What is Work in Process Inventory? Definition, Difference, Calculations, Importance and Optimization Techniques in 2022

What is Work in Process Inventory? Definition, Difference, Calculations, Importance and Optimization Techniques in 2022

Inventory distortion costs the global economy an estimated $1.1 trillion, including shrinkage, stockouts, and overstock. The quantity of waste created by system inefficiencies is simply mind-boggling. It is nearly equal to the gross domestic product (GDP) of the whole nation of Australia. It is crucial to account for raw materials and completed items, and each firm must account for the products used in the production process. Ensuring that no raw resources are idle is another benefit of calculating work in process inventory, which indirectly helps to reduce the waste produced, encountering the extra revenues lost during manufacturing. For most businesses and shops, recovering even a small portion of that loss may completely alter their course. From here on, this article will explain what work in process inventory is, its importance, and how to calculate work in process? What is Work in Process Inventory? Work in process or WIP inventory refers to items in the manufacturing stage and being prepared to become a finished good for sale. Work in process inventory comprises the cost of labour, raw materials, and any production-related overhead expenses. It does not include any raw materials that have yet to be used to manufacture commodities or things already prepared for market sale. As a business manager, overseeing and managing a company's warehouse and inventory is crucial to maintaining the stock at targeted levels through inventory management. WIP inventory is mainly concerned with businesses in the manufacturing, construction, consulting, etc. industries. In general, it is suggested that you compute your inventory periodically, such as every two weeks, at month's end, or every three months. It should be noted that work in process inventory is another name for work in progress inventory, both of which are shortened as WIP inventory. Is there a difference in meaning between these phrases, or are they synonymous? Let's see. Comparing Work In Progress and Work In Process Inventory Despite being used interchangeably, the meaning of these two phrases in the business language is different. The main distinctions between work in progress and work in progress are as follows: Raw materials quickly transformed into final commodities are referred to as work in process inventory. On the other hand, work-in-progress inventory, frequently used in the construction industry and other service-related industries, describes how a project is progressing overall and how much it costs concerning its progress. Additionally, both names have the same meaning when used by companies that sell actual goods. Work in process refers to unfinished items that will soon be transformed into finished goods. For instance, a bakery producing 50 packets of bread or a company that makes mobile phones assembling various components for an order will be considered to have work in process. While work in progress takes a long time to convert into a finished product. For example, a building whose five floors are to be constructed out of a planned twelve floors building is a WIP example. Renovation, tasks, and services can all be referred to as work in progress, which is more comprehensive than work in process. Work in process is often exclusively used for things that are currently being manufactured. [contactus_uth] Importance of Work in Process Inventory  The what is explained in work in process inventory definition above, but then why is not. Why do businesses keep partially finished inventory? The fact that things are being created is the most evident. They can be fabricated on a conveyor belt, or they might be in line for additional processing. They are actively being produced in any case. Safety stock, buffer stock, or anticipation inventory are additional justifications for work-in-process inventory. Some businesses find it advantageous to keep products in stock throughout specific production phases as backup against supply shortages or surges in demand. Although classifying WIP material that is stored in a warehouse awaiting assembly may seem tiresome, it is essential for tracking and enhancing your supply chain and inventory control. Keeping too much work in process inventory is often inadequate for a company's financial line. This is due to a few factors: WIP inventory consumes room on a production floor or in a storage facility that could be utilized for merchandise that is ready to sell, raising carrying costs.Your capital is more heavily invested in inventory awaiting sale the more WIP you have on hand.The danger of items being misplaced, damaged, out-of-date, or lost before they can be assembled increases when there is excessive WIP inventory. Work in process inventory should also be classified because it significantly impacts your company's worth. In addition, even though work-in-process inventory is counted as an asset when you seek a loan, the lender might be wary of using it as collateral because it isn't very liquid. The Importance of Calculating Accurate Work in Process Accounting Every business pays close attention to its cash flow statement and overall financial stability. On the other hand, small to medium-sized companies frequently have little to no tolerance for the mistake, but more prominent corporations may tolerate a few more faults owing to scale and average. Three crucial factors make calculating WIP accounting essential. Taxes  Nobody wants their country's tax office to audit them for filing incorrect taxes. WIP inventory is a taxed item since it is a current asset, and any understatement or incorrect accounting may incur significant penalties. Overestimating can result in producers paying huge taxes when they are not necessary, which is equally dangerous. Cash Flow and Financing Many businesses turn to short-term financings, such as work in the process of inventory financing, to solve short-term cash flow concerns. Accurate WIP accounting and valuation are a must for this kind of financing, and if either is done incorrectly, the short-term financing agreement may be terminated. Accurate values are also employed when evaluating a company's health for a longer-term loan. Impact On Production Production mistakes can also be caused by inaccurate WIP accounting. Upstream operations may be activated to make up a perceived loss or idled to enable a perceived overage to diminish if one segment of WIP is valued too highly or too lowly. If the WIP computation and value were incorrect, the plant may go out of balance, affecting delivery schedules and resulting in financial losses since fewer future sales would be made. Inaccurate accounting can also send the wrong demand signals when purchasing raw material, which results in overordering materials and decreased cash flow. This excess inventory or underordering materials and increasing costs due to equipment shutdown will pause to bring in the necessary material. This can be reduced only once the error is discovered. Terms & Formulas To Know Before Calculating WIP Inventory Calculating WIP inventory has several components, same as other computations. Calculating this becomes impossible without knowing these elements. So let's learn more about these parts so that you can rapidly calculate your inventory. Beginning Work in Process Inventory Cost The beginning work in process inventory cost represents your balance sheet's asset column for the preceding accounting period. You must identify the ending WIP inventory from the previous accounting period and carry it forward as the beginning inventory for the current fiscal year to compute the cost of your beginning WIP inventory. Your ending WIP inventory may be seen on your balance sheet under existing assets. Cost of Manufacturing The costs involved in creating a finished product that can be sold are all included in the manufacturing cost of your goods. It covers the price of labour, raw materials, and any other production-related expenses. The quantity of work in process inventory on hand causes the manufacturing cost to increase. The cost of production rises as inventory in the process increases. As a result, this raises the price of manufactured items. Calculate the cost of manufacturing using the work in process inventory formula given below: Manufacturing Costs = Raw Materials + Direct Labor Costs + Manufacturing Overhead  Cost of Manufactured Goods (COGM) The overall expenses incurred to produce a finished good are referred to as the cost of manufactured goods (COGM). To determine the worth of your current in-process inventory, you must know the final COGM. The COGM is calculated by adding your starting work in process inventory to the production expenses. The ending result in process inventory is then subtracted, giving you the final cost of manufactured products. The equation is: COGM = Total Manufacturing Costs + Beginning WIP Inventory - Ending WIP Inventory How to Calculate Work In Process inventory? The work in process inventory formula combines the beginning work inventory for the subsequent period with the ending work inventory for that period. Once you have calculated your starting in-process inventory, manufacturing expenses, and cost of made items, you can quickly ascertain how much work in process inventory you have. WIP inventory is estimated using the following formula: Beginning WIP Inventory = Ending WIP Inventory - Manufacturing Costs + COGM How to Get Beginning Work in Process Inventory?  There is no difference between starting and finishing work in process inventory; the only difference is the accounting period. Work in process inventory is always calculated by businesses after accounting periods, whether those periods be quarters, years, or other durations. Therefore, this total WIP value represents the beginning and the conclusion of the work-in-progress inventory for the relevant accounting period. The current balance sheet of your business includes this ending WIP inventory as a current asset. Therefore, you need the initial work in process inventory to understand how to discover work in process inventory. You will also need the finishing work in the process inventory to compute it. How to Calculate Ending Work In Process Inventory? Before calculating your inventory in-process, manufacturing cost, and COGM, you must first compute your beginning work in process inventory. Once they have been established, you may quickly add your WIP inventory using the method below. Ending WIP Inventory = Initial WIP Inventory + Manufacturing Cost - COGM Let's look at an example to comprehend better how to compute this. Imagine that your business's work in process inventory at the start of the new year is $125,000. You spend $100,000 on manufacturing expenses in the same year, and your cost of manufactured goods (COGM) is $1,75,000. Consequently, the ending in process inventory would be: Beginning WIP Inventory + Manufacturing Costs - COGM = Ending WIP Inventory  $125,000 + $100,000 - $175,000 = $50,000 Your ending WIP inventory would be $50,000. How to Cut Down Your Work in Process Inventory Managing all sorts of inventory and supply chains are now well-established domains of specialization. And these occupations all concur that it's generally ideal for keeping the inventory of work in progress to a minimum. The greater your Work in Process inventory, The fewer storage options you have for your most lucrative goodsThe more money you have invested in products that won't sellThe greater the chance that unfinished items may expire or become outdated Associating a cost with a completion percentage makes determining WIP inventory complex. Not a simple task to do, so reducing WIP inventory before reporting is a standard procedure.  The following practices mentioned below can reduce your work in process inventory. Just in Time Procurement A production technique is known as "just in time inventory" involves bringing in the materials as needed based on demand. It is a method many businesses use to cut down on resource and financial waste. The primary goal of this strategy is to eliminate excess inventory, waste of commodities, overproduction of items, and management of storage expenses, among other things. Great Coordination This advice may not be as technical, but it is just as crucial as any technological strategy. Coordination is the secret to managing a good, profitable, healthy business. Ensure your staff members share the same objective of creating as much as possible with the given resources if you want to maintain an ideal level of WIP inventory. To function effectively, they must know every step in the production process. In addition to assisting you in maintaining a perfect level of work in process inventory, this will also hasten the manufacturing and supply process. Upgrade to New Equipment It's crucial to provide qualified workers with the appropriate tools and equipment. To increase their output, they require the right equipment. The fastest and most affordable strategy to reduce WIP is to keep equipment in good condition. How to Improve Work in Process Inventory Flow?  Most e-commerce businesses rely on a manufacturer or supplier for sellable items. Therefore, it is essential to comprehend the process and movement of in-process inventory since it might indicate how efficiently your supplier or manufacturer creates finished goods. Additionally, you may find ways to strengthen the supply chain by working closely with your supplier and other partners in your retail supply chain, such as a 3PL company. Source the Right Supplier You probably won't have much insight into the work in process inventory process unless you sell a highly customized product. Then, you influence the manufacturer you choose to engage with and the products you source. Still, it is up to your manufacturer to monitor WIP levels and look for methods to save costs while enhancing labour, workforce, and production procedures. First, however, you can query your provider about things like: From whence do the raw materials originate?Is it possible to reduce expenses and manufacturing lead times?Can your products be manufactured locally? Use a 3PL to Assist You With Inventory Management The main asset of an e-commerce company is frequently its inventory. Therefore, you will need a system to track inventory as it is sold after your work in process inventory transforms into sellable items. The technology used ultimately interacts with your store, allowing you to effortlessly manage all inventory and orders from a single dashboard while they handle order fulfilment on your behalf. Conclusion In a period of exceptional supply chain disruptions that cause a lack of raw materials and longer lead times, keeping an eye on supply chain efficiency is crucial. In addition, many retailers predict demand and order goods months in advance due to the longer lead times. Therefore, collaborating closely with suppliers to get the most precise lead time predictions possible to prevent a buildup of WIP inventory is crucial. Accurate inventory cycle counts made possible by an integrated warehouse management system (WMS) are another crucial aspect of maintaining low work in process inventory levels. In addition, accurate, real-time inventory counts allow for more precise forecasting, facilitating simpler, more effective communication with suppliers and freight forwarders. Small to mid-sized retailers may use enterprise-level inventory management tools to improve their WIP inventory flow by outsourcing fulfilment to a 3PL partner. How WareIQ Can Help You to Optimize Your Inventory Management With WIP Inventory Get A More Accurate Value For Your Business Work in process inventory is an inventory asset; thus, failing to account for it on your company's balance sheet might result in an undervaluation of your overall inventory. The price of your final items will be inflated as a result. WareIQ's eCommerce services help accurately determine the value of your inventory for tax purposes. Detect Red Flags Faster For managers, rising WIP inventory levels are a warning sign. A significant WIP inventory level may indicate bottlenecks in your manufacturing process and that the process isn't running correctly. With WareIQ, you can identify and fix these issues before they hurt your bottom line by tracking WIP. Avoid Counting Inventories By Hand WareIQ helps you to assess the value based on the present stage of each unit in the production process. As some businesses physically count their WIP inventory, this wastes a tonne of time and keeps your staff from working on more complicated tasks.  You may estimate the worth of your inventory using the work in process formula without the hassle of manual counting. [signup] Frequently Asked Questions What distinguishes inventory from WIP?When an item of inventory has been combined with human labour but has not yet attained the state of completed products, it is categorised as a WIP. With it, some but not all of the required labour has been completed. There are several accounting techniques used by various firms to calculate WIP and other inventory accounts. How should a WIP be documented in accounting?Simply begin with the work-in-progress account's opening balance. The expenses of the resources added during the applicable time should then be included. Subtract the work-in-progress account's ending balance for that time period to finish. Why is an inventory of work in process a significant factor?Your balance sheet may be impacted by understanding how to calculate WIP inventory appropriately. It's critical to comprehend how WIP inventory functions, what factors affect its cost, and how to compute it at the conclusion of the accounting period if your company sells highly customised items. Based on how much it costs to create and manufacture completed items, this will give you an idea of COGS. What is included in the inventory of work in process?Costs for the manufacturing process, including labour and all raw materials, are included. Because it calls for an evaluation of the cost of labour and overhead related to the proportion of work completed, calculating WIP inventory is challenging. Most merchants attempt to have as much inventory as possible in the completed product's condition before the end of a reporting period since it is challenging and time-consuming to compute. Is WIP an asset?Since there is reasonable anticipation that such items will become marketable products that can potentially convert into cash within a year, accountants see works in progress (WIP), which are materials and partially produced goods that are awaiting completion.

