Key Considerations for an E-Commerce Fulfillment Model

Archives, Global Logistics, Global Trade Daily, Warehousing

Key Considerations for an E-Commerce Fulfillment Model

September 21st, 2021 Sam Nichols Leave a comment

More and more people today are choosing to do their shopping online. The first quarter 2021 e-commerce estimate increased 39% from the first quarter of 2020. Whether it is ordering groceries ahead of time for pickup, tapping an ad on Instagram and buying those sunglasses that caught your eye or a monthly subscription for razors that shows up like clockwork, all of these products begin somewhere. In turn, each of these “somewheres” reach their consumers through their own unique fulfillment model.

By 2023, retail e-commerce sales are expected to account for $740 billion in revenue, up approximately 58% from 2017, according to a Statista market study. If you are a consumer, this may not fully interest you. You might say, “So what? I click a button and the things I want arrive when I need them to.” However, if you are someone in the infancy of starting a business, or if you have an established business that you would like to expand via online sales, creating and maintaining an efficient fulfillment model can be a challenge you grapple with every day.

No two fulfillment models are the same, nor should they be. What works for one retailer may not be effective for another. However, regardless of industry, product or business size, many of the considerations involved in designing an operation are similar. This article will explore what those considerations are, why they are important and how any business can transform their customer engagement through a fulfillment model that evaluates options for insourcing or outsourcing operations, considers strategic investments in supply chain technology and leverages supply chain best practices.

INSOURCING VS. OUTSOURCING FULFILLMENT OPERATIONS

Prior to the emergence of widespread retail e-commerce, fulfillment was a relatively straightforward process. Companies manufactured or procured their products, which were then warehoused in a location with viable transportation routes to their points of sale before eventually being shipped wholesale and stocked at brick-and-mortar retail stores for consumers to purchase. So, what changed? In this simplified example, the biggest shift is that now instead of retailers or company-owned stores accounting for the largest share of orders to the warehouse for fulfillment, this volume is coming from the individual consumer. That said, what has enabled this shift to occur? Well, the answer to that question is multi-faceted. Again, keeping things in a simplified view, this change has largely been driven by an overall decrease in shipping-related costs and expanding technological capabilities that increase the speed of the fulfillment process.

The shipping industry has drastically changed in the last 20 years, with outsourced and third-party logistics (3PL) providers significantly contributing to this reduced-cost trend. According to an Acumen report, the global third-party logistics market is expected to grow at a CAGR of around 7.5% from 2021 to 2028 and is expected to reach a market value of around US$ 1,800 billion by 2028.

Shippers continue to report a reduction in logistics costs by utilizing these outsourced services. What is their secret? Primarily, two factors—scale and technology. Scale, in this sense, means that a wide variety of products from various retailers can be stored and shipped from the same location. This increases truck capacity utilization from the 3PL facility (middlemen) to the shipping hubs that handle last-mile delivery to the consumer. The more a truckload can be fully utilized, the lower the shipping cost per individual item.

This principle applies to every retail operation. If you have an emerging business and want to reduce the cost of reaching your customers, partnering with a 3PL service may be a great option. This would allow a company to take advantage of the 3PL’s scale and technology, for a fee, and to tap into a wider consumer market for less than it would cost to internalize their logistics. Similarly, 3PL partners can be advantageous from a time-to-value perspective. By providing a pathway to quickly spin-up and initiate customer engagement via e-commerce distribution, a 3PL partner can provide scale and reach faster than internalizing. However, this time and cost equation changes as sales volume increases. If a company continually achieves a high sales volume, and can afford to implement a lengthier planning horizon, moving to an internalized operating model may be the better option.

This is where understanding and applying the technology utilized by logistics industry leaders, along with adhering to best practices for warehousing and distribution, become critical to a business’s success. On the other hand, if a company does not meet the sales threshold where partnering with a 3PL is advantageous, options certainly exist to improve fulfillment speed, reduce costs and grow an operation by adopting these technologies and best practices on a smaller scale, all while keeping retail operations independent.

TECHNOLOGY

For any operation that desires growth, investing in and improving the technology used to conduct business is a great place to start. This is especially true in a world where anyone who is a maker, creator or inventor can turn ideas into profits by simply creating a website marketplace using common services such as Shopify or Squarespace. Entry into the e-commerce space has never been easier. It is, however, difficult to know what to do next when the sales orders start piling up.

Is too much success a bad thing? Of course not. However, as a retailer, the obligation to customers is to provide them with the products they purchase in a timely manner while reducing defects and incurred costs as much as possible. It sounds simple but gaining brand popularity and maintaining it are two different things. The former is largely based on marketing or innovation while the latter is predominantly due to a high level of organization and business efficiency.

Systems

Let us revisit our scenario mentioned at the end of the “Insourcing vs. Outsourcing” section. In this example, consider a retailer that has introduced an innovative product or brand to the e-commerce market, and sales are taking off. The success is there, but what do you do next to improve organization and efficiency? First and foremost, getting a grasp on inventory and understanding the product movement within the “four walls” of your operation will prove critical to the long-term success of the business. This is where a warehouse management system (WMS) can help. In years past, the acronym WMS has been synonymous with large-scale, highly sophisticated and automated operations. Today, however, this landscape has changed significantly. Gone are the days of high start-up costs and expensive on-site equipment with an army of consulting resources to get a basic WMS up and running. Those kinds of deployments are now predominantly reserved for the most sophisticated large-network fulfillment businesses where subject matter expert resources can provide their highest value.

So why adopt a WMS? A warehouse management system should be thought of, to use a computing analogy, as the “operating system” for your fulfillment business. It can funnel in orders that you receive from your e-commerce web portal and manage workflow—from directed put-away of product to batch picking orders—with the goal of timely fulfillment to consumers. It can track inventory from receipt to storage and replenishment to sale. Furthermore, it will function as the nucleus of your operation where additional systems and technologies can be built out to continue enhancing operational capabilities. These additional systems may eventually include a transportation management system (TMS) for optimized truck-load planning and parcel shipping, a labor-management system (LMS) for improving workforce engagement and order management or distributed order management system (OMS/DOM) for managing various order streams coming from multiple points of sale.

The WMS can even serve as the basis for attaching automation components such as a warehouse controls system (WCS) or warehouse execution system (WES) for use with conveyor, robotics, sorters or storage and retrieval systems. According to a study by APQC, organizations utilizing a WMS spend roughly $3.63 less per $1,000 in revenue across the entire logistics process than those not using a WMS. This may not appear to be much, but as revenue increases, these savings do as well. Likewise, the efficiency gained by implementing a WMS can result in significantly higher-order accuracy rates and reduce the overall number of expedited orders shipped, further lowering overall shipping costs for a seller.

Low-Cost Options

The core function of a WMS is to better manage the flow of goods within an operation by increasing organization, with the thought being that a high level of organization leads to increased efficiency. This is something any operation, big or small, can take advantage of. Vendors today are providing system options for all sizes of fulfillment businesses. On the smaller side, vendors such as Systems Logic’s “Wireless Warehouse in a Box” and Ship Hero’s suite of products provide excellent cloud-hosted and subscription software options for a quick, easy and affordable deployment.

Additionally, these products incorporate direct one-click integrations to many common sales channels for immediate organizational benefits while also providing a foundation for future technological enhancements that may be desired. According to the company FAQs for both vendors, typical setup time for a system of this type is roughly one week but can depend on several factors. These variables can include the size of the product catalog that needs to be loaded in, the number of sales channel APIs you would like to connect and the extent to which you would like to custom configure certain aspects of the product. Notably, purchasing a WMS and utilizing it for fulfillment within one to two weeks should appeal to any seller that views organization and efficiency as primary drivers for the future success of their business.

