What's Trending in D2C and eCommerce?
A Paradigm Shift? From Free Returns to a Fee for Returns
In recent years, there has been a noticeable shift among eCommerce brands towards charging a fee for returns. While many companies still offer free returns, an increasing number of brands are implementing policies that require customers to pay a fee when returning items. This change has been driven by a variety of factors, including rising costs associated with processing returns, the need to deter fraudulent or excessive returns, and the desire to offset the cost of offering free shipping to customers. This shift has been observed across a range of eCommerce sectors, including fashion, electronics, and home goods, and is likely to continue as brands seek to optimize their profitability and balance the needs of their customers. “In India, about 25%–40% of clothes sold online are returned where a seller pays for forward & reverse logistics with no revenue capture.”-Harsh Vaidya, CEO, WareIQlink Why do Brands Want to Charge for Returns? E-commerce brands may charge for returns for a variety of reasons, including: To cover the cost of processing and handling returns: Returns require additional labor and resources to process, such as restocking, repackaging, and shipping the item back to the warehouse. E-commerce brands may charge a fee to cover these costs. To deter excessive returns: Some customers may abuse the returns process by ordering items with no intention of keeping them, and then returning them after use or damage. Charging for returns can deter this behavior by making customers think twice before making a return. To offset the cost of free shipping: Many e-commerce brands offer free shipping to customers, but this can be costly for the company. By charging for returns, the brand can offset some of the cost of providing free shipping. To incentivize customers to keep their purchases: By charging for returns, e-commerce brands can incentivize customers to carefully consider their purchases before buying. This can lead to fewer returns and a more profitable business. Paradigm Shift Ripples From West to East Many eCommerce fashion and lifestyle brands have varying policies when it comes to returns and fees. Some of these brands may charge for returns, while others offer free returns. Here are some examples of eCommerce brands that may charge for returns. In the United States and Canada, brands such as ASOS, Zara, H&M, Boohoo, TopShop etc. are charging a small fee for returns. The fee varies depending on the location and the type of item being returned. Some Indian eCommerce marketplaces, particularly those that sell high-value items like electronics and appliances, such as Flipkart, Croma etc. have been charging a fee for returns for quite a while now. These fees typically cover the cost of processing and restocking returned items, as well as any associated shipping costs. However, in recent years, many Indian fashion and lifestyle eCommerce brands have moved towards offering free returns as a way to attract and retain customers. This trend has been driven by intense competition in the eCommerce market, as well as rising customer expectations for convenience and flexibility. Recently a news article from The Rest of the World publication revealed how Myntra, the leading fashion and lifestyle marketplace in India, has devised a system to identify and assign scores to customers basis the frequency of their returns. If the score of a customer crosses a specific threshold, a fee will be applied to items they then wish to return. That said, some Indian eCommerce brands may still charge a fee for returns in certain circumstances, such as for items that are heavily discounted or for international orders. Ultimately, the decision to charge for returns will depend on a range of factors, including the company's business model, industry dynamics, and customer preferences. As eCommerce continues to grow and evolve in India, it is likely that the policies around returns and fees will continue to evolve as well. Bracketing: The Main Cause Behind the Rise of Return Fee For years now, customers have been known to employ the tactic of bracketing their online purchases. Bracketing in online purchase refers to a practice where a customer purchases multiple variations or options of a product with the intention of returning some or all of them. For example, a customer might buy a shirt in three different sizes, with the intention of returning the two that do not fit properly. The practice of bracketing is often used by customers as a way to mitigate the uncertainty associated with online shopping, particularly when it comes to sizing and fit. By ordering multiple options, customers can try on the items in the comfort of their own homes and return those that do not fit or meet their expectations. While bracketing can be a useful strategy for customers, it can also pose challenges for eCommerce brands. When customers order multiple variations of a product with the intention of returning some or all of them, it can create additional costs and complexity for the brand in terms of processing returns and managing inventory. As a result, some eCommerce brands have implemented policies to discourage bracketing, such as charging a fee for returns or limiting the number of items that can be purchased in a single order. “Major international corporations such as Zara, H&M, and Uniqlo have begun to implement fees for returns in specific nations to combat the practice of "bracketing," where customers order multiple variations of size, color, or design without intending to keep all the items.”-Harsh Vaidya, CEO, WareIQlink Is Charging a Return Fee Fair? The question of whether charging a return fee for online orders is fair is a complex one and depends on various factors, including the reason for the return, the cost of processing the return, and the overall value proposition offered by the eCommerce brand. On one hand, it can be argued that charging a return fee is fair because it allows eCommerce brands to recover some of the costs associated with processing returns, such as shipping, restocking, and quality control. If a customer is returning an item simply because they changed their mind or made an incorrect purchase, it could be argued that it is reasonable for them to cover some of these costs. On the other hand, it can also be argued that charging a return fee can discourage customers from making purchases in the first place or returning items that they are genuinely dissatisfied with. This can ultimately hurt the customer experience and damage the reputation of the eCommerce brand. “Any time you take away something from consumers or make them pay for something that used to be free, you’re gonna get some outcry over it.”Sky Canaves, senior analyst of retail and e-commerce at Insider Intelligencelink The Future of Paid Returns On one hand, there are indications that eCommerce brands may continue to move away from charging fees for returns in order to remain competitive and meet customer expectations. As online shopping continues to grow in popularity, customers are becoming more accustomed to the convenience and flexibility of free returns and may be less willing to shop with brands that charge fees. At the same time, there are also factors that could lead eCommerce brands to continue or even increase their use of return fees. For example, rising costs associated with processing returns, particularly for large or heavy items, could make it more difficult for eCommerce brands to offer free returns on all products. In addition, the increasing prevalence of bracketing, where customers order multiple variations of a product with the intention of returning some or all of them, could create additional costs for eCommerce brands and incentivize them to implement fees to discourage the practice. Ultimately, the future of charging fees for returns in eCommerce is likely to be shaped by a complex interplay of factors and will depend on the strategies and priorities of individual brands and retailers. “From my perspective, the flat fee for returns is unjust to those customers who experience actual problems, such as incorrect size, subpar fabric quality, etc. Charging a returns fee to this base could have a negative impact on their eCommerce behavior.”-Harsh Vaidya, CEO, WareIQlink