July 16, 2022

Top 50 Dropshipping Products to Boost Sales and Maximise Profit in 2022

Top 50 Dropshipping Products to Boost Sales and Maximise Profit in 2022

As more people gain access to the internet and all the conveniences and lifestyle-improving facilities that it brings to the table, the eCommerce space is expanding just as rapidly, especially in developing countries like India, where this rapid growth is even more pronounced. There are plenty of homegrown startup eCommerce marketplaces that are now providing intense competition to industry leaders such as Amazon, Flipkart and eBay, and retailers are taking full advantage of all the tools at their disposal. Ultimately, the main goal of eCommerce selling is for a company to generate interest in their products among consumers so that they end up purchasing the items that they want and need. It is up to retailers to research their target market and supply the appropriate goods to fulfill the demand of their customers.  If a quality commodity is promoted to the wrong crowd, in a different price segment than was intended, it is bound to generate little revenue than what it could if it was visible to customers who would actually buy it. However, this interest and the actual sale mean nothing without a proper means of delivering orders in the best possible way. Many eCommerce sellers have turned to dropshipping in recent years due to its cost-effective nature. In this blog, we take a look at what dropshipping is, the benefits of finding the best dropshipping products, 5 ways to be able to identify them and 50 of the top dropshipping products in 2022. Stick around. What is Dropshipping? Dropshipping is an eCommerce fulfillment mechanism that is contrary to traditional order fulfillment, where, instead of the company storing its own products and fulfilling orders by its own means or through the use of a 3PL fulfillment company, it relies on the manufacturer or vendor themselves to directly ship the order to the customer. One of the biggest disparities between dropshipping and conventional fulfillment is that the company doesn’t directly handle its own products. Similarly, the vendor that fulfills the order doesn’t actually own any of the stock. Their services are utilised by the retailer to be able to fulfill orders. While dropshipping does have its own benefits, it often takes much longer for customers to receive their orders. [contactus_lilgoodness] Benefits of Using Dropshipping Requires Less Initial Investment Dropshipping requires comparable less investment than other order fulfillment methods. While setting up an eCommerce business itself is much more cost-effective than setting up a conventional brick-and-mortar store, dropshipping doesn’t require product purchases unless a sale has been made to a customer and they have already paid. This significantly reduces the need for ordering large quantities of products and retailers can test the waters before they need to make any decisions. Relatively Easy to Setup Setting up an eCommerce company that doesn’t have to deal with physical inventory and worry about storing it is much easier than retailers that need to find their own warehouses or partner with 3PL companies to use their fulfillment centers and other services, which can drastically increase expenses. Sellers that use dropshipping generally don’t need to pay for a warehouse, packaging and delivering orders, keeping track of inventory, taking care of reverse logistics and repeatedly placing replenishment orders. Consists of Low Overhead Expenses Because many conventional operational costs are mitigated by using dropshipping, overhead costs of running a business become comparatively low, which enables retailers to start a business and operate it from their home as opposed to needing to set up an office space. Because no products or employees are handled directly by the seller, there is little need for anything more than a laptop through which they can operate their business. Can be Overseen From Anywhere Dropshipping products to customers is extremely convenient for retailers as they do not have to deal with any of the important operations themselves. As long as they have a stable internet connection and a laptop, they can oversee business operations from anywhere they want to be. All that they need to do is maintain consistent contact with their suppliers and more occasionally, their customers to ensure that everything is running smoothly and no issues have arisen. Access to a Diverse Product Range One of the biggest advantages of dropshipping is that sellers always have access to the top dropshipping products. If there are trending dropshipping ideas that are being utilised by other companies, it is easy for retailers to hop on the bandwagon if their supplier also produces those goods. Whenever new and improved products enter the market, sellers can simply list them on their website and start selling them. This ensures that they will never be out of fashion or risk their products becoming obsolete. 5 Ways to Identify the Best Dropshipping Products for Your Business Identify Trending Dropshipping Products One of the best options to be successful in choosing the best dropshipping products for your online store is to identify the current trending dropshipping products that are being sold on other websites or by other competitors. The best way to search for which products are trending is to use services such as Google Trends to check what customers are searching for the most. Since dropshipping products is a relatively flexible business, retailers can easily list those products on their platforms to stay relevant. Search for an Untapped Niche Targeting an untapped niche can be a great way to gain a competitive advantage and benefit from being early to the party. Selling the top dropshipping products in a particular niche that is still relatively uncompetitive is a great way for a business to cement itself as the undisputed go-to option for customers who are searching for dropshipping products in that niche. Examples of targeting a niche with dropshipping ideas include selling Christmas decorations in December and beach wear in summer.  Research Your Competitors' Dropshipping Products A good way to identify which dropshipping products to sell and pricing strategies to implement would work for a particular company is to do some research on similar products that are sold by competitors. Additionally, it would be helpful to note which pricing bracket they are targeting and which products are doing well compared to others. Because of the vast resources of the internet, this research should only take a couple of hours at most.   Browse Online Forums to Get Dropshipping Ideas The marketplace of ideas known as the internet has given rise to multiple forums and online communities where people can discuss a whole range of topics, including which dropshipping products to sell. Sites like Facebook and Reddit are littered with all kinds of eCommerce groups, some open and some requiring an invite, that discuss a whole range of matters relating to dropshipping products. Scrolling through these pages and filtering them based on location, type of products, price brackets and more, can help retailers get a good idea as to which dropshipping products would work best for them. Opt for a Research Tool to Find the Top Dropshipping Products Research tools for dropshipping products are software solutions that use a variety of algorithms and metrics to successfully provide useful data on a wide variety of different products, across industries and selling platforms. Retailers can use these tools to gauge the best dropshipping products to sell based on characteristics such as sales volume, order history, number of retailers selling the product and much more. There are many tools available in the market but Sell the Trend and Niche Scraper are some of the best. 50 Best Dropshipping Products for eCommerce Retailers to Maximise Profit Gaming Headsets With the video game market experiencing skyrocketing growth, especially after the onset of the pandemic with more consumers being indoors, it is estimated to be worth more than $200 billion by next year. Gaming headsets are one of the dropshipping products that are currently trending so they could be a good option to sell. Bluetooth Speakers With more and more people in the country listening to their favourite tunes through apps such as Spotify and Apple Music, dropshipping products such as Bluetooth speakers are in high demand, with a growth rate of 29% estimated between 2020 to 2024. Smartwatches Regular watches have become a relic of the past as smartwatches have taken a stranglehold on the watch market. Most smartwatches seamlessly integrate with phones to provide notifications, easy access to quick functions and health data. It has become one of the best dropshipping products for retailers. Wooden Watches One of the best fashion dropshipping ideas is wooden watches. Being the polar opposite of smartwatches, they have their own niche audience due to their eco-friendly nature and a predicted growth rate of 4% between 2021 and 2025. Muslin Blankets These blankets are made of muslin, which is a soft, breathable and lightweight form of cotton. They are available in a variety of colours, shapes and sizes and have become one of the fastest-growing dropshipping products. Teeth Whitening Kits With more people paying attention to their personal hygiene, teeth whitening kits have become one of the most popular dropshipping products in the healthcare space, with consistent growth since 2015 and an estimated worth of $7.4 billion by 2024. Hair Growth Serums This is one of the top dropshipping ideas as the global hair products industry is set to reach $211 billion by 2025. Hair growth serums are one of the most trending dropshipping products on Google Trends and could be a good niche to tap into. USB Charging Docks Everyone needs to keep their devices charged at all times. Although the market has seen its share of fluctuations, it is still estimated to be valued at almost $38 billion by 2025. Another plus point is that they are quite cheap and fast to manufacture. Baby Carriers With the population steadily growing, more parents require an easy way to carry around their newborns and baby carriers have been the answer. The numbers are steadily rising as per Google Trends. Smoothie Blenders Since the dawn of the health-conscious movement, more people have been looking for ways to quickly get their fill of healthy ingredients, which is assisted by these popular dropshipping products. They have shown an upward trend for the last couple of years. Organic Teas This is one of the most popular dropshipping products that is targeted at people who want to maintain healthy lifestyles. While there are many variations and flavours, the overall market is estimated to grow by more than 16% between 2020 and 2027. Bluetooth Headsets With most phone manufacturers committing to Bluetooth by making the headphone jack a relic of the past, Bluetooth headsets have become one of the most popular dropshipping products among gamers, video streamers and music listeners, which is most of the population and is expected to exceed $25 billion by 2025. Seamless Innerwear Seamless inner wear is one of the most untapped dropshipping ideas in the eCommerce market. It is innerwear that does not have any seams so it does not leave an outline on your clothes if you are wearing something skin-tight. Security Cameras With the world becoming a more dangerous place, many people want to protect their businesses and homes by getting evidence of anything suspicious if it were to ever occur. With the industry expected to grow by 8% by 2025, it is one of the most sought-after dropshipping products in the security market. Anti-Ageing Creams It seems that many people are worried about preserving their youth because this is one of the highest trending dropshipping products in the market. The anti-ageing industry is currently worth $58 billion and is expected to grow by 7% by 2026. Beard Oils This burgeoning market has gained steady popularity in recent years due to the revival of the beard as a symbol of masculinity. It is expected to grow by 3% by 2027. Yoga Mats This is one of the dropshipping products that is bought by the same health-conscious people that buy smoothie blenders and drink organic tea, which is clearly a lot as the market is set to grow by 8% by 2026. Yoga Leggings Yoga leggings, as the name suggests, are used for yoga but also for gymming, jogging and other physical activities. This is one of the dropshipping products that has gained popularity in recent years. Vaporizers Vaping has emerged as a healthier alternative to cigarettes and has gained massive popularity in recent years, given the estimated worth of $48 billion by 2023. Face Rollers It is an emerging beauty product that is made from crystals and supposedly has multiple benefits for the skin. It has become one of the most popular dropshipping products amongst fashion bloggers and influencers. Facial Masks One of the many dropshipping products in the beauty industry, facial masks have been popular for a long time and are considered a must in any respectable healthcare routine. Waterproof Bags They are good dropshipping products to sell as their demand has been steadily increasing. They are made of synthetic materials and have waterproof linings to prevent water from getting in, even if it gets wet. Insulated Bottles In an effort to reduce the use of plastic bottles, insulated bottles have become a popular alternative in terms of dropshipping products. Currently valued at $62 billion, it is set to grow by 4% by 2028. Electric Massagers Due to the emerging popularity of self-care routines, electric massagers have become popular dropshipping products, reflected by the steady growth of 6% a year. Matcha They are green tea leaves in powdered form and need to be mixed with hot water. Along with organic tea and other health dropshipping products, it has gained popularity due to a more health-conscious society. Sports Bras They have emerged as popular dropshipping products due to the constant promotion by celebrities and are no longer considered just sports or gym wear but a comfortable alternative to t-shirts that can be worn anywhere. Anti-Dandruff Shampoo With an increase in the number of people that are plagued with dandruff, dropshipping products like anti-dandruff shampoo have become popular and are expected to achieve 3% growth by 2023. Phone Cases Phone cases have been popular dropshipping products since the inception of the smartphone but are increasingly so nowadays due to the expensive nature of phones. The market is expected to be valued at $74.5 billion by 2026 in the US alone. Wiper Blades This seems like one of the more out-of-the-ordinary dropshipping products to sell. However, with the growing number of people who require wiper blades for their cars, it can be a good niche to tap into. Tea Tree Oils  It is another option in the long list of healthcare dropshipping products. It is known for its antiseptic properties and aids in removing acne, bacteria and infections as well as a natural perfume, insect repellant and laundry scent. Tote Bags They are fashion accessories that can become good dropshipping products due to the increased popularity they have received in recent years due to the unique designs and patterns available. LED Lamps LED lamps have become popular dropshipping products due to the less electricity consumption they require. They also come in various designs and shapes. The market is growing at a rate of 13% annually. Sunglasses Sunglasses are dropshipping products that aren’t always on an upward trend but rather, experience seasonal spikes. It is still a good segment to get into. Men’s Grooming Products Men’s grooming products are also dropshipping products that experience seasonal spikes, especially around Christmas and other festivals which implies that men mostly take care of themselves during special occasions. Calligraphy Pens Calligraphy is becoming popular again and calligraphy pens are the dropshipping products that enable the ancient art form to be done in a more modern way. Eyelash Extensions Yet another feature in the beauty dropshipping products category, the market for eyelash extensions is set to reach $1.8 billion by 2024, which has been simplified with do-it-yourself kits. Artificial Flowers Fake flowers are popular dropshipping products for people who want to save money on special occasions. Another advantage is that they can be kept permanently, instead of withering up and needing to be replaced. Kid’s Tents Kid’s tents are trending dropshipping products in the children’s market. They enable kids to set up ready-to-use tents and play in them to their heart's content. Rice Cookers Rice cookers have become an essential household item for cooking rice as it doesn’t require any effort and always deliver perfect results. They have an upward trend on Google trends. Dog Toys They have become popular dropshipping products in the pet accessory industry and have multiple different shapes and sizes for every type of dog breed out there. Air Fryers Air fryers have garnered massive popularity since 2017 as they make fried food healthy without removing the taste. The market is set to reach $1.2 billion by 2026. Duvet Covers It is a household item that enhances the comfort of beds and couches. The bedding industry is expected to receive a valuation of $147 billion by 2028 so investing in it will be a great idea. Sleep Gummies They are a candy that is laced with melatonin, which is a hormone that regulates sleep. This product is gaining popularity due to the rise in insomnia and sleep levels across the world. Electric Toothbrushes They have been on an upward trend for many years and the market is set to be valued at $2,163 million by 2026. Capitalizing on selling electric toothbrushes can profit businesses immensely. Sports Tracksuits They have emerged as popular dropshipping products, not just for sporting events or active lifestyles but also as a comfortable alternative to pants for any occasion. Smartphone Tripods The capabilities of smartphone photography have increased exponentially in recent years and tripods provide a cheap way of getting even better-stabilized footage. Blue Light Filtering Glasses Blue light has a tendency to increase eye strain and cause headaches, especially since people are always in front of their screens, be it a phone, tablet or laptop. These glasses have become popular to curtail the effect of blue light on our bodies, reflected by the estimated 8% growth by 2026. Selfie Ring Lights They are circular lights that have been used by medical practitioners for years. However, these devices can be attached to a phone camera to balance out the lighting in low-light scenarios to provide better pictures. Wall Decals There are many uses for wall decals, whether it is a teenager trying to make their room look cool or couples trying to decorate their house. Either way, they have become popular dropshipping products over the years.  Welcome Mat Almost every house has a door mat in front of it and is the first thing you see before you walk into the front door. The industry was worth $5.1 billion in 2018 and is expected to continue growing as homes will always require door mats. Conclusion: Fulfill eCommerce Orders With WareIQ While dropshipping may have a variety of benefits such as low setup costs, operational costs, additional flexibility and less strain on retailers, it is also frequently plagued with multiple drawbacks such as extended delivery times ranging from multiple weeks to months, quality control issues and poor customer support since the retailer isn’t directly involved in the shipping process. Dropshipping products is a smart choice for startups and companies that are still in their infancy. However, retailers that have enough capital to acquire their own storage or fulfill orders directly should definitely consider partnering with a 3PL fulfillment company like WareIQ for all their eCommerce requirements. WareIQ is one of India’s highest ranking eCommerce fulfillment companies that provides the whole spread of eCommerce services ranging from storage to order fulfillment and everything in between. Some of our most-utilised offerings include: Providing storage solutions through a network of multiple fulfillment centers and dark stores located across the countryGiving users access to our custom WMS that can manage and track inventory across multiple fulfillment centers and 20 plus eCommerce marketplaces, in addition to providing updates in real-timeOffering an app store with a slick user interface and various applications to enhance the productivity of various eCommerce tasksPartnering with more than 20 of the largest shipping aggregators in the country to ensure the shortest delivery time and most cost-effective rates for every order. [signup] Dropshipping Products: FAQs Which companies are dropshipping suited towards?Dropshipping is generally the most beneficial for small companies that are just starting out and are on an extremely tight budget since everything is taken care of by the vendor. What are the drawbacks of dropshipping?Dropshipping is often associated with delayed delivery, low-quality standards and poor customer service. Why is it necessary to identify the right dropshipping products?It is necessary for a business to find the right dropshipping products in order for them to be successful and generate sales. They need to do this by analysing the market, target audience, competitors and many other factors. What are the alternatives to dropshipping?Order fulfillment that is done either by the retailer directly or by partnering with a 3PL company is a common alternative to dropshipping. The retailer handles the merchandise directly and stores it in their own or outsourced fulfillment centers as opposed to dropshipping. What are the advantages of order fulfillment over dropshipping?Order fulillment has much shorter delivery times, has rigid quality control measures, provides order tracking to both the retailer and customer, and customers have direct support from the retailer which provides a better experience.

