Ecommerce sellers are facing unprecedented logistics and supply chain challenges, including rising inventory costs, higher Amazon FBA fees, and increasing marketplace complexity. In January 2022, Amazon increased their Fulfillment by Amazon (FBA) fees by as much as 8%, and more than doubled their disposal fees. With increased supply chain bottlenecks, it is critical that ecommerce sellers rethink their fulfillment approaches to improve profitability and operational flexibility.
To ensure that the ecommerce fulfillment process is both efficient and resilient, there are three core strategies that e-sellers should adopt:
1. Separate Fulfillment Processes for Dropship/DTC: To reduce risk to the business, ecommerce sellers should separate the fulfillment processes for traditional retail from the fulfillment processes used for dropship and their DTC ecommerce channels. Traditional retail involves shipping full pallets o product to centralized warehouses. However, ecommerce dropship involves less than truckload sizes and smaller orders.
2. 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 fulfillment teams to ship to anyone, anywhere. Importantly, consolidating all your ecommerce DTC fulfillment needs will help sellers decrease their inventory requirements, and improve cost efficiency.
3. Create Channel-Specific Virtual Bundles: Virtual Bundles are items that are listed on ecommerce sites but are created by the fulfillment center by picking and packing separate products items together. Ecommerce sellers can list, promote, and advertise these Virtual Bundles 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 flavors, 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 fulfillment approaches that provide flexibility and decrease inventory requirements. However, these fulfillment 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.
HINGE GLOBAL and Distribution Management can help. We provide direct-to-consumer fulfillment expertise and cost-effective shipping. In fact, our solution may be cheaper than FBA, and result in faster shipping to consumers! We even decrease your inventory storage costs, and help grow your sales.