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ShipHero Ecommerce Fulfillment Trends – Week in Review For November 16, 2020

Introducing the ShipHero weekly shipping trends report. ShipHero provides warehouse management software and outsourced ecommerce fulfillment to over 4,000 brands, processing an annual gross merchandise volume (GMV) of over $5 billion.In an effort to provide useful data to the DTC community during Covid and the rapid changes occurring in our industry, we are sharing some of the broad segment trends from the products on our platform. Here is the data for the week ended November 16, 2020:

More charts available on data.shiphero.com.Do you find this information useful? Let us know! Twitter: @weareshiphero or Email al@shiphero.com.

Political Merchandise: A Logistical Triumph

Merchandise: the capitalistic solution for our innate human need to signal our fandom and find our tribe. Who doesn’t own a jersey from our coveted hometown or college sports team, or maybe you bought a t-shirt from your favorite performer? And now that presidential hopefuls act more like rockstars than politicians, political merchandise has infiltrated the United States’ presidential elections in a major way. From mugs to fly swatters to a bright red hat with the four-letter acronym that defined a presidential campaign, it seems that Merchandise Allows Giant Advantages; MAGA indeed.

So while the presidential candidates continue to duke it out through speeches, rallies, and debates, there is another constant underlying battle happening at the gift shops. Political merchandise has now become a crucial element in the United States’ presidential elections in terms of both fundraising revenue as well as brand awareness and reputation. In an election where everything rides on the candidate’s reputation, the logistics company outsourced by the campaign doesn’t just fulfill the orders, it also fulfills the promise of the candidate. Let’s dive into the role that merchandise plays in politics, and examine how nimble, outsourced logistics could be the defining competitive advantage in the upcoming election. So keep your eyes ON the merchandise!

The Booming Political Merchandise Industry

Throughout recent elections, political marketing has produced a booming multibillion-dollar industry, so campaign managers have closely collaborated with their merchandise team to develop and distribute trinkets, tokens, gag gifts, and apparel as an impactful way to effectively communicate the candidate’s campaign message and brand reputation. Political merchandising and promotional products have seen a giant spike in recent elections due in large part to the marketing minds behind the Donald J Trump presidential campaign, who was able to turn his patented “Make America Great Again” slogan into a $45 million market, reaping massive benefits for his campaign budget and influence.

During the 2020 election cycle, the Joe Biden Victory Fund and the Donald J Trump site each offer approved and sponsored political merchandise and promotional products, and all of the revenue from sales goes directly to fundraise for the political campaign. Conversely, websites like RedBubble and Etsy carry all types of items with the candidate’s name, likeness, and message; whether it is actually sponsored by the candidate remains unknown in many cases and the revenue from these products may or may not end up in the hands of the candidate. Such an example could be the Trump flag that boasts him with the muscular body of Rambo holding a massive rocket launcher.

Candidates have allowed these unauthorized third party sales to continue because it still propagates their message and grants them an extended reach, with the risk being that they could lose control of their message through decentralized distribution. However, in the 2016 election, Trump’s campaign began sending cease-and-desist letters to online retailers, providing a warning that the use of Trump’s name, likeness, and trademarked slogan is illegal infringements of a trademark. This year in 2020, that has not yet been the case.

One recent merchandise success story of the 2020 election stems from the famous fly that perched on Vice President Mike Pence’s silver spider web hair during the 2020 Vice Presidential debate. Before you could even utter “shoo fly” the Biden campaign was already selling “Truth Over Flies” fly swatters and the $10 knickknacks sold out by the next morning. A short three days later, bobbleheads of Pence with the fly sprung up as pre-orders by the National Bobblehead Hall of Fame.

The battle of merchandised political messages is all about reach, speed, and fulfillment: where can you deliver your message, how quickly can it be delivered, and how confident are you in fulfilling that message? With that in mind, how the respective campaigns plan to fulfill their merchandising promises requires further speculation.

Elect for the Right Logistics Company

“After the Democratic National Convention, it’s only a matter of months for a candidate to identify a brand, reinforce it, and promote it before the general election,” says Bruce Newman, a marketing professor at DePaul University and editor-in-chief of the Journal of Political Marketing. And in the instance of Mike Pence and the fly swatter, it could boil down to a matter of hours. So how do campaigns ensure that they can fulfill their merchandising promises and uphold their ever so important reputation?

Looking into the Joe Biden Victory Fund page, the site advertises that it is administered through bumperactive.com, which is a company that specializes in custom logos and decals on promotional products. The Biden campaign has wholly outsourced the manufacturing and logistics of their political merchandise for the sake of speed and expertise. They advertise on their site that delivery is in 7-10 days and any problems should be addressed through bumberactive.com.

Comparing this to the Donald J Trump shop page, the site does not indicate a third-party distributor. Instead, all inquiries should be routed directly through shop.donaldtrump.com. What is no doubt a strategic move by the Trump campaign to keep this information concealed to avoid meddling, the Trump campaign understands that any hiccup in fulfillment could cost them dollars, but more importantly, votes. The Donald J Trump shop website also advertises similar delivery times of 7-10 days.

Beyond just delivery, the ability to source, price, manufacture, and ship an item quickly is a huge competitive advantage, as seen with the Biden Fly Swatters example. In a statement to CBS News, the merchandise director for the Biden campaign was quoted as saying, “We saw the internet and our supporters sharing a viral moment online, so our digital team came together on the fly to show that Joe Biden and Kamala Harris will always choose truth over lies, science over fiction, and unity over division.”

With the goal of shipping quickly, the respective campaigns need to elect logistics companies that can be quick and nimble, and innovate on the fly (pun intended). Smart fulfillment companies like ShipHero allow e-commerce companies to source, pack, and ship quickly and to every corner of the United States. ShipHero boasts an average time to ship orders for new brands within as little as 3 days from signup. And through smart warehouses, state of the art technology, and innovations in transportation, ShipHero offers 2-day ground shipping reach for 98.4% of the contiguous US population. When deciding on a logistics solution, vote for speed, for reach, and for trustworthiness. Having a robust ecommerce order fulfillment solution is critical to the success of your business.For the 2020 US elections, please do your part and vote! — https://www.headcount.org

What is Revenue per Visit?

And, how our best warehouse management software can help you fulfill all those new orders.

The trinity to e-commerce digital marketing excellence lies in three metrics: Average Order Value (AOV), Conversion Rate (CR), and Revenue per Visit (RPV).

In this series, we will introduce how these metrics are gathered, how they impact your business, and how to improve each.In this first part, we will discuss Revenue per Visit.

‍Revenue per Visit (RPV) is calculated as Total Revenue ($) divided by the Number of Visitors (#)

RPV is also calculated as Average Order Value ($) multiplied by Conversion Rate (%)

Revenue per Visitor and Your Business
‍Revenue per Visitor basically translates to: how much money does my business make for every person that visits my website.

RPV also allows you to gauge your new visitor acquisition efforts: are you attracting the right kind of visitor?

Notice it says visitor, not visit. The RPV metric does not use the total number of visits to your site in its calculations; rather, it counts only unique visitors, with each individual person counting as one visitor.

Revenue per Visitor (RPV) as a metric carries an important distinction from Average Order Value (AOV) and Conversion Rate (CR) -- discussed in our AOV and CR blogs. WIth AOV and CR metrics, you are able to set targets, a desired number or percentage to achieve. For RPV, the importance lies in how the metric is trending, whether upwards or downwards.

• Positively-trending RPV -- an upwards trend for RPV means that your website is attracting a larger amount of high-quality or qualified customers i.e., customers that are likely to convert upon visiting your site.
• Negatively-trending RPV -- a downwards trend for RPV means that your website may be attracting more visitors, but these visitors are unqualified or less likely to convert.

RPV allows you to measure and determine your budget for spending on user acquisition, such as your advertising budget.

• Positively-trending RPV signals that your user acquisition strategy is working and the dollars you spend are paying off.
• Negatively-trending RPV signals a disproportionate growth of unqualified customers to your site, or possibly it can indicate a problem in your sales funnel, such as too many form-fields or possibly performance issues on your website landing page.

