Dec 22, 2022 | Blog, Podcast, Warehouse Management Software
How to Cut Shipping Costs without sacrificing Customer Satisfaction
In this PalletSide Chat podcast episode, we’re sharing a panel, hosted by our own COO Maggie Barnett for FounderMade East. Speaking with Brett Tepper from ModKat and Rich Brewer from Boutique Brands, they discuss practical solutions for keeping shipping costs low and customers happy. They cover everything from optimizing fulfillment processes to utilizing technology effectively.
Most business owners know that reducing shipping costs is a major priority, but it can be tricky to do so without alienating customers. It can be daunting, but with the right advice, it can be done without sacrificing customer satisfaction. This expert panel will teach you how to keep your customers happy while shaving dollars off your shipping bill. Tune in for the tips and tricks these experts have gleaned from their own experiences running successful eCommerce businesses in an ever-changing landscape. Shipping rates may be skyrocketing, but that doesn’t mean your eCommerce business has to suffer!
The Litter Box Business
When it comes to litter boxes, even the most design-savvy among us can be taken by surprise. Just ask Brett Tepper and his business partner, who found themselves unexpectedly in charge of cat box duty. What they discovered was a litter box that was, in their words, “not happening.” The following day, Tepper’s business partner came in with an idea for a better design.
Thus began a journey that would take them from Walmart to Taiwan and eventually result in a successful product. Today, Tepper and his partner continue to work with the same manufacturer, and their litter box remains one of the most popular on the market. They are considered “OGs” of the Shopify world, as they were one of the first 300 people to use the platform. Who would have thought such a simple, but smelly, idea could lead to success?
“So I had a few developers lined up, and then one of the developers said, ‘Have you heard of Shopify?’ So I started looking into it, and I was like, ‘This is it.’ Yeah, they have been with it since.” -Brett Tepper.
How ModKat Handles Exploding Freight Costs
ModKat prides itself on being able to adapt to change. So when the pandemic hit and their sales exploded, it was a happy challenge. However, soon they found themselves facing a different problem: exploding freight costs. Freight bills soared from $6,000 per container to $12,000, then $18,000, eventually topped at an astonishing $32,000. They knew they had to make tough choices to keep their business afloat. They started by eliminating free shipping, then slowly escalated prices.
With four primary sets of SKUs, ModKat has increased pricing on their higher-end litter boxes. The downside to shipping litter boxes is that they are big, so they all hit dim weight and can only fit a few per container. With a 40-ft HQ container, they can only fit about 550 of their largest litter boxes. This directly affects the pricing scale, so that’s where most of the cost-cutting has been done. Fortunately, they have enough margin on the refills to keep them at the same price. The other great thing about the litter box liners is that they fold flat and ship small, so freight doesn’t affect them as much.
How ShipHero Has Helped
If you’ve ever worked in eCommerce, you know a lot goes into fulfilling orders. And if you are doing it yourself, a whole other stress level comes with it. That’s why ModKat outsourced fulfillment to a 3PL when Tepper started his business. But then, around 2012, he got a 5,000-square-foot space and started prepping orders himself. Tepper mentions that it was great and awful at the same time. He learned a ton about how fulfillment works and why 3PLs work a certain way. But after a year, he realized it wasn’t a tenable situation and returned to using a 3PL. He’d been with the same one for seven years but recently switched to ShipHero. If you’ve thought about fulfilling orders yourself, Tepper says go for it – but be prepared for many long nights (and early mornings).
ModKat went back to dim weight and because of that, they had four warehouses with their old 3PL, and keeping inventory in all four warehouses was difficult. That was taking up a ton of their time, just ordering correctly for all warehouses. So, knowing that ShipHero did load balancing was a massive thing for ModKat. Then on top of that, ShipHero also consolidates shipments. Which saved them a ton of money on shipping costs. So all of those things allowed ModKat to focus on other parts of their business rather than just managing logistics all the time.
Boutique Brands
In the world of fast fashion, speed is everything. That’s why Rich Brewer of Boutique Brands has made it his mission to streamline the fashion ecosystem and help his employees move more quickly. By streamlining the process from manufacturing to reselling, Brewer and his team can turn inventory faster and keep up with the latest trends. And they’re not stopping there. They’re also constantly reviewing their website and ensuring they appeal to customers. It’s all about staying ahead of the competition and keeping costs down.