Mid-Tier Options

On the mid-level side—keeping the cloud-deployed and subscription basis requirements—many players have forayed into this market providing a wide array of capabilities and advantages. Some vendors in this space have begun to incorporate controls systems, labor and order management modules, KPI dashboards and reporting, as well as additional configuration options. Other capabilities of these products include multi-site and multi-tenant deployments, lite-kitting and build-to-order needs, and space-cube and pick-path optimization functions.

Strong vendors in this space include Deposco, Intellitrack, Path Guide, Ship Edge and SKUVault. Further investigating these options may appeal to businesses that are already utilizing a low complexity system but recognize additional capabilities are needed to sustain and expand upon their success. Uplifting systems in this space will likely require coordination with vendor resources as well as possibly employing contract labor that specializes in WMS installations and configuration. Once live, however, these systems give any mid-sized fulfillment operation significant capabilities that they can continue to develop and utilize for years to come.

Top-Tier Options

If you are familiar with the current WMS landscape, then the vendors servicing the top end of the market should not come as a surprise. These offerings service the most technologically complex distribution operations and provide a level of capability that other systems simply cannot match. They are also on the cutting edge of supply chain innovation, often incorporating native control systems, advanced order streaming (opposed to traditional waving) functions, sophisticated put-away and allocation configuration options, as well as enhanced labor and capacity planning tools. Some vendors are even revolutionizing the way their systems are sold and maintained by converting their products to what is known as a “version-less” architecture. This, in simple terms, means that once you purchase a subscription to the product, you will not have to purchase its successor version in the future. It also means that updates and software patches, along with product upgrades, can be pushed out to the customer with minimal intervention or disruption to day-to-day processes at a lower overall cost.

When considering systems of this scale, products offered by Blue Yonder, Infor, Manhattan Associates, Körber-HighJump and SAP come to mind. Other vendors that fall just short of the very top tier include Avectous, Click Reply, Made4Net, Microlistics and Softeon, among others. It is worth noting that these systems will require significant capital investment to purchase, deploy and maintain over their life cycles. The previously mentioned version-less example is a way in which vendors are attempting to address some of these long-term cost concerns. However, the price of adoption is still quite high. That said, if a business requires intelligent and automated decision-making from its systems, along with high visibility and control over distribution operations, these are the best solutions available.

Extended Systems and Other Options

WMS solutions receive significant attention due to the organizational and process capabilities these systems present, but a key feature for sellers may be left out of the vendor-provided solution. This feature is called parcel shipping. Parcel shipping is defined as shipping small and light boxed items, usually weighing less than 100 pounds, that can be moved without equipment assistance. The process of parcel shipping involves packaging the sold items, weighing and measuring the shipping container with its contents inside and addressing the box to the end customer with a printed shipping label. Parcel shipping capabilities can be introduced to the fulfillment process as standalone systems, part of a TMS or within a WMS solution. Many options are available in this technology space so it is pertinent to research the various types of parcel shipping solutions that will best fit your current business’ size and complexity while allowing for future growth and development.

BEST PRACTICES

While incorporating supply chain technologies and automation into a fulfillment model can drive widespread efficiency gains and reduce operating costs, these tools must be utilized effectively to achieve the desired benefits. The parameters that define the successful use of these tools are known to industry specialists as supply chain and warehousing best practices. Now, it should also be stated that these best practices can and should be incorporated to all distribution models regardless of size and complexity. Any distribution operation can reap widespread benefits by implementing these methods to improve organization and streamline processes.

Slotting

The concept of effective slotting can be a major driver of efficiency gains for any size business. Slotting, as a warehousing strategy, is the idea that goods should be stored in areas of an operation that ultimately reduces the overall travel time needed for laborers to complete outgoing orders. A “slot,” so to speak, is where an item lives within the building. This is the primary place you store an item or product to be readily accessible for boxing and shipping. For instance, if workers are consistently traveling back and forth across a building to obtain the most ordered items a business sells, this becomes inefficient. Instead, consider grouping the highest sales volume items together in the most easily accessible zone of an operation to reduce the amount of travel time required to collect and fill orders. It should also be mentioned that these high-volume items will likely change over time and as such, slotting strategies should change as well.

The number of high-volume products grouped together may expand or contract and may also be swapped out with other products as sales figures and forecasts change. It also does not have to stop there. Many businesses organize their entire operations such that the least commonly purchased items are at the farthest end of their building with the most purchased items located closest to pack-out and shipping. Again, the whole idea is to reduce the amount of time and effort it takes to get products out the door and into the hands of customers. This can also be further supplemented with automation such as conveyors, goods-to-person systems and even AI-assisted software algorithms included in some high-end WMS solutions. However, technology and automation are not a requirement to implement this strategy and reap immediate benefits.

Storage Mediums

A question many businesses periodically ask themselves is, “What size building is needed to store and effectively distribute product?” In some cases, the question should instead be framed as, “Is the available space we have being used effectively?” Evaluating and refining the way in which products are stored can be equally as important as determining where they are located and will likewise be a key component of defining how much space a business requires. Like slotting, which functions as a strategy to reduce travel times, determining which storage mediums to use is all about reducing the amount of wasted space, or “air,” that exists in a product location. For instance, if a section of full-size pallet racking is being used to store quarter- or half-size pallets, this space is not being properly utilized. There could be anywhere from 50-75% of unoccupied space in each of these locations. In this example, if these products are consistently stored in pallets of this size, consider reducing the location opening height of the racking bays. Depending on the product weights, it may be possible to add one or two more overall levels of storage to this area and consolidate products without requiring additional square footage.

This is a straightforward example, but now consider how much space is potentially being wasted when you examine a full-size warehouse. What other consolidation opportunities exist? If a business is carrying a large amount, think multiple pallets of certain products at a time, there could be an opportunity to implement a double-deep pallet storage system. This would lead to an increase in the volume that can be stored at one location while minimizing the overall square footage required to do so. Likewise, strategies exist for handling smaller quantities and sizes of products.

Decked shelving systems can provide a way to mix cases of products in smaller locations, further minimizing the amount of wasted space. These mediums can also be quite sturdy, with the ability to stack high, allowing for large volumes of various products to be in one centralized area. Just be sure to keep track of where everything is placed. These strategies can be further expanded upon by incorporating technologies such as automated storage and retrieval systems (ASRS), pallet shuttle systems for very high-density full-pallet storage, as well as both horizontal and vertical carousel systems for small item storage and high throughput rates. Last, but certainly not least, do not underestimate the potential of building a mezzanine. The overall takeaway from this best practice should be before building out, consider what can be accomplished by building up, and strive to effectively use the space available before acquiring more.

Product Handling

When thinking about overall operating efficiency, the goal is to move product from storage to the customer as fast and accurately as possible. A factor that can directly affect this, within the four walls of a fulfillment operation, is the amount of product handling required to complete a sale. Like reducing travel times within the building, minimizing the number of steps required to go from storage to the customer can greatly increase the number of sales that can be completed in a given timeframe. One way to do this is to look for opportunities where processing steps may be redundant. When filling orders, instead of placing items in an intermediary bin to take to a packing area, where they must be transferred from the bin to an outbound shipping carton, consider placing the ordered items directly into the shipping box to eliminate this double-handling.

Expanding upon this idea, another strategy is to fill multiple orders at a time. Think about using a cart or other simple equipment to collect the ordered products from storage directly into their shipping containers and then taking this batch of orders to a pack-out or shipping area. By adopting this strategy of “batching,” further improvements can be made such as grouping similar orders together and minimizing the overall travel distance required. Or alternatively, if volume is high enough, it becomes possible to collect all of the items needed for a group of orders and then sort the products to the right shipping containers at a downstream area, enabling operators to process more volume in a shorter period of time. This is an area that most WMS systems excel in, especially higher-tier systems where more automated decision-making tools are included.