Calculating RPV

Let’s look at how to calculate RPV, and show the implications it can make for your business. Consider the following scenario:

Example 1

• Company A’s website has a total monthly revenue of $20,000 and 10,000 visitors; RPV = $2 per visitor
• Company B’s website has a total monthly revenue of $20,000 and 5,000 visitors; RPV = $4 per visitor

Example 2

• Company A’s website sells couches, so they have an AOV of $2,000 and a conversion rate of 1%; RPV = $2 per visitor
• Company B’s website sells clothing, so they have an AOV of $50 and a conversion rate of 8%; RPV = $4 per visitor

In both examples, it is apparent that Company B is attracting higher-quality and more qualified customers than Company A. Company B is also spending half of what Company A does in customer acquisition.

So, improving RPV could be the competitive advantage you need to succeed. Ready to start climbing?

Top 3 Proven Ways to Increase RPV

If you want to start on the path towards positively increasing your PRV, you need to start attracting the right customers to your site and providing them with the best experience. Here are the Top 3 Proven ways to do just that:

1. Attract the Right Customers

Attracting the right customer to your website is the best way to improve your RPV. Now, who are the right customers?

The right customers are those specific website visitors that are more likely to convert and hopefully contribute towards a higher Average Order Value (AOV). Oftentimes these are referred to as ‘qualified’ customers. These customers also have growth potential for their lifetime value -- calculating Customer Lifetime Value is a great way to understand who the right customers are.

In analyzing your customer base of those that successfully converted, what common factors did they share if any? Any demographic or location similarities? Did they look at the same products? Did they check your ‘About Us’ page or Company Mission statement before converting?

Questions like these are what Data Analytics departments strive to answer, and it is the basis for your ecommerce business to take a data-driven and targeted approach towards marketing your business and finding the high-value customers or customers with a potentially large lifetime value. You should focus on retaining valuable customers, and getting rid of the rest.After you identify and attract the right customers to your website, what’s next?

2. Sell, Sell, Sell

As discussed in our past blog about AOV, providing product recommendations, and upselling or cross-selling complementary products along the customer journey is an effective method to increase AOV.

To recap, the strategies to increase AOV are:
Product recommendations
Set order minimumsIncrease prices
Upselling
Cross-selling
Urgency and Scarcity
Reward Programs

3. Offer the Best Experience

As discussed in our blog about Conversion Rates (CR), you must think about your customer journey from landing page to purchase confirmation. Each step in this process needs to be streamlined to reduce friction and increase your conversion rates.

To recap, the strategies to increase CR are:
Adding pop-ups
Simplify the first step
Chat boxes
Reduce form fields
Eliminate noise and distractions
Retargeting and remarketing

Conclusion

The above three methods are the top three proven ways to increase your company’s RPV.

Identify and market to your high-value customers

Sell more product per transaction and Improve the average order value (AOV)

Optimize the customer experience and improve conversion rate (CR)

This is the first part of our 3-part blog series covering essential e-commerce metrics: RPV, AOV, and CR. We hope you have a better grasp of how to measure the success of your e-commerce business. We'll cover AOV and CR in future posts.

The beauty of your ecommerce company is that it can be easily measured and optimized; all you have to know is what to look for and how to turn the dials. Check back here to learn more about other metrics and tools of the trade.

And, if your warehouse is getting a surge of volume, we can help. We believe we have the best warehouse management software on the market. It will make your warehouse run like a finely-tuned Swiss watch, with great efficiency and minimal mistakes.

You are an eco-conscious consumer. Maybe you turn off and unplug your lights, or you try to reduce water consumption. You may buy second-hand products, or perhaps you are well-studied on the long, long list of rules for recycling.

Maybe you carpool or ride a bike, or you have a garden and shop for organic produce. You do all the eco-friendly things that would make Al Gore blush; but now consider this inconvenient truth: each and every time a package arrives on your doorstep within 48 hours of ordering, also known as same-day delivery or two-day delivery, the environmental costs of such an expedient service are wasting all of your carbon-diminishing habits.

"The time in transit has a direct relationship to the environmental impact. I don't think the average consumer understands the environmental impact of having something tomorrow vs. two days from now. The more time you give me, the more efficient I can be." That is a quote from Patrick Browne, director of global sustainability at UPS.

The advent and booming popularity of same-day and two-day delivery have forced delivery and fulfillment companies to take more inefficient and carbon-intensive routes, passing both the financial and environmental costs on to the consumers. Yes, the shipping may appear to be ‘free’, but that is because notable e-commerce giants are fronting the logistics costs for competitive reasons while doing all they can to disguise the true costs, the harm to our environment. Cue Captain Planet.

Let’s delve into the environmental impacts of the services provided by these e-commerce giants, and then examine carbon-friendly solutions with promises of the exact same delivery times.‍

The Cost of Consumer Expectations
‍You wake up in a cold sweat. It is your dear mother’s birthday tomorrow, and you have nothing, nada, zip, zilch, diddly-squat... just like last year. You’re out of excuses, and more importantly, out of time. What is a desperate son or daughter to do? Well have no fear; up in the sky, look! It’s a bird, it’s a plane, no! It’s a delivery drone coming to your rescue. Ah, the future.

The trend of faster delivery times, from click to door, has always been a point of competition amongst e-commerce companies, with a 2019 study conducted by Rakuten Intelligence showing that delivery times have been steadily decreasing the previous two years from 5.2 days to 4.3 days. And today, over 50% of shoppers between 18-35 years old have reported that they expect same-day shipping and will opt for speed of delivery; however, 90% of consumers reported that they would opt for free delivery over speedy delivery.

So, are you willing to trade speed for the eco-friendly, green alternative? If so, you are in the vast minority. A study by Forbes in 2019 showed that 95.6% of consumers were not willing to make the trade-off of speed for package consolidation, and 54% of consumers mention ‘speed of delivery’ as their top delivery consideration when shopping.

Our expectations as consumers are trending towards not only the same day but within 1-3 hours for some products. The promise of e-commerce was economies of scale, allowing companies to synergistically ship orders to your door in a more environmentally-friendly way when compared to each consumer driving to the store in their own cars. These initial environmental benefits are now at risk as shipping gets artificially pushed to be faster and faster.

‍Environmental Costs of Shipping
‍You may be thinking, how bad is bad? Well, in the worst-case scenario, a package delivered the same-day could result in carbon emissions up to 35 times more than if the delivery had been done efficiently. These abhorrent emission numbers can stem from carriers relying heavily on air freight, which values speed, instead of the lower carbon option of ground freight.

Transporting 2 tons of freight over 500 miles with a truck creates just 12% of the carbon emissions used to do the same with a plane. That’s right, give a trucker a hug. The air freight option is much more expensive and carbon-intensive than ground freight and is used solely in the case where goods need to be shipped long distances, quickly. This, of course, requires a lot of energy and fossil fuel.Not only does air freight emit over 8 times the carbon, but the effects of these emissions are also 2 to 3 times more harmful compared to carbon emissions from ground transportation because airplanes release the carbon at high altitudes into the atmosphere, where they contribute much more to the greenhouse effect.

While larger delivery companies are able to combat a portion of these added carbon emissions by purchasing more carbon-neutral vehicles or packaging, the large majority of companies that are struggling to compete, such as meal kit delivery or razor subscription box companies, just cannot afford to be environmentally-friendly, and unfortunately, it will be all of us that will pay the price.

‍Solutions for Low Carbon Delivery
‍“But it’s my mom’s birthday tomorrow and I need to get something, like, today!”, you may be saying to yourself. Or, “Shouldn’t that be the company’s job to be environmentally friendly?” Well, absolutely. Here are some ways that companies are meeting consumer expectations for quick service, all while reducing the added carbon footprint.

‍Implementing Machine Learning
‍One of the major trends in 2020 for delivery and fulfillment will certainly be the injection of Artificial Intelligence (AI) and Machine Learning into the supply chain. According to McKinsey & Company, businesses can expect to gain between $1.3 trillion to $2 trillion a year in economic value by using AI in their supply chains.

