As increasing consumer demand accelerates e-commerce growth, the logistics of getting orders to customers becomes more complicated – especially with the novel coronavirus impacting entire supply chains.
Despite the uncertain times (or more so during this time), one thing remains unchanged; the customer’s need for fast delivery. Popularized by Amazon, same-day and next-day delivery has become the default expectation today. In fact, studies by PwC & Accenture reveal that:
- 61% of consumers are willing to pay more for 1-day shipping speed and 40% of customers prefer to shop from stores that offer 2-day shipping.
- More than (51%) half of retailers offer same-day delivery and 65% plan to offer it within two years.
Fast shipping is no longer a good-to-have but rather a necessity for e-commerce businesses to survive. Amazon has built a supply chain that can deliver most products within 2-day (and high moving goods the same day). They optimize every part of the fulfilment value chain to achieve these timelines. But can other e-commerce sellers provide the same experience without Amazon-level resources?
Yes, they can.
To optimize the fulfilment cycle, we must first understand the ‘Click to Door’ journey – all the different stages and destinations an order goes through before it reaches your customer.
Click to Door journey
What does it take for an order to reach your customer? Let’s take a look.
- Pack & Ship: The journey starts with your warehouse, where the order has to be packed and labeled. This could typically take 1-2 days depending on order volume and your warehouse’s manpower productivity.
- First Mile Delivery: The order is collected from your warehouse by a courier partner and shipped to the distribution center. Typically, the pick-up schedule is once a day if the warehouse is located in the metros. In case of larger order volumes, courier partners can also schedule multiple pick-ups every day.
- Mid Mile Delivery: This stage involves the transfer from one hub to another. All collected parcels are aggregated based on to and fro zones and moved together. The mid mile process, typically, takes one day.
- Local Sorting Center: Once the order reaches the delivery target zone hub, it is passed to the local sorting center based on the area of delivery. This typically takes anywhere from half a day to two days.
- Last Mile Delivery: Finally, the order is picked up from the sorting center and aggregated with multiple orders going to the same pin code and assigned to a delivery boy.
The entire process is inherently long and relies on the productivity of your distribution partners and the partnership that you have with them. Inefficiencies in either of these stages can lead to significant delays and unhappy customers, i.e. lost revenue for your business.
How can you optimize the process?
To build an efficient shipping engine, your logistics network must be efficient. This incorporates a mix of partners, resources, and best practices designed to help you optimise.
- Schedule multiple pickups in a day
- Store goods in distributed warehouses close to your demand
- Partner with same-day delivery partners
While you can implement the above processes yourself, it may require a lot of initial investment and stretch your capacities. A good alternative would be to partner with companies that offer logistics support. This is where we come in. Modern logistics partners such as WareIQ unifies network, technology, and expertise to offer end-to-end fulfilment services allowing you to focus on your core business and not worry about logistics.
With WareIQ you get:
- The ability to store inventory in several of the fulfilment centers so you don’t have to manage your own warehouse(s)
- Robust technology that tracks your inventory and orders and offers advanced analytics
- The e-commerce logistics expertise needed to improve your supply chain
- Bulk discounts and ability to reduce your delivery times and shipping costs
WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.
Many growing e-commerce businesses like Kama Ayurveda, Wingreens Farms, Sangeetha Mobiles, and Organic Riot partner with WareIQ to offer next-day shipping. WareIQ helps you shorten your orders’ click to door journey and make the entire process more efficient
- Pan India Fulfillment & Darkstore Network: Plug-and-play fulfillment infrastructure with no minimums, which is compliant with Amazon Seller Flex, Flipkart Assured, Myntra and other marketplaces
- Inventory & Network Planning Excellence: Best-in-class AI models for sales forecasting, product segmentation, and inventory management to reduce inventory by 40% and increase revenue by 10%.
- Vertically Integrated Fulfillment Tech Stack: Our Fulfillment Tech Solution supports integrations with 20+ top marketplaces & D2C platforms, and prominent national, regional and hyperlocal couriers, enhancing reach by covering deliveries for 27,000+ pin codes
- Supply Chain Productivity Applications: Integrate a host of supply chain productivity apps with a single-click to your existing CRMs, ERPs & accounting software to manage your logistics workflows from one command center. Use Apps like RTO Shield to get 100% RTO protection, Branded Tracking to turn your order tracking page into a profitable marketing channel, and many more.
Trusted by 300+ top Indian brands, we are helping them accelerate online sales and expedite their growth through a synergistic combination of advanced technology, robust fulfillment infrastructure & seller enablement services!WareIQ is backed by leading global investors including Y Combinator, Funders Club, Flexport, Pioneer Fund, Soma Capital, and Emles Venture Partner.
With WareIQ’s infrastructure and technology, you can ship 90% of orders across India in 1 day. Such delivery timelines translate to not only cheaper logistics costs but an elevated customer experience, resulting in higher conversions and lower cart abandonment.
Supercharge your fulfilment with WareIQ now, contact our team.
