Reading gives you superpowers

By: Aaron Rubin, Founder & CEO of ShipHero

At a glance, selling on marketplaces like Amazon, eBay, Etsy, and others seems like a golden ticket for new and growing eCommerce businesses. The idea of selling products on the biggest marketplaces in the world should, in theory, increase your sales and grow your company. But there’s always something brands overlook when it comes to selling on marketplaces: order fulfillment.

How can you fulfill orders across multiple marketplaces that have their own shipping policies or customer expectations? With disparate data coming in from so many systems, it can be tough to fulfill orders and ensure you have enough inventory for all of them.

Marketplace fulfillment comes with its fair share of drawbacks that you should be familiar with before finalizing your decision. Fortunately, eCommerce brands can overcome these challenges with some help. There’s a reason almost 90% of Fortune 500 businesses are using 3PL providers instead to fulfill their orders.

The issues with marketplace fulfillment

eCommerce marketplaces have lowered the barrier of entry for new brands and contributed to the eCommerce industry’s rapid growth. However, the model isn’t flawless. Here are some of the most common problems eCommerce brands face with marketplace fulfillment:

No direct integrations with marketplaces

As your brand grows, integrations are vital to maintaining a seamless workflow. However, switching between different platforms to obtain crucial information is time-exhaustive and inefficient, inviting delays and possible errors.

Additionally, direct integrations are vital for streamlining fulfillment operations – they’re necessary to gain real-time order information and update inventory data according to recent orders.

Hard to sync inventory data between multiple marketplaces

Many sellers list their products on multiple marketplaces to reach a wider audience. However, this practice makes it difficult to sync your inventory data. If orders are fulfilled at different marketplaces, you’re prone to losing track of inventory counts, leading to shortages or overstocking.

Lack of centralized data to see which channels are performing best

Performance monitoring is critical for growing eCommerce brands; you need to identify areas of improvement and learn from your successes. Unfortunately, eCommerce marketplaces don’t offer centralized data, including key performance analytics and fulfillment insights.

Without the correct data, it’s challenging to monitor your brand’s success or lack thereof. Additionally, having access to meaningful insights helps brands streamline their marketing and customer support efforts.

Multiple fulfillment methods make it difficult to keep track of orders

Many eCommerce brands offer customers multiple fulfillment options, including various delivery options (including overnight and 2-day delivery), order pick-up, or mail-order delivery.

Unfortunately, the more options you offer, the more difficult keeping track of orders becomes. For example, if customers have arranged to pick the order up, you’ll have to keep track of whether the order was picked or if there’s been a rescheduling.

Hard to meet Amazon’s stringent requirements for Prime shipping

Amazon’s latest Seller Fulfilled Prime (SFP) option seems to offer eCommerce merchants the best of two worlds – you get access to the exclusive Prime label but retain autonomy over your fulfillment operations.

Unfortunately, while SFP fulfillment is an excellent idea, in theory, Amazon’s stringent requirements make it challenging to qualify for the program. To maintain the exclusive SFP status, your Prime trial orders must have a cancellation rate of less than 1%, a minimum 99% on-time rate, and all orders placed before 2 pm have to be fulfilled and shipped on the same day.

How to improve marketplace fulfillment

While marketplace fulfillment comes with its fair share of drawbacks, you can streamline and optimize the fulfillment process with some help.

Leverage software that integrates with multiple marketplaces

Merchants can integrate advanced inventory and warehouse management system software with marketplaces to organize all relevant data, analytics, and insights in one place.

The right fulfillment software gives you access to order details in real-time, helps monitor sales and performance metrics, and reliably monitor inventory levels and forecast demand.

Work with a 3PL that offers fast shipping speeds

Meeting the shipping expectations of modern consumers is increasingly difficult, but third-party logistics providers help you provide expedited shipping options without incurring high costs.

Given that 43% of abandoned carts are due to high shipping charges, and 54% of consumers under 25 declared same-day delivery as their top purchase driver, growing eCommerce brands need to step up their logistics game.

Make use of distributed inventory to cut down on shipping costs

Distributing inventory across multiple, strategically-placed fulfillment centers helps eCommerce brands simultaneously provide faster shipping times and reduce last-mile delivery costs. This is because, with a distributed inventory, you can ship products to customers from the fulfillment centers closest to them.

How ShipHero improves marketplace fulfillment

ShipHero’s leading warehouse management solution and fulfillment services help growing eCommerce brands optimize marketplace fulfillment. Our fully integrated system syncs your inventory and eCommerce store data, and you can set automation rules to streamline tedious processes.

ShipHero helps eCommerce brands grow sustainably with our:

Done-for-you fulfillment services for multiple marketplaces

ShipHero’s outsourced fulfillment services take the pressure of order fulfillment off your hands, so you can focus on growing your store. We’ll manage your inventory, pick and pack orders (and ship them, too), and take care of reverse logistics regardless of how many marketplaces you’re selling on.

Thanks to ShipHero’s leading warehouse management system and team of fulfillment experts, fast-growing eCommerce brands like yours can keep up with evolving consumer expectations. With our network of distributed fulfillment centers, you can offer customers 2-day and overnight delivery options without incurring high last-mile delivery costs.

Our highly trained workforce and advanced software collectively minimize pick and pack errors, reducing wrong order requests and protecting your bottom line.

Multiple marketplace integrations

Whether you’ve partnered with Amazon, eBay, Etsy, Walmart, or another marketplace, ShipHero’s warehouse management system integrates directly with your marketplace and centralizes all the relevant information.

You can view inventory data in real-time, access team reports, view order history, and access key information like actual shipping costs for each order, all from one central dashboard.

Easy returns management

Your returns process dramatically impacts customer loyalty, and you don’t need to take our word for it. A report revealed that a positive return experience affects brand loyalty in 95% of online customers, and over 65% of online shoppers consult a brand’s return policy before making a purchase.

To meet consumer expectations and help our eCommerce partners secure customer loyalty, ShipHero offers done-for-you returns management and reverse logistics services. ShipHero integrates with your marketplace and manages returns as they come in, preventing delays and improving customer retention.

Conclusion

Marketplace fulfillment comes with its fair share of drawbacks, including a lack of integrations, disorganized data, analytics, and stringent requirements to qualify for more recognized fulfillment programs.

Thus, many growing eCommerce brands partner with ShipHero to overcome these challenges and optimize their marketplace fulfillment. With ShipHero, online retailers can offer expedited shipping times, minimize pick and pack errors, manage returns easily, and centralize their real-time inventory and order data.

Optimize your marketplace fulfillment with ShipHero today.

Schedule a meeting today with our experts to learn more about our inventory management and shipping software built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

ShipHero

About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter & LinkedIn.

By:  Aaron Rubin, Founder & CEO of ShipHero

‍Have you ever tried to buy a popular product, but found that its prices rose almost overnight? The increase in price can be due to a number of reasons, but chances are the price went up due to the product being almost out of stock.

For example, luxury goods are an interesting topic of discussion in economics because they violate the law of demand. Unlike conventional goods, luxury items enjoy high demand because of their exclusivity and financial barriers, and making them more accessible decreases their demand.

What drives this unorthodox behavior, though? Well, the experts define it as "scarcity".

How scarcity works

Scarcity arises when there's a mismatch between the supply and demand of a commodity; the demand surges, and the supply doesn't keep up. As a result, the commodity's price rises, which is termed scarcity pricing.  

Scarcity pricing is subject to the scarcity principle, which states that the good's price will increase until its supply and demand reach equilibrium.

Scarcity can arise naturally, because certain products have limitless demand, while supply always has limitations. A good example of limitless demand is resources, like gas, electricity, and water, which have limited available reserves. When the supply for these resources doesn't match the demand, scarcity arises naturally.