These computing solutions have limitless potential to transform the supply chain and logistics network. The main impact of these solutions can be found in the following areas:

• Predictive demand: tuning Machine Learning models to predict and forecast demand, using order metrics, product data, and real-time KPIs, will allow companies to shorten shipping distances, lower delivery time, and eliminate the need for carbon-intensive air freight in some circumstances.
• Smart Warehouses: Smart warehouses are able to simplify and automate the tedious tasks of picking, packing, and shipping, thereby creating a greener and more cost-efficient system.
• Route Optimization: Route planning using real-time location data allows companies to optimize ground routes with various stops, allowing them to fill ground vehicles more efficiently and aim to reduce fuel consumption.

Delivery and smart fulfillment companies like ShipHero are realizing the potential of Artificial Intelligence and Machine Learning to solve the complex problems presented by logistics and supply chain operations; and when configured correctly, Machine Learning has the ability to help key business leaders get the real-time information they need to make smart decisions.

Considering the present-day state of shipping and delivery during the COVID -19 pandemic, with shipping carriers at capacity and consumer demands at all times high, companies must rise to meet this watershed moment where e-commerce has seen 5 years of growth... in just four months. So being able to combine these new technologies, a wide fulfillment network, and transportation optimization will present a radical new shift for e-commerce logistics.

‍Reducing Waste
‍Single-use and disposable materials are terrible for our environment, filling up landfills, waterways, and the bellies of poor turtles. Fulfillment companies like ShipHero are switching to recyclable packaging, thereby eliminating single-use materials, and using sustainably sourced paper and recyclable packaging.

Waste can also be created by overproduction, unnecessary inventory, and unnecessary transportation, all of which can be addressed and reduced through a smart fulfillment platform set with a goal to lower and optimize carbon emissions. So how can companies measure their carbon emissions?

‍Transparent Reporting and KPIs: A Competitive Advantage
‍Almost half (46%) of surveyed global consumers said they would be willing to forgo a brand name in order to buy environmentally friendly products. In this information era ripe with cancel culture, brands should be sure to show-not-tell their customers how they are being eco-conscious, lest join the expanding list of canceled brands.

Over 73% of global consumers say they would definitely change habits to reduce environmental impact and over half of shoppers choose brands based on sustainability; so, brands that are notably eco-friendly like Lush Cosmetics, Patagonia, and TOMS make sure to advertise just how eco-friendly they are. In order to meet the expectations for this majority of consumers, companies must be able to demonstrate this competitive advantage through transparent reporting and Key Performance Indicators (KPIs).

When warehousing, distribution, and fulfillment activities are all performed by a singular entity, carbon emissions and footprint are much easier to monitor, optimize, and report. These are brand new reporting capabilities that could not have been made under standard fulfillment methodologies, and now these capabilities can be developed even further. Taking the approach to continually build out more eco-friendly reporting services at a steady pace, ShipHero can make a difference now, all while continuing to evolve them over time; and they even envision a future service where carbon savings are published and available for every shipment with a simple scan of a QR code included on the shipping label. What’s important to note is that ShipHero does all of this while maintaining the exact same delivery times (between 3-5 days) that you and your consumers have come to expect.

Then, these carbon emission optimization metrics are passed onto you, so that you can communicate them to your loyal, eco-aware customer base.

Ah yes.

The instant dopamine rush of seeing your name on that big, brown package sitting on your doorstep. You pick up the box and scurry inside, grab your trusty pair of scissors, open the box and… it’s not what you ordered. Dang.

ShipHero - We Have a Full Range of Ecommerce Fulfillment Services to Handle Your Returns and Much More

Is there a bigger frustration in the shopping experience than having to return an item? Long lines, obscure policies, unhelpful employees, and where the heck did you put that receipt?

And that’s just pre-COVID, back when you could go to the store and meet the perpetrators face-to-face.And what’s more, in the age of rising e-commerce sales where shopping, browsing and just about everything is done online, approximately 30% of orders are returned, which translates to 3 in every ten packages you can expect to return. This figure rises to a whopping 50% for clothing retail. Not only that, those percentages only account for when the shopper purchases items for themselves, not as a gift. Oh, and speaking of…

Black Friday Cyber Monday shopping is right around the corner, with most shoppers reporting to start shopping in October. 2020’s holiday season will smash ecommerce delivery records and with delivery companies like UPS, USPS and FedEx already strained or at capacity, let’s talk about the returns aftermath.

‍Online Returns

‍National Returns Day is January 2nd, so don’t forget to get your mailperson something nice.

In case you weren’t aware, National Returns Day is known as the day in which American shoppers return the highest amount of packages back to retailers. In fact, Reuters stated that “UPS estimated that it processed 1.9 million Christmas returns for U.S. retailers on National Returns Day 2020 (January 2, 2020), equating to a 26% year-over-year increase.”

When compared to purchases made in a traditional brick-and-mortar retail location, purchases made online are returned three times more frequently. The major cause of online returns stems from a disconnect between what is advertised online versus what is actually shipped to the consumer, and the main culprit seems to be issues with how the product is portrayed, such as low-quality images or incorrect size and style comparisons for clothing. In fact, discrepancies in sizing with each manufacturer are responsible for more than half of all customers that are returning clothing items due to a wrong size or fit.Considering that e-commerce sales revenue is growing 15 percent year over year, and the product return rate sits around 30 percent of sales, that leads to about 4 billion additional units that need to be delivered and shipped.

Considering the effects of the pandemic, with delivery companies already at capacity and demand only increasing, you would assume that this has an impact on what companies accept for returns. But, you can just return them for free, can’t you?

‍The Cost of Free Returns

‍We as consumers have come to expect relatively liberal return policies from our stores. With Amazon Free Returns, Walmart Free Returns, Nordstrom, and L.L. Bean all having notoriously generous return policies, almost 32% of shoppers in the US reported that they would forego an online purchase if there wasn’t an offer of free returns.

The process of preparing returned products to be sold further diminishes profit margins, and the term ‘Free Return’ comes with a lot of hidden costs, either tacked onto the price of goods by way of margins, or fronted by the retailer for competitive reasons.

In order to successfully reduce the adverse effects that returns have on your e-commerce business without taking the margins hit of ‘Free Returns’, you need to know why, when, and how customers return items, especially during these uncertain times. This is where reverse logistics supply chain capabilities are able to help your business maintain inventory, reduce operational costs, and provide your customers with a phenomenal return experience. So, what is reverse logistics?

‍Reverse Logistics: The Solution to Returns

‍Reverse logistics supply chain is defined as the operations involved in the moving of product from the end consumer back to the seller or manufacturer for the purpose of satisfying returns, salvaging value, or recycling and disposal.

According to a 2020 report by Tech HQ, “The global reverse logistics market is forecast to hit US$603.90 billion by 2025, and businesses can save millions of dollars if reverse logistics management is implemented and done properly. With the expansion of the e-commerce industry emerging in parallel with the closure of many brick-and-mortar stores, retailers can expect to see a hike in return goods once the reopening of the sector begins.”

While brick-and-mortar retailers have the ability to leverage their COVID-19 solutions of contactless check-out and curbside pick-up and dropoff to handle the onslaught of returns, those without a physical location must handle this through delivery and fulfillment companies.

If you are an online retailer, this should signal to you that solving returns will absolutely be an essential component of your business if you want to properly maintain inventory, retain revenue, avoid exorbitant operating expenses, increase customer loyalty, AND increase your company’s sustainability and eco-friendliness.

The answer seems to boil down to a data-driven approach fueled by big data, and in some cases, blockchain.

Partnering with companies like Happy Returns and Returnly will allow e-commerce businesses to turn logistical challenges into business opportunities, as well as transform return policies and processes into a holistic returns strategy. This translates to understanding all aspects like why, how, and when customers make returns, and using a data-driven approach to optimize the return process.

Smart fulfillment companies like ShipHero leverage their partnerships with companies like Happy Returns as well as their expansive big data collection and analysis capabilities in order to forecast returns and plan accordingly, ensuring that your customers are happy, your margins are intact, and your company is sustainable. Check out ShipHero's full line of ecommerce fulfillment services that can handle your company's fulfillment, returns, and much more.