How Does Decentralized Inventory System Help in Adapting to Changing Buyer Behavior & in Growing eCommerce Businesses in 2022? Benefits And Challenges Of Having A Decentralized Inventory Management
Ordering merchandise, shipping, storing, and selling become critical decisions that must be made as firms expand. Increased industrial storage is required to expand the range of items offered and enable products to reach a greater geographic area. A critical choice during this expansion phase is whether to transport goods from a single central site or smaller warehouses dispersed around the country. Both centralised and decentralized inventory has benefits and drawbacks, and their use depends on the organisational structure, individual objectives, and management methods. According to the U.S. Census Bureau, manufacturers, retailers, and merchant wholesalers in the United States had inventory worth more than $1.9 trillion in June 2018. Believe it or not, according to experts, roughly 90% of a company's inventory is stationary. It is kept in storage, whether on racks in a warehouse or on shelves in a store. A company's merchandise is only genuinely in transit 10% of the time. So it becomes essential for the organization to think about managing their inventories. In this article, you will learn about centralized and decentralized inventory systems with how to maintain a decentralized inventory system, which helps expand the reach of your business. What is a Decentralized Inventory Management System? Decentralized inventory refers to an inventory management system in which the items are moved from a central location to other warehouses, further decentralising the process. This technique is appropriate for businesses whose clients are dispersed across the country. Quick delivery also contributes to enhancing client happiness and service. Decentralized inventory aids in more effective and quick emergency response. The risk of fire and other natural disasters is reduced since all the commodities are kept in various warehouses. Products are more vulnerable to dangers if kept in a single location. For example- As an illustration, imagine that you own a Delhi-based online business with regular consumers from Maharashtra, Rajasthan, and Karnataka. You only have one warehouse in Gurugram from which you transport goods to particular regions of the nation. A centralized inventory system is what this is. Due to the proximity of your location to your consumers in Rajasthan, their orders will arrive swiftly. Customers from Maharashtra and Karnataka, on the other hand, are dissatisfied with the extended shipment delays. As a result, in addition to the current facility in Gurugram, you plan to establish regional warehouses in Mumbai and Karnataka. When you receive an order, you can determine which facility is nearby to the customer's delivery location and send the product there. If the item is out of stock at that location, you ship from the nearest warehouse. A decentralized inventory management system is what this is. Although it may seem enticing, implementing and maintaining a decentralized inventory management system successfully calls for strategic planning and a top-notch management system. 4 Challenges Of Having a Decentralized Inventory and Multiple Warehouses A large body of management theory supports decentralized warehouses, but ignoring the difficulties they provide would be naive. Instead, we need to consider a few things, including administration, inventory visibility, and employee-related problems across various warehouses. Inventory Control Supply chain management becomes more challenging when inventory is dispersed among several distribution sites. However, when everything is in one place, management is focused there, reducing processes and lowering expenses. Retailers can feel as though they have to give up inventory management due to a lack of clarity when there are products in numerous locations. Although ERP systems should in theory support these tasks, they're not always reliable and can occasionally lead to inventory shortages or errors. Management Of Decentralized Inventory Naturally, managing numerous sites is more difficult than managing just one. More staff, inventory, and administration are necessary when there are many warehouses involved. Warehouse operations may easily become complicated and disorganised if warehouses are shared, serve as distribution centres, or serve as drop shipping destinations. Even if everything could run perfectly in one place, increasing inventory locations might make procedures more difficult and even endanger regular business operations. Coordinating Warehouse Shipment Costs Calculating a rate or lead time for shipping from a single location is almost always constant. Shipping from the same location each time implies predictable cut rates and transit times, giving clients the transparency they expect in their purchase. The number of considerations increases significantly when locations are included in the equation. Which warehouse will handle shipping for the order? Does the customer's closest warehouse have the variety of goods they need? Have you got a lot of stock in one place but a dangerously low quantity in another? Of course, making decisions in several locations is more difficult than doing it at a single location. But how will this impact the choices you make about your inventory? Prior to adding more sites, it's critical to build a plan for these factors. Having the proper tools in place is essential for controlling shipping costs between warehouses. Utilizing Decentralized Inventory Management to Address Challenges A multi-location distribution system or decentralized inventory offers several advantages over other approaches, despite its difficulties. Businesses that struggle with long lead times, dissatisfied consumers due to transit periods, or a lack of distribution flexibility should carefully consider multi-warehouse management and how it might address these issues. The option of having smaller or fewer facilities is another benefit of a decentralised supply chain for e-commerce firms. These warehouses can be handled quickly and adaptably, providing retailers with greater insights into the levels, demands, and shortfalls of inventory replenishment. In the end, merchants almost always benefit from the flexibility that comes with decentralized inventory management. [contactus_lilgoodness] How Can a Decentralized Inventory Aid in the Development of Your Online Business? Decentralized inventory could be a wise investment for growing e-commerce companies. With smaller, local facilities, businesses can deliver goods to clients more quickly. In addition, warehouses may be able to act as client pickup places depending on their location, a service that is becoming more