Sometimes, suppliers may introduce scarcity to influence the price of certain goods. For example, if rice prices drop significantly, suppliers may stop producing as much, so the demand increases and the price hikes.

Brands may use scarcity to drive sales, which is especially common for luxury brands. Luxury goods are priced exceptionally high, which should discourage sales as per the law of demand. However, brands use scarcity to sell luxury goods instead.

Here's how.

High-demand luxury products as an example

The high demand for luxury products is a prime example of how businesses use scarcity and the scarcity principle to drive sales. Luxury goods are made more desirable by implementing scarcity; the products are out of reach for most consumers, making them more appealing.

Because of the discrepancy gap in supply and demand,  luxury goods providers can freely charge premiums and keep their products' demand response high. In fact, the more inaccessible a luxury product is, the more its demand may surge. This is perceived scarcity.

Take Ferraris for an example - to buy a high-end one, you don't just need to match the high price point. The company vets each prospect and requires you to have owned a less-expensive Ferrari before you can buy a more exclusive model.

What happens when products become a commodity?

When products become a commodity, they lose their exclusivity and uniqueness - customers perceive the goods' price as their only differentiator. The result? Brands are at risk of losing their customer base, and the demand for the now-commodity goods starts to drop.

Let's take the Ferrari example again, and assume the luxury car becomes a commodity. If price became the only differentiator, Ferrari would struggle to sell any cars. Since the car is no longer perceived as a luxury, exclusive good, prospects will purchase cars that are more affordable instead.

The effects of scarcity on pricing

Depending on the industry and the nature of the product, scarcity influences pricing in interesting ways.

Higher supply costs

When raw materials become scarce, their prices increase, leading to higher supply costs. For example, T-shirts are always "scarce" products because their demand is limitless, while their supply may fall short. If cotton becomes scarce, the price for the fabric will spike, increasing the costs for manufacturing T-shirts.

Increased shipping prices

Scarcity isn't limited to luxury goods - necessary machinery, transportation, resources, and goods can follow the scarcity principle too in certain situations.

For example, the global shortage of containers has led to a massive 300% hike in shipping costs as a result of scarcity. In this scenario, it's not the containers themselves but shipping that's suffering from scarcity.

With fewer container reserves, logistics providers can transport fewer items, leading to an imbalance in the supply and demand of shipping. Thus, delivery costs skyrocketed, so only consumers that pay the high fees can have their orders delivered.

Longer wait times

When products become scarce, businesses introduce longer wait times, meaning buyers cannot instantly satisfy their demand. For example, COVID-19 introduced a shortage of microchips, leading to longer wait times.

Some businesses use longer wait times to influence customer decision-making; for example, luxury brands introducing long waiting lists to:

• Increase the perceived value of the product - to create the impression that it takes more time, care, and effort to produce the desired product
• Maintain exclusivity

Another interesting effect of scarcity on wait times can be seen from services scarcity. For example, when the demand for Uber rises exceeds the supply, the service introduces a surcharge. Thus, only consumers willing to pay the extra expense can satisfy their demand immediately. Otherwise, they are effectively experiencing a longer wait time. Services scarcity of this kind influences consumer decision-making; each customer makes a cost-benefit analysis, and decides whether to pay the premium or continue waiting.

Higher customs fees (for international shipments)

Governments may impose higher custom fees on exports for scarce products to regulate their movement. When certain goods become scarce, governments may take measures to encourage brands to cater to the local population rather than international customers.

By imposing higher custom fees, brands have more incentive to sell scarce goods to locals. Additionally, increased fees may make it difficult for brands to compete in the international market, further incentivizing them to sell locally.

For example, let's say T-shirts become scarce in country A, so the government imposes high custom fees to ship T-shirts to country B. Now, if a business in country A tries to sell T-shirts in country B, they may not be able to compete with the local cost of T-shirts.

Conclusion

Scarcity affects everyone in some shape or form, arising naturally as a consequence of limitless demand, or synthetically by cultivating perceived scarcity.

Perceived scarcity is important for luxury brands because they must maintain a degree of exclusivity without encouraging their customer base to pursue alternatives.

Schedule a meeting today with our experts to learn more about our shipping software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By: Aaron Rubin, Founder & CEO of ShipHero

Warehousing has been around for a long time, but in recent years, technology has advanced warehouse processes tremendously. As a result, businesses can optimize fulfillment operations and cut down logistics costs significantly.

Largely because of the COVID-19 pandemic, the eCommerce market grown rapidly over the past 2 years, increasing the need for optimized warehouse fulfillment. eCommerce fulfillment can be more complicated than it is for its brick and mortar counterpart, and thus the need for more optimized, tech-enabled warehouse processes has increased.

The 6 key warehouse processes explained

Warehouse processes are categorized into the following 6 key components:

1. Receiving

In the receiving process, warehouse teams accept the inventory from suppliers. The team also verifies that the correct items are delivered and that they comply with the agreed quality standards. If any discrepancies are found, a report is generated, detailing the missing products.

2. Putaway

After the warehouse receives the products, your putaway staff transports the goods from the loading space to the warehouse storage location.

Products are putaway in areas that are easy to access, making it convenient for your picking team to locate them later. During the putaway stage, it’s important to transport products carefully and store them strategically to prevent damages.  

3. Picking

In the picking stage, your fulfillment team locates and collects items to fulfill customer orders. Order picking can be costly and time-consuming, making up for an estimated 55% of your total operating expenses.

Some ways to reduce your picking costs and optimize the process are:

• Employing an experienced fulfillment team that’s skilled at locating packages and transporting them with care.
• Using barcode scanners or RFID to improve picking accuracy.
• Optimizing your warehouse layout and organizing your inventory, so your picking team can move around easily and conveniently locate items.
• Using machinery (like forklifts or cranes) or robots to transport items quickly and more securely.

4. Packing

After picking the products, they are brought to the packing station, where your fulfillment team prepares them for shipping. In the packing stage, it’s important to handle items carefully and to choose the right packaging, padding and dunnage.

Shipping damages are responsible for a whopping $1 billion annually in the U.S., as they invite costly returns, shipping costs and refunds. To mitigate these costs, packaging orders properly is essential.

The package’s size depends on the items' dimensions, whereas the packaging material, padding and dunnage depend on the type of items. Fragile items, like glass or ceramics, are typically stored in cushioned packages, after being covered in bubble wrap.

After the items are carefully packed, they’re labeled with a packing invoice or sales order, ready for dispatch.

5. Dispatching

After the warehouse has successfully picked and packed the correct order, it's time to dispatch the package to the right address. In the dispatch stage, fulfillment teams should make sure orders are shipped to the correct address to prevent costly wrong order complaints. Moreover, if packages are scheduled to arrive/be picked up in a given timeframe, your team should arrange the dispatch accordingly.

6. Returns

Retailers work hard to prevent the dreaded returns stage, but eCommerce returns are currently at a rate of 30%, making them an inevitability. The returns process involves costly reverse logistics; depending on your policy, you may have to pick up old items and ship the replacement order.

Businesses are bound by their return policy, which means you have to eat the costs if customers initiate the returns process. However, brands can implement the best pick and pack practices to optimize fulfillment and reduce return requests.

How to improve warehouse processes

Hire experienced warehouse managers

Warehousing costs make up a large percentage of your brand’s expenses, and fulfillment operations directly contribute to customer experiences. Slow pick and pack times (and thus slower shipping), wrong orders and damaged shipments make it difficult to maintain customer loyalty.