We realized there was no way we’d be able to continue filling orders one year down the road at the rate we were growing. We were excited by the growth, but we needed a software solution like ShipHero.-- Jake Rajsky, Vice President, American Tall

Challenges

Scaling fulfillment with rapid business growth

Finding high-quality, well-tailored men’s clothing online can be a tall order—especially for men who are 6’3” or taller. So there was high demand when American Tall, a men’s apparel brand, launched their direct-to-consumer ecommerce site.

At first, the small family business relished picking and packing each order by hand. They even enclosed personalized thank- you cards with each order. But as their business grew, keeping up with order fulfillment became a challenge.

Download Case Study

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The ecommerce fulfillment experts at ShipHero on the top trends for 2019

The e-commerce industry has experienced unprecedented growth over the past decade and it shows no signs of slowing down. Research shows that e-commerce could account for $4.88 trillion in global retail revenue in 2021. But what factors are driving this change?

Today we’re going to be taking a look at the 2019 e-commerce trends that account for this massive growth and how you can utilize them for the benefit of your own business.
Let’s dig in...

1. Customer service is becoming more automated.

An e-commerce business can live or die by its customer service strategy, and advancing technology continues to provide new ways to engage with and meet the needs of your customers. Chatbots, for example, are a new trend that enhance the customer experience with minimal cost when compared to traditional customer service teams.

If you’re unfamiliar, chatbots are live chat services that run via an algorithm. Think of it as a “if the customer says X, the chatbot says Y”. Statistics show that the majority of consumers find the greatest benefit of chatbots to be 24-service. While these automated chat services are still in their infancy, they still give e-commerce businesses the ability to scale certain aspects of their customer service department.

If you’re interested in integrating a chatbot into your store, there are hundreds of different services and chatbot use strategies, based on your e-commerce platform, to fit your needs.

2. Direct-to-Consumer models are on the rise.

Consumers want to receive their orders quickly, correctly, and at the best price possible. A tactic many e-commerce companies are starting to use is direct-to-consumer sales. This model eliminates middlemen such as wholesalers and retailers while building a closer relationship with the customer.

Studies show that 52% of consumers will go directly to a businesses website in order to purchase their products. Why? Much of the reason comes down to the relationship that businesses are able to create selling direct. All channels — from marketing to shipping — are consistent under the umbrella of the brand itself. Businesses in all industries are taking notice of the direct-to-consumer rise. Tesla cut out car dealers in order to sell direct to their customers, Nike is predicted to grow their direct sales to $16 billion in 2020 and, remarkably, 61% of wine sales in 2017 came from direct-to-consumer sales.

To succeed in direct-to-consumer sales you need a top-notch ecommerce fulfillment partner. ShipHero can help.

3. Voice-enabled technology will become the new battleground for e-commerce.

According to new research, over 35 million Americans used a voice-activated device at least once a month in 2017 – this number represents a nearly 130% increase over 2016. Smart home assistants and voice recognition systems are on the rise for various aspects of home automation, and 2019 will see a rise in the use of these systems for e-commerce. E-commerce giant Amazon is betting heavily on it. According to an Amazon press release, customers use of Alexa for shopping more than tripled this year compared to last year. The reasoning behind its growth is simple — consumers are looking to technology as a way of gaining back their time. Rather than having to click around in search of an item you’re out of, you can simply request it from Alexa in seconds. The algorithm will scour your past purchases to make a relevant product suggestion and after you confirm, the order is placed.

4. Analytics will continue to advance.

Integrated technology and analytics platforms such as Google Analytics provide e-commerce businesses with valuable data about the performance of their customer base, sales, and products. However, current analytics is almost exclusively used to show what has happened in the past and not what could happen in the future. The relatively new field of Predictive Analytics provides e-commerce businesses with a deeper understanding of customer habits and preferences by analyzing past data and using it to help increase conversion rates. The best current representation of predictive analytics in action would be the rise in product recommendation sections on e-commerce sites. These products are not random. More often than not, they are unique to the visitor based on viewing habits, past purchases, and more. As technology advances further, machine learning will allow for even greater predictability and e-commerce personalization.

5. Amazon will continue to dominate the e-commerce market.

Over the years, Amazon has become an e-commerce powerhouse. In 2018 they dominated the industry with record profits and often hover around the most valuable company in the world. In 2019, it is likely that Amazon will continue to dominate the market, which leaves smaller companies with just one option – to find new ways to remain competitive.

The goal is not to compete directly with Amazon but find ways to integrate it into your e-commerce model by using their marketplace for your own products or fill in the gaps that Amazon has. One of the best ways you can do this is by building a remarkable brand on your own platform. Amazon, while widely used, doesn’t have the ability to offer a fully cohesive brand because they sell products from other vendors. Think of it as the difference between your local grocery store and Trader Joe’s — which has a greater brand appeal? By selling your products direct, as mentioned above, you have the ability to create a more consistent brand experience, which allows for a stronger relationship between your business and the customer.

6. The middleman will slowly disappear.

Each year, the supply chain for e-commerce businesses grow shorter. This no better visualized than in the meteoric rise of B2B marketplace, Alibaba. Today, all you need is an idea and some cash (or credit) to turn it into a reality. Don’t have access to investment capital? You can still bring your idea to market with sites like Kickstarter and Indiegogo. The middlemen and third-party distribution channels, are starting to fade away as the need for their services becomes obsolete.

7. Mobile payment platforms will become the norm.

Though there are still situations where cash is king, e-commerce platforms will always rely on digital payment platforms. However, the type of digital payment will begin to shift.

As mobile traffic accounts for nearly half of global web traffic, it is estimated that global mobile payment revenue will rise from $450 billion in 2015 to over $1 trillion in 2019.As an e-commerce business, review your analytics to see where your traffic and conversions are coming from. Are you seeing an upward trend in mobile visits? Consider implementing Apple Pay and Android Pay to allow for seamless payment. Remember this: Consumers are more likely to convert when there are less steps to completing a purchase.

8. Subscription services will continue to expand.

Over the past few years, subscription boxes like Dollar Shave Club have become extremely popular. While this realm of e-commerce began with the intention of delivering highly used consumer goods (e.g. meal delivery boxes) they have expanded to include almost every industry imaginable — from coffee to clothing. From 2014 to 2017, the subscription box market has grown by an incredible 890%. This growth is due to two factors. First, businesses are looking for every way possible to increase customer lifetime value by turning products into services. Second, customers are looking to receive highly-used products on a regular basis without having to put extra effort or thought into the purchase.

9. Social media will continue to drive sales.

In recent years, social media has become the number one channel for e-commerce businesses to grow and develop their brand. This, in turn, has led to an increase in sales. According to data from BigCommerce, online stores that have a social presence have 32% more sales on average than stores that don’t. Why is this? It comes down to the ability to build a relatable brand that stays top of mind. Also consider that organic social costs are relatively minor in the world of digital marketing and yet they play the biggest factor in building a relationship with customers.

10. Shoppable posts will become more common.

Social media platforms like Instagram already provide excellent opportunities for brands to convert followers to customers, and we’ll continue to see this as a major trend for 2019. Research shows that 80% of Instagram users already follow at least one business and 60% use Instagram to find new products. Furthermore, 75% of those who use the platform to find new products end up engaging further with the brands they discover. To put this trend to work for your business, upload your product catalog to Facebook. This will allow you to “tag” posts with products that will lead followers (Facebook and Instagram) back to the page on your site where they can make a purchase.

11. Augmented reality will change the way customers shop.

One of the downsides of shopping online versus in a brick-and-mortar store is that you can’t physically try the product before you buy. One way online retailers have started to bypass this hurdle is by incorporating mixed reality technologies into their e-commerce platform. For example, IKEA’s Place app makes it possible for customers to catch an augmented reality-powered glimpse into what the products would look like in their own homes. Though AR and VR technology isn’t a perfect fit for every e-commerce industry, it could help some retailers stand out from their competitors. To best analyze whether your business could benefit from augmented reality, ask yourself the following questions…

• Is there a need to see the product in a certain environment?
• Is there a benefit to the customer seeing or comparing different variations of the product in person?
• Are there details of the product that need to be thoroughly examined prior to purchase?

If you answered “yes” to any of these questions, consider integrating augmented reality into the future of your e-commerce store. With e-commerce giants like Shopify investing in it for their customers, it’s becoming easier than ever to integrate into your own site.

