Your most unhappy customers are your most important source of learning.” Bill Gates, Microsoft Founder

 

Regardless of whether it’s a conventional showroom, face-to-face, or online sales, the customer continues to be a king. It becomes more relevant in e-commerce selling, where there’s no face-to-face contact with the customer, and everything is based on statistics. The advantage of meeting a customer, wooing him or her with your sincerity and warmth is denied in the digital age.

 

The following decisions can dictate the way your e-commerce sales graph keeps looking upwards.

Looking for a pattern in customer behaviour is the first step. Does a customer always look for only bargain items? Is quality the criteria? Or is it only the cheapness that is paramount? Does the customer engage in repetitive buying, like a specific brand or type of cosmetic soap, toothpaste, clothes brand, or even books of a specific author or genre?

 

Discerning any kind of pattern in your customer buying is the first step to improving your sales. When you reach a point where the sales are getting predictable, you’ve got a winning proposition.

 

In the meantime, you should also be able to identify slow-moving products or services. And why are they so? Is it because trends are changing? Or do you get consistent complaints from customers?

The customer is usually never wrong. It could well be your product that needs an improvement, either in terms of its quality or the selling approach. Compare your slow-moving products with the faster ones. Search for dissimilarities. Are you able to discern a pattern?

 

Distinguish the types of customers that you serve. Typically, these are the following types:


⇒ New– a customer who has come in, through reference, web search, or accidentally. Encourage this customer and transform her from a new to a loyal customer with your sincerity and commitment.

 Impulsive – a buyer who enquires about product A but sees product B, and buys it for no easily known reason. Explore the decision of this buyer and find out what works or doesn’t work.

 Insistent – a person who is insistent on getting only a particular brand, type, or cost-sensitive product, and cannot be swayed by substitute products. For example, a customer insists only on a corduroy check shirt and nothing else. Or a woman who insists only on a particular brand of makeup. In a way, such customers are a delight, because if you’ve got a product that she wants, it’s a good sale, and of course great customers. It’s also an opportunity to explore why this product is in demand, even if only by one customer.

 Loyal– these are the delightful variety who stick by you, through thick and thin. Everything that you do is pleasing to this type of customer and a “must-have” on your list!

Segmenting your customers is thus very vital to the success of your organization.

 

Optimizing your pricing structure:

 

In other words, price your products based on how much the customer is willing to pay. It’s quite possible to work out how much a customer is willing to pay, rather than following a cost accounting method. To elucidate, your cost accountant might tell you that a product needs to be sold for $100, to break even, if not make a profit. In contrast, if a customer is bargaining to pay only $90, but is willing to take more than one unit of the product, it’s a worthwhile compromise. You can increase your sales based on large-volume sales. And what’s more, studying the buying trend and the reviews that you’re getting for your item, more and more customers will begin to patronize this product line.

 

Finally, use a good analytics tool for observing, predicting, and automating your sales. Automate, automate and keep automating your sales order processing!

Data Data Data! I can’t make bricks without clay.” Sir Arthur Conan Doyle, Physician and Writer

 

You might have installed the best Analytics tool in the market; like Adverity, Google Analytics, Hotjar, Klavio, Woopra, etc. But the point is, does your team use these tools effectively and optimally?

 

It’s beyond doubt that you generate an enormous amount of data in your e-commerce store. This data includes customer behaviour and insights, customer conversions, marketing statistics, product movements, (slow vs fast-moving) customer complaints, low stock or damaged stock, and so on. But all this data is pointless, if not appropriately interpreted, analysed, and actioned.

 

Sadly, only a minuscule percent of online sellers sit down to analyse their data. Most retailers are busy trying to improve sales through aggressive but ineffective ads, offers, schemes, and keeping an eye on the traffic, but not much else. Many retailers don’t observe if their annual or periodic goals and targets have been met or learn from user experiences.

 

The following simple but effective checks can ensure absolute ROI on your Analytics tool.

 

What device is the customer is using?

 

Even as back as a decade ago, the mobile phone was just a device to make and receive calls. Now it’s a watch, alarm, planner, notepad, calendar, payment device, internet device, and more…packaged as a pocketable device. Without a doubt, people are spending more time on their mobile phones than in conversing with others or working. So much so, it’s a force to reckon with, when it comes to online buying. In fact, predictions are that mobile devices will soon replace conventional desk-based systems, in the near future. Therefore, the retailer needs to design applications that are also mobile-friendly in terms of layout and ease of operations. This is not to take away the possibility of desktops and laptops being used to transact purchases.

 

Are we respecting the content from social channels?