Automation, Automation, Automation
As an eCommerce business knows, shipping costs can eat into profits quickly. But what happens when a company returns to charging for shipping? It’s not easy to tell customers that they now have to pay after getting used to free shipping. And it’s even harder to do it in a way that doesn’t damage the customer relationship. That’s why it’s important to have systems that allow you to rate shop among carriers and find the most cost-effective option for each shipment. By automating the process as much as possible, you can minimize the impact on your bottom line and keep your customers happy.
The Return Process
Returns are allowed at Boutique Brands. There are, however, some brands that charge shipping to and from their stores. Occasionally, customers have to print a label and pay for it, but Brewer is working to simplify the process. They have yet to do exchanges, which Brewer wants to implement because that will cut down on the total loss of revenue from returns if they can use a system like Happy Returns. It automatically creates a product on Shopify. Customer service teams can then click a button and be done. Brewer is currently engaged in analyzing what’s working, what’s not, and who has the best return on investment for returns.
“We are more or less just maximizing every automation we can maximize.” -Rich Brewer.
Provider transparency
Provider transparency is something that has become increasingly important in recent years. Consumers want to know where their products come from and how they are made. They also want to be able to track their orders and see precisely where they are at all times. This level of transparency can be challenging to achieve, but it is something Flexport is working hard to provide. While the data isn’t always up to date, ModKat appreciates the insight Flexport (a freight-forwarder) gives them into the supply chain process.
Recently, ModKat has been dealing with some supply chain issues beyond its control. They have had to ration inventory and cancel orders, and their customers have understandably been frustrated. In response, they created a feature on their website where people can sign up to be notified when an item comes back in stock. They thought this would help alleviate some of the frustration, but it turns out that people get even more frustrated when they get 100 notifications that an item is back in stock, only to find that it’s already sold out again. Despite the challenges, Tepper is grateful for his loyal customers and will continue to do everything he can to keep them happy.
Preparing for the Next 12 Months
Over the last three years, the world has been turned upside down. We have seen economic turmoil, political upheaval, and a global pandemic. So what are ModKat and Boutique Brands doing to prepare for the next 12 months? For starters, they’re stocking up on essentials. ModKat is ordering like crazy, trying to get as much inventory as possible. They’re also trying to figure out ways to pep up their customers. At some point, they plan to reintroduce free shipping or offer discounts. But the most important thing is that they’re getting back on their feet. The sales are picking up, and they see more customers every day. ModKat is excited about the future and ready to take on whatever comes its way.
For Boutique Brands, maximizing automation is their key to success. By using data to select styles that are in demand, and cost-effective carriers, brands can reduce costs while still providing the latest trends to customers. Additionally, expanding social media outreach and implementing loyalty programs can help increase brand visibility and customer engagement. By taking advantage of these various marketing and operational strategies, Boutique Brands can stay ahead of the competition and keep their businesses growing.
“We’re actually ramping up our influencer campaigns, our UGC, our loyalty programs. All of this stuff is going into play to basically drive more business to help mitigate the additional costs.” -Rich Brewer.
Turn the Challenges of Today’s Marketplace into Opportunities for Tomorrow’s Success
If there’s one thing that’s certain in eCommerce, it’s that shipping rates are always on the rise. Carriers announce new rate increases yearly that can eat into your profits if you’re not careful. But don’t despair – there are still ways to keep your shipping costs under control, even in the face of rising rates. Optimizing your fulfillment processes and utilizing technology effectively can minimize the impact of rate hikes on your business. By streamlining your operations and using shipping rates as a lever to drive customer loyalty, you can turn the challenges of today’s marketplace into opportunities for tomorrow’s success. So don’t let rising shipping rates get you down – use them to fuel your eCommerce success.
The FounderMade East panel was hosted by ShipHero’s COO, Maggie Barnett, and she was joined by Brett Tepper, the co-founder of ModKat, and Rich Brewer, the product manager at Boutique Brands. This session is packed with great information for anyone in eCommerce, whether you outsource your fulfillment or manage it in-house. So, take a moment and listen to the full panel or watch it on YouTube!