Thus, when hiring warehouse managers, look for experienced professionals that can optimize internal operations and streamline your team’s workflow. Good managers should:

• Have keen organizational skills, to optimize your warehouse layout and storage system.
• Be comfortable with numbers and skilled at interpreting data to track inventory and scale fulfillment operations.
• Be tech-savvy, so they can leverage the right technologies and automation to optimize warehousing processes.
• Keep up with the latest industry trends - warehousing technology is continually advancing, and keeping up with developments is critical to scaling your fulfillment operations.

Above all, good managers should be committed to continually monitoring your warehousing operations and identifying areas of improvement. They should actively work to remove both short-term and long-term friction from the supply chain, to cut fulfillment times and costs down.

Check-in with your workers

Your workers are on-the-ground and actively engaged with fulfillment operations, which means they might pick up on problem points that executives overlook. Check-in with your workers regularly, find out how they’re finding the workload and whether they have any suggestions to improve warehouse efficiency.

Implement software that supports the growth of your business

Logistics software has advanced significantly over the years, allowing businesses to minimize human error and optimize productivity. Warehouse management systems (WMS) are powerful software that streamlines supply chain operations by providing real-time inventory insights, meaningful data and analytics, automation rules and more.

WMS optimizes productivity and saves businesses from stock shortages (or surplus) by forecasting demand and tracking inventory. Additionally, mobile WMS tools help workers verify items and orders, minimizing pick and pack errors.

Audit warehouse processes every 6 months

Auditing your warehouse processes bi-annually doesn’t just help with identifying problem areas, but also monitoring the success of efficient practices. For example, if one of your warehouses has a lower ‘wrong order’ rate than others, you can identify the cause of their efficiency and implement it across the board.

Additionally, half-yearly audits help businesses avoid stagnation. For example, is your warehouse layout still optimal, or does it need improving because of new stock? Or, do you have deadweight stock that’s eating up space and increasing overhead costs? Don’t neglect to audit your warehouse processes regularly - they’re vital to optimizing supply chain efficiency and should be regularly vetted.

Review the entire supply chain

Supply chain problems and bottlenecks don’t necessarily occur after warehousing operations commence - some issues may arise earlier. For example, fulfillment operations might be delayed because your supplier is delaying the warehouse delivery. Reviewing the entire supply chain is important because, for this example, you might need to negotiate with the supplier (or change suppliers entirely) to optimize order fulfillment.

Work with a 3PL

Emerging brands might lack the resources to hire experienced fulfillment experts and optimize warehouse processes. This is why many growing DTC brands partner with third-party logistics providers to affordably scale their fulfillment operations.

Leading 3PLs provide businesses with complete transparency into their operations, and optimize your warehousing, inventory management, shipping and reverse logistics. The right 3PL partner can help you reduce errors and damages, cut down fulfillment costs and offer expedited shipping offers to customers.

How eCommerce stores benefit from optimized warehouses

Optimized warehouses have minimal errors and damages, fast pick and pack times, and optimal inventory management. Here's how eCommerce stores benefit from them.

Grow their logistics network

Growing your logistics network is only sustainable if your warehouse operations are optimized. Otherwise, businesses that scale with inefficient fulfillment processes may suffer from late deliveries, increased wrong order complaints, and more damaged goods.

With optimized warehouses, fast-growing brands can scale their fulfillment operations without hurting their bottom line.

More efficient use of storage space

Warehouses with organized, strategic layouts make it convenient to locate required items. Additionally, optimized warehouses are designed to minimize picking times by leveraging shipping zones and implementing a clear route structure.

Orders are shipped faster

Optimized warehouses enhance the efficiency and speed of your warehouse operations, including packing and picking processes. As a result, your fulfillment teams can pick, pack and dispatch items quicker, leading to faster shipping times.

The advantages of working with a 3PL for warehouse management

Working with a third-party logistics provider helps brands scale their fulfillment operations sustainably while focusing on growth.

Optimized logistics network

3PLs optimize each stage of your fulfillment process, including warehousing, inventory management, pick and pack processes and shipping.

Access to distributed warehouses

Leading 3PLs have multiple warehouses nationwide, allowing partners to distribute inventory across various, strategically-located warehouses. By distributing your inventory, your 3PL can ship orders from locations closest to each customer, cutting down delivery times and costs.  

More time savings & lower labor costs

Third-party logistics providers have skilled fulfillment teams and advanced software to optimize your fulfillment operations, saving time and cutting down costs.

In addition to the cost-saving benefits of a distributed inventory, 3PLs also use software to automate tedious processes and determine optimal picking routes and equip their pick and pack teams with mobile tools to minimize errors.  The result is improved fulfillment efficiency and reduced expenses.  

More efficient use of warehouse space

Thanks to their teams of fulfillment experts, 3PLs use optimized warehouse layouts and strategic organizational systems to make the most of the warehouse space. For example, items that are regularly bought together might be stored closely. As a result, items are easier to locate, and they can be picked conveniently with minimal risk of damages. In larger warehouses, fulfillment teams typically divide the storage areas into dedicated zones, to reduce complexity and make it easier to identify items.

Better data & analytics

Access to real-time data and analytics is vital to optimizing fulfillment operations. Otherwise, businesses are at risk of shortages, overselling, errors and delays. Advanced 3PL software provides real-time inventory analytics, implements automation rules, syncs your eCommerce store and inventory data, and provides more accurate demand forecasting.

3 things to look for in your next warehouse management system

Since warehouse management systems play such a vital role in optimizing your warehouse processes, here are three important features to look for:

Software that connects to your store(s)

eCommerce inventory management can be complicated because although your store is digital, the goods are still physical. Look for warehouse management systems that directly integrate with your store, syncing real-time inventory data to protect merchants from overselling.

Additionally, after connecting to your store, the WMS should provide your fulfillment team with important data like customers’ shipping addresses or picking lists. More advanced 3PL software even provides displayed vs actual shipping costs, so businesses can accurately monitor delivery expenses.

Software that’s compatible with your warehouse equipment

Look for WMS that's compatible with your warehouse equipment; leading 3PLs make their API accessible to facilitate custom integrations. WMS that's compatible with your equipment can set automation rules, sync important data (like humidity or temperature settings from sensors) through IoT, and streamline analytics.

Demonstrated ROI

Pick a WMS that has a demonstrated track record of increasing ROI for fast-growing businesses. A record of ROI improvements gives you the confidence that you're choosing software that can help you achieve your growth goals.

Optimize your warehouse with ShipHero

ShipHero's industry-leading warehouse management software (WMS) helps the fastest-growing DTC brands optimize their warehouses. Our WMS integrates directly with your eCommerce store, syncing inventory and store data and allowing you to set automation rules.

ShipHero's WMS is compatible with modern warehouse equipment and provides vital data and analytics, including team reports and accurate demand forecasting. Additionally, we have a proven record of decreasing brands' warehousing costs and increasing ROI.

Conclusion

Optimizing your warehouse operations is a comprehensive process; brands need to improve the efficiency of their warehouse operations to keep up with demand as their business grows.

For brands looking to run the best warehouses possible, check out ShipHero to learn how we can help improve warehouse operations so you can focus on growing your business.

Schedule a meeting today with our experts to learn more about our WMS built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO
‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By:  Aaron Rubin, Founder & CEO of ShipHero

Technology has dramatically advanced the logistics industry in recent years, with warehouse and inventory management systems providing real-time analytics, tracking features, and many more tech-enabled features that streamline fulfillment processes.

But what if your warehouse could directly communicate low inventory and pick your items for you? What if your warehouse always maintained the right inventory levels? It might sound futuristic, but the technology is already here.

Welcome to smart warehousing.  

What is a smart warehouse?

A smart warehouse is a tech-driven warehouse that stores raw materials and/or inventory, and uses various tools to monitor inventory and optimize warehousing processes. Unlike traditional warehouses, smart warehouses leverage AI and technology to streamline internal processes.

