May 4, 2021 | Best Practices, Blog, Fulfillment, Warehouse Management Software
With the ecommerce industry booming and competition increasing every day, customers have increased expectations about the online shopping experience and the order fulfillment process.
Of course, platforms like Amazon set the bar for both ecommerce merchants and couriers alike with their impressive overnight and 2-day shipping policies. For small businesses, pulling off quick delivery times can put a lot of pressure on your logistics operations. Unless you have a network of fulfillment centers and a big labor force, fulfilling orders to get delivered in a cost-effective manner is going to be tough.
So, how can you manage shipping costs to profitably ship orders and not lose sales to major brands? This article will take you through the basics of shipping costs and how you can correctly estimate them through different factors and tools.
How to calculate shipping costs
The total shipping costs depend on the basic information of the package that you’re shipping and on the declared value of the products inside. However, the total cost often depends on many other complex factors as well. Here are a few factors that contribute to the shipping rates that popular courier services offer.
Package dimensions
The package dimensions, such as length, width, and height, are usually multiplied together to calculate the dimensional or volumetric weight of the package. The size of the package usually determines the shipping rate per cubic foot and different box sizes are marked with different shipping costs.
Package weight
If the actual weight of the package outweighs the dimensional weight calculated from the standard formula, then the actual weight of the package is used as the billable weight and the shipping costs are based on that. Thus, the larger the package is, the higher its shipping costs.
Package destination
Additionally, the shipping costs depend on the destination country and the destination zip codes. For some zones, the shipping costs are usually higher. Like in the United States, shipments to Hawaii and Alaska are often more expensive than in the continental states. The total costs depend on the zone distance which is calculated by counting the shipping zones between the point of origin and the destination.
Value of contents shipped
Often, packages with a high declared value require shipping insurance. This is also true for expensive products and dangerous goods that require their own packaging to be shipped in that isn’t standard. The parcel handling-related charges add to the shipping-related charges, resulting in higher shipping costs in total.
Expected delivery time
For most couriers, premium and fast shipping get more expensive the more zone distance there is to cover. For example, overnight shipping in the same zone might not be as expensive as overnight shipping to some destinations five zones away, as that would probably require air shipment for fast shipping. The standard post delivery to the same destination might cost less but it would take longer for it to be shipped.
Shipping cost calculators for shipping carriers
The above-mentioned factors are usually what popular shippers use to estimate shipping costs. Many ecommerce platforms have their own shipping calculator, like the Shopify shipping calculator that gives instant shipping quotes for a package. Let’s take a look at some of the carriers.
USPS shipping rates and shipping calculator
USPS is among the cheapest carriers in the USA, especially for ground shipping. The post office sends daily rounds for shipments and this is the reason that USPS offers fast deliveries at such modest rates, making it one of the best deals out there.
USPS offers a variety of deals based on the mail classes like priority mail, flat-rate shipping with envelopes and different boxes, etc.
You can use the USPS Shipping calculator to get shipping quotes from the courier on domestic/APO/FPO and international shipping.
FedEx pricing and shipping calculator
FedEx is another popular carrier service in the US and Canada. FedEx offers a variety of delivery deals ranging from same day to overnight shipping, and from ground to air shipment.
The FedEx Small Business program offers shipping solutions to small businesses and the rewards program offers shipping discounts. FedEx shipping costs are based on the dimensional weight of the packages.
You can check the FedEx shipping cost calculator on their website to estimate shipment charges.
UPS pricing and shipping calculator
UPS is another popular courier service in the United States. UPS shipment ranges from the UPS ground to UPS 3-Day Select or 2nd Day Air. UPS prices, like that of FedEx, are also based on the dimensional weight of packages. Small businesses can often cash in on some shipping discounts through the UPS Connect program, which apply to both ground and air shipments.
The UPS shipping calculator can be found on their website.
Shipping cost calculation FAQs
By now, we’ve covered the basics of shipping charges and how they are calculated. In case you still have some questions about shipping cost calculation, here are some of the most frequently asked questions, answered.
How do I calculate dimensional weight?
The dimensional or dim weight is calculated by measuring the dimensions of the package and then dividing the total volume by a standard dim divisor. Popular shipping carriers like USPS, FedEx, UPS, and DHL, etc. base their shipping rates on the dimensional weight of the package.
Can I ship flat rate?
Yes, USPS has many offers for flat rate shipping where you can ship by putting your products in the standard flat-rate envelopes or the flat rate boxes in sizes small, medium, and large.
How do I calculate shipping costs for USPS?
Shipping costs on USPS can be easily calculated through the shipping calculator available on their website. You can use the drop-down menu available on the website to estimate the shipping cost of the different shipping label deals offered by USPS.
How do I get shipping discounts?
Usually, third-party logistics companies have set deals with shipping carriers like USPS, UPS, and FedEx, etc. By using the services of a 3PL provider, you can often get shipping discounts through these couriers. Just sort out these details with your fulfillment provider.
Which is the cheapest carrier to ship with?
One of the cheapest carriers is the United States Postal Service or the USPS for short. Comparing the average shipping costs for FedEx, USPS, and UPS, it is clear the USPS is the cheapest option for both ground and air shipments. USPS also offers many shipping services like the Retail Ground, Priority Mail 2-Day, and Priority Mail Express, etc. The actual shipping quotes are present on the USPS website.
How 3PLs reduce shipping costs
By teaming up with third-party logistics companies (3PLs) for logistics and warehouse management services, small businesses can enjoy major savings on shipping costs. So, how exactly can you save on shipping costs by outsourcing your fulfillment, you ask? Let’s take a look!
Discounted shipping rates
Because 3PL companies manage order fulfillment for several clients and handle plenty of daily shipments, they often have agreements for discounted rates with carriers. This way, they can offer their clients discounted shipping rates as well. Most 3PLs don’t charge extra fees for the discounts, so you can rest assured that you won’t be charged extra for shipping with a 3PL.
Distributed inventory
Because of distributed inventory, ecommerce business owners can have inventory stored at different warehouses in different shipping zones. This makes fast shipping easier as the inventory can be sourced from the closest warehouse upon the placement of the order and the extra fuel charges can be avoided. Basically, orders will be sent to the warehouse closest to the customer to improve delivery speeds and reduce transportation costs.
2-day delivery and overnight delivery
Additionally, these fulfillment companies are often able to offer overnight and 2-day delivery options, thanks to the above-mentioned factors. This helps small businesses compete with Amazon and other large brands that have the fulfillment network capable of delivering orders quickly.
Conclusion
Shipping costs not only depend on the product you’re sending and where you’re sending it from, but also on where and how fast the goods are being sent. Additionally, the total costs also depend on what carrier you are partnering up with. The good thing is that these things can often be estimated to great accuracy with the help of internet tools.
To sum things up, shipping costs, while they seem simple enough, involve a lot of complex factors in their overall calculation, and you should definitely keep them in mind.
Get started with ShipHero’s fulfillment services to reduce shipping costs.
Apr 22, 2021 | Blog, Warehouse Management Software
The secret to success with any ecommerce business is to keep your customers happy. Rapid order fulfillment, free shipping, and excellent customer service are some of the best ways to do that. When determining an ecommerce business plan, many fail to factor in (or underestimate) product returns.
Returns are a necessary evil for any ecommerce business, and if you don’t handle them properly, they could swiftly break you. Frequent returns negatively impact your profit margins but also destroy conversion rates, bring down customer loyalty,, and threaten the survival of your business as a whole. Developing and enforcing a strong returns policy is a must if you want your business to be successful. Counteracting return fraud should also be a focus to further prevent lost profits.