 

Content in social channels is a very happening thing in these times. What is written about online stores is important to improving business, and comprises almost half of the data, required to make meaningful analyses. Use your monitoring tools to gather data from social media. What do customers want? What are they talking about? Is there any information on competitive data? Does your store have a good impression?

 

This data can be effectively used to create brand awareness, sales or lead generation, customer involvement, brand identity, and store traffic.

 

Have we done any kind of surveys?

 

Conduct studies using website survey tools such as segregating traffic through various sources like ads, search engines and social media, and even word-of-mouth. There are tools to help with the duration of a visitor’s stay at your website. Naturally, the longer the time spent, the better are the positive outcomes. Numbers play an important part, in any survey. The more the number of visitors during a particular phase, or for a web page, the better the scope for conclusive analysis. Explore the type of activity performed on your website. This can include seeking the Help Desk, reading the FAQ, trying to log in to get more information, and generally navigating the site for longer periods.

 

What is the percentage of our customer conversions?

 

Analytical tools can help you with the activities that are performed on your website. How many visitors browse your products and go back without any action? How many move from browsing, to adding products to their cart? Do they keep changing their decisions and canceling the shop cart orders? How many are finally checking out with their purchases? If visitors are dropping products into the cart but abandoning them soon, you’ve got to study what is going wrong. Usually, it’s the price, or something as simple as free delivery. Many customers are turned off by a charge for delivery. Your content plays a  critical part a well. Well-written and clear product descriptions will invite a customer. Text with grammatical and spelling errors will drive the customer away. Another interesting observation is of existing customers shopping for a new product. In other words, an old customer shopping for a new product. This can be good news. 

 

Are our pages top landing?

 

Keep checking reports that declare store analytics and web analytics. Store analytics is about the factors that optimize store performance, such as improved product quality, enhanced store design, uncluttered pages, and other usability aids which increase the traffic footfall, and any kind of numbers. Identify the difference between your top landing and low-performing pages. Map your success quotient with the underperforming pages.

 

Understanding how your customers are behaving and their experiences with your website is a key factor to help you create compelling and meaningful CTAs.

You must be very patient, very persistent. The world isn’t going to shower gold coins on you just because you have a good idea. You’re going to have to work like crazy to bring that idea to the attention of people. They’re not going to buy it unless they know about it.” Herb Kelleher, Founder of Southwest Airlines

Herb was not far from the truth when he spoke these words of wisdom. And what is good for the airlines industry is just as good for e-commerce companies as well. We begin with a great idea for our e-store like Amazon, Flipkart or Shopify. Agreed. But how do we integrate logistics on our own? There are many facets to fulfilling our customer’s product requirements. And when product fulfilment is impacted, sales will plummet.


So what is E-Commerce Fulfilment?

 

Everything begins with an order, like a novel, vacuum cleaner, or stationery. Once a customer places an online order, the following steps are necessary to fulfill the order:

 

⇒Receiving inventory shipments

⇒Inventory storage

⇒Order processing (Pick  and Pack)

⇒Shipping

⇒Returns processing 

 

Let’s take a look at the components of a fulfilment cycle.

 

Warehousing

 

We need a place to store products coming from suppliers. A warehouse is a point of transit where products are stored, packaged, labeled with the e-store name, and sent to the customer’s location. Products should be stacked based on weight, volume, durability, and accessibility; FIFO (first in first out) LIFO (last in first out), etc.

Depending upon the nature of our online business, we may be happy with one warehouse location, or several, in a given geography.


Managing Inventory

 

We need to list all the products stored in a warehouse, logically and practically. There should always be the latest information on the availability of stocks and those running out. And importantly, correct counting is done, for the entire stock. A rugged inventory management software is imperative to run a warehouse efficiently.


Managing Orders

 

Incoming orders are the core of any business. We have to process all orders received into our system, quickly, efficiently, and correctly. We can never ignore customer orders. When we say processing, we refer to aligning the order to the inventory and ensuring that the correct item is being shipped out, and tracking enabled.


Picking Products & Packaging

 

No supplier in the world can issue any product that we ask for. There are specialist suppliers for sports goods, stationery, garments, perfumes, electronic items, medicines, and so on. A product has to be thus picked from its location. Then correctly packaged (with the e-commerce store name and logo), to ensure efficient shipping.


Shipping

 

Once a product is appropriately packaged and labeled, the delivery team has to make arrangements to arrange the transport or call for a courier’s vehicle. This team has to ensure that the first mile and last mile in the shipping cycle are efficiently and timely managed.


Managing Returns & Rejections

 

It’s quite common for a customer to return a product, either because it doesn’t conform to requirements. Or damaged, or defective. The inventory application must register this entry, as also the physical arrival of the goods to the warehouse. This is called reverse logistics.