March 05, 2023
Packaging Customization and Personalization: A Lesser-known Tactic to Boost Customer Delight in eCommerce
Packaging customization personalization in eCommerce logistics can help delight customers and create a positive brand experience. An example of a popular real Indian D2C apparel eCommerce brand that has used packaging personalization and customization to their advantage is Chumbak. Chumbak is an Indian D2C brand that specializes in creating trendy and colorful apparel and accessories. Chumbak uses packaging personalization and customization to their advantage by: Using visually appealing and high-quality packaging that enhances the unboxing experienceIncorporating their brand's unique and colorful design elements into the packaging, making it instantly recognizable and memorable for customers.Offering a customization service where customers can have their own name or message printed on the packagingIncorporating eco-friendly materials for packaging and ensuring their packaging is sustainable and responsible This approach has helped Chumbak to create a unique and memorable customer experience, which has helped to increase customer satisfaction and loyalty. What Kind of Personalization and Customization Options are Available Usually? Here are a few ways to personalize and customize packaging for ecommerce logistics: Custom branding: Add your company's logo or branding elements to the packaging to make it easily recognizable. This can include custom printed boxes, bags or mailing envelopes. Personalized messaging: Include a personalized message or thank you note inside the package to make the customer feel valued. This can be done via a printed card or a handwritten note. Custom packaging inserts: Use custom packaging inserts to create a unique unboxing experience. This can include tissue paper, confetti, or other items that add a touch of elegance to the packaging. Product-specific packaging: Create packaging that is specific to the product being shipped. For example, if the product is a fragile item, use packaging that is specifically designed to protect it during transit. Eco-friendly packaging: Use eco-friendly packaging materials such as biodegradable or recycled materials to appeal to customers who are environmentally conscious. Gift wrapping: Offer gift wrapping as an option for customers who are buying the products as a gift. This can include custom gift wrapping paper or a gift box. By personalizing and customizing packaging, you can create a memorable brand experience for customers and increase the chances of repeat business. It's also important to consider the cost and feasibility of the customization before implementation. Impact of Customization and Packaging Personalizing and customizing packaging in eCommerce logistics can have several positive impacts on your business, including: Brand awareness: Personalizing and customizing packaging with your company's branding can increase brand awareness and make your company more easily recognizable. Customer loyalty: Personalized messaging and unique packaging can make customers feel valued and appreciated, which can increase customer loyalty and repeat business. Unboxing experience: Customizing packaging can create a unique and memorable unboxing experience for customers, which can increase customer satisfaction and positive word-of-mouth marketing. Increased perceived value: Personalized and custom packaging can make the customer feel like they are receiving a premium product, which can increase the perceived value of the product. Environmental consciousness: Eco-friendly packaging options can appeal to customers who are environmentally conscious, which can have a positive impact on the company's reputation and social responsibility. Gift giving: Personalized and custom packaging can make it easy for customers to send the package as a gift which is a great way to reach new customers and increase sales. Overall, personalizing and customizing packaging in eCommerce logistics can help create a positive brand experience for customers, increase customer satisfaction, and ultimately drive sales and revenue for the business. Customization and personalization also impact key business metrics positively. An example of how delighting customers with custom and personalized packaging can help improve eCommerce business growth is as follows: Increased customer loyalty: By providing personalized and custom packaging, eCommerce companies can create a positive and memorable experience for customers, which can lead to increased customer loyalty and repeat business. Positive word-of-mouth: Customers who have a positive experience with a company's packaging are more likely to share their experience with friends and family, which can lead to increased brand awareness and new customers. Enhanced brand reputation: By providing high-quality and personalized packaging, eCommerce companies can enhance their brand reputation, which can lead to increased customer trust and loyalty. Increased revenue: By creating a positive and memorable customer experience through personalized and custom packaging, eCommerce companies can increase customer satisfaction, which can lead to increased revenue through repeat business and new customers. Cost savings: By reducing packaging costs and providing eco-friendly packaging solutions, eCommerce companies can save money and appeal to environmentally conscious customers. Overall, delighting customers with custom and personalized packaging can help eCommerce businesses to improve customer loyalty, increase brand awareness and reputation, and grow revenue. Importance of Order Personalization and Customization in 2023 Order personalization and customization is important in 2023 for eCommerce brands because it helps to create a unique and memorable customer experience. With the rise of eCommerce competition, customers are increasingly looking for more personalized and tailored shopping experiences. By offering personalization and customization options, eCommerce brands can differentiate themselves from their competitors and build stronger relationships with their customers. Additionally, order personalization and customization can help to increase customer satisfaction and loyalty. When customers receive a product that is customized to their preferences, they are more likely to feel satisfied with their purchase and may be more likely to return to the brand in the future. Order personalization and customization can also help to drive sales and revenue growth. By offering personalized and customized products, eCommerce brands can increase the perceived value of their products, which can lead to higher prices and increased sales. How can WareIQ Help? WareIQ's full-stack fulfillment solution has enabled multiple leading brands across categories such as Blissclub, Setu Nutrition etc. create a delightful experience for their customers by utilizing custom packaging material, thank you notes, combo creation etc. This helps brands deliver a premium customer experience and makes the moment of truth - the unboxing experience- unforgettable for clients. In case a brand has a particular requirement for packaging material, we can be flexible about it and help brands fulfill the orders in the way they feel is the best for their customers. With our capable fulfillment operations team, brands can rest assured that their orders are being picked, packed, and shipped in an accurate fashion, without any delays or damages, leading to on-time deliveries which facilitate positive customer sentiment about the brand experience. To know more about our personalization and customization services, visit: WareIQ Order Customization and Personalization
February 25, 2023
eCommerce Packaging: What is its Significance and How to Optimize Costs?
