Diversify your fulfilment process for cost savings and growth
In January 2022, Amazon increased their Fulfilment By Amazon (FBA) fees by as much as 8 percent, and more than doubled their disposal fees. With increased supply chain bottlenecks, it is critical that eCommerce sellers rethink their fulfilment approaches to improve profitability and operational flexibility.
ECommerce sellers are facing unprecedented logistics and supply chain challenges, including rising inventory costs, higher Amazon FBA fees, and increasing marketplace complexity. To make the eCommerce fulfilment process both efficient and resilient, there are three core strategies that e-sellers should adopt:
- Separate Fulfilment Processes for Dropship/Direct-to-Consumer (DTC): To reduce risk to the business, eCommerce sellers should separate the fulfilment processes for traditional retail from the fulfilment processes used for dropship and their DTC eCommerce channels. Traditional retail involves shipping full pallets of product to centralised warehouses. However, eCommerce dropship involves less than truckload sizes and smaller orders.
- Consolidate All Dropship and DTC: Rather than supporting each eCommerce channel separately, Sellers should consolidate all their eCommerce dropship operations under one roof. This simplification provides flexibility to support multiple channels, enabling fulfilment teams to ship to anyone, anywhere. Importantly, consolidating all your eCommerce DTC fulfilment needs will help sellers decrease their inventory requirements, and improve cost efficiency.
- Create Channel-Specific Virtual Bundles: Virtual Bundles are items that are listed on eCommerce sites but are created by the fulfilment centre by picking and packing separate products items together. ECommerce sellers can list, promote, and advertise these Virtual Bundles [The virtual product bundles tool for FBA lets brand owners create ‘virtual’ bundles made up of two to five complementary ASINs – Amazon Standard Identification Number – which are purchased together from a single detail page. This allows brand owners to offer bundles without packaging items together or changing FBA inbound inventory. The tool works best with Firefox or Chrome.] without needing new packaging or UPC/GS-1 codes. Developing channel-specific Virtual Bundles helps sellers tailor their offerings to each retail site, maintain strong margins, and win the Buy Box.
Because of the flexibility of Virtual Bundles, eCommerce sellers can ‘test and learn’ what flavours, assortments, and size combinations have the highest consumer appeal, and tailor the bundles to fit the consumer profiles on different eCommerce sites. For example, on Amazon, large count packs and variety packs often perform very well. Starter kits can also be successful Virtual Bundles.
In summary, with all the current pressures on the supply chain, eCommerce sellers should embrace fulfilment approaches that provide flexibility and decrease inventory requirements. However, these fulfilment approaches require the right operational infrastructure. Sellers need to have reliable shipping and pick-and-pack processes, reliable shipping, and up-to-date inventory tracking technology.
- Fred Killingsworth is the founder and CEO of Hinge Global. Based in Cincinnati, Ohio, Hinge Global is an eCommerce consulting agency that provides direct-to-consumer fulfilment expertise and cost-effective shipping. Prior to Hinge, Killingsworth spent years at Amazon implementing strategic initiatives internationally.