and more popular every day. Lower Shipping Expenses Your distribution options are immediately doubled when you add even a single warehouse location for your goods. You may be able to significantly reduce transit times and shipping costs owing to greater proximity to more consumers, depending on the strategic position of your facilities. Shipping costs decrease when warehouses are positioned closer to delivery sites. Expand Your Consumer Base Similar to the advantages of lower transportation costs, expanding your network of sites can help you reach clients who live farther away. If their order will be delivered in just a few days, a consumer interested in a pair of shoes from our go-to shoe shop is far more likely to order. Shipping may take a few weeks if the business just had one location, providing customers with an incentive to purchase somewhere else. Your prospective consumer base will grow as a result of expanding your footprint, which will increase your revenue. Quicker Local Delivery Times Having numerous warehouses boosts a local customer's ability to pick up purchases directly or provides them access to same-day delivery, especially in the age of curbside pickup and same-day delivery. With these choices available, shoppers might be able to purchase and get goods on the same day. You can only provide immediate pickup to consumers in one location if you have one warehouse. However, distributed warehousing brings your items and additional consumers together. 6 Factors to Consider Before Implementing Decentralized Inventory Control system A decentralized inventory system can appear to be the magic solution for a failing eCommerce warehousing company in the continuously changing eCommerce fulfilment industry. It may not be the best method for everyone due to a few factors that may alter its effectiveness. Before implementing decentralized inventory control, take into account a few variables that may have an impact on how it functions for your company. What is the Weight of my Goods? It might not be beneficial to have inventory in many locations if you sell heavy goods, such as furniture or exercise equipment. It might not be a wise investment to transport merchandise first to a warehouse before sending it from the production or import site because shipping prices for things like this are already rather high. To What Location Do I Deliver Orders? It might not be a good idea to distribute merchandise outside of the general area of your consumer base if your business is largely reliant on local clients. A seller of umbrellas, for instance, definitely doesn't need to move their business from Seattle to Arizona and may even lose financially if they did. What Are The Running Expenses For Several Warehouses? Spreading your items over many locations can not be advantageous if they need specific attention, such as refrigeration or routine quality inspections. Given how expensive it already is to store this kind of merchandise, increasing the expense of keeping them might not be a wise investment. What is the Amount of Orders Each Month? Using numerous warehouses is generally not essential if you just transport a few high-value items each month. It could be best to keep things straightforward and centred with only one site while eCommerce companies are still in the beginning or growth phases. It can be required once you've ramped up and are getting a bigger stream of orders. Do Businesses Really Need Additional Warehouses? The eCommerce logistics industry is now buzzing about decentralised inventories. Given all the talk about it, it could appear essential to expanding your company. However, now might not be the best moment to consider decentralising your inventory if your shipping issues do not include inventory location. Is the Current Technological Setup Ready for Several Warehouses? Do You Require a Solution for Managing Many Warehouses? Do you currently use an ERP? a management system for warehouses? What software do you currently use to manage your business? Make sure your systems are strong enough and prepared to manage the shift before making the jump to distributing your products. The single most important action to do before starting the shift will be to be well-prepared. 7 Best Practices For Maintaining A Decentralized Inventory System Researching and implementing an Enterprise Resource Planning(ERP), or a Warehouse Management System(WMS) will be one of your initial stages. Your work will be a lot easier and business operations will run much more smoothly if a software solution is in place to handle things. Are you prepared to explore dispersed inventory? It's a wise choice that will benefit you. To fully profit from the distribution, you'll need to set it up properly in the meantime. Here are a few of our pointers for successfully managing Decentralized Inventory Balance Your Stock Levels In order to maximise storage space and prevent fulfilment delays, your data should be used to establish stock levels. To effectively manage your inventory across all warehouses, you must determine your maximum, minimum, average, and order levels by taking a look at your product sales, inventory turnover, and lead time rates. To keep expenses low, it's crucial to maintain strict control over your stock levels and make sure they are balanced. Why? Because it reduces waste and guarantees you are not putting too much strain on your finances with high stock expenses. In order to select which warehouse to stock which goods and maximise product levels, you need also pay attention to the following KPIs: Your per-order processing feeYour lead Time Statistics (or order fulfilment latency)Your Ideal Order Rate Watch Your Bestsellers Closely The most crucial goods to maintain will be your most well-liked offerings. Setting up minimum inventory levels of these items at each site is a smart move to make sure you can send them out from each warehouse swiftly. It's crucial to anticipate these trends and have extra stock of these items because they will frequently sell out. Count Product Stock In Decentralized Inventory System It's crucial to make sure you do stock counts at each facility. Ecommerce retailers frequently make the error of believing they simply need to track the overall quantity of items without taking into account the product levels at each warehouse when transitioning to a decentralized inventory system. To guarantee that the stock levels we indicated are balanced at each warehouse, you must be aware of all of your items there. If you aren't utilising decentralized inventory management software, you'll need to work hard to keep an eye on product counts at each warehouse since running out of a product at one warehouse can cost you time and money. When you have a lot of items, divide your inventory counts into focus