July 15, 2022

Wholesale vs Retail: A Comprehensive Guide for eCommerce Sellers in 2022

Wholesale vs Retail: A Comprehensive Guide for eCommerce Sellers in 2022

Retail and wholesale are two crucial steps in the distribution process in the supply chain sector. Any product that a business produces is first sold in bulk to the wholesaler, who then sells it to the retailer, who then sells it to the final consumers. To put it simply, the wholesale and retail difference is that a wholesaler purchases the goods in large quantities from the manufacturer and then sells them to the retailer, who in turn sells them to the final consumers. The primary difference between wholesale vs retail is that a wholesaler sells products to businesses or retailers who will then resell them. A retailer, on the other hand, solely sells products to the final customer as their target market. These two commercial connections serve as key sales channel intermediaries. The supply chain will be affected if any of these links are missing. We shall discuss the key distinctions between wholesale vs retail in this blog. What is Wholesale? Wholesale refers to the cheaper, large-scale sale of products to merchants and retailers. The wholesaler purchases the goods in bulk disassembles them repackages them, and then sells them to retailers. The wholesaler only offers particular products and is least concerned with the store's location, the products' packaging, or their presentation. They care less about a product's quality and more about its quantity. Significant investment is needed for a wholesale company and not just in marketing and advertising. The wholesaler's clients are dispersed over numerous towns, cities, and states. The majority of purchases are made by clients using credit. A wholesale ecommerce store should be authorized to sell products solely to retailers and typically not to the general public. However, a buyer will pay more if they choose to purchase a product directly through wholesale vs retail. In order to concentrate on one type of business for their goods, a wholesaler typically sells just one product or a single category of products. [contactus_gynoveda] What is Retail? Direct sales of products or services to consumers are referred to as retail. Retail sales can be conducted using a wide range of items and delivery methods. A few examples of the different kinds of retail establishments are: Internet shopsLow-cost retailersconventional stores The fact that the sale involves the final consumer sets a retail transaction apart from a wholesale one. The parties engaged are more important than the type of distribution channel for defining retail. Retailers serve as middle-man between wholesale businesses and customers. You can classify yourself as a retailer if you exclusively sell goods with the intention of distributing finished products. Similar to this, a retail-based transaction will take place if you are purchasing items for personal use. For instance, if you need a printer for your brand-new company and buy one from your neighbourhood store, you engaged in a retail-based transaction. Retailers typically only offer minimal amounts of products. Sure, if your company expanded to that point, you could buy 100 printers from the same store. However, as this is not a typical request, it would probably take some time to complete. Retailers typically offer things in far lesser volumes than wholesalers do. Wholesale vs Retail: Key Differences Between a Wholesaler and Retailer [table id=40 /] Wholesale vs Retail: Types of Wholesalers and Retailers Wholesalers Merchant Wholesalers  These are the most typical wholesalers used in the private label, FMCG, and agricultural industries. Simply put, merchant wholesalers are the people that purchase products directly from manufacturers, keep them and then resell them to customers. They are not limited to selling exclusively to retail or online customers as they can sell through any channel. Any losses incurred in the process of purchasing and reselling the product must be paid for by the merchant wholesaler. Sales and Distribution Wholesalers These wholesalers handle both the manufacturing and direct distribution of the goods to retailers. Typically, they don't trade in products made by other companies. They can reduce their overhead costs for transportation, warehousing, etc. by merging the manufacturing and distribution processes. When manufacturers establish a distribution division within the business, they are acting as their own distributors. They will market and sell their own goods to other retailers and wholesalers. Discount Wholesalers This kind of wholesaler specializes in purchasing and reselling merchandise at deep discounts. These products are either inventory liquidations, returned or refurbished products, or discontinued lines. They offer retailers massive discounts which leads to an increase in the number of bulk orders placed, which enables retailers to get the products at much cheaper prices than other wholesalers. Dropship Wholesalers Dropship wholesalers aren’t really wholesalers in the regular meaning of the word. When an online retailer sells something, its wholesaler or distributor will send the item right to the customer. A drop ship wholesaler resembles a retail partner more in this regard. On many websites, you may find a tonne of dropship wholesalers. They are responsible for manufacturing products as well as shipping them to the final customer. Online Wholesalers Instead of using more conventional channels like trade exhibitions, this kind of wholesaler offers its products in large quantities online. This is very different to other types of wholesalers, who have been slow to adopt the use of technology in their promotional activities. These wholesalers are able to gain more attention through internet ads and other types of marketing. Retailers Speciality Stores These concentrate on name-brand products and a particular category. Examples of speciality stores are Victoria's Secret and Nike, which typically exclusively sell products that have their brand name or are connected to it. Online Retailers Without incurring the costs associated with traditional brick-and-mortar merchants, online retailers deliver items straight to clients at their homes or places of business. They typically sell things for less than retail pricing, store goods in retail warehouses, and establish connections with warehouses, vendors, and occasionally, manufacturers to obtain goods at lower costs. Department Stores In the actual retail area, traditional department stores offer a large variety of goods that are categorized into various categories. Shoes, apparel, cosmetics, jewellery, home goods, and other items are some of the categories found in department stores. Supermarkets These merchants offer a wide variety of food and drink items, along with occasional home goods and consumer electronics. Petrol Station Convenience Stores  These are often retail establishments that specialize in selling fuel to customers on the move. They also sell a small selection of groceries and automobile care items but at exorbitantly high "convenience" prices. Other Media Retailers Let's not overlook media sellers who market their products through conventional channels like TV and catalogues. Although this is a diminishing trend, there are still many stores that utilize it to sell their products. Wholesale vs Retail: Which Business Model is Right for You? You might choose to start out as a store if your small business is just getting off the ground. Most likely, you don't now have the capacity to satisfy wholesale demand. Spend some time establishing your brand and gain a following. You can do online business and send things straight to customers. Using wholesale suppliers to establish yourself in brick-and-mortar stores is something you might think about when your brand develops, your business grows and you become better equipped to make huge quantities of products. Or you could decide to start your own brick-and-mortar businesses. Keep in mind that you are not required to pick between the two. Growing businesses frequently do both.  You may achieve the level of freedom you seek by running your own business and being able to market your original works. You are able to acquire this financial freedom and build a prosperous business for yourself whether you are a retailer or a wholesaler. If you need assistance with fulfilling and storing any type of eCommerce orders or products, whether it is wholesale vs retail, WareIQ has got you covered.  WareIQ is one of India’s fastest-growing eCommerce fulfillment companies that provides a vast number of fulfillment centers and dark stores all across the country. We do not have any minimum order requirements and you only have to pay for the storage you use. Additionally, we utilize advanced technology such as a state-of-the-art WMS to help you track and get real-time updates across multiple fulfillment centers and eCommerce marketplaces. Wholesales vs Retail: FAQs Who are retailers?A retailer, sometimes known as a merchant, is an organization that sells products such as apparel, groceries, or automobiles to customers directly through a variety of distribution methods in an effort to make a profit. This business may be situated offline or online. How crucial are wholesalers and retailers to marketing?Every firm needs wholesalers, distributors, agents, and retailers. They frequently serve as a catalyst for managing a sales force, enhancing advertising, analyzing market demand, and managing supply in accordance with it. Wholesale vs retail: Which is less expensive?For a number of reasons, the wholesale price is less than the retail price. This is due to large batches of products being made and sold together.

July 15, 2022

What is a Stockout? Reasons, Impacts and 5 Ways to Prevent Out of Stock Situations in 2022

What is a Stockout? Reasons, Impacts and 5 Ways to Prevent Out of Stock Situations in 2022

Customers frequently come to your online business looking for a certain item to buy on the spot. They directly search for the product on various selling platforms. You can take advantage of customers that are currently visiting your store by making sure that all products are in stock. However, if the product is often out of stock, it may significantly reduce prospective sales, dissatisfied clients and eventually impede the expansion of a business. Stockouts have a negative effect on a customer's experiences so you should put all of your efforts into preventing them. Stockouts cause disappointment for both you and the buyer who is willing to spend their money and may urgently require your goods. It ultimately results in a loss of revenue and may harm the reputation of your brand. In this blog, we will learn all about out of stock situations and how we can prevent them to provide a better customer experience and never disrupt the revenue chain. What is a Stockout? A stockout, also called out of stock, refers to a shortage of a particular inventory item which leads to sellers not being able to fulfill orders for that item. Stockouts not only result in a loss of revenue but also customers. If there is no indication of when the item will be back in stock and available for purchase, it can be very detrimental to a company. A stockout occurs when demand is more than supply and there is not enough regular inventory or safety stock to fulfill all orders. A stockout may also result from production process interruptions or delays in the supply chain. Due to the greater likelihood that customers may go elsewhere for the items they need, a stockout increases the risk of lost sales. As a result, customer relationships may suffer over the long term. [contactus_uth] Reasons for Out of Stock Occurrences Poor Inventory Management Inventory management is a crucial function for every eCommerce seller. You have a lot of things to take care of while managing inventory. Different sellers manage their inventory differently. Some use FIFO or FILO for inventory accounting purposes and some use high-end inventory management systems while some use manual counting of inventory to keep track of any changes that are made. Poor inventory management can result in frequent stockouts. Good inventory management can result in better calculations, forecast demand for future purchases and automate reorder requirements. Inaccurate Count of Inventory Inventory items should have a report on the count so that at any time, you will have an idea of the number of products you have in storage and how many orders you can fulfill. Sellers having inventory stored in multiple different locations frequently and who do not maintain adequate records of their inventory frequently have out of stock situations occur, which leads to an inability to fulfill orders. To avoid this, they can invest in an inventory management system or have frequent manual counts of inventory. Inadequate Forecasting and Inaccurate Reporting Business is all about forecasting and taking risks. If you are not forecasting demand to be able to supply products and fulfill orders accordingly, you will lose profit and sales. If you order increased inventory as compared with your demand then you will be left with wasted stock which may cost you additional expenses to store for a long period as it can become obsolete. Conversely, if you are under order compared to your demand, you are at the risk of facing stockouts. Incompetent Supply Chain An incompetent supply chain will never deliver your inventory on time and you will face multiple problems, including stockouts, regularly. With them, you have a risk of supplying damaged products to customers which will always end with customer dissatisfaction, negative feedback and a loss of business. Delays Caused by Suppliers Especially during seasons of high demand and if you rely mainly on one supplier, they can be put under immense pressure to deliver inventory in a short duration of time which can lead to accidents, delays and mistakes. This leads to you not being able to get your products on time which can lead to out of stock situations. Lack of Experience and Expertise Purchasing is a very crucial task for a seller to select the right inventory in an adequate amount so they can avoid stockouts and reorder the correct amounts when required. A new eCommerce seller may not forecast the actual upcoming demand and can also lack the resources and experience to know what to do in difficult situations. How Can a Stockout Harm Your Business? Loss in Sales You miss out on a sale when you do not have what a customer is seeking. Lost customers result in a loss of revenue because not having enough stock on hand can result in not being able to fulfill orders. You are in business to make money, not to lose money. Stockouts are primarily the result of ineffective inventory management. Proper inventory counting and demand forecasting are crucial in order to prevent stockouts. Affects Branding Customer satisfaction may make or break your eCommerce firm because poor customer satisfaction has a negative effect on customers and reflects in their reviews. Customers may submit unfavourable reviews on your website or other review sites if they frequently notice that your product is sold out, which will damage the reputation of your company. These reviews are visible to potential buyers, who can consider your company unreliable. Your bad review gives companies that sell comparable items an advantage since it gives them knowledge of the areas where your brand falls short, allowing them to take advantage of it. Weakens Customer Loyalty How much would it cost to get one new consumer to your online shop? If you run out of an item, not only will conversions drastically decline because there won't be anything to buy, but the consumer is also likely to buy from a competitor who has the item in stock. Additionally, they might make future purchases from competitors. Stockouts can ruin a customer's purchasing experience, making it unlikely that they will ever come back to your store again. Without a doubt, stockouts can have a significantly negative impact on future business expansion. Some customers are eager to sign up for back-in-stock notifications if an out of stock item is difficult to get delivered. This is an excellent tactic to notify and nudge customers to make purchases when things are back in stock. Even so, this does not ensure that any future sales will be converted. 5 Ways to Prevent Stockouts Use Inventory Management Software It is an all-in-one solution for inventory management for an eCommerce seller. It keeps track of all your inventory items so that you cannot get confused about what you have and what you don't have. It optimizes the inventory space and utilizes it in the best possible way. It also enables automated counts, updates changes in real-time and provides insights into various aspects of inventory, across multiple fulfillment centers. Keep a Safety Stock Keep extra inventory on hand as this is another simple approach to guarantee that you will never run out of essential supplies. This is referred to as "safety stock." Safety stock increases your tolerance for supply chain disruptions but it can also be expensive, increasing your inventory carrying costs and reducing the amount of productive inventory you have on hand. Forecast Future Demand Companies can reduce the chances of a stockout by strengthening their capacity to forecast customer demand in addition to better supply forecasting. Modern demand forecasting is essential to preventing demand from exceeding supply and causing a stockout, especially around the introduction of new products. Calculate Inventory Replenishment Time If customers know that an out of stock product will soon be back in stock, they may wait. If you routinely monitor the inventory levels and replenish products when levels are low, you can prevent stockouts and, if stockouts do occur, you can more readily let the customer know when the item will be available. Automate Reordering In the era of automation, we need to gel with the market and its strategy. Most retail chain stores use the Internet of Things(IoT) for keeping a record of inventory and reordering so that they can track their inventory wherever they are. It calculates reorder levels and accurately tells a seller when they should place an order and at what time they will get it. Conclusion: How to Prevent Stockouts with WareIQ Stockouts can have immensely negative consequences for businesses in terms of lost sales and loss of revenue. There are many ways to prevent stockouts before they occur. Partnering with a renowned 3PL company like WareIQ is one of them. WareIQ is one of India's fastest-growing eCommerce fulfillment platforms that uses an abundance of technology to help your business run as efficiently as possible. We have a custom WMS that can forecast demand, provide the adequate MOQs and EOQs that are needed, set replenishment triggers when the quantity of a product is running low and provide real-time updates to inventory levels, across multiple fulfillment centers and 20 plus eCommerce selling platforms. Stockout: FAQs What is a stockout in business?Stockouts refer to the shortage of an inventory item. An out-of-stock situation can arise at any point in the supply chain but it has the most negative effects on store shelves and revenue when it happens right before a client makes a purchase. What is the stockout level?When there is more demand for a product than there is inventory on hand, a stockout occurs and this is known as the stockout level. This typically occurs when product demand exceeds expectations and there is not enough inventory or safety stock to fulfill all orders.  How is the stockout rate calculated?The percentage of an assortment that is not in stock is referred to as the out-of-stock rate, which is the opposite of the in-stock rate.The formula is:SKUs not in stock divided by the total number of available SKUs.