Smart warehouses can identify and accept orders, count your inventory, track goods, and make sure orders are sent to the correct location. They automate almost the entire journey of items from supplier to customer, with minimal mistakes.

Components of a smart warehouse

Intelligent warehouses are ‘smart’ thanks to various tools and technological features that automate and optimize warehousing operations. These advanced warehouses offer:

Scalability

With traditional warehouses, your team is primarily responsible for managing inventory and optimizing warehouse processes. This means that, as your brand grows, your workforce is under more pressure to manage a growing inventory and larger order volumes.

Smart warehouses, however, alleviate these stresses by scaling with your brand. Smart warehouses use warehouse management software (WMS) and other technology to accurately manage inventory (and monitor real-time inventory levels), fulfill large order volumes quickly, and minimize errors.  

Data & analytics

Smart warehouses collect data from cameras, sensors and RFID cards to track and measure temperature levels, real-time inventory, order accuracy, pick and pack times and more. Access to data & analytics helps eCommerce merchants identify problem areas in the supply chain, and take action.

Additionally, smart warehouses monitor inventory levels and industry trends to improve the accuracy of demand forecasts, so merchants don’t have to worry about overstocking or being short-stocked.

Robotics & artificial intelligence (AI)

In general, robots can move faster and carry more items than humans, making them ideal for picking and packing. Smart warehouses leverage AI-powered robots to optimize these processes; robots can identify optimal routes, further decreasing picking times.

Radio-frequency identification (RFID)

You might be familiar with RFID from its application in credit cards. Instead of manually swiping your card through a machine, RFID cards transmit radio waves that verify your transaction from a distance.Smart warehouses use RFID technology to optimize pick and pack processes, count inventory faster, and reduce errors. A digital RFID tag is added to each package as it enters the warehouse so the items can be counted automatically.

RFID technology offers more efficiency than traditional labeling and barcode scanners. Unlike barcode scanners, RFID can scan tags from a distance based on the package’s general proximity. This makes them superior not only for identifying packages but locating them in the warehouse too.

The Internet of Things (IoT)

IoT integrates warehousing processes by syncing data between different systems using the internet. Each machine or system, including robotics, WMS, and RFID, are linked through internet-enabled devices, allowing them to communicate effectively.

With IoT, robots can use RFID to quickly locate packages, WMS can help humans process orders faster and track order shipping. Thus, IoT facilitates an integrated data-sharing system that optimizes warehousing processes and minimizes errors.

Warehouse management software

WMS is used in both traditional and smart warehouses to optimize everyday operations. Advanced WMS integrates with your eCommerce store and other systems (such as robots or mobile workstations) to optimize pick and pack processes, manage inventory levels, and forecast demand, among other functions.

Smart warehouses get the most out of WMS by integrating them with other systems through IoT, like robots, sensors, and scanning systems.

Automated picking tools

Automated picking tools can be robotic or semi-robotic - they work with your pick and pack team to optimize inventory management.

Order pickers spend a great deal of time walking around warehouses, but computerized cranes and forklifts can automatically pick items and transport them across long distances in minimal time. Conveyor belts are also a popular, semi-automated option to increase picking speed.

Some more advanced warehouses use robots to automate picking times. Using IoT, AI, and RFID, robots can communicate with your WMS to know which items to pick, quickly scan and locate products, and deliver packages directly to your packing team.

How to benefit from smart warehouses

If you’re wondering how smart warehouses can improve your supply chain operations and optimize order fulfillment, here’s a rundown of the key benefits they offer:

Reduce manual labor & human error

Labor costs generally contribute the most to your warehousing expenditure, and as your brand grows, hiring more manual labor becomes inevitable. Unless you leverage automation, that is.

Smart warehouses leverage technology to automate labor-intensive, time-consuming processes, so your human team can focus on more specialized tasks and cut back on labor costs.

Another reason why businesses are gravitating towards tech-enabled warehousing practices is to reduce human error. Picking errors can result in additional costs for returns (and thus additional shipping), refunds, lost sales, and customer service.

Pick and pack errors can drain your profitability by 11-13%, which is why it’s important for brands to adopt IoT and automation. Robotics guarantee faster, more accurate pickings and help ensure orders are shipped to the correct location.

Lower inventory damage and inaccuracies

Damaged goods are another costly expense that’s inevitable when you’re using human labor. While you can’t eliminate damage risks entirely, smart warehouses mitigate them significantly by leveraging technology and robotics.

WMS, robots, and RFID work together to correctly identify each item and determine optimal transportation routes. Additionally, robots can carry heavier items without dropping them, ensuring packages are safely transported from inventory to your packing team.

Better analytics & reporting

Analytics and reporting not only help you optimize inventory management but also identify problems in supply chain management. With detailed analytics, you can determine where errors/damages occur, and investigate the issues.

Moreover, with smart warehouses, your WMS provides real-time inventory data and analyses trends to encourage accurate demand forecasting. This helps businesses prepare for demand surges, such as during the holiday season, and prevent overstocking.

Faster shipping & fewer returns

Customer experience is everything nowadays, and providing expedited shipping helps eCommerce retailers stay ahead of their competition. Unfortunately, warehouse picking can be a lengthy process, especially if your team has to navigate a large, well-stocked facility.

Smart warehouses help speed up picking times and optimize tracking and reporting to speed up your fulfillment process, resulting in faster shipping. Additionally, with a tech-enabled system, order inaccuracies and damages are reduced, resulting in fewer returns.

Efficient warehouse space utilization & optimization

Utilizing and optimizing warehouse space is a complex process that involves many considerations. Smart warehouses use inventory tracking to ensure your inventory levels are always balanced by preventing overstocking and alerting retailers to deadweight items.

Additionally, smart warehouses perform ideally when your warehouse is properly organized. Thus, to ensure your warehouse functions optimally, it’s important to implement a layout that makes retrieval and storage processes convenient.

Predictive order processing

Predictive order processing employs technology and automation to deliver better customer experiences. While supply chain processes were once primarily analog, smart technologies use buying patterns, trends, sales history, and similar data to predict orders before customers place them.

Thus, with predictive order processing, your team can get a head start on order fulfillment and deliver better customer experiences.

Higher customer satisfaction

Keeping customers satisfied is vital for improving customer retention, loyalty, and growing your brand sustainably. Smart warehouses help mitigate errors and speed up the fulfillment process to deliver better experiences, enhancing customer satisfaction.

Lower costs lead to lower prices

Speaking of customer satisfaction, low prices are a great way to attract customers and outdo your competition. With smart warehouses, brands can reduce warehousing costs by leveraging automation and reducing errors and damages. Thus, you can list goods at lower prices without hurting your bottom line.

Conclusion

Over the years, the rise of technology has dramatically improved warehousing and inventory management processes, optimizing supply chain efficiency. While smart warehouses may seem futuristic, the technology is here, and top eCommerce brands are leveraging it to stay ahead.

Smart warehouses use IoT, technology, automation, sensors, robotics, and other robust technology to reduce errors, minimize pick and pack times, accurately track and forecast inventory, and ultimately deliver better customer experiences while optimizing your revenue.

Schedule a meeting today with our experts to learn more about our powerful shipping software built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO
‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By:  Aaron Rubin, Founder & CEO at ShipHero

You’re more than likely still coming off the high of Black Friday/Cyber Monday and the sugar rush of pumpkin pie. And you should be; this is a tough time of year for everyone, but eCommerce retailers have a special challenge. So many retailers make the majority of their revenue in these few critical weeks and that ratchets up the intensity for everyone in an organization.