lists so that you don't have to count every item all the time. The most effective approach to achieve this is to separate your items into high-risk (those with the poorest history of inventory counts) and high-value categories (products with the highest revenue potential.) Utilize Both Movable and Fixed tracking Long-term headaches may be avoided by making an investment in your inventory management. To build a reliable inventory management system, fixed and mobile tracking are required. Why? Since you can precisely assign warehouse destinations by combining fixed and movable tracking options, you can be sure that you always know whether the hardware needed to process the order is up to par, where each product is placed, what its status is, and which products are ready for fulfilment and shipping. Simply said, it streamlines and expedites your fulfilment services. Here is a brief explanation of each for those who are unfamiliar with warehouse management jargon- Fixed Tracking Fixed tracking, sometimes referred to as asset tracking, is the continuous observation of your production-related machinery as well as any equipment that supports your warehousing and fulfilment centre operations. To track the location and status of equipment, utilise RFID tags or barcodes. Movable Tracking Movable tracking, sometimes referred to as inventory management, is the process of keeping track of each product and how many you have on hand, as well as which items need to be refilled and which ones are in excess. In a nutshell, it's the administration of your inventory and figures in real-time. Not Every Product Needs to be Stored in Every Warehouse The number of goods you sell will increase along with the size of your eCommerce logistics business. It makes no sense to keep all of your goods in every warehouse. As we mentioned above, one of the greatest strategies is to divide your inventory into best- and worst-sellers, and then stock your warehouse appropriately. To enable speedier, more affordable delivery, you may, for instance, make sure that your bestsellers are present at each warehouse site while keeping all of your slow sellers in one warehouse and your medium sellers in another. Remember that clients may request many products at once that may be stocked at different locations. Due to the possibility of having to fulfil items from several locations, this may result in additional shipping and packaging expenses. It would be beneficial if you compared these expenses to the warehouse layout you choose and, where it is practical, matched goods that are frequently stored together. If you aren't arranging warehouses with decentralized inventory management software, label your items as out of stock once they have been transferred to the new location. Real-Time Data Update The most important decentralized inventory management advice is to make sure that your ordering systems and warehouses' data are in sync to avoid delays. You can get away with this manually if you operate a tiny business from your home with just one warehouse. However, if your company is expanding and adding more than one warehouse site, a robust decentralized inventory management system, like the new Multi-Warehouse Management feature, is the only method to handle data in real-time. This feature enables you to: Build decentralized inventory warehousesControl inventory levels and move it across warehousesManagement of warehouse inventory allocation depending on channelsImplement connectors with 3PL and Amazon FBAManage dropship ordersImplement automatic order routing by the supplierMake invoices, shipping labels, and packing slips.Receiving order notificationsIntegrate with shipping software and carriersAccess order status in real-time across all markets Utilize Cross Docking and Wave Picking Make sure you are preparing for a lean operation when organising your decentralized inventory management. In other words, you aim to minimise expenses. You may accomplish this with the use of two warehouse management systems: wave picking and cross-docking. In the latter, a product is dispatched out as soon as it is received. Alternatively, if you make your goods, consider it a method that allows for considerably less storage space, lowering warehouse expenses. However, it becomes difficult to retain this storage option as your organisation expands without creating fulfilment issues. Wave picking entails greater storage capacity so that orders may be completed in sequence throughout the day, making it preferable for larger, expanding businesses. Utilizing these strategies can ensure a distinct, lean system in your intricate shipping system if you have adequate inventory management software. Centralized vs Decentralized Inventory Management System The primary difference between centralized inventory and decentralized inventory is that the former refers to an inventory management system in which the goods are moved from the primary warehouse to various warehouses that are close to the consumer's residence. The latter refers to an inventory supervision mechanism in which all necessary operations are carried out in a central setup. Centralized Inventory This inventory management system conducts all activities in a single place. Despite the possibility of separate product-based storage areas, storage is frequently done in one big warehouse. The same crew handles all inventory, and the same transportation techniques are used. The majority of e-commerce businesses, including Amazon.com, use it. Utilizing centralized inventory has several benefits, such as: It makes it simpler to promote and uphold the corporate culture.Operating expenditures like rent and other utilities have decreased significantly.The lowering of expenses results in higher profits.Better customer service is delivered by emphasising the use of trained personnel, improved methods for responding to questions and requests, and improved tools.Management responds quickly to any issues with goods or procedures. Despite the many benefits, a decentralised inventory has a number of drawbacks, such as: Rush delivery and high transportation expenses, particularly in the long term, may be passed on to the client.Result in competition for resources like human resources Decentralized Inventory Decentralized inventory entails distributing your stock among several sites. Large retailers like Amazon frequently use these multi-channel distribution techniques. This method offers a wide range of advantages as well. When items are kept in warehouses close to clients, merchants may reach them in more places in less time. Additionally, it reduces the danger of keeping all goods in one location in the unlikely case of tragedy or poor management. The following are the main benefits of decentralized inventory: When compared to a centralized