12. International e-commerce will continue to expand eastward.

According to recent research, nearly 4 billion individuals (just over half the world's population) can now be classified as “middle class”. Of that number, almost 9 in 10 of the next billion middle-class consumers will be Asian. With more money comes more purchasing power. Though expanding into international markets has its fair share of challenges, it does present a gigantic opportunity for some companies.

If you’re considering expanding into international markets, understand how you can properly serve this newly evolving Asian middle class. To put this opportunity into perspective, consider that research shows the middle class markets in China will account for $14.1 trillion and India will account for $12.3 trillion in 2030.

Final Thoughts

In the end, a successful e-commerce business is one that provides a valuable product or service and creates an overall satisfying customer experience (from interacting with the brand to using the product). Don’t feel compelled to utilize all of these trends in the coming year. Rather, review these trends and start to think about the current state of your own business to understand what areas of your supply chain or marketing strategy provide the most potential for growth.

From ShipHero - The Top Pick Among Warehouse Management Software Companies

In the vastly competitive world of e-commerce, it can be a challenge to stand apart from the crowd. With limitless options available at their fingertips, consumers are always looking for the lowest price and the greatest value. As a business owner, you must walk the fine line between offering competitive prices and still keeping your head above water in terms of margins.

When it comes to grabbing the attention of consumers and converting them into paying customers, it is sometimes the little things that matter most. While most business owners understand the importance of branding, marketing, and advertising when it comes to improving sales, many underestimate the true value of offering free shipping.

You may be surprised to learn that high shipping costs are attributed to an astounding 55% of abandoned carts. So, the answer is clear — offer free shipping, and the sales will come, right? Well, it’s not that simple.

Keep reading to learn more about the pros and cons of offering free shipping and how to effectively make it work for your business without going bankrupt.

What’s So Great About Free Shipping?

One of the greatest benefits of shopping online is that it is incredibly easy to compare prices. Amazon, Jet, and even Google want to show you the highest rated products, at the lowest prices, with the least expensive (or free) shipping options. With so much competition out there, e-commerce stores need to find ways to convert visitors into paying customers and to keep those customers coming back.

That’s where free shipping comes in.Free shipping is a huge benefit for customers, and it is often the deciding factor between one site and another. Though shipping is free for the customer, however, they are not free for the merchant, and those costs can add up quickly. That’s why you see so many websites offering free shipping for a minimum spending amount – the sale of those add-on items helps the company recoup the costs associated with shipping the order.

To give you an idea of just how powerful offering free shipping can be, consider recent research that showed 58% of shoppers will add additional items to their cart in order to qualify for free shipping at a set dollar amount. Not only that but shoppers will also spend 9.4 percent more when they need to meet a free-shipping minimum. So, while you may still be eating the cost of shipping yourself, by using free shipping strategically, you’re able to generate more revenue from it.

The Psychology Behind Free Shipping

The question any e-commerce business owner wants to know is, “Does free shipping really work?” The benefits for the customer are obvious, but how do you actually make it work for your business without dipping into your margins too much? The first step in answering this question is learning about the psychology behind free shipping.

First and foremost, it must be mentioned that free shipping is rapidly becoming the norm. Consumers are less likely to think of it as an option and more likely to think of it as a staple. Everyone from giant online retailers like Zappos and Wayfair to department stores and small businesses have begun to offer free shipping. For many of those companies, free shipping is only available for customers who meet a spending minimum but, for others, all orders ship free.

What’s the psychology behind the free shipping strategy? It all comes down to the consumers perceived value of shipping. Prior to purchasing, a customer determines the overall value of their purchase by performing quick subconscious math, weighing the costs and benefits associated with buying the product. If shipping ends up being too expensive for an item that we could just as easily get at a nearby store, the math doesn’t add up and the cart is abandoned.

Another reason why free shipping is so powerful has less to do with the shipping part and more to do with free part. According to Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, people change their behavioral patterns when something free comes along. In his book, “Predictably Irrational”, Ariely gives us a real-world example of the power of free in action. When Amazon introduced free shipping on some of its European sites, the number of orders increased dramatically. However, not in France. That is because instead of being reduced to zero, the shipping price in France was reduced to only 1 franc (about 10¢ USD). Yet this minor cost was enough to prevent a jump in sales.

How Free Shipping Is Typically Used

Though free shipping is everywhere, companies use this tactic in various ways. Here are some of the different free shipping techniques you’ll typically see in action:

• Free shipping on all orders – no qualifications or restrictions.
• Free shipping for members or subscribers only.
• Free shipping on orders that meet a minimum threshold.
• Free shipping on qualifying items.
• Free shipping to a brick-and-mortar store for pickup.
• Free shipping for buying during a certain window.

Every e-commerce store is different, so the free shipping policy you select will be unique to your company. You’ll need to find the right strategy that keeps your customers happy, that drives sales, and that helps you recoup the costs for offering the program.

What Are the Benefits for Your Company?

Though the idea behind free shipping is sound, it isn’t fool-proof. There will certainly be times when the customer simply isn’t interested in adding more items to their cart to qualify for the discount. There are also cases where the additional revenue from those add-ons doesn’t actually cover the cost of shipping. Additionally, and most importantly, free shipping may fail to work if the consumer isn’t in the right phase of the buying cycle.

The buying cycle begins when the consumer becomes aware of a need that must be filled. Next, the consumer considers ways (products) to meet that need and starts to assess the pros and cons of different options. Eventually, the consumer settles on a particular product and makes the purchase. Free shipping comes into play during the final stage of this process – the purchase. If the consumer isn’t ready to make a purchase, the lure of free shipping may not be enough to close the sale.

On the other hand, when free shipping DOES work, it provides several benefits. Here is a quick summary of the potential benefits free shipping has to offer for e-commerce business:

• Increase in sales – We’ve already covered the fact that offering free shipping increases sales, but how exactly does it do it? For one thing, offering free shipping leads to a reduction in cart abandonment – it helps push potential customers over the edge to close the sale. It can also set your company apart from the competition and increase perceived value.
• Increase in ARPU – Average revenue per user (ARPU) is heavily affected by free shipping policies, especially when you set a minimum spending threshold. In a way, free shipping is an upsell technique you can use to increase the size of an average customer’s order.
• Increase in loyalty – Offering free shipping makes your customers happy, and a happy customer is more likely to come back. When you offer free shipping as part of a loyalty or membership program, it helps to increase repeat sales. Just take a look at what Amazon Prime has done to increase loyalty in the Amazon marketplace.

Free shipping is a tool e-commerce businesses can use to increase conversion rates and keep customers coming back, but it is not a perfect system. Keep reading to understand how to make it work for your shop.

How to Make Free Shipping Work for You

If implemented properly, free shipping could make a big difference for your business. You’ll need to design a free shipping policy that suits your business and ensures that you recoup the costs of shipping on most orders.

Here are some simple steps to follow when designing a free shipping policy for your business:

• Calculate how much you need to sell to recoup the cost of shipping. Spend some time running the numbers to see whether you can make up the money you lose by covering the cost of shipping yourself. This will help you determine whether you can offer free shipping for all orders or if you need to add some stipulations such as a minimum purchase.
• Decide on a minimum purchase threshold. If you run the numbers and see that you could be losing too much money by offering free shipping on all purchases, consider adding a minimum spending threshold. By requiring customers to spend a hypothetical $50 or $100 to qualify for free shipping, you can guarantee that your profit margin on those orders will be higher and consistent.
• Use free shipping as an incentive during short-term campaigns. If it simply isn’t feasible for your site to offer free shipping all the time, you can still use it as a promotional tool for short-term marketing campaigns. Seasonal sales and new product releases are excellent opportunities to drive sales and adding free shipping as a bonus can boost sales even further.
• Consider offering free shipping on certain items. If your business sells a wide variety of products, the profit margins are going to be different for different goods. You can choose to offer free shipping only on items where the profit margins line up or on items you want to sell more of.
• Offer free shipping as a benefit for membership, subscriptions, and loyalty programs. Membership and subscription programs are a great way to get repeat business, but you need to offer your subscribers benefits – free shipping is a good one.
• Limit free shipping offers to returned items. If you’re not in a position to offer free shipping on all of your orders, offering it for returns is still a step in the right direction. It gives your customers peace of mind knowing that if they are unhappy with the product, it won’t cost them anything to return it.
• Use free shipping as a loss leader. The definition of a loss leader is a product sold at a loss to attract customers. However, it can also be applied to free shipping. For example, if you owned a subscription based e-commerce business, you may find that offering free shipping on the first order may increase conversions. Whereas you can make up the cost of shipping due to the higher average lifetime value of the customers (since they’re recurring orders).