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About the Panel Host: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial, and administrative procedures, reporting structures, and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management, and a passion for business transformation. She is known for her expertise in delivering operational excellence and her ability to provide guidance and mitigate risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.
Follow Maggie on Twitter & LinkedIn.
Dec 16, 2022 | Blog, Fulfillment, Warehouse Management Software
It’s hard to believe that we’re already at the end of 2022, but as we all know, time flies! The eCommerce landscape of 2022 has been a wild ride, from fulfillment technology advancements to mobile commerce innovations and seamless omnichannel experiences. As 2023 rolls around, all these developments mean one thing: Companies need to stay on their toes and continue adapting their eCommerce strategy to the latest advancements to stay ahead of their competitors in the highly competitive eCommerce space. A lot has happened, so let’s look back at some of the biggest eCommerce developments in 2022 and see what they mean for 2023.
Mobile Shopping’s Rise to Power
eCommerce has come a long way since its inception, and the rise of mobile shopping is a testament to this. Mobile commerce volume is expected to hit $620.97 billion by 2024. This means nearly half (42.9%) of all eCommerce purchases will be made via a mobile device. eCommerce companies should fine-tune their strategies to cater to the increasingly mobile-savvy consumer.
More and more shoppers are investigating products on their phones before deciding which to buy. Plus, with handier features and conveniences, they can enjoy the ultimate comfort while browsing and making purchases at their fingertips! The rise of mobile shopping gives eCommerce businesses more opportunities than ever to increase customer engagement and drive up profits.
Omnichannel Selling
eCommerce is a rapidly growing juggernaut of a marketplace, and one of the biggest trends to keep an eye on is omnichannel selling. Technically speaking, this strategy allows you to reach customers in as many channels as you can think up – from in-store purchases and eCommerce sites to social media platforms, email campaigns, and beyond! But what does it mean for businesses? Well, for starters, it means that staying ahead of eCommerce trends has never been more important!
A successful omnichannel approach can bring numerous advantages; shoppers are no longer held to traditional hours or wait times when trying to reach an employee. Thanks to an eCommerce store that operates 24/7 and ways to reach customer support, even after business hours have ended. Additionally, with strong SEO practices and clever content marketing at play behind the scenes, customers find their way through different touchpoints right into your eCommerce store. All these advantages add up.
eCommerce Goes Social
In the modern eCommerce landscape, it’s become increasingly important for businesses to cultivate a presence on social media. With more people flocking to platforms like Facebook and Instagram, eCommerce companies are turning to social commerce models as an easy way to engage potential shoppers and increase brand exposure.
This trend has only been further augmented by clever influencer campaigns and sponsored content that drives measurable results. Ultimately, leveraging eCommerce trends and social media allows businesses to acquire and convert more customers quickly. It’s no surprise that companies are increasingly looking at social media as a viable eCommerce channel – once again proving how impactful this powerful medium can be!
Immersive Experiences with AI and AR
eCommerce trends are ever-evolving and staying on the cutting edge can be challenging. One of the most prominent eCommerce trends is using AI, automation, and Augmented Reality (AR) to improve customer service and experience. Although AI applications have been around for a while, only recently have eCommerce organizations taken full advantage of their potential in their technology stack.
With AI and AR capabilities, eCommerce companies can go beyond mere personalization to create immersive shopping experiences with product recommendations tailored to an individual’s needs, virtual or augmented store environments that shoppers can explore without leaving home, and even eCommerce versions of the metaverse complete with avatars navigating life-like simulated stores. Together these tools represent just some of the ways AI has enabled eCommerce companies to enhance their customers’ experiences while streamlining their operations simultaneously – something they’ll no doubt be capitalizing on more and more in the coming years!
Using Technology to Optimize Labor
eCommerce trends continue to accelerate, and with peak seasons arriving earlier each year, warehouses are under immense pressure to find ways to optimize labor for order fulfillment. In the past, the answer was to hire more workers – throw bodies at the problem, as it were. But in today’s tight labor market, such a strategy isn’t feasible.
