What is Inventory Days on Hand? Definition, Inventory Days on Hand Formula, Importance & 5 Strategies for Improvement
When you buy or replenish inventory in your warehouse, it doesn't leave immediately. It lies there for a period of time before being shipped or transferred. It is important for a business to refine its inventory management processes so that the duration of inventory lying idle is limited as this can lead to obsolescence or expiry. However, it is also suitable for a business to have inventory on hand in case there is an emergency or urgent requirement. Businesses need to find the sweet spot of having just the right amount of inventory in storage. In this article, we take a look at the meaning of inventory days on hand, how to calculate it using the inventory days on hand formula, its importance, and ways to improve it. What is Inventory Days on Hand (DOH)? Inventory Days on Hand (DOH) is the number of days that inventory stays in your warehouse or storage space before being sold. It reveals how many days it takes you to sell your average inventory on hand. It is an accounting ratio that indicates the average number of days that different kinds of inventory, including raw materials, work-in-progress goods, and finished goods, spend in your warehouse before turning into sales. It is also called Days Inventory Outstanding (DIO), Days in Inventory, Inventory Period, or the Inventory Days of Supply. Further, it depicts how soon a company can turn its current assets into cash. This metric is extensively used by analysts and business intelligence to gauge the company's liquidity and financial and operational health. [contactus_gynoveda] What is the Inventory Days on Hand Formula and How to Calculate it? The inventory Days on Hand formula considers the average inventory value in your warehouse compared to the Cost of Goods Sold (COGS) and the number of days in an accounting period such as a week, month, or year. The below equation comes in handy for calculating the inventory in hand: Inventory Days on Hand = [Average Inventory Value / Cost of Goods Sold] x Number of Days in Accounting Period And if you know the inventory turnover ratio for your business, you can use the below inventory on hand Formula: (Number of Days in Accounting Period) / (Inventory Turnover Ratio) = Inventory Days on Hand Importance of Inventory on Hand The inventory days on hand figure reveals much-desired information about your business. Here's why you need to monitor it regularly: Analysis of Operational Performance Inventory days on hand show how long working capital gets frozen in stock. Once you have that data, you can devise ways to shorten the duration by optimizing procurement and sales processes. A lower DOH value indicates that your business is productively utilizing its inventory. On the other hand, a higher number shows the company's poor investment decisions and inefficient stock utilization. However, a high inventory quantity doesn't always showcase unproductive business practices. For example, you may have a higher DOH value if you store stock for around-the-corner peak season sales or a lockdown-like contingency. Either way, this analysis helps calculate and enhance your business's operational performance. Prevents Stockouts and Overstocking While companies keep adequate stock to shield them from demand fluctuations and variable market dynamics, inadequate inventory management can hurt business operations and revenue. Stockouts or overstocking occurs due to poor demand forecasting or incorrect analysis and reporting. That is when inventory days on hand come to your rescue. DOH clearly tells you how far you are from a stockout or when you need to stop further ordering of inventory. Keeping a tab on it warns you before a crisis unfolds in your warehouse and can help prevent the crisis from occurring. Improves Efficiency Inventory on hand is an indicator of business efficiency. A lower DOH indicates better cash flow and higher productivity. A smoother cash flow also gives you the leverage to pump more capital into the business for expansion, promotion, research and development, and other activities. Attracts Potential Investors DOH helps you gauge the inventory conversion rate of your business. A higher stock conversion or liquidity means that you can frequently replace or refill your merchandise, thus keeping your product offerings refreshed for your customers. It is an indication of an agile and flexible business. This practice tends to lure more customers to your stores and attract larger amounts of attention from potential investors. Similarly, lower liquidity indicates poor business performance. It shows that you cannot sell the stock you buy and cannot replace it with fresh supply on time. Forecasts Storage Costs Inventory days on hand show how much inventory you need to order and when. It indicates the amount of stock turnover which tells you how frequently you need to replace or replenish the stock of a particular commodity, within a specified time period. It also highlights areas in your inventory management process where there is scope for improvement. Thus, you can use the inventory on hand figure to forecast storage costs for your inventory. Mitigates Operating Costs Where and how long you store your inventory affects your storage and operating costs. The lesser stock you have on hand, the lesser you need to spend on ecommerce warehousing and other operations. Therefore, knowing the storage period of your stock enables you to plan your finances in advance and mitigate expenses to the largest extent possible. Of course, having a competent 3PL partner like WareIQ allows you to leverage a nationwide presence of warehouses closer to customer locations. This type of service helps further reduce cost overheads. Increases Profit Margins Inventory is a current asset and affects a company's cash flow and profit margins. The inventory days on hand ratio shows how much time and money must be invested in a stockpile before they turn into sales. Therefore, better and regular monitoring of the inventory on hand can safeguard you against loss-making decisions related to unwanted stockpiling or a lack of adequate volume. Top 5 Strategies to Improve Inventory Days on Hand If you regularly deal with inventory days on hand, you might want to improve it wherever possible. Here's how you can do that: Utilizing Inventory Management Software Your 3PL partner's superior inventory management software can track and trace inventory and keep inventory records actively updated. This software can be coupled with devices such as hand-held scanners that scan merchandise in the warehouse and sends data directly to the system for accounting and record-keeping purposes. In addition, these systems can trigger alerts when some stock needs replenishing, when you have overstocked or when it needs to be replaced with a fresh supply, especially in the case of perishable items. Such robust tech can remove the burden of keeping accurate inventory records and renewing them regularly. Furthermore, they essentially guide you on how to improve your inventory management efficiency. Improving Relationships With Manufacturers Better inventory management by the business causes less hassle for the manufacturers and sellers of products. In addition, accurately telling them when you need to stock up or replace the old inventory strengthens your relationship with them. Logistical pace and associations affect the relationship between sellers and manufacturers. For example, if a retailer needs a small quantity of stock urgently, the supplier can utilize existing stock to deliver it to their doorstep on time. In such a scenario, their relationship will grow and become stronger. If, on the other hand, the logistics speed is slow, the supplier will have to keep extra merchandise, thus increasing their inventory days on hand. Strong alliances with suppliers will push you to keep adequate inventory days on hand, thus improving inventory management and business performance. Providing Markdowns and Bundles You can bundle slow-moving stock in pre-determined groups with further discounts. Products experiencing low sales can be combined with a similar category of other products that have a higher rate of demand. For instance, you can combine poorly selling plates with fast-moving coffee mugs. A markdown on their prices can further attract the attention of customers. Clean-ups, closeouts, or flash sales are common ways to mark down your inventory and push it out to improve the inventory days on hand. Making Use of Unsold Inventory If markdowns don't work for your unsold inventory, there might not be a way out of storing it indefinitely. The stock in your warehouse costs you the storage, maintenance, labour, and other overheads. Hence, it is better to put it to use in whatever way it can. If you cannot sell it, you can always donate it and count it as a CSR initiative, recycle it to make new products, or refurbish it to attract new demand. Even if you cannot sell it, it will be less of a loss if it is involved in another business process rather than just wasting your storage space and the money spent on renting it. Streamlining Operational Processes Unclear and poorly strategized operational processes cause trouble in inventory management. Your warehouse and supply chain operations need to be streamlined to avoid an excess burden on the existing inventory. Ensure seamless communication and a smooth flow of information to avoid logistics chain disruptions. Combined with a skilled workforce to operate the systems and man the merchandise on the ground, this can help to improve your inventory days on hand ratio. How Can a Fulfillment Company like WareIQ Help Improve Inventory Days on Hand? A strong 3PL partner like WareIQ can change the way you manage inventory. We can provide three things you will need the most to monitor your stock effectively: State-of-the-art WMS to assist in inventory management and forecasting inventory days on hand of your current inventory.Advanced technology to record and monitor the inventory days on hand and provide solutions for improving it.Nationwide network of fulfillment centers so you can store inventory near areas of high demand or near shipping and distribution hubs. Most importantly, a trustworthy logistics partner can empower you with all the tools, technology, and knowledge to control your inventory on hand in the most intelligent manner. Inventory Days on Hand: FAQs What is the difference between inventory days on hand and inventory turnover?Inventory days on hand refers to the average time it takes for a retailer to turn its inventory into sales whereas inventory turnover indicates how fast a retailer can sell its inventory. During calculations, DOH is the inverse of inventory turnover. What is considered a normal number of inventory days on hand?The ideal inventory days on hand ratio for an eCommerce business can be between 2 and 4. If it is lower than this, it could indicate weak sales or a decline in the demand for your products. What causes increases in inventory days on hand?Inventory days on hand can increase for a multitude of reasons but mainly because of economic, global, and competitive factors that result in a sudden fall in demand and sales levels. How to calculate the inventory days on hand?While ideal inventory on hand differs depending on the nature, price point, and type of products that a business deals with, it can be found out by dividing the average stock by the cost of goods sold and then multiplying the figure by the number of days in that accounting period.
June 13, 2022
Stock Discrepancy: Definition, 5 Main Causes and Top 7 Methods to Avoid Inventory Discrepancy in 2022 in eCommerce
The fast-evolving business trends and technologies bring new challenges to every organization. To mitigate the issues of the end-to-end supply chain and cope with customer expectations, organizations are constantly focusing on reducing the delivery lead time. And one of the essential steps to reduce the lead time is to manage inventories in every form like raw material, semi-finished products, and final products. Experts define inventory as a necessary evil. It is essential to run the business, but it blocks the business capital in the form of materials. Therefore, it is essential to manage accurate inventory. The stock discrepancy is one of the major challenges in inventory management, especially in the eCommerce business. This article will take you through a brief definition of a stock discrepancy, its primary reasons, and the best practices to avoid inventory discrepancy. What is Stock Discrepancy? Stock discrepancy refers to the variety of physical available stock or inventory of items with respect to the current inventory in records or systems. To run a successful business of any size, maintaining accurate stock is vital. But inventory variation is a common scenario in a practical situation. In the case of industries like e-commerce, where you need to deal with a massive number of different SKUs, quick and error-free product transfer, and handling hundreds of last-mile deliveries, the chances of inventory mismatch increases. Minor inventory discrepancies can be managed easily, but major inventory discrepancies can lead to considerable losses to your organization. Therefore, you must have a robust system to check inventories, find loopholes and implement best practices to avoid any untoward situations. [contactus_gynoveda] 5 Main Causes of Inventory Discrepancy Managing inventory throughout an eCommerce supply chain may sound easy, but it is a complicated task. You need to deal with thousands and lakhs of inward receipts and outward delivery day in and day out. Tracking every material movement, delivering the right product to the right place at the right quantity, and above all, managing inventory accuracy is nothing short of a nightmare. But the task becomes easy if you know the probable causes of inventory discrepancy and how to avoid them. Here are some major causes of Inventory Discrepancy. Inventory shrinkage As the name suggests, when there is a shortage in the actual inventory compared to the stock in the records, it is known as inventory shrinkage. Simply put, it refers to when the physical stock of any item is less than the system stock. There are some probable reasons behind such discrepancies: Pilferage or Theft: Here are two possibilities:If a person involved in operations may pilferage items. Or,Some outsiders may steal.Administrative errors: There may be a chance of error in the accounting system, which eventually decreases the item's quantity. Vendor Fraud: Manufacturers/suppliers may have sent you fewer number items than they billed for it. Misplaced inventory There is a place for every material in modern warehouses, and it is described in the inventory management system. Whenever the warehouse team receives an item, it is labelled first and then goes to its exact location. The same activity happens in the case of goods for delivery. In most industries, this activity is done by humans whereas, in some advanced warehouses, automated robots perform the task. Discrepancies in inventory are primarily due to human errors like wrong material receipt or issuance, putting materials in wrong locations or incorrect labeling. Many times, suppliers also send the wrong materials unintentionally. Any of these mistakes can lead to a stock disrepancy. Human error One of the major causes of inventory discrepancy is human error. Apart from using highly advanced e-commerce warehouse management systems, some of the eCommerce end-to-end supply chain is driven by humans. And if your employees are not appropriately trained on how to receive, store, track and manage stocks, inventory discrepancy is unavoidable. An inventory management system can assist people in managing the inventory efficiently, but they are the people who run the system. Firstly, to avoid human errors, you need to make sure that people understand the consequences of inventory variations. Keeping a standard operating procedure in place, displaying visual instructions, regular training, and frequent inventory audits are some of the best practices to avoid such errors. Mismanaged returns Return management does not add value to the business directly, but it has an impact on the balance sheet and revenue of the organization. Reverse logistics is as important as last-mile delivery. Poor return management can generate significant stock discrepancies and damages. As there are several ways to treat the returned materials (restocked, refurbished, bad-quality-disposed, or scrapped), it is important to perform every activity carefully. If a bad-quality material is not stored back in the warehouse, it will create a stock discrepancy. Similarly, if a returned material is coded wrongly and placed in the location, it will show the wrong information in the system. Effective return management not only helps you to avoid inventory discrepancies but also helps you to improve revenue. Glitches in Inventory Management Software Inventory management software must connect with the existing softwares/platforms businesses use in order to scale to accommodate advanced logistics. Choosing from hundreds of inventory management software solutions and understanding a slew of its features that necessitate training and continuous assistance is a difficult task. Choosing a wrong inventory management software can give further rise to stock discrepancy due to incorrect inventory counting, inventory forecasting etc. 7 Methods to Avoid Stock Discrepancy Having a healthy inventory with accuracy is the key to delivering products on time. On the one hand, it improves customer satisfaction, and on the other, you can book more orders due to better visibility of your inventory status. Stock accuracy is beneficial in mitigating supply chain risks by avoiding incorrect customer orders, material shortages, theft, and damages. Here are some best practices which can help you to avoid stock discrepancy. Double Check During Counting of Stock Physical inventory counting is a common process to identify and avoid inventory discrepancies. In this process, every item is checked physically, and then the stock is matched with the inventory records. Double counting can minimize errors. In case of a large inventory pool, you can use the ABC analysis method to identify high-value items and perform a double check on those items especially. You can decide the frequency of physical counting on the basis of ABC and FMR strategy, and decide on a quarterly or annually sales velocity audit (for fast-moving items and slow-moving items). Identify the Location of Stock In a running eCommerce or production environment, the pace of materials movement is very fast, and there is a tendency to keep the same items in different locations. It is also important to check whether similar items are mixed with each other or not. With a slight change in design, the item code changes, but identifying the difference between such items becomes challenging. While performing physical inventory counting, you must check all the locations thoroughly and avoid the mixing of similar materials. Check the levels of Inwards & Outwards Stock To improve the inventory accuracy of your warehouse, you must ensure a strict inward and outward process. During the inwards process, checking every item along with their vendor invoices can help avoid major inventory mismatches. Often suppliers inadvertently send similar items with different item codes, leading to stock variation. Communicate with Manufacturers Suppliers play a significant role in an efficient inventory management process. You should establish strong communication with your vendors so that any issues, especially inventory variations, can be communicated immediately. If you inform your supplier about any stock discrepancies during the inward process, they can also check at their end and resolve the problem at the moment. Moreover, training the supplier’s staff can also make a big difference and help run your business smoothly. Strong and transparent communication with your vendors not only helps you to manage inventory discrepancies but also helps avoid a stock-out situation or overstocking and reduces the cost of poor quality (COPQ). Opt for an Inventory Management System In this dynamic eCommerce environment, it is inevitable to have a smart inventory management system in place. It can help you to manage the stock