Any of these free shipping strategies might work for your business, but you’ll have to take the time to choose the right one. To give you an idea what these strategies look like in action, here are some statistics from companies that have successfully implementing a free shipping strategy:

• According to research published by CNBC, offering free shipping on returns (a policy offered by Zappos) boosted sales by 357%.
• Red Door saw a 90% increase in sales after establishing a minimum purchase threshold – free shipping on orders over 75%.
• Research from Marketing Land revealed that 9 out of 10 customers were more likely to do their shopping online when offered free shipping. Of those, about 30% made weekly purchases.
• According to David Bell of Wharton University of Pennsylvania, customers find a free shipping offer with an average savings of $6.99 to be more appealing than a product discount worth $10.

As you can see, there are many ways to work free shipping into your business plan. It may take some work to find the right tactic, but it is definitely worth implementing.

Simple Tips for Implementing a Free Shipping Strategy

Now that you have a better understanding of the psychology behind free shipping and the benefits of offering it to your customers, you may be wondering where to start. Here are some simple tips to help you implement a free shipping strategy for your online business:

• Calculate your free shipping threshold. This number should be close enough to what your average customer typically spends but enough to cover your costs. To determine this number, look at data from your last 6 to 12 months of sales to find the sweet spot between setting your spending threshold too high and setting it too low.
• See what your competitors are offering. Though the most important thing is to make sure you’re not losing money, you also want to see what your competitors are doing because you want to give potential customers a reason to choose you over them.
• Do a test run before committing to a free shipping strategy. You don’t have to commit to any free shipping tactic right away – you can run a promotion for two to four weeks to test out your free shipping policy and then evaluate the data to see what works best given your unique e-commerce scenario.
• Don’t forget about returns. Returns are a necessary evil in the world of e-commerce, and it is your challenge to find the balance between keeping your customers happy and keeping your business alive. Think about the options such as free returns, customer-financed returns, or a flat rate for customer returns.
• Once you settle on a free shipping policy communicate it clearly. Customers want to know exactly what they’re getting when they make a purchase. Think of it less like a policy and more like a marketing tactic. Make sure everyone that lands on your site is well aware that you offer free shipping.
• Work the cost into your product prices. If you really want to offer free shipping but you can’t afford to eat the costs yourself, you might be able to work the cost (or at least some of it) into your product pricing. Just make sure you don’t go so high that you lose out to your competition.

Though including free shipping on your e-commerce store has the potential to increase sales and customer loyalty, it might not be right for your business at this time. If your profit margins are already low, for example, adding free shipping to the mix may cut your profits even more or negate them entirely.

The Bottom Line

Free shipping is an excellent marketing tool that has led to incredible benefits for many e-commerce businesses. Before you tack on a free shipping policy for your own business, however, you need to weigh the pros and cons – you also need to think practically about whether it will work and how to implement a free shipping policy.

When considering a free shipping policy, there are three questions you need to answer:

1. Are your margins high enough to cover the costs?
2. Will you still be making a profit once all costs are covered?
3. How do you plan to use free shipping as a marketing tool?

Answering these questions will help set you on the right path toward determining whether free shipping could be a beneficial tool for your company. If you decide that it is, take the time to choose the best policy and follow the tips you’ve received here to start implementing your policy.

Need great software to run your warehouse? ShipHero is a leader among warehouse management software companies. See what we can do for you here.

ShipHero Logistics Experts Show How To Optimize Your Warehouse Layout For Order Fulfillment

When it comes to ecommerce businesses, order fulfillment is the name of the game. The speed and accuracy with which you fill orders is one of the key factors in your long-term success. If you want to succeed you need to properly store and organize your inventory, so it can be picked, packed, and shipped with the greatest efficiency, speed, and accuracy.

That’s where warehouse optimization comes into play.

Warehouse optimization is not a process that should be implemented without careful thought. Before you can take steps to optimize your warehousing layout and process, you need to have a thorough understanding of what you’re currently working with and the limitations. Once you’re able to identify weaknesses and areas of unmet need, you can start getting into the details of optimizing your new warehouse layout.

In this article, we’ll walk you through the practical aspects of optimizing your warehouse layout starting with choosing the right warehouse space and brainstorming ideas for your ideal warehouse layout. We’ll also talk about how to implement your plan and provide tips for optimizing the different stages of the order fulfillment process.

When to Make the Switch and How to Choose a Warehouse Space

The goal of any business is to grow – it’s really that simple. Depending what type of business you’re running, the steps you take to accomplish that growth may differ. What all successful ecommerce businesses have in common, however, is an efficient order fulfillment process and, in most cases, that means a warehouse with a layout optimized for maximum efficiency.

If your business has grown to the point where you are considering purchasing or leasing a warehouse space, congratulations! Before you make the switch, however, there are a few things to think about.

First and foremost, are you really ready to make the switch?

Before you start looking around for a bigger warehouse space, you need to be sure that you really need it and that you can afford to run it. It might make sense to move to a larger warehouse space, for example, if your sales have started to exceed your storage capacity for inventory. It might also make sense to move to a different warehouse if you’re expanding into a new market. Take the time to think about whether making a switch is really the smartest choice for your business and, if it is, the next step is to carefully choose a warehouse space.

The first thing you’re going to be looking for when evaluating warehouse spaces is, of course, size. You need a warehouse large enough to hold your current inventory and to leave room for growth without being so large that you sacrifice efficiency. After size, you need to think about the little details that will really make a difference in your day-to-day operations.

Aaron Rubin, CEO of Ship Hero, suggests that even the smallest details like the type of flooring matters. In an interview with EcommerceFuel.com Rubin said, “The next most important thing that people don’t think about is the floor. You want something with a smooth, not pitted concrete floor.” He goes on to say that cheap flooring can produce dust that covers your products and pitted floors can damage rolling carts.

Here are some of the other key elements to consider when choosing a warehouse space:

• Size – When choosing a warehouse, think about how much space you need to store the inventory you currently have but leave room for expansion. It almost always makes sense to sign a multi-year lease. The caveat is you don’t want to get locked in should the business go under. Make sure your lease has a buyout clause so you can terminate it.
• Location – The location of your warehouse determines how quickly and efficiently you can fulfill orders and ship them to your customers. You’ll need to do some research about your market to determine the best location for your warehouse. Regardless of where it’s located, Rubin advises to find a warehouse that has a loading dock. This will make pallet shipments much easier to receive.
• Cost – Buying or leasing a warehouse isn’t cheap, so you’ll need to run the numbers to make sure you can afford it and that it will be a lucrative decision to make the change. In addition to the cost to lease or buy the warehouse, you’ll also need to factor in costs for shipping. If you’re an established business looking to expand, getting a line of credit from a bank could be the best option.
• Demographics – The location of your warehouse will impact the cost and the kind of job market you have to draw from in staffing your warehouse. Do some research to see if your business fits the local industry and whether you’ll be able to find qualified and experienced staff.
• Potential – Choose a warehousing space that not only fits your current needs but leaves room for expansion as well. Moving from warehouse to warehouse can be expensive and incredibly time consuming. Plan out what your inventory needs may be years down the line to give yourself enough warehouse space to accommodate it.

Now that you understand when the right time is to make the switch and what to consider when choosing, let’s discuss what to think about before you start planning your warehouse layout.

Things to Think About Before You Begin

Once you’ve chosen your warehousing space, next comes the task of planning the layout. Before you start getting into the details of planning your warehouse layout, however, there are a few things you need to consider. First and foremost, why is it even important to optimize how your warehouse layout?