Thankfully, engineers and technologists have developed solutions to keep eCommerce operations running smoothly while requiring fewer employees on the warehouse floor. The development of robust eCommerce technologies like advanced warehouse management means warehouses can maintain high throughput rates with fewer people. However, warehouse managers know there’s still no better way to fulfill orders than by leveraging extra manpower during peak season – even if only for a few weeks each year. With dedicated teams using the most up-to-date eCommerce tools combined with clever coordination of optimal resources, there’s no eCommerce challenge too complex for any warehouse.
What Does This Mean for 2023?
As we enter 2023, it feels like eCommerce is on a rollercoaster. Technological innovations and consumer expectations have changed almost constantly, and retailers must reimagine themselves to stay in business. But amidst all the chaos, there are two reliable retail trends that every business can count on: change and innovation.
Retailers need to adapt faster and move with agility regarding eCommerce trends like fulfillment, mobile commerce, omnichannel experiences, social media presence, and the use of AI. It’s about more than just “keeping up.” Businesses must lead the way to stay ahead of their competitors. They need to be smart about recognizing eCommerce trends as they emerge and being prepared for customers’ needs today so that they’re ready for whatever tomorrow might bring. With the right strategies in place and a willingness to innovate swiftly, companies will be well-positioned for success come 2023.
eCommerce Continues to Evolve
eCommerce trends in the eCommerce space are nothing short of amazing. eCommerce brings many fulfillment options for sellers, from same-day deliveries to improved returns processes, giving consumers more power than ever. eCommerce lets businesses enter the domain of mobile commerce, where they can quickly reach their target audience and foster more relationships. As eCommerce continues to evolve, we can expect greater convenience for shoppers and improved management capabilities for sellers to meet their customer’s needs and desires in real-time. The eCommerce landscape is exciting and rapidly changing – one thing is clear – the future promises immense opportunities for online business owners!
If you’re looking for a software and fulfillment solution that can scale your business, ShipHero has you covered. We offer direct integrations with various popular eCommerce platforms and marketplaces, making it easy to get started. Plus, we constantly work on adding new features and integrations so that you can keep up with the latest eCommerce trends. Ready to start shipping like a pro?
Maggie M. Barnett, Esq. COO of ShipHero
ShipHero
About the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. She is known for her expertise in delivering operational excellence and an ability to provide guidance and mitigating risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.
Follow Maggie on Twitter & LinkedIn.
Dec 15, 2022 | Blog
At just 22 years old, Evan Johansen is already a serial entrepreneur. He’s the mastermind behind Auri, a gummy company taking the internet by storm. In this PalletSide Chat, Johansen shares how he turned his mushroom gummy idea into a booming business. He proves your dreams can become tangible successes with hard work and clever marketing strategies.
In this blog post, we’ll look at some of the marketing techniques used by Johansen for his business. With this information, you can create a successful marketing campaign.
Market your Business like a Pro
The ad game can be tough, especially for smaller eCommerce brands. At first, the numbers could have been better for Auri on the ad side of things. However, Johansen was convinced that a little extra effort could pay off big time in terms of profitability. The keys to success were more content and improved user experience on their landing page. And guess what? Doubling down on those areas paid off, and now he’s seeing substantial ad profits. It shows that sometimes investing more upfront can lead to major rewards. Don’t give up on your ad strategy just yet – keep improving, and you never know where it might take you.
“I would rather take something that maybe isn’t the best idea and take bad action versus no action at all, because at least if you’re taking bad action, you’re figuring [it] out.” -Evan Johansen.
Social Media Strategies that Work
Being creative is key. Staying on top of trends and finding ways to adapt them to your brand can make all the difference in standing out from the crowd. One successful tactic Auri has been using lately is creating videos in the style of the popular social media platform TikTok, then sharing them across all our other channels. As an entrepreneur, being able to pivot and react quickly to changes or new challenges is crucial – and in the fast-paced world of social media, that means constantly coming up with fresh ideas and staying ahead of the curve. So, don’t be afraid to experiment and try new things.
In Johansen’s experience, higher ad spending often correlates with higher ROAS (return on ad spend) and better results overall. Plus, split testing allows for testing and improvement, like adding additional informational pages or trying out different ad styles. Ultimately, the key to success is constantly iterating and putting more effort into what’s already proven effective.