July 15, 2022

Merchandise Inventory: Definition, Importance, Calculation, and Examples in 2022

Merchandise Inventory: Definition, Importance, Calculation, and Examples in 2022

In the United States only, 43% of small businesses track inventory either manually or not at all, which can seriously hinder their capacity to operate profitably in the long run. Operations that don't manage their inventory are more prone than those that do to experience forecasting issues, which may result in higher inventory carrying costs, unanticipated stockouts, or an abundance of unsold inventory. No matter the size or business, inventory is a valuable asset for the firm's balance sheet. Merchandise Inventory is a crucial accounting tool that may be used at every level of the manufacturing process to connect production with order processing. This critical source of revenue is essential to a business's commercial operations and directly impacts how well it performs in terms of fulfilment. Regarding selling the inventory, manufacturers' inventory differs from merchandise inventory. While merchandise inventory concentrates on purchasing the completed items, manufacturers' inventory creates the inventory.  Effective inventory management is one of the cornerstones to business success for distributors, wholesalers, and retailers. These businesses frequently have substantial sums of money invested in stocks meant for consumer purchase. But, of course, the most significant asset for many companies is their inventory ready for sale or retail merchandise; car dealers, for instance, may have millions of dollars invested in their vehicle inventory.  What Is Merchandise Inventory? The word "merchandise inventory" refers to the items that wholesalers, retailers, and distributors purchase from suppliers and manufacturers intending to sell. Finished items or raw materials prepared for sale and intended for resale to clients can be included in merchandise inventory.  All items bought but not yet sold are included in the merchandise inventory. This unsold inventory is a current asset on a company's balance sheet. Inventory of goods falls within the concept of existing assets since it is typically anticipated that businesses would sell their stock within a year via routine business activities. In addition, the total amount paid to suppliers for the completed items/raw materials, as well as any related expenses, such as insurance, shipping, and storage, are included in the value of the inventory of goods. The profitability, competitiveness, customer happiness, and ultimately the existence of a business may all be impacted by how well it manages its merchandise inventory. [contactus_uth] Objectives of Merchandise Inventory  An internet business's most noticeable present asset is its merchandise inventory, which directly affects its performance. Therefore, for correct calculations relating to total costs, assets, and profitability, the company needs to understand the process of merchandising inventory. Additionally, the expertise necessary for accurate computations aids a corporation in comprehending the crucial associated financial factors.  Determining The Gross Income The gross profit, the difference between sales and the cost of goods sold, is calculated using inventory. Then, the cost of goods sold is compared to the revenue for the accounting period to estimate the gross profit or trading profit. Opening stock plus purchases less closing stock equals to cost of goods sold. The calculation demonstrates how inventory value influences cost and gross profit. For instance, if the closing stock is overpriced, the gain for the current year will increase while the profit for the years after would decrease. Analyze The Financial Situation A current asset is designated as closing stock. The closing stock value determines the company's financial status on the balance sheet. The working capital situation and the overall financial position might be misrepresented by overvaluation or undervaluation.  Prevention Of Insufficient Inventory Stocks For most firms, running out of inventory may be a fatal mistake. Understocking decreases client loyalty to your brands and directly affects company revenue. Additionally, failing to satisfy clients owing to a lack of inventory puts your company on a fast track to losing its favourable brand reputation. Thus calculating merchandise inventory is beneficial in maintaining inventory levels, which helps the organization in the long run.  Importance of Merchandise Inventory in Accounting Since product inventory is typically one of an online brand's most valuable assets, maintaining precise inventory management and tracking is essential since it directly influences a brand's financial health. Engaging a CPA when your firm expands is crucial since inventory accounting may be a challenging business procedure to handle. However, it doesn't imply there aren't resources a company can use, such as knowing inventory turnover rate and other crucial inventory reporting indicators, to maintain product inventories better. You may lower your risk of inventory loss, stockouts, and holding too much inventory by prioritizing item inventory control and management. An indication of how liquid your inventory is, for instance, is the turnover of your item inventory. The absence of unnecessary financial ties to dead stock inventory, which also raises carrying costs, is demonstrated by a greater turnover rate. Once the inventory has been sold, the cost of goods sold (COGS), also known as the logistical cost of procurement, is considered to calculate gross profit. Several alternative inventory valuation techniques may be used to track inventory and its worth. It depends on your business which option makes sense, given the advantages and downsides of each approach. You must regularly use your chosen technique to ensure accuracy in reporting inventory. Merchants Use One Of the Following Approaches To Value Their Inventory: First In First Out (FIFO) The First-In, First-Out (FIFO) strategy works well to maintain a high level of profitability and a fresh inventory of goods. The company may ensure that the shipments are of the best quality by prioritizing the sale of the first-acquired goods over the purchase of later-acquired goods. When selling seasonal items, FIFO enables a business to value its inventory by calculating the cost of goods sold from the first item it purchased and using that figure to value the remaining stock. This guarantees that profits continue to increase despite changes in the market. As a result, FIFO makes the company more efficient and profitable. Last In First Out (LIFO) The LIFO approach assumes that the most recent additions to the goods inventory will be sold first. Therefore, businesses that specialize in non-perishable goods benefit the most from LIFO. However, the cost disparity between the pricing of the items in the current market and those in the previous one can raise COGS and lower gross profit margins. Weighted Average Accounting Method The average cost of things throughout a company's accounting period is the main foundation of the intermediate cost inventory accounting technique. It is distinct from the previous two methods in that it does not keep track of the cost per inventory unit for every purchase or delivery. Instead, dividing the cost of the goods in the merchandise inventory offered for sale by the total inventory available will get the weighted average. Just-In-Time (JIT) In the just-in-time approach, merchandise is only bought as required rather than being held on hand. This can help firms with erratic sales since it keeps them from having too much inventory. In addition, this approach lowers risk, storage overhead costs, and wasteful loss from unsold goods. Specific Identification Method Every item in the product inventory is tracked using the specified identifying technique from purchase to sale. The method functions well for inventories of large, readily recognized objects with various attributes and prices. However, the strategy necessitates businesses tracking each item individually using an RFID tag, the particular ID affixed to objects that offers the most precise inventory cost and profit record. The unique identification approach increases the accuracy of the inventory valuation process, but it is mainly limited to valuing expensive and unusual things like real estate, jewellery, and cars. ABC Analysis Using the ABC Analysis, a firm may decide which products to sell first based on the cost of goods sold (COGS). The product inventory is divided using this manner into three separate groups: A - High-value, low sales: consists of the inventory of goods, which generates a healthy profit but requires considerable upfront expenses. An extended stay with this group may put a burden on finances. B - middle-value, average sales: Consists of products with a stable foundation and infrequent sales. Low-value, high-sale products in the inventory make up category C, which boosts the balance sheet without adding much to profit margins. The Methods To Measure Merchandise Inventory After selecting a methodology, you must choose a system that establishes how frequently you will monitor inventory value. An infrequent physical count is a "periodic system" carried out by hand. Real-time inventory management is regarded as a permanent approach, which is more prevalent in inventory accounting since it takes less time and is more precise. This is particularly true if your company has to track every item as it passes through your e-commerce supply chain. Perpetual Merchandising Inventory Companies must constantly update the data on the goods being sold as part of the perpetual inventory method. The firm can examine the inventory activities and transactions during the accounting period thanks to frequent updates on financial reports. The following transactions were made within the time frame: Purchases that were recorded as credits to the payable accounts and debits to the inventoriesPurchases that are deducted from the cost of items soldTotal monies credited to the inventory accountsChanges to the quantity debited and recorded in the price of goods sold, as well as credits to the inventory accountChanges in the placement of inventory The perpetual merchandising inventory system is the most popular technique businesses use to track all aspects of merchandising inventory in real-time. Periodic Inventory System for Merchandising Companies do not need to maintain an ongoing update of the inventory value and amount when periodically marketing inventory. Instead, a company conducts periodic inventory by taking an inventory report at predetermined intervals to monitor changes to the merchandising inventory. In particular accounting cycles, the procedure involves manually accounting for and comparing the inventory. Organizations that use periodic inventory include Small businesses can manually account for their inventory within the required time frame.Businesses have no resources to invest in inventory automation hardware and software.Businesses that offer lower-quality goods in large quantities, such as hardware stores that sell nuts, bolts, nails, and screws or candy shops that sell thousands of chocolates. For small enterprises, when the inventory loses some value with consecutive transactions, permanent merchandising inventory management appears to be redundant. The procedures used for periodic merchandising inventories are frequently incorrect and subject to human error. As a result, this inventory system cannot give the organization any real-time insights into its cost of goods sold, turnover rate, or other inventory indicators. How is Merchandise Inventory Calculated and Tracked? The examples below show how a store determines and tracks item inventory to help you understand merchandising better: Let's say a business that sells cleaning supplies in bulk is figuring out how much inventory it has. The accountant consults several sections of the balance sheet to determine the current worth of the company's inventory on hand. The accountant uses the following financial information: Beginning Merchandise InventoryCost of Goods Sold (COGS)Ending Inventory Beginning Merchandise Inventory Calculation The value of the inventory at the beginning of the accounting period is referred to as the beginning merchandise inventory or opening merchandise inventory. Before any new inventory is purchased or the current inventory is sold, the opening merchandise inventory value is determined. The ending merchandise inventory value from the prior accounting cycle is included in the beginning Inventory for the current accounting cycle. Beginning Inventory = (Ending Inventory + COGS) - Purchased Inventory Calculating The Cost of Goods Sold (COGS) The overall cost of producing the finished goods inventory of commodities, including labour, raw materials, etc., is calculated as the cost of goods sold. The primary method of valuation used to estimate how many gross profits were generated by a single or series of sales is COGS. Cost Of Goods Sold = (Beginning Inventory Cost + Purchases Cost) - Ending inventory Calculating the Ending Inventory  Since it is the last quantity to be reported on the balance sheet for the designated accounting period, merchandise inventory is referred to as the "closing inventory." This is because the cost of goods sold is subtracted from the initial inventory, and a new amount is added to determine the merchandise inventory (COGS).  Ending Merchandise Inventory = (Beginning Inventory + New Inventory) - COGS  Example of Calculating Merchandise Inventory An illustration of how a business determines and records its goods inventory is shown below. Let's imagine a business that produces and prints T-shirts. The T-shirts are $20 each. 5,000 T-shirts are sold, 800 fresh products are added to the inventory, with 400 items left in stock. Ending Inventory - 400 x $20 = $8,000 COGS = 5,000× $20 = $100,000 Inventory purchased - 800 x $20 = $16,000 The formula for calculating the starting inventory is:  Beginning Inventory = (Ending inventory + COGS) - Purchased inventory. Beginning Inventory = ( $8000 + $100,000 ) - $16000                                  = $92000 Merchandise Inventory Cost of goods available for sale or initial Inventory = merchandise inventory - COGS Inventory of goods equals ($92,000) - $16,000 = $76,000 As a result, $76,000 worth of merchandise inventory at the firm during a given accounting period. Use of Merchandise Inventory Once it is Calculated According to the given example, $76,000 worth of merchandise inventory during the accounting period. The accountant may use this information to decide how to allocate extra resources, distribute cash for essential supplies, and other uses for the company's earnings. Therefore, understanding the company's item inventory is critical to correctly assessing the profitability and financial health of the business. Furthermore, since that is the amount businesses disclose on the balance sheet, accountants frequently see product inventory as the ending inventory balance. As a result, companies may better define revenue targets and inventory KPIs by using this figure, which indicates how much of their inventory is available for sale. Conclusion The inventory of commodities that a business purchase for resale to clients is known as merchandise inventory. Typically, firms that use inventories of products are merchants and wholesalers. The financial stability of a corporation depends on effective inventory tracking and management. To save costs, boost performance and profitability, and enhance customer happiness and loyalty, a corporation must comprehend and optimize its goods inventory. How WareIQ Makes It Easy To Track & Account For Your Merchandise Inventory? Managing eCommerce logistics operations while your online business grows is challenging since your attention must be directed toward activities generating income. A top-tier fulfilment partner with a tech-enabled logistics network is WareIQ. With WareIQ, you can outsource fulfilment while maintaining complete operational visibility and having access to integrated inventory management solutions. Monitoring Stocks In Real-Time How much inventory or stock are you currently holding across all storage facilities? What location is it in? What is its value? In what condition is it? You can quickly track inventory and manage SKUs from the WareIQ dashboard, giving you total inventory insight in real-time. This will make it easier for you to precisely track inventory flow, storage and inventory warehousing expenses, and the typical number of units on hand over time. All of the top eCommerce systems may be connected to WareIQ within minutes. Once your store is connected, and your items are synced, you can: View current stock levels by SKU.Set reorder points for each SKU according to the number you want to receive restocking alerts.Combine several SKUs for promotions.Multichannel eCommerce Selling Inventory Optimization Your order volume will rise as your company expands. However, this may make it more challenging to estimate demand effectively, manage real-time inventory, and optimize inventory storage. With built-in inventory optimization tools, WareIQ's fulfilment system enables you to estimate demand more accurately, strategically distribute inventory, and monitor storage and warehousing costs across fulfilment locations. Reporting and Analytics At WareIQ, we offer an analytics and reporting solution that aids in forecasting future client demand and ideal stock levels as part of our full-stack fulfilment services. Our robust analytics and reporting platform can help you find the answers to queries like: What were the historical stock levels for my company at any given period or place?How long do I have until an SKU runs out of stock?When must I place new orders for each product's inventory?How frequently are certain products sold?Which products are not selling and cost a lot to store for e-commerce?  With these insights, you can increase the efficiency of your warehouse and logistics operations, enabling you to exceed client expectations while lowering costs and travel times consistently. With WareIQ, you can quickly develop a multichannel channel selling strategy by extending into new fulfilment centre locations and sales channels. In addition, WareIQ records it all for you in a single dashboard rather than requiring you to gather inventory data and information from several sources. [signup] Frequently Asked Questions Is merchandise inventory an asset or an expense?It is always regarded as a current asset when inventory of goods is bought with the aim to sell. Any unsold inventory that remains at the conclusion of an accounting period or fiscal year is recorded as "ending inventory" on your balance sheet. How can a business record merchandise inventory?On a company's balance sheet, merchandise inventory is often shown as a prepaid expenditure. Due to the fact that the inventory has already been acquired for resale, it is seen as a prepaid expenditure. Inventory of goods is transferred from the asset category to the cost category when it is sold. This is due to the fact that every product that is sold must either be produced or acquired, both of which are costly. What should be included in the merchandise inventory?The price the retailer or other reseller paid for the products out of their own pockets is included in the inventory of goods, along with any other expenses the business spent such as shipping, insurance, and storage. Whether it is in shops or warehouses, all unsold inventory that is available for purchase is included in the term "merchandise inventory."