In this article, we’ll cover the ways in which your return policy impacts sales and how to change your policy to benefit your business. We’ll also cover some of the best ecommerce return practices to make sure that returns don’t ruin your business.
The State of E-Commerce Returns
In 2017, there were over 1.6 billion digital buyers around the globe – that’s more than 20% of the world’s population. What’s more is that number is projected to increase to over 2.1 billion by 2021. Though the e-commerce market presents nearly limitless possibilities for retail businesses, it does come with its challenges.
Reaching your target audience can be tricky when you have billions of potential customers, and you must compete with dozens or even hundreds of businesses like yours. In the wide world of ecommerce, it’s the little things that make your business stand out – things like your return policy and refund policy.
According to Star Business Journal, returns at brick-and-mortar stores hover around 8% to 10% while returns for online retailers are nearly double at 20%. Furthermore, returns can be extremely expensive for a business – particularly during the holidays. Here are some eye-opening statistics:
- Over 40% of online purchases include multiple sizes or variations with the intent of returning unwanted items.
- 77% of online returns come from repeat customers.
- 95% of online shoppers say a positive return experience affects brand loyalty.
- On average, it takes 28% of businesses two weeks to add a returned item back into inventory.
To account for the logistics of returns, many businesses take steps such as increasing their workforce, adding more warehouse space, and creating separate departments to handle returns. All of these factor into an ever-dwindling profit margin as the cost of returns grows higher.
Before getting into the details of how you can keep ecommerce returns from potentially ruining your business, let’s take a closer look at some of the ways returns affect your overall profitability.
How Do Ecommerce Returns Affect Your Profitability?
To a certain degree, keeping your customers happy is about transparency. Customer expectations in the world of online shopping are high considering they can switch to a competitor’s site or Amazon in just a few seconds.
The customer experience in today’s world is critical to success. Your customers want to know that the products they are purchasing are of the highest quality and they are getting the best value for their money. Customers want to know their order will be processed quickly and efficiently and that they can contact customer service with questions or concerns, which will be resolved in a timely manner. They also want to know what your return policy is upfront, before clicking “buy”.
Your ecommerce return policy affects your business more than you may realize. According to recent research, about 67% of online shoppers will check a company’s return policy before buying. What do customers like and dislike about return policies? Let’s take a look…
- About 80% of consumers surveyed expect free returns.
- Only 25% of online merchants offer free returns.
- Over 83% of consumers read a company’s return policy before buying.
- About 71% of customers decide not to purchase when restocking fees are charged for returns.
As an ecommerce business owner, you need to account for all variables when it comes to profitability. While it might cost your company money to offer free returns, doing so could, in turn, boost your sales. In fact, customers are twice as likely to make a large purchase (over $1,000) online if free returns are offered.
To give you an example of what a good return policy can do for your business, consider the Zappos model. They were the first ecommerce retailer to offer a 365-day, free two-way shipping, and returns policy. What’s more, is that the free return shipping policy allowed customers to return their shoes for any reason. This was absolutely unheard of in 1999.
According to Zappos’ VP of Services and Operations, the company’s best customers have the highest return rates (up to 50% of everything they purchase) but they also spend the most money which makes them the company’s most profitable customers. At first glance, it may sound like their return policy is hurting business but, over time, those loyal customers end up spending more, which offsets their returns.
Simply put, a lenient return policy (when properly executed) can make a huge difference for your business and for your profit margins by creating a more loyal customer base.
What Really Drives Returns?
In order to improve your returns policy, you first need to gain a better understanding of who is returning your goods and why. Here are some of the most common reasons for returns:
- Damaged Goods – Items arrive at the customer’s door having been damaged prior to or during the shipping process.
- Mis-Delivered or Undelivered Goods – Items fail to arrive at the desired destination.
- Malfunctioning Goods – Items arrive at the desired location but do not work properly.
- Gift Returns – Items are received as gifts and returned by the giftee if they don’t want the product.
- Exchanges – Items are exchanged for another item.
- Inaccurate Description – Items received are not as described, either in terms of size or style.
- Changed Mind – The customer simply changed their mind about the product.
In addition to identifying why certain items are being returned, it is also helpful to develop customer profiles to determine who is making the most returns and how to prevent it from damaging your business. For example, some customers intentionally take advantage of lenient returns policies by purchasing items to wear once and have no intention of keeping them after. There are also others who order multiple sizes and options for the sole purpose of trying them on at home.
Having developed a better understanding of your customer base and the most common reasons for returns, you can now work on developing a stronger return policy.
Tips for Developing a Hassle-free Returns Policy
Now that you understand that the majority of customers will check a company’s return policy before making a purchase. It is also important to note that nearly 50% of customers will continue buying from a company if they have a hassle-free return policy. So, how do you create a return policy that improves your profit margins while also retaining your customers?
Here are some simple tips to help you develop a strong return policy that wins over customers while keeping return rates low:
Offer returns in a specific time window
Your customers want to know that if they aren’t satisfied, they’ll be able to return the item easily. For example, if you sell footwear, your return policy can state that all shoes can be returned within 30 days if they’re still in good condition.
Keep your return policy clear and concise
A clear return policy makes it easy for customers to understand which products can be returned and which can’t. If you have products that have a separate return policy, be sure to list them on the product page so customers are aware of any special return policies.
Make your policy easy to find
Your customer shouldn’t have to search for it. A strong return policy should show that you stand behind your product to instill confidence in your business to build trust with the consumer.
Never copy a return policy from another company
You should personalize your return policy to your business and products. While there are templates available to help you craft a return policy, they’re meant to be customized to your brand’s unique return policy.
Try to keep the language light
Avoid phrases like “you must” and “you are required to.” You want your returns process to be easy, not scary.
Be clear about what the customer can expect during the process.
Some customers expect immediate refunds or a gift card when returning a product. Your return policy should list out the steps involved during the return process so they know how it all works.
Make it clear whether you offer an exchange for returned products or if you provide store credit or a full refund.
The bane of any online retailer’s return policy is deciding between full refunds or store credit. While there is no one clear answer as to which one to choose, we recommend surveying your customers to see what they’d prefer.
Give specific instructions about the procedure for returns and exchanges.
Tell the customer whether they need to use the original packaging or if they can use their own. Tell them if they need to include the order slip and if they can print a return label online.
Educate your staff
So they understand the return policy and can communicate it to your customers quickly and efficiently. If your staff is confused about the returns policy, it could lead to negative interactions with customers when they try to return products.
No company is perfect but having a strong returns policy will prevent returns from destroying your business. Even with a strong policy, however, you should be prepared to take a hit now and again. If you make a mistake with shipping or packaging, you may be forced to eat the cost yourself for the sake of keeping your customer happy. Unlike physical stores, customers can’t just walk in and return a product at no cost to you. Always keep the customer and your long-term bottom line in mind.
What About Reverse Logistics?
The term reverse logistics is sometimes used interchangeably with returns, but they are not quite the same. Technically speaking, reverse logistics refers to monitoring the life-cycle of a product after it arrives at the customer’s door. This includes the ways the product can be reused, how it should be disposed of, and other ways to create value with an expired product – it also involves the return of products from the end consumer back to the manufacturer.
In order to develop a reverse logistics procedure, you need to first think about the different stages a product goes through during a return. First, you’ll need to consider the physical shipping of the returned product – how you will get it from the customer back to the warehouse. Next, you may need to test the returned item to identify existing flaws and document any problems. Then, you’ll need to repair, recycle, or restock the item.
To help you get a better understanding of the reverse logistics portion of your company’s supply chain, there are four key analytics to consider:
- Volume – Take a look at which products are being returned most often – if it’s a large volume of the same products, you may need to consider a recall or make changes to your production.