E-Commerce Fulfillment Models

There are such important models, we can shift to:

♦ Self-Fulfillment

♦ 3PL Fulfillment

♦ Drop shipping

Let’s understand the pros and cons of these fulfillment options.


Self Fulfillment

 

With the Self Fulfillment model, the e-commerce store manages all the fulfillment operations at its premises, such as orders, warehouse, inventory, packaging, and shipping, and even returned goods. While it has the advantage of being self-sufficient, it does not look like a sustainable model, down the line. When orders increase, there will be requirements for larger warehouses, more locations, more staff, and processes. It might work for specialist e-commerce stores like florists, cake shops, and so on. But either the growth will be stunted, and subject to competition. Or messy, when stores get overwhelmed by the deluge of orders.


3Pl Fufillment

 

3PL Fulfillment fills the void. These are an integrated solution where a store need not worry about the logistics of managing an order to the point of its delivery. All the hassles of day-to-day logistics will be handled by these professionals. You can shift your gears from small to medium and large very easily. These fulfillment centres have access to several suppliers of the same product and can arrange for goods far more easily. They have also the advantage of flexible (and specialized like cold storage, temperature-controlled, etc.) warehouses, that can shrink or grow, corresponding to requirements. The staff is trained in all aspects of logistics.


Drop shipping

 

With the drop shipping model, the supplier directly ships the product to the end customer. The e-store never holds inventory at any given time. Orders and shipments are tracked through a fulfillment application. This is not a recommended model for sustained growth

Whenever you see a successful business, someone once made a courageous decision.Peter F Drucker, management consultant, educator, and author

Working with a logistics partner makes sense when your business is growing at an exponential rate. That said, how do e-commerce companies work with these fulfillment companies? What makes them an essential part of a business integration?


What do these integrated providers do?

 

Such third-party providers not only process orders and ship products but also manage warehouses that act as the conduit points between the supplier and the customer. They are called third party logistics providers, because of their unique and compelling mode of operations. A few of these fulfillment centers have more than one warehouse, to facilitate faster and cheaper regional movement of products. They typically work with e-commerce companies like Amazon, Flipkart, Magento, Shopify, etc.


How do these 3PL providers charge?

 

This depends on the extent of services they provide. A fully integrated provider offers order processing, picking, warehousing, kitting (bundling products into SKUs) packing & packaging, loading, and delivering services. The charges are either by the hour or by a unit of a product, for an end-to-end cycle. In a few cases, storage and handling charges may be customized and made separate.

Now that we’ve seen how these 3PL providers work and charge, let’s see what the benefits of working with a fulfillment center are. 

The most obvious reason for a growing e-commerce company is that tasks and operations can be outsourced to centers to reduce day-to-day issues of stock movement.

In addition to this obvious reason, there are quite a few hidden benefits.


No investment in warehouses

 

This is a big overhead and the costs of running a warehouse can be daunting, even to companies with enough funding. And more importantly, what if there are products that move sluggishly? An example is a supplier of woolen garments. During summers, there’s virtually no demand for these, in warm countries or regions. Similarly, orders for umbrellas, raincoats, and footwear will be placed only during monsoons. And are unwanted inventory during unseasonal months. Whereas, a fulfillment center can provide anything around the year, at a fair price.


No investment in staff

 

If an e-commerce company is running its own end-to-end operations, resources of various skills have to be hired, trained, and deployed. It’ll need pick-up teams and vehicles, warehouse staff, packaging experts, and delivery teams. In addition, a sophisticated ERP solution is also required, to seamlessly integrate all these activities.

Handing over these tasks to a 3PL provider saves time, energy, and headaches!

 

 

No diversions and distractions

 

An e-store with a unique idea can focus on high-impact product development, marketing, and customer satisfaction. Even in these multi-tasking times, specialist operations have their own value. It always makes sense to do what we know best! That is why cosmetics, shoes, toothpaste, and garment manufacturers focus on their core skills and not deviate from their business goals.

When companies choose a third-party fulfillment center, they can just impose their faith on experts to do the logistical end of things. Be they warehouse specialists, packaging experts, or delivery teams with a good idea of the local geography.


No delays and wrong deliveries

 

Usually, when companies have to deal with several operational teams, there is bound to be confusion and chaos. The wrong product is delivered. Or a product is delivered late. Or even worse, goods are delivered in a damaged condition. Instead of taking care of all the logistics, an e-commerce company can be more fast and efficient in its operations when it can shift its operations to logistics partners.

When do companies need to integrate with 3PL providers?

Though there is no hard and fast rule, the process can begin when an e-store has kick-started its operations with a few orders. It’s quite likely that these stores will try out all the operations by themselves during the early days, not only to familiarize themselves with the processes but also due to a lack of support partners.