July 14, 2022

Reverse Dropshipping: A Comprehensive Guide for eCommerce Sellers in 2022

Reverse Dropshipping: A Comprehensive Guide for eCommerce Sellers in 2022

Dropshipping is a retail business practice where a seller fulfills orders placed by buyers without keeping stock of the product with them. The merchant or vendor directly sends it to the buyers with the help of logistics companies. Conversely, reverse dropshipping is an emerging business practice that involves shipping premium products to exporting companies in countries like India, China, Korea, etc. It indeed has high-profit potential but is also quite complex to start. In this blog, we will help you get a better understanding of reverse dropshipping and the advantages and challenges that a seller will face. What is Reverse Dropshipping? Reverse dropshipping is an eCommerce business concept where a manufacturer offers a premium quality product to retailers in countries with mass production capabilities such as India and China. Preferably, the products utilised for reverse dropshipping are initially developed in the US, Germany and other developed countries. One of the main reasons for reverse dropshipping is that vendors flock to industrial giants like China or India due to the demand for high-quality products that are sought after by the citizens because getting them within their own country is difficult. The majority of locally made goods now have inferior quality due to China's large scale manufacturing. As a result, wealthy Chinese consumers must look for new means of satisfying their extravagant demands. The business model of reverse dropshipping is similar to that of traditional dropshipping but differs in one crucial way. Reverse dropshipping companies get high-quality, handmade products instead of a lot of cheap, low-quality goods. Because of this, reverse dropshipping has far higher profit margins when it succeeds. [contactus_lilgoodness] How Does Reverse Dropshipping Work? Using this business strategy, many prosperous companies are earning enormous sums of money. Fewer sellers will be willing to persevere because starting something is difficult. Here are a few steps you can take to start to reverse dropshipping: Select Your Niche Find a market that is currently underserved before you get started. You probably won't be able to list certain items on Amazon and make rapid sales, unlike what traditional dropshipping entails. You need to do market research, which can involve hiring a local professional to guide you through an uncommon area. A gap analysis will be the ideal place to begin. This will inform you of the areas with the greatest demand and provide you with a few possible starting points. Source Your Products After deciding on a strong market niche, you must source top-notch goods from developed countries like Canada, the United States or in Europe. Get partnered with a reliable dropshipping company. Contacting manufacturers directly and trying to work out a reverse dropshipping arrangement would be a good option. Be upfront about the fact that you want to send products overseas. They might already be set up for reverse dropshipping in India, making it easy to ship internationally as well. Determine the Most Effective Platform for Product Sales Finding the right marketing channels will go hand in hand with reverse dropshipping. Amazon and Flipkart may not have the same loyal following worlwide. Additionally, you can discover that various social media apps are popular in different countries or that Shopify store websites are uncommon. For example, Tik-Tok is banned in India but is used in many countries. China, for instance, relies heavily on the smartphone app WeChat and has barred other popular social media apps such as Facebook and Instagram. Another country where the majority of sales are made via Instagram or the Line app in Thailand. If you want to be successful, you must go where your consumers are and use the platforms that are popular in those countries. Mention and Translate Product Descriptions You must translate product descriptions regardless of where you decide to list your products, be it on social media, an eCommerce platform or a website. Do not trust Google Translate or similar apps. These translation tools frequently make mistakes, which could cause your writing to lose context or become insensitive to cultural differences. You must work with a local translator instead. With a professional translation, everything will be translated accurately without losing the actual meaning. If product descriptions are clearly translated, there will be less chance that there will be misunderstandings that lead to consumer returns or exchanges. Select Marketing Channels According To Specific Products You need to spend money on marketing to magnify your message. You cannot rely on people just stumbling onto your site naturally, especially if they do not know where to look. Consulting a local marketing specialist or a digital marketing company that knows how to promote to the community is a better practice. They can help you avoid wasting your advertising budget by advising you on the finest channels. In order to boost the likelihood that your products will sell and possibly help you raise your prices, local marketers can work with you to present your products in the best possible light. Advantages of Reverse Dropshipping Higher Profit Margins One of the most appealing aspects of reverse dropshipping is the fact that profit margins are higher than the conventional approach. Because most dropshippers rely on buying low-quality commodities in bulk, the profit is competitively low. By using a reverse dropshipping strategy, you can concentrate on selling less quantity of high-quality goods. It means that both your markup and your margin will be higher. Access to Niche Buyers Premium products are always purchased by niche buyers. They may not worry about the amount and other charges but they look for better service and quality. So this niche audience will buy a premium product from you and will have high chances of returning. Knowing that your company has the products they demand. They look for quality over quantity and price. Low Competition There is plenty of room to gain market share because reverse dropshipping is still a niche sector. You will only be up against a handful of companies rather than competing with thousands of dropshippers. These companies might likewise struggle to effectively market online. In other words, if you employ a dropshipping website builder to make the process simple, you can really stand out from the competition and simply take control of the market. In addition, there is plenty of room to expand into new markets despite the presence of thousands of conventional dropshippers. Less Investment in Marketing and Advertising Advertising and marketing are frequently less expensive and more competitive elsewhere. You will probably discover that pay-per-clicks and SEO are far less competitive here because of the limited number of buyers. The best thing you can do if you are serious about starting a long-lasting, sustainable reverse dropshipping business, is to engage with a local business to carry out market research. This will need some initial expenditure, but it will provide you with a thorough picture of the marketing landscape and show you where you can expect to get the most return on your investment. This will help you achieve personal publicity. Easy To Offer a Personalized Experience When you have a limited number of customers and you know that they can give you better profit margins and what kind of goods they require, it is relatively easier to provide a customised experience that is tailored to their requirements. You have dedicated resources from which you can offer a personalized experience. Simplifies Business Operations With the reverse dropshipping concept, you can quickly fulfill your orders and collaborate with the best suppliers. The duty for sourcing, picking, packaging and shipping is handled by your supplier. This makes it simpler to quickly expand your business operations by focusing on the core activities of the company such as research and development and marketing your products. Challenges of Reverse Dropshipping Difficult to Start There are other problems besides linguistic barriers in reverse dropshipping, such as cultural differences and governmental requirements. To be successful, you will have to put in the extra effort. Make sure to conduct thorough research to comprehend the market and the local culture before choosing a country to dropship too. Your chances of long-term success will increase the more thorough your initial study is. Has More Compliances One of the problems with India and other Asian countries is that regulations in emerging nations appear to change every day and perhaps, even every hour. In these countries, nothing is set in stone and new rules and bureaucratic red tape are commonplace. Depending on what you plan to dropship, you might have to deal with similarly absurd and complicated rules. To make sure you are abiding by local laws, it could be helpful to consult with an attorney in your area before you begin. Difficult to Source Products To provide the best quality products for which your customers are ready to pay a premium amount of money, you need to do research and tie up with a competent supplier for the business. You will find difficulty in making a deal with the manufacturers who are in other nations like America, Germany, etc. It’s difficult to find them and once you do, you face problems in having a conversation and striking a deal with them. Marketing-Related Challenges The benefit of marketing to people who share a language and culture is that you know how to communicate with them. You can hire a professional who is well-versed with a variety of technologies and social media platforms. It can be challenging to locate the appropriate marketing channels in a foreign country. Working with local marketing professionals to help you create a strong brand and use appropriate marketing channels is one method to get around this. To make this easier, you might need to create some dropshipping positions and hire locals in the regions where you wish to sell. Investing in affiliate marketing, where influencers and bloggers from your target market can drive traffic to your site, is one method to offset this problem. Even the best dropshipping websites may only be profitable if they receive a sufficient number of daily visits. If you want your firm to succeed, this is essential. Need for a Multilingual Website As you now know, reverse dropshipping is fulfilling items to different nations so for each nation, you need to describe the product and other related information in their language. You need to send order confirmation messages/emails, invoices and other sales updates in many local languages such as Mandarin for Chinese customers, a variety of different languages for India, etc. Suggested Read: Dropshipping websites that can help your business grow. Conclusion: How Can WareIQ's 3PL Fulfillment be a Good Alternative to Reverse Dropshipping? WareIQ, one of India’s fastest-growing third-party fulfillment companies, provides a variety of fulfillment options within the country which enables you to run your supply chain smoothly. Experts at WareIQ are experienced in a multitude of different aspects of eCommerce fulfillment. We have tie-ups with dozens of national as well as international shipping companies, sellers and manufacturers. When you use the dropshipping or reverse dropshipping method in India, managing returns becomes a challenge. However, we offer an RTO Shield which helps mitigate RTO requests and provides insurance against it. We have solutions across every touchpoint of logistics. In case you serve a niche market that is not near to your physical location and you find it difficult to reach all your customers, we provide fulfillment centers and dark stores in every corner of the country. We have a complete all-in-one solution for each and every eCommerce business requirement by using a high-tech AI-based application that integrates with multiple selling channels in one place, which ensures that you and your customers will have the best possible experience. Reverse Dropshipping: FAQs What is reverse dropshipping?Instead of purchasing goods from China, India or other countries and exporting them around the world, you import goods from developed countries, particularly the US and and Europe, and sell them in different countries. This is known as reverse dropshipping. Can I dropship to the USA from India?All you require to dropship to the USA is a business bank account in India and registering with your GST number. Is dropshipping profitable in India?India is a very profitable market for dropshipping because of the enormous growth potential, a large amount of untapped resources and the lower risk associated with it. Can I dropship to another country?Dropshipping allows you to sell anytime and everywhere, so instead of just dropshipping in a certain country, you can sell your products anywhere in the world. 