New products and sellers are emerging in the retail market daily. Those enterprises that experience success will continually look for new ways of expanding customer engagement. Whether that means outsourcing operations or taking steps to internally build a robust fulfillment model, the decision to pursue either avenue will be unique to each individual business. Developing an internal distribution operation may seem like a daunting task, especially as success mounts and orders begin to accrue. However, abundant success should not be thought of as a bad thing, but rather a challenge to innovate. The tools required to capitalize on this success and grow towards the future have never been more accessible, though it can be confusing knowing just where to start. Hopefully, the information presented here helps to provide clarity on these topics and outlines a roadmap for improving operations regardless of a business’s size or complexity.

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Sam Nichols is a Project Consultant for Tompkins Solutions. Tompkins Solutions, a subsidiary of Tompkins International, is a global supply chain services firm dedicated to helping clients achieve supply chain excellence and profitable growth. Founded in 1975, Tompkins has integrated its decades of experience in strategy, commerce, logistics and technology to provide unique supply chain consulting and material handling integration solutions. By combining best-in-breed services and technologies, Tompkins delivers a true end-to-end supply chain solution, enabling clients to improve the customer experience and ensure long-term success. Tompkins is headquartered in Raleigh, North Carolina and has offices throughout North America. For more information, please visit www.tompkinsinc.com.

Archives, Global Logistics, Global Trade Daily, Special Reports

How to Make Your Logistics More Sustainable with Green Delivery Packaging

September 8th, 2021 Simon Pleas Leave a comment

As the online retail industry continues to boom, delivery packaging is becoming an ever more important sustainability concern. Due to the Covid-19 pandemic, there has been a significant increase in online orders, and with technology constantly developing and improving, this is going to continue to increase.

In an article written by Kayla Jenkins entitled “How has E-Commerce Adapted During the COVID-19 Outbreak?” we see that there has been a 32.4 percent increase in e-commerce sales in 2020 and e-commerce shops as a whole achieved sales in the value of over $270 billion. That is a lot of boxes and packing being used; which will lead to a lot of waste and packaging materials that take hundreds of years to biodegrade.

A lot of companies are guilty of not being sustainable when it comes to packaging. Boxes are unnecessarily being used to ship slightly smaller boxes; styrofoam peanuts are being thrown into boxes and can take up to 500 years to biodegrade. In the United States, about 165 billion packages each year are shipped with cardboard which roughly equates to over one billion trees. In a study carried out by Statista, it states that 77 percent of people who order online prefer packaging that fits the actual size of the product to reduce their impact on the environment.

Over at 2Flow, they have put together an infographic entitled “How to Make Your Logistics More Sustainable with Green Delivery Packaging.” The infographic outlines the environmental impact of packaging; the opportunities that come with having a more green approach; the business benefits of going green; the goals of sustainable delivery packaging; how to go about making your product delivery packaging more green; and what the business experts have to say on the topic by showing suitable case study examples.

Archives, Global Logistics, Global Trade Daily, Warehousing

Sustainable Warehousing: New Requirements to ‘Green’ Online Retail Demand

September 7th, 2021 Damien Gallogly Leave a comment

Although the pandemic rapidly increased the demand for online shopping, the e-commerce industry has been experiencing rapid growth for years. Spurred by consumer desire to have unlimited choices instantly, e-commerce is expected to represent 26 percent of all retail sales in the U.S. by 2025 — resulting in the need for an additional 330 million square feet of distribution space. With ambitious plans to make the U.S. carbon neutral by 2050, warehousing and logistics organizations have an obligation to decrease the industry’s carbon footprint. This means taking a low-carbon approach to construction and building maintenance, as well as improving site selection and availability for warehouses to reduce transportation emissions.

Warehouse Site Selection

The increase in e-commerce has inevitably led to a rise in demand for warehouse space. Ideally, providers are seeking options closer to where their consumers live — near major metropolitan areas. However, warehouses require expansive spaces, with most key players in the industry looking for facilities over 100,000 square feet or even 250,000 square feet. This can make it challenging to find suitable sites to meet new demand, hiking up costs for warehousing land. Additionally, distribution centers are finding it difficult to locate existing assets to lease or purchase that meet these requirements. Many end up looking for new builds or refurbishing abandoned commercial assets, such as malls or office spaces.

Currently, most warehousing demand is coming from the Western U.S., including markets such as Phoenix and California’s Central Valley. These areas are heavily populated but also offer vast land resources close to city centers. Moving further outside of cities and major metropolitan areas can increase availability and decrease cost, but it has an adverse impact on the environment. When distribution hubs are located farther from where the demand is, journeys will be longer, increasing carbon emissions. In order to improve the sustainability of the industry, government strategies are needed to reduce land requirements for distribution centers, allowing them to be placed closer to where consumers live. In circumstances where this isn’t possible, companies need to consider means to lower the emissions caused by distribution strategies, such as using Electric Vehicles (EVs) to transport products to consumers.

Repurposing existing spaces can help reduce the carbon emissions of warehousing sites, as it reuses resources and potentially allows for shorter distribution timelines. Unfortunately, there is still a lot of work required to get these facilities up to standard for modern warehousing and manufacturing needs. Another key trend that will improve site selection by allowing for smaller horizontal square footage and improved proximity to city centers is the growing popularity of vertical warehouses. In metropolitan areas where horizontal land is not an option, logistics facilities are going vertical, creating multi-floor warehouses and manufacturing sites. Logistics demands are changing as new industries enter the market, including food services. This has inspired innovation in the design of buildings.

Low-carbon Construction and Operation

According to a United Nations Environment program study, buildings and new construction are responsible for huge carbon emissions, accounting for 36 percent of global energy use and 39 percent of annual energy-related carbon dioxide emissions. With warehousing requirements increasing, it is a pivotal time for this industry to evaluate construction-related emissions and consider environmentally aware building methods.

Modular construction has been used across several sectors with great success, including life sciences and residential construction, and these same practices can be applied to warehousing and logistics. Modular construction takes place off-site in manufacturing facilities, with completed designs moved on-site for installation. This can reduce material waste, as it uses a controlled environment for building. It also creates reusable, standardized building designs. Because the building parts are plug-and-play, it also makes the demolition of buildings more sustainable as the units can be removed when they are no longer needed, then repurposed elsewhere. Using hydrogen-powered transportation to move modular projects on-site can help further reduce carbon emissions, but this new trend is only sustainable if companies invest in hydrogen manufacturing plants.

The materials used in warehouse construction are also important. Utilizing steel building frames can reduce wear and tear on the building. It’s also recyclable and can be reused on other projects. Reusing materials from other projects, or using materials that have lower embodied carbon, can bring down the carbon footprint of the building. All materials used in warehouse construction need to be carefully considered if a company wants to reach sustainability goals.

Sustainable practices should also be followed when the building is in use. In a warehouse environment, energy efficiency is important, but it must be balanced against workers’ needs. Workspaces must be illuminated and heated properly to keep workers safe and comfortable. Implementing energy-efficient lighting and heating, as well as using alternative energy sources, can help meet sustainability goals while managing requirements for workers. Technology can be used to monitor energy efficiency, manage inventory and create more efficient internal processes, thereby reducing overall energy consumption.

Smarter warehouses are also needed, whereby technology can be implemented to reduce consumption. Warehousing is now implementing robotics to reduce manual labor requirements while improving efficiency. Although the use of robotics is mostly to improve productivity, when used in conjunction with other sustainable design initiatives, the results can reduce carbon emissions. For example, JD.com, a retailer out of China, opened an automated warehouse in 2018 that boasted only four employees but 200,000 daily package fulfillment. When China announced its goal of reaching carbon neutrality by 2060, JD.com began exploring low-carbon, innovative solutions for warehousing, such as solar panels to power the robots. As new technologies emerge, building considerations will need to change. For example, the use of drones in delivery means that spaces need to accommodate charging stations and landing pads. In new warehouses, companies will need to look towards new technology trends to ensure buildings are prepared for the future.