levels, indicate the possible errors, and even help you to locate the item quickly. The advanced inventory management software is beneficial in significantly reducing the inventory counting time, which is a huge saving for any eCommerce business. Train Employees To make a big change, it is essential to increase awareness. As the technology in every field changes, new tools and techniques get introduced into the market every day. Adopting new technologies and training people on the fundamentals is essential. Employees need to know the correct method of inventory counting and its benefits and drawbacks for efficient inventory management. Partner with a 3PL Another best practice to avoid inventory variations is partnering with a 3PL like WareIQ. Being an experienced organization, WareIQ knows every nitty-gritty of inventory management and how to prevent stock discrepancies effectively. It offers stringent control and saves your time and money. Through the latest digitized tools, the overall inventory forecasting process is performed quickly and with high levels of transparency. Conclusion Technological advancement has increased buyers' expectations in terms of competitive price, better material quality, and quick delivery. Poor inventory management with many discrepancies can hamper your revenue and result in customer dissatisfaction. Human errors and inefficient systems are the root cause of a stock discrepancy. By implementing best practices, you can eliminate all bottlenecks and establish a healthy inventory system in your organization. Adopting intelligent inventory management software and partnering with an efficient 3PL like WareIQ can help manage your inventory better. We at WareIQ give you full transparency of your inventory with real-time tracking features that make you monitor your product levels & status across our multiple warehouses from anywhere. As we know, return and reverse logistic is the major cause of the stock discrepancy, we provide RTO and logistics insurance to save your time, money, and other resources. If you keep the listed items on your website in our fulfillment centers, then you do not have to worry about inventory management and stock discrepancy. We are solely responsible for any discrepancy. If in case, it comes from your vendor's side, you will be informed immediately. [signup] Stock Discrepancy FAQs What is the reason for stock discrepancies?Reasons for stock disparities are:i) Theft of stockii) Incorrect recording of dataiii) Misplaced stock and can't be trackediv) Mis-handling of damaged and returned stockv) Human error while the stocktake process like wrong counting What are the necessary actions businesses should take if there is a discrepancy in stock?i) Confirm the discrepancy by double-checking recordsii) Make necessary changes in the records if there is a discrepancyiii) Remove any extra items that have been detected as a discrepancyiv) While arranging replenishment orders, make sure you have enough stock to cover the difference How does WareIQ ensure low to zero inventory discrepancies?WareIQ does inventory tracking for sellers through its own warehouse management system software where WareIQ operations experts handle the process of managing inventory that ensures low to zero inventory discrepancy. How can companies minimize stock variances?To minimize stock variances:i) Inspect incoming inventory and label itii) Separate customer-owned inventory from the restiii) Standardize Inventory Picking Recordkeepingiv) Audit the Bill of Materials and sign for every inventory removed from the warehousev) Extra Requisitions and Returns should be tracked
June 11, 2022
4 Techniques and Importance of Inventory Management in Supply Chain
Inventory management affects the movement of items along the supply chain. An effective inventory control system ensures that the corporation retains just enough stock or raw materials to maintain good manufacturing and market supply of completed products. As a result, a company with a well-functioning supply chain management system can stay competitive in its field. Information technology has benefited inventory management. For example, IT systems can monitor inventory to guarantee that no excess or insufficient stock is stored, improving the firm's efficiency and lowering operating costs. Manufacturing companies manage their inventory levels to keep track of raw materials and then manufacture just enough goods for the market to avoid the costs of generating and maintaining surplus inventory. That is why inventory management in supply chain management is essential for the efficient working of eCommerce fulfilment organizations. Inventory Management in Supply Chain Inventory management is one of the most crucial components of any organization. It is essentially the management of items or stock, which refers to the goods that a company organization produces at any particular time for selling or manufacturing. The administration must ensure that the commodities are kept at a cost-effective level and that stock is always available. If an organization has too much inventory at any particular time, it will be unprofitable since the cost of holding it will be too high, reducing profitability. Inventory control is crucial in the supply chain since it is the key to long-term success. Inventory may play the most crucial function in supply networks by balancing demand and supply characteristics. The size of the firm determines how well inventory is managed. The actions taken put a corporation in the position of attempting to strike a balance between meeting client needs, which are frequently impossible to foresee precisely, and keeping an adequate supply of resources and commodities. Strategic plans are commonly used to attain balance in managing inventory. Carrying cost or holding cost of inventory, replenishment lead time, inventory valuation, asset management, inventory quality management, price forecasting, inventory forecasting, the physical state of the stock, ordering cost of inventory, and the physical condition of the list are all areas of concern for inventory management in supply chain management. One of the goals of managing inventory is to guarantee that the merchant has the information to manage and maintain proper merchandise when placing orders, shipping items, handling them in a variety of warehouses, and keeping other costs in check. [contactus_lilgoodness] Relationship between Inventory management and Supply Chain Management Inventory control is one of the most critical aspects of supply chain management because it significantly impacts the company's profitability. Because one of the main goals of a company is to make money, inventory management in supply chain management is critical because it leads to higher revenues. In addition, this centralized management aims to maximize customer value and provide a competitive edge. The merchant must first determine inventory requirements before establishing organizational goals. After that, he should be able to maintain a supply chain management system and a report on the inventory status at the end of a financial quarter. The inventory should be compared between actual and expected levels. Furthermore, the management should be able to track inventory movement to guarantee no losses. Finally, using the various reports, the manager should be able to reconcile the inventory balances at regular intervals. 7 Objectives of Inventory Management In Supply Chain Management System The technique of coordinating the movement of items and services across several processes and locations is known as supply chain management, or SCM. Raw material storage and transportation, work-in-process inventories, finished objects, and end-to-end order fulfilment from origin to consumption are all included. All business activities linked with a company's procurement, production, distribution, and sales order fulfilment functions are included in SCM. As a result, it entails managing supply and demand, sourcing raw materials and components, manufacturing and assembly, warehousing and inventory tracking, order processing and management, distribution across all channels, and ultimate customer delivery. Supply chain managers are in charge of creating effective plans and strategies to guarantee that the supply chain is running smoothly. They develop well-defined action plans based on detailed analysis and forecasts, enhancing overall performance. The backbone of today's business organizations is the ultimate integration of inventory management in the supply chain system. Suppliers who follow SCM principles are anticipated to provide more value to their customers than those who do not. The seven most important goals of inventory management in supply chain management are listed below. Improve Operational efficiency Efficiency is one of the most important goals of Supply Chain Management. Waste minimization is synonymous with efficiency. Waste can take many forms, including squandered materials, squandered funds, person-hours, delivery time, and so on. Therefore, waste minimization is an essential aspect of managing the supply chain. What role can SCM play in waste reduction? First, it manages manufacturing, inventory, transportation, and logistics to reduce waste. This is accomplished by exploring ways to improve systems to reduce waste. If your organization, for example, exchanges inventory data with a supplier and keeps it updated in real-time using ERP software, inventory may be replenished quickly to meet demand. It might be tough to master the process of efficiently managing these operations, but knowing how to do so can be incredibly valuable to your company's overall performance. Improve Quality Waste reduction is only one aspect of inventory management in supply chain management. Another important goal is ensuring the product is of the most excellent quality possible. Quality Assurance is the observance of numerous customer-specified quality parameters, ranging from performance to particular features. This involves following food safety rules, displaying ethical and sustainable business practices, and taking other comparable steps. Establishing exact criteria and including supplier partners from the beginning is crucial. To keep things moving through the supply chain, you must be nimble in real-time handling modification and variation to that specification. The quality of a company's goods, as well as its total profitability, are directly influenced by SCM. Quality management in the supply chain is critical for gaining a competitive advantage while minimizing operational costs. Optimized Logistics The better the inventory management, the better would be the supply chain. However, the purpose of logistics management is to optimize transportation and the supply chain. Each company is responsible for its part in ordering, shipping, and delivering goods in an autonomous commercial environment. Due to bad timing and coordination, the costs of this company model are substantially greater. Supply Chain Management guarantees that your operations run smoothly and that all stakeholders, including suppliers, manufacturers, wholesalers, and retailers, are on the same page. With SCM, you may optimize transportation and logistics processes with any vendors or buyers you work with. Orders are automatically recorded into a system, alerting other facilities that more resources are needed to complete the request. This ensures that the entire procedure runs smoothly and flawlessly. Reducing Logistics Costs Efficient supply chain management inventory helps cut off the company's operational costs. Building an optimized flow of goods reduces the cost of all forms of company costs, including acquiring, manufacturing, and shipping items. In addition, by facilitating a seamless flow of raw materials between a supplier and a firm and the movement of finished goods between a company and its consumers, the holding period of both raw materials and finished goods may be reduced—this aids in the reduction of losses and the minimization of total operating costs. Enhancing Customer Services One of the essential aims of supply chain management is customer happiness. By far, the most efficient method of client service is through your supply chain. It directly impacts two of the most critical aspects of customer satisfaction: price and delivery. You can surpass your competitors in terms of retail price and profitability if you have a well-functioning supply chain. Having high-performing operations also aids you in meeting or exceeding your consumers' product delivery expectations. It's vital to keep your consumers happy by giving them what they want, when they want it, and at the lowest price feasible. That's precisely what good Supply Chain Management allows you to achieve. You can give the excellent service, transparency, and visibility that your consumers want by choosing the suitable systems, processes, and partners for your supply chain. By building strategies that minimize mistakes and maximize inventory management efficiency, you keep total control over the lifespan of your items, from conception to delivery. The stronger your supply chain is, the better the customer experience will be, the happy your customers will be, and the more likely they will buy from you again. Streamlining Distribution Supply Chain Management benefits businesses by streamlining the distribution process. Creating adequate coordination between various transportation routes and warehouses is vital to promote faster goods flow. Also, Logistics Management allows companies to reduce logistics costs while delivering goods more rapidly. Consequently, the whole distribution system has been upgraded, allowing items to be delivered at the right time and place. As a result, it's a good idea to invest in technology that allows you to efficient inventory management, provide detailed data, automate delivery, give real-time tracking, and conduct other distribution duties. Established Coordination The purpose of supply chain management is to improve coordination among the different stakeholders in an organization. Employees, customers, and suppliers will be able to connect with the firm more efficiently thanks to establishing a channel. In the case of an emergency, managers may immediately lead their workforce, and employees can contact their supervisors via the established channel. Customers can also access relevant information through self-portals as part of the customer support system. It promotes information exchange among all stakeholders and aids in the creation of a well-coordinated organization. 5 Reasons for Inventory Control To Be The Initial Step in Supply Chain Management Systems Even in our increasingly competitive economy, keeping track of inventory is a virtual necessity because inventory is often a business' most vital and costly asset for maintaining a centralized supply chain management system. Yet, according to U.S. Small Business Administration, 46% of small firms either don't track inventories or do so using a manual technique. For five reasons, inventory control should be the initial step in fine-tuning your supply chain management systems. Inventory Turnover One of the essential criteria for centralized management is the inventory turnover ratio, which is the cost of items sold divided by average inventory. A balanced ratio is critical for keeping your inventory profitable rather than squandering money on overstocking, stocking obsolete products, or rushing shipments to satisfy consumer demand. For example, a low inventory turnover ratio (low cost of goods, high average inventory) means you're spending too much on items that should have already shipped to customers or were never manufactured in the first place because of the cost of keeping them on the shelves while their value depreciates is counterproductive. High inventory turnover, on the other side (high price of products, low average inventory), suggests you won't be able to satisfy demand fast if the market shifts. Allows Capital to be Released Once you've paid for the supplies you'll need to make your inventory, that money won't be available until you've received payment from a buyer — in other words, your capital is tied to the prospect of a sale. This may restrict you from using that money to put back into your firm or recruit new personnel, among other common tactics for improving revenue development, unless your organization has a quick cash conversion cycle. Inventory control includes making sure that inventory isn't put into production until you know it will sell rapidly. Improved Customer Service Customers should be satisfied with a well-made and rapidly delivered product, which is the expected outcome of a lean and efficient supply chain. An optimized inventory and supply chain results in fewer shipments to complete orders, real-time tracking of orders from the warehouse to the customer's front door, accurate inventory that prevents charges from being placed on out-of-stock items, and a lower return rate because customers have fewer issues with their product. Swiftly and adequately resolving a customer's concern will go a long way toward boosting your reputation and assuring future business. Advanced Technology Inventory control used to entail spreadsheets and manual audits, which were prone to human error and left businesses vulnerable to accounting errors that put them in financial and legal jeopardy. Across many industries, automated and integrated technologies are becoming the norm. For example, financial data, such as accounts receivable, is increasingly combined with sales information, including client histories. The idea is to keep inventory under control from quarter to quarter so that it does not affect the bottom line. That type of real-time data integration wasn't conceivable until recently. Still, inventory control solutions are now built from the ground up to handle these functions, which helps centralized supply chain management systems run more efficiently. Encourages Growth Trends in Optimizing Supply Chain Processes Future trends are increasingly becoming a reality for organizations of all sizes, from cloud computing to real-time tracking. Automated inventory control is the ideal approach to connecting with technologies that will keep you one step ahead of your rivals. "Just-in-time" inventory, for example, can help improve turnover rates by allowing you to retain inventory levels just high enough to meet demand. Businesses require strong ties with suppliers via common software databases to execute "just-in-time" operations like supplying customizable packaging. This will allow order fulfilment to your locations as needed. Many interrelated yet separate pieces work together to generate customer happiness and higher income in a complex supply chain. Our supply chain is exposed to several variables out of our control in today's often-disrupted business environment, including fluctuating market demand and new competitors. Our inventory is the one thing we can control: where it is, where it is going, and what we need to do to keep it at growth-friendly levels. Inventory control is the first stage in maintaining an effective supply chain. It may also be the most crucial step, given that poor management and lack of planning are two primary reasons small businesses fail. How Can I Improve Inventory Management in Supply Chain Management? Technology is at the heart of effective supply chain management. Traditional, frequently manual procedures are eliminated, saving time and lowering the chance of mistaken addition. In addition, any information captured becomes easier to communicate throughout a complete supply chain when activities are managed digitally. You're halfway to comprehensive supply chain optimization if your organization has installed a transportation management system (TMS). Transportation and inventory management are two critical components of a successful supply chain. Transportation management systems handle product movement along the supply chain and offer a robust communication platform for carriers, shippers, and manufacturers. The amount and kind of items in an eCommerce warehouse or other storage facility are the subjects of inventory management platforms. These pieces of technology, when combined, establish the foundation for businesses to get their products into the hands of customers as quickly as feasible. When a corporation uses a centralized supply chain management system to respond