Packaging is going to be very important in eCommerce logistics in 2023 for several reasons: Increased e-commerce sales: With the continued growth of e-commerce and online shopping, the demand for packaging materials and services will also increase. This is particularly true as more people are shopping online due to the pandemic, and this trend is likely to continue. Personalization: Customers expect a personalized and unique shopping experience, and packaging is an important part of that experience. Personalizing and customizing packaging can create a memorable brand experience and increase customer loyalty and repeat business. Brand differentiation: With more e-commerce companies vying for customers, packaging can be used as a way to differentiate a brand and make it stand out from the competition. Safety and security: As e-commerce logistics become more complex, the safety and security of packages during transit will become increasingly important to ensure that products arrive in good condition. Cost and efficiency: Packaging costs and efficiency are becoming increasingly important as e-commerce companies seek to control expenses and streamline logistics processes. Automation and new technologies are being developed to help companies reduce costs and improve efficiency. What are the Factors that Govern Packaging? When deciding on packaging options for logistics, several factors should be considered: The type of product being shippedThe distance and mode of transportationThe handling and storage conditions during transitThe cost and durability of the packagingThe packaging regulations and requirements of the destination country It is recommended to consult with a packaging expert or conduct testing to determine the most suitable packaging option for your specific product and logistics needs. Factors That Affect Packaging Product type, mode of transportation, storage conditions, packaging durability, and packaging regulations all play a role in determining the most suitable packaging option for eCommerce logistics. Product type: The type of product being shipped can determine the necessary level of protection needed during transit. Different types of products may require different types of packaging for eCommerce logistics.Perishable items, like food or plants, may need temperature-controlled packaging and insulated liners to maintain freshness.Fragile items, such as glassware or electronics, may require extra cushioning and reinforcement to prevent damage during transit.Items with irregular shapes, such as furniture or artwork, may require custom-fit packaging or additional wrapping to protect them during transit.Clothing or other soft goods can be packaged in folded or rolled format and shipped in boxes or poly mailers.Hazardous materials, such as chemicals or batteries, may require special packaging and labeling to comply with regulations for safe transportation.It's important to consider the specific product requirements and regulations for packaging and shipping before making a final decision. Mode of transportation: The mode of transportation can affect the amount of shock and vibration that a product may be exposed to during transit. Packaging materials and designs may need to be adjusted accordingly to provide sufficient protection. Storage conditions: The storage conditions during transit can also affect the type of packaging required. For example, if a product is going to be stored in a cold or hot environment, packaging materials and designs may need to be adjusted accordingly to maintain the product freshness. Packaging durability: The durability of the packaging is another important factor to consider. When shipping a product repeatedly or for a long distance, durable and reusable packaging may be more cost-effective than disposable packaging. Packaging regulations: There are certain regulations and requirements for packaging that must be followed, depending on the destination country. These regulations can vary depending on the type of product being shipped, and it is important to ensure that the packaging used complies with these regulations to avoid any delays or fines. By considering all these factors, you can determine the most appropriate packaging option for your specific product and logistics needs. And it's always good to consult with a packaging expert to make sure that the packaging you choose is suitable for your product and the shipping conditions Example: An example of how product type, mode of transportation, storage conditions, packaging durability, and packaging regulations can affect eCommerce logistics packaging is the shipment of fragile and expensive glassware from the United States to Germany. Product type: The glassware is fragile and requires extra protection to prevent damage during transit. Mode of transportation: The mode of transportation will be by air freight, which can expose the glassware to more shock and vibration than if it were shipped by ground. Storage conditions: The glassware will be stored in a warehouse before being shipped, and the warehouse has a controlled temperature and humidity. Packaging durability: The glassware is expensive, and the packaging needs to be durable enough to be reused for multiple shipments, this will decrease the packaging costs in the long run. Packaging regulations: The packaging must comply with the regulations set by authorities such as FSSAI To meet these requirements, the glassware will be wrapped in bubble wrap and placed in a durable and reusable wooden crate. The wooden crate will be able to withstand the shock and vibration of air transportation and provide extra protection for the glassware during storage. How to Calculate Packaging Cost? Calculating the price of packaging in logistics can be a complex process that depends on various factors such as the type of product, the volume of the shipment, the type of packaging, and the cost of materials and labor. One way to calculate the price of packaging is to use the following formula: Packaging cost = (Cost of materials + Cost of labor) x Quantity The cost of materials includes things like boxes, tape, labels, cushioning materials, and any other materials used to package the product. The cost of labor includes the time and wages for the employees who are responsible for packaging the product. Another way to approach the calculation is to use a packaging cost per unit of product. This method is useful when you have a large number of items that are similar in size and weight. You can calculate the cost per unit by dividing the total packaging cost by the number of items. Packaging cost per unit = Total packaging cost / Number of items It's also important