inventory management system, the system's distribution flexibility is substantially greater.There is a bigger decrease in the cost of transportation.Additionally, the shipping time is drastically cut down. The following are the main drawbacks of decentralised inventory: Significantly greater operating and investment expenditures.Inventory management calls for additional physical labour and personnel.Additionally, the control expense is somewhat greater.The likelihood of incorrectly allocating products is higher. Tabular Representation: Centralized Inventory VS Decentralized Inventory System [table id=33 /] Centralized vs Decentralized Inventory Management: Which is Right for Your Business? Decentralized inventory is defined as inventory that is held in many locations and warehouses, as opposed to centralised inventory, which is defined as inventory that is stored at a single location.In the case of centralised inventory, top management makes the decisions, but in the case of decentralised inventory, lower and middle management make the decisions.Less labour is needed for centralized inventory control. On the other hand, the latter situation necessitates more personnel.In contrast to a decentralized inventory management system, which may not guarantee price consistency, a centralised inventory system guarantees price uniformity.The likelihood of theft from consolidated inventories is quite low. On the other hand, there is absolutely no chance of theft with the latter. Conclusion The two main warehouse distribution types are, broadly speaking, centralised and decentralised. Between the two, there is a third choice, but all models are vital and relevant. Understanding your clients, regional presence optimization, fulfilment capabilities, and other factors are necessary when selecting one for your company. Because there is just one site rather than several, inventory management is simpler and more cost-effective with a central warehouse. Transport costs, however, can be rather high depending on how far shipments must go. Not all clients or consumers will be in close proximity to the core hub. A decentralised strategy keeps the warehouses dispersed and much closer to the final consumer. Over the centralised paradigm, order fulfilment, shipping times, and customer service frequently increase significantly. With a shorter distance between nodes, transportation expenses are also significantly reduced. However, operating costs are substantially greater and rise as more sites are opened. Both models provide options for outsourcing and cutting-edge automation to build a more streamlined and effective company. It frequently boils down to the demands of the typical consumer. Which model will best serve their needs, and how can the organisation help? WareIQ As A Inventory Management and Fulfillment Partner It is feasible to create a hybrid system using both methodologies, with WareIQ. The hub of operations, where all the inventory or product is normally kept, is a central warehouse. They are known as branch warehouses or decentralised warehouses and support several nodes that are located closer to the end-user. Only high-demand items are stored and managed in the branch warehouses, with real-time analytics and efficient distribution based on market demand. In other words, the smaller warehouses provide clients with faster delivery of the most popular items together with superior customer support. All of the inventory that the company controls, including more specialised items, is kept at the central warehouse. Additionally, it restocks the branch warehouses as needed. The combination of centralized and decentralized inventory is made possible and more effective than it would be without WareIQ's cutting-edge technologies, such as advanced computing, machine learning, AI, and big data. With WareIQ, What does Having Such A Decentralized Inventory Mean To Your Brand and Service? Benefits to business and consumers for having a decentralized inventory with WareIQ are as follows: Faster Pan-India delivery with better shipping timeline/tracking. Data-driven optimization of your business. Efficient and smart inventory placement powered by the philosophy of "supply where there is demand". Helping meet the customers' expectations of an Amazon-level service.Reducing cancellations due to delays in delivery. Managing a central warehouse is cheaper but it comes at the cost of the cons we have discussed earlier. Outsourcing the decentralization of your inventory to a platform like WareIQ can actually bring down the overall costs as it improves business and customer retention. It also helps in achieving better operational efficiency- i.e providing superior services to the customers at the same cost. Also, managing local demand surges and scaling your business in new cities becomes easier. For a customer, it means faster delivery (within 1 day) and options like same-day pickups. They may no longer be bound to Amazon when they expect the same. It also increases their reliability and trust in the brand. [signup] FREQUENTLY ASKED QUESTIONS What distinguishes a centralized from a decentralized inventory system? A centralised inventory management system is one in which all activities are performed in one location. A decentralised inventory, on the other hand, is a method of inventory control in which goods are moved from a central office to various places that are close to the client. What impact does decentralized inventory have on the inventory control system?A decentralized inventory setup enables quicker customer delivery times if you have many clients dispersed across a big area. Because local consumers might prefer picking up their item to having it transported, it can also enhance customer service. Which is better Centralized or decentralized inventory?Decentralized inventory systems function well if a company has a sufficient number of competent employees who can act promptly. On the other side, centralization of power is favoured if management staff are followers and lack initiative. What's a good illustration of decentralized inventory businesses?Hotels, supermarkets, apparel showrooms, and other businesses are good examples of decentralized inventory businesses. because it is impossible for one individual to concentrate on several places that can be located all over the planet. Why do businesses decide to decentralize their inventory?As their businesses grow, organisations frequently decide to decentralise their inventories. With more items being sold, it may become impossible for one manager, or a small group of managers, to supervise the entire business.
June 29, 2022
How to Improve Regional Utilization and Optimise Demand-Based Inventory Distribution for Faster eCommerce Fulfillment with Accuracy & Lower Inventory Holding Costs?