However, just because you’ve made the sale and shipped the product doesn’t mean that you’ve closed the loop on that customer. There’s so much more that can and should be done in the guise of client relationship management and marketing. Now that you’ve hooked someone with your awesome products, you want to keep them coming back. Let’s examine 5 key steps for marketing to customers during this busy holiday shopping season and beyond.

Tip #1 - Be prepared for returns and exchanges

This might seem counterintuitive, but how you treat a customer return or exchange could have a long-lasting impact on whether you’ve gained a repeat customer. Hopefully, you’re using a return partner like Returnly or Loop (which both integrate seamlessly with ShipHero’s software). They make it much easier to manage returns, often absorbing the burden of processing the return, the return shipping/label and everything in between.

However, if you’re not working with a partner like that, you want to be sure that everyone on your team, and especially those in customer service, are ready to manage return and exchange emails. But the number 1 task to tackle first is setting and communicating your return policy. If you don’t currently have one on your site, get it up there ASAP. A return policy not only protects you from angry customers who might want to throw a fit if something isn’t right, but it also sets expectations. You can include everything from expected timeframe for responses, steps to the return process and whether or not you’ll be able to manage exchanges.

Make sure everyone is up to speed no later than Christmas Day as the day after Christmas and beyond are when you’ll see the largest influx of return and exchange requests.

Tip #2 - Ask for reviews

Client reviews are a huge selling point for new or browsing buyers. Time and time again, word of mouth has proven to be the most effective selling method for many brands, including all types of eCommerce retailers.

Sending a follow-up email a few times following a purchase and successful shipment can encourage people to leave a review. There is always the chance that it might lead to a negative review, but in the end, the positives far outweigh the negatives.

Tip #3 - Take the chance to upsell

Now that your customers have made purchases, another remarketing opportunity is available - and that is the upsell. Perhaps instead of sending an email with a reminder to write a review, you can send one that reminds the customer there’s still time to purchase and send virtual gift cards. This is especially great for the last minute shopper or for someone who has just had another person added to their gift-giving list.

Cart abandonment emails are another way to encourage customers to come back and make a purchase. A recent study found that more than 46% of customers open cart abandonment emails. Take the time now to remind them of what they were browsing for in the first place.

Tip #4 - Communicate with your customers after the holidays

Once the holiday season has passed, you want to keep these customers engaged with your brand and products. If you have a customer relationship (CRM) tool, consider setting up an email sequence that will send reminders regarding new products or sales or maybe even provide a coupon code for a product the customer looked at but didn’t purchase. This is a great way to convert some more passive dollars into sales.

Tip #5 - Spend some money on retargeting ads

Lastly, consider spending some money post BFCM on retargeting ads. These ads are the ones that “follow” people from your site to other sites like Facebook or Instagram. You can remarket your shop or certain products to people who have previously visited you. This again can help keep your products and store top-of-mind while customers peruse the Internet looking for a different gift. Oftentimes persistence pays off.

While this is not an exhaustive list of all the remarketing efforts you can undertake during the holiday shopping season, it's a good start. Partner with your internal teams, especially customer service and your warehouse, to ensure that everyone understands your returns/exchanges policy and knows how to enforce it.

In addition, spend some time with your marketing team or agency to uncover the best remarketing options for you and your customers. A one size fits all approach doesn’t often work for remarketing, so be conscious of frequency when sending emails, serving retargeting ads or reaching out for reviews. You want to remind people of your products and your store - not annoy them. The endless amounts of holiday music on a loop does that already.

Schedule a meeting today with our experts to learn more about our powerful shipping software built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO
‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

The pandemic has added words to our vernacular that many people had never heard before. Terms like supply chain, freight forwarding, 3PL, last mile and fulfillment are now much more familiar to the everyday consumer than they’ve ever been. However, as often happens with industry-specific verbiage, that doesn’t always mean the definition or understanding of these terms is widespread.eCommerce shipping is a current hot button issue, forcing many people to spend more time thinking about how the products they buy actually make it from a factory in China to a shipping container to a US port to a warehouse to their front door. While this is part of the supply chain, two very specific types of businesses are more involved than ever - 3PLs and freight forwarders - and it can be hard to keep them straight … even for those who work in the industry.Below is a breakdown of the differences between third party logistics (3PL) companies and freight forwarders, as well as an understanding of when a company might choose one type over the other.

Freight Forwarding Defined

A freight forwarder is typically a company that manages moving products from one place to another. They typically are a non-asset company that doesn’t manage trucks or drivers or any port workers - they manage the details of where a shipment is, where it can get loaded onto a ship, plane or truck, and how it will get transported to a warehouse for fulfillment and distribution.The major benefit of a freight forwarder is that they can negotiate better rates with shipping companies due to the volume of product they’re moving. By working directly with carriers, freight forwarders can broker better rates than eCommerce companies often can on their own.They can also work to coordinate shipments that might need multiple types of transportation throughout the journey, such as land to sea to land to air.Freight forwarders also have a deep understanding of customs,imports and exports. These are the areas of shipping that typically have the most red tape and can easily trip up a newer or smaller eCommerce organization that doesn’t have previous experience with these issues or simply doesn’t have the bandwidth to manage these details.Freight forwarders are also very familiar with every type of possible transportation, including sea, air and ground. Due to the breadth of their client base, they need to have a solid understanding of how to move any product for any company from anywhere in the world.

Third Party Logistics (3PL) Company Defined

A 3PL is an organization that can manage a few different processes. While a freight forwarder is strictly responsible for forwarding freight, a 3PL might be in charge of one, two or all of the following:

• Transportation

Services could include: LTL (less than truckload), FTL (full truck load) services, rail, air, ocean and/or trans-modal

• Warehousing & Fulfillment

Services could include: receiving, inventory management, returns, eCommerce fulfillment, B2B fulfillment, inspection, and/or kitting

• Forwarding

A freight forwarder can be considered a 3PL, too. Sometimes a freight forwarder also operates their own warehouses, but often still work with fulfillment centers like ShipHero to manage the B2C shipmentsYes, you read that right, it is possible for a freight forwarder to be considered a 3PL. In the end, it depends on how much of the logistics process they own - if a freight forwarder manages their own warehouse then there’s a good chance that they offer warehouse management services like pick, pack and fulfillment. This puts them more at the level of a 3PL, than just a freight forwarder.The true value of a 3PL lies in their warehouse and fulfillment capabilities. They are equipped to handle eCommerce fulfillment duties from receiving to DTC to returns to storage. By outsourcing these tasks to a third party logistics company, eCommerce retailers are free from the worry of warehouse leases, employees, hiring and dozens of everyday tasks that are necessary to run a business that don’t impact the bottom line.

How to Choose Between a Freight Forwarder & a 3PL

The biggest question for most eCommerce retailers is how to choose between a freight forwarder and a 3PL. In general, there are a few scenarios that lend themselves more to one than the other. Here are a handful of situations to look for when choosing.