to consider the cost of packaging for transportation, for example, if you're using a pallet, you need to consider the cost of stretch wrapping, shrink wrapping or strapping. When considering the cost of packaging, it's also important to take into account the cost of any potential damage or returns that may occur due to inadequate packaging. By investing in appropriate packaging, you can decrease the risk of damage and returns, which can ultimately save you money in the long run. It's always good to consult with a packaging expert or conduct testing to determine the most cost-effective packaging option for your specific product and logistics needs. Example: An example of how to calculate packaging cost in Indian Rupee (INR) in eCommerce logistics is for a small e-commerce company that ships 200 units of a single product per month. The product is a small electronic device that requires special packaging to prevent damage during transit. The company uses the following materials for packaging: Corrugated boxes: ₹5 per boxBubble wrap: ₹2 per footTapes: ₹1 per yardLabels: ₹0.50 per label The company pays its packaging employees ₹1000 per hour, and it takes them 30 minutes to package each unit. The cost of materials for packaging one unit is: Corrugated box: ₹5bubble wrap: ₹4 (2 feet are used per unit)Tapes: ₹1 (1 yard is used per unit)Labels: ₹0.50 The cost of labor for packaging one unit is: (₹1000/60) * 30 minutes = ₹500 The total cost of packaging one unit is: ₹5 + ₹4 + ₹1 + ₹0.50 + ₹500 = ₹510.50 The total cost of packaging 200 units is: ₹510.50 x 200 = ₹102,100 So the packaging cost per unit is: ₹102,100 / 200 = ₹510.50 This is just an example, in reality, the cost of packaging can vary greatly depending on the product, the volume of the shipment, and the cost of materials and labor. It's always good to consult with a packaging expert or conduct testing to determine the most cost-effective packaging option for your specific product and logistics needs. How to Optimize Packaging Cost? Optimizing packaging costs in eCommerce is important for several reasons: Cost savings: By reducing the cost of packaging, eCommerce companies can increase their profit margins and become more competitive in the market. Environmental sustainability: By using eco-friendly packaging materials and reducing waste, eCommerce companies can improve their environmental footprint and appeal to customers who are environmentally conscious. Brand reputation: eCommerce companies can create a positive brand reputation by providing high-quality packaging that is both protective and visually appealing. Additionally, by using eco-friendly packaging, companies can appeal to consumers who are environmentally conscious. Shipping cost reduction: By optimizing the packaging design and materials, eCommerce companies can reduce the size of the packages and the weight of the products which will result in reduced shipping costs. Customer satisfaction: By providing adequate protection for the products and creating a positive customer experience through personalized packaging, eCommerce companies can increase customer satisfaction and loyalty. Compliance: By staying up to date with packaging regulations and industry standards, eCommerce companies can avoid costly fines and penalties. Overall, optimizing packaging costs in eCommerce allows companies to increase their profits, improve their environmental footprint, and enhance the customer experience while staying compliant with industry standards. eCommerce companies can optimize packaging costs by implementing the following strategies: Conduct packaging assessmentsUtilize cost-effective packaging materialsOptimize packaging designUse automation and technologyOutsource packagingReuse and recycle packaging materialsNegotiate with suppliers Here is an example: Let’s take the example of an e-commerce company that sells clothing. They currently use branded boxes that cost ₹150 each, custom tissue paper at ₹2 per sheet, and custom labels at ₹1 each. They ship 500 units per month. Using the above tactics, here is what they do: Conduct packaging assessments: The company conducts regular assessments and evaluations of its packaging materials and methods. They find that the custom-branded boxes are costly and the tissue paper is not necessary for the product. Utilize cost-effective packaging materials: The company switches to using plain, unprinted corrugated boxes at ₹100 each. They also switch to using biodegradable bubble wrap at ₹2 per foot instead of traditional plastic bubble wrap at ₹5 per foot. Optimize packaging design: The company implements void-fill materials such as biodegradable loose-fill peanuts at ₹1 per 100g to take up less space in the box. This reduces the size of the boxes needed, resulting in cost savings. Use automation and technology: The company invests in an automated box-sealing machine to improve efficiency and reduce labor costs. Outsource packaging: The company outsources packaging to a third-party logistics provider that specializes in sustainable packaging solutions, which helps them to take advantage of economies of scale and specialized equipment. Reuse and recycle packaging materials: The company implements a recycling program for its packaging materials. They also use returnable packaging, such as crates, for multiple shipments. Negotiate with suppliers: The company negotiates with suppliers to get better prices for packaging materials and buys in bulk to take advantage of volume discounts. It's important to note that this is just an example, and the actual costs and savings will vary depending on the specific materials, methods, and logistics involved for each company. How can WareIQ help? WareIQ is a rapidly growing eCommerce fulfillment company that provides a vast amount of services to meet every requirement that online sellers can have. We support eCommerce brands by providing them with the exact packaging requirements needed to fulfill their orders safely and securely. At the same time, we ensure we adhere to the guidelines shared with us by brands and create a delightful unboxing experience for their end customers. We use a variety of packaging materials - air wraps, bubble wraps, foam sheets, heavy-weight kraft paper, etc. and can customize packaging as per the online seller's specifications in order to balance cost, safety, and experience. For brands across categories, we have curated kits and created combos by themes and specific use cases, which included thank you notes, cards, branded packaging etc. all aimed to excite and delight the customers.
February 18, 2023
How multi-piece-shipment (MPS) can potentially reduce your logistics cost by half?
