Preparing your Fulfillment Operations for 2018

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.

Workflow

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.

Inventory Optimization

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.

UPS & FedEx's Seasonal Surcharges for 2017

UPS and FedEx have both announced pricing changes for holiday season 2017. Typically, these two shipping providers adjust their pricing in tandem - when one announces a change to their shipping & handling rates, the other announces a similar strategy soon after. But this year, that's not the case.

Effective 11/20 through 12/24, FedEx's holiday season rates are pretty straightforward. Essentially, there will be no increased residential holiday season surcharges, except in the case of packages that are oversized (increased to $97.50 per package), unauthorized (increased to $415 per package), or that require additional handling (increased to $14 per package).

UPS on the other hand, is taking a very different approach by implementing peak season surge pricing for all packages. This pricing (+$0.27) goes into effect for Ground Residential packages from 11/19 to 12/2, stops for 2 weeks, then resumes from 12/17 to 12/23. Peak season pricing for Next-Day Air residential (+$0.81), 2nd Day Air residential (+$0.97), and 3-Day Select residential (+$0.97) will only be in effect from 12/17 to 12/23. On top of that, UPS plans to add peak surcharges to packages that exceed maximum size and weight limits.

The goal behind UPS' peak season pricing is to offset the costs of increasing their fleet's cargo capacity, opening temporary facilities, and hiring additional sorting and delivery staff. However, this strategy is not only different from FedEx - it's different from UPS' past tactics. Traditionally, UPS has handled seasonal cost overruns by negotiating the level of volume discounts with a limited number of major retail shippers. For 2017, UPS is basically passing these costs on to their clients by spreading general surge pricing across all shippers. We’ll be looking forward to hearing about the effectiveness of UPS’ pricing strategy once the holiday season ends.

Fulfillment Fundamentals for Ecommerce

Since order fulfillment is a "behind the scenes" process, newcomers to ecommerce don't usually have a strong strategy in place for efficient fulfillment processes. In this post, we'll cover some fulfillment fundamentals to help beginners avoid the costly mistakes of over-stretching or over-complicating their fulfillment operations.

Free shipping vs. fast shipping

Yes, offering free shipping is a surefire way to increase sales. However, it's not free for the seller – and the costs can add up. Fortunately, there are many strategies you can use to reduce or recoup the costs of free shipping. For example, increasing the transit time decreases the cost while still appealing to most customers. In their 2016 "Pulse of the Online Shopper" study, UPS reported that 85% of shoppers are willing to wait 5-7 days for delivery if shipping is free.

Larger orders give you better margins on shipping

Packaging and fulfillment expenses aside, it's cheaper to ship two units instead of one. The profit margin from selling an additional unit will offset the increased shipping costs that result from sending a bigger, heavier package. This is important to remember when adding new SKUs or running promotions. For example, it may be more cost effective to kit products together, rather than offering them for sale individually. When it comes to promotions, the above UPS survey also found that 52% of consumers added items to their cart to qualify for free shipping.

Too many SKUs can negatively impact fulfillment

It can be a great idea to provide flexibility for your customers by offering multiple SKUs containing variations of the same product. However, it’s important to strike a balance. While larger orders return higher margins, too much variety and volume can increase the costs and reduce the efficiency of your inventory management and order fulfillment processes. Before running a promotion, adding SKUs, or entering peak season, don't forget to account for the impact on your fulfillment operations.

Tips for Improving Packaging Efficiency & Sustainability

Ecommerce businesses stand to benefit from implementing environmentally friendly business practices – and changing your approach to packaging is a great way to start. It can save you money, improve logistical efficiency, and drive home your brand's commitment to the environment with every single delivery. Follow these tips to start your transition into more sustainable packaging.
    

Choose environmentally-friendly packaging materials

Evaluate your current packaging for materials that can harm the environment - especially those that can't be recycled, take a long time to breakdown (like polystyrene foam and plastics), or that release toxins as they breakdown (like certain inks and adhesives). Can you switch these out for recyclable, eco-friendly equivalents? For example, corrugated cardboard tubes and scraps work well as dunnage and are easy to recycle. Similarly, laser printing, thermal printing, and soy-based inks are excellent alternatives to toxic inks and dyes.

Pack more efficiently

In addition to materials, your packing practices are also important. Larger-than-required packages waste filler materials and take up excess space in shipping vehicles, contributing to fuel consumption. Automated box making machines or custom-designed packaging are both eco-friendly solutions that not only save the earth, they save you money by conserving materials and reducing product damage during shipping.

Evaluate your logistics

Take a close look at how packages move from warehouse to doorstep for opportunities to reduce waste. Depending on your products and customers, there may be more you can do to combine individual orders into bulk shipments. If you notice lots of unused space in the trucks leaving your warehouse, consider co-shipping with other companies to reduce fuel costs.

The Benefits of Call Center Outsourcing

Customer service call centers provide ecommerce businesses with a number of benefits. You need a call center – no question. However, you may not need to manage call center services internally. While an internal call center comes with some nice advantages in terms of flexibility and control, a partnership with a qualified provider also has perks that might be a better fit. In this post, we'll discuss a few of the benefits you can get through call center outsourcing. 

Cost savings

For many small to midsize companies, staffing and managing an internal call center can be challenging and costly. Unless you're selling highly technical products that require in-depth knowledge, the operational expenses may not be worthwhile. Conversely, an outsourced call center helps you avoid the costs of capital investments such as quality call monitoring systems, scheduling software, chat support integration with your website, etc. You can also save on the costs associated with recruiting, training and retaining call representatives – which really comes in handy during your peak season. Speaking of which…

Seasonal flexibility    

Because of their established focus on providing customer service, a good call center should be able to handle the higher volume of calls during your peak seasons without straining your budget or internal team.

Faster growth

If an outside partner is handling your call center functions, you're free to focus on the core components of your business. Outsourcing your call center allows you dedicate more bandwidth to developing products, customer acquisition, marketing campaigns and other growth initiatives.

Choosing whether to manage a call center on your own or outsource will ultimately depend on the nuances of your business. However, it's worth considering the cost-effective benefits of collaborating with call center service providers. To learn more about the call center services provided through Fulfillment Works, contact us today.