- Percent of Sales – What percent of your net sales is lost to returns and how many of the returned items can be reincorporated back into your inventory?
- Product Condition – See if you can identify a pattern of failure or malfunction to determine what is going wrong with the product and what condition it is in when it is returned.
- Financial Value – Are the returned products able to be recycled or resold? Think about ways to use returned items to minimize the blow to your profit margins.
Once you’ve gathered this information, you can gain a deeper understanding of your company’s reverse logistics and use that information to optimize your workflow. Improving the efficiency of your reverse logistics system provides numerous benefits, including the following:
Reduction in related costs
When you plan ahead for returns and implement a system to ensure that orders are fulfilled correctly, you can minimize related costs for administration, shipping, quality assurance, tech support, etc.
Faster processing
By implementing a reverse logistics system, you can increase the speed with which orders and returns are processed which keeps your customers happy.
Improved customer retention
A poor return policy can prevent a customer from coming back, but a strong policy instills confidence in the brand and makes customers more likely to purchase again, even after you’ve made a mistake.
Recoup your losses
By using a reverse logistics system to gather data on returns, sellers can decide how best to use returned products to reduce losses. You could fix and restock the product, scrap it for parts, or repurpose it in another market.
Improve the Returns Management Process with ShipHero
ShipHero is a leading 3PL for ecommerce merchants. We work with over 4,000 ecommerce merchants to ship out millions of orders a year and process returns as they come in. Here’s why you should let ShipHero handle fulfillment and logistics for you.
Done for you returns processing
Don’t want to handle every return that comes in? Leave it to us. With ShipHero, we handle all returns as they come in. With our integrations with your ecommerce platform and marketplaces, returns are easily processed on our end.
Integrations with returns management software
ShipHero currently integrates with Returnly to make returns management even easier. With our open API, ShipHero can be connected to any of your returns software to make the returns process easier to integrate into our workflows.
Turn fulfillment into a growth channel
With ShipHero, you’re able to offer customers 2-day and overnight delivery as shipping options. These can be powerful conversion drivers that help you compete against the likes of Amazon and other major brands so you stop losing sales to them.
Final Thoughts
Handling returns in a quick and efficient manner is the key to keeping your customers happy. With a strong returns policy, you can minimize the damage caused by shipping errors, manufacturing defects, and other issues that necessitate a customer return. When your customers feel like they can trust your company to correct errors in a timely manner, they will be more likely to become repeat customers.
Apr 21, 2021 | Best Practices, Blog, Fulfillment, Warehouse Management Software
Between finding the best deals, navigating carrier requirements and managing inventory, order fulfillment is challenging and time-consuming. Fortunately, you can outsource order fulfillment to third parties to focus on other business tasks.
Amazon offers two fulfillment methods for its sellers: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). What are the differences, and which one should you choose? Read on to find out!
What are Amazon FBM and FBA?
FBA is a fulfillment option where Amazon handles all order fulfillment tasks for sellers. If you register for FBA, your inventory is stored in a designated Amazon warehouse so the fulfillment crew can pack and ship your items.
Meanwhile, FBM involves a company selling its product on Amazon sales channels while handling storage, shipping and customer support on its own.
Of all current Amazon sellers:
- 57% use FBA only
- 34% use a combination of FBA and FBM
- 9% use FBM only
Amazon Prime Shipping
FBA and FBM sellers can ship products via Prime, Amazon’s reward program that offers one or free two-day shipping. Amazon reports that sellers with Prime memberships are more popular than non-member sellers – customers are more likely to purchase products from you if the Amazon Prime badge shows up on your listings because customers want fast deliveries.
Prime is automatically available for all FBA sellers. If you’re an FBM seller, you need to earn a Prime membership by joining Seller Fulfilled Prime (SFP). To be eligible for and retain a Prime membership, you need to ship all of your orders on time and have a low cancellation rate – otherwise, you’ll lose it.
Seller Fulfilled Prime is currently not accepting new registrations, but you can sign up for the waitlist.
How Fulfillment by Amazon Works
Fulfillment by Amazon sends your products from an Amazon warehouse directly to customers. Here’s a simple guide to explain how FBA works:
- Amazon receives your products at a designated FBA warehouse.
- Amazon stores your items.
- Amazon handles all customer transactions.
- Amazon prepares your product for shipping.
- Amazon ships your products out to customers.
- Amazon deposits profits to your bank account every two weeks.
FBA vs. FBM – Choosing the right option for your business
Considering your specific business and the products you sell, you may be better off with FBA, FBM, or a hybrid of the two. Each option is evaluated below on the cost & fees, autonomy & control and ease of use.
Is FBA better than FBM?
FBM is the better option for your company if:
- You sell heavy, bulky, or oversized products
- Your products sell slowly and inventory turnover is low
- You already have logistics in place and can fulfill your products
- You have existing customer service practices and want to control your customer experience end-to-end
- You want higher margins
- You don’t want to be at the mercy of Amazon’s fees
- You sell products that aren’t in the approved categories for FBA
FBA is better for your company if:
- You sell small and lightweight products
- Your products sell quickly and have a high volume of inventory turnover
- You do not have logistics in place and expenses would be higher than fulfilling on your own
- Your products are large-margin products that can offset Amazon’s additional fees
- You do not have a customer service department
- You are okay relinquishing control of your customers’ experience to Amazon
Shipping Items to Amazon FBA
One of the best perks of being an Amazon FBA member is that Amazon handles your entire inventory process. All you need to do is ship your products to an Amazon FBA warehouse, and the team there will do the rest.
How to Ship to Amazon FBA
Recently, Amazon introduced a “Send to Amazon” inventory replenishment method that’s very simple and saves you a lot of time. Here’s how to send items to an Amazon FBA warehouse:
1. Choose Items to Send
First, choose what items you plan to send to an FBA warehouse from your product listing and enter how many units you’re sending.
2. Enter Your Shipping Address and Choose a Carrier
Input your destination Amazon FBA warehouse, then choose between an Amazon-partnered carrier or your preferred carrier company.
3. Print Shipping Labels
Depending on your choice in the previous step, you can print shipping labels directly from the Amazon Shipping Services page or your chosen carrier’s company website.
4. Attach Labels
Once you have printed labels, attach them to your product boxes. Note that Amazon has strict packaging requirements, so make sure you use the right boxes.
5. Send Your Items
With the labels attached, you can schedule a courier pickup or visit the nearest office. From there, the carrier will ship your items to an Amazon FBA warehouse, where an inventory team will handle the rest.
Amazon FBA Cost Factors
You’ll be charged costs and fees if you participate in Amazon FBA. Here are some factors that influence your Amazon FBA usage costs:
Item Size/Weight
You can use Amazon’s FBA Calculator to predict fees and expenses, given your item sizes and weight. Overall, the fee structure for FBA sellers dramatically increases with the size and weight of a product; therefore, FBA sellers with small, lightweight products incur fewer fees.
Inventory Turnover
Inventory turnover is the speed at which a company sells and restocks inventory. Amazon tracks sellers’ inventory turnover and assesses fees based on the duration; in other words, sellers with products that sit in Amazon fulfillment centers for longer (i.e., have slow turnover rates) must pay higher FBA fees. Additionally, if a product sits in an Amazon fulfillment center longer than 365 days, they are charged long-term storage fees.
FBA Fulfillment Fees
All FBA sellers must pay FMA fees to cover the shipping and handling costs involved with fulfilling their company’s orders. These most likely cover the labor hours, packaging and overhead that Amazon incurs to provide this service.
FBA vs FBM: A Comparison
FBA and FBM have their pros and cons. To help you choose, we’ve laid out some key differences between the two fulfillment methods below:
Autonomy & Control Over Inventory
How much control do you hope to retain over your company? FBM has the most power and autonomy regarding fulfillment because there are many ways to fulfill your product, like dropshipping, outsourcing to a 3PL, leasing and operating your warehouse, or even using a spare bedroom in your apartment for storage.