promptly to a customer's order, for example, merchandise travels quickly out of the warehouse and no longer occupies inventory space. That space is then freed up for newer goods to take their place. Quick shipments may be handled via inventory management systems, guaranteeing that the oldest product is dispatched first. When inventory and supply chain management operate together, tracking ruined or damaged inventory is more accessible. Products may be tracked down to the SKU level and readily traced as they leave the warehouse. When a product is recalled, inventory management teams have the information they need to locate and isolate faulty merchandise. Specific transportation management systems, such as Microsoft Dynamics, can link directly with ERPs. When these technologies are combined, logistics professionals benefit from enhanced shipping accuracy, considerable time savings, and access to valuable data for SKU-level cost allocation. Additionally, by exchanging data between systems, integrations between a TMS and an ERP may assist bridge the gap between inventory management and transportation management, ensuring that all parties involved have reliable, real-time inventory information. Inventory Management Techniques to Overcome Supply Chain Problems From the procurement of raw materials to the delivery of the item to the ultimate consumer, the supply chain tracks products. As a result, supply chain management encompasses various components and factors, including logistics for moving resources and goods from point A to point B. Inventory management may be considered part of a more extensive supply chain system. Ordering, storing, and distributing goods are all aspects of inventory management. Inventory management, when done correctly, may have a substantial positive impact on a company's bottom line. On the other hand, poor inventory management decisions, such as over-or under-ordering, may be costly and detrimental to a company's long-term health. If a company does not spend on learning and adopting the best inventory management practices, supply chain interruptions will increase dramatically. There are vital concerns that have led to supply chain challenges. One is the worldwide supply chain crisis linked to the COVID-19 outbreak has received the most significant attention. Worldwide, suppliers have been impacted by safety limitations, labour shortages, and shutdowns. Some supply chains have only had minor glitches, while others have yet to recover and return to routine fully. The good news is that you and your firm can overcome these supply chain disruptions by employing a few proven, contemporary inventory management solutions. Utilization of Automation, Artificial Intelligence, and Machine Learning Automation is a fantastic technique for improving inventory management efficiency. Warehouse automation, for example, may increase productivity by directing robots to discover or transport products using cloud-based technologies. As a result, individuals no longer need to locate and package products. Essentially, these robots may support human employees by acting as assistants and increasing the overall pace of operations within a company. Automation technologies powered by AI and machine learning can also help with supply chain difficulties. The programme may gather and interpret data to make the supply chain as a whole more visible. Inventory Control Applications The more inventory management you have, the less disruption and stress the rest of the supply chain will give you and your company. While achieving the appropriate degree of inventory control isn't always simple, many businesses use inventory management methods like the ABC analysis to make the process go more smoothly. All goods are designated as A, B, or C in an ABC analysis. The highest demand or value is for A-level items. C-level items, on the other hand, sell slowly and are counted seldom. B-level things fall midway in the middle. Inventory and supply chain managers can better assess whether to purchase replacement stock once goods have been categorized this way. Utilization of Both Passive and Active Demand Forecasting Techniques. It makes economic and logistical sense to know how much of a product to have on hand each quarter. However, predicting demand for a particular product may be challenging, which is why many people divide demand forecasting into passive and active demand forecasting approaches. Active demand forecasting entails keeping a close eye on what's going on in the market. It's a combination of intuition, trend data, and historical data. Because they have limited historical data to evaluate, startups often rely on active demand forecasts for advice. Historical patterns are used in passive demand forecasting to predict future requirements. Companies can choose between passive and active demand forecasting or a combination. Employing Inventory and Warehouse Management Software Must If you go into any company for inventory control and good supply chain management techniques, you'll see a lot of technology. The warehouse management software system has been a game-changer for smoothing out the creases of inventory management. The majority of warehouse management systems collect significant amounts of data. They also indicate what's going on in the warehouse and the whole supply chain. This makes them essential in identifying possible supply chain disruptions and pain areas. There are several other advantages to using warehouse management software. Many work in tandem with other business systems, such as customer relationship management software. That implies that when a customer cares professional answers the phone, they may leverage warehouse management information to give excellent service. It's hard to outsmart every supply chain snag, especially in the face of uncontrolled occurrences like a worldwide epidemic. Nonetheless, inventory management best practices and tools can help mitigate the impact of interruptions. Conclusion Supply chain management is an integral part of every business's operations. It is critical to assist a company in gaining a competitive edge and maximizing customer satisfaction. Because of the increased degree of competitiveness, a company's supply chain management function has grown increasingly significant in today's corporate environment. As a result, there is a more critical requirement for businesses to assure consumer satisfaction. Inventory management, the backbone of supply chain management, is vital to customer satisfaction. Inventory management, through EOQ and JIT, aids in the reduction of supply chain management expenses as well as the forecasting of inventory levels. Furthermore, inventory management is a valuable strategy for managing risk in an organization by ensuring that safety stock is maintained. Supply chain management can fulfil its most fundamental goals through inventory management. As a result, it may be claimed that inventory management lies at the heart of supply chain management and that organizations must embrace it if supply chain management is to be successful. In other words, without inventory management, businesses will struggle to prosper in the supply chain. It serves as the foundation for all other supply chain operations, including transportation, production, and distribution. WareIQ- The Most Efficient Inventory Management System WareIQ is a leading fulfilment company in India, specialising in managing the supply chain of eCommerce businesses through effective inventory management. Through automatic replenishment suggestions, WareIQ's inventory planner aids in demand forecasting and maintaining precise stock levels across SKUs in warehouses in appropriate locations.Checklist-based Quality Checks are also conducted by WareIQ's operations professionals, guaranteeing that the QC process is complete and dependable.WareIQ adheres to the two points listed below to avoid mispicking:1. Using handling units to convey merchandise and scanning bar codes for pick and pack fulfilment services.2. Design and implementation of a process for tracking and tracing mis-picked merchandise [signup] FAQs Why is inventory management so crucial in the supply chain?Because a corporation must balance client demand with storage space and cash constraints, inventory management is critical in the supply chain. Inventory management gives you a clear picture of your supply chain like procurement, production, delivery, etc. What is the impact of excellent inventory management on the supply chain?By maintaining a consistent inventory flow, good inventory management may promote profitability, improve supply chain visibility, and improve operations. For today's supply chain management, inventory optimization is the gold standard. What is the definition of inventory supply?MRO inventory is often referred to as supplies or supply inventory. It's made up of consumable materials, equipment, and supplies that are utilised in the manufacturing process but aren't included in the final product. What role does inventory play in the supply chain?What role does inventory play in the supply chain?Inventory facilitates the balance of demand and supply, which is perhaps the most essential role it performs in supply networks. Firms must deal with upstream supplier exchanges and downstream consumer needs to efficiently manage forward and reverse flows in the supply chain. Is inventory control an element of operations control?As a result, inventory management is an important aspect of operations management. When it comes to inventory, the most important factors are when to refresh stock and how large orders should be. An inventory policy is what it's called. The basic considerations of when and how much to order are addressed by an inventory policy.
June 11, 2022
Opening Inventory: Definition, Importance & 4 Methods to Calculate Opening Stock with Opening Inventory Formula
The beginning of a new accounting period, like the latest financial year, brings along new levels of supply chain inventory. Inventory is an important aspect of every eCommerce business and the amount of opening inventory available at the start of an accounting period can provide insights into a company’s performance in the previous cycle. In this article, we will take a look at what opening inventory is, the methods to calculate it and its importance. Keep reading. What is Opening Inventory? Opening inventory is the book value of inventory that is available at the beginning of an accounting period. It also includes the stock value carried forward from the previous period. It is counted as a current asset in the financial books. Furthermore, it helps calculate the average inventory value during a specified time period and helps to determine the cost of goods sold. It is also called the beginning inventory value of a company. Its calculation depends on several factors. [contactus_gynoveda] 4 Methods to Calculate Opening Stock Find the Cost of Goods Sold for the Previous Accounting Period The cost of goods sold (COGS) is the expense that you incur for manufacturing products and preparing them for sale. It is the sum of beginning inventory and inventory bought during the last accounting period, excluding the ending stock in the same period. It is also the total per-unit cost to a company for each sale. The lower the COGS and higher the product cost price means higher revenue margins for the company. All gross profits and expenses on product sales qualify as inventory metrics. Opening inventory formula = [Beginning inventory + inventory purchased during the last accounting period] – ending inventory of the same period Find Your Ending Inventory Balance This figure depends on the opening inventory, net purchases for the last accounting period and the cost of goods sold. Here's the formula: Ending inventory formula = [beginning inventory of the last accounting period + net inventory purchase in the same period] – COGS Determine the Cost of Purchases Made It is the money spent on buying additional inventory. This number helps decide your working capital requirements. It depends on the value of your opening inventory and ending stock in the previous accounting period and adds the cost of goods sold. It is calculated as follows: [Ending inventory – beginning inventory in the last accounting period] + COGS This formula doesn't work well for labour-intensive sectors, like manufacturing, where the cost of goods sold depends on factors other than the inventory. Such elements make the calculation of actual goods sold trickier. Use the opening inventory formula There are two opening inventory formulas to calculate opening stock: For manufacturing enterprises: Opening inventory formula = cost of raw material + value of WIP goods + cost of finished goods When we know the cost of goods sold, closing inventory and sales data: Opening inventory formula = [COGS + ending inventory in the last accounting period] – inventory purchased in the same accounting period Or Sales – gross profit – [COGS + closing stock] You may also be using one of the following methods for inventory valuation: FIFO First in, first out is a common method of pushing out the inventory that entered the warehouse first. The first manufactured or purchased stock is sold off before the others. It uses the same disposition as supermarket stores, where you may observe that the oldest products are displayed upfront. It is mainly used by sellers of perishable products. LIFO As opposed to FIFO, the last in, first out method suggests selling off the newest inventory first. Auto dealers commonly use this method to lure customers in with new models and sell them off before the old ones. Weighted Average Method The average cost of items purchased is used to calculate the COGS and ending inventory value. Many manufacturers use this technique of inventory valuation, so they can avoid differentiating between product batches. Importance of Calculating Opening Stock Calculating opening stock helps in the estimation of various critical factors to ascertain your business performance. Cost of Goods Sold You can use the formula mentioned above to calculate COGS. However, to ascertain this, you should include unsold ending stock for prior accounting periods in the gross profit figures. Opening stock creates the opening balance of a new accounting period and forms the basis of COGS. Gross Profit Once you have determined the COGS, compare it with the revenue earned to find your gross profit margins. Equating COGS with sales tells you whether your operations brought you a profit or a loss. Average Value of Inventory This is an average of beginning and ending stock. It can be calculated as [opening inventory + ending inventory] / 2 Inventory Turnover It measures how frequently you sell your inventory in a year and if you can replace it in a timely manner. Inventory turnover indicates the operational efficacy of a company. A slow turnover suggests weak sales and a quick turnover shows healthy sales figures but insufficient inventory. Most retailers with high volumes and low margins experience one of the highest inventory turnover rates. Here is the most commonly used formula: Inventory turnover = COGS / average value of inventory Although inventory turnover can be calculated by dividing COGS by sales, most analysts and businesses don't use it. This is because sales figures include profit margins that can skew the inventory turnover figure. 7 Important Use Cases of Beginning Inventory Here are some primary use cases for beginning inventory: Recognises Inventory Management Disputes A higher number of leftovers or a supply crunch signals inventory management disputes. Frequently evaluating the opening inventory can help identify these issues at the right time. More negligible beginning stock shows lapses in the merchandise ordered during the last period. Calculating opening stock helps highlight these issues, so you can take timely actions to restore balance. Identifies Logistical Issues Owning more or less inventory than forecasted inventory indicates supply chain gaps. As a result, a demand or supply mismatch could lead to logistical disruptions. Knowing the opening inventory balance at the beginning of every accounting period helps you ascertain the loopholes in the chain. Spots the Shrinkage Inventory shrinkage occurs due to a difference in the stock accounted for in the books and the actual quantity in the warehouse. It is a logistical nightmare for retailers and suppliers and occurs for various reasons. Damaged or stolen goods or human errors are the most common causes of shrinkage. Monitoring the beginning inventory level can highlight gaps in the figures and help prevent or reduce shrinkage. Highlights Demand Changes Variations in the opening stock levels indicate changes in your business' supply and demand. For instance, a sudden growth in sales leads to a reduced beginning stock and vice versa. So calculating the opening stock helps in understanding your business performance. Controls Your Taxable Revenue Opening inventory helps determine the average stock level. Combined with sales forecasts done right, the opening inventory level can help you understand how much stock you need. Thus, you can decide when and how much to pre-order. This can also help you reduce your taxable income. Analyses Your Business Performance Opening stock is a current asset that forms a part of your working capital. It is to be held temporarily and assists in estimating the liquidity levels of a business. Statutory Compliance The AS-2 and Ind AS-2 guidelines mandate disclosure of inventory levels of your company. Information like the carrying amount of inventory and the related expenses need to be revealed. Some of the stock-related data you need to provide are: Inventory accounting policies.Carrying amounts for all inventory stages such as raw material, WIP and finished goods.The written-down amount of any inventory counted as an expense or a reversal of that amount and the conditions that led to it.The cost of inventory is counted as an expense, like COGS. Conclusion Inventory valuation deeply affects supply chain efficacy. And the stock levels decide the demand and supply gaps which influence your business performance. Numbers are everything for an enterprise; managing the inventory becomes critical for success if you deal with tangible products. Your logistics and operational prowess can break down if the inventory is not managed correctly. The simple formula of opening stock tells you where you stand at the beginning of a new accounting period. Pay close attention to what the stock numbers say as it determines how well you can meet customer expectations. Evaluating opening inventory is critical to deciding your expenses and the gross profit you earn in every cycle. It is a metric of your business's success. You can utilise skilled staff and technology to monitor the inventory levels closely. Of course, inventory monitoring demands some time, but your products need it. If you require inventory monitoring, order management or any other logistical task, WareIQ can be of assistance. WareIQ is one of India’s fastest-growing eCommerce companies that centralises the use of technology in all our core offerings. In addition to helping you monitor opening inventory levels, we also provide inventory and order management through our custom WMS, a country-wide network of fulfillment centers and partnerships with more than 20 of the largest shipping aggregators in India to ensure that your orders will always get delivered at the fastest pace and the cheapest rate. Opening Inventory: FAQs Can opening inventory be considered an asset?Opening inventory is considered a current asset when mentioned on the balance sheet. It includes both items that are in production and ready for sale. Is opening inventory a debit or credit?Opening inventory is the amount of inventory that has been left over in the previous year and is carried forward to become the opening stock of the next financial year. It is considered as a debit balance. What are considered purchases in relation to opening inventory?Any finished item, raw material that goes into the creation of a product or any other material that is used anywhere in the manufacturing process can be considered a purchase. How can WareIQ help you to manage your opening inventory?WareIQ has a custom WMS that takes care of all inventory-related and order management activities across multiple platforms and fulfillment centers.