In e-commerce, a multi-piece shipment refers to a single order that is fulfilled using more than one package. This can occur when an order is too large to fit in a single shipment. E-commerce companies from various categories may use multi-piece shipments, but it is most commonly used in the following categories: Fashion and apparel: Ship multiple items, such as clothing and accessories, in one package to customers.Home goods and furniture: Large items such as furniture and appliances are processed as Multi-piece ShipmentsElectronics and technology: Ship multiple items, such as cell phones and computers, in one package to customers.Beauty and personal care: Makeup and skincare products are put into one package and shipped to customers.Grocery and household items: Food and household supplies are delivered in one package to customers.Books and media: Multiple items such as books, movies, and music, are shipped in one package to customers.Toys and games: Usually ship multiple items, such as toys and games, in one package to customers. However, not all e-commerce companies from the aforementioned categories use multi-piece shipments. Ultimately, it depends on their specific business needs. Cost-Saving Potential of Multi-Piece Shipments (MPS) Multi-piece shipments, or consolidated shipments, have the potential to save costs in several ways. Reduced shipping costs: By consolidating multiple items into one shipment, the overall shipping cost per item may be reduced.Reduced risk of damage or loss: Consolidation of multiple items leads to lesser exchanges at hubs and thus lesser risk of damage or lossReduced inventory holding costs: Consolidating multiple items into one shipment allows for more efficient use of warehouse space, which can reduce inventory holding costs.Reduced handling costs: Elimination of multiple pick-ups and deliveries leads to a reduction of handling costs associated with each individual package.Reduced packaging costs: The need for multiple packages and their associated costs (e.g. boxes, packaging materials, etc.) is eliminated due to the consolidation of multiple items. Here is an example to illustrate how multi-piece shipments can save logistics costs, and significantly improve the consumer experience. "Imagine a mattress brand receiving an order of a mattress, a pillow, and a comforter from a customer setting up his new house. If the brand’s fulfillment company divided it into three packages - one for the mattress, one for the pillow, and one for the soft furnishing - the shipping cost would be INR 900. On the other hand, if the entire order was shipped in a single multi-piece package, the total shipping cost would be roughly INR 390. This is a logistics cost saving of INR 490 per order!"- Harsh Vaidya, CEO, WareIQ Illustrative example to showcase the cost-saving potential of Mult-piece Shipments (MPS) What happens in absence of Multi-piece Shipment (MPS) capability? In absence of MPS, customers, generally, receive a broken brand experience. Different ETAs for potentially complementary productsDifficulty in tracking all orders in a single placeHigher cost of deliveriesDelay in deliveries of different items from the same order This leads to overall negative customer sentiment toward the brand and higher levels of customer dissatisfaction What is required to process Multi-piece Shipments (MPS)? A confluence of smart technology to efficiently manage orders and inventory and skilled people and operations are what make Multi-piece Shipments (MPS) possible. WareIQ's smart fulfillment capabilities combine the above in the following form to enable MPS for brands and sellers across categories and channels: Order Management system with the ability to add more packages to shipment detailsFulfillment tech in the warehouse provides staff visibility on the Order IDs, and SKUs to be clubbed together, and scan-based operations to make it error-freeUnified tracking engine with the ability to club multiple AWBs into oneTraining of the FC staff on the nuances of this use-case Here's a look at how WareIQ helps sellers in creating Multi-Piece Shipments (MPS) easily in just a few clicks: https://youtu.be/msaJVAtlCvU Enabling Multi-piece Shipment (MPS) using WareIQ
January 23, 2023
Stranded Inventory: Impact, Causes & Solution
While it may not receive as much spotlight, Stranded Inventory is an essential KPI to track by Consumer brands. Last year, sellers lost $1.5 BN of sales on Amazon due to stranded inventory. While they lost sales, they continued to pay fulfillment providers with heavy storage costs. Double Whammy! Source With stranded inventory, your seller ratings go down on Amazon thereby impacting your future sales potential. What is Stranded Inventory? Stranded inventory is the sellable inventory in the fulfillment center that does not have a buy option on your website or marketplaces like Amazon. Stranded inventory can have a negative impact on a business's financial performance, as it ties up valuable capital that could be used elsewhere. It can also lead to operational inefficiencies and can negatively impact customer satisfaction. Examples of Stranded Inventory Seasonal items that do not sell well during the off-season, such as Christmas decorations in the summer.Obsolete technology products, such as outdated smartphones or computers.Slow-moving items that have been on the shelves for an extended period of time, such as fashion items that are out of style.Products that are no longer in demand due to changes in consumer preferences or market trends, such as CDs in the age of streaming music.Overstocked items that were purchased in bulk but did not sell as well as expected.Items that have been discontinued by the manufacturer and are no longer available for purchase.Raw materials that are no longer needed because the production process has been changed.Items that are perishable, such as food items that have reached their expiration date. Why Does Inventory Get Stranded? Low Demand for SKUs or quality issues leading to low ratingAmazon policy violations: Product safety concerns, IP violationsSeller initiated stranded: Closed/Deleted listings, System error due to listings missing critical details How Can You Reduce Stranded Inventory (using AI)? Smart Demand Forecasting: AI algorithms can use past sales data and trends to make more accurate demand forecasts and reduce stranded inventory riskInventory optimization: Optimizing inventory levels through consideration of lead times, demand patterns, and carrying costs can help reduce stranded inventoryChose Fulfillment provider with faster stock inward SLAsPrice optimization: Analyze data on past sales and market conditions to optimize prices and reduce the risk of stranded inventory due to unsold products.