Meanwhile, FBA sellers have little to no autonomy over handling their products. Once you ship products to the FBA warehouse, Amazon will handle the entire order fulfillment process.
Customer Experience
Most FBA members pass customer service responsibilities off to Amazon, so they don’t usually speak directly to customers. Outsourcing customer service means saving money and effort because you don’t have to pay or train customer service specialists. However, you’re also passing up a chance to communicate directly with customers and foster brand loyalty.
Meanwhile, Amazon FBM sellers are 100% responsible for customer service. Because the customer service ball is in your court, you must spend time and money to ensure a positive customer experience. However, this is an opportunity to connect with customers and reinforce your brand.
Seller Rating
FBA sellers have little concern over their seller feedback and rating because Amazon handles most of the process. In fact, FBA sellers can request Amazon to remove negative feedback if Amazon was the one who handled the fulfillment.
FBM sellers have almost complete control over their sales, so you might be easier targets for bad feedback. Since you can’t request Amazon to remove negative feedback, you must constantly deliver the best service and respond to negative reviews on your own.
Ease of Use
The whole process of order fulfillment, picking, packing and shipping is laborious and time-consuming.
For companies and brands with no sales channels or fulfillment methods, Amazon FBA allows instantaneous access to a gigantic logistics network for a price. But this also saves you time to focus on the aspects of your business that need your attention most.
Companies and brands that already have fulfillment channels and are considering adding Amazon should consider whether the additional FBA logistics channel is worth the costs, especially those that sell big, heavy products.
If you already have logistics channels and partners, FBM is likely the better option because you don’t have to pay the extra FBA fulfillment costs.
Amazon FBA vs FBM: Which is Best?
Which one is “best” between FBA and FBM depends on what you want out of your business. There’s no doubt Amazon will remain the #1 eCommerce site for a long time, so both options are relatively stable.
Generally, FBM is better if you want more control over your sales process and build more brand loyalty through direct customer interactions. FBA is better if you want a hands-off approach to order fulfillment and are fine with Amazon running your customer service.
Best Amazon FBA Freight Forwarder
Even if you’re an FBA member, shipping items to Amazon warehouses takes time and effort. Fortunately, you can go to freight forwarders to help send products out to Amazon FBA without hassle. Here are some of the best Amazon FBA freight forwarders operating today:
Unicargo
Unicargo is an Amazon freight forwarder that inspects your products upon picking them up, so you don’t accidentally ship damaged goods to the FBA warehouse. Unicargo also offers short-term storage warehouses if something happens with your FBA membership.
Flexport
Flexport offers freight forwarding services with real-time tracking in over 80 countries. If you run an environmentally-aware business, Flexport is a good choice because one of its mission to attain 100% carbon neutrality.
Freightos
Freightos helps you compare freight quotes from dozens of providers so you can find the best deals easily. It also offers on-demand freight tracking and issue resolution assistance if things go wrong mid-shipment.
Let ShipHero Handle Amazon Fulfillment
Need help with fulfillment for your Amazon orders? Here’s how ShipHero’s third-party logistics software can help you offer Amazon-like delivery speeds without breaking the bank.
2-Day and Overnight Delivery
ShipHero has fulfillment centers across the country that deliver to customers within one to two business days. We can help you deliver as fast as Amazon – without the FBA fees.
Multiple Sales Channel Fulfillment
ShipHero doesn’t just handle Amazon order fulfillment. We offer third-party order fulfillment for numerous major eCommerce platforms like eBay, Shopify, Walmart and BigCommerce.
Affordable Shipping Costs
Thanks to ShipHero’s partnerships with multiple shipping carriers, Amazon sellers working with us get lower delivery costs for each order. Moreover, our fulfillment network makes last-mile delivery faster and more affordable.
Conclusion
So, is FBA or FBM right for your business? Stay tuned to our Shipping Methods Explained series as we dive deep into the specifics of fulfillment.
Learn more about ShipHero’s industry-leading warehouse management software.
Amazon FBA vs FBM FAQs
Can you use both FBA and FBM?
You can use both FBA and FBM. In fact, about 34% of Amazon sellers use both fulfillment methods. You can use FBM to sell large products that don’t sell too well and FBA to sell smaller, high-selling products. This combination method saves you more money because you can avoid large item fulfillment and long-term storage costs.
Does Amazon charge for FBM?
Amazon doesn’t charge subscription fees if you’re an individual FBM seller, but you’ll be charged $0.99 for every product sold. However, you can get a Pro FBM subscription at $39.99/month to avoid paying $0.99 for every item you sell.
How much does Amazon take from FBA?
Amazon takes a variable FBA fee, depending on the product’s size and dimensions, that starts at $2.92 for every item sold. You also need to pay monthly storage fees based on how much merchandise you have in FBA warehouses.
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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Apr 20, 2021 | Blog, Fulfillment
Fulfillment centers, also known as 3PLs, provide a great option to expand your fulfillment capabilities. ShipHero Fulfillment provides an easy outsourced fulfillment option without the need to engage with a 3PL directly if you’re running a Shopify store and are looking for simple fulfillment services.
Online shopping has made it easier than ever for consumers to find the products they want at the best price. As brick-and-mortar stores slowly fade into the background, eCommerce stores are taking advantage of nearly limitless scalability and a worldwide customer base.
Though the convenience of online shopping is a major draw for many consumers, a positive customer experience is still vital for success. If purchases take too long to process or if shipments are delayed, your business could suffer and you may lose potential repeat customers. Rather than limiting your inventory to prevent backups and shipping mishaps, consider using a fulfillment center to manage your store’s inventory. These companies help your business deliver global eCommerce order fulfillment.
Fulfillment centers, also known as third-party logistics companies (3PLs), provide a great option to expand your fulfillment capabilities. If you’re an eCommerce merchant selling products on Amazon or another eCommerce platform, a fulfillment center handles all the order processing for you. They’ll receive the order, prepare it for shipping and get the order delivered to the customer. ShipHero Fulfillment provides an easy outsourced fulfillment solution for many eCommerce merchants running on a variety of marketplaces including Shopify, WooCommerce and more.
In this article, we’ll explore fulfillment centers as a convenient option for online merchants. You’ll learn what a fulfillment center is, how it compares to warehousing and the specific benefits of using a fulfillment center. We’ll also provide helpful tips for choosing the right fulfillment center for your business. Another option if you’re looking to outsource your shipping is to use a fulfillment service, a new option for using a fulfillment platform to manage and ship your orders without engaging with a fulfillment center directly. We’ll add an article that details more about this and how you could use Shopify store fulfillment.
What is a Fulfillment Center?
A fulfillment center is a location, typically a large building, that fulfills eCommerce retail orders. A fulfillment center handles the entire order process, from picking and packing to shipping.
Without a fulfillment center, an eCommerce retailer must take items from their inventory, pack them and send them through a shipping carrier to the customer. If you run an especially popular business, you may be swamped with orders and spend most of your valuable time processing shipments instead of developing your business.
Not just that, but more orders mean a larger chance of human error in the shipping process. If your team loses focus because they’re overwhelmed, they may make mistakes that result in unhappy customers.
To prevent errors and save valuable resources, third-party logistics companies often offer fulfillment center access to their clients.
How Do Fulfillment Centers Work?
Fulfillment centers work by storing your inventory so your 3PL’s team can process orders whenever they come in. Here’s a quick overview of how fulfillment centers process your orders:
- You receive customer orders, which will then be forwarded to your 3PL provider.
