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!
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- Obsolete technology products, such as outdated smartphones or computers.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 rating
- Amazon policy violations: Product safety concerns, IP violations
- Seller 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 risk
- Inventory optimization: Optimizing inventory levels through consideration of lead times, demand patterns, and carrying costs can help reduce stranded inventory
- Chose Fulfillment provider with faster stock inward SLAs
- Price optimization: Analyze data on past sales and market conditions to optimize prices and reduce the risk of stranded inventory due to unsold products.
Supercharge your fulfilment with WareIQ now, contact our team.
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
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