June 10, 2022
Inventory Levels: Definitions, 5 Strategies & Benefits for Having a Minimum Inventory Level￼
An inventory is the life of any business. It is immensely important in producing and selling products or services. There are many different types of inventory levels and you need to understand them to help run your business cost-effectively and efficiently. What are Inventory Levels? A company holds stocks of products in its inventory, which are its business assets. Hence, inventory levels need to be at the optimum. None of the products can be left unaccounted for, or unattended to, as such breaches can cause heavy losses and create confusion over a period of time and across the supply chain. Inventory levels are classified as Minimum level, Maximum level, Danger level and Average level. [contactus_gynoveda] What are the Different Levels of Inventory? Minimum Level A business always needs to maintain a minimum inventory level to ensure that a sufficient amount of raw materials are readily available for production to continue without any interruptions. Whenever the level dips below the minimum inventory level, it can lead to a production outage. This may cause a dip in the stock levels and sometimes a business can run out of stocks completely. Based on the demand and consumption rates, and the average production time to produce goods, the minimum inventory level can be easily calculated based on a simple formula: Minimum inventory level = Average usage x Average lead time (reordering level) The minimum inventory level can vary depending on the type of business. However, the following supply chain elements need to be taken into account: Material Type: If there is a standing order that requires a specific type of material, there is no need to keep a minimum inventory level.Purchase Time: This refers to the lead time or the time taken by a business to acquire supplies for the manufacturing process. The time is calculated from the order placement stage to the arrival of the supplies.Consumption Rate: The material consumption rate is calculated based on the trends in a particular industry but also depends on the data analysis of production history over a specific time period.Reorder Level: The stock reordering level depends on the replenishment requirements of the business, which are based on production volumes. This level hovers between the maximum and minimum inventory level and can be easily calculated with a simple formula: Reorder level = Rate of maximum consumption x Maximum reordering period Maximum Level While the minimum inventory level has to be maintained at all times to avoid the production process getting affected, the maximum inventory level should never exceed the set level since it can lead to overstocking and raw materials lying idle for an extended period of time. Moreover, maximum inventory levels result in higher storage costs, pilferage, discrepancies in quantities of stock and other inconsistencies. It is easy to calculate the maximum level using the below formula: Maximum Inventory level = Reorder level + Reorder quantity - (Minimum usage x Minimum purchase time) The reorder level can be arrived at using a simple formula: Reorder quantity = Average daily consumption x Average purchase time The key factors to consider while calculating the maximum inventory level: Daily consumption of raw materials (on average)Average purchase time required to replenish stocks of raw materialsAvailability of storage spaceReordering quantityCost of holding inventoryRisks involved such as damage, pilferage, materials turning obsoleteFluctuations in raw material pricesShelf life of raw materialsFluctuating consumer preferences Danger Level A business can never afford to have its inventory levels reaching the danger level at any time. This is because it means that the stocks of raw materials are running out at a dangerously fast speed. Whenever the inventory levels breach the danger level, the company has to source materials quickly. More often than not, procuring materials from other sources on an emergency basis increases the cost. Danger levels must be avoided at all costs, as businesses need to look for new, unqualified or unverified vendors, which affects the overall quality of the end product. Moreover, ordering on an emergency basis increases the freight cost, leading to an overall increase in inventory costs. It is wiser to calculate inventory levels in advance to prevent them from reaching dangerous levels. The danger level can be arrived at by using a simple formula: Danger Level = Average consumption x Lead time for emergency procurements Average Level As the name suggests, the average level refers to the level of raw materials available in the inventory at any point in time. The average level is usually consistent and does not vary unless there is a spike in demand or stocks lie unused due to some extraneous circumstances. It can also dip to the danger level if the procurement of raw materials is affected for any reason whatsoever. It is easy to calculate the average level with a simple formula: Average level = Minimum stock level + 0.5 x Order quantity How to Calculate Inventory Levels for Optimum Use? Lead Times of Inventory Production The lead times of inventory production can be calculated on reordering delays. While considering the lead times of inventory production, the time involved in processing the purchase order and the time the supplier or vendor takes to accept and process the order need to be considered. If the supplier has a practice of accepting orders only once a week, it is advisable to place purchase orders well in advance (at least four days earlier). The extra four days is the buffer time to cover any delays in supply. The delay in supply is calculated by adding the sum of the supply delay to the reordering delay. Availability of Safety Stock Safety stock can be easily calculated. It is the sum of maximum daily usage x the maximum lead time or the maximum time a vendor takes to effect deliveries. From this result, subtract the average product usage (daily) and multiply it with the average lead time. The formula is somewhat tricky: Safety Stock = (Maximum daily usage x Maximum lead time) – (Average daily usage x Average lead time*) * Lead time is calculated as the number of days Forecasting Demand Forecasting demand, also known as demand planning, is arrived at by referring to the past data, current trends and upcoming requirements, all of which help to forecast demand for the future. Accurate forecasting is essential for a business to maintain sufficient buffer stock to fulfill customer orders without having to keep large amounts of inventory lying idle. Forecasting demand is not just about setting a reorder schedule, it is also about using data analysis to help identify set patterns and trends. It helps in adapting to the prevelant dynamic conditions and to meet or exceed customer demands or expectations. 5 Best Strategies for Maintaining Stable Inventory Levels Implement an Inventory Tracking System An inventory tracking system, like a barcode scanner, is useful for manufacturers to track and manage inventory. Your inventory management system can seamlessly integrate with barcode readers to track the products in stock or transit. You can also store and analyse the data to create reports that provide valuable insights into your inventory’s performance and can help to maintain optimum inventory levels. Determine Reorder Points A reorder point (ROP) is the minimum stock a business needs to hold in inventory to avoid stockouts and be able to fulfill orders smoothly. The reorder point’s goal is to maintain inventory levels to meet supply demands. Hence, each time the inventory levels hit the reorder point, an alert is triggered to replenish stocks of raw materials for the specific item. The reorder point is determined based on daily sales volumes or the number of product units sold per day. It also considers the vendor’s lead time, which is the time it takes for materials to arrive. The simple formula for calculating a reorder point is: Reorder point = Lead time demand + Safety stock Use an Inventory Management System If you deploy the relevant technology to complement your supply chain at all stages, it ensures that your distribution network operates smoothly and without any glitches. Implementing an inventory management system helps sync SKUs and orders to monitor fulfillment centers, sales channels and inventory levels in a centralised location. An efficient inventory management system helps in tracking and managing inventory levels accurately to save precious time. Communicating Clearly With Your Supplier You must make your expectations clear by communicating effectively with your vendors. Efficient inventory management depends on maintaining proper stock schedules. Holidays, power disruptions, transit delays, etc., need to be taken into account to avoid delays in scheduling. The finer details of your vendor’s operations need to be integrated with your inventory management system, as vendors play a critical role in the supply chain. Monitoring your vendor’s performance over a period of time is crucial in achieving the best results. Carry Out Inventory Audits Inventory audits, or warehouse audits, may take more of your precious time than you bargained for. However, when a huge amount of inventory is involved, mere manual use of spreadsheets to keep track of it just won’t do. You need to automate and digitise your inventory audits to make them consistent and reliable. You can think of syncing your inventory with a reliable inventory storage system to make it more efficient. Benefits of Having a Minimum Inventory Level Maintaining a minimum inventory level is a common objective for most businesses, as it makes sense. Higher inventory levels mean additional management and higher costs. A right balance needs to be struck between inventory and demand. Here are the benefits of maintaining minimum inventory levels: Reduced Storage Costs Holding stocks for long periods of time costs money. The costs include utilities for space and the manpower deployed to manage the inventory. Moreover, holding minimum inventory helps to pay vendors promptly instead of holding huge stocks in inventory, which will lie idle even after the payment has been made. Easy to Manage It is always easy to manage minimum inventory levels, as the time involved in organising and retrieving inventory is reduced drastically. Moreover, the replenishment process is also simplified and is more efficient if the inventory is shortened. If your business has a high inventory turnover rate, holding minimum inventory levels is beneficial in the long run. More Cash at your Disposal Having minimum inventory levels leaves you with liquid cash, as acquiring inventory is a costly process. If your business involves expensive products, having heaps of money stored in idle inventory leaves you with hardly any cash to deploy for meeting other expenses. When you replenish inventory levels at almost the same rate you sell your products, the cash inflow matches what you pay for the inventory. More Space Becomes Available Due to space and inventory being inversely proportional, you will have more space by having lower amounts of inventory. Businesses should be concerned with holding maximum inventory levels, as the cost per square foot of shelf space increases if there is any space lying unused. Maintaining lower inventory levels requires less demand for space and helps you manage your inventory levels more efficiently. How can WareIQ help achieve a Minimum Inventory Level? Live Updates to Changes in Inventory Levels With WareIQ, you can track inventory levels and receive functionality reports. WareIQ can share real-time updates on stock positions from its dashboard. It allows you to make the right decisions as to when stocks need to be replenished to prevent stockouts. You can have the following critical information at your fingertips: Current inventory held by the businessData on historical inventory levels for any period/locationThe next reorder due for a specific productWhether a flash sale will cause a dip in inventory levelsIf the current product demand is in sync with historical dataDetermines the fastest-selling productsDetermines which products are moving sluggishly causing additional inventory costs Reduces Cost of Inventory WareIQ makes your expansion plans a lot easier. You can even expand globally, while still keeping track of your expenses on storage. You can use WareIQ to ask questions such as: How much is the per-unit storage cost I incur?What is my average cost to fulfill an order?How many pallets/shelves/bins am I being charged for?When I change my inventory locations, how much can I save on shipping costs? Further, WareIQ helps you automate your inventory levels by suggesting the appropriate infrastructure and expertise, along with technology integration. WareIQ also helps optimise your storage to enable cost savings. Mitigates Wastage of Inventory WareIQ uses cutting-edge technology and demand forecasting to help you maintain optimum inventory levels, thus reducing the risk of holding too much inventory. The inventory forecasting tools help you decide on the optimum level of inventory based on demand and also take care of seasonality wastage, products passing expiration dates and other factors that result in diminished sellability. You can have tight control over your inventory levels, which helps prevent inventory shrinkage. Automates Notifications for Replenishment of Low-Stock Items WareIQ helps retrieve historical inventory data to help you calculate precise reorders to replenish stocks quickly. It helps you to consider lead times and inventory replenishment times as well. The inventory automation tool triggers alerts whenever stocks reach the threshold level that has been pre-determined. Counts Inventory at the SKU Level WareIQ features an advanced inventory tracking software that lets you view inventory on SKU levels on demand. You can also monitor the performance, along with the ‘unit sales per day’ details. You get to know what is available at which locations, letting you make quick changes whenever required. Access to a Nationwide Network of Fulfillment Centres WareIQ lets you gain access to a nationwide network of fulfillment centers to enable you to scale and grow. You can expand your customer reach, reduce shipping costs and hasten last-mile delivery without incurring additional costs. The technology-driven nationwide fulfillment network lets you know which is your best-selling product and at which location and allows you to place inventory at the most intelligent locations based on customer demand and access to transport, among others. Conclusion As you scale your business, you must keep track of your inventory levels, especially when your plans include opening new warehouse locations and selling across multiple channels, which can become pretty challenging over time. WareIQ is here to lend a helping hand with matchless fulfillment solutions that enable you to maintain optimum inventory levels and track inventory across multiple locations. Inventory Levels: FAQs How do you determine the optimum inventory level?Proper inventory planning and forecasting involves setting a minimum and maximum threshold to ensure that there is never overstocking or understocking. It is calculated as average inventory divided by average sales. What is an ideal inventory level?An inventory turnover ratio of anywhere between 5 and 10 is generally considered ideal for most industries. This indicates that your business restocks its inventory every 1 to 2 months. How can you consistently maintain inventory levels?Some key strategies to manage your inventory levels are listed below:Streamline your forecastingUse the FIFO methodIdentify low-return stockAudit your inventoryUse inventory management softwareTrack your stock levels constantlyReduce equipment repair times How can WareIQ assist with maintaining optimum inventory levels?Users can take advantage of our advanced WMS to be able to analyze past inventory and order data across multiple platforms, forecast demand and supply levels for a specified time period, and manage inventory levels across multiple warehouses.