- The fulfillment center team picks the ordered items from storage for packing.
- The shipping carrier accepts the ordered items and delivers them to the customer.
The general process is similar to doing it yourself, but fulfillment centers do it at a larger scale to take the burden off your hands. Fulfillment centers are generally more experienced in fulfilling orders, so they can do it more efficiently.
Fulfillment centers can process business-to-business (B2B) and business-to-customer (B2C) orders cost-effectively. B2B orders are usually shipped to the client’s shop or storage, while B2C orders are shipped to the customer’s residence.
Understanding the Challenges of Online Stores
Online stores provide customers access to a wide range of products they might not have access to in traditional brick-and-mortar stores, depending on their location. By shopping online, consumers also can compare prices. However, online shopping is about more than just finding the best price; it’s also about efficient shipping and an overall positive customer experience.
On the seller’s side, online shopping opens up a whole new customer base that isn’t limited to a specific region. Though this creates the potential for much higher sales margins, it does come with a few challenges. Overselling, for example, is a common problem among online merchants. This happens when the merchant receives more orders for an item than they have the inventory to fulfill. They are then forced to contact their customers to tell them that the item is out of stock or shipping will be delayed. Both options can lead to low customer satisfaction levels and potential lost sales.
All it takes is one angry customer to write a bad review that could dissuade other customers from buying your products.
In addition to overselling, many online merchants encounter specific shipping issues such as mispicks and misships. A mispick happens when the merchant selects the wrong product for an order, and a misship occurs when the wrong item is sent to the customer.
Both of these situations result in returns. Plus, there’s a high probability that the customer will simply cancel the order instead of waiting for the correct item to be sent.
The larger an online business’s inventory, the higher the risk for problems. It might be time to consider a fulfillment center if you’re currently trying to manage your inventory directly and experiencing these and other issues.
Fulfillment Center vs Warehouse: Comparison
The term fulfillment center is often used interchangeably with warehouse, but the fact is that they are different. Both are large buildings used to hold business inventory, but the services offered can differ.
A warehouse is a long-term storage solution used to store products for an extended period. In many cases, a warehouse is an industrial space designed to house inventory items in bulk. If you were to walk into an inventory warehouse, you’d see products being moved by a forklift on large pallets stacked high with large quantities of similar products. Warehouses are primarily used by wholesalers and businesses that fulfill B2B orders.
Generally speaking, a warehouse is usually the best option for retailers that have a diverse inventory and stock large quantities of products. Large retailers sometimes have the capital to purchase warehouse space, but leasing is usually the most cost-effective option for small and mid-sized retailers. For small businesses, renting a storage unit is sometimes the best option.
A fulfillment center performs some of the same roles as a warehouse but with additional services. In addition to storing inventory, a fulfillment center will fulfill customer orders. When an order is placed through an eCommerce store, the order is forwarded to the fulfillment center, where the inventory is picked and boxed up, then labeled for shipment and sent to the customer.
Using a fulfillment company means outsourcing order processing which takes the burden off your shoulders and lets you focus on other areas of your business.
How Does a Fulfillment Center Compare to a Warehouse?
Despite their surface similarities, fulfillment centers and warehouses offer different services. Here’s a look at three elements that set fulfillment centers apart from warehouses.
Long-term vs. Short-term Storage
Warehouses are designed for long-term storage, where your items are kept for months or even years. Meanwhile, eCommerce fulfillment centers are more common for short-term storage because your inventory frequently changes as orders come in and out.
In fact, your inventory shouldn’t stay in fulfillment centers for a long time because storage fees can get expensive. At the same time, you should keep sending inventory to fulfillment centers to avoid running out of stock.
Facility Operations
Warehousing operations are generally very simple. Items come in when you send them and come out when you need them. There’s not a lot of processing involved aside from moving items around.
Meanwhile, fulfillment centers have more complex operations because they handle order processing. Here are some key operations of a fulfillment center:
- Receiving items from factories or manufacturers
- Picking products to fulfill customer orders
- Assembling items, if required
- Packing items and labeling shipments
- Shipping items through carriers
- Accepting and managing returns
Frequency of Pickups by Freight Companies
Warehouses don’t see a lot of shipping company pickups because you can get items shipped in bulk instead of individually. That’s why we typically see scheduled truck pickups at warehouses, with items being stacked together in big batches with pallets.
Fulfillment centers often see daily shipping company pickups or even several times a day if you run an especially prolific eCommerce business. eCommerce fulfillment centers get multiple shipper pickups daily because they need to fulfill customer orders that come in even after business hours.
Fulfillment Centers vs Warehouses: A Summary
Here is a quick summary of the differences between a warehouse and a fulfillment center:
- The primary function of a warehouse is to store inventory, while a fulfillment center’s goal is to turn inventory over quickly and ship orders.
- Fulfillment centers handle all stages of the order fulfillment process, including negotiating rates with shipping carriers.
- Operations at a warehouse are relatively static, whereas operations at a fulfillment center are much more complex and in constant motion. Some of the services provided by a fulfillment center include the following:
- Receiving inventory from merchants
- Picking products for individual orders
- Gathering inventory and packaging orders
- Labeling shipments for delivery
- Turning over orders to the shipping carrier
- Managing customer returns and exchanges
- Warehouses typically have scheduled less-frequent pickups, whereas fulfillment centers typically have daily pickups from shipping carriers.
- Fulfillment centers can guarantee same-day or next-day shipping.
Every 3PL provider is different regarding their services and the size and type of businesses they cater to.
Later in this article, we’ll talk about how to choose the right fulfillment center for your business, but for now, let’s take a closer look at the benefits fulfillment centers provide.
What Are the Benefits of Using Fulfillment Centers?
Simply put, the benefit of using a fulfillment center instead of directly managing your inventory is that you don’t have to deal with the inventory management’s ins and outs (e.g., storing, shipping and returns). It may sound simple, but you will never go back once you make the switch. The supply chain for eCommerce companies is complicated, and fulfillment centers make the supply chain easier to manage.
After using a fulfillment center to manage your inventory, you’ll find that the order fulfillment process not only goes much smoother, but you’ll be able to free up time on your end which can be dedicated to growing the business (rather than managing it).
Here are some of the top benefits of using a fulfillment center:
Extra Storage Space
Working with a fulfillment center means you don’t have to find extra space for your inventory on your premises. This is especially useful if you run a small business at home or in a small office.
Managed Order Fulfillment And Shipping Services
Fulfillment centers handle everything from product picking to shipping, so you don’t have to do it yourself.
Affordable Carrier Rates
Many fulfillment centers work with shipping carriers to give you delivery cost savings. Lower shipping rates mean you save money with each sale, growing your profit.
Enable 2-Day And Overnight Shipping
Working with fulfillment centers allows you to offer 2-day or overnight shipping options to your customers.
Professional Inventory Management
Fulfillment center workers know what they’re doing, so you can trust your items will be properly organized and stored. You also get live updates to see which items are in and out of stock.
Returns Processing Assistance
Your fulfillment center assists with returns and exchanges, saving you a lot of time and effort.
Helps You Focus On Your Business
Fulfillment centers and 3PLs handle inventory and order fulfillment, so you don’t have to. This means you can focus on other tasks for your company, like marketing, customer service and product development.
By now you should have a thorough understanding of what a fulfillment center is and how it can benefit your business. If you’re ready to make the switch, you’ll be glad to know that there are 3PL providers all over the country waiting to handle your inventory. Keep reading to learn how to find them.
Things to Consider When Choosing a Fulfillment Center
A fulfillment center may seem like the perfect solution if you’ve been struggling to keep up with orders and manage your own inventory. While 3PL providers can take the burden of order fulfillment off your shoulders, there are some things you need to consider before you commit.