User-Generated Content
It’s no surprise that social media users are jumping on the UGC (user-generated content) bandwagon, creating content for brands and raking in cash. But as a brand, it’s essential to avoid getting caught up in the craze and overpay for UGC. Plus, don’t discount “lower-quality” content. Sometimes simplicity resonates more with social media users and can result in even higher engagement. Bottom line: stay grounded amidst all the UGC hype and focus on finding what works best for your brand.
“It’s all about pivoting, readjusting, and that’s the name of the game. When you’re an entrepreneur you need to be able to pivot very quickly.” -Evan Johansen.
Advertising Tactics to Control Ad Spend
Let’s face it, we live in the age of ad overload. With so many platforms and options for ad placement, it can be tempting to try and do a little bit of everything. But as Johansen wisely points out, it’s important to focus your efforts on the platforms yielding the best results. Constantly utilizing new ad channels may seem impressive, but they drain resources if they aren’t producing results. Instead, focus on maximizing your efforts and streamlining your ad strategy for maximum effectiveness. In the world of advertising, sometimes less is more.
The world of ad spending is constantly evolving, and it can be tempting to chase after the newest platform. Still, at the end of the day, a successful ad strategy rests on creativity and measurable results. As tempting as the potential for “arbitrage” may be on a platform like TikTok, it’s not worth investing in ad spending if there is no way to track conversions and ROI. Creativity is essential in grabbing attention and driving engagement, but it also needs to result in a direct return on investment. Sticking to this philosophy allows for a streamlined, successful ad strategy that consistently delivers results.
Social Media Advertising Tools
Tools like Facebook Ad Library and AdSpy make it easier than ever to peek behind the curtain and see what campaigns are performing well. Simply typing in a keyword can uncover a wealth of advertisements tailored to your interests. And for those interested in TikTok ads, PiPiADS offers estimates on ad spending and engagement metrics for added insight. So, the next time you need social media inspiration, turn to these tools for an inside look at what’s working for other brands.
“What I found with advertising, at least for us, is once you find what’s working, you have a test that you can then iterate off of.” -Alex Lewkowict.
Flexible Fulfillment
The key to success in eCommerce is often speed and efficiency, and that’s where Auri has found a helpful ally in fulfillment partner ShipHero. Working together, they can quickly fulfill orders and keep cash flowing, even during periods of backorder. Backorders may sound like a negative for customers, but the truth is it’s a testament to the popularity and high demand for Auri’s excellent products. Automated emails ensure that customers are always kept in the loop, making for a seamless and stress-free shopping experience.
“Yeah, {ShipHero} has just been an absolute game changer for that {flexibility}, because if I was working with a different fulfillment company that was not flexible, we would not be able to do what we’re doing. It’s almost a foundation of it all.” -Evan Johansen.
Thinking Outside the Box
Evan Johansen proves that your dreams can become a reality if you market them correctly. He also provides insight into how he identified his target market and controlled ad spending while still pumping out creative content. So, if you’re feeling lost in the world of marketing your business, take heart—Johansen has been there too. And he’s come out on top by never giving up and constantly innovating his strategy. So, what are you waiting for? Listen to the interview (and try some Auri gummies while you’re at it!)
So, what can you learn from Evan Johansen about marketing your startup? First and foremost, it’s important to be creative. You need to find a way to stand out from the crowd, which means thinking outside the box. Second, it’s essential to tweak your content until you find what works, don’t be afraid to experiment. The best campaigns are always evolving!
Have any questions or comments? Let us know by emailing us at podcast@shiphero.com.
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Listen HERE
About the Hosts: As VP of marketing, Dan Van Meer is always on the go. From overseeing project management and data analytics, he has his hands in a little bit of everything. Most importantly, he ensures that all creative work – from graphic design to digital marketing – is high quality and on-brand. Co-host Alex Lewkowict is quite the renaissance man. He’s been an adolescent entrepreneur, successful CEO, and Founder of a men’s skincare line, and he created One23 Fulfillment. Did we mention he made the Forbes 30 under 30 list?