Brands must provide faster deliveries and effective order fulfillment as competition in the eCommerce sector heats up. It is essential to be able to predict demand effectively and keep inventory levels in line with consumer demands. The amount of time it takes an eCommerce business to deliver an item to a customer's door has a significant impact on how customers perceive a brand. It is essential for both small and large businesses to fulfill orders quickly and accurately if they want to grow their eCommerce consumer base. Smaller brands must increase their consumer base through flawless order fulfillment while larger companies and international brands must preserve their brand reputation and existing customer base. To make delivery quicker and more cost-effective, eCommerce businesses are practising regional utilization. Let us get a better understanding. What is Regional Utilization? Regional utilization (RU) is an eCommerce calculation term which reflects the percentage of local and zonal order fulfillments out of the overall order fulfillments. Giant eCommerce players consider regional utilization (RU) as a significant factor in determining the seller account status. Electronic brands and sellers often prepare their stock for some of the most awaited eCommerce season sales like Amazon’s Great Indian Festival or Flipkart’s Big Billion Day. Regional utilization (RU) ensures faster delivery and reduces additional logistic costs. [contactus_lilgoodness] How to Calculate Regional Utilization? The following illustration shows the regional utilization (RU) formula: Let's see, with the help of an example, how regional utilization (RU) is calculated. Suppose you have 10 fulfillment centers across India and the following factors are at play: You received 25 total orders in the month of July, 5 from New Delhi, 5 from Mumbai, 5 from Bangalore, 5 from Pune and 5 from Chennai. Out of 25, you managed to fulfill 15 orders locally. Therefore, your regional utilization (RU) = 10/25 X 100 = 60% Why Should an eCommerce Business Figure Out Their Regional Utilization? Businesses calculate regional utilization (RU) for a variety of reasons, including: To Get Faster Order Fulfillment When inventory is stored in close proximity to your customers, their orders can be fulfilled at a faster rate due to the less amount of distance that needs to be traversed and less time needed to travel that shorter distance. For instance, if your company has fulfillment centers located in Mumbai and Pune and you get the majority of your orders from those 2 cities, fulfilling orders will be much faster than if your fulfillment center was located in Nashik. To Achieve a Lower Amount of Returns If there is an unforeseen delay in the fulfillment of an order or delivery timelines are generally longer due to the physical distance between the fulfillment center and the customer, there is a higher chance of customers initiating a return. When businesses take advantage of regional utilization, they reduce the wait time that customers have to endure and thus, reduce the number of returns that are initiated. To Save on Shipping Expenses By making use of regional utilization, you can save immensely on your shipping costs because prices increase along with distance and if the distance is shortened due to goods being located to the customers that order them, shipping expenses automatically decrease. To Increase Profit Margins Regional utilization not only reduces shipping and logistical expenses, it also increases the efficiency of fulfillment operations, including saving money on returns management. All these elements when put together lead to an overall increase in your company’s profit margins. Some more important uses of regional utilization are listed below: Finding the inventory allocation across the country according to demandCreating a successful strategy for effective deliveriesChanging to a low-cost shipping moduleIncreasing product visibility better helps your seller account on online marketplaces to perform better Reducing RTOsIncreasing customer satisfaction by meeting their expectationsOffering same-day deliveryStoring different inventory items at different locations as per their order volumes 6 Ways to Improve Regional Utilization & Optimise Demand-Based Inventory Distribution To improve regional utilization (RU), eCommerce businesses can adhere to 6 methods mentioned below: Keep Warehouses at Multiple Locations A centralized warehouse is easy to manage but it increases the cost and time of delivery which not only affects your revenue but also customer satisfaction. It is always better to have decentralized inventory at multiple warehouses across the country to reach customers faster, that are located in any nook and corner of the country. Have a Trained Resource Pool of Warehouse Operations & Delivery Personnel Trained human resources in warehouse management & last-mile delivery can make the task of regional utilization easy, as they will ease operations and smooth your delivery processes. They can personally handle any task with great effectiveness. Opt to Partner with 3PL Partnering with a trusted 3rd party logistics company helps you to take more and more orders and then easily fulfill them. A few fulfillment partners come with the feature of same-day and next-day delivery and have micro fulfillment centers scattered across the country, which increases regional utilization. Never Risk Stock-Out of Inventory Always keep a minimum amount of inventory with you to deliver orders swiftly instead of risking stock-outs. MOQs, reorder quantity and reorder level can help you to avoid stock shortage and purchase it as per your demand, in addition to improving regional utilization. Optimize Data and Forecast Demand Data is the equivalent of gold in the digital market. In today’s world, every business is collecting leads. Data will help your company to forecast its demand and improve regional utilization to offer better order fulfillment. You will not be overloaded with inventory or face shortages during seasonal sales. Use a Warehouse Management System A Warehouse Management System (WMS) is a high-tech software mainly used for warehouse management. It automates multiple warehouse processes which makes fulfilling orders faster and less prone to errors and mistakes. Inventory across multiple fulfillment centers and sales channels can be managed from a single dashboard. Conclusion: How to Optimise Inventory Distribution and Regional Utilization with WareIQ for Faster Order Fulfillment? Regional utilization (RU) is now the standard industry indicator for measuring the effectiveness of eCommerce companies, whereby shipping orders from the same area might greatly raise the market's profit margin. An increase in regional utilization (RU) can address the unbalanced dynamics of supply and demand, enabling quick fulfillment, significantly reducing