First and foremost, you need to determine whether it’s a cost-effective solution to start using a fulfillment center. Prices vary from provider to provider but will include costs for things like warehouse space, equipment, warehouse management, staff salaries, worker’s compensation and liability insurance, packaging supplies, postage and more. Some 3PL providers offer a flat rate while others add individual fees per task, such as picking and packing.
In many cases, outsourcing your order fulfillment services costs more than doing the work yourself, but what you’ll be saving is time. If managing your inventory and fulfilling orders is holding you back from doing the work you need to grow your business, outsourcing may be worth the extra cost.
Not only do you need to consider the cost of using a fulfillment center, but you need to make sure that the center you choose is compatible with your eCommerce platform. The type of software you use determines whether the 3PL provider will be able to receive, process and track orders. The easiest option is to choose a provider that can integrate with your existing software rather than changing your entire eCommerce platform to match the provider.
With these factors in mind, here is a simple process to follow when choosing a 3PL provider:
Review Your Existing Shipping Process
Sit down and take a closer look at your inventory as well as your shipping process. Take the time to identify existing problems and consider whether a 3PL provider could resolve them.
Do Some Research to See What Options Are Available
You may be able to find a 3PL provider in your region, or you could choose one closer to your largest customer base.
Compare and Contrast Services Provided
Each 3PL provider is different, so you’ll need to know your business’s needs before finding a company to match.
Narrow Down Your List to No More Than Three
Once you’ve created a list of options, narrow it down to the top three choices – these are the companies you’ll evaluate on a deeper level to make your decision. Any more than three will simply be too much to handle.
Dig a Little Deeper Into the Company You’re Considering
You’ll be relying on your chosen 3PL provider to fulfill your customer’s orders and handle returns efficiently. Choosing a company with similar culture and values to your own is important for maintaining a consistent and satisfactory customer experience.
Think About Technological Compatibility
Even if your business is still fairly new, you already have some kind of management software in place – save yourself the hassle of switching by choosing a 3PL provider that is compatible with your existing management software.
Plan Ahead for Scalability
Ideally, outsourcing your order fulfillment process will give you more time to focus on what it takes to grow your business. Choose a 3PL provider that can scale its operations to accommodate your changing business needs.
Choose a Provider That Uses Distributed Fulfillment
Depending on what your business sells, you’re likely to have customers from all over the country. You want to choose a 3PL provider with multiple distribution center locations to keep costs down and optimize your efficiency.
Consider Experience and Customer Satisfaction
Though the satisfaction of your own customers is paramount, you also want to be satisfied with your 3PL experience. Look for a company with a proven track record that you can trust to handle your business’s day-to-day order fulfillment operations. Financial stability is also an important consideration, and you should look for a provider with plenty of industry references – and don’t hesitate to check them!
Negotiate the Pricing
Each 3PL provider prices their services differently, some according to the size of your business and others by individual services. You’ll need to sit down with your chosen provider to determine the exact pricing and what specific services are included.
Once you’ve chosen a 3PL provider, you need to sit with them and discuss the details. Many small businesses who switch to using a fulfillment center skip this step and end up frustrated when there is no clear process.
Before you sign a contract, sit down and go over the details of exactly what you expect from the company and how they will fulfill those expectations. You’ll need to determine which responsibilities the 3PL will handle and which you will retain in-house. It’s also a good idea to establish a schedule for regular meetings between members of your team and representatives from the 3PL. This is where you’ll evaluate the 3PL’s performance and discuss any changes that need to be made.
Examples of Fulfillment Companies
Looking for a great fulfillment center provider for your eCommerce business? Here are three example fulfillment companies to consider:
Fulfillment by Amazon
Fulfillment by Amazon (FBA) boasts over 170 fulfillment centers and 150 million square feet of storage space. Additionally, FBA users can offer free two-day delivery to their Amazon Prime shoppers – a great way to draw customers in and improve sales.
In addition to Amazon itself, FBA also supports numerous eCommerce platforms like Shopify and WooCommerce.
FedEx Fulfillment
Shipping carrier FedEx offers a full-service fulfillment center and third-party logistic service that includes packaging, warehousing and order fulfillment. In addition to its complete suite of services, FedEx Fulfillment also assigns small business owners a professional assistant to teach them about fulfilling orders.
Rakuten Super Logistics
Rakuten Super Logistics boasts 100% order accuracy and guarantees order turnaround by the next business day. Rakuten Super Logistics users can also offer customers two-day ground shipping to 98% of the United States.
However, Rakuten Super Logistics requires a minimum volume of 250 orders per month, so it may not be the best option if you can’t pass the threshold consistently.
How ShipHero Makes Fulfillment Easy
Boasting over 4,000 eCommerce partners, ShipHero is one of the leading 3PL companies for online merchants. Here are some key benefits of working with us as your third-party logistics provider:
2-Day and Overnight Delivery
You may have lost sales because your store doesn’t offer 2-day delivery like Amazon. Customers expect 2-day shipping everywhere they shop, but building a fulfillment network that can do that is a lot of work for a business – especially a small one.
If you work with ShipHero, you can offer 2-day and overnight delivery to compete with Amazon and other eCommerce giants. Moreover, we offer shipping discounts so your customers can enjoy cheaper 2-day deliveries.
Nationwide Fulfillment Center Network
Storing your entire inventory in one fulfillment center usually leads to longer delivery times, excess inventory and higher shipping costs. For instance, if your fulfillment center is in Florida, delivering orders to California will be much more expensive than shipping to New York, due to distance and many other factors.
ShipHero’s distributed fulfillment network boasts eight warehouse facilities in the United States and Canada, with locations in Florida, Texas, Vancouver and more. We split your inventory across these fulfillment centers, so customer orders will be sent out from the closest location. By reducing the shipping distance, you save money and your customers get faster deliveries.
Integrations With Your eCommerce Platform
We support many popular eCommerce platforms like BigCommerce, WooCommerce, Shopify, Shopify Plus and Amazon. Our eCommerce platform integrations are very simple to activate and especially useful if you’re selling on multiple sites. In addition to handling all orders, we offer real-time updates from your multiple eCommerce platforms, so you don’t have to fumble through multiple sites to see everything.
Transparent Fulfillment Fees
Unlike other fulfillment providers that have unexpected hidden fees, ShipHero offers a simple and transparent pricing model. Our single flat rate covers the entire order fulfillment process for the lower 48 states. We don’t lock you into lengthy contracts like other companies, either.
The Final Word
Customer satisfaction is essential to the success of your online business. If customers like your products and experience a smooth order fulfillment process, they’re much more likely to recommend your business to others and become regulars themselves.
As an online business owner, you’re responsible for selling high-quality products that cater to your customer base’s needs. However, you can’t focus on that if you still have to process orders yourself. Outsourcing the order fulfillment process to a third-party logistics provider means you don’t have to spend hours a day dealing with customer orders and have more time to develop your business instead.
Fulfillment Center FAQs
What is a fulfillment warehouse?
A fulfillment center or a fulfillment warehouse is a place where your third-party logistics provider stores your inventory and processes customer orders. Whenever an order comes in, the fulfillment center team picks, packs and ships the product to the customer’s door.
Do fulfillment centers handle inventory management?
Fulfillment centers handle inventory management as part of their order fulfillment services.
How does order processing work?
Here’s how your fulfillment center staff processes orders:
- They receive inventory from your manufacturer or distributor.
- They store and organize stock on the warehouse shelves.
- They pick items from shelves according to the order.
- They prepare the items for shipping.
- They send the items to carriers for delivery.
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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Let us know how we can help you today by scheduling a call HERE.