1. You are only concerned with getting your inventory from one location to another.Maybe you’ve recently secured product that’s stuck somewhere in Canada and you need it in Michigan. In this instance, using a freight forwarder would be the perfect choice. Best option: Freight Forwarder
2. You need to get your inventory shipped from China, into a warehouse and then shipped to consumers. This is a pretty perfect situation for a 3PL. They have the processes in place to manage shipping carriers, receive and putaway your inventory and pick, pack and ship your orders. Best option: 3PL
3. You’ve acquired some inventory but it’s not enough to justify the cost of an entire shipping container. Freight forwarders can save money by combining different clients’ orders into one container. Since they have access to a variety of inventory locations and clients’ different needs, it should take them no time at all to organize the shipment and get it where you need it - normally for less than you expected. Best option: Freight Forwarder
4. You’ve increased advertising for your product on the West Coast and now have a lot of orders pouring in from Washington State. Your current warehouse is in Maine - so this is creating a problem. Working with a 3PL will alleviate this issue in no time. Depending on size, most 3PLs have more than one warehouse and work to maximize your inventory distribution to keep shipping costs and times down. Best option: 3PL

Choosing between a freight forwarder and a 3PL is really about the long-term. If you are looking to forge a relationship with a logistics company that will act as a partner, and manage your fulfillment process from start to finish, you’re really looking for a 3PL. If you’re looking for a more transactional relationship that you may only use once or twice a year, then a freight forwarder will work.As we continue to move through 2021 and into 2022 there is no doubt that the shipping game will continue to evolve. The more you know about your options, the better choices you’ll make.If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed and delivered with our fulfillment service. No setup fees, simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting Today

By: Maggie M. Barnett, Esq., COO at ShipHeroThe COVID-19 pandemic brought brick and mortar business operations to an abrupt halt, rapidly increasing the burden on eCommerce fulfillment. Unfortunately, as online shopping orders skyrocketed, so did package thefts in the United States.As a business owner, stolen and damaged goods can affect your bottom line significantly. Damaged good claims generally translate to returns or refunds, which could mean lost revenue.However, in both package damage and theft, accountability matters a great deal. Is your own fulfillment staff stealing inventory? Is your carrier responsible for the damaged goods? Did your customer leave the order vulnerable on their front porch for too long? Does a police report have to be filed?Liability determines who takes the fall, so it's important to take every precautionary measure in your capacity as a business owner. But first, you need to identify why your packages are being damaged or stolen so that you can come up with a relevant solution.

Why Do Packages Get Damaged or Stolen?

Porch pirates stealing local boxes off your customers' doorsteps wasn't uncommon during the global pandemic. But are your warehouses suffering from inventory theft? And what factors are damaging your delivered goods?Here are some reasons that might be to blame:

No use of cushioning materials

Until teleportation becomes an option, delivering items invites risks and potential damages. However, you can reduce the odds of goods being damaged from shock, vibrations, or external force by using cushioning materials.Cushioning materials form a protective layer that absorbs impact; pillows, bubble packs, and styrofoam sheets are popular choices. When deciding which material to use, consider the type of product you're shipping.Is it a large item or a small one? Do you need a more resilient, shock-absorbent material? You might also need to consider temperature-sensitive packaging for certain goods.

Packages are too big

Using oversized packages leaves room for the goods inside to move around during the delivery process. Consequently, they might get damaged from impact against the box's walls or by falling on top of one another. This is why you need to use packages with the right dimensions for secure delivery.Larger packages also require more cushioning material/padding, which increases your costs. If you reduce the padding, the goods are more likely to get damaged, inviting damage claims and order return/refund costs.Thus, avoid using packages with the wrong dimensions to improve your customers' experience and reduce costs.

Improper handling

Your package moves through several hands in the fulfillment process before reaching the delivery people. Every person handling the package poses a risk of damage or even theft. You can wrap your parcel in red tape labeled 'Fragile material,' and there is no guarantee that you'd receive it undamaged.With the mass increase in shipping, mishandling is inevitable to some extent. However, the shipping company you use also plays a massive role in secure delivery. Some companies directly deliver the package to the recipient, while others leave it on the front porch.

Theft

A survey found that 1 in every 5 Americans fell victim to porch piracy during the early pandemic days. Package theft statistics also reported spikes in theft during the holiday season.Holiday package theft can cost you heavily in returns and refunds if you're held liable, so it's vital to take safety precautions beforehand.Unfortunately, efforts like a neighborhood watch, security systems, home security cameras and doorbell cameras do little to protect customers against package thieves. If customers feel your delivery process is at fault, they might hold you liable for the lost package.However, since most package theft cases occur after the product is delivered to the doorstep, you typically won't be held liable. If in-transit theft or damages occur (although they're quite rare), you'll need to take care of the replacement or offer a refund.You can schedule package retrieval or leave the parcel in package lockers (instead of at the doorstep), Amazon Key, or Amazon lockers to reduce the risk of package theft and your brand's liability. And make use of email or SMS delivery alerts to notify the resident that their package has been delivered.

Infestation

While the chances of package infestation are low, you shouldn't completely rule out the possibility. Infestations are easily transmitted, and if your packages come into contact with them, they'll happily set up camp.International packages are at a greater risk of infestation because of crowded conditions on freight ships. So when you're shipping internationally, exercise caution to prevent rodent and insect infestations. If you're delivering consumables, the packages should be leak-free for protection.

Water damage

Fluctuating weather conditions are a nightmare for logistics companies. They slow your deliveries down and increase the risk of package damage. If it's pouring down rain, delivery personnel have to be extra careful to protect packages from water damage.Unfortunately, weather conditions aren't the only cause of water damage. When packages are shipped via sea, the air and cargo's moisture can seep in and cause packages to peel away somewhat.

How to Prevent Shipping Damage

It’s impossible to prevent shipping damages entirely, but there are tried-and-tested strategies to mitigate it.

Use the right packaging

Avoid oversized packaging like the plague - they'll damage your goods and drive your costs up in the long run.Beyond the package size, you also need to account for factors like the material itself and what padding you use. Natural fiber packaging is generally preferred for foods and consumables, but it's expensive. Carriers generally use more budget-friendly packaging like food-grade cardboard or plastic for delivering items.

Don't leave empty space in packages

You won't always have the right-sized packages on hand, especially when you have large orders to fill. You might need to use larger containers at times like this, but you can mitigate potential damage by filling empty spaces with dunnage.Kraft paper is the most economical choice for dunnage, and it's eco-friendly too. Foam is generally used for electronics and sensitive items like medical equipment, and air pillows are used to protect goods from slipping out of place.If you don't use dunnage or padding, your product will move around, knocking against the walls of the container. The goods are also more susceptible to impact damage.

Wrap each product in protective material

When shipping fragile products or goods that are prone to leakage, you need to wrap them in protective material. The protective material you use depends on the items.Bubble wrap is a top choice for fragile items like glass while packing paper or plastic covering works for more durable items.

Review data on shipping damages to see where improvements can be made

Reviewing previous shipping damages helps identify problem areas and improve your order fulfillment process. According to a HuffPost report, 1 in every ten eCommerce packages arrives damaged.The damage may be caused in transit, in which case the shipment company is to blame. By studying past situations, you can better understand where the problems occur and why they keep repeating.Online retailers need to review any holiday package theft to avoid refunds on lost packages.

Use shock/impact indicators

Impact indicators monitor any shock or damage the package endures, calculate it and report it back. It also alerts handlers in real-time to be cautious. Indicators aren't expensive and they can protect your packages from costlier damage, making them promising long-term investments.They also give you peace of mind, as you've taken the necessary shipping precautions from your side. The rest is up to the carrier.

Can I Hold a Carrier Liable for Shipping Damage?

You can hold a carrier liable for shipping damage if you can prove that the parcel was in good condition before it was handed over to the courier. Carriers like FedEx, USPS, UPS and others all have policies in place that can help you determine if the damage was caused by them.After the package is passed to the carrier (in good condition), if any damages or delays occur, or if the package doesn't arrive, you can hold them liable.

How ShipHero Reduces Shipping Damage

ShipHero Fulfillment helps brands and 3PLs reduce shipping damages to cut back on losses and improve their customers' experience.

Fully-trained & professional fulfillment staff

ShipHero's dedicated teams of fulfillment experts pick, pack and ship your orders with care.

We use the right packaging for each order

We don't use boxes that are too big, and our fulfillment team is trained to use the best cushioning and dunnage for each item.

Insurance claims for shipments

ShipHero Fulfillment offers shipper's insurance that covers both damaged and missing goods at a declared coverage rate of $1 per $100.