January 11, 2023
Top 10 eCommerce Trends to Watch Out For in 2023 [Views from Industry Leaders Included]
eCommerce as an industry is constantly changing and evolving, even more rapidly than other sectors, due to the proclivity of sellers and customers to jump on board emerging trends in relation to technology, services, website design, marketing, and more. This is because of the hyper-competitive environment that eCommerce sellers find themselves in. For instance, even if a retailer has a business idea in a relatively untapped industry and gains an early adopters advantage, the market will soon be inundated with other sellers trying to duplicate the success of the initial seller. This reduces their competitive advantage because every firm will be trying to be employing their own tactics to highlight their brand to prospective customers and showcase reasons why they should choose them as opposed to other competitors. Thus, in order to maintain an edge over your nearest rivals or gain ground over them, you need to consistently monitor eCommerce trends that are gaining popularity in the market and take advantage of them in your own business. “2023 is the year that brands need to figure out how to deliver fluid omnichannel shopping experiences.”Arjun Vaidya, Entrepreneur and Investor Significance of Keeping Up With eCommerce Trends eCommerce trends can have a significant impact on the success or failure of a business, based on how fast you are able to adapt. For instance, ultra-fast delivery is taken more or less for granted today but when it was first introduced by Amazon in the late 90s, it completely changed the way customers were able to purchase and receive their goods. Thus, companies that didn’t adapt and offer a similar solution of their own would often lose ground to other companies that did. The same can be said about features like live order tracking, multiple payment options, branded packaging, and more. Once consumers get a taste of these facilities, they would not want to go back to purchasing from a retailer that doesn’t offer them. Similarly, if every brand in your industry is promoting its items through social commerce platforms like Whatsapp, you also need to jump on the bandwagon to keep your business in the mix. Latest Growth Statistics on eCommerce Industry Let’s take a look at some notable statistics that reiterate the significance of keeping up with eCommerce trends: With many studies showing that the eCommerce industry is growing by upwards of 35% per year, with around 40% of new sellers coming from smaller towns and cities, the industry is expected to triple its value, from $50 billion in 2022 to $150 - $170 billion by 2027.In 2022, 20% of all retail sales were made online, up from 17% in 2021 and this number is expected to rise to 23% by 2025.eCommerce sales are expected to reach $6.51 trillion globally by next year, with 22% of those sales coming directly from sellers' websites.27% of eCommerce users use voice command technology, out of which, 46% used it to perform price comparisons with other products, and 41% used to it find out which businesses sell a particular item.18% of online shoppers stated that the reason they abandon their carts is because of a lack of multiple payment options.The number of customers that chose to pay for their purchase via an online payment option increased by 45% in 2022.75% of customers in 2022 suggested that they preferred paper and other sustainable packaging compared to plastic while 71% said that they would choose a sustainable alternative if they had a choice.By 2027, 27% of basic customer interactions with a business are expected to be performed by an automated chat bot.80% of customers state that they would be more likely to purchase from a company that offers personalised options for various products and services.75% of customers browse through multiple listings on various platforms before shortlisting where they want to buy from. “I think moving forward, a media company that’s separate from a marketing company will not exist. I think the lines are blurring and they will continue to blur.”Katia Beauchamp, CEO of BirchBox How Can You Monitor eCommerce Trends? Due to the amount of advanced technology at our disposal, you can monitor eCommerce trends using a variety of methods. The popularity of social media has played a big part in the way customers express their satisfaction or displeasure with a business. Similarly, businesses can monitor social media to identify the likes and dislikes of customers and identify what made them choose a particular brand over others. Another way to identify eCommerce trends is to look for the introduction of new features in the market, such as the emergence of sub-30-minute deliveries that were pioneered by having dark stores where products could be stored and delivered locally. Let’s take a look at a few ways you can successfully monitor eCommerce trends in 2023: Use Industry Reports Many companies and organizations publish reports on eCommerce trends. These reports can provide valuable insights into current and emerging trends in the industry. Either you or someone from your organization should browse through these reports and identify if there is anything of significance to you and your brand which can help propel your business going forward. Follow Industry News and Blogs Staying up-to-date with industry news and blogs can help you stay informed about eCommerce trends. Many of these sources provide analysis and commentary on trends in the industry, which come in useful if you need precise data to analyze the effect that such trends could have on various portions of your business. Use Social Media Social media platforms can be a great source of information on eCommerce trends, considering that platforms like LinkedIn act as a digital meeting point where the world’s brightest minds can seamlessly exchange ideas and have healthy debates for every user to see. Many eCommerce businesses primarily use social media to announce new products, promotions, and other updates, which can provide valuable insights into current trends. 67% of small businesses prefer marketing and promoting their products on social media to conventional marketing. Use Analytics Tools Analytics tools such as Google Analytics can provide data on customer behavior, including trends in traffic, conversions, and revenue. This can help you understand how trends are affecting your business and identify areas for improvement. Additionally, they can help you pinpoint the pages that customers spent the most time on and the ones that resulted in them leaving, so you can make edits to your listings and websites accordingly. Conduct Customer Surveys Asking customers directly about their preferences and behaviors can provide valuable insights into current and emerging trends. Surveys can be conducted online or in person and can be a useful way to gather customer feedback and stay attuned to changing trends. For instance, a customer may have experienced a specific service while ordering from a specific company and may voice their dissatisfaction that your company doesn’t provide that same feature. This allows you to gather similar data and implement the facility in the future. “There are so many opportunities on the horizon, from mobile exclusives to geo-located offers to better filtering and searching. We’ve only scratched the surface of what’s possible with personalization.”Michelle Peluso, CEO of Gilt Group 10 Most Important eCommerce Trends to Watch Out For in 2023 Omnichannel Retail is Making a Comeback With the world recovering daily from the after-effects of the global pandemic, many shoppers have decided to go back to their old shopping habits as well. A recent study by Harvard indicates that 73% of consumers prefer purchasing through a variety of means, compared to 20% that shop solely in physical stores and 7% who shop exclusively online. While online shopping is extremely convenient for some things, customers have showcased that there is nothing quite like browsing for exactly what you need while the products are tangibly