From raw material shortage to back-ups at ports, e-commerce brands are always facing disruption. Logistics operators are usually those who deal with many of these problems but even they are not immune to the challenges. We spoke to Kristina Lopienski, Director of Marketing Communications, ShipBob, about the logistics challenges for e-commerce merchants.
The upcoming holidays are typically the busiest period for e-commerce brands.’As customers expect more from ecommerce experiences – free returns, free and fast shipping, and even share-worthy unboxing moments – those who keep up logistically will bring in more customers and keep them coming back,’ explains Lopienski.
Delays & Shortages
The pandemic accelerated demand for e-fulfilment, which has continued even 18 months after initial lockdowns began. ‘We’ve definitely seen our customers experiencing supply chain issues firsthand, from their inventory getting tied up at ports, to raw material shortages affecting delays in the production process.
Some brands are looking to diversify their manufacturer mix with multiple partners in different areas to reduce risk if their primary supplier is unable to replenish according to plan. They are working closely with them by sharing predicted Q4 order volume ahead of time to avoid not having inventory in time or running out of product during the holiday season. More than anything, they are working in longer-than-normal production and transportation lead times, factoring in all of these variables into calculations to replenish even earlier this year.
When outsourcing fulfilment, it’s important to look for a solution that goes beyond the traditional pick, pack, and ship model. This means that, instead of only facilitating one isolated part of the fulfilment process, the 3PL coordinates with all aspects of the supply chain using technology and automation.
This modern approach to fulfilment can help businesses make more informed decisions about the supply chain (from which locations to store inventory in, to how much inventory to order in a given time period) and ultimately provide end customers with an exceptional experience.
During initial conversations with different 3PLs, ecommerce brands might come across a few 3PLs that are unable to work with them, as every 3PL has their own set of customer qualifications. Each business is unique, which is why it will take some time to find a 3PL that will provide everything that is needed. If none seem to fit within budget, ecommerce brands can consider the following:
- Can your order volume justify it? It might not come until you hit a certain volume (e..g, 500 orders/month, or maybe 1,000 depending on your margins).
- Pricing tactics such as bundles, increasing product costs, and minimum spend thresholds in exchange for free shipping, should be considered to raise the average order value.
‘The cheapest option isn’t always the best option, and will depend on your needs. Be cautious of trade-offs for the lowest cost option, and closely compare apples to apples (since 3PLs use different fulfilment costs structures, where some are all-in costs, and others charge for each tiny line item, requiring brands to add up all of them to get the full picture),’ Lopienski explains.
What the future holds
Demand for e-fulfilment is going to continue to accelerate at a rapid pace, with more ecommerce brands focusing on their logistics strategy, even as a competitive advantage. For the holidays in particular, e-commerce brands must pay attention to carrier cutoffs for each service (even padding in extra time) as well as carrier transit time performance. It’s critical to communicate potential delays to customers. They will understand as long as it’s proactive and encourages them to place orders earlier this year. Using multiple shipping carriers can also provide more shipping flexibility.
as it’s proactive and encourages them to place orders earlier this year. Using multiple shipping carriers can also provide more shipping flexibility.
You can find a list of useful questions to ask on page 13 from The Logistics Point Magazine November 2021.