Traditionally thought of as straightforward projects, warehouses are becoming increasingly complicated. New design, technology and sustainability requirements are forcing companies to innovate in order to develop forward-facing warehouses that will meet future demand. At the same time, increased demand is forcing companies to accelerate timelines while reducing costs. Traditionally reserved for complex life sciences projects, project control consultants will become increasingly necessary on new builds, as well as refurbishing projects.

Environmentally Aware Warehousing and Logistics

Large e-commerce companies are starting to see the importance of creating environmentally sustainable operations. Many U.S. companies that moved manufacturing capabilities overseas are now looking to reinvest in U.S. infrastructure to reduce shipping timelines. California’s World Logistics Center is aiming to be the most sustainable center of its kind in the world, investing in green vehicles and green technology, rooftop solar panels and conservation grants, among other efforts. Other large logistics players are also making promises to reduce the industry’s environmental impact.

These positive changes show that the industry is ready to ‘green’ online retail demand. To do so, there needs to be serious considerations around where and how warehouses and logistics centers are being built. The benefits for the operators are there — a low-carbon approach to construction can lower future operational costs. But it also has a larger impact on future industries that are experiencing increased demand, such as data centers and life sciences. If logistics can show the benefits and ease of sustainable construction and design, it can pave the way for future sustainable construction booms.

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Damien Gallogly is Vice President, Americas West Region at Linesight and has over 17 years experience in the construction industry. As a project controls expert, he has worked on a number of large-scale projects, and benefits from considerable international experience across the U.S., UK, Ireland, the Middle East, and Asia. This gives him an in-depth understanding of working on major developments and complex projects, from early engagement through to project closeout. Damien has worked with a range of multinational clients, supporting their development and ambitious programs with valued, strategic counsel.

This article originally appeared here. Republished with permission.

Archives, Global Logistics, Global Trade Daily, Uncategorized, Warehousing

Shopping Cart Abandonment: A Challenge for E-Commerce

September 3rd, 2021 David Jacobs, Industry Insight & Outreach Manager, Generix Group Leave a comment

Unfulfilled shopping carts are rampant in the retail industry and represent a significant source of additional revenues. Too many sales are left pending due to the lack of a smooth process and relevant options presented in real-time to the consumer. To “tighten the weave” of these abandoned sales, retailers need to manage unique and omnichannel baskets. Here is an analysis of best practices.

According to Baymard Institute, 55-75% of initiated shopping carts are abandoned. Despite these statistical findings, shopping cart abandonment is not fatal to retailers. Retailers like Cultura and FNAC have been demonstrating this for several years with a dynamic, 360° approach to their customers’ selections. Their strength? Ensure an overall view of the product selection and associate additional offers and advantages in real-time, regardless of the customer channel (at home, on the move, in-store).

Distributors: Aim for the Top!

“This ‘seamless’ connection between physical and digital channels is the first prerequisite for better basket completion” explains Philippe Petit, product marketing manager at Generix. “The second element relies on the retailer’s ability to analyze, in real-time, the nature and value of products, and to trigger personalized offers in correlation, which improve customer satisfaction and the retailer’s margin.”

According to a study by AB Tasty, a personalized e-commerce customer experience can increase the revenue generated by 15%.

To turn this promise into reality requires a software suite capable of transforming “static” shopping carts into dynamic allies for retailers. “Omnichannel Sales ensures this mission by integrating ‘sales gas pedals’ that offer customers discounts, additional products, advantages or loyalty points depending on the products they select,” says Philippe Petit.

Golden Rules

1. A high-performance shopping cart is unique, omnichannel, and seamless

2. It is managed in a personalized, contextual, and real-time manner

3. It is a customer relationship and satisfaction tool

4. It improves sales, margin, and loyalty

The customer in search of omnichannel fluidity

Consumer journeys are made up of constant back and forth between several spaces (physical and digital), several terminals and several moments (information searches, price comparisons, analysis of comments, delivery conditions, etc.). In networks that combine in-store and online sales, too many baskets turn into a trap, due to a lack of management that is in line with this “mosaic” of expectations and behaviors.

There is also the case of franchised stores, which do not always have the same management systems as branches, resulting in a discontinuity in customer relations. In marketplaces, the rate of completion of baskets varies greatly depending on the costs and delivery conditions of each supplier.

The unified basket, a factor of recurrence, recognition, and valuing of customers

“The absence of a unified shopping cart, managed in real-time, penalizes the brands. Between two distributors that are apparently equivalent, customers always choose the one that offers them the most simplicity and recognition,” continues Philippe Petit. To reverse this trend, Generix Omnichannel Sales aggregates data into a single basket, thus freeing retailers from the problems of re-entering or merging files.

The solution integrates the entire spectrum of information including the basket (items, value), the customer journey (physical and digital), the transaction, promotions, loyalty, and history (recency, frequency, value). This makes consumers feel known, recognized and rewarded for their loyalty. “This is a strong element of differentiation, with a purchase act that is supported from start to finish, regardless of the channels and paths,” emphasizes Philippe Petit.

The statuses can be configured (pending, abandoned, or canceled). The customer, the sales advisor, and the after-sales service can find, in real-time, the shopping cart created via an e-commerce site, a wish list prepared on the phone, an order placed on a salesperson’s tablet.

The retailer can create and instantly distribute discount codes sent by SMS, encouraging consumers to go to the store or online. Omnichannel Sales even offers web services for VAT processing and legal collection of shopping carts generated via a salesperson’s tablet or an in-store kiosk.

According to a study by OpinionWay and iloveretail 48% of French shoppers use their store while in a store.

Clear and efficient returns management: An important decision factor for e-customers

Returns are the third most important decision factor for e-customers, after price and delivery terms. The clearer the brand is on the conditions of return (deadlines, logistics), the more it encourages customer trust and commit to purchasing.
“Generix uses the complete information of the registered baskets in the case of a partial or complete return of a purchase”, underlines Philippe Petit. Whether it was generated in-store and/or online, the single basket kept in Omnichannel Sales facilitates the management of returns, with the same level of information whatever the origin of the order (mobile, web, store, call center, etc.).

Generix hopes to eventually offer an analysis of the reasons for basket abandonment, whether it’s due to a product line’s pricing policy, an over cost between the product’s value and its delivery cost, or a lack of clarity on the return conditions. The result is a significant reduction in the number of unfulfilled shopping carts in consumer e-commerce.

As omnichannel-driven demands become the norm, with resulting customer satisfaction harder to achieve, supply chain professionals need to leverage advanced WMS technology to keep their operations nimble, efficient and scaling – especially in these volatile times. Given Generix Group’s completeness of vision and ability to execute, as recognized once again by the Gartner analyst community, their Solochain WMS is well-positioned to help companies needing a modern, flexible and agile solution that can easily adapt to their changing needs. We invite you to contact us to learn more.

This article originally appeared here. Republished with permission.

Archives, Commentary, Global Trade Daily

Boosting Checkout Conversion Rates: Tips for Businesses Chasing E-Commerce Success

August 31st, 2021 Claire Gates Leave a comment

A customer clicking “pay” means the sale is pretty much a done deal, right? Not so fast. What if that final step isn’t actually a leap towards revenue? What if that transaction stumbles at a final hurdle? In this increasingly global landscape, the lack of payment method options is causing exactly that misstep for e-commerce players.

The general theory is that e-tailers expect checkout conversion rates greater than 80% once a consumer has selected the product or service, entered all their personal details, remained on the site, and then try and pay. In reality, nearly 50% of online shoppers say they will abandon a purchase at checkout if their preferred option is not available. This means that the actual conversion – and therefore revenue rate – is far less than 80%.