June 10, 2022
What is Direct Fulfillment? How is it Different from Amazon FBA?
eCommerce retailers are constantly striving to offer the best services to their customers at the most competitive rates to out-shine their rivals. There are many important decisions to be made, especially in terms of order fulfillment because that is the most visible aspect to the customer and they get to experience it first hand. There are many different methods of order fulfillment and today we take a look at one of the more unconventional ones - direct fulfillment. Read further to understand what it is, how it works and if it would be the right fit for your business. What is Direct Fulfillment? Direct fulfillment is the process of shipping goods ordered by a customer directly, using the company’s own facilities and resources, and not relying on a 3PL fulfillment company for any aspect of the fulfillment process. Another process is that wholesale sellers make a large number of product purchases, obtained from the producer, after which separation of the goods into distinct categories occurs, in order to sell to retailers. The distributor then sells the products to the end consumers. This is known as Indirect distribution. Fulfillment By Amazon (FBA) is a service provided by Amazon that helps their clients with storage, packaging, shipping guidelines, and other aspects of the fulfillment process. This reduces the burden on sellers. Sellers ship their products to an Amazon fulfillment center, where the products are stored in warehouses, according to their demand, expiry date, etc. The products are then shipped whenever they are needed. When an order is placed, the employees in Amazon are always physically getting ready to prepare, package, and ship the products. [contactus_uth] What are the Benefits of Direct Fulfillment? There are many benefits in the process of direct order fulfillment, especially during the inception of an online retailer, where customers would be fewer and demand would still be on the lower side. A few benefits of direct order fulfillment are Ability to consolidate important information on client purchasing habits.Ability to separate yourself from the competition.First-hand look as to the performance of certain products and client feedbackFaster supply of your goods to your customer'sRemoval of payments and credit to a third-party distributorDirect relationship with your clientsExpanded number of ASINsBuy request no neededUnavailable assuranceHassle-free reverse logisticsNo outbound delivery costs How do I get started with Direct Order Fulfillment? Direct order fulfillment starts with the following steps: The online retailer gets client requests and orders.The company checks stock and by the same token, acknowledges or dismisses the order request.The company initiates the fulfillment of each order from the area allocated by Amazon (commonly a stockroom) and drops the request if they don't have stock in that area.The company satisfies the order request by utilizing the chosen transporter and transport strategy during the arrangement. If you are currently an Amazon vendor 1. If it's not too much trouble, record a help case in your Vendor Portal mentioning the desire to be set up on Drop Ship Central and Direct Fulfillment. If you are not currently an Amazon vendor Train your onboarding contact that you would like the "DF (Direct Fulfillment)" box checked during arrangement on Vendor CentralDuring the Vendor Central arrangement process, you will get a challenge to pursue Drop Ship Central, the administrative entry for dealing with your immediate satisfaction queries.As a component of the guided setup process, you will be asked to (1) pick your conveyance name preference (utilize Amazon's transportation mark as opposed to giving your delivery name); (2) provide your fulfillment warehouse data; (3) provide your hours of operations, occasion, and termination plans; and (4)select a transporter.In around 48 hours, you will get the last guidance to transfer your stock feed data into Drop Ship Central. What are the Advantages and Disadvantages of Direct Order Fulfillment? Advantages Of Direct Fulfillment You can oversee your own branded shipping, stock, and orders.As long as you have the space, can print address names, pick and pack, and stand in line at a mailing station, you can satisfy orders on your behalf.It functions reliably, assuming your clients are nearby, the operations are sensible, and the transportation costs are negligible, particularly when order volumes are relatively low.Rather than most 3PLs, you can store and transport transitory or perishable merchandise, such as blossoms or lithium batteries.You can be located closer to your clients since this choice accompanies more client contact. Disadvantages Of Direct Fulfillment This strategy requires a lot of staff to oversee customer service and other eCommerce fulfillment processes. This is likely removing diverting your attention away from developing the business.You need to have adequate warehouse space to store items.To ensure quick international shipping, would require a lot of capital and resources than partnering with a 3PL fulfillment company.Human blunders can happen when orders expand in size and complexity, particularly on the off chance that you are not utilizing automation to assist in dealing with your stock. Read our blog about Seller Fulfilled Prime to get a better understanding of other services Amazon has to offer. What are the Main Points to Keep in Mind while Choosing Direct Fulfillment? Fulfillment companies new to direct order fulfillment and multi-level marketing (MLM) organizations might battle with one or more of the extraordinary prerequisites needed to successfully serve their customers. Nature of Business Retailers with expanding business operations are best suited to benefit from direct order fulfillment. Such businesses have the monetary means and available manpower to take on the process of fulfilling customer orders on their own, without needing to bank on Amazon’s fulfillment services. Retailers that seek to reduce their order fulfillment and logistics costs can do so by distributing to customers directly and don’t need to pay any fees to a 3PL fulfillment company. Reduced Delays Retailers who rely on Fulfillment by Amazon frequently face challenges relating to inventory receiving times. The receiving process, which would initially take 5 days, can now take upwards of 30 days. This lengthy delay can severely reduce the availability of inventory. By independently taking care of order fulfillment processes, companies can make use of their entire inventory, which would result in an increase in sales. Benefit to small businesses Small businesses generally find Fulfillment by Amazon to be a useful tool and can adopt Amazon’s offerings as their main fulfillment strategy with Direct Fulfillment as a backup. Retailers who make use of Fulfillment by Amazon have access to standardized shipping devoid of any hassles. Amazon takes care of the storage of inventory, packing, and shipping aggregation for all orders that come in. Smaller businesses can also use direct order fulfillment as a backup option to transfer more of their products. Fulfillment by Amazon (FBA) vs Direct Fulfillment: What are the Differences? Given the benefits, it shouldn’t shock anyone that most third-party sellers on Amazon utilize its Fulfillment by Amazon (FBA) service. With FBA, sellers' items automatically qualify for Amazon Prime and Super Saver Shipping. They can likewise exploit Amazon's customer service experience, and this all means acquiring more deals than contending with non-FBA sellers. Notwithstanding, not all that sparkles is gold. Amazon's FBA has its disadvantages as well, and numerous sellers frequently select to deal with this aspect of eCommerce logistics themselves. If you're a third-party seller deciding on direct order fulfillment, you might need to enlist external assistance to help you in dealing with the logistical portion of your business. Fulfillment, direct or otherwise, has become well known and has progressed as necessities have ascended over the last ten years. Innovation is a major tool in terms of dealing with the entire cycle and monitoring individual shipments as well as the stock in the warehouse. For the vast majority of businesses, the goal is to get to the same level of assurance that Amazon Prime offers in terms of reliability and quality. The differences between direct fulfillment and FBA are listed below: [table id=5 /] Conclusion Direct order fulfillment facilitates your enterprise to manage expenses and mitigates dangers while at the same time enhancing your capacity to serve customers. You get all the recognition for providing professional services but conversely, you also get all the blame if something goes wrong. It is a primary step and doubtlessly, a hard one. If you feel that your business needs to outsource its fulfillment requirements to a 3PL company, WareIQ can definitely be of service. WareIQ, is a full-stack eCommerce fulfillment company for some of the most reputed brands in India. WareIQ offers a full-stack platform for eCommerce companies to enable same-day delivery and next day delivery to customers – an Amazon Prime-like experience but accessible to everyone. Why You Should Choose WareIQ's Fulfillment Centers for FBA Prep Service? Comply with Amazon’s scheduled delivery Prep services ensure proper packaging and preparation which helps to reduce delays in receive time. Taking scheduled appointments in the Amazon Fulfillment Center is a hassle because of the complex checklist of items to be executed. There are chances of missing the time slot leading to stock rejection. Stock preparation needs to follow Amazon guidelines which is a thorough process that WareIQ staff is trained in. WareIQ offers FBA prep services that ensure quality control, streamlining and adherence to Amazon standards whether it comes to fragile item preparation, repackaging thousands of SKUs to simply labelling products correctly with barcodes. WareIQ’s automated order fulfillment system ensures efficient and accurate picking and packing. Save operational costs Keeping track of a lot of different stock keeping units or SKUs that require different prep services can be tricky. You have to ask yourself if your business can afford to have its products returned or be billed a non-compliance fee for failure to meet FBA standards. Outsourcing FBA prep is a cost-effective way to move inventory. With WareIQ’s smart technology, SKUs are mapped across sales channels for efficient fulfillment. Also, with WareIQ you’ll only pay for what you use, which means if you ship only one product in a month, you’ll only pay a pick and pack fee for that one. WareIQ books slot for clients on their behalf and offer bulk shipping with multiple sellers thereby ensuring cost efficiencies. Save space FBA doesn’t just take up mind space, it takes up a whole lot of physical space as well. De-palletizing and repackaging, and storing packing materials such as poly mailers, fragile item wrapping, or labels can take up a lot of space, which most vendors do not have. In this case, a fulfillment center may be a great option. WareIQ has the bandwidth to fulfill 1 to 10,000+ orders each day. Save on resources Think about what you could be doing with the resources it takes to manage FBA prep. Outsourcing to a fulfillment centre can help you focus on growing your core business. [signup] Direct Fulfillment FAQs (Frequently Asked Questions) What does direct fulfillment order mean?The term "direct fulfillment" refers to sending an order directly to the customer. Direct fulfillment is when your eCommerce company sells D2C (direct to consumer) and ships orders to your customers. However for wholesalers, if you are selling products to other online retailers, you will ship the orders of your products in large quantities. What are direct fulfillment centers?A direct fulfillment center is a site where products and orders are shipped directly to customers or individual shoppers. These multi-million-square-foot warehouses store products, pick and pack orders, ship orders, and manage product returns. What is Amazon’s direct fulfillment program?Amazon Direct Fulfillment is a backend service of Amazon fulfillment. A vendor that is a part of the Amazon direct fulfillment program can ship products directly to consumers when Amazon runs out of product. What is the difference between FBA and Direct Fulfillment?In FBA, Fulfilled by Amazon, You ship a portion of your inventory to Amazon fulfillment centers, where it is held until a buyer decides to purchase it. However, in the case of Direct Fulfillment, vendors ship their products directly to the customers.