present in front of them. Thus, retailers need to make the jump to omnichannel retail if they want to take advantage of higher sales in 2023. https://www.youtube.com/watch?v=R42UyZww_Iw Watch the full video where Mrs. Vineeta Singh, Co-founder of Sugar Cosmetics explains why the future of D2C retail is omnichannel Increasing Importance of Highlighting Differentiating Factors During the pandemic, with the burgeoning popularity of eCommerce compared to previous years and people making the jump to try their hand at starting a business, the number of online companies that emerged have been unparalleled since. With all these new sellers diluting the market, the onus is on each brand to highlight and promote the reason customers should choose them. Whether it is providing lower prices, free shipping, or flexible returns, identify the unique selling point of your brand and waste no time in reiterating that message to customers. Globalisation is Taking the World by Storm With the borders of many significant countries fading away, at least for retail international trade and investments recuperating after a couple of hard years, globalisation has become the power for the course in modern society. It has never been easier for brands to manufacture their products in one country and sell them in multiple countries of their choosing. Additionally, many local Indian brands are expanding their services abroad, to take advantage of markets with higher GDPs and per-capita incomes, resulting in the increased international movement of commodities. Performance Marketing is On its Way Out Given the emphasis placed on performance marketing for what seems like an eternity, it may be a surprise to learn that industry experts have suggested that firms do not need to waste resources and effort on performance marketing and rather divert their attention to social commerce and social media marketing. A common consensus among industry experts is that performance marketing has seen a dip in its significance so it makes more sense to invest in your brand itself and have all your sales and operational funnels in place, with promotions and marketing being required only after that is done. So if you want your business to increase its exposure to potential customers, you need to update your tactics. Mobile Optimization is the Future Most online interactions take place on mobile devices. After all, they are smaller. More portable and less cumbersome to use than dragging around a laptop everywhere. Seldom do people not perform every task on their mobile devices. Given that mobile devices comprise 71% of online traffic and 61% of where orders are placed, there is no dispute that mobile devices are the present and future of eCommerce in the foreseeable future. As phones start to get more capable, more and more people will start using them for their eCommerce needs. Therefore, your business needs to make sure that every interaction customers have with your online store is optimized for a smooth and seamless mobile experience. Brands are Becoming Increasingly Reliant on External Funding It is estimated that upwards of 73% of direct-to-consumer (D2C) brands plan to opt for external funding for 2023 and beyond. This phenomenon will result in increased competition and retailers trying to do whatever they can in their bid to stay competitive and be profitable. These tactics are necessary because the current state of the global economy could indicate that taking on so much debt by giving away equity could create a vacuum that many companies might not be able to recover from. Thus, it is important for retailers to try their best to increase their profit margins and maintain their profitability. The Rapid Onset of Social Commerce Social commerce takes place when sellers use social media platforms and messaging apps to promote their products and services directly to customers. This strategy has become progressively more important as social media has gained a strong foothold in everyday life for the strong majority of customers. For instance, Gen Z uses TikTok more than Google to browse for and purchase products. Social media platforms generated a mindblowing $992 billion in online sales in 2022, a figure that is estimated to skyrocket even further to $2.9 trillion by 2026. Platforms like Whatsapp and Telegram have become increasingly common for business transactions and even support features like automated chat bots for basic interactions with customers. https://www.youtube.com/watch?v=zcBxbGTdIts Watch this debate on social commerce vs eCommerce with panelists like Mohit Bhatnagar, MD at Sequoia India and Vidit Aatrey, Co-Founder of Meesho Rise of Automated Communication As mentioned in the previous point, businesses are increasingly using automated chat bots for both regular and advanced communication with customers. If you have ever received a promotion or link from a Whatsapp business account, odds are that it has been sent by a chat bot. Additionally, most well-designed websites have implemented chat bots to assist customers in navigating around the website and searching for various product details, such as pricing, colours, availability, and more. They provide a cost-effective and hassle-free way of keeping customers engaged and providing instant answers to queries. 87% of customers wouldn’t shop at a brand that has poor customer service and chat bots are a great way of rectifying that. Expanding Emphasis on Sustainability The world has generally become more environmentally conscious as more and more people get elevated to a comfortable lifestyle and start to question the impact of consumerism on the planet. More than 51% of customers have stated that they have become more sustainably aware after the pandemic. Companies are encouraged by consumers to adopt technologies and materials that contribute to reducing carbon footprints in every sector. If your company has successfully adopted some form of green technology, either in the products themselves, the packaging, or the delivery process, make sure to highlight it to consumers so they would consider your brand in contention for their purchases. Customers Place Additional Value on Personalization Customers thrive when they get to purchase a product in exactly the configuration they want, a sentiment backed up by more than 60% of consumers. A personalized experience can range from being able to customize a logo on a t-shirt to having orders delivered at a specified time. In the eyes of customers, the amount of personalization and freedom that a brand offers are a strong indication of the value it places on them. Therefore, you need to enable some form of customization that will be a meaningful addition to the way customers interact with your brand and will definitely pay off in the long run in the form of positive reviews and feedback online. “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”Jeff Bezos, Owner and Former CEO of Amazon eCommerce Trends: Winding Up Staying up to date with the latest eCommerce trends is a must if you want your business to be on the bleeding edge and you do not want it to fall behind your competitors. In the past, certain eCommerce trends, such as Amazon’s ultra-fast delivery and Prime badges that indicate delivery speed revolutionized the way eCommerce operations were conducted and the convenience with which customers view eCommerce. All these years later, trends like those have become widely adopted as industry standards, with every firm needing to adapt or risk getting left behind. In recent years, there has been a new wave of eCommerce trends seeking to enhance and streamline even more aspects of the industry. If you are a current or aspiring eCommerce seller, we hope this post gave you the insights you needed to be aware of the latest trends permeating the market in 2023 and how you can adopt them for your own business. Infographic to Summarise the Latest eCommerce Trends 2023 A quick summary of top ecommerce trends to watch out for in 2023
January 09, 2023
When and Why Should Zone Skipping Be a Part of Your Logistics and Fulfillment Strategy?