July 14, 2022

10 Best Amazon FBA Alternatives for eCommerce Retailers to Fulfill Online Orders in 2022

10 Best Amazon FBA Alternatives for eCommerce Retailers to Fulfill Online Orders in 2022

The eCommerce industry is growing at a rapid rate, especially in a developing market like India, where more people are gaining access to the internet, and the conveniences offered by it, on a daily basis. Logically, the number of retailers striving to capitalize on all these new internet users is also expanding and with a plethora of eCommerce marketplaces, that cater to a variety of different budgets and product types, online sellers are spoiled for choice as to which one fits their requirements and audience the best. An opportunistic company would try to sell on as many of these platforms as possible, to gain as much visibility to potential customers as they can, and many of them do.  One of the biggest factors in the boom of eCommerce retail in India was the entry of Amazon, the world’s largest eCommerce selling platform, into the country in 2013. Since then, India has become one of the biggest markets for Amazon, especially after losing out on market share to local competitors in China. The company has committed itself to a vast expansion in every sector of the country, with landmarks such as the opening of the largest Amazon campus in the world in Hyderabad in 2019 and the then CEO and co-founder, Jeff Bezos, explicitly stating the company’s goals of making India its number one focus. While this has had a positive impact on the entire eCommerce industry as a whole, there are many retailers who abstain from selling on Amazon and would rather focus their efforts on homegrown platforms such as Flipkart and Myntra. In addition, Amazon’s first-party fulfillment service, Fulfillment by Amazon (FBA) levies many restrictions and additional expenses on sellers such as some of the highest commission charges in the industry, rigid packaging guidelines and minimum monthly sales targets, among others. Read our blog on FBA Vs FBM to find out which one is right for your business. Although it offers some of the best fulfillment services and use of technology in the country, this lack of flexibility can lead many retailers to search for Amazon FBA alternatives, some of which offer just as many services, cheaper pricing plans and more freedom to position their brand in the way that they want, while still taking advantage of selling on Amazon’s eCommerce platform. In this blog, we will take a look at the reasons companies search for alternatives to Amazon FBA, the 10 best Amazon FBA competitors in the country and how WareIQ can be of assistance. Read along. Top 5 Reasons Companies Search for Amazon FBA Alternatives Reduced Branding Capabilities If retailers use FBA to fulfill Amazon orders, they have to abide by Amazon’s packaging standardisation, which essentially means the first thing that customers will see when they unbox their order is Amazon branding, front and center. This is a conscious effort by Amazon to let the customer know where the product was ordered from and who fulfilled it, as opposed to highlighting the brand of the seller, who has done the hard work of researching and manufacturing the product, and who has generated a sale for Amazon. If a retailer wants to highlight their own brand instead of Amazon’s, which already has more than enough name recognition, they are better suited to find alternatives to Amazon FBA. Complicated Payment Structure Amazon FBA’s payment structure can be extremely complicated to figure out, especially for retailers who don’t have much experience with using the platform’s services. There are a vast variety of different expenses, some of which are fixed, variable or circumstantial. There are 3 main fees that Amazon imposes on its sellers - Seller fees which is a standard fee to use their services, fulfillment fees which encompass warehouse operations such as picking, packing and shipping for each order, and storage fees which is a based on the amount of storage space your inventory occupies. Additionally, the charges can vary depending on seasons, events, sales and other factors and Amazon is notorious for charging penalties for minor infractions. Sellers who want to have simple and transparent payment plans often seek to find Amazon FBA alternatives. Merged Inventory With Similar Products The large number of sellers that utilise FBA for storing multiple products and variations means that not every product will get access to its own, separate storage location in the warehouse. Similar products from different sellers are often clubbed together and assigned a single slot, from where they are picked and packed, whenever an item is ordered. This results in the increased possibility of the wrong products being selected and shipped, resulting in customer dissatisfaction, a negative impression of the brand and the hassle of dealing with product returns for the seller. If a retailer wants their own designated storage space for the entirety of their product line-up, it would benefit them to look for Amazon FBA competitors. Limited Inventory Control Retailers who require strategic control over their inventory would be better off finding alternatives to Amazon FBA, due to the increased difficulty of adding and removing products that are stored in FBA warehouses. Continuing with the theme of penalizing retailers for minor offences, Amazon imposes a penalty fee if inventory is stored for a longer period than the predetermined date, which limits the ability of retailers to effectively forecast market demand and order and store products accordingly since they have no room to make the necessary changes and additions to their inventory. Partnering with FBA requires retailers to order and store all their inventory in one go, which makes it difficult to achieve the right product quantities and can result in wastage and losses, which sellers will have to incur. Rigid FBA Prep Guidelines Amazon's ultra-strict guidelines can be a benefit for consumers but a challenge for retailers to follow extensively, as there are many regulations to follow in order to get their products prepared to be fulfilled by FBA. FBA prep refers to the rigid instructions set by Amazon in regard to packaging, labelling and safety standards. One example is the need to follow the Amazon Standard Identification Number System (ASIN) where each product has to be labelled separately and split into multiple different shipments before being dispatched to an FBA warehouse. This ultimately increases the expenses and storage costs for retailers as one product is effectively split into multiple shipments, taking up more storage space in the process. If retailers do not want to be subject to harsh requirements and penalties, they can opt to find Amazon FBA competitors. [contactus_uth] 10 Best 3PL Alternatives to Amazon FBA WareIQ Source WareIQ is a rapidly expanding eCommerce fulfillment company that was founded in 2019 and is currently headquartered in Bangalore. Making good use of the advanced technology services it has at its disposal, the company offers a comprehensive tech stack that includes a state-of-the-art WMS which can integrate with more than 20 of the biggest eCommerce marketplaces including Amazon, an app store that consists of a variety of easily downloadable apps that functions in a similar way to conventional mobile app stores such as the Google Play Store and Apple App Store, branded order tracking that can be fully customized and much more. Additionally, the company has partnered with more than 20 of the biggest shipping aggregators in the country to provide ultra-fast same-day and next-day delivery to most pin codes across India. Some of the features of WareIQ that make it one of the best Amazon FBA alternatives are: Offers a pan-India network of Fulfillment centers and dark stores, enabling eCommerce sellers to store inventory closer to customer Has 20+ shipping partners enabling same/next day deliveryProvides easy integrations with 20+ eCommerce marketplaces & online platformsOffers a fulfillment platform with a unified OMS & WMS viewHas an inventory planner for smart inventory placement to reduce overstocking & avoid stockout situationsProvides a shipping recommendation engine to choose the most cost-effective last-mile delivery partnerProvides packaging facilities that are highly customizableOffers branded tracking facilities that can be tailored to every retailer’s requirementsProvides industry-leading pricing plansDoes not impose any minimum order requirementsHighly capable customer success team for 24x7 customer support Related Article: Amazon Pricing Strategy FedEx Source FedEx is a multinational eCommerce giant that offers eCommerce fulfillment solutions, supply chain services and shipping facilities across many different industries such as healthcare, electronics, retail and much more. The company was founded over 50 years ago, in 1971, in Little Rock, Arkansas, United States and currently has its headquarters in Memphis, Tennessee. The company operates in upwards of 220 countries globally and offers features to eCommerce retailers such as being able to sync their order details and inventory lists across multiple selling platforms, in a single location. The company is one of the most experienced in the field of eCommerce fulfillment and will be sure to handle any task with ease. Some of the features of FedEx that make it one of the best Amazon FBA alternatives are: Offers ultra-fast delivery and returns management facilitiesProvides a vast fulfillment network for deliveryProvides users with a simple and intuitive technology platformProvides integrations with a variety of eCommerce marketplacesOffers a worldwide network of services ShipMonk Source ShipMonk is an eCommerce fulfillment company whose primary focus is to make tech-based eCommerce services readily available to a wide audience of retailers, across industries. The company’s headquarters are located in Fort Lauderdale, Florida and since its inception in 2014, its services and operations have expanded rapidly. ShipMonk offers a wide variety of services ranging from packing services, pick and pack operations, and warehouse management to customer support and much more. It currently has 100 plus digital stores and assigns dedicated account managers to every customer for onboarding assistance. Some of the features of ShipMonk that make it one of the best Amazon FBA alternatives are: Offers a digital billing portal to customersHelps with the automation of warehouse operationsHas a wide variety of branding and customisation servicesProvides decreased pricing for bulk orders and tax benefitsDoes not impose a setup or inventory receiving fee DHL Source Dalsey, Hillblom and Lynn, abbreviated as DHL, is a global eCommerce juggernaut in the eCommerce fulfillment industry. Founded in 1969 in San Francisco, California and currently headquartered in Bonn, Germany, the company has grown immensely and provides courier and shipping services to more than 220 countries across the globe. While the company is split into many sectors, its distribution branch offers door-to-door delivery and transportation of freight through air and sea. A significant advantage for retailers who ship internationally and use DHL for their requirements is the company’s ability to clear customs without any hassle and seamlessly tackle any other challenges that could arise, while also offering insurance on every package. Some of the features of DHL that make it one of the best Amazon FBA alternatives are: Offers integrations and inventory optimisation across multiple eCommerce marketplacesProvides effective logistics managementProvides a wide range of B2B and B2C fulfillment servicesOffers next-day delivery in 80 plus cities and towns in IndiaProvides a central tech platform for inventory management, order fulfillment and other procedures Rakuten Source Rakuten is a world-renowned fulfillment company that offers various eCommerce-related services such as packaging, shipping, kitting and returns management, among many others. Founded in 1997 in Tokyo, Japan, it also maintains its global headquarters there. It has provisions to enable retailers to track shipping metrics to be able to streamline and enhance their shipping operations to reduce expenses and increase delivery speeds. Additionally, the company offers a service called XParcel, which is targeted at small and medium-sized companies, to make their fulfillment requirements easier and cheaper. Some of the features of Rakuten that make it one of the best Amazon FBA alternatives are: Offers specifically-tailored services for eCommerce retailersProvides integrated marketing solutionsOffers same-day and next-day delivery in the USRuns specialised fulfillment centersOffers subscription box and kitting services BlueDart Source BlueDart is an Indian logistics and courier operations company that was founded in 1983 and is currently headquartered in Mumbai, Maharashtra. The company is one of the largest and longest-operating Indian eCommerce fulfillment providers that also offers global operations in more than 220 countries in addition to the more than 35,000 serviceable pin codes within India. Along with the conventional array of eCommerce services, they also offer some unique facilities such as allowing customers to choose their preferred delivery date and time by selecting schedules and time-slots. It also offers an API that can provide specialised services such as weather-proof packaging, automated proof-of-delivery updates and much more. Some of the features of BlueDart that make it one of the best Amazon FBA alternatives are: Provides local as well as global operationsProvides most major payment optionsOffers specialised services such as weather-proof packagingAllows scheduled delivery at specific dates and timesHas a vast amount of experience in the industry Ekart Source Ekart was originally founded in 2009 as a subsidiary of Flipkart but has since changed ownership and has expanded its range of services to offer fulfillment to a wide variety of other eCommerce marketplaces, including Amazon. Headquartered in Bangalore, Karnataka, the company has garnered popularity due to its relatively low prices and provision of ultra-fast delivery. They currently offer same-day delivery in 13 cities and next-day delivery in 50. The company also offers a tracking API that provides status updates on orders, printing of labels and much more. Some of the features of Ekart that make it one of the best Amazon FBA alternatives are: Provides reverse logistics servicesHas an API that gives real-time order and inventory updatesOffers some of the lowest rates in the industryIncludes most major payment optionsHas a pin code coverage of around 4,000 Ecom Express Source Founded in 2012 and currently headquartered in Gurugram, Haryana, Ecom Express is a logistics and courier services company that offers eCommerce fulfillment services. One of their unique selling points is their ability to successfully ship high-value commodities such as jewellery and electronics, by providing additional security and safety features. The company operates 7 days a week and on public holidays, while also offering guaranteed delivery within 72 hours of the order being confirmed. Similarly, they also provide a 72-hour guarantee for returns. Some of the features of Ecom Express that make it one of the best Amazon FBA alternatives are: Provides enhanced security features for all ordersOperates 24/7 and on public holidaysProvides 72-hour guarantees for every orderProvides reverse logistics servicesServices more than 27,000 pin codes Shadowfax Source Founded in 2015 and currently headquartered in Bangalore, Karnataka, Shadowfax is an eCommerce fulfillment and logistics company that offers both domestic and international operations. The company provides a variety of delivery options including marketplace pickups, warehouse pickups, and first-mile and last-mile delivery, in addition to hyperlocal and ultra-fast delivery. The company also provides value-added services such as in-transit storage and on-demand pickup, and has gained recognition for its fast delivery services. Some of the features of Shadowfax that make it one of the best Amazon FBA alternatives are: Services more than 7000 pin codes in IndiaProvides facilities like in-transit storage and on-demand pickupAccepts most major payment methodsOffers a variety of delivery optionsProvides both first-mile and last-mile delivery DTDC Source DTDC is one of the earliest eCommerce logistics providers. Since its founding in Bangalore in 1990, the company still operates its headquarters there. It has a customer base of more than 10,000, 75% of which consists of eCommerce businesses. It services more than 17,500 pin codes in India and provides additional facilities such as warehousing and a tracking API that can provide order updates and issue non-delivery reports, and much more. It also offers a variety of different delivery options including ultra-fast delivery, hyperlocal delivery, scheduled delivery and slot-based delivery, in addition to the conventional options of same-day and next-day delivery. The company also differentiates itself from the competition by being able to fulfill orders for a wide variety of commodities including high-value goods, bulky goods and even hazardous goods. Some of the features of DTDC that make it one of the best Amazon FBA alternatives are: Accepts all major payment optionsProvides specialised delivery for high-value, bulky and hazardous goodsOffers a tracking API with real-time tracking facilitiesServices more than 17,500 pin codesProvides express delivery Feature Comparison Table of Amazon FBA Competitors [table id=39 /] Conclusion: Why is WareIQ One of the Best Alternatives to Amazon FBA in India? The eCommerce retail industry is extremely competitive and a competent fulfillment service can mean the difference between a retailer acquiring success or failure. Order fulfillment is one of the most important aspects of online selling as it determines the kind of experience a customer will have and the impression they will carry about the company that they ordered from. Most retailers are required to sell their products on Amazon, simply because it is one of the largest, most recognised and technologically advanced fulfillment platforms in the world. It opens up a vast amount of opportunities and access to customers that they simply couldn’t get otherwise. Retailers, especially those who aren’t well-versed with the order fulfillment process, often opt to fulfill their Amazon orders with FBA, mainly out of convenience and because they perceive it as the best option. However, partnering with a 3PL fulfillment company like WareIQ, can often grant them access to even more facilities, better service, fewer restrictions and cost-effective pricing. WareIQ is one of India’s emerging eCommerce fulfillment providers that uses advanced technology to tackle the multiple challenges associated with the order fulfillment process. We ensure that we provide the best experience to our users, by providing enhanced and flexible services, that are easy on the pocket. Some of our industry-revered services include: Country-Wide Network of Dark Stores and Warehouses Offers an intuitive plug n’ play setupHas integrations with Flipkart Assured, Amazon Seller Flex, Myntra and other other online marketplacesOffers local sourcing hubs to lower first-mile costsOffers in-house inventory management Efficient Warehouse Management and Network Planning Offers industry-leading AI models for demand forecasting and triggers for automatic replenishmentProvides bundling of commodities based on type (regular, non-regular, seasonal etc.) to improve the generation of sales Vertically-Integrated Fulfillment Tech Stack Provides integrations with more than 20 top-selling platforms and D2C channelsProvides integrations with hyperlocal, regional and national shipping aggregators, covering more than 27,000 pin codesProvides an individual unified technology stack for WMS and OMS App Store With Easy-to-Install Apps to Enhance Productivity Uses an RTO Shield which offers 100% protection from returnsAmplifies post-purchase satisfaction through custom branded tracking pagesSends notifications on order updates to customers through Whatsapp, SMS and EmailHelps in customer feedback generation  Super-Fast Delivery Through WareIQ Rush Offers same-day delivery with no minimum order requirements Increases revenue conversion rates by 30%Offers near-zero RTO%Provides NDR & COD verification through WhatsappDecreases Cost per Shipment (CPS) Amazon FBA Alternatives: FAQs What is Amazon FBA?Amazon FBA is Amazon’s first-party fulfillment service. Retailers can opt to deliver their orders through FBA for additional fees and have to prepare their products to meet the various requirements that it has. Can sellers opt to fulfill their Amazon orders through 3PL companies?Yes, Amazon allows retailers to fulfill orders on their own or through a 3PL company of their choice if they opt for the Fulfilled by Merchant (FBM) program. What is the primary goal of 3PL fulfillment companies?The main goal of 3PL fulfillment providers is to offer a vast variety of eCommerce-related services to retailers that they may not be able to do on their own, including order fulfillment, reverse logistics, inventory management and much more. Why is same-day and next-day delivery important?Customers have become spoiled for choice and are accustomed to instant gratification by having everything they need at the click of a button. Customers who do not receive their products in time often perceive it as an unnecessary inconvenience and can lead to negative sentiments about a brand. What should you choose WareIQ as an alternative to Amazon FBA?WareIQ uses advanced technology to provide the best, fastest and most cost-effective eCommerce services to customers such as order fulfillment, inventory management, reverse logistics and much more. We also provide unique features such as storage facilities across a country-wide network of fulfillment centers, an advanced WMS that aids in the automation of multiple processes and an app store, where users can download popular apps to increase the productivity of various services.

July 13, 2022

What is Just In Time (JIT) Inventory Management System? A Detailed Guide for Online Businesses in 2022

What is Just In Time (JIT) Inventory Management System? A Detailed Guide for Online Businesses in 2022