June 09, 2022
How to Sell on eBay? 9 Simple Steps to Become an eBay Seller in 2022
eBay was one of the companies that were born from the internet boom in the 1990s. Since its inception in 1995, it has become a household name in the eCommerce business and currently operates in 32 countries, worldwide. The company was founded in 1995 and is headquartered in San Jose, California. eBay predated the entry of its closest rival, Amazon, into the Indian eCommerce market by almost a decade, commencing operations in the country in 2005. It has arguably pioneered the rapid growth of the eCommerce industry in the country, with other major players such as Amazon and Flipkart, wanting a share of the action. In this blog, we will take you through how you can sell on eBay, the benefits of using eBay for sale, the challenges associated with it and how WareIQ can help. Why Should You Choose eBay for Sale? Immediate Recognition While Amazon has garnered more trust from customers in recent years, eBay is no slouch when it comes to trustability and customers’ ability to recognise the brand as an eCommerce giant. If a retailer uses eBay for sale, customers will automatically associate them and their products and services with eBay and all the positives that come with it. This instantly increases the chances of customers buying your products compared to if you were an independent seller because they have faith in eBay’s verification processes and trust that their purchase and order fulfillment experience will be up to the mark. Auction Services One of eBay’s unique features that continues to set it apart from other competitors is the ability for retailers who sell on eBay to conduct auctions. Products that get sold at auctions always end up getting sold for a much higher price than the retail equivalent, simply because the product will always get sold at the highest possible price that people are willing to pay. eBay also gives users the option to set a reserve price, which acts as a safety net to prevent products from getting sold at a severely discounted price compared to what it is actually worth. Promising SEO Capabilities This is another metric where eBay is slightly behind Amazon but still offers prime SEO results, pun not intended. Regardless of what types of products customers are searching for, eBay results are bound to pop up in the top 5 to 10 results, at least. Retailers who only sell on eBay and other eCommerce platforms and who do not operate their own websites can take advantage of the heightened SEO results. Reduced Prices This is one metric where eBay has a clear advantage compared to Amazon. Amazon charges around 15% plus additional fees per sale compared to eBays 10%. This means that retailers who sell on eBay can retain higher profit margins while selling at the same or discounted prices compared to who sell on amazon , flipkart or other eCommerce websites, which can be a huge boon, especially for small to mid-sized businesses. Gigantic Customer Market eBay, while still second to Amazon, has an astounding 183 million active users. This means that retailers who sell on eBay instantly get access to this huge market of potential customers which can instantly result in more demand and sales. However, sellers will have to fend off other competitors who are also seeking to make use of this newfound demand. Retailers will need to adjust their business strategy accordingly but new customers are always a good thing. [contactus_gynoveda] 9 Simple Steps to Start to Sell on eBay Creating an Account Open the “My eBay” drop-down menu that is present on all eBay pages and click on “selling”. Type of Account You can either opt for a business account or a personal account. Once that is done, enter the information in the registration form and click on “create account”. You can also sign up with an Apple, Google or Facebook account. Then fill out your contact details and click “Continue”. Registering as an eBay Seller After filling out the contact details, you will be redirected back to “My eBay”. You will have to register as an eBay seller. Click on the “My eBay” menu and click on “selling” as done previously. Listing an Item You will be directed to the Selling Overview page where you need to click on “List an Item” which will redirect you to fill out the “Sell Your Item” form. Naming Your Product Once you enter the name of your product, click on “Get Started”. Adding Product Information Once you enter all the details in the “Sell Your Item” form, click on “Submit”. The listing will then be saved as a draft from where you will be directed back to the Seller Account Registration page where you have to click on “Get Started”. Verify Your Phone Number You will have to fill out your phone number and have it verified by entering an OTP. Changing Account Type You can now change your account type if you want to. It will mostly not be needed. Users can opt between 2 types of accounts to sell on eBay: Personal Account: Choose this if you want to sell on eBay as an individual or if you are connected to a registered business.Business Account: Choose this if you want to sell on eBay as a company (Single-member LLC, Corporation/Multi-member LLC, Partnership) or a sole proprietor. You Can Now Sell on eBay Now that your account has been verified, you can commence selling on eBay. Challenges Faced by Retailers Who Sell on eBay Presence of Additional and Hidden Fees eBay, like other eCommerce selling platforms, cannot abstain from imposing additional and hidden fees on retailers. Retailers are often bombarded with new and varying prices that they have to pay if they want to continue to sell on eBay. Examples include getting charged an insertion fee if you add one listing in 2 different categories and you are also using a free account. These expenses can often have dire consequences for retailers who already have slim profit margins. Restrictions on New Sellers eBay seeks to make the most amount of money it can. Retailers have to remember that it is not a charity service and eBay's bottom line probably matters even more than their own. To ensure that firms are pulling their weight, restrictions such as selling thresholds or minimum income requirements for a specified period of time are often imposed on sellers, with penalties being imposed on sellers who cannot meet them. This will rub salt in the wound for new businesses that are already struggling to get by. Creation of Product Listings Creating listings on eBay can often be a lot harder than it needs to be. For example, if retailers want to upload in bulk, they can upload a CSV file but will have to filter through more than 60 pages of instructions, which can make it unnecessarily complicated for people who are not well-versed with technology. This process can take time and effort, especially if your catalogue is diverse and you have different products with multiple variations. Restrictions on Type of Images eBay imposes restrictions on the type of images that can be used. Images can only be between 500 pixels wide and 1600 pixels wide. Images that are either above or below this threshold will not cut it. Additionally, eBay is very strict when it comes to images used from existing sources and requires crediting the original source, which can then direct the interest of customers away from your page. Lack of Automation and Integration When retailers opt to sell on eBay and utilise eBay’s 1st-party services, they often limit themselves because there are no options to integrate with other platforms or software solutions. This makes life much harder for businesses that want to sell their products on multiple platforms because they will have to juggle manually updating multiple different pages that have different passwords which can be a cumbersome process. Additionally, there are limited options for automation for basic tasks such as packaging. Suggested Read: Sell on Instagram eBay for Sale: 8 Strategies to Get the Most Out of it Run Promoted Listing Campaigns Promoted listings are a tried and tested way of improving product visibility and eventually, sales. Research shows that promoted listings are viewed 36% more than regular ones. The pricing scheme for these campaigns also limits the amount of risk incurred by a retailer because instead of paying upfront, eBay receives an additional percentage of each sale made. Use Intelligent Keywords Keywords are the words that customers type into search engines when they are looking for a product. Keywords constantly evolve depending on the season, type of products, the platform used, etc. Retailers need to constantly be ahead of the curve and use the appropriate keywords in their product descriptions, page titles and image descriptions so that they can give themselves the best chance of matching with what customers are looking for. Offer Fast and Free Shipping In the current landscape we live in, same-day and next-day shipping have become the norm. Your business needs to offer it to avoid being left behind. Another way to spark interest from customers is to offer free shipping wherever possible. There are many methods to offer free shipping while still retaining a high-profit margin such as including the shipping cost in the price of the product and having minimum cart requirements, among others, so retailers need to analyse their capabilities and offer shipping services accordingly. Try Hiding Negative Reviews If your listing page is constantly flooded with negative reviews, it could be indicative of a much larger issue. However, if you are a growing business, there are bound to be trials and errors along the way. Retailers who sell on eBay, need to make sure that they address and correct every negative review that they receive so that can be gotten out of the way because they have been solved. They also need to put an honest effort into turning negative reviews into positive ones so that when another customer checks the reviews, the ratio of positive to negative reviews will be higher. Try to Achieve eBay Top Seller Status If you sell on eBay, you should definitely consider becoming a top-rated seller. This will give you an achievable long term goal and will enable you to optimize all the metrics that will help get you there such as providing an excellent customer experience and selling products that are popular. By becoming a top-rated seller, you would be eligible for various perks such as boosted visibility, a specified amount that gets credited towards promoted listings, discounts on shipping and much more. Have a Fair Return Policy Retailers who use eBay for sale need to frame an appropriate return policy. Since returns expenditures are generally incurred by sellers, they need to have a policy in place that doesn’t put undue pressure on them. Conversely, they also need to keep in mind that a strict, rigid return policy can be a turn off for customers. Retailers need to strike a balance between offering a fair return policy for themselves and their customers. eBay offer a cash-back guarantee relating to orders that are not fulfilled, damaged products and orders that don’t match the description. Excluding these circumstances, retailers are free to choose if they want to offer returns or not. Promote Your Listings on Social Media Social media and eCommerce go hand in hand. The same people that are browsing pages on Facebook and Instagram are also checking for products that they want to buy and spend hours looking for the best deals possible. The logical conclusion is to utilise social media to promote products that you sell on eBay since those users are already well-informed about the internet, how to buy products online and would appreciate extra knowledge about a sale or a product that they may want to buy. Run Email Marketing Campaigns For retailers who sell on eBay, running email marketing campaigns is a good way of keeping people informed and reminded about your products, promotional offers you are running and information about your brand in general. It is also a good way of gathering data about the tastes and preferences of customers so that it can be used for future marketing campaigns and can yield better results. Conclusion It is a dream for many retailers to sell on eBay due to the vast array of benefits that comes with it. While it is definitely a good idea to register to sell on eBay, we also do not recommend putting all your eggs in just one basket. Due to the adverse growth of the eCommerce industry in the country, it pays dividends to generate as much exposure as possible in order for a retailer to capture the maximum amount of market share that they possibly can. It also depends on factors such as the nature of your business and products, the financial capabilities of your business and the potential customers you are trying to target. If you do decide that selling on eBay is the right decision for your business, you would need to think about the best way to fulfill all those orders. This is where WareIQ can be of assistance. WareIQ is emerging as one of India’s most rapidly expanding 3PL fulfillment companies. We provide every aspect of order fulfillment such as fulfillment centers to store products, picking and packing services, distribution and delivery services and reverse logistics. This, coupled with our superior and advanced tech platform that provides a state of the art Warehouse Management Software, NDR support and an RTO shield that gives you protection from liabilities and return orders, is sure to make your order fulfillment experience world-class. [signup] Sell on eBay: FAQs What are some things retailers shouldn’t do while selling on eBay?There are few things that retailers should abstain from while selling on eBay and some of them are listed below:- Using unoriginal photos- Not being honest about the product and its features- Ignoring messages and enquiries from customers- Miscalculating shipping charges- Not fulfilling orders to certain locations- Setting the wrong start price at an auction How long does it take for you to get paid when you sell on eBay?Payment usually occurs 1 day after confirming the payment from the buyer, unless there is some issue with the transaction. It takes about 2 days for the amount to reflect in the sellers account. Is there a listing fee while listing products to sell on eBay?No, there are no fees associated with listing your products on eBay. Fees will only be charged if a product is sold and if you opt for any of the featured listing options. Can you integrate an eBay account with WareIQ’s WMS?Yes, an eBay seller account can be integrated with WareIQ’s WMS and users can avail of all the benefits that come with that. How can 3PL companies like WareIQ solve the challenges faced by eBay sellers?3PL companies such as WareIQ provide flexibility to users by providing services such as order fulfillment, packaging and shipping at much cheaper rates. Additionally, WareIQ’s WMS can integrate with most eCommerce selling platforms and can consolidate data relating to orders and inventory from all of them in one centralised location.
June 08, 2022
What is Free Shipping In eCommerce? How To Offer Free Deliveries For Your Online Store in 10 Ways?
eCommerce Shipping stores are a common sight in online shopping. Instead of wandering around in physical stores and fighting amongst crowds, fulfillment sellers can sell whatever their products at great convenience from the comfort of their offices or homes. For many merchants, free shipping (also known as free distribution, or free delivery) is an added draw that helps them build customer loyalty and lower shipping costs. However, it's not just enough to give away the goods; there needs to be a strategy behind putting this offer together. Free deliveries are a marketing strategy for eCommerce fulfillment companies. In today's competitive online world, many small businesses plan to offer free shipping or at least find ways to lower shipping costs - but it can be hard to understand how to apply this successfully in a real-world scenario. Warehousing and Fulfillment can be tricky for eCommerce logistics, especially those that rely on warehousing and D2C fulfillment companies. However, there are many benefits of free delivery - from increasing customer retention rates to receiving appreciation from your customers. This article will outline how you can provide free shipping and lower shipping costs to your online customers. What is Free Shipping in eCommerce? Free shipping is a fantastic feature for online shoppers. It allows customers to get their items without paying any extra fees. It can be a great way to attract new customers and make them feel appreciated. Ensure you have accurate shipping information on your website and offer free shipping on qualifying purchases. Use promotional codes and discounts to incentivise buyers to make purchases that qualify for free shipping. It will help you reach your MOV requirement faster and increase the number of customers who receive free shipping when they make a purchase, which will enable a higher rate of customer retention and acquisition. [contactus_gynoveda] Why Should Online Stores Offer Free Shipping? Online stores can evaluate both flat rate shipping or standard shipping offered by the 3PL players & then decide which kind of shipping will help them offer free shipping to their online shoppers. Read the blog on flat rate vs standard shipping to understand the differences. Free Deliveries are a great way to attract customers and keep them returning to your online store. Offering free delivery on all orders can help you gain loyal customers and make more sales. There are many reasons online stores should offer free delivery, but four of the most important ones are listed below: Helps Increase Your Customer Base When you offer free deliveries, you tell customers that you value their business and are willing to go the extra mile to ensure that they're satisfied with their purchase. It makes customers more likely to return and recommend your store to their friends. Boosts Your Sales Figures If an online retailer has many shipping options, they can better cater to the sizes and needs of their consumers. The availability of these different shipping methods equates to a higher sales rate. In 2017, eCommerce warehousing giant Amazon reported that offering free shipping increased sales by 27%. That's a massive boost for any online store and it demonstrates just how important free shipping is for attracting customers. Can Increase Profit Margins The shipping charge should be available both on the product page and at checkout to maintain an ongoing cost from product page to checkout. If an extra shipping charge deters a customer, they may abandon their shopping cart. Offering free delivery or at least providing lower shipping costs makes it even cheaper for customers since they don't have to pay any additional fees associated with shipping. Plus, if you have a lot of regular customers who order large items, free shipping can save them money. Shows Your Customers That You Care Many online stores offer free distribution on orders on a specific retail value to show their customers that they're valued and appreciated. Offering free delivery is one way to show your customers that you understand the importance of their business. 