Amid a pandemic-induced shift to online transactions, consumers now have a stronger sense of what they want in terms of ease-of-use, customer experience, communications, site aesthetics, fulfillment, and everything in between. Consumers expect their e-commerce experience to have been tailored specifically for them.

Accessibility to locally preferred payment methods (LPMs) forms is just one component of this, albeit an important one. E-tailers, as well as payment companies servicing e-tailers, need to ensure that all aspects impacting the customer experience are optimized if they are to truly capitalize on the global e-commerce opportunity in front of them.

The conversion rate conundrum

While it is clear that the user experience is having a direct impact on cart abandonment, it seems that this isn’t translating into action. According to statistics, the global average cart abandonment rates are between 60% and 80%. In fact, companies looking to sell to consumers from different regions across the globe can miss out on 77% of their potential business if they don’t accept LPMs, as more than three-quarters of all global e-commerce purchases are made using them.

At first glance, this is obviously a concerning rate of abandonment. But in the context of the wider e-commerce landscape, it’s potentially disastrous. When COVID-19 hit, e-commerce in the US alone experienced 10 years’ worth of growth in just three months. In Europe e-commerce revenues saw an increase of US$71bn year-on-year, leading to predictions that 2021 would see another revenue jump of 30%. That’s not to mention Asia, which now accounts for nearly 60% of the world’s retail sales online.

With 53% of people surveyed by UNCTAD saying that they intend to continue shopping online after the pandemic ends, this initial shift is now a long-term proposition and those initially lost conversions i.e. sales, reflect the possibility of a much longer-term problem – especially if your competitors have reacted quicker to these trends and demands.

How can businesses increase sales in any market?

To begin with, there needs to be an intention to understand and acknowledge the new consumer climate and what they expect in the post-pandemic world. From a global perspective, LPMs form a large component of this demand.

However, it is critical to keep your global offering locally relevant. For example – don’t offer US preferred payment methods to Asian customers or UK preferred payment methods to Indian customers. Ensure that an LPM is relevant for the market and customer base and where relevant, give them a couple of choices. More than that, showcase those accepted payment types. Old payment method logos could lead to mistrust. And on that same issue of ‘trust’, instilling confidence early on by informing customers how they can pay before they actually reach the payment page, will lead to increased conversion and basket sizes.

Additional tips for fostering a better consumer relationship and ensuring improved conversion rates include aligning the language on the payment method page to the language your customer has been shopping in; providing small information bubbles for each payment method option so customers can make a more informed choice; and make sure to show your trading name on the payment method, as customers won’t necessarily be familiar with your legal name.

Plugging in and partnering, not going it alone

These small and simple gestures may seem insignificant, but they can make or break trust with a consumer. However, what is not simple, is the level of digital transformation required to bring these value-add propositions to the table. With ‘transformation’ being the keyword.

Integrating – and then managing – local payment methods are costly, complex, and time-consuming – often taking as long as a year and can cost more than $1 million to integrate a single LPM to existing infrastructure.

Embedding the tips highlighted above requires a quality, multi-faceted infrastructure. Each LPM brings with it unique funds flow, compounded by numerous operational, regulatory, and legal complexities. That is why many brands are leveraging partnerships to expedite their speed to market and reduce costs versus building in-house.

By outsourcing a local payments infrastructure, businesses can integrate LPMs faster, which addresses the customer’s needs more rapidly hence increasing revenue and could also provide a competitive advantage. Partnering with a dedicated provider of LPMs will also enable deeper and more expansive access to consumers in different markets; the option of the provider managing the entire funds flow for each LPM on behalf of the business tapping into it, and additional monitoring and optimization services to get the best conversion rates for each LPM.

Businesses that leverage a local payments infrastructure can rapidly and cost-effectively tap into the global audience that awaits.

By putting this service into your basket, consumers are more likely to pay for what they’ve put in theirs.

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Claire Gates is the Chief Commercial Officer at PPRO

Archives, Global Logistics, Global Trade Daily, Special Reports

Get Ready for the Holidays 2021

August 27th, 2021 Mark Kapczynski Leave a comment

In the heat of summer, the holiday shopping season can feel like it’s a long way away. Experienced e-commerce merchants know better. Simply put, capitalizing on the holiday season requires a lot of effort, and a lot of advanced planning. If you want to meet those seasonal quotas, you’ll want to start strategizing right away.

So, what steps can you take right now to position your e-commerce brand for seasonal success?

1) Develop a seasonal sales plan.

First and foremost, you’ll want to create a basic plan. What are your goals for holiday sales? And, what are some specific sales, promotions, or deals that you want to offer your customers in order to help you achieve those goals? Start finalizing sales and specials now.

2) Start developing seasonal graphics.

To help your customers get into the holiday spirit, you may wish to develop some special graphics to use on your homepage and on social media. Developing these graphics may take a little time, so don’t wait until the last minute! Start generating your marketing collateral today.

3) Identify top sellers.

Hopefully, you have some data available to show you which products were your bestsellers during last year’s holiday shopping season (and in the weeks leading up to the holiday shopping season). Since these are items you know to be popular among seasonal shoppers, plan to showcase or highlight them again this year. (You may also wish to spotlight some of these items in your sales and promotional deals.)

4) Consider gift cards.

Do you provide gift cards to your e-commerce store? Creative gift card ideas tend to be popular around the holiday seasons, so if you don’t already offer them, you may wish to consider launching and highlighting them for Christmas shoppers.

5) Plan gift sets and bundles.

One of the best ways for you to upsell is to bundle items that go well together naturally; for example, you might offer an incentive to buy a sweatshirt and a toboggan together, perhaps branding it as a “winter wear” pack.

6) Plan an email marketing campaign.

Email marketing is one of the best ways to drum up interest in seasonal sales. Start drafting a string of emails right now, including some teasers, deal/promo announcements, follow-ups, “last chance to get it before Christmas” emails, and so forth. Abandoned cart emails can also be effective.

7) Start thinking about remarketing.

During the holidays, one of the most effective forms of marketing tends to be remarketing. This will allow you to keep your e-commerce brand top-of-mind among those who visit the site without completing a purchase. You can also use remarketing to reach out to customers who select a product, then abandon their cart. Again, developing a good remarketing plan can take some time, so we’d recommend that you begin the planning process now.

8) Create gift guides.

Another way to upsell during the holiday season is to create gift guides. These may be blog posts, infographics, or special product category pages on your website, where you can put together items that are similar in price, in style. The goal is to make it as easy as possible for your customers to find the perfect gifts for their friends and loved ones.

9) Design posts for Instagram.

You’ll want to leverage the powers of social commerce to hit your holiday sales goals. Start by putting together some Instagram posts that you can use to drive traffic to your e-commerce platform.

10) Make sure your website is ready.

During the stressful holiday shopping season, the last thing you want is for your customers to have a difficult time completing their orders. Be sure your website is optimized to provide a positive user experience. Test and verify that it’s optimized for mobile use, that it loads quickly, that there are no broken links, and that there are clear calls to action throughout your copy.

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Mark Kapczynski is the Chief Marketing Officer of Gooten, a globally distributed company that operates a smart supply chain for brands and retailers that are looking to utilize print-on-demand manufacturing to transform the way they do business.

Archives, Global Logistics, Global Trade Daily, Warehousing

All About Packaging – Pallets

August 23rd, 2021 BoldtSmith Packaging Leave a comment

Packaging is such a broad term that covers everything from a metal crate for a train battery to a gusseted pouch for pancake mix. One variable that the majority of packaging has in common is nearly all packages are stored or ship on a pallet at some point in the supply chain. Coincidently, a pallet is also often the most misunderstood type of packaging! In this article, we will be completing a deep dive into pallets including a few secret tricks we use to drive out costs associated with pallets.

What is a pallet?