Successfully managing your inventory is crucial to operate an online store. But it may also be difficult, costly, and time-consuming. Because of this, businesses worldwide employ various alternative inventory management solutions to reduce their inventory costs and streamline their various warehouse operations. A just in time inventory is a well-liked technique, which if effectively executed can reduce inventory costs by 10%, and this money might be put to use for expansion, automation projects, hiring workers, and research & development. the list is endless. Businesses may better manage their demands for raw materials, manufacturing, and customer orders by using a just in time inventory system. However, for things to go well, the business must have a well-oiled supply chain in place to ensure that everything happens at the precise right time. This article will examine just in time inventory, its benefits and drawbacks, and how it may be used to help you determine if this system will work for you. What is Just In Time Inventory? Traditional supply chains are replaced with a just in time inventory system, which lowers the overhead expenses of maintaining a warehouse and stocking inventories. With just in time inventory management, you may place orders with suppliers for items or materials in quantities sufficient to fulfil immediate customer demand without carrying extra inventory. Why Utilize Just In Time Inventory Management A modern cost-cutting tactic that has gained popularity and acceptance is JIT inventory. It aids businesses in minimizing waste, increasing productivity, minimizing mistakes, and maximizing profit. However, due to vast stockpiles of useless goods that cause manufacturing uncertainty and turmoil, businesses frequently suffer losses. Using a JIT inventory management system, businesses may bring manufacturing under better control and cut expenses associated with handling inventory. To cut expenditures on inventory management, the firm can store little stock as needed by using JIT inventory. As a result, it guarantees less material waste, more productivity, defect-free goods, and complete elimination of waste related to inventory handling. Additionally, it enables companies to do better market and sales analyses and demand forecasting. Businesses utilize a just in time inventory management system to produce goods precisely and cut down on wasteful spending. JIT Inventory is a productive approach created in Japan to reduce waste and increase revenue. It is a technique that increases cash flow and ensures ROI (Return on Investment). How Does Just In Time Inventory Management Work? For the just in time model to function, a client must first place an order with the manufacturer. The manufacturer recalls an order with their suppliers as soon as they get the order. After receiving the order, the suppliers give the manufacturer the materials required to fulfil the customer's purchase. The manufacturer then receives the raw ingredients, assembles them, and sells them to the client. The fundamental JIT inventory steps are as follows: Step1- Order From A Client After a business gets an order, a project manager examines the requirements and chooses the materials—along with their quantities—that will be used to construct the product. Step 2- Purchase Supplies Next, they make the precise number of purchases of materials required for the order. Step 3- Manufacturing And Delivering The product After receiving all the supplies, the manufacturer produces the product and delivers it to the customer. Step 4- Cycle Maintenance It is possible when a business has a contract with a client that requires it to renew orders regularly based on a timeframe. A just in time inventory example is as follows: Let's say your automobile manufacturing company assembles vehicles. You would need to order steel frames to build the chassis and other components, but steel cannot be stored in a warehouse for an extended period due to its susceptibility to rust. Not only does this increase the likelihood that the steel will rust, but it also raises storage costs for steel frames that you may or may not use. As a result, you wait for a client to place an order for the automobile they want to buy before ordering steel from your supplier and using it to make the car's chassis and assemble the other components. This is how the JIT inventory system works. For the efficient aspect of this method to kick in, your business needs to be able to deliver the inventory very quickly. A customer who orders a car doesn't want to wait any longer than necessary for it to arrive. If so, you should utilize an effective inventory management system to acquire the steel components and other essential items and have them delivered to your production facility more rapidly. [contactus_lilgoodness] Pros and Cons of Using Just In Time Inventory Management Just-in-time operation demands meticulous supply chain planning, and top-notch software completes the entire process until delivery, improving productivity and reducing room for error because each activity is tracked. A just in time inventory management system has the following significant benefits and drawbacks mentioned below. Pros Improves efficiency  The expenses of acquiring, controlling, and keeping surplus raw resources and inventories are decreased by the JIT approach. This causes an increase in inventory turnover, which keeps stock from accumulating in your warehouse for too long and becoming outdated. Additionally, you may accept and store supplies in the lowest numbers feasible, thereby decreasing surplus raw material stockpiles. Finally, local sourcing ensures that your suppliers are close to the manufacturing facilities of your business, allowing for prompt delivery and minimizing the need for safety stock. Mitigates Inventory Waste A just-in-time approach prevents overproduction, which occurs when the market's supply of a good exceeds its demand and results in the buildup of unsalable stocks. These unsaleable items become the dead stock in the inventory, which increases waste and takes up space. In a just in time system, you only order what you require, eliminating the possibility of building up unnecessary inventory. Lowers Holding Expenses Of Warehouse Excess inventory can cause your holding expenses to quadruple, making warehousing expensive. Warehouse holding expenses are kept to a minimum in a just-in-time system. You only place an order when a client does, so by the time it gets to you, the item has already been sold, negating the need for long-term storage. Businesses that employ the just-in-time inventory approach can completely scale back or do away with their warehouses. Complete Control Over Manufacturing In a JIT approach, the manufacturer controls the demand-pull-based production process. They may immediately increase the production of a product in high demand and decrease the production of those in low need to meet client demand. As a result, the JIT approach is adaptable and able to meet the constantly shifting market demands. For instance, Toyota waits until it receives an order before buying raw materials. Due to maintaining less inventory, the firm has been able to save expenses and swiftly adjust to changes in demand without worrying about current inventory. Improved Relationships with Clients and Suppliers Fewer things need to be moved on the shop floor at once when using JIT inventory management. This enables your management to concentrate on streamlining procedures and creating top-notch items. As a result, less defective, higher-quality items increase customer satisfaction and reduce waste. In addition, because suppliers in the JIT manufacturing model ensure the product's quality, deliveries move straight to production, avoiding delays from inspection. Companies may be more adaptable by maximizing resources, including people and equipment, and by cutting down on turnaround times, thanks to the dynamic and agile manufacturing process. It enables businesses to devote more time to marketing, sales, and client acquisition rather than dealing with product flaws, surplus inventory, and ambiguous production methods. In addition, it will enable the production plan to accurately schedule work and release machines and equipment for new work orders. JIT inventory has various advantages, including less rework and greater time, space, and resources for upcoming orders. In addition, companies may enhance the quality and dependability of their products and their relationships with suppliers and consumers by accurately anticipating and predicting demand. Cons The following are some drawbacks of just-in-time (JIT) manufacturing. Relies Heavily On Future Predictions JIT inventory management necessitates that businesses fully comprehend sales trends and variations. For example, many companies must have more inventory due to seasonal sales to meet rising customer demand. As a result, you must prepare for situations like these and ensure that your suppliers can meet the needs. Since demand can sporadically change, a prediction cannot be relied upon. This may make it harder for your company to satisfy those needs. Because you won't be able to help your clients in such circumstances, you risk losing customers and money. Risk Of Stock Running Out  With JIT production, you carry less inventory, and this is because you base your stock decisions on demand predictions. If those predictions are erroneous, you won't have the appropriate quantity of goods accessible to your customers. One of the most frequent problems with production that applies JIT and lean approaches is this one. Dependence on Suppliers  When you rely on suppliers to fulfil each order, you risk holding up the delivery of items to your clients. In addition, customers could go to a competitor if you didn't meet their expectations. Because of this, it's critical to select trustworthy suppliers and build solid working relationships with them to ensure you have access to the supplies you need to satisfy your customers' requests. Top Companies And Industries That Utilize Just In Time Inventory Management Industrial Examples OF JIT Inventory Systems While other sectors have been using the just in time lean management method for much longer, it has recently been developed and improved. Just in time inventory industry examples include Restaurants The process of preparing food is based on a just in time inventory concept. A chef will purchase meat and produce daily because many of the raw components for meal preparation are not shelf-stable. The morning before the dinner service, the chef must make an educated guess about what the customers will order. At most eateries, food preparation is also done right on time. Only when someone places an order are meals prepared and cooked. This technology makes it easier for eateries to deliver hot, fresh meals to customers. Additionally, it gives the restaurant the most flexibility in using the ingredients it has on hand to fulfil erratic client requests. Big Manufacturers Just-in-time production and inventory management systems are employed by many of the largest corporations in the world. These include Dell, Apple, Tesla, and General Motors. In addition, just in time stocking is a strategy used by retailers like Walmart and Target, particularly for seasonal goods. Clothing And Fashion Industry An entire industry sector, fast fashion, has been created as a result of just in time processes. For example, chain stores like Zara and H&M don't place orders in advance for the entire season. Instead, brand-new clothing is created, produced, and sold in record time. As a result, fast fashion companies can stay current with trends that might alter after an Instagram post. Print On Demand Even one of the oldest businesses in the world—book printing—has benefited from technological advancements that arrived just in time. The size of a print run doesn't have to be estimated by publishers anymore. Instead, they may print a book copy once a consumer puts an order, thanks to print-on-demand technology. As a result, customers continue to obtain their reading material swiftly because binding and printing are automated and done rapidly. In addition, because books may be printed and distributed from places all over the world, near the buyer, print on demand significantly reduces shipping costs. Dropshipping Dropshipping is a type of just in time inventory in the online retail industry. With the dropshipping business model, you wait until a consumer puts an order before buying things from the supplier. The online merchant does not maintain any inventory. Dropshipping outsources inventory management and storage to the dropshipping 3PL provider. Organizational Examples Of JIT Inventory Systems Many organizations, but primarily those that employ a manufacturing line or need to maintain a raw material inventory, use this system as an example. Here are a few of the best examples of JIT use are- Toyota One of the best-known instances of just in time production simply because it was a pioneer in the efficient use of this concept. At Toyota, raw materials are not transported to the assembly line until after the client has placed the order and the product is prepared for assembly. No pieces are added to the next node during the procedure unless necessary. This minimizes the amount of inventory, which results in cheaper expenses. Furthermore, by using this method, Toyota can respond to client requests rapidly without worrying about keeping too much inventory or disposing of it. Toyota's success may be attributed to several things, including that modest quantities of raw materials are stored at various stations to ensure that there is always enough to begin manufacturing any product. For raw materials to be supplied, it is also essential to accurately predict the demand for those resources. Dell Another excellent example of a manufacturing process that has shown this approach's effectiveness is Dell. They use a somewhat distinct strategy in that they help their clients reach their objectives and also offer lower lead times than in most cases. To do this, they bargain with suppliers to hold inventory rather than carry it themselves. By doing this, they may request components with short lead times, which makes it simple for Dell to assemble and ship to consumers. Their technique is mainly successful because of their trustworthy suppliers and the short lead times. Harley Davidson After World War II, there was a significant shift in this situation when they switched to JIT after demonstrating a less-than-efficient procedure. By keeping inventory on hand, they could reduce lead times and provide clients with a much more effective service. For example, at Harley Davidson, inventory levels dropped by 75% after adopting JIT, yet production increased simultaneously. Because the process could no longer hide behind a mountain of expensive goods, they were able to see and address its inefficiencies. McDonald's  Except for a few finished goods, fast food outlets like McDonald's typically have everything they need to build a meal and wait until the customer places an order. As a result, the procedure is so uniform that each time a consumer uses it, they have a similar experience. Conclusion Any approach you choose will usually fall somewhere between the just in time or just in case inventory management. After a season, you don't want to be left holding a lot of inventory that hasn't been purchased. However, you also don't want supply chain hiccups to result in empty shelves for you. Sales may be lost as a result. eCommerce logistics companies should ideally have enough inventory to match demand until the manufacturer's next order comes in. Additionally, you should retain a backup supply to guard against supply interruptions. Your turnover ratio rises when your stocking levels are optimized. As well, storage costs are reduced.  Although it necessitates extensive planning, the Just in Time inventory management model is a suitable operational framework. Again, this strategy's cost-efficiency is excellent, but there is little opportunity for error. It is to your organization's best advantage to collaborating with a reliable third-party logistics provider that can assist you in evaluating your supply chain and putting changes in place for your business flow to migrate to this new framework smoothly. How Can WareIQ Assist With JIT Inventory System? To improve our clients' inventory management, we at WareIQ collaborate with them. For example, we assist you in determining your replenishment levels based on how long it takes for your items to travel from the production to the warehouse shelves. Members of the WareIQ team are well-versed in just-in-time inventory management and other lean inventory management techniques. We are aware that our success depends on the success of our clients. We can't wait to work with you to expand our business and yours. [signup] Frequently Asked Questions What is the JIT inventory concept?The just in time inventory system, sometimes known as JIT inventory, is a kind of inventory control where supplies are only procured when needed. This approach's primary goals are to lower the cost of keeping inventory and boost inventory turnover. How does JIT inventory management improve businesses?JIT inventory systems are excellent for cutting costs and increasing productivity. A JIT inventory strategy can reduce your inventory storage costs and enable you to spend less on your inventory over time, freeing up important money for other business needs. What traits distinguish a just in time inventory system?Consistent production rates, smaller batch sizes, closer supplier relationships, high product quality, rapid and economical setups, adaptable facilities, multi-skilled labour force, efficient maintenance, and continual technique development are all traits of a JIT inventory system. What are the just in time inventory system's five guiding principles?By utilising methods like complete quality management, continuous quality improvement, targeted factories, minimising setup times, flexible resources, group technology layout, and pull production system, the just in time inventory system focuses on the elimination of waste. How can a system of just in time inventory increase productivity?By optimising production procedures and reducing inventory, the JIT inventory system aims to reduce waste and boost efficiency. Creating just what is needed, when it is needed, and in the amount needed at a certain moment is what just in time inventory really entails.

July 12, 2022

10 Best Tips to Handle Out of Stock Situations for eCommerce Businesses in 2022

10 Best Tips to Handle Out of Stock Situations for eCommerce Businesses in 2022

Stockouts frequently appear on retailers’ lists of worst nightmares and for good reason. Out-of-stocks not only result in lost sales but also in poorer levels of consumer satisfaction and loyalty. When you don't have what a customer wants, they frequently feel let down, and that can have a negative impact on your business. Although you can take many precautions to avoid out of stock situations, stockouts are unavoidable in a few circumstances. This article will give you a few tips to handle out of stock situations as & when they occur. What are Stockouts? Stockouts are the absence of specific items or products at the point of sale when the customer is ready to buy. Stockouts cost retailers an estimated $1 trillion annually; in some industries, stockouts occur as frequently as every third shopping trip. A stockout can occur for a variety of reasons, including: Undercounting inventory and ending up with less than you expectedIncreasing demand for a specific itemSupplying delays caused by manufacturersLacking the necessary funding to purchase fresh stock In a physical store, this usually leaves prominent gaps in the shelves. Stockouts are even more aggravating for online customers because there is often no way to tell whether the stockout is due to a temporary technical issue or a major disruption in the retailer's supply chain. Out-of-stocks and generalized product unavailability are distinct but important to avoid. [contactus_gynoveda] -> With gynoveda Why is it Important to Handle Out of Stock Situations Before They Occur? Customers May Get a Negative Impression of Your Business While running an eCommerce business, if an out-of-stock situation is not handled properly, customers may get a bad impression. Additionally, if you consistently ignore customer complaints and negative feedback, it can negatively impact your business in the following ways: Lost profitsLack of repeat customersExisting customer dissatisfaction Negative feedback and reviewsDamage to the company’s reputation Backorder Costs Can Increase When your company accepts orders for out-of-stock products, there will be an increase in the frequency and amount of backorders. This can increase the costs and the duration of the supply of products and by the time the order reaches the customer, they may be dissatisfied with the duration and service. The biggest problem is handling out-of-stock in all companies. Revenue Will be Lost When your company receives orders for out-of-stock items and doesn’t make an effort to prevent stockouts, potential sales and revenue generation can be lost perpetually. This can have a drastic impact on all businesses, especially smaller and medium-sized companies that rely on every sale they can get. Your Business May Get Negative Reviews When a company provides a poor customer experience, it risks receiving negative feedback on selling platforms and other online websites. Customers get a bad taste in their mouths when they run out of stock and some may end up writing negative reviews online, which can prevent other customers from giving your business a chance. Causes of Products Going Out of Stock Although there are only a few likely outcomes of stockouts, such as customer frustration and lost sales, there are numerous scenarios that can lead to stockouts in the first place. Disparities in Product Counts A discrepancy between item counts and the record of how many units of a particular item a retailer has in stock is a common cause of stockouts (also known as phantom inventory). There are four major causes of discrepancies in item counts: Errors caused by humansTechnical difficultiesShrinkage as a result of damage or theft.Inaccurate Forecasting Although it is difficult to quantify, human error is frequently to blame for inventory management errors. During busy shopping periods, especially in retail stores, it is all too easy to miscount items. Disparities in item counts can also be caused by technical issues. Computerized inventory management systems are used in the majority of warehouses and distribution centers. However, when these systems experience technical issues, such as data center downtime or when synchronization between two computerized systems is delayed, discrepancies in item counts can occur. Inventory mismatches are sometimes caused by a combination of these two factors. It's all too easy for busy warehouse workers to miscount items by hand and it's just as simple to enter incorrect data into an inventory management system. Transportation Issues While many inventory management issues are well within retailers' control, logistical issues are not always. Retailers have recently faced numerous supply chain challenges, including hundreds of thousands of unloaded containers with merchandise on ships waiting to dock at ports around the world. Beyond shipping, the Covid-19 pandemic has disrupted the global supply chain, from manufacturing to transportation and logistics. It is just as easy for goods to be misplaced by warehouse staff as it is for the wrong shipment to be delivered to the correct location. Similarly, a logistics provider's shipping tracker may indicate that a shipment is on its way for delivery when, in fact, the shipment is still being processed in a distribution center. When you multiply these issues by the millions of products that must be shipped to thousands of retailers, it becomes clear how critical accurate logistics information is. Inadequate Management of Cash Flow Stockouts can also be caused by cash flow issues. You may know how much inventory is required but without sufficient funds, you cannot purchase it. If a lack of cash flow is causing stockouts, better planning and funding can help handle out of stock situations better.  Cash is one of the most important aspects of a business as it is responsible for paying for all of the services and machinery that is used in the manufacturing and fulfillment process so if there is not an adequate amount available to pay for essential services like ordering enough goods to prevent stockouts, it can have a negative impact on the supply chain processes of the business. Poor Inventory Replenishment Stock replenishment entails ensuring that you always have enough products to sell at the appropriate time. According to research, poor shelf replenishment practices account for 70 to 90% of stockouts, with supplier shortages accounting for only 10 to 30%. Stock replenishment is becoming increasingly important in the omnichannel retail environment, where you must provide the best product selection possible, whether online or in-store. Today, many automated stock management systems are available to track inventory and order items based on your specifications. It is critical not only to keep items in stock but also to forecast future demand, reduce markdowns and keep customers happy. 10 Tips to Handle Out of Stock Situations and Prevent Them From Occurring Stockouts occur when a retailer runs out of inventory as a result of increased customer demand or a breakdown in the supply chain, affecting retailers' shelves and overall profits. It could be the most frustrating shopping experience for both online and in-store customers. Here are a few ways to prevent stockouts: Specify if a Product is Currently Unavailable Out-of-stock products should be divided into two categories - those that are not currently available and those that have been permanently discontinued. It should be clearly stated which category applies to the product in question. It also ensures that customers know whether or not they can expect it to return. Some websites allow customers to out-of-stock items in wishlists or receive notifications when the item becomes available later. A weekly stock audit is essential to prevent stockouts. Choosing a strategy that encourages greater user engagement can work wonders for retailers. Provide Similar Product Recommendations It is the retailers' responsibility to use product pages to provide alternatives to users based on their preferences and customer behaviours. It is possible when retailers understand the categories in which their customers are interested, segment them and display relevant products in an appealing manner. When a product is unavailable, it aids in the recommendation of alternative product groups. These groups can assist retailers in avoiding a sale and keeping users interested in the brand. It aids in redirecting users from the product page to the home page. Mention the Restock Date If a product is out of stock, it is the duty of the retailer to mention if and when the product will be restocked to prevent further dissatisfaction from customers and give them reliable and transparent information, instead of accepting their order, only to disappoint them later. The restocking date can either be mentioned on the product listing page directly or you can encourage the user to fill out their contact information and send them a reminder when it is back in stock. Remove the Out-of-Stock Product Listing One solution to handle out of stock items is to move the product listing to the bottom of the search results or remove it together. If you reduce its visibility, fewer people will click on the listing, resulting in fewer unhappy customers. It's a straightforward "out of sight, out of mind" strategy. It can be difficult to keep track of your inventory in order to make these changes automatically. Inventory tracking and management software, which allows retailers to forecast product shortages, is commonly used by businesses with multiple product lines. If you have the funds and infrastructure to do so, this is a great way to get ahead of the game when a product appears to be running low on stock. Encourage Customers to Pre-Order You as a retailer can accept pre-orders for products that aren't currently available but will be soon. It can be resolved by offering a longer shipping time or a pre-order option to secure the sale immediately. Customers value the retailer's honesty and willingness to serve; as a result, customers may have to wait a little longer than usual for their preferred products. Encouraging customers to pre-order will help to anticipate the demand for particular products and prevent stockout situations. Use an Inventory Management System Out-of-stock items are more than just a nuisance. It may have long-term consequences for your Amazon FBA business as well as other sales channels. Algorithms can push your competitors ahead of you in the seller rankings. This can have a disastrous effect on your revenue. Because of too many stockouts, some companies have lost their coveted position in the buy box.  This is yet another reason why inventory must be synced across all warehouses and sales channels. This is where using inventory management software can help to handle out of stock situations. You must have a consistent - and accurate - inventory count regardless of where your inventory is physically located or where you are selling it. Forecast Demand for Various Products Inadequate or inaccurate inventory forecasting is another common cause of out-of-stock situations. Retailers face a significant challenge in forecasting demand for specific products. According to recent data, 73% of retailers struggle with inventory demand forecasting. Performing an ABC analysis makes it easier for some retailers than others to predict how much inventory will be needed and when. Businesses that primarily sell seasonal items, such as winter sports equipment or beachwear, may find it much easier to forecast demand for specific products. However, there are ways for all types of retailers to anticipate demand and avoid stockouts. When preparing inventory forecasts, retailers should consider lead time—the time between placing an order for new products and receiving them from a supplier. Examining previous purchase orders from specific suppliers is one way to estimate lead time. This is unlikely to be sufficient on its own, but it can be used as a starting point for calculating lead time from individual suppliers. Have Constant Inventory Counts Some retailers still physically count their inventory. While this may be an age-old technique, it's probably time to upgrade to modern standards. Using good inventory management software will allow for automated inventory counts at predetermined intervals so that you can always be aware of your inventory levels and have any changes updated in real-time. Use Automatic Low-Stock Alerts Low inventory alerts can be set for your entire store or customized per SKU. The frequency of alerts and the information you receive are also customizable. Some of the useful features of an inventory management system that will help prevent stockouts are: Default Alert ConfigurationSet a Safety StockSet Location or Warehouse AlertsSet Individual Variant Alerts Have Alternative Vendors To handle out of stock situations or prevent stockouts from occurring, you need to partner with alternative vendors to recover yourself from a critical situation by not being entirely dependent on one vendor. By using multiple vendors, you can always place orders with the relevant one for different product types and can rely on another one in case an issue or delay arises. This way, customers will not be inconvenienced and you can make sure that all products are available in stock. Conclusion: How Can WareIQ Help eCommerce Businesses Handle Out of Stock Occurrences? Being able to handle out of stock situations is vital for every eCommerce business, not only to prevent lost sales and revenue but also to ensure that customers are satisfied and that costs are kept in check. While there are multiple ways to prevent stockouts from occurring, paying little attention to your inventory levels can be the most effective. If you need assistance to prevent or minimise out of stock occurrences, you can consider partnering with WareIQ. WareIQ is one of India’s leading eCommerce fulfillment companies. Through our use of advanced technology such as our in-house WMS, we can help prevent stockouts from occurring by monitoring changes to your inventory levels in real-time and syncing order details and inventory management across fulfillment centers and more than 20 eCommerce selling platforms. Users can also set low-stock warnings to trigger an automatic order of the relevant products from the supplier. Handle Out of Stock Situations: FAQs What is the impact of out-of-stock situations?Revenue loss is the most visible impact of stockouts. You lose the profit from that sale if a customer attempts to place an order but the item is out of stock. Consumers might choose less expensive goods. Or, even worse, you can permanently lose a customer, which would result in less recurring sales in the future. Why do stockouts occur?When things are out of stock, customers who wish to buy them cannot. Both physical retailers and internet stores experience stock shortages. Stockouts are frequently brought on by inadequate inventory management and supply limitations. What is an OOS scan?To update products with no on-shelf inventory, retailers should implement inventory audits, often known as OOS scans. Associates can visually scan planograms during scheduled store tours, check system inventories for backroom stock, and initiate new orders. What is NOOS?NOOS is a category/segment of Apparel that, as the name suggests, never goes out of stock, since the demand for this is constant. For e.g. white shirt, blue jeans etc. What value-add does WareIQ provide for handling NOOS products?WareIQ can provide:1) Faster, same-day delivery2) Attribute-based smarter recommendations to push products with similar attributes in order tofulfil demand at an adequate pace, keeping sales momentum high3) Leverage robust data analytics to cater to size-set variations based on parameters such asgeography, age-group etc4) Analyze the discount sensitivity of the target audience, set the right discount, and improve sales