As mentioned above, the speed, efficiency, and accuracy with which you fill your orders will determine whether your business lives or dies. The order fulfillment process can be fairly complex, so you need to really think through the details for picking, packing, and shipping. If you want to maximize profitability, it all starts with proper warehouse planning. When planning your warehouse, you’ll need to set up certain areas to make sure that your picking and packing process goes smoothly.

Here are some of the areas you’ll need to work into your warehouse layout:

• Receiving Station – This is where new products are received and checked in before they are stocked on warehouse shelves. This station needs to be well-organized to keep your inventory current and accurate.
• Packing Station – In this station, customer orders are packed into shipping boxes or poly-bags, and the shipping label is created and applied.
• Staging Station – Here is where items move from the packing station to skids or carts before being moved to the outbound shipping station.
• Returns Station – Many companies choose to have a dedicated returns station. If you don’t, you’ll likely be handling returns through the receiving station.

In addition to knowing which stations you’ll need and where to place them in your warehouse, you also need to plan around existing structures. For example, if your warehouse doesn’t have a loading dock, you’ll need to adjust your plan and create separate sections for inbound and outbound inventory. If there are walls or support structures in the middle of your warehouse, you’ll need to think carefully about the placement of your stations to prevent staff from having to navigate around them dozens of times a day which can reduce speed and efficiency.

Start with a Detailed Plan for Organization

Once you’ve thought through some of the details for optimizing your warehouse, next comes the stage in which you actually do the detailed planning. You’ve already thought about which stations you’ll need and whether there are any existing obstacles to work around – now is the time when you put those details together to actually map your layout for optimal efficiency.Here are some simple steps to complete as you start organizing your warehouse layout:

1. Measure the warehouse space you are working with and be sure to note any obstacles.
2. Decide where you are going to place your receiving, packing, staging, shipping, and returns stations – keep in mind the location of your loading dock, if you have one.
3. Plan to dedicate about 15% to 20% of your total space to staging and make sure it is adjacent to the shipping station – the remaining ~80% will be divided among storage and other stations.
4. Choose the best shelving for your products to save space and time (we’ll go into greater detail about shelving in the next section).
5. Decide on a labeling system and make sure all aisles and product locations are clearly labeled.
6. Create material flow paths and picking paths to maximize efficiency by choosing the fastest route between stations.
7. Plan the specific locations where you’re going to store your inventory – make sure the highest-selling items are in easy to reach locations.

Throughout the planning process, it helps to have a clear objective in mind. Ask yourself what the main goal is that you want to accomplish by optimizing your warehouse layout. Do you want to maximize your use of space by optimizing your shelving and storage practices? Do you want to cut down on travel time by being mindful of how you arrange your inventory and packing stations? Do you want to increase your warehousing efficiency by cutting out unnecessary products and processes?

If you can identify the primary goal for optimizing your warehouse, it will help you make the right choice in all of the decisions you make along the way.

Optimizing Your Order Fulfillment Processes

Creating a detailed warehousing plan is one thing, but implementing it is something else entirely. Optimizing your warehouse means optimizing the different stages in the order fulfillment process. Your primary goal at all times is to get the right products to the right customers in the shortest amount of time. Optimizing warehousing processes including receiving, picking, packing, and shipping is the way to do it.

Here are some simple tips for optimizing your warehouse operation along all the various stages of the order fulfillment process to ensure maximum efficiency:

1. Receiving

When it comes to optimizing your warehouse flow, it all starts the moment your product enters the warehouse. When products are received, they are checked for damage, mis-picks, and quantity so your staff will need plenty of space to perform these tasks without impeding the in-flow of new inventory. To make receiving as quick and painless as possible, your warehouse should have a loading dock – this will save time as pallets can be loaded directly from the truck into the warehouse instead of being removed from the pallets and delivered in smaller loads. Having a loading dock versus not is the difference between a one-man job and a multi-person job. Don’t count on the delivery driver to help.

2. Picking

In this stage of the order fulfillment process, pickers receive orders and then pick the products for packing. Where you store your inventory, the type of shelving you use, the locations of your picking stations, are all factors that affect accuracy and efficiency. Here are some simple tips for optimizing your picking process:

• Don’t store multiple unique SKUs in the same location
• Place products in easily accessible areas for pickers
• Designate certain zones for certain products (ex: hot sellers, seasonal, etc.)
• Reduce travel time by picking as many orders in a single run as possible

Optimizing your picking process is not something you do once – you should be making adjustments as your business grows and your inventory changes.

3. Packing

This stage of the order fulfillment process needs to be completed as quickly and accurately as possible. The best place to start in optimizing this stage of the process is to place your packing location near the shipping location to minimize travel time. You should also limit the types of packing materials you use, so pickers are able to assemble each order efficiently.

4. Shipping

It doesn’t matter how fast and efficient your picking and packing process is if your shipping provider can’t keep up. It pays to have connections with multiple providers, so you can offer your customers the best price on a variety of shipping speeds. Plus, if one of your providers falls through, you’ll always have a backup, so you don’t risk losing a sale. When it comes to optimizing your shipping process, have a designated shipping station so orders can be picked up, scanned in, and shipped out quickly all in one place.

Tips for Improving an Existing Warehouse Layout

If you’re moving from in-house order fulfillment to purchasing or leasing a warehouse space for the first time, you’re in a great position. Starting from scratch may take time, but it gives you the opportunity to plan everything from the very beginning to optimize your layout and maximize profits. If you find yourself making adjustments to your warehouse layout as your business grows, you may face some limitations, but there are still things you can do to make improvements.

Here are some ways you can improve an existing warehouse layout:

1. Adjust your aisle widths. Something as simple as moving your warehouse storage shelves closer together or further apart can have a significant impact on speed, efficiency, and safety. Rethinking your layout could help you find as much as 15% to 18% more space. Just make sure that your aisles are wide enough for safety (e.g. operating a forklift) but not so wide that you’ll be wasting storage space or losing time during picking.
2. Change your shelving. The simplest things can have the biggest impact on your business – shelving is one of them. If it isn’t already, rearrange your shelves, so they are all running in one direction and orient the aisles, so you can see straight down from the packing station. Aim for fewer, longer rows than for many shorter rows.
3. Rearrange your inventory. Take the time to examine your product velocity and make changes to your storage practices as needed. Many businesses make the mistake of storing similar products together when it is more beneficial to store them according to how quickly they sell. Place the highest-selling items closer to shipping lanes to cut out unnecessary steps.
4. Measure your travel times. While it may seem like more space is always better, it could actually end up reducing efficiency due to longer travel times. Take the time to measure travel times within your warehouse so you can identify areas for improvement.
5. Liquidate unsold inventory. If your business has been running for a while, you probably already know which items sell and which items don’t. If you eliminate some of those unpopular products, you can save storage space and time during the picking and packing process.

In the short term, making these and other adjustments to your warehouse layout could be costly both in terms of time and money. Depending how much you need to change, you may even need to shut down operations for a few days. To minimize the damage and maximize your benefits, do all of your thinking ahead of time until you have a detailed plan that you can put in place as quickly and as efficiently as possible. Though you may lose money on the time it takes to incorporate these changes; if you do it right, the payoff will be well worth it down the line.

ShipHero provides outsourced, quality order fulfillment services. Find out more here.

The world of ecommerce is a fickle one. At times, it seems completely random which sites survive, and which do not. In reality, however, it is the sites that plan ahead and take steps to keep up with the growth of their business that are the most likely to succeed.

The primary goal of any business is to grow, though there are certainly smaller goals you want to meet along the way. In the very beginning, for example, your first goal might be to break even – to start seeing positive cash flow after covering startup costs. From there, you want to see steady growth on a month-to-month basis and over the course of the year.

‍Ecommerce sales totaled $1.3 trillion in 2014 and are expected to grow by nearly 250% to a total of $4.5 trillion by 2021. If you hope to capture a slice of that pie for yourself, you need to set a strong foundation, build momentum, and prepare for future challenges. In this article, we’ll go into depth about the best ways to scale your ecommerce business both efficiently and effectively.

Start Strong with a Firm Foundation

Though most ecommerce businesses start out small, you should always be thinking and planning ahead. With each business decision you make, ask yourself, “Is this strategy scalable?” This is particularly important when it comes to things like choosing your inventory and with creating and implementing a digital marketing strategy.