Zone skipping has become an increasingly popular logistics strategy for businesses looking to reduce shipping costs and improve delivery times. According to a study by the National Retail Federation, nearly 60% of retailers surveyed used zone skipping in their shipping operations. One reason for the popularity of zone skipping is the increasing complexity of global supply chains. With more and more businesses sourcing materials and products from around the world, shipping costs can quickly add up. By bypassing certain shipping zones or regions, businesses can often find more direct and efficient routes, resulting in significant cost savings. For example, a business that ships products from Asia to the United States might traditionally use ground transportation to move the goods across the Pacific Ocean. However, by using air or ocean shipping instead, the business could potentially save thousands of dollars in shipping costs and reduce transit times by several days. Definition of Zone Skipping in Logistics Zone skipping in logistics refers to the practice of bypassing certain shipping zones or regions in order to reduce shipping costs or transit times. This can be done by using a more direct or efficient routing, such as by utilizing air or ocean shipping rather than ground transportation, or by using a third-party logistics provider that has established relationships and negotiated rates with carriers in specific regions. Zone skipping can effectively reduce shipping costs and improve delivery times, especially for businesses that ship large volumes of goods over long distances or to multiple countries. However, it can also involve additional logistical challenges, such as coordinating with multiple carriers and customs agencies, and may not be feasible for all shipments. "Large marketplaces like Amazon & Flipkart efficiently do Zone Skipping to lower their net logistics cost while delivering parcels at fast speed with low returns. Zone skipping refers to a shipping method in which a package is shipped to a location in a different zone from the intended destination, with the intention of reducing shipping cost and improving speed.Last-mile comprises 60-80% of the total logistics cost for most of the brands. So efforts to reduce this cost component derives maximum savings in the value-chain. In India logistics, Zone categorization works as follows: Zone A & B are local and regional zones while Zone C & D are metros & national shipping zones respectively. There is a huge difference in cost & speed between the zones, and RTO (returns) %."- Harsh Vaidya, CEO & Co-Founder, WareIQ Impact of Zone Skipping Zone skipping can have several impacts on businesses and their supply chains, both positive and negative. Some potential impacts include: Cost Savings One of the primary benefits of zone skipping is the potential for cost savings. By bypassing certain shipping zones or regions and utilizing more direct or efficient routing, businesses can save thousands of dollars in shipping costs. Improved Delivery Times Zone skipping can also lead to faster delivery times, allowing businesses to bypass congested or slower-moving shipping lanes and utilize more efficient routing. This can be especially important for businesses that rely on the timely delivery of goods to meet customer demand or production schedules. Increased Complexity However, implementing a zone skipping strategy can also add complexity to a business's supply chain. Coordinating with multiple carriers and customs agencies can be time-consuming and may require additional resources. In addition, businesses must carefully evaluate the reliability and reputation of carriers to minimize the risk of damage or loss during transit. Environmental Impact Another potential impact of zone skipping is its potential environmental impact. By using more efficient or direct routing, businesses may be able to reduce their carbon emissions and other environmental impacts. However, air or ocean shipping may also have a larger environmental impact than ground transportation. "To illustrate this with math, consider the following for a parcel to be shipped to Bangalore:➡️Shipping from NCR to Bangalore (Zone C Shipment), would typically cost, say INR 50/shipment (500 gms) by Air and would take 48 hours➡️Shipping this locally within Bangalore (Zone A Shipment) would cost INR 30/shipment and would take 24 hoursThis brings a savings of INR 20/shipment in last-mile delivery. Assuming fulfillment costs (storage, pick & pack) being the same in both the locations, the incremental cost would be first-mile cost & excess inventory holding cost. In our experience, this would blend to ~ INR 8/shipment This would lead to a saving of INR 12/shipment overall with an improvement in speed by 1 day. For a business with 3,000 orders/month, this translates to savings of INR 36,000 per month or INR 4,32,000 per year.Zone skipping also help in reducing returns. When an order is shipped directly to the customer, there is less opportunity for the item to be damaged or lost in transit. Additionally, by reducing the distance that orders have to travel, businesses can reduce the risk of delays or other issues that can lead to customer dissatisfaction and returns.As per our data, Zone D RTOs are 3 times of Zone A, and 2 times of Zone B. This not only adds to your cost, but dramatically impacts your future repeat purchases in the Zone.It's important to note that zone skipping may not always result in a cost benefit, as the cost of inventory holding & first-mile may overshoot the savings if not done right. In this case, a brand would be buying the fast-shipping experience without the savings. As an intelligent fulfillment network, WareIQ helps brands with real-time insights on Zone Skipping, and create inventory plans to lower holding costs. Further, we have daily stock replenishments running between our FCs across the zones leading to efficient transfers at low cost. All done seamlessly through a centralized platform."- Harsh Vaidya, CEO & Co-Founder, WareIQ When to consider Zone Skipping? An eCommerce company should consider zone skipping when: High Shipping Costs: Zone skipping involves shipping products directly from the manufacturer or supplier to the customer, bypassing the company's warehouse or distribution center. This can result in lower shipping costs as the products are not being shipped twice.Demand concentrated in certain zones: If there is high demand for products in certain regions, zone skipping can eCommerce players meet demand more efficiently by shipping products directly to those regions.Long lead times: In case of long lead times, zone skipping can help to reduce the lead time by shipping products directly from the manufacturer or supplier.Limited warehouse capacity: Zone skipping can help brands to manage inventory more efficiently in case of limited warehousing capacity by shipping products directly to customers.Improving customer experience: Zone skipping can improve the customer experience and increase customer satisfaction by reducing shipping time and costs. Conclusion Zone skipping can help modern Indian eCommerce by placing inventory closest to customers, thus lowering shipping costs and boosting delivery times. This can also help companies manage their inventory more efficiently and meet high demand in certain regions. However, it's important to note that zone skipping comes with its own complexities, such as compliance with laws and regulations, communication with suppliers and manufacturers, managing inventory and forecasting demand. Therefore, it is important to put this into action with a trusted 3PL that possesses the aforementioned capabilities of generating sharp data insights regarding your supply chain, has a smart fulfillment platform for easily placing your inventory at the right location, and has designed a refined people and process approach is well-aligned with your business goals and objects and makes zone skipping as a strategy seamlessly possible. [signup]
December 23, 2022