10 Different Ways to Provide Free Shipping to eCommerce Customers There are a few different ways to offer free deliveries by eCommerce fulfillment to customers. Here are some examples: Use Voucher Codes If you have voucher codes that you offer your customers, you can include them with orders or offer them as a separate product. This way, customers can get access to lower shipping costs or free shipping without spending extra money on more purchases. Offer Free Returns If you offer free returns, you can make it so that customers who return items receive free shipping. This way, customers won't have to worry about paying for shipping twice – once for the original purchase and again for the return. However, use this policy sparingly if your business incurs the logistics cost. Provide Free In-Store Pickup If you have a brick-and-mortar store, you can also offer free in-store pickup for online orders that are above a certain amount. This way, eCommerce customers can take their purchases home without having to pay for shipping. Offer Exclusive Deals on Free Shipping Sometimes, it's beneficial only to offer free delivery on specific items or particular year periods. This way, you can promote your products and keep your customer base loyal by offering exclusive deals with the benefit of free shipping. Use Social Media to Promote Free Shipping You can use social media platforms like Facebook and Twitter to promote special deal. This way, you can attract new customers and keep your existing ones happy by offering free shipping on their favourite items. Offer Minimum Requirements You can always specify minimum requirements that customers need to meet in order to take advantage of free shipping. This could result in more sales as customers try to reach these minimum requirements which will result in more revenue for the company. Offer Free Shipping to Certain Locations You can offer free shipping to certain locations that meet your expectations for the amount of demand and confirmed orders that they yield. It will help to increase demand even further in these areas, while mitigating increases in shipping prices as orders can be shipped in bulk and you can take advantage of large scale discounts offered by shipping companies. Provide Free Shipping During Specific Seasons Certain seasons result in more demand and more products sold than others. In order to make your customers happy and not risk your bottom line by being too generous, you can offer free shipping only during seasons that result in a large number of sales for your business. Suggested Read: Peak Season Shipping Include the Shipping Fee in the Price of Products By doing this, you are able to maintain your profit margins and also make customers feel like they are getting a better deal than what they actually are since they assume that they are getting something for free. Use Memberships or Subscriptions as a Way to Entice Customers You can entice customers into signing up for memberships or subscriptions by offering perks such as free shipping and ultra-fast delivery. This will help to promote your products as well generate new sales. How Do eCommerce Brands Recover the Zero or Lower Shipping Costs? Brands that are not profitable enough to provide shipping free on all products can choose to offer bonuses with purchases so that customers will spend more and qualify for free delivery. Find Out How to Increase the Price of Your Product. When you are pricing expensive items, shipping may be more than the cost of the item itself and make the product seem overpriced. However, adding a little to the price of already expensive products might not dissuade customers from buying as it will still be cheaper than paying for shipping. Add markup to your products to cover the average shipping and logistics costs. It is hard to predict additional orders, so covering shipping might make it plausible for the other charges. Find Out How to Get Customers to Spend More Gradually Increase LTV, offer subscriptions and loyalty programs and consider effective email marketing strategies. Customers often need to make a second purchase to cover the cost of acquisition. For example, six will subscribe for a second transaction out of ten customers. If the customer's next purchase covers their initial expense, then anything after that is a bonus. Add Bundling or Lower the Spending Threshold to Increase Your AOV Bundle products together to be able to charge lower shipping costs. Include other benefits, such as buying a membership to the website to get more value and money from the customer's purchase. Increasing your AOV (average order value) will help you reach new customers and keep old ones coming back for more. To increase the average order value (AOV), you should bundle products together or pre-kit them, so it's a single pick and pack process to fulfill an order. For example, Bathorium, a manufacturer of bath frames, allows customers to purchase six for the price of five – this saves shoppers money and increases AOV. To avoid losing customers, consider raising prices if the cost of free shipping is too high. If you offer low-cost items or no subscription model with a product, you might require customers to have a minimum order quantity(MOQ) to receive free delivery. How Do I Know if Free Shipping is Right for My Online Business? Some stores have the flexibility to offer customers free shipping on all products. However, other stores need to offer free distribution as an incentive for customers for specific products. For instance, if your product is expensive, you should test free delivery/shipping out for that product by running a limited-time promotion. To promote or boost sales, experiment with the minimum spending requirements and time limitations. It will help you customise the campaign to your customer's needs. Remember, experimentation is critical when it comes to marketing, and you should always keep track of what is working by doubling down on it and stop or remove things that aren't working well. Free delivery likely indicates that retail fulfillment is profitable. If you keep purchasing and making returns, there's always demand for the product and shipping aggregation. Avoid excessive returns by examining the potential impacts and ramifications of your purchase. If you want to offer free shipping, lower shipping costs or make your entire shipping process more efficient, WareIQ can help. We offer the choice of more than 20 of the largest shipping courier providers in the nation at the most competitive prices to enable you to retain higher profit margins and provide a high quality delivery experience to your customers. WareIQ is one of India’s leading and fastest-growing full-stack eCommerce fulfillment companies that offer a variety of services from same-day and next-day delivery, shipping badges and RTO Shield, to state of the art technological solutions such as our custom WMS and our intuitive, well-designed app store. We can take care of your brand’s entire fulfillment service requirements and ensure that you and your customers get the best order fulfillment in the country and have a hassle-free experience and raise satisfaction levels to new heights. [signup] Free Shipping in eCommerce FAQs (Frequently Asked Questions) Is it worthwhile to provide free shipping?Free delivery is an increasingly common online shopping option in which customers do not have to pay an additional shipping fee. Customers who value clear pricing structures may welcome free delivery, making it a possible competitive edge for online enterprises. How significant is free delivery to customers?Free delivery makes up to 75% of consumers more inclined to purchase. This is because the incentive enhances the online experience and eliminates the barrier that shipping prices generate. Most importantly, customers consider free delivery to be easy and convenience influences their purchasing decisions. Does offering free delivery increase sales?Free delivery is a great method to increase your sales since customers adore it. They see it as an extra benefit that will allow them to save money when the time comes to buy. How does free delivery make money?Free shipping is used as a lever by smart merchants of all sizes to enhance conversions and average purchase values while minimizing the negative impact on revenue generation. Furthermore, free delivery might save customer care expenses for returns. When returning an item, customers frequently request that delivery costs be paid. How can eCommerce business lower shipping costs?• changing product packaging materials which in turn will help reduce the weight and dimensions of packages• decreasing shipping distance by using a network of multiple fulfillment and micro - fulfillment centers• get discounted shipping rates with a 3pl service provider like WareIQ Is free shipping actually free?There is no such thing as free shipping, the customer is paying for it in one way or another. There is a significant amount of money that has been used in shipping and handling of products, so it can never be free. Yes, there is no charge in the bill ~ shipping fee= 0 INR for shipping but it is compensated in the cost of the product or MOV or other. How do I offer free shipping for my online store with WareIQ?There are a few methods that online retailers such as WareIQ use to offer free shipping. One approach is to require a minimum purchase amount before providing free shipping. Other methods include charging additional fees for free shipping or offering different discounts for customers who choose to order products with free shipping. Since we offer users a choice of shipping companies, you can always ship your products at the most competitive rates.
June 07, 2022
5 Important Tricks to Maximize Sales Velocity in eCommerce Business in 2022
In our everyday life, we get hundreds of notifications on our mobile phones through the various applications we have downloaded. They are loaded with new offers, flash sales, newly launched products and much more. Businesses are spending millions on such promotional activities through the help of campaigning and CRM tools. The ultimate goal of them is to create sales opportunities. These sales opportunities help immensely to boost the presence of a company to their existing customers and also to new customers but the following question arises - Are those people continuing to buy products now or at any time in the future? This should be an important question that every eCommerce retailer should ask themselves. They should find out the rate of an increase or decrease in sales within a certain time frame. This captivating process is called sales velocity in eCommerce. What is Sales Velocity in eCommerce? Sales velocity in eCommerce is a term used to describe the measurement of revenue an eCommerce business earns within a given time period. It is a useful practice for brands to forecast their actual revenue generation in order to know the running cost & profit/loss of their business for the specified time period and how it is going to perform in the future. [contactus_uth] Sales Velocity Formula To calculate the sales velocity of an eCommerce business, you first need to bifurcate the business into segments such as small, medium and large. As every company has its unique definition of what constitutes each segment, the seller should divide them accordingly. After determining the market segments, apply the sales velocity formula for each one of them. Sales Velocity = (Total number of Opportunities x Deal Value x Win Rate) / Length of Sales Cycle(a time period) Why is it Necessary for Businesses to Track Sales Velocity in eCommerce? The capacity of a business to thrive and develop is largely determined by sales velocity in eCommerce. The quicker prospects move through your pipeline, the better your chances are of maintaining high velocity sales. As a result, high velocity sales reflect that a business is generating a lot of income in a short amount of time. Tracking sales velocity in eCommerce over time helps a seller to compare their company's performance to that of other companies, the efficacy of particular departments or areas and evaluate how changes in sales processes affect an organization, for better or worse. Understanding sales velocity in eCommerce can also assist companies in better forecasting and determining how to optimize the sales process for faster and more high velocity sales. 4 Important Factors That Impact Sales Velocity in eCommerce The four factors that impact sales velocity in eCommerce are and help to high velocity sales: Number of Opportunities(Qualified Leads)Average Deal ValueWin/Conversion RateDuration of Sales Cycle Number of Opportunities(Qualified Leads) A certain quantity of opportunities is always in your pipeline. Check to see if they're legitimate opportunities. Your bottom line will suffer if your pipeline is full of junk leads with only a few that have a possibility of converting. Average Deal Value In every transaction, the most important resource for both parties involved is time. Make sure you're getting the most out of it. For both your prospect and yourself, incorporating offers or add-ons will improve the calibre of leads while also raising your average deal value and high velocity sales. It is a lot more relevant for companies offering software as a service or businesses that use the subscription model, where customer lifetime value is the most important factor for the business. Win/Conversion Rate Your average win rate is determined by the number of high-quality leads you generate. To find the win rate, divide the number of sales achieved by the total number of sales opportunities that came across. It can later be subcategorized into SQL and MQL. SQL or Sales Qualified Leads are the leads that are converted into sales whereas,MQL or Marketing Qualified Leads are the leads that may get converted into sales in the future. Duration of Sales Cycle This is the only aspect of sales velocity in eCommerce that you should avoid increasing. Shortening your average sales cycle and closing more quality deals faster can be accomplished by creating a more efficient sales process, revising your sales playbook and occasionally adding manpower to your sales force. 5 Tricks for an eCommerce Business to Achieve High-Velocity Sales Once an eCommerce company's sales velocity has been precisely determined, it can be improved by increasing the number of opportunities, average deal size and win rate or shortening the sales cycle. Increase the Number of Qualified Leads Sales velocity in eCommerce can be increased by increasing sales opportunities and sales opportunities can be increased by converting leads into qualified leads. A lead is a potential customer who has shown interest in a business by reaching out and interacting with it through inquiries through calls and emails and attending a seminar or exhibition by the business, etc. Leads are then turned into sales after the business takes care to qualify them within time. Conversely, an opportunity is a qualified lead. It means that the business has dealt with the lead and then converted it into a sale. A pipeline full of leads isn't always a positive thing as it might cause problems if the leads aren't thoroughly qualified. Concentrate your efforts on those who are a good fit for your solution. Focus on lead quality rather than quantity to improve the number of good chances in your pipeline. It's preferable to have a smaller number of high-quality leads than a large number of low-quality leads. Also, keep your expectations in check. Keep doing what's working for your company. If the solution is best suited for small firms, don't approach an eCommerce giant expecting to make a quick sale. There will always be opportunities to extend your consumer base but it is critical to keep your expectations realistic. Elevate the Average Deal Size A product is sold once its value matches or surpasses the price. Many times, a customer is willing to buy a product but they may not have enough money and sometimes the customer has money but they don't find that the value of the product matches the pricing so a seller needs to match that value and persuade the customer. Boosting average deal size can be explained as accurately as connecting value and pricing. When selling, one of your major concerns should be to focus on the customer's needs and pain points. Make each customer's presentation unique and deliver your solution in a way that demonstrates how it can satisfy their needs and alleviate their problems. Customers should regard you as a consultant who can assist them in finding a valued solution rather than a salesperson seeking to meet given targets. Also, make sure you're using your time wisely. Don't rush anyone through the process but give bigger opportunities with larger clients more time and consideration. You'll be able to devote more time to the deals that will have a bigger impact if you finish your smaller deals faster. Now it's time to start building and nurturing relationships. Building strong, mutually beneficial relationships with consumers will increase the average deal size significantly. CRM software makes this simple, allowing users to maintain customer connections and provide additional value to both buyers and sellers. Optimize Conversions Customers may leave your sales pipeline for a variety of reasons. Identifying why your consumers are or aren't buying is critical for optimizing your conversion rate, whether it's due to a rival or their lack of enthusiasm to address a problem. Ensure that you undertake a thorough sales discovery at the onset of your relationship with the consumer. Recognize why the customer is looking for a solution and position your company as the answer. Match each of their requirements to a feature of your solution. Remember to emphasize the risks of not jumping at the opportunity as well as the advantages of fixing the problem. Keep in mind that your sales process and the buyer’s journey are similar but not identical. Be patient with customers as they go through the process of making a purchase decision. Analyze your sales process to figure out where the customers are getting out of the deal. The problem might be that you need different lead qualification standards or that your representatives need more value demonstration practice. Find areas of struggle in your sales process, identify the problem and take action to resolve it. Reduce the Duration of the Sales Cycle Every transaction is unique and the amount of time you spend selling to each consumer will vary. Smaller and less established organizations can make faster judgments since they have fewer requirements and stakeholders to persuade. Understanding the size of a company and its desire to solve a problem will help you determine how soon you can sell to them. When a customer contacts you, don't be slow to answer. Reach out as soon as a lead has been qualified. If you're further along in the sales process and they're contacting you with concerns, make it a point to get them the information they need as soon as possible. Another strategy to shorten your sales cycle is to have ready-to-distribute material. Customers should have access to blogs, case studies, tutorials and product overviews. By avoiding any back-and-forth with queries and responses, you will save time. If you notice that your sales funnel is sluggish, it's usually because of this. Trust your instincts and respond as quickly as possible. Accelerate Growth with High Velocity Sales A full pipeline does not always imply a productive pipeline. Keep a close eye on sales velocity and the four major factors that influence it. Be careful to measure it on a regular basis and keep track of any changes. Conclusion: How Does Sales Velocity in eCommerce Help a Growing Business and How Can WareIQ Assist? Sales velocity in eCommerce is a helpful tool used by businesses to calculate their sales with respect to different timeframes and scrutinize the reoccurring problems faced by potential buyers. Creating a sale is not the most difficult part but mitigating customer difficulties through easy product delivery, branded packaging, calculating MOQ, etc. should be the real concern. In the process, most eCommerce companies get directly involved and waste their time and resources which reflects a failure in terms of sales velocity numbers (data). Comparatively, a lot of eCommerce companies are taking the help of 3PL fulfillment companies. WareIQ is one of the trustworthy fulfillment companies that promises to be a vital resource to their partners. In terms of the four factors that result in high velocity sales, here is how WareIQ can help with each one: Number of Opportunities(Qualified Leads) Our custom and highly advanced AI and ML-based WMS software have the following features: Deals immediately with your qualified leadsAnswers queries of confused buyers which persuades them to make a dealReduces the frequency of RTOs Average Deal Value A company looks for lifelong loyal buyers to increase sales velocity in eCommerce. Companies can do this by convincing users that they are getting the best deal possible We make this possible by providing the following: Hassle-free fulfillmentPersonalized customer experiencesBranded shippingEnabling high discounts Win/Conversion Rate Conversion rates are enhanced by increasing sales through different techniques, such as selling on multiple channels and running flash sales and campaigns. Here’s how WareIQ can help: Through our integrations with multiple platforms, sellers can keep track of all their data, across channels, in one place.We solve problems that buyers may face in real-time through our tracking pages, customer support etc.We entice customers by providing same-day and next-day delivery at lower shipping costs. Duration of Sales Cycle In the eCommerce market, delivery timing plays an important role in a sale. Customers are willing to pay more to get their delivery as soon as possible. WareIQ helps businesses by providing the following: Multiple warehouses in prime locations minimize the delivery time and ultimately, the sales cycle time.We give retailers access to more than 20 of the fastest courier services in the country and smartly allocate orders to the most relevant and cheapest option.We take care of order fulfillment, from the moment an order is confirmed till the time it is successfully delivered to the customer.We offer fulfillment 24/7 which reduces time for retailers as well as their customers. [signup] Sales Velocity in eCommerce - FAQs What does velocity mean in business?In business, velocity refers to the time it takes for a corporation to reach particular milestones, which can be measured in days, hours or minutes. It refers to the amount of work performed in a particular amount of time. Additionally, velocity may be used in various departments, including product or service development, sales and marketing. How do you increase sales velocity?You can increase sales velocity by:Increasing the number of opportunities for salesIncreasing the average deal sizeImproving your personal success rateReducing the time it takes for you to close a sale How to calculate sales velocity in eCommerce?Sales velocity is calculated by multiplying the number of opportunities created in a given period by your average selling price and close rate and then dividing it by your sales cycle, which is calculated over the same time period. What is lead velocity or lead velocity rate?The Lead Velocity Rate (LVR) is a metric that monitors the month-over-month growth in the number of qualified leads your company generates. Your LVR percentage is a measure of the efficiency of your pipeline and the long-term growth potential of your organization. What is SKU velocity?The frequency with which each SKU is picked over a given period of time is referred to as SKU velocity. It is a supply chain KPI that's often used to evaluate a logistics facility's stock distribution plan across multiple sites.