Dec 9, 2022 | Blog
With online shopping continuing to grow in popularity, demand has never been higher for fast and efficient fulfillment services. As a fulfillment warehouse, you need to be able to ship products as quickly and accurately as possible.
That’s where warehouse storage and organization come in. Nothing can kill productivity faster than a disorganized warehouse, so let’s break down the best ways to keep your operation running smoothly.
Why is an Organized Warehouse Essential for Fulfillment?
There are a few problems you can encounter when your warehouse isn’t organized or running properly, such as:
- Wasted Time – If workers have to walk back and forth to pick items for shipments, those seconds and minutes can add up. Even just 15 minutes per employee for a 50-person warehouse could lead to 3,000 minutes lost in a year.
- More Returns and Refunds – Mis-picked orders can lead to dissatisfied customers, meaning they’re more likely to return their items. Unfortunately, putting these products back on the shelves is more wasted time for your staff.
- Inaccurate Inventory Counts – If your inventory is not organized properly, you can order more products than you need or delay ordering because you think you have more than you do. Either way, such inefficiencies can cost you dearly in the long run.
Overall, every piece of your warehouse is like a cog in a well-oiled machine. One faulty part could cause a chain reaction that could lead to major headaches and higher operating costs.
Top Five Ways to Keep Your Warehouse Organized
Because warehouse organization and storage are so critical for success, let’s look at five ways you can improve your operational efficiency. Best of all, you can combine strategies for even more benefits that lead to more clients, happier customers, and fewer returns.
Invest in High-Tech Solutions
Fortunately, we’re living in a golden age of technology, so there are multiple options available, including:
- RFID Tags – These tags make it easier for pickers and inventory managers to stay up-to-date with production levels. Tags can be on bins or individual items, depending on your needs. As workers scan these tags, your inventory management system updates automatically.
- Worker Tracking Software – Programs can keep track of individual employees and how they move throughout a given shift. If you notice a lot of time spent going back and forth, you can figure out what’s causing that extra wasted time and fix it accordingly.
- Order Tracking – As items move in and out of your warehouse, you should know details like where they came from, how long they stayed in the warehouse, how they were shipped, and their final destination. Warehouse management software allows you to track inventory in real time so you’re never out of the loop.
Review Your Warehouse Layout
So much time is wasted with inefficient picking methods. For example, let’s say you have multiple types of the same product. If you don’t store these items together, workers have to go searching for each variety.
As a general rule, you want to place similar items in the same area and rank products based on seller info. Best-selling items should stick together while infrequent purchases can get moved to an area with less-heavy traffic.
If workers also have to sign in and out or submit documentation, you can place this station next to the fulfillment center. This way, employees can finish an order and fill out the paperwork without too much downtime in between.
Create a Waste Management System
A dirty or disheveled warehouse is an inefficient warehouse. Not only can empty boxes and other items pose a safety threat, but it’s much harder to verify your inventory levels.
So, it’s better to come up with a waste management system so workers know where to put packaging and other items. You can also have a picking system so individuals empty a current supply box before opening another one.
Focus on Safety
Just like a dirty warehouse, an unsafe warehouse is also highly inefficient. Usually, unsafe environments occur when the company cuts corners and doesn’t take its employee’s health seriously.
Safety measures can include apparel, best practices for dangerous items, clear marking for forklift paths, and more. Overall, the more you invest in extra-safe measures, the more likely your warehouse will stay safe and efficient.
Keep Warehouse Staff Trained
Employee morale and turnover are two of the biggest threats to the fulfillment industry. eCommerce giants like Apple and Amazon are struggling to retain workers, thanks to long hours, grueling working conditions, and more.
Maintaining a regular training schedule can help keep your employees sharp and motivated. Not only can you cover existing problems and risk factors, but you can also look at potential future situations.
Even better, staff training can be fun and engaging, further bringing everyone together when they’re on the clock.
By utilizing these top five tips, you can improve your operational efficiency greatly, leading to a higher level of client satisfaction while also creating a more cohesive environment for your staff.
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For More Information About ShipHero
Whether you want to let go of running your own warehouse, or run your warehouse better, you can do both – and so much more – with ShipHero.
Click HERE to Schedule a Meeting with Our Sales Team.