Here are some other tips to follow in the early days of your ecommerce business to ensure that you have a solid foundation on which to build:

• Set goals for 1, 3, 5, and 10 years. As your shop grows, you’ll find yourself making decisions that will impact the future of your business – having specific goals set at different intervals can act as a guide to help you make the decision that is best for your business.
• Determine how you will measure your company’s progress. Annual revenue is a good measure of sales, but it doesn’t reflect profit or progress. Take the time to identify your Key Performance Indicators (KPIs) so you can track your business’s progress month-over-month and evaluate how different growth strategies pan out.
• Write a solid business plan. You’ll need a business plan in order to guide the success of the business within the first year. This plan is not only key for starting any new business but also projecting what hurdles you’ll have to overcome in the future as well as keeping you accountable.
• Run the numbers before you commit. Before you start buying or manufacturing inventory, you need to know that your sales will be enough to cover your costs. Create a cash flow spreadsheet and run the numbers to see how much revenue you can expect, what your monthly fixed costs will be, how much you’ll be spending on inventory, etc.
• Identify your target audience and build your brand. Gather information about your demographic and develop your brand to appeal to that audience. Having a strong brand identity will help guide you in future endeavors such as implementing a digital marketing strategy and choosing where to expand in the future.
• Build a strong website. Your website is going to be the mode that drives your sales, but it is also a tool for driving traffic. In addition to creating your sales pages and landing pages for any outbound marketing, you’ll also need content to help drive search engine traffic (inbound marketing).

First Steps to Build and Retain Momentum

Building your initial website can end up being easier than you might think. Particularly with the multitude of tools at your fingertips, such as Shopify. What is not so easy is turning that website into a successful, profitable, and scalable business. Though annual worldwide ecommerce sales are in the trillions, many new shops close their doors within the first few years. In order to scale your business for long-term growth, you’ll need to start out by taking certain steps to build and retain momentum. Here are 3 things you need to do:

1. Create a Strong Digital Marketing Campaign

Your website is the infrastructure for your online business, but you’ll never make any sales if no one sees your page. A strong digital marketing campaign is the key to building your online presence, driving traffic to your site, and converting visitors into paying customers. Here are some simple online marketing tips to get you started:

• Do some keyword research. Before you start marketing, you need to do some research to identify the strongest keywords to reach your target audience. Ubersuggest is a great free tool that can help guide your research.
• Create an automated email campaign. Not only is email one of the easiest ways to communicate with customers, it also provides ecommerce businesses with the highest return on investment. According to a study by Campaign Monitor, for every dollar spent on email marketing $44 is made in return.
• Personalize it. The internet is continually becoming a dynamic place where it reacts to our actions. For example, the ads you see on your social feeds from websites you just visited. Make your ecommerce store a personal experience for customers and they’ll be more likely to convert. This can be as simple as adding a “click to chat” bubble on the homepage or as advanced as sending them a reminder email when they leave something in their shopping cart.
• Implement a loyalty program. Depending on what industry you're in, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Consider implementing a loyalty program to keep your customers engaged and give them a reason to shop with you again.
• Optimize your site for mobile devices. You may not be surprised to learn that mobile internet traffic has outpaced desktop traffic. However, what is surprising is the fact that the search results for the same queries on mobile versus desktop searches are often different. This comes down to whether your website is mobile optimized or not. Get the upper hand for your ecommerce business in the search results by making sure your website is optimized for all mobile devices (phones, tablets, etc).
• Create content and build authority. One of the best ways to build trust with your customers is to establish your business as an authority in the industry. You can build trust by offering high-quality, informative, and relevant content on your site. Don’t limit yourself to print content either, use photos and videos as well. The process of using content to market your business is called Content Marketing.
• Connect with your target audience. The power in digital marketing comes from being able to connect with your target audience in a more personal way. No other form of marketing does this better than social media. Social channels like Facebook, Instagram, and Twitter give you the ability to connect, engage, and grow your business in a more personalized matter. Whether you’re simply building a following on social channels or using their ad platforms to connect with your demographic, you should invest time and energy into your social media strategy.

When it comes to ecommerce, digital marketing is not a one-and-done strategy – you’ll need to keep at it if you want your business to grow. There is no harm in starting out small but, as your business grows, you’ll want to start expanding your marketing strategy with it.

2. Switch to Third-Party Logistics (3PL)

In the early stages of your business, you might be able to handle order fulfillment yourself or with a limited staff. As you start scaling your business, however, you’ll need to decide whether you want to invest in your own warehouse space or if you want to outsource the order fulfillment process to a 3PL provider.

A 3PL is a third-party logistics provider who takes over one, some, or all of the aspects of your order fulfillment processes. Hiring a 3PL means that you will no longer be responsible for storing your inventory, picking and packing your orders, arranging shipment with different carriers, and handling returns. This will free you up to focus on the other things that will help you scale your business.If you do choose to run your own warehouse, it is critical to choose the right warehouse management software.

3. Develop Excellent Customer Service

When it comes to running a successful ecommerce business, the quality of your product matters greatly. What matters even more, however, is customer satisfaction. When it comes to the scalability of an ecommerce business, word of mouth marketing is gold. This all comes down to the ecommerce buying cycle. The buying cycle looks like this:

Since ecommerce products are not tangible, like they are in brick-and-mortar retail stores, the cycle is often time more drawn out. Consumers spend more time making a buying decision because they cannot see the product in person and because there are some many choices available to them. The way you can tackle both of these obstacles is by offering customers supreme customer service.

Take for example Zappos, the world’s biggest online shoe store. In 1999, before ecommerce really became mainstream, they were able to convince people to buy shoes online. How? Through incredible customer service. In fact, Zappos encourages their customer support team to make a connection with all customers. To put this in perspective, their longest customer support call clocked in at a whopping 10 hours and 51 minutes.

Every business is unique, so the steps you need to take to build your initial momentum may be different than the steps another company needs to take. Keep reading to learn some simple ways to start scaling your business in order to retain that momentum.

6 Ways to Scale Your Ecommerce Business

As we mentioned in the beginning, building and implementing a strong digital marketing campaign is the best way to establish an online presence and to start obtaining customers. As your business grows, you’ll need to think about logistics and how best to maximize efficiency while minimizing costs.Here are a 5 ways to do it:

1. Evolve your marketing strategy. Over time, your business is going to grow and with that growth comes change. Upon achieving certain milestones, you should take a closer look at your current customer base and check to make sure that your marketing strategy is finely tuned to targeted that audience.
2. Optimize your order fulfillment strategy. Whether you’re filling orders in-house or you’ve hired a 3PL, make sure that your order fulfillment strategy is designed for cost-effectiveness as well as efficiency. If you do have a 3PL partner, set aside time each year to talk to them about things such as your growth and how they can work to help.
3. Consider expanding into a new market. If you are already working with a 3PL, expanding to new markets could be a fairly straightforward process.
4. Upgrade your technology. As your business grows, that could mean potentially hundreds, if not thousands, of new SKUs. Your initial ecommerce platform might not cut it at a certain point. Invest in technology that helps automate your business — whether that means upgrading from SquareSpace to Magento or simply finding a new project management app.
5. Keep an eye on your competitors. One of the best ways to scale your business is to fill a niche that your competitors have left open. Study your competition to understand what they’re doing right and, more importantly, what they’re doing wrong. Look for unmet needs by reading their customer reviews to get a sense of how you can fill in the gaps they’re missing.

Don’t feel like you have to implement all of these ideas at once. In fact, some of the ideas on this list might not work for your business at all. It is your job to know your business and to understand its potential – only you can decide how best to achieve your long-term goals and what tools and strategies to use along the way.

There are no guarantees in the world of ecommerce – a business that is thriving one day could tank the next. Though you cannot possibly predict every little thing that could affect your business, it pays to be thorough in the planning process if you hope to scale your operations down the road. Think carefully about building a strong foundation to create momentum in the early days of your business and always keep working to maintain that forward progress. Good luck!

ShipHero is one of the top providers of warehouse management software for ecommerce companies. See how we can help you here.