A pallet is a horizontal platform that is used as a base to unitize goods during transportation and storage. Pallets are typically handled in the supply chain by forklifts, fork trucks, and conveyor systems. Most commonly a pallet is made of wood but can also be constructed of other materials such as metal, plastic, corrugated, and hexacomb.

Why is a pallet used?

Pallets are used as the most common method of unitizing products to safely and effectively move and store goods through the supply chain. Pallets also allow for stacking goods in racking or multiple pallets stacked on top of each other.

Pallet Material

Once it is determined if a returnable or expendable solution is the route to explore, the next logical step is to determine the material type. If returnable, common materials include plastic, metal, and wood. If expendable, common materials include wood, hexacomb and corrugated. Wood is the most commonly used material given its performance, cost, and existing supplier base.

Pallet Type

There are a variety of pallet types commonly used such as a stringer, wing, and block-style pallet to name a few. The type of pallet needs to be selected that provides the features required for your specific product size, weight, and supply chain. Selecting the incorrect pallet type can result in wasted money, product/packaging damage.

Pallet Size

There are standard and custom pallet sizes. The standard sizes vary based on location. The standard size in the US is a 48”x40” platform. With that being said, the 48”x40” platform is not always the correct size depending on variables such as supply chain and size of packaging. Having the incorrect pallet size not only potentially increases the pallet cost but also costs associated with freight and damage.

Interested in learning more if your pallets are optimized for your packaging and supply chain? Click the below link to learn more about what BoldtSmith Packaging does.

Expendable or Returnable

The first variable to explore when selecting a pallet is whether it should be an expendable or returnable solution. A returnable pallet is most often used in a closed-loop supply chain. For example, an automobile company is receiving headlights from a local manufacturer on a dedicated truck. In this scenario, a returnable pallet is a solution that should be explored.

On the other hand, if a manufacturer is shipping their finished goods from China to the United States on an ocean container and LTL once it arrives domestically, a returnable solution likely will not be applicable.

Pallet Alternatives

To reference the earlier example for a product manufacturer shipping products from China to the US, fitting the most amount of product into the ocean container is critical. The average height of a pallet is 5” and when double-stacked into the ocean container, that is 10” of air being shipped. Popular alternatives to pallets include floor loading and slip-sheets. Both alternative methods require modified unloading techniques when received domestically. Does it make financial sense to eliminate pallets for overseas shipments? Potentially, a financial analysis needs to be completed to allow for the data to provide the evidence needed to determine the best method of unitizing the product.

Packaging Considerations

It’s so critical when selecting the pallet type, material, and size to consider the entire packaging system. The referenced packaging system includes the packaging going on the pallet, method of securing product to pallet, storage methods (racking vs stacking), etc. For example, what package is being put on the pallet? If an engine is going on the pallet, plastic banding would be a reasonable material to use to secure the product to the pallet. If boxed goods are going on the pallet, the stretch film may be a better material used to tie the product to the pallet.

What Does BoldtSmith Packaging do?

BoldtSmith Packaging Consultants is a recognized leader in packaging design, testing, and optimization for retail and e-commerce packaging, shipping crates and displays. We do not manufacture or broker packaging, we sell a service filling in as a temporary packaging engineer for companies requiring specialized packaging expertise. Click the below link to learn more about BoldtSmith Packaging and the services that we offer.

What does BoldtSmith Packaging do?

Archives, Commentary, Global Trade Daily, Special Reports

How to Build an Unforgettable eCommerce Brand That Stands Out In the Crowd

August 23rd, 2021 Sienna Johns Leave a comment

There has never been a more difficult moment to compete in the eCommerce sector. Products may go viral overnight, new brands can infiltrate and take on competitive industries, and the change in allegiances between corporations is a minor problem for buyers.

Online purchasing has simplified the lives of many people. Not only can you get items delivered to your house, but you also have access to a vast array of products. We are no longer restricted to the product variety accessible in our neighborhood stores. As fantastic as it is to have all of these alternatives, it complicates the process of owning an eCommerce shop. Every day, the market becomes more saturated.

Therefore, how can you attract attention to your eCommerce store and make it stand out from the competition?

What is an eCommerce brand?

Your eCommerce brand is more than simply a logo, brand name, and clever tagline; it is also how people perceive and speak about your business and its personality. It is the impression made on individuals by an eCommerce company they have dealt with, directly or indirectly. It is a business’s distinct, one-of-a-kind personality, the first thing that springs to mind when consumers hear your business’s name.

Here are some suggestions.

Complete customer understanding

The first and most critical step toward making your clients fall in love with your brand is understanding and appreciating its origins. That implies you must also understand precisely to whom you are marketing your products.

When determining your audience, exercise extreme caution. A diverse population utilizes many products. However, the majority of them may be narrowed down to a “Primary” or “Secondary” audience, and so on.

While a game can appeal to players of all ages, the brand must determine and focus on its primary demographic. You must make your brand appealing to folks who are most interested in a product like yours.

Use social media and video content to get them through visuals. First, you must determine which closely defined client profile or persona spends the most and purchases the most in the product area you compete with. A broad approach will not communicate to anyone in the audience that it is for them.

Provide leading-edge products – conduct research and sell a superior product!

There is no surer approach to attract customers than to provide the best or most intriguing goods. Conduct research to ensure that your product is distinct from others existing on the market. What are the most popular interests similar to yours? Why are they superior?

Consider positioning your product as an upgrade to theirs; incorporate newer technology or stay current on industry trends. Being on the cutting edge entails being one step ahead of the competition. Therefore, make sure to conduct industry studies, identify trends, and develop an innovative product to differentiate yourself.

Strong personality

Memorable brands always have a personality. You consider them and identify the elements and attributes that make them stand out in customers’ thoughts. From Apple’s sleek, fashionable, and creative design to Coca-Cola’s cheerful personality to Mercedes’ elegant, expensive, and wealthy image, all of these factors contribute significantly to businesses standing out and being remembered by consumers.

Attributing personality features to your brand may occur organically due to how clients perceive your brand, but you may also carve out the traits you desire. Through the design of your website, the graphics and material on it, and your advertising, you can establish a personality that will entice clients and help you stand out.

Customers will recognize you based on your characteristics. Online brand development is a continual process that educates clients about what you have to offer, what you stand for, and how you can help them improve their lives. Customers are satisfied not just with your goods but also with you because brand identity fosters favorable emotions. And that includes product packaging; YES According to studies, most buyers are drawn to the cute packaging, which is much better if custom-produced. Numerous organizations, such as RXD, now offer an infinite number of services for custom brand packaging.

Provide an unforgettable customer service experience

In today’s marketing landscape, experience is undoubtedly the most crucial differentiating feature. Customers from all around are searching for a firm that can deliver a fantastic easy experience – not the lowest pricing or the most creative items.

There are numerous ways to provide an excellent experience on your eCommerce store, from optimizing the checkout process to developing a great website. While the website you construct has an essential impact on how your clients feel about your company, don’t ignore the importance of creating a dedicated, efficient service team.

Conclusion

Developing a long-term eCommerce brand is a skill that will pay off well in the future. This is critical for every eCommerce firm that wishes to differentiate itself from the pack and separate the best from the rest. By maintaining consistent brand identity across all aspects of your business, from your domain name and social media presence to influencers and customer service, your business may develop into a long-lasting brand that many will remember for years to come.

3pls, Archives, Global Logistics, Global Trade Daily

SIX THINGS TO CONSIDER IN PICKING THE BEST THIRD PARTY LOGISTICS OUTFIT

August 19th, 2021 Jonathan Dyble Leave a comment

Logistics is the lifeblood of commerce and e-commerce. For companies that have built their foundations and business models in the process of producing, selling, shipping and delivering goods, it is arguably the most vital cog in the entire machine.

Get logistics right, and a business can thrive. Get it wrong, however, and the effects on any company’s brand reputation and bottom line can be catastrophic.