shipping costs and enhancing the customer experience. We at WareIQ personalize your deliveries according to their demand, priority, locations, etc. We offer branded shipping and micro fulfillment centers across the country to enable regional utilization in most cities and towns. WareIQ is an eCommerce fulfillment platform that offers Prime-like logistics to online brands for same/next day delivery. You can split your inventory in-house or you can use a tech-enabled 3rd party fulfillment company like WareIQ to get access to fulfillment facilities that are strategically placed all over India. We combine a nationwide fulfillment & shipping network, a highly-skilled warehouse operations team and our vertically integrated tech platform & inventory planning product to drive: Over 30% accelerated sales with same/next day delivery options across 20+ marketplaces/D2C platforms80%+ regional utilization & 40% lower holding costs100% compliance with marketplace SLAs with 0% leakage claims in processing returns Regional Utilization: FAQs What is multi-warehousing?Multi warehousing is a means of having different warehouses in prime locations handled from a single platform. It is unlike conventional centralized warehouses where all the inventory is kept and then distributed from there. Role of WMS in Regional UtilizationThe WMS optimizes your order fulfillment data and bifurcates orders according to your preferences and you can filter your orders as per zonal and local deliveries. What is cloud warehousing in eCommerce businesses?In order to assist businesses to get insights and make data-driven business choices, vast sets of corporate data, including both current and historical data, are successfully stored and managed in a data warehouse. How can Regional Utilization help eCommerce companies?Order fulfillment from a local warehouse, results in improved regional utilization to smart inventory allocation across different warehouses which,i) Saves 25% in additional logistical expenses per pieceii) Leads to faster deliveries, increased conversions and visibility in marketplaces.iii) Decreases return rates as a result of quicker delivery Does WareIQ help in demand-based inventory distribution?Yes, WareIQ provides a fulfillment platform with a multi-layered solution providing inventory & network planning excellence. With WareIQ’s vertically integrated tech platform & inventory planning product, online and D2C brands & marketplaces like TCNS, Blissclub, Flipkart fashion etc, have experienced more than 80% regional utilization with 40% lower inventory carrying costs.
June 29, 2022
How to Enhance Post-Purchase Experience in eCommerce With Order Notifications?
The eCommerce industry is highly competitive, especially in a rapidly expanding market such as India’s, and the onus is on companies to try and find unique ways of differentiating themselves from the competition. As customers begin to order online more often because of the convenience that it brings, more and more are starting to get accustomed to useful convenience features such as ultra-fast delivery and seamless order tracking. In fact, research indicates that more than 83% of online shoppers expect regular updates about the status of their packages. This is where providing transparent and timely order notifications to customers can help to improve their experience and opinion about a company. Read along to get a detailed understanding of order notifications, the overall post-purchase experience and what it entails, and how WareIQ’s notifications app can help provide a stellar customer experience. What are Order Notifications? Order notifications, also called post-purchase notifications, are real-time alerts that are sent to customers to keep them informed about the status of their order and when it is expected to arrive at their destination. They can typically be sent on a variety of mediums such as email, SMS, Whatsapp and even customised platforms such as an order tracking app or a branded tracking page, where retailers are able to provide more detailed information such as product banners, social media links, information about the company and much more, compared to conventional channels. Order notifications are an extremely important facet of modern eCommerce retail as they enable customers, most of which run on extremely tight schedules, to make arrangements to be available to collect their orders. The details that are generally present in post-purchase notifications include the order number, tracking ID, which stage of the fulfillment process the order is in such as “items have been packed”, “items have been dispatched” and “items are out for delivery”, and the estimated date and time that the package will arrive at the customer’s doorstep. [contactus_lilgoodness] 5 Elements Involved in Providing a Good Post-Purchase Experience to Customers Enhanced Communication Customers generally expect a basic after-sales experience that encompasses a feedback form and details about their purchase. However, something as simple as an appreciative email or message, thanking them for their service and saying a few words about how their business helps the company to stay afloat, goes a long way towards making them feel special and that they are actually valued by the firm. This will also increase the chances of them becoming repeat customers and recommending the company to their family and friends who have similar requirements. Customer Support Some companies often provide excellent customer support while trying to convert interest into a sale and during the delivery process, only to falter after the customer takes ownership of their order. A bad taste can be left in the mouth of a customer who has spent their hard-earned money on purchasing the products of a particular company, only to find that they are ignored or provided with sub-par customer support after the company no longer has an active interest in keeping them engaged. This is where companies can differentiate themselves by keeping a record of prior customers and their contact information, and giving them importance when they have an inquiry or issue. They could even be calling because they are interested in making more purchases so retailers need to capitalize on making them feel like their business is welcome. Increased Consumer Loyalty Research indicates that a customer retention rate of 5% can boost profits by up to 90%. Providing a seamless after-sales experience is essential for businesses who want to retain customers, whether it is through post-purchase notifications, promotional emails or messages thanking them for their business. Customers are more likely to repeatedly purchase from brands that they can trust and that have made a genuine effort to provide an enhanced experience to them, not just to sell them a product, but also to keep them in the loop about future events, campaigns and new