Follow us today on Twitter and LinkedIn.
Dec 9, 2022 | Blog
Backorder Meaning in eCommerce
To stay competitive in the world of eCommerce, businesses have to find ways to satisfy the demand of consumers for almost instant gratification. When consumers shop, they expect to be able to purchase the products they want and receive them promptly. While items online may not always be available right away, clients expect to receive them as quickly as possible.
When clients find out they can’t have what they want when they want it, they are faced with deciding whether to wait for the product to become available or look for another company that may have it in stock. If products aren’t available because they’re out of stock or backordered, there’s a risk clients will take their business elsewhere.
What Does Available on Backorder Mean?
A backordered item is a product that isn’t present in your physical inventory, but it’s expected to be replenished. This means that although you’re unable to fulfill orders to clients immediately, you expect to have the product back in stock by a certain date. The fact that you have an expected shipping date means that you may be able to keep a client’s interest in a product since you can let them know it’s available on warehouse backorder.
When items are backordered, it indicates that demand is outpacing supply. Too many items on backorder may be a sign that inventory isn’t being managed effectively. Long wait times are likely to be frustrating to clients who may take their business elsewhere.
Does Available on Backorder Mean the Same as Out of Stock?
The meaning of the term backorder isn’t exactly the same as out of stock. Items on warehouse backorder aren’t currently in your warehouse but are available from suppliers. Items that are out of stock may or may not become available again in the future. eCommerce businesses may accept orders for items on backorder since they’re expected to be ready to ship in the future. Orders aren’t usually accepted for items that are out of stock.
Common Causes of Backorders
There are several different things that may cause an increase in backorders. Some examples include:
- Unexpected demand. More orders are placed than anticipated sometimes because of marketing or seasonal trends.
- Weather delays. Bad weather or natural disasters may slow transportation and prevent items from being shipped right away.
- Supplier problems. Products may be delayed because of miscommunication or the manufacturer or supplier’s inability to meet production goals.
Businesses often keep extra stock on hand to try to prevent items from ending up backordered or out of stock. This is known as safety stock. If there’s insufficient safety stock because of counting errors, your company may not be prepared to handle normal demand, let alone higher-than-usual demand.
Disadvantages of Backorders
As your eCommerce business grows, you’re likely to receive an increasing number of orders. Backorders can lead to increased customer service headaches because sometimes people call repeatedly to find out when their order is being shipped. If people have to wait too long for an order, they may change their minds and decide to cancel.
If demand for your products increases more quickly than supplies are replenished, you may face shortages or a large number of backordered items. To keep clients satisfied, stock shortages or backorders shouldn’t be something that occurs regularly. When products are out of stock or back ordered too often, it can damage the reputation of your company.
Keeping Clients with Backorders Happy
Clients with backorders often start looking at other companies when they find out the items that they want aren’t available right away. Consider what actions you can take to keep your clients happy. Offering a coupon for a discount on their next purchase lets them know you’re concerned the order couldn’t be fulfilled promptly and that you value their business. If they’ve ordered multiple items, ship what’s available without charging extra to ship the backordered item separately.
Communication is Key
Providing good client service includes keeping clients informed so that they know right away when a product they’re interested in is backordered as well as when it’s back in stock. If backordered items only happen occasionally, it may stimulate demand for items that aren’t immediately available. You can help to create excitement for the product by sending emails counting down the number of days until it’s in stock again. Another advantage to backorders is that they give you some insights into what products are in the highest demand.
How Can You Reduce the Number of Warehouse Backorders You Have?
Advanced technology makes it possible to monitor inventory automatically and to receive up-to-date information such as alerts when stock is low. Using warehouse management software is a good way to be proactive about inventory management and obtain better forecasting.
Effective inventory management means using methods such as real-time inventory tracking to make sure there’s sufficient safety stock on hand. This can help ensure that fulfilling orders won’t be delayed because of supply chain issues, which can help reduce the number of warehouse backorders you experience.
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For More Information About ShipHero
Whether you want to let go of running your own warehouse, or run your warehouse better, you can do both – and so much more – with ShipHero.
Click HERE to Schedule a Meeting with Our Sales Team.
Follow us today on Twitter and LinkedIn.