The challenge for many firms looking to deliver goods to customers is the simple fact that they will lack the resources or know-how and are unable to effectively handle large-scale logistics in-house. To maximize commercial opportunities, products must be deliverable across large geographies, yet this is almost impossible to achieve singlehandedly.

As a result, many will turn to third-party logistics (3PL) providers–supportive organizations specializing in the provision of cost-effective fulfillment and distribution services.

Indeed, logistics is big business. According to estimates, roughly 10% of the United States’ $21 trillion annual GDP can be attributed to the industry.

Given the size of the opportunity, the market continues to become increasingly competitive, resulting in rampant logistics-centric innovation among 3PL providers who today provide a range of highly effective, bespoke services.

For those seeking the help of a 3PL, this innovation is hugely beneficial. Yet not all 3PLs are created equal. Within such a crowded environment, the challenge for many companies is finding the right provider that is capable of unlocking as many otherwise unattainable benefits as possible.

Here are six things to consider when choosing a third-party logistics provider.

Track record

While many services a company utilizes can be somewhat transactional, a 3PL-client relationship must be built on trust. Such providers will become a vitally important part of your business’s success, so it is important that you know they have a proven ability to support your specific needs.

There are a variety of ways in which you can determine this track record:

-Are they an established player in the market?

-Do they hold accreditations from recognized industry bodies?

-Do they have case studies with example success stories working with companies similar to your own, in your regions of interest?

-What sort of results are they delivering for those clients, and how do these compare with your expectations?

-Take the time to understand a potential providers’ areas of strengths and weaknesses to ensure they are able to deliver upon their promises.

Expertise

Despite broadly catering to the same demands, the individual offerings of 3PLs will often vary. While one provider might offer a limited number of services but specialize in your specific industry and/or geographies of interest, another might offer an expansive range of services that could help to make your supply chain more scalable, yet only do so on a generalized basis without the ability to meet a stringent set of bespoke needs. Rarely will one company’s model mirror that of another.

Consider your specific business needs and goals, understand how logistics will best support these, and then you can work to understand what kind of 3PL provider and services you will need. In following these steps, you are more likely to benefit from 3PL services that are relevant to your organization.

Location

The footprint of a 3PL is just as important, if not more so than its services. The best providers will have a well-established network that is able to uphold a seamless logistics operation across multiple locations, either regionally or perhaps globally.

Indeed, this is a further question: Are you looking to sell your goods locally, regionally, nationally or internationally? One 3PL may have an unrivaled footprint in one state, but not be able to compete with others who specialize in country-wide services.

Again, consider your own needs and find a 3PL that can meet those requirements.

Compatibility

While cost will often be the primary factor worth considering for any company, it should not be the be-all and end-all. Cheaper doesn’t always mean better value. With 3PLs, it is equally worth considering the company’s cultures and values to understand how they work with your business and cater to your customers.

-Are they willing to communicate with your company on a regular basis?

-Are they a good cultural fit?

-Do they demonstrate a willing commitment to data sharing that can demonstrate your ROI?

-Do they have a track record of going the extra mile for their customers?

It is worth remembering that your 3PL provider will be an extension of your business, and the quality of their offering will reflect on your own brand. Ensuring you create a truly embedded partnership with a close working relationship is, therefore, vital.

Scalability

With the support of a good 3PL, it is likely that your business will be able to grow more quickly. But does that same 3PL have the flexible and agile characteristics necessary to support that growth?

Scalability is a fourth important element to consider when selecting such a provider. If the answer to the above question is no, then you may find that you will be forced to change 3PL provider in the near future, causing unnecessary administration, stress, costs and disruptions.

Equally, it is not just about whether a 3PL can scale with your business, but what impact this might have.

-What would this mean for your costs?

-Will the services and value for money improve, reduce or stay the same?

Place your roadmap front and center and ask yourself whether a 3PL would be able to support this.

Innovation

As has already been mentioned, competition in the logistics space continues to spur an ever-increasing amount of innovation among 3PL providers who are deploying state-of-the-art technologies and cutting-edge services to both cut above the noise and benefit their customers on a daily basis. Some 3PLs will be more committed to innovation and technologies than others, however.

To identify those that will value innovation and bring plethora of benefits to your business not only now but in the future, consider their current offering.

-Will their software and systems integrate with your own?

-How do they track metrics, data and deliver analytics? Can they provide this information to you easily?

-How usable and up to date are their website, dashboards and alike?

Those that can deliver positive answers to these questions will likely be companies that are committed to continually enhancing the service they bring to their customers and will likely maximize industry innovation to the benefit of your business.

Ultimately, it is important to do your research. Don’t just settle on the cheapest provider. For something as important and integrated as a 3PL, which will become an extension and representation of your own brand and business, it is important to focus on quality in all aspects.

By considering these six simple factors, you will be well placed to find a more suitable, more relevant 3PL capable of meeting your organization’s needs.

Archives, Global Trade Daily, International Trade

Top Products You Should Avoid Dropshipping

August 17th, 2021 Mike Austin Leave a comment

There’s a reason why dropshipping is such a popular business model among aspiring entrepreneurs. Selling products that you don’t need to ship or store is accessible in that it doesn’t require much capital to get started. Also, it comes with low overhead, and, with such a wide selection of products available to sell, entrepreneurs can more easily experiment with their business without too much risk.

It’s an excellent choice for business owners who don’t have a large space to operate within, considering the dropshipping business model has built-in inventory management. Entrepreneurs who use dropshipping can run their business from practically anywhere and don’t have to worry about many of the logistics involved in running a traditionally supplied business.

Still, for all the benefits of dropshipping, there are a few drawbacks that may lead to financial problems.

Along with the labor involved in order fulfillment, you also export your trust. Too often, well-meaning and legitimate dropshipping businesses find themselves entangled with suppliers who are out to make a quick buck at the expense of the customer. This ultimately damages your business’s reputation and may cause consumers to perceive it as a scam when really, you aren’t the problem so much as the dropship supplier is (which is why it’s so important to shop around and try out a different supplier every now and then).

There’s no doubt finding a reliable supplier can be difficult. And, even when your dropshipping supplier does come through for your customers, sometimes you are met with such a low-profit margin that you may wonder whether running an e-commerce platform is even worth it.

An e-commerce store is a great way to earn an income — provided you’re selling the right dropship product. One of the most common mistakes entrepreneurs make is to sell items willy-nilly, without considering the possible complications of the sales channel or order fulfillment process. To aid your discretion in what products you offer your customers, we’ve compiled a list of items to absolutely avoid selling in your online business, so you don’t make financial mistakes.

Your Dropshipping Business Shouldn’t Sell 11 These Items

1. Large Items

As the owner of a dropshipping business, you may be tempted to sell large items like furniture with the expectation that they will yield you high-profit margins. The furniture itself may be worth big bucks, but the headache is not.

Here’s why; If you’ve been in the dropshipping business for a while, you’ve likely used ePacket, a shipping method that is offered by third-party providers operating in China and Hong Kong. ePacket is designed to ship lightweight items at low cost and high speed. This is the shipping option of choice for popular Chinese online store AliExpress.

For a dropshipping product to qualify for this super-cheap, super-speedy shipping method, the weight of the package cannot exceed 4.4 lbs. The longest side of the package cannot exceed 60 cm (if rolled, the limit is 90 cm). You cannot use ePacket to ship anything worth over $400 U.S. dollars. The shipping cost for large items often surpasses what the item itself is worth, making this a poor choice for the dropshipping retailer.

For obvious reasons, furniture is a no-go for ePacket shipping, which is why you should avoid it altogether as a dropshipping model. Not to mention, there is typically a higher risk of large items being damaged in transit than smaller items.

2. Items That Cost Over $100

If you want to keep your dropshipping company profit margins up, don’t bother with items that cost over $100 before shipping and handling. Of course, you can opt to have a pos financing system, but anyway, there are several reasons why selling expensive items doesn’t make a whole lot of sense.