product launches. After-Sales Service It is easy to think of after-sales service as customer support but they are very different in practice and they each have their own role in providing a positive post-purchase experience to customers. While customer support is centred around more technical aspects such as answering calls and solving problems, after-sales service focuses more on making sure that customers are satisfied, even if there are no additional issues that arise. It encompasses things like product returns, facilitating exchanges and much more. Good after-sales service leads to happy customers so businesses need to focus on providing it. Heightened Customer Satisfaction Most customers have enough presence of mind to gauge the difference between genuine effort and doing the bare minimum. To achieve a high level of customer satisfaction, firms have to put in the time and avoid taking shortcuts, as that can often lead to poorer results than what was intended. Additionally, it is also important to keep track of the rate of satisfaction that customers exhibit when they have encounters with different departments of a business. Retailers need to push for feedback in order to understand what their strengths and flaws are so that they repeat and expand the procedures that work and mitigate or adjust the ones that don't. Importance of Post-Purchase Notifications in eCommerce Active Communication is Expected by Customers Post-purchase communication helps firms assert to customers that they genuinely appreciate their business and value their feedback as to where they succeeded and where they fell short, which allows them to make the relevant changes and adjustments to streamline every process and customer interaction. Customers also may have queries or product-related issues even after they have accepted their order so it pays to constantly be available in case they try and contact the company. Order Notifications are Anticipated by Customers It is overwhelmingly clear that customers expect constant and consistent alerts from retailers about the status of their orders, as is mentioned in an earlier portion of this blog. Order notifications provide insight to customers as to which stage of the fulfillment process their package is currently in and when it will reach their destination, allowing them to make the necessary preparations to accept it when it arrives. Post-Purchase Notifications Inspire Brand Loyalty and Positive Feedback from Customers The post-purchase interaction is the last thing that a customer will experience of a business on their current order cycle so it is essential that they are left with a positive opinion. Not only does this increase the chances of them becoming repeat customers, but their positive and impactful reviews on a listing and other public forums can be the push that is needed to convince other potential customers to give the business a chance. Conclusion: 3 Ways in Which WareIQ’s Notifications through the “WareIQ Interact” App Enhances Post-Purchase Experience Order notifications and post-purchase interactions are essential for providing a comprehensive and positive customer experience. Oftentimes, the after-sales services offered by a business are what matters more than the actual purchase itself. This is also something that many businesses neglect to offer so opportunistic retailers can use this as a means to stay ahead of the competition. And if they are partnered with WareIQ and have access to all of our post-purchase offerings, they are guaranteed to be on top of the eCommerce totem pole. If anyone is well-versed with downloading apps on the Google Play Store or Apple App Store, there won’t be a learning curve involved to seamlessly download and install apps on their custom WareIQ dashboard. One of our latest offerings to help retailers offer their customers an exemplary post-purchase experience is the notifications app. Designed to make sending order notifications and other after-sales interactions with customers as easy and seamless as possible, users can simply download apps with the press of a button. WareIQ’s post-purchase notifications app - “WareIQ Interact” enables online businesses to provide a powerful, personalized & automated post-purchase experience to their customers across WhatsApp, Email & SMS during the entire shipping journey. Through WareIQ Interact, you can deliver a personalized & interactive experience to your customers in 3 ways: Engage Customers Across Channels Drive up-sell & cross-sell opportunities by sharing notifications with customers across multiple channels – WhatsApp, Email & SMSAdditionally, lower NDR & RTO rates by seeking direct confirmation from the customer over Whatsapp, Email & SMS Live Delivery Updates Share a variety of live updates regarding your customer’s consignment delivery & alleviate their shipping concerns Track Notifications Access the notifications dashboard to track the history of all communications sent out WareIQ not only offers services like order notifications and post-purchase services but also the entire gamut of operations that are associated with eCommerce fulfillment. This includes facilities such as: A nationwide network of fulfillment centersA custom WMS that can handle inventory managementIntegrations with multiple eCommerce marketplacesA choice of more than 20 of the largest shipping aggregatorsThe most cost-effective and transparent pricing in the businessSmart inventory placementIntelligent delivery assignment based on the quickest routes and cheapest pricesNo minimum order quantityA custom app storeAn RTO shield with insurance and liability protection Post-Purchase Experience: FAQs Why is it important to provide order notifications to customers?Customers often get aggravated when they do not know the status of their order. It is important to provide order notifications so that they can see where it is in real-time and be reassured that it is on its way. What platforms are used to send notifications through WareIQ’s notification app?We commonly send updates through email, SMS and Whatsapp. Do all major 3PLs offer order notifications?No, only certain companies like WareIQ offer shipping notifications, in addition to a vast variety of other eCommerce fulfillment services. Can other applications be downloaded on WareIQ’s app store?Yes, we provide a full suite of multiple applications that are designed to enhance productivity in different areas of eCommerce fulfillment. How can WareIQ’s notifications app help in customer retention?By providing a prolific post-purchase experience to customers through the use of our notifications app, with facilities such as real-time updates, custom email notifications, branded tracking pages and more, they will be more inclined to have a favourable view of your business and will likely choose it for future purchases compared to your competitors.
June 29, 2022