Conclusion

Package damages and theft result in losses and affect your bottom line, so it's crucial to take thorough, protective measures. If your customers receive damaged goods or have them stolen, it's important to identify the cause.Sometimes, your company won't be liable, and if it is, identifying the cause saves you from repeating the problem. If you need help guaranteeing reliable, secure delivery, then reduce your shipping damages with ShipHero. We're already helping Fortune 500s and thousands of fast-growing DTC brands deliver orders safely.If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed and delivered with our fulfillment service. No setup fees, simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting TodayMaggie M. Barnett, Esq., COOShipHeroAbout 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.

Technology and automation have dramatically streamlined modern business processes. The logistics industry in particular has grown tremendously thanks to modern advancements. Despite the power of technology though, eCommerce brands still need to have effective inventory management systems in place to optimize their order fulfillment processes.

To optimize your inventory management, it's important to use a combination of the best practices and industry-leading software solutions. By streamlining your inventory management, you can cut back on unnecessary expenditure, fulfill orders quicker and increase your bottom line.

How to Create an Inventory Management Process That Just Works

Here are the best practices for creating an inventory management process that works for every successful business.

Data is Your Hero

Accurately reporting your relevant inventory data is a vital part of an effective inventory management system. All the data including your beginning inventory, how many finished inventory items were shipped out, your cost of goods sold (cogs), product returns, deadstock, and inventory quantity need to be accounted for.

To report data accurately, your team needs to be actively engaged in supply chain management. Make a point to count inventory and compare the value with the figure on the GRN (Goods Received Note). If you deal with perishable items, you need to be especially careful about expiration dates. You should pay attention to any stock damage or returns and keep a comprehensive written record.    

Implement a Warehouse Management System

A warehouse management system is a collection of software and processes that enable a business to control and monitor all operations within the warehouse.

A warehouse management system gives businesses real direction and control over their warehouse processes. With a system in place, you can optimize each process and use analytics to monitor performance.

Warehouse management software lets you monitor assets from the time they're delivered from the manufacturers to the time they reach your customers.

A strategic warehouse management system streamlines restocking and logistics operations and uses demand forecasting tools to balance your inventory levels. WMS software tools take care of important calculations like your economic order quantity.

They also integrate well with any system, whether it's the periodic inventory system or the perpetual inventory system.  

Or Work With a 3PL

As your eCommerce store grows, keeping up with order fulfillment becomes increasingly difficult. Brands reach a point where to keep up with demand, they have to decide whether to:

1. Hire more, specialized logistics personnel to handle the increasing demand.
2. Hire less experienced staff and train them up.
3. Work with a third-party logistics provider (3PL).

Initially, many businesses shy away from option (3) because of the significant upfront costs. However, in the long run, the third option cuts back your expenses and optimizes your fulfillment process.

With option 1, the costs of hiring specialized personnel add up. Moreover, as your brand continues to grow, you might have to hire even more employees to keep up with the demand.

On the other hand, option 2 puts you at risk of heightened expenses due to inexperienced team members and more mistakes. An inexperienced team translates to delays and incorrect orders.

Third-party logistics (3PL) providers, on the other hand, give you access to a team of experienced professionals without you having to pay salaries and benefits. They're partners; not employees. About 86% of Fortune 500 companies and 96% of Fortune 100 companies use 3PL services.

Audit your Existing Inventory Management Processes to Discover and Analyze Issues

An audit of your management processes identifies problems that you can improve to streamline inventory processes.

For example, is your picking team finding it difficult to locate items? Then it's time to organize your inventory better. A ratio analysis where you compare your current financial year to the last helps identify potential performance issues too.

If last year's numbers were better, you might be losing revenue on unnecessary expenses, like storage costs due to overstocking.

After discovering problems in your management processes, you can take proactive steps to solve them and streamline your fulfillment process.

Implement an ERP

An enterprise resource planning (ERP) system is software designed to help organizations manage their daily business tasks. An ERP can manage a multitude of business activities ranging from accounting and HR to risk management and supply chain operations.

You can move your financial data over to the software after installing it. The inventory software is then free to organize warehousing operations and manage inventory logistics.

With an ERP, you can monitor your operations through your mobile devices, and the software facilitates integrations with popular eCommerce applications including eBay, Amazon and Shopify.

Use Multiple Fulfillment Centers

While a single fulfillment center seems more cost-effective because of the reduced storage costs, there are some additional expenses you need to consider.

Having multiple, strategically located fulfillment centers cut down your delivery times and costs. This is because your business can fulfill orders from the center nearest to the recipient. It also means you can offer expedited shipping, which consumers have come to expect as standard practice.

Since small businesses can't always afford the overheard that follows using multiple centers, many turn to a 3PL provider instead. Leading 3PLs have their own network of distributed fulfillment centers that you can utilize by partnering with them.

Change your Inventory System

It is crucial to choose an inventory valuation method that best aligns with your business model. With the first in, first out method there are certain advantages, such as a reduced risk of obsolete inventory and a reduced inflationary impact.

The valuation method you select can significantly influence your inventory management process. You need to choose one that best suits your business.

The first in, first out (FIFO) method offers certain advantages, like reduced risk of obsolete inventory and less inflationary impact. But some businesses choose to swap from FIFO to methods like JIT.

The 'just in time' (JIT) method requires less storage space, because you buy stock on an immediate-need basis. Using this method also means you have working capital to invest elsewhere, rather than having it tied up as stock.

JIT also reduces your chances of overstocking significantly. But, at the same time, JIT doesn't leave much room for error or delays. If your supplier runs late, and customer orders are coming in, orders may end up delayed or unfilled altogether.

Conclusion

Effectively managing your inventory improves the efficiency of your entire fulfillment process, leading to faster deliveries, accurate orders, reduced costs, and happier customers.

You can optimize your inventory management by implementing the best practices, including leveraging distributed fulfillment centers, implementing an EPR, and taking a data-driven approach.

However, managing your inventory processes isn't easy, especially if your eCommerce brand is growing rapidly. If you're struggling with inventory management, ShipHero's warehouse management software and team of experts can help streamline your operations.

Since we started, ShipHero has paid close attention to our clients’ wants and needs which has led to often highly positive reviews on third-party sites like G2, Shopify, Trustpilot and Capterra. We take these reviews seriously and look to them not only for pats on the back, but to learn and grow from the feedback our clients take the time to provide.

This fall, we’re honored to say ShipHero has been ranked #1 in the G2 Momentum Grid® Report for Shipping Software. This is a huge achievement, and to be ranked #1 by G2, the world’s largest platform for software reviews makes this award even better.

Building Momentum

It’s no secret that ShipHero has been building momentum in the past 12-18 months. You have to keep growing or you die. To be the Leader in the Momentum category for Shipping Software means we outpaced our competitors in areas like web growth, social growth and employee growth. We beat out some of our staunchest rivals, including ShipStation and FreightPOP in all of these areas.

The Momentum Grid® Report for Shipping named ShipHero as the highest-ranking shipping software platform in three areas: Momentum Score, Satisfaction Score, and Momentum Grid Score. Only three shipping software providers qualified as a Momentum Leader, with ShipHero ranking number one.

Customer Satisfaction

We were named a leader in the Shipping Software category as well. This ranking is based on two things:

• High Customer Satisfaction Rating
• Large Market Presence

We have always stated that our Support Team is key to our business. In fact, we have two times as many employees for our Onboarding Team as our Sales Team. We let others talk; at ShipHero, our goal is to do.