For one, your customer base is looking for a bargain. They’ve come to your website because they think they’ll find a good deal there. Because the customer is coming in with that expectation, it’s unlikely they’re willing to spend any amount in the triple digits on a single item. Customers who are willing to pay more will likely avoid a discount site altogether.

Secondly, it’s hard to justify the markup on items worth more than $100. If the wholesaler’s price is already high, there’s less of a chance you’ll be able to get away with charging the customer much more.

And lastly, items with a hefty price tag, such as specialty or luxury products, are already offered elsewhere in abundance. For instance, if someone wanted to purchase a musical instrument such as a bass guitar — which is a high-cost item, even at a discounted price — they would likely go to a specialty store rather than purchase from your business. While finding a niche for starting your own online store is a great idea, it’s highly recommended that your niche items are not inherently expensive.

3. Clothing and Shoes

One of the greatest woes of buying clothes online is that you can’t try on a piece before you buy. Sometimes you can’t rely on product descriptions or product images, either.

Too often, this leads to disappointment, negative customer reviews, and returns. The returns you may have to deal with as a merchant could be enough to make you vow never to sell clothing again. Any item that must be sized, whether clothing or shoes, has a higher likelihood of being returned by the customer.

It’s also very easy to unknowingly misrepresent an article of clothing. For example, if you are an e-commerce business that only ships to the U.S., but your dropshipping supplier is a Chinese clothing manufacturer, it’s likely that the clothing is sized incorrectly for a U.S. audience. Consumers may become confused about irregular sizing, leading to mixups, frustration, and returns.

A disgruntled customer may take to your e-commerce store’s website to complain that a pair of jeans don’t fit as specified or look like the picture, and a bad review will scare away a potential customer. For this reason, it’s best to stay away from any sized items at all — it’s just not worth the hassle.

4. Fragile Items

Fragile items, such as glass and porcelain dishware, figurines, etc., can present a problem in transit, especially when shipping internationally. Depending on the quality of packaging by the wholesaler, an item might arrive damaged or broken. The safer option is to only ship plastic and other non-breakable materials. If you’re determined to ship fragile items, it’s a good idea to consult your dropshipping supplier about their fulfillment method. Ask your sales channel how they package that particular item, especially if it is a new product about which you cannot find much information. You may also want to read reviews of the item to see whether customers experienced problems with how their package arrived.

5. Supplements, Diet Pills, and Health Products

It probably won’t surprise you to learn that Facebook has stringent advertising policies. In addition to an extensive list of products (healthcare items and supplements included) that cannot be advertised on Facebook, there are restrictions pertaining to how you can advertise a new product in your online store.

Supplements cannot be advertised at all, and images showing “before and after” results are also not allowed. You also cannot use product images in a way that implies achieving health goals, such as muscle gain or weight loss, will occur as a result of using a product.

Supplements, diet pills, and health products are all items to avoid, considering that Facebook is a major driver of revenue for many a dropshipper. Without Facebook advertising, it may be harder to move your products. That is the number one reason why the above items don’t make great products; however, there are additional arguments to be made about the legality and safety of these products — some of which may be unregulated by the FDA or may even be illegal in some countries and regions.

6. Safety Equipment

Selling safety equipment simply puts the merchant at a far higher risk of liability than is necessary. For example, say a customer buys a motorcycle helmet from your website. By virtue of being a helmet, it is meant to protect the consumer from a head injury. If that customer gets into an accident while wearing your helmet and the helmet doesn’t perform as promised, you may have a major lawsuit on your hands. Since you can’t check the quality of items yourself, you’re placing all your trust in the supplier’s quality control.

However, this doesn’t mean you can’t sell equipment related to activities like motorcycling — just steer clear of equipment meant to protect consumers from serious injury. Examples of safety equipment to avoid include:

-Helmets

-Shoulder pads

-Mouthguards

-Flame retardant clothing

-Safety gloves

-Safety glasses

To a lesser extent, this even extends to equipment for electronic devices, such as a supposedly waterproof phone pouch, screen protectors, or other hardware meant to protect electronics. While you’re less likely to get a lawsuit thrown at you over a broken phone screen, your customers will not be happy, and you can expect a rather scathing review.

7. Counterfeit Items

It should be fairly obvious that selling counterfeit items is yet another invitation for trouble — if not just for legal reasons, then for your business’s reputation. It is completely illegal to sell counterfeit goods, whether you are producing, selling, or transporting such goods.

The top five counterfeit items most commonly bought on the internet are:

-Watches and jewelry

-Handbags and wallets

-Consumer electronics

-Consumer products

Pharmaceutical and personal care products

Whether or not you knowingly sold counterfeit goods, you can get in a lot of trouble. This is why it’s best to keep a close eye out for products of the above types that appear to be replicas of branded items. If the supplier price seems too good to be true, it probably is.

8. Weapons

Even if you are selling weapons such as pocket knives in a completely legal way, they can be a major annoyance to sell. The legality of a particular type of knife, for instance, may vary from region to region. Someone who is unfamiliar with weapon laws in countries their online retailer ships to would do best to avoid selling weapons altogether. There may be legality issues with selling items across national borders as well. At worst, your e-commerce business has unwittingly sold weapons that are illegal in a particular country; at best, a shipment doesn’t make it past customs. In the end, it’s probably not worth the trouble and risk of selling dangerous items.

9. Common Household Items

Avoid selling common, everyday items that consumers can find at just about any corner store. The reason? Well, just that. If you’re selling a generic item that can easily be purchased at any other store, including brick-and-mortar stores, you don’t have much of a competitive edge. For example, if a consumer has run out of toothpaste, they’re likely to buy it at any nearby drugstore. There is no incentive for the customer to buy from you, especially if they will have to wait several days to weeks for the item to arrive. But, if you sold something that was unique, such as a trendy type of teeth-whitening toothpaste with “exotic” ingredients, customers may be willing to wait for your specialty toothpaste (and hopefully buy some regular toothpaste in the meantime!).

10. Cosmetics

The reason for avoiding cosmetics is similar to the reasons for avoiding items five and seven. Namely, you may end up accidentally peddling a good that is untested or unapproved by the FDA, and possibly even counterfeit. Counterfeiting makeup has become an extremely lucrative venture. Unfortunately for the duped customer, counterfeit cosmetics often contain unregulated and unsafe ingredients that can cause skin irritation, damage, and serious allergic reactions. The same goes for cheap makeup brands from foreign countries; they are often not regulated or held to the same standards as higher quality brands. They may contain highly toxic ingredients — something you definitely don’t want passing through your hands and into the hands of your customers.

11. Copyrighted Items

Selling copyrighted items is one of the biggest financial mistakes you can make on your e-commerce platform. Just like with counterfeit products, selling items that violate copyright laws is illegal. It may be tempting to sell items that are copyrighted because there is an existing fanbase you can target; however, it’s not a good idea. Should you be caught, legal charges can be brought against you, and your store may be shut down entirely. Companies like Disney and its subsidiaries are well-known for going after any instance of copyright infringement. A small dropship company that is found to be violating Disney’s copyright, for instance, stands almost no chance of recovering from a lawsuit.

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Mike Austin is a Content Director at Adrack.com. He has worked in the Digital Marketing industry since 2009. As a conversion-driven marketer, he is passionate about helping businesses expand their online visibility and reach their goals.

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Golden Rules

The customer in search of omnichannel fluidity

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Your Dropshipping Business Shouldn’t Sell 11 These Items

1. Large Items

2. Items That Cost Over $100

3. Clothing and Shoes

4. Fragile Items

5. Supplements, Diet Pills, and Health Products

6. Safety Equipment

7. Counterfeit Items

8. Weapons

9. Common Household Items

10. Cosmetics

11. Copyrighted Items

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