Logistics Best Practice #1: Treat Logistics as an Essential Business Process
Handling logistics should not be viewed as something external to your business practices — quite the opposite. In fact for many SMBs, finding the right logistics solution is integral to business success, and prioritizing logistics strategy in early phases of business development can position your business for rapid and sustainable growth.
Companies of all sizes recognize the importance of investing in sales and marketing for their business, but frequently fulfillment and logistics workflows receive little to no optimization. This is clearly evidenced by the fact that nearly 2 out of 3 users will abandon their purchase after adding it to a cart. According to an eCommerce Usability Report by the Baymard Institute, 21% of shoppers abandon cart because the checkout process is too complicated, while 50% of shoppers abandon cart because of high fees, including shipping. Sales and marketing strategies will drive new customers to your business, but optimizing fulfillment to meet customer expectations for fast and affordable shipping will decrease cart abandonment rates and increase retention rate. In fact, our recent merchant survey data shows that 65% merchants saw cart conversion rates increase by as much as 25% when 1-2 day delivery was offered at checkout, and 58.5% of merchants saw more repeat customers with a 1-2 day delivery promise. Optimizing a sales strategy without optimizing your supply chain to support those channels will lead to negative customer reviews, poor retention rates, and complicated or overpriced fulfillment solutions.
Logistics Best Practice #2: Consider a Quality Fulfillment Provider with a Focus on Lean Logistics
Prioritizing efficiency in your supply chain is the most effective way to improve your unit economics and grow your whole business. The results are two-fold: First, increased cart conversion rates and higher average order values resulting from a 1-2 day delivery promise drive up top line revenue, positively affecting customer acquisition costs. Second, strategically positioning your inventory closer to your end customers drives down fulfillment labor costs and lowers your cost to serve. Finding a logistics partner that looks at your end to end supply chain to help you make strategic decisions about your fulfillment network will drive growth for your business.
Logistics Best Practice #3: Ensure Flexibility for Shifting Demand
Many SMBs find that their orders skyrocket around holidays and busy seasons, like Christmas or the onset of summer. The COVID-19 pandemic further highlighted the importance of flexibility in supply chains, as merchants and retailers struggled to keep up with rapidly evolving consumer behavior. For this reason many merchants are turning to on-demand fulfillment partners that offer flexible agreements that allow merchants to pay only for the resources they need when they need them.
Take for example, CoolersByU, a provider of “ready-to-paint” coolers and kits. CoolerByU targets primarily college students involved in Greeklife communities, creating heavily seasonal demand cycles for their business. Given these challenges, CoolersByU prioritized a fulfillment provider that required no long-term contracts and no inventory minimums. By partnering with one of these on-demand fulfillment partners, CoolersByU reduced shipping expenses by 30% and eliminated 25 weekly hours of inhouse fulfillment responsibilities, all while adopting a solution that allows them to scale fulfillment up and down based on need.
Logistics Best Practice #4: Understand Your Business Objectives Before Creating a Logistics Strategy
Your business goals should determine your approach to logistics rather than the other way around. For example, Hungry Harry’s, an allergy-friendly line of baking mixes, planned from the outset to have a multithreaded sales strategy, and although they built their brand on D2C eCommerce sales, they knew their long-term growth strategy would include distribution to major supermarket chains. In support of this strategy they prioritized finding a fulfillment partner with the flexibility and expertise to fulfill a mix of orders from small parcel residential shipments to full pallet retail shipments. Their commitment to their long-term business objectives enabled them to find a partner that would support them on their path to achieving their goals.
Understanding the lasting effects of logistics practices on your business outcomes will allow you to see your fulfillment partner as a true partner in growing your business and achieving your goals. Speed of delivery will continue to drive revenue and customer satisfaction, and merchants who prioritize supply chain and logistics operations will find a competitive advantage in an increasingly crowded market. To learn more how Ware2Go can help you put these logistics best practices to work for your business reach out to one of our logistics experts.