June 06, 2022
Why is eCommerce Order Tracking Important? Top 5 Tools for Tracking eCommerce Orders in 2022
Since eCommerce businesses rely on logistics companies to get their products into customers' hands, the logistics industry as a whole has been directly impacted. The logistics industry has expanded enormously as a result of the rise of the eCommerce sector, providing new technologies to help improve online shopping experiences. eCommerce order tracking is one such service that stands out in the world of eCommerce logistics. Advanced eCommerce order tracking software allows companies to track and manage their orders while they are in transit. This allows businesses to fix any issues that may arise during transit, as well as provide customers with information about the eCommerce order status of their goods. Today we will learn about every aspect of eCommerce order tracking and how it is beneficial to the eCommerce industry by ensuring customers can keep an eye on their orders as well as helping retailers understand if there are any errors or delays that have taken place. What is eCommerce Order Tracking? eCommerce order tracking is the process through which customers can track the eCommerce fulfillment status of their orders in real-time. It includes features like shipment tracking, Estimated Time of Arrival(ETA), and frequent updates on the location of the order. It plays an important role in enhancing the customer experience while product fulfillment, ETA and being notified of any delays, help a retailer track the product if they have opted for dropshipping, retail fulfillment, choosing a third-party logistics service, or tracking reverse logistics during order fulfillment. [contactus_gynoveda] Top Factors that Affect eCommerce Tracking Order Lack of Technology eCommerce order tracking requires the use of advanced technology, mostly from the seller's end. A supply chain system must get updated at each stage and should reflect in the eCommerce order tracking page. Any failure of technology at any point will affect the entire process. A few points to note are: A buyer just needs to have a smartphone to access the eCommerce order status but a seller needs to have advanced software.A good website is required to check for Pincode availability.An automated mail sender for sending order placement confirmation messages and emails with the order tracking IDs is needed.An order tracking tool is required such as a webpage.Human resources are required to handle and update it in case of any errors or glitches.An advanced software system is required to automate the entire eCommerce order tracking process.A dedicated customer care official to handle any related queries and issues is needed.A chatbot is needed to answer minor tracking-related queries in real-time. Shortage of Capital Investment A small eCommerce business with limited capital can barely afford to place MOQs and EOQs so they may also struggle to afford a decent eCommerce order tracking software. Developing an eCommerce order status system and keeping it connected with real-time logistics processes is a money-consuming task. It not only requires a huge one-time investment but also a constant short-term investment. Lack of Fulfillment Processes Fulfillment is a term that consists of various aspects that need to be taken into consideration and includes tasks such as transportation and logistics. Order fulfillment consists of eCommerce order status, proper inventory tracking, order information needed for picking the product from a particular warehouse, creating scan codes and tracking ID/number, ETA, etc. Lack of Expertise A supply chain runs 24/7 on high-end technology. It demands 100% accuracy and the shortest delivery time possible. For such tasks, retailers or their partners are required to be well-versed in technology as well as fieldwork expertise. Any mistake can ultimately result in a loss for a seller in terms of product damage and can create a bad image which ultimately results in poor feedback and buyer relinquishment. 5 Benefits of eCommerce Order Tracking Increases Customer Satisfaction With the eCommerce industry being so competitive, online shopping practically requires providing a good customer experience. If you don't want to lose business and seek to provide similar facilities to Amazon or other eCommerce giants, you must have an eCommerce order tracking system in place. Customers will notice if you don't provide the anticipated quality of service, putting your client loyalty at risk. Customers are more likely to write a positive review and re-buy from you in the future if you provide eCommerce order tracking to them. It not only gives them the most up-to-date information but also a sense that you care about their overall experience. Before reaching the customer, an order may pass through a post office or sorting facility after leaving a warehouse, 3PL fulfillment center, or packing facility. Customers will be less confused if they are kept informed. Reduces Costs Engaging customers is a very tough task for a business. Many companies do numerous things to keep their customers engaged such as arranging quizzes, running campaigns, and promoting their brands on social media, which costs them a lot of money. Customers want to be able to follow the progress of their orders. If you don't supply it, you'll almost certainly have to deal with hundreds of WISMO (where is my order) calls consumer complaints, and inquiries, which will be quite expensive in the long run. It's a vital scenario; if you don't act quickly, your customer reviews will suffer. It can devalue the brand's image. The number of inquiry calls/messages will drop considerably if you provide order tracking to customers where all tracking information would be generated automatically. You may save effort, reduce the stress on your customer service team and focus on quality assurance by automating order fulfillment with order tracking. This will save you time and money, allowing you to spend it in other ways to improve client experiences. Controls Order Fulfillment Quality It enables eCommerce companies to deal with problems in real time. The lifetime value of your consumers will rise when these basic solutions are provided. Also, many eCommerce sellers partner with third-party fulfillment providers for taking advantage of multiple warehouses at an optimum cost where they do not control logistics directly so with eCommerce order tracking, they can track their products when they are dispatched for fulfillment. Lowers Workload Expenses Whether you have a large customer service team or not, they will still benefit from automating eCommerce order tracking procedures. They might put this time saved to good use by providing personalised service to dissatisfied clients. Overall, your consumer experience becomes more smooth while maintaining a high level of quality. Helps in Tracking RTOs Order tracking benefits both eCommerce firms and their customers from a 360-degree perspective. This can also come in handy when dealing with a large number of RTO requests. Sellers can get an idea about which products and orders are being returned and from which locations, which can assist in the mitigation of RTO-related losses. Top Strategies to Get the Most Out of Tracking eCommerce Orders Utilize eCommerce Order Status Pages as a Means of Marketing eCommerce order tracking pages can be customized to tell customers about upcoming or existing flash sales, the introduction of new products, positive customer testimonials, and ask them for valuable feedback. This increases the amount of time a customer spends on your page as opposed to your competitor's websites. Integrate Live Chatbots for Answering Tracking-Related Queries in Real-Time In today’s world, people are in the habit of two-way communication. They want to ask questions and get a reply to their queries immediately and most sellers do not have a customer support executive to handle these queries so Live Chat through bots comes to the rescue. If sellers facilitate a Live Chat customer support system, they will turn out to have a better customer experience with a more personalized touch. Show Buyers Your Appreciation During Every Purchase The tracking system will know when the product got delivered, so automate a thank you letter to show the buyer that you appreciate the purchase. Additionally, you can give extra discounts to the same customer for further purchases, based on terms and conditions. Collect as Much Data About the Order and the Customer as You Can Customer data can be a potential MQL (marketing qualified lead) for any seller. They know that the buyer might buy similar products or products related to their last purchase, in the future. Most eCommerce giants are spending billions on acquiring customer data by not only collecting it but also buying it because they know that it will help them to figure out and forecast according to customers’ preferences. Mention the ETA and Adjust it According to Delivery Forecasts When a buyer arrives at your page and sees your products’ availability on multiple eCommerce selling channels, they check if the delivery is serviceable to their address and what the ETA is. Providing an accurate ETA is helpful for both parties because the customer gets an expectation of when it will arrive and the seller has a target of when they need to deliver the order. Use Personalized Data for Future Campaigns Post completion of the delivery, the eCommerce order tracking page provides a confirmation of the delivery and can include a field for customers to provide their feedback or give ratings for the various services they have encountered. Honest feedback helps provide valuable insight into a buyer’s tastes and behaviours which can be used in marketing and promotional campaigns in the future. Top 5 Tools for eCommerce Order Tracking in 2022 WareIQ Source Among the order tracking tools that are available, WareIQ is one the best and most trustable tracking tools for eCommerce orders and enables real-time tracking across India. WareIQ is a full-stack eCommerce fulfillment platform that provides superior order management services too. It enables order management, inventory management, returns management and a whole lot more as well as order tracking for online sellers and their customers, across multiple channels. It also utilizes a pan-India network of warehouses to enable same-day or next-day shipping to buyers. A few features of the fulfillment company are listed below: Manages order data, inventory levels, and billing from the same systemFulfillment of orders, as well as providing branded shippingReduces RTO rates through an RTO ShieldStores inventory in multiple- fulfillment centers across the countryHelps in ordering inventory according to EOQ and MOQQuick setup, scale-up, and scale-down according to seasonality, sales order velocity, and other factors It helps sellers to enable and utilize the facilities in three simple steps: Step 1 Suggests intelligent inventory placements. To recommend optimal inventory placement, it uses technology to analyze the order density, SKU velocity, seasonality, and market trend by location. Step 2 Picks up your products and distribute them to their hubs from your central warehouse. They combine their platform with sellers' online storefronts and marketplaces. Step 3 Pick, Pack, and Ship; uses the same inventory to fulfill orders from the seller’s online marketplaces, and offers smart shipping where the fastest and cheapest courier service is always chosen to enable the fastest possible delivery at all times. WareIQ provides a full shipping journey and real-time order updates on the tracking page. It offers branded tracking page exclusively to its e-commerce clients to boost brand awareness, repeat customers & improve post-purchase engagement. Shippo Source Shippo is an integrated shipping partner for Gator Website Builder's eCommerce websites. It also works with Magento and WooCommerce, as well as Mercari, Etsy, eBay, and Amazon marketplace systems, as well as national postal services in some non-US nations. It offers drastically discounted fares on major domestic and international carriers. A few features are listed below: Order fulfillment and branded tracking updatesQuick returns and finding the best shipping ratesVendors can provide delivery updates to consumers via email and textCreation of branded tracking pages on the website ShipStation Source ShipStation is a comprehensive shipping tool that manages orders from major eCommerce channels, gets the cheapest prices from different carriers, keeps customers up to speed on order status, streamlines customer returns, records inventory and provides statistics. Marketplaces like Amazon, Walmart, Alibaba, Etsy, eBay, and Jet use Shipstation. Some of their features are: Is compatible with both WooCommerce and MagentoWorks with major shipping companies and provides low ratesAllows you to create a bespoke tracking system for mobile and desktop that displays to your consumers, where their order is and the ETA Shipway Source Shipway is an eCommerce automation tool that helps companies automate their order management and shipping processes. It employs artificial intelligence to automate and avoid fraud, as well as to assist businesses in executing deliveries smoothly. To maximize the chances of connecting with customers, the platform uses different methods to reach out to them. It works with over 12,000 brands and is integrated with over 600 carriers in local and international marketsMonitors about 200,000 orders per day and has sent out more than 500 million notices to dateAssists businesses in creating branded tracking pages for a better user experienceSends out real-time and periodic updates on the status of orders which results in reduced inquiry callsGenerates detailed reports on carrier performance and aids in the reduction of RTO rates ShipWell Source ShipWell is a transportation management solution that helps companies to keep track of their orders while they travel. ShipWell uses data from ELDs and mobile devices to provide real-time product tracking. The platform employs notifications to keep you updated on the status of your order while it's in transit. A managed service team is also available for high-quality client assistance on the platform. Ensures end-to-end visibility with native ELD connectors and the Shipwell Mobile appTracks and traces shipments on the platform, which has access to over 2 million ELD-connected units and 850,000 driversEliminates blind spots throughout the shipment lifecycleIdentifies potential risks so that they are taken care ofImproves customer service by streamlining carrier touchpoints Conclusion: What eCommerce Order Tracking Facilities Does WareIQ Provide? WareIQ helps you to enhance customer experience by allowing them to track their orders at every stage of fulfillment, including when they are received, packed, shipped, in transit, out for delivery, and delivered. Even if an item is being returned, refunded, or exchanged, there will be reverse order tracking provided to both parties to mitigate any confusion. Online customers are notified in real-time through all channels - email, WhatsApp, text messages, etc. In addition, we offer the ability to customize your eCommerce order tracking page with product snippets, brand details and customer care information, so that users will stay engaged with your brand even after purchase. WareIQ's branded tracking page is an opportunity to turn your order tracking page into a profitable marketing channel, where you cross-sell & up-sell using marketing banners, logos, store links etc. [signup] eCommerce Order Tracking FAQs What is branded order tracking?A branded eCommerce order tracking page improves the post-purchase experience of customers by putting useful information through clear and customized content. What is eCommerce order tracking?Clients can track the eCommerce order status of their online orders in real-time with eCommerce order tracking technology. Expected delivery dates, shipment tracking, and regular updates on the eCommerce order status are among the main services it provides. Can I track a package with the order number?No. The order number and the tracking number are two separate numbers. Buyers can only track their packages using a tracking number; tracing a parcel using the order number is not feasible. How does product tracking work?In simple terms, monitoring a package or courier entails locating packages and containers, as well as other items, during the sorting and delivery process. This allows you to confirm their location and source, as well as get an estimated delivery date. Can WareIQ help me with order tracking?Definitely, Yes! WareIQ can help you with eCommerce order tracking and reverse order tracking.
June 06, 2022