for maintaining a competitive edge - but only if the pros, cons, and costs have been thoroughly vetted. Alternatively, a third-party fulfillment provider may be a better solution. You can reduce transit times, cut shipping costs, and increase order volume without taking on the risk of opening and operating a whole other distribution center. At Fulfillment Works, we utilize customized solutions to provide clients with full-service fulfillment including logistics management, data solutions, warehouse services (with facilities strategically located in Nevada and Connecticut), and much more. Contact us to learn how we can help with your distribution goals.
As part of events honoring Women Entrepreneurship Week, Fulfillment Works’ Co-Founder and CEO, Amy Cooper, led a roundtable discussion with aspiring students at Quinnipiac University's Center for Innovation and Entrepreneurship.
Speaking to a full house, Cooper recounted the initial founding, early history, and rapid growth of Fulfillment Works. She also spoke on her responsibilities as CEO, such as dealing with the challenges of client management, lead generation, and corporate marketing on a daily basis. During the discussion, students asked plenty of questions about work/life balance, tips for starting a successful business, and the accumulated wisdom from running a nationwide business for 18 years.
To this day, Fulfillment Works continues to grow and innovate thanks to Cooper’s diligence and expertise! Full coverage of the event can be read on Quinnipiac University's website.
If you've played (or still play) the iconic puzzle video game Tetris, you've probably noticed how similar the game is to working in an ecommerce warehouse. The basic goal of the game is to pack a non-stop flow of various geometric pieces into a finite space. Packing the pieces together neatly and efficiently filling empty spaces grants a high score, while the opposite reduces the size of the playing field and limits the options you have for setting new pieces. As the game goes on, the pieces need to be set faster and faster. Once you run out of space, it's game over. Sound familiar?
As ecommerce businesses gain more customers and add more SKUs to their inventories, some begin to struggle with the physical limitations of their warehouse facilities. Of course, growth is certainly a good problem to have. But running out of space can negatively impact in the speed and efficiency of your fulfillment operations – quickly undoing that growth. Unlike Tetris, you have many more options for utilizing your warehouse's "playing field." Before you decide to start a "New Game" by opening another distribution center, try these tips for optimizing your warehouse space.
Vertical stacking is bad in Tetris, but great for warehouses! Look up and check if you’re using all the vertical space available. If you can expand upward, ensure that your pallet racks can handle the extra top-weight. Assessing your vertical space is also a good time to consider installing mezzanines.
Width & depth
Redesign your aisles to be just wide enough to accommodate material handling equipment and personnel. Even a small reduction, multiplied across several aisles, can make a big difference. Similarly, consider “double-depth” racking to increase your depth of storage.
If you store the same product in multiple locations, consider merging the locations to utilize space more efficiently. But before you do, make sure that the merger won’t create a bottleneck of multiple pickers heading back and forth to the same spot.
Cut excess supplies
Reduce the amount of dunnage, boxes, and other packing materials you keep on site. Work with your suppliers to see if it makes more sense to get smaller, but more frequent deliveries of supplies.
Get help from an expert
When you get stuck in a video game, asking for help is the fastest path to progress! Fulfillment Works provides warehousing services out of our FDA-registered, climate-controlled, state-of-the-art managed warehouse facilities in Nevada and Connecticut. Contact us to learn more about the specifications, capabilities, and warehousing services of our East and West coast fulfillment centers.
A well-designed website and great products can draw customers in, but it's actually fulfillment that convinces them to stay. Recurring assessments and planning ahead are the keys for successful fulfillment operations. With that in mind, prepare for 2018 and beyond by looking for ways to improve your fulfillment performance. To start, focus on the following areas.
Resources & Staffing
From forklifts to scanners, warehouse equipment is critical for maintaining productivity and organization. Take stock of these resources and make sure there are enough to accommodate peak seasons and inventory growth. Of course, the staff using the equipment is even more important. Review your annual staffing needs and budget accordingly for anticipated increases. When the time comes to increase staff, evaluate the depth of their training to identify any gaps or common pain points.
You can have the best equipment, resources, and facilities, but none of it will matter if your fulfillment processes and operations are inefficient. Make sure to take a close look into the following areas:
- Receiving – Are incoming products properly labeled and packaged? Is there anything your suppliers can do to make restocking faster and easier for you?
- Picking & Packing – Are there recurring tasks that are overly complex or time-consuming? Consult with your staff to identify common bottlenecks and come up with solutions.
- Systems & Software – A robust fulfillment management system will give you the data you need to find inefficiencies and reduce the demand on your internal resources.
Are you losing money from storing unpopular SKUs or from underestimating customer demand? Make sure your inventory management software and the data it provides is being used properly. You should be getting a robust picture of how inventory moves across all of your points of sale. By analyzing the order history from each channel, you can determine purchasing trends and adjust your inventory to avoid stockouts or over purchasing.