July 11, 2022

10 Best AliExpress Alternatives for Dropshipping  in 2022

10 Best AliExpress Alternatives for Dropshipping in 2022

AliExpress has emerged as a big name in the eCommerce dropshipping space with its specialized dropshipping company, DSers. However, there may be some features that you require from your dropshipping service that isn’t offered by AliExpress. If a need cannot be met by the company, it would be a good option to identify an AliExpress alternative. In this blog, we will look at the best AliExpress dropshipping alternatives and how they compare. What is AliExpress Dropshipping? China-based online retailer AliExpress, which runs the dropshipping website DSers for AliExpress, is owned by Alibaba. AliExpress has millions of products listed that make it the first pick for many dropshippers. Unlike many wholesale merchants on Alibaba, AliExpress lets you order single units of goods. As a result, you can ship directly to customers without the need for special off-site inventory storage. Free registration and the options to browse millions of products at reasonable prices are its two biggest advantages. You can easily place an order on the website without talking to any vendors if there is a language barrier. DSers is in-charge of managing all notifications and shipment tracking. Several very dependable automation solutions are also available that automate order fulfillment for well-known eCommerce sites. One of its drawbacks is that most of AliExpress's suppliers are located in China. The time it takes for products to reach customers in different countries can be longer despite the fact that this leads to reduced prices and commonly accessible global shipping options. Because of the fact that customers must wait weeks for their orders to arrive, it is best for companies to search for an AliExpress alternative that is located in India and has shorter shipping times. [contactus_gynoveda] Required Features in AliExpress Alternative Dropshipping Companies Provide Single and Bulk Order Shipping When you become an eCommerce seller, you have to deliver products to each of your buyers as well as store high-demand products to have stock to fulfill later sales to avoid stock-outs or price hikes. Your partner dropshipping company should be able to ship every order, regardless if it is just a single order of a small item or a bulk order of heavy items. This gives you flexibility in knowing that every order can be fulfilled with the same company, which gives you more bargaining power and lower costs. Have Good Return Policies A dropshipping company should frame and offer a return policy according to the facilities they can provide. You should inquire about the return policies of multiple companies and choose the one that offers that fits your requirements. They need to offer features like penalty-free returns in case of product damage or substandard quality. Offer Better Reachability It should be an important aspect to notice. If you want to dropship your products and agree with all of the policies, you should also check the dropshipping coverage of every company and select the one that provides services to the most locations. Utilize Automation Dropshipping is used by eCommerce sellers mainly to be less directly involved in the order fulfillment process and use less of their resources, either financial or labour. A good dropshipping company is incomplete without efficient automation of key processes to provide a good experience.  Comparison Table of Every AliExpress Alternative [table id=38 /] Top 10 AliExpress Dropshipping Alternatives for Retailers Seasonsway Source Seasonsway dropshipping is an AliExpress dropshipping alternative that is best suited for fashion items because they mostly focus on fashion-related products, which can be understood by having a quick glance at their inventory. They have a substantial stock of mobile accessories, home goods, garments, innerwear and gift items. These specific product niches are all more profitable than other niches. Experts give advice on trading in the aforementioned markets where retailers can make more money. Therefore, Seasonsway should be one of the best options if you wish to trade in these categories. Signing up with Seasonsway is free. You will have to either create your own website or register with retail marketplaces since they don't offer any. They provide a wide range of fashion products. You receive a dashboard from which you can handle your dropshipping requirements, including payments, processing, and other dropshipping needs. Snazzyway Source Snazzyway is unique in regard to being an AliExpress alternative. It is an Indian-based dropshipping website specializing in women's undergarments. The ideal fit is if you work in the women's underwear industry, such as lingerie, bras and other inner-wear. In addition, if you think the undergarments market is undervalued, you should know that the Indian lingerie market, which was valued at over $3 billion in 2017, is expected to rise at a healthy CAGR of roughly 14% to reach $6.5 billion by 2023. If you are a dropshipping company that deals in garments and innerwear, you can definitely consider Snazzyway as a prime AliExpress dropshipping alternative. DHGate Source The primary option that crossed every retailer's mind when AliExpress was banned in India and they had to find AliExpress dropshipping alternatives, was DHgate. It is yet another trustworthy AliExpress substitute in India. On DHgate, you can buy practically everything. It offers B2B and B2C dropshipping services. The website's user interface is its best feature. Its product categories are extremely thorough. Various categories have further subcategories. All of the top logistics providers including TNT, HK Post, Singapore Post, Post Link, Ems, China Post, UPS, DHL and FedEx, are used by DHgates. DHgate often needs 3 to 15 days to deliver its goods. Depending on the goods, the days may change. DHgate has the option for credit cards, PayPal, and Western Union. Banggood Dropshipping Source Banggood is another AliExpress dropshipping alternative with affordable rates on a variety of goods and has a strong rivalry with AliExpress. With more than four million listed products, it contains everything from iPhones to drones. This eCommerce shop is relatively unknown, which naturally makes it an alluring location for dropshipping goods. Numerous products are available on Banggood from China, Hong Kong and even the US. The majority of the items on this list are obtained straight from the manufacturer. Banggood offers ePacket and air parcel shipping with transit times ranging from 7 to 30 days. Visa, PayPal, wire transfers, and even cash on delivery are numerous payment options, accepted by Banggood. The majority of items, including drones and robots, that aren't offered by other online retailers are available at Banggood. Banggood is an excellent option to look at if you need to dropship these difficult-to-find commodities. TradeIndia Source TradeIndia is a good AliExpress dropshipping alternative because they are the second-largest B2B marketplace in India, with a total of 42,93,725 registered buyers and 37,47,446 registered sellers. The TradeIndia platform facilitates around 31,42,496 interactions between buyers and sellers each week. That is the main justification for choosing their services. You can connect with thousands of reliable dropshippers in India by signing up on their platform. Although the majority of the vendors listed here are from other nations, you can look for Indian dropshipping businesses too. TradeIndia offers a large variety of products, so you won't ever be out of style. You can browse through thousands of products in a variety of categories on their website. DX Source DX has a huge selection of products available for dropshipping, which makes it a good AliExpress alternative. It has a top bargains section where all items are discounted by roughly 50%. As a result, dropshipping with DX becomes profitable for retailers. The majority of DX products are shipped the same day. The delivery period, however, may surpass 15 days if you reside in a nation that is further from the producer. On the majority of its products, DX provides free shipping. PayPal and credit cards are accepted for payments. Salehoo Source Salehoo is a dropshipping and eCommerce AliExpress alternative designed to prioritize the concerns of eCommerce business owners over inventory. With Salehoo, you can access more than a million products from 8,000 suppliers for just $67 a year. Salehoo's inventory is directly sourced from wholesalers so you have an advantage over other eCommerce store owners that source their products through AliExpress and DHgate. Salehoo offers some of the top products for dropshipping. Most Salehoo wholesalers allow you to negotiate delivery times and receive your products whenever you like. The shipping of the goods will, however, take at least 30 days if the wholesalers are headquartered in China. for payments, PayPal and credit cards are accepted. You can choose the goods you wish to offer through your store with Salehoo by clicking a few buttons. For only $67 a year, it also enables you to bargain with customers and purchase and sell goods at the best prices. GeekBuying Source Geekbuying is an AliExpress alternative where electronic and tech gadgets are the major items sold. You can find the rarest tech products here. On this dropshipping platform, you can also find jewellery, watches and apparel.  Products can be shipped anywhere in the world by Geekbuying. For all locations, the standard shipping period is between 5 and 10 days. It also allows you to place bulk orders. You have a variety of payment choices on Geekbuying. You can pay on this website using PayPal, a credit card, a debit card, Boleto, or Konbini. Additionally, instalment payments and wire transfers are both options. Worldwide Brands Source Dropshippers and wholesalers can connect on the Worldwide Brands network. Just after a one-time payment of $224, all of the wholesalers who use WorldWide Brands are accessible to you for a lifetime. According to the portal, users have access to more than 16 million products. Worldwide Brands offers numerous products that you may order and dropship directly to your consumers. Most of these products are obtained directly from manufacturers or wholesalers so you will get them at a low price. Each product's delivery period on WorldWide Brands is determined by the wholesaler. If the wholesaler’s headquarters are in China, the merchandise will be delivered in about a month. You can receive the goods from local wholesalers in less than a week. For payments, PayPal and credit cards are accepted. For experienced dropshippers who want to test out selling new products in the market, WorldWide Brands is the ideal venue. It is not intended for beginner dropshippers who want to establish their own business. Deodap Dropshipping Source DeoDap is an AliExpress dropshipping alternative that is privately held by the Indian trading and distribution business. Their management has extensive knowledge of the importing and distribution industries. The company's primary duty is to procure, market and distribute grocery goods from both domestic and international markets. In 2010, DeoDap was founded as a tiny family business. At the time, the company's primary activity was delivering various goods to small retail stores. They have a strong presence in India and run a very competent sales, marketing, warehouse and distribution operation. As a result, they can work with all the big wholesalers as well as individual retail businesses. They constantly look for products that they believe could have an impact on the Indian market. They have the expertise, knowledge and resources required to guarantee the prosperity of our suppliers. Conclusion: Opting for the Best AliExpress Dropshipping Alternative with a 3PL Fulfillment Partner like WareIQ India is the biggest eCommerce retail market and that is why there are various dropshipping companies that are trying to capitalize. Most sellers tie up with multiple dropshipping companies but it is also important to think about the kinds of products you sell, if their service fees and shipping costs fit within your spending plan and whether their delivery times are reasonable for the locations of your clients. For retailers who need the full range of eCommerce fulfillment services, working with a specialized 3PL provider like WareIQ can be the best AliExpress dropshipping alternative by offering fulfillment services with ultra-fast delivery as opposed to dropshipping. WareIQ is a full-stack eCommerce fulfillment platform that offers all the services required for online merchants, including storage in multiple fulfillment centers, picking, and packaging, shipping, last-mile delivery, etc. As we partner with more than 20 of the biggest shipping Indian aggregators, we will always offer the quickest and most affordable option for each order within the country and provide users with multiple technological benefits such as an advanced WMS and a custom app store. AliExpress Alternative: FAQs Which is better among AliExpress and Alibaba?Alibaba is the better option for sourcing private labels and custom products because you are buying directly from a manufacturer who can make products to your specifications. You can buy pre-made items from AliExpress that are normally not customizable. Is AliDropship the same as AliExpress?AliExpress is designed keeping in mind the end buyer so retailers may purchase individual products. Additionally, they provide dropshipping by sending goods directly to the address of your choice.After selling AliExpress products, you can start a dropshipping business via the AliDropship platform. What are AliExpress alternatives in India?Gearbest, Banggood, DH Gates, Geekbuying and SaleHoo are some of the top alternatives to AliExpress in India. Is order fulfillment and dropshipping the same?No, order fulfillment is when the retailer fulfills customer orders on their own or through a 3PL company where as dropshipping is done directly by the wholesaler or manufacturer.

July 11, 2022