It’s a great idea to initially tie up with small-sized 3PL providers who can customize their operations to suit the store’s needs, as opposed to going to a major fulfillment center. In the case of the latter, not only will the costs be more, the processes and legalities will also be exhaustive as well as exhausting. Especially when sales are unpredictable, though the processes and overheads remain the same. This leads to delays and disappointed customers.


As a store grows in confidence and sales, there is always a time to shift to more organized 3PL providers, who can not only provide integrated services, but also help increase your sales as a result of excellent delivery mechanisms, trustworthy dealings, and data points. 


These providers can help e-stores with valuable data to create or reset organizational goals

I don’t create companies for the sake of creating companies, but to get things done.” Elon Musk, CEO & CTO of SpaceX, Investor in PayPal

Third-party fulfillment providers (3PL) typically work on managing inventory, packing & packaging, handling orders, and shipping products to the end customer. For this reason, they can be called 3PL providers or fulfillment centers.

Why do E-Commerce companies require 3PLs?

Though every online store starts with a small idea or a unique concept, you’ll be surprised to see how fast this line of business can grow, if the examples of AmazonFlipkart, and Shopify, etc are anything to go by. Incoming orders can increase in leaps and bounds, leaving these companies staggering with the sheer logistics of operational issues. It’s not only about efficient order management and warehouse software applications. It’s more to do with the physical aspects of handling labor, managing a growing warehouse, transporting and delivering products on time safely, and timely.

You also need a deep pocket to finance an ever-increasing venture and insurance protection.

Thus e-commerce companies constantly face the challenge of growing too fast too quickly or stagnating with a huge warehouse full of inventory and insufficient sales.

Let’s accept the fact that no company is strong at everything. Like we said, having a unique idea is not enough. We should also have the logistics tied up from all ends, both defined and undefined. Or the unexpected.

Therefore, it makes sense to play the game smart and integrate logistics headaches to specialist 3PLs.

 

What are the advantages of engaging 3Pls?

 

For one, e-companies can better utilize their time and effort in developing a solid customer base, exploring new product ranges, and marketing their services, instead of investing effort in trying to fulfill a large and growing number of orders. This task can be simply unproductive and a drain on huge time and market presence.


♣ Shift it to the experts!


It’s always difficult to predict the volume of business in today’s dynamic times. What should be the warehouse space? How many warehouses should we have across the country? Having a small warehouse with insufficient handling facilities can be a deterrent to growth. On the other hand, what happens when there is a huge investment in warehouses across the region and large volumes of inventory? We’ve to make sure that there is optimum utilization of space, resources, and logistics.


♣ Pay as you grow for your infrastructure!


Thirdly, you can entrust your day-to-day activities to fulfillment providers who know their jobs, the best. This includes vast experience, geographical knowledge of the region, and trained resources who are quick efficient, and flexible. If we’ve products that sell across the country, 3PLs with a geographical spread of fulfillment centers can offer better expertise, and value for money. Having the access to various fulfillment centers can reduce transpiration times and costs.

Shift to outsourcing fulfillment.

6 Reasons why outsourcing fulfillment is beneficial to your business

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  • ⇒ Saving time. Entrusting day-to-day operations and repetitive tasks to specialists will free up the time for a company to focus on the essentials of core functions and leave the support activities to specialist providers.
  •  
  • ⇒ Reducing costs. Outsourcing helps us to reduce (uncertain) overheads of labor and operations, and follow the flexi-costing model.
  •  
  • ⇒ Saving on technology and infrastructure. We don’t need to invest on infrastructure, business processes, and technology. It’s a better idea to leave the support functions to specialists. Because, the larger a company, the more is the time spent on unproductive tasks.
  •  
  • ⇒ Capitalizing on expertise. Instead of spending time and effort on training employees, an e-commerce store can better manage its operations by outsourcing specialist tasks to the experts. This also ushers productivity and efficiency to the business.
  •  
  • ⇒ Reducing risks. Outsourcing helps companies to spread their risks. Compartmentalizing operations helps us to focus on core skills and expertise, rather than adopting a seamless but potentially risk-prone environment.
  •  
  • ⇒ Keeping flexible staff strength. If the nature of business is seasonal or cyclical, permanent staff will be an overhead that cannot be avoided. Instead, outsourcing logistical operations can bring expenses down, as well optimum staff deployment. Companies can always add more staff as required, as opposed to downsizing resources, through no fault of theirs.
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Thus an efficient 3PL provider can bridge the huge chasm between customers, orders, inventory, products, suppliers, shipping, and sales.