Apr 15, 2021 | Best Practices, Blog
Proper inventory management is crucial to building a thriving Shopify store. Statistics from Shopify reveal that sellers accrue almost $2 trillion in costs due to inventory mismanagement. The losses are spread among overstocking, out-of-stock items and preventable returns.
Interestingly, these aren’t the only problems associated with inventory management. Shopify store owners still have to battle missing items, misplaced inventory, wrong product packaging and delivery, among others. If you can establish a solid foundation for tracking inventory on your Shopify store, you’re on your way to building a genuinely agile eCommerce business.
What is Inventory Management?
Inventory management refers to how businesses manage goods as they move along the supply chain. eCommerce inventory control ensures that companies know their products are in stock and are notified when inventory needs to be replenished.
Ultimately, a good inventory management system should minimize costs, satisfy customer demand and help you maintain optimal inventory levels. It should also centralize your data, making it accessible to the appropriate point persons.
Part of stock management is inventory control, which is the process of handling existing inventory, while the former primarily involves forecasting, ordering and receiving goods.
Why is Inventory Management Important?
Inventory management is the key to any eCommerce business’ success. It ensures customer satisfaction, keeps businesses profitable and minimizes operational costs. Other benefits of having an effective inventory management system include the following.
No Spoilage or Dead Inventory
When your inventory moves faster and your product lines stay healthy, you don’t put anything to waste. Regular inventory updates can help you avoid spoilage with perishable goods like food and beverages. Similarly, automatic stock updates can prevent dead stock, which are non-perishable products that are no longer in season.
Early Detection of Low Stocks
Most American retailers without powerful inventory software only have an inventory accuracy level of 65%. The more warehouse locations they have, the more this percentage falls.
Fortunately, perpetual inventory systems inform you of available inventory items in real time, preventing stockouts and missed sale opportunities. Instead of scrambling to increase your stock flow, early stock alerts can remind you to make refills in advance.
Improved Cash Flow
Cash flow shortfall is a persisting problem for businesses without perpetual inventory systems. The best way to increase cash flow is to turn inventory into revenue. When you factor inventory into your business operations, you get insight into how much you can sell and buy at any given time.
Remember, inventory flow can directly impact your future sales. Projecting when you’re about to run out enables business owners to accurately plan and increase sales.
Minimized Warehouse Costs
Efficient inventory counts tell you what items are selling fast and which don’t. You can free warehouse space up and store items that sell more by keeping up with sales volumes.
In addition, you can monitor every single product that doesn’t sell, potentially cutting them out of your inventory. When you stock only what is necessary, you can downsize your warehouse and save on costs.
Improve Shopify Fulfillment Network
By employing effective inventory management methods, you can hasten the fulfillment process. For instance, if you have multiple fulfillment partners, inventory management techniques like distribution ensure that you are close to buyers and can keep customers happy. Doing so also ensures that customer returns are seamless and you can easily re-enter usable inventory into circulation.
What is an Inventory Management System?
Inventory management systems enable users to track inventory quantity and streamline processes from purchasing to end sales. Key features of a stock management system include:
- Barcode scanning
- Detailed reports
- Labeling and documentation
- Purchase and supplier management
- Low stock alerts
- Stock turnover rates
- Bills of material (BoM) management
What is Inventory Management for Shopify Stores?
Inventory management for Shopify stores is the systematic approach to sourcing, storing and tracking your inventory. With a proper inventory management system in place, you’ll have the right stock at the right levels, in the right place, at the right time and at the right price.
Plus, it’ll reflect on your Shopify store listings. That way, you can avoid preventable losses due to out-of-stock items, overstocking and returns, and your brand has a better shot at survival, growth and profitability.
Why Inventory Management Matters for Shopify Stores
Inventory management is crucial to the success of Shopify stores. If you can get this aspect of business right, you’ll reduce overall inventory costs, optimize order fulfillment and position yourself to serve your shoppers better. Below are some of the benefits of proper inventory management:
Accurately Track Inventory and Prevent Stockouts
Shopify store owners understand that meeting customers’ needs is crucial to profitability. If you frequently run into stock management problems like overstocking, out of stock or overselling, you’re likely to have many dissatisfied customers. Ultimately, they would go elsewhere to make a purchase, and you may never see them again.
Better Cash Management and Inventory Accounting
If you have too much stock that you can sell within a reasonable period, you’re leaving your capital idle while wasting precious storage space. Knowing how much product to stock helps minimize the amount of dead stock on your shelves and levels out cash flow.
Improve Multi-Channel Selling and Demand Forecasting
Proper inventory management facilitates seamless selling across multiple marketplaces. For example, suppose you’re selling on Shopify, Amazon, eBay, Etsy and your business website. In that case, you’ll need to stay on top of your stock levels to convey accurate information to customers across these platforms. Inventory management also helps you accurately forecast demand, so you’ll always have what your customers need in stock.
Save Inventory Dollars
Virtually every task involved in inventory management helps you manage your resources efficiently. If you stock the right amount of the right products, you won’t waste inventory dollars on storage space. There’ll also be fewer cases of spoiled or expired inventory since your turnover rate will be optimal. Furthermore, the potential gains of having what your customers need in stock whenever they need it is unquantifiable.
Inventory Transfers
Due to varying demand levels, you may frequently have to transfer inventory from one marketplace to another when selling across multiple channels. If you do not follow the right inventory management practices during the transfers, tracking each channel’s inventory levels gets harder.
Shopify Inventory Management Challenges
Shopify has built-in inventory management software that’s adequate for tracking your inventory and managing sales on Shopify. However, the native Shopify app can’t cater to retailers’ unique needs who sell on multiple channels. Here are three common problems you’re likely to experience with Shopify’s native inventory management solutions:
Products That Don’t Integrate Into Shopify
Shopify has a long list of restricted and prohibited items. If you sell one of these products on other platforms, you’ll be facing a significant challenge with multi-channel inventory management.
Often, the only viable option is to have separate inventories for Shopify and other platforms. This complicates the inventory tracking process and can lead to inaccurate or inconsistent stock levels across the different channels.
Automated Inventory Replenishment
As your SKU library expands, your inventory management process will likely become more complicated, and there’ll be more opportunities for inventory management errors. To prevent these problems, you need inventory management software that automatically replenishes depleted stock from suppliers.
Such a program should recommend order quantities by factoring in your sales volume on Shopify and other channels. Unfortunately, the native Shopify app may be unable to carry out the task effectively.
Functionalities Across Channels
The native Shopify inventory management software does not fully support multi-channel selling. For example, the app cannot estimate all the product variants in your online stores. This information is vital to evaluating the performance of your products on channels other than Shopify.
Phantom Inventory
When your system reports items that don’t exist in your store, you risk creating phantom inventory. Without accurate and powerful reports, your business can become susceptible to errors and shrinkage.
While enterprise resource planning has its advantages, it does come with a steep learning curve, so always brush up on your inventory management tips.
How Do Shopify Merchants Handle Inventory Management?
How you utilize the different types of inventory management will ultimately depend on your business goals, existing systems, retail locations and other requirements. You can implement several strategies when using inventory management for the Shopify app.
FIFO Principle
The first-in, first-out (FIFO) principle prioritizes selling the old stock first, which is an ideal method for retailers that sell perishable goods. To achieve a FIFO system, warehouse management begins from the back, pushing older products to the front.
LIFO Method
Opposite the FIFO method is last-in, first-out or LIFO. This method involves selling your newest stock first, which benefits businesses that want to curb rising prices. While this method will lower taxable income, it will also yield lower profits and can negatively impact your retail business’ bottom line.