As a result, 95% of ShipHero users rated their customer satisfaction 4 out 5 stars, making ShipHero one of the top 5 shipping software companies based on customer satisfaction. G2 ranked a total of eighteen shipping software providers in its Fall 2021 report. It’s also important to note that 88% of our current customers would recommend us to other eCommerce companies in need of powerful shipping software.

Onward and Upward

These rankings mean a lot to us, because they prove that our client-first approach, our commitment to always doing things the right way, and our belief that our software is the best around are well-founded. We’d also like to note that our ratings on similar review sites range from 4.8 to 4.9 out of 5 stars. It’s validating to know we’re doing a lot of things right and better than our competitors.

If you’re looking for powerful shipping and warehouse software, ShipHero has the tools and processes you need to bring order to your warehouse chaos. Our software runs in our 5 owned and operated warehouses across the United States because it works. If you need more proof, check out the details of the G2 Momentum Grid® Report for Shipping Software, Fall 2021 HERE.

Schedule a meeting today with our experts to learn more about our warehouse management software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO
ShipHero

About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter & LinkedIn.

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On average, one out of three businesses miss their delivery deadlines because they just sold a product that's out of stock. This highlights just how common inventory management issues are. Poor inventory management leads to losses and unhappy customers. Being understocked translates to unfulfilled orders, and excess inventory drives storage and management costs up.

To optimize your order fulfillment process, maintaining your inventory and knowing the best times to re-order are vital. So let's take a look at common problems to steer clear of, and some solutions to your inventory management issues.

Common Issues with Inventory Management

Some persistent inventory management issues afflict most businesses at some point, which include:

Products Consistently Running Out of Stock

Running out of products consistently is a result of inefficient inventory management. Failing to set accurate reorder points and stock up on in-demand products leads to shortages, which translates to unfulfilled orders.

If you run out of in-demand goods, not only are you losing revenue from potential sales, but your customers may start purchasing from competitors.

Incorrect Demand Forecasting Leads to Inventory Shortages or Too Much Inventory

The idea behind demand forecasting is to analyze industry trends and predict what your inventory levels should be. If a product's popularity is expected to pick up soon (like chocolates during Valentine's Day) or decrease soon (like air conditioners towards the end of summer), demand forecasting helps prepare your inventory accordingly.

However, inaccurate demand forecasting causes more problems than it solves. Incorrect predictions throw your stock levels off balance; you may end up overstocking or understocking, inviting respective consequences.

Companies Forget to Re-order Products

Forgetting to re-order products leads to shortages and consequently, unfilled orders. If you don't have a proper inventory management system in place, forgetting to re-order from suppliers might happen frequently.

How the Inventory Turnover Ratio Affects Inventory Management

Your inventory turnover ratio typically indicates how strong or weak your sales are at a given time.

What is the Inventory Turnover Ratio?

The inventory turnover ratio is an efficiency ratio, and it's also known as stock turnover or inventory turns. The metric measures how efficiently your brand manages its inventory. The calculation determines the rate of sales and restocks of a particular product during the fiscal year. Your company's inventory turnover can indicate inventory performance; a high turnover ratio generally means strong sales, while lower inventory turnovers might be due to overstocking.

How to Calculate Inventory Turnover Ratio

You can calculate the inventory turnover ratio by using the inventory turnover formula:

‍cost of goods sold (COGS) / [(beginning inventory + ending inventory)/2]

‍Here, the beginning and ending inventory is divided by 2 to calculate the average inventory. Moreover, the average inventory is taken over a particular time period. Alternatively, you can calculate the ratio by dividing sales instead of COGS by the average inventory value. However, since sales include a markup, this method is generally not as accurate.

How to Analyze Inventory Turnover Ratio

The inventory turnover ratio assesses how your rate of sales aligns with your warehouse restock rate. Thus, the ratio actually indicates how efficient your inventory management system is.

To analyze your turnover ratio, important factors to consider include:

• The industry standard as a benchmark to monitor your performance. Low-margin industries generally have higher inventory turnover ratios.
• Cost flow assumptions can cause fluctuations in the turnover ratio, but you don't necessarily need to have a course of action for them.
• The valuation method you're using affects your inventory turnover calculation, and thus the result. For example, using LIFO over FIFO generally produces a higher stock turnover, courtesy of the higher cost of goods sold (cogs) with a lower inventory value.

What is an Ideal Inventory Turnover Rate?

What qualifies as a 'good' inventory turnover rate largely depends on the industry. You can estimate how healthy your turnover rate is by comparing it to the industry standard. Then, you can better understand your inventory's success by comparing your turnover rate and seeing if it's higher or lower.

Low Inventory Turnover

A low inventory turnover generally means your brand is underperforming because it indicates either surplus stock or a lack of sales. However, if you're expecting shortages or a price hike on the goods soon, then a low turnover rate is beneficial. It means you're holding out for a better time to sell.

Otherwise, low turnover rates are usually caused by at least one of the following factors:

• Overstocking
• Liquidity problems
• Weak sales
• Failed marketing efforts
• Inefficient inventory management

High Inventory Turnover

In most industries, a high inventory turnover ratio is generally a positive indicator. It means your products are selling well, and you’re successfully restocking every 1-2 months.

The ideal inventory turnover ratio is generally between 5-10 and varies across industries. Generally, high inventory turnover indicates improved liquidity, efficient inventory management and strong sales.

However, inadequate inventory or stock shortages also lead to higher inventory turnovers, so you need to assess the contributing factors.

5 Ways to Improve Inventory Management

If you're looking to improve your inventory management, here are five of the best practices.

Leverage Product Bundles

Product bundling is a technique of grouping multiple products or services and selling them as a single unit. It's a simple strategy to reduce marketing and distribution costs while guaranteeing a higher average order value (AOV).

You can lump multiple products together, including high and low ticket items, and sell them at a reduced cost. Since you don't have to market each item individually, the profit margin is still appreciable.

You can also leverage product bundles to sell off slow-moving inventory. Deadstock takes up storage space and drives storage costs up, so pairing a few unwanted items with some in-demand ones can rid you of the excess inventory.

Adjust Product Pricing

Adjusting your pricing strategy helps keep inventory levels balanced by combating both understocking and overstocking problems. If you've got too much inventory to manage, dropping the prices on certain products helps you sell them out faster and reduce storage costs.

Alternatively, if you're understocked, you can increase the prices of the items to temporarily reduce demand. When your inventory is restocked, you can drop the prices again.

Make Use of Automatic Re-orders

Manual reorder processes invite inaccuracies and your personnel may forget to place the orders altogether.

You can leverage inventory management software to set accurate, automatic re-order points, based on real-time inventory levels and demand forecasting. With automatic reorders, you mitigate the risks of running out of inventory or overstocking.

Streamline the Supply Chain

Inventory management is just one stage of your supply chain; by optimizing the processes before and after it, you can collectively streamline distribution and fulfillment efforts. This involves optimizing stocking times, organizing inventory, reducing picking and packing times and improving the delivery process.

Work with a 3PL

Third-party logistics providers help streamline your entire order fulfillment process, including warehouse and inventory management, picking, packing and delivery.

SMBs in particular benefit from working with 3PLs because they don't have to hire their own, specialized logistics team. 3PL providers optimize your fulfillment process, improving your customer's experience and reducing unnecessary costs.

Working with a 3PL also guarantees transparency, because unlike with a 4PL, you retain ultimate control. Leading 3PLs also have their own software to give their partners updates and a transparent view of their operations.

Conclusion

Inventory management issues affect your bottom line, leave your customers unhappy and may overwhelm your workforce too. By implementing the best practices, you can mitigate inventory management issues and streamline your workflow.

As your eCommerce brand grows, managing your own inventory becomes increasingly challenging. You have more orders to fill, a larger and geographically diverse customer base, and your employees struggle to keep up with the logistics.