Regular Auditing
Facilitating a regular inventory and supplier audit can put the current state of your business into context and pinpoint areas of improvement. There are several ways to keep track of low or excess inventory:
- Physical inventory count: A physical inventory count refers to year-end inventory reporting. Count your stock to pinpoint discrepancies, update accounting and file income tax.
- Spot check: Count products in stock one by one throughout the year to ensure you have enough of that particular item. Spot checking is best for fast-moving items.
On top of physical audits, supplier audits can help identify areas of risk, improve your standards, enhance supplier communication and increase customer satisfaction.
Relationship Management
Relationship management is imperative to adapting quickly, especially if you have more than one retail store location or a thriving online business.
If you have a bad supplier, you could have insufficient inventory or too much of it. The better your relationships, the easier it’ll be to bring up issues with suppliers and resolve them. Keep your suppliers in the loop by letting them know when you’re expecting a sales increase, if you’re experiencing inventory dips or if a specific product is running behind schedule.
Accurate Forecasts
Accurate forecasts are challenging to achieve but not impossible. If you want to ensure you’re stocking the correct inventory, keep an eye on:
- Your average growth rate
- Market trends
- Upcoming deals and promotions
- Predicted ad spend
- Daily, weekly and monthly sales
- Sales comparisons
Noting these metrics can help you make more informed inventory decisions and prevent miscalculation in inventory mean.
What to Look For in a Shopify Inventory Management App
The Shopify App Store boasts numerous third-party inventory management tools that can make up for the native app’s shortcomings. Brands that sell on multiple channels typically layer these inventory apps over Shopify’s inventory management software to deliver the best results.
But how do you know the right app to choose among the scores of available options? Here are the nine inventory management features eCommerce store owners should look for in any app.
Multi-Warehouse and Multi-Channel Functionality
A good inventory management app must be capable of syncing your inventory across all sales channels and fulfillment centers. When you update your inventory, it should reflect in real-time or at most within fifteen minutes.
Order Routing and Automation
The app you want to choose should automatically route orders to the nearest fulfillment center to save on shipping costs. The order routing will be based on inventory availability across fulfillment centers, destination zip code and delivery date. Your inventory management app should direct the order to the warehouse, guaranteeing cost-effective and timely delivery.
Inventory Control Features
You want an app that allows you to adjust the number of units on your listings across channels. The inventory adjustments should reflect in real-time to prevent overselling or processing the payment for an order you cannot fulfill.
Comprehensive Analytics and In-Depth Reporting
You should be able to generate real-time data about stock level, inventory turnover, sales margins, profitability, etc., from your inventory management app. All these metrics can guide your purchase decisions and help you satisfy your customers better.
Shared Inventory Across Listings For the Same Product
The ideal app should be capable of tracking inventory across multiple listings for the same product. This is one of the shortcomings of the native Shopify app, as it cannot effectively manage multiple inventory listings that rely on one source.
Automated Inventory Replenishment
Your inventory management system should be able to generate purchase orders once you have the lowest inventory levels automatically. Furthermore, it should recommend order quantities based on previous sales data. These capabilities will significantly streamline your stock replenishment process.
Locked Inventory
If you offer special promotions or pre-order sales, you may want to prevent the items from showing on listings. However, you’d still want them to show on your total inventory since you’ll be processing pre-orders and promotional sales orders. The best Shopify inventory management apps have a wide range of features for locking such products.
Cross-Channel Capabilities
As mentioned earlier, brands that sell across multiple channels will benefit significantly from having a bird’s eye view of their inventory and sales data across each channel. For example, they should know how each SKU is shared across listings, the quantities of inventory in each warehouse at any given time, the amounts appearing on the listings across each channel, etc. Not all inventory management software can provide these vital pieces of information as desired.
How ShipHero Makes Inventory Management Easy on Shopify
If you’ve been looking for an all-encompassing Shopify inventory management app that allows you to fulfill orders expediently and manage inventory while still giving you the best shipping rates, ShipHero is the future of inventory management. Our inventory planner serves over 4,000 eCommerce brands and third-party logistics (3PL) companies, and you’ll no doubt enjoy our custom workflows. Below are a few advantages of ShipHero over its competitors:
All-in-One Inventory Tracking
With ShipHero, inventory management doesn’t stop at knowing what’s left in your warehouse or fulfillment center. Our all-in-one inventory tracking feature gives you limitless capabilities, including but not limited to tracking a product’s shelf life, tracking movement across warehouses, monitoring sales data across each sales channel, figuring out the best shipping routes and even providing customer experience insights.
These features allow you to monitor inventory movement in and out of your fulfillment centers while ensuring you give your customers the best shopping experience.
Easy to Set Up Shopify Inventory Integration
ShipHero is available on the Shopify App Store, and it seamlessly integrates with all the essential Shopify features. For example, the app easily connects with Shopify POS and allows you to swiftly and securely process customer orders as they come in. Beyond Shopify native apps, ShipHero also boasts numerous integrations that make it easy to connect shipping carriers, other eCommerce platforms such as WooCommerce and other essential business software like Inventory Planner.
And it still doesn’t end there. ShipHero further boasts over 20 partners that provide systems expertise and integrations to help you get more out of the app. FedEx, Hermes, LaserShip, DHL, USPS, WooCommerce, Walmart and Shippo are just some of ShipHero’s illustrious partners.
Inventory Reorder Alerts
As already emphasized, the ideal inventory management app should be capable of automatically reordering inventory based on your sales records. ShipHero also ticks this box, and it can significantly streamline your stock replenishment process while helping your in-house buyers make better decisions.
Also, since the app can have multi-channel integrations, it monitors your stock level across all the warehouses and factors in your sales data across each sales channel before placing the order. So, you can rest assured it’ll suggest just the correct quantity you need to satisfy all your customers and not just your customers on Shopify.
Conclusion
The native Shopify inventory management app can satisfy your needs if you only sell a few items on Shopify. However, the app’s limitations become more glaring when you explore other channels and expand your SKU library.
You’ll have to manually input SKUs into individual listings and update your stock levels, which can lead to poor inventory management. Doing this is akin to going back to managing stock using excel spreadsheets, and there’s no doubt your stock managers can make better use of their time.
Thankfully, ShipHero, an all-encompassing option for inventory management that integrates seamlessly with Shopify, is the commerce solution you need. The software possesses the much-desired multi-channel inventory management capabilities to streamline your inventory management tasks, get real-time location data, achieve strong sales and improve operational efficiency.
What’s more? You’ll be incurring significant cost savings while leaving your customers pleasantly satisfied. ShipHero helps you spend less time on inventory and has just the attributes you need to stay ahead of the competition.
Get started with ShipHero today by clicking the button below.
Shopify Inventory Management FAQs
Is there inventory management in Shopify?
Yes, there is built-in inventory and warehouse management on Shopify. You can track inventory history, stock transfers and product variants, adjusting stock levels as necessary.
Which is the best inventory management software integrated with Shopify?
The best inventory management for Shopify is ShipHero, which is ideal for growing and high-volume brands. ShipHero provides real-time tracking for stock transfers, levels, sellouts and replenishments. It also offers full warehouse management, enabling users to automate repetitive functions that contribute to a complex workflow.
In addition, ShipHero provides advanced reporting and personalized dashboards that make it easy to share data across teams. Other advanced features besides direct integration with Shopify include multi-location inventory, barcode scanning and supplier management. ShipHero also serves 10% of Shopify Plus stores globally.
How do I add a stock to Shopify?
You can add stock to your Shopify account by following these steps:
- Click on Products from the Shopify admin page.
- Click Add Product.
- Entitle your product and add a description.
- Save your product.
There are additional options for updating your stocks on Shopify, including duplicate, tags, edit, barcode scanning, delete and archive.
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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Let us know how we can help you today by scheduling a call HERE.
