Transforming Ecommerce Fulfillment and Logistics into a Strategic Weapon

John LeBaron

September 21, 2021

 

Tiffany Milar

September 21, 2021

Success on any ecommerce platform requires nailing fulfillment and logistics, yet these tend to get a bad wrap for being just a cost center. In this post, we’ll teach you how to actually leverage fulfillment and logistics to your advantage and take your ecommerce business to the next level.

The current state of ecommerce

The COVID-19 pandemic accelerated ecommerce growth in the last two years like never before. Consider the following statistics:

  • From 2019 to 2020, ecommerce sales grew 44% year-over-year from $598 billion to $861 billion.
  • Over the same period, retail sales only grew 7% year-over-year from $3,780 billion to $4,040 billion. Keep in mind, retail sales includes ecommerce sales.
  • Ecommerce penetration into retail sales grew from 15.8% in 2019 to 21.3% in 2020.
  • China’s ecommerce penetration grew to 51% this year, making it the first country to surpass 50% of retail sales through ecommerce.

Clearly, ecommerce is growing and here to stay. But at a high level, it also presents some challenges.

Brands trying to navigate this $6 trillion industry struggle to lead their customers through a massive retail channel. Within direct-to-consumer (D2C) alone, brands must decide between D2C platforms, competencies (insights, traffic, content, protect, logistics), D2C plugins, and logistics. Extending that to international markets and adding marketplaces makes ecommerce a monumental task.

While many try to shore up competencies with various Software-as-a-Service (SaaS) tools, Pattern built its own ecommerce acceleration platform that ties all of them together into one tool.

How to use logistics

That said, logistics is an important piece of the ecommerce puzzle that can be optimized for cost savings. Here, there are several leverage points to consider: shipping speed, locations/FCS, return policy, fulfillment options, and inventory pools. Each of these can be calibrated to run efficiently, and every ecommerce platform has slightly different offerings.

For example, Amazon leads the standard on shipping speed, offering its Prime members free two-day, one-day, and sometimes even same-day shipping. As consumers expect faster and faster shipments, it’s important to consider fulfilling orders through Fulfilment By Amazon (FBA). Or if you prefer to customize the consumer experience with special packaging, Fulfilment By Merchant (FBM) may be your option.

Another factor to consider is inventory pools, which refer to how inventory is controlled in the supply chain. Again, different ecommerce platforms will handle your inventory, well, differently. Walmart, for instance, is turning its over 5,000 U.S. stores into distribution centers, thereby getting inventory as close to the consumer as possible and reducing shipping costs.

Logistics as a revenue driver vs. cost center

So how do you turn logistics from a cost center to a revenue driver?

Focus on high-selling products.

Often in ecommerce, we’re tempted to list every product, but shipping rarely sold products to warehouses only compounds costs. Instead, try to predict your inventory needs. If an item sells regularly, you can afford to have a surplus. If not, you don’t want to get stuck with years worth of inventory.

Single or low-priced items under $20 are notoriously hard to sell in ecommerce because by the time you discount shipping and other costs, they are not worth the work. So, consider bundling products or offering sample sets to reduce overall shipping costs.

To drive more revenue, analyze the data and automate your inventory supply.

Optimizing shipping fees

Amazon publishes all their packaging dimensions by category online. So if you’re shipping with FBA, try to configure your product as closely to the desired packaging’s dimensions. You don’t want to waste packaging space by shipping air.

Also check the weights and dimensions of your products and make sure they are audited and listed clearly on Amazon because they won’t verify them for you. This can bring a lot of cost savings that can turn you into an office hero overnight.

Leveraging a 3PL

Adding a middle man to your ecommerce business can feel scary, but sometimes it’s worth it. Since third-party logistics (3PLs) ship orders for many clients, you can benefit from their economies of scale. They offer capabilities that you can leverage.

Plus, Amazon’s clunky multi-click tools were not designed for fast execution. 3PL partners and softwares like Pattern’s ecommerce acceleration platform add a technology layer that can soften the costs of your logistics operation.

The reality of returns

Whether or not to accept returns is a tricky decision that depends on your return rate, brand, and product. 30 to 50% of returns are non-resellable. But if you get a lot of returns or some that are expensive products, reselling might make sense.

Make sure to read customer reviews to see why products are being returned. There may be a manufacturing defect somewhere along the supply chain that you can fix, and that could massively reduce return rates.

Choosing D2C vs. marketplace shipping

D2C (Direct-to-consumer) logistics gives you more control over the consumer experience. From customer acquisition to retention, you can cultivate better consumer experiences by customizing packaging and marketing campaigns. It’s more expensive, but it can be worth it. Plus, D2C makes it easier to do cold shipping and to optimize shipping weight.

Going international

When expanding to foreign markets, you need to first think about import/export regulations and distribution. There can be a lot of logistical layers to work through.

Second, try testing out new smaller markets by drop shipping a minimum viable product directly from the U.S. This may cost more time and money, but it helps gauge demand before you fully invest in entering a new market.

Pattern recommends starting off with Amazon FBA Export, then upgrading to Amazon Global Store, and finally establishing a local presence.

Ecommerce-specific packaging

The old idea of big boxes on the shelf no longer applies to ecommerce. Bigger packaging just costs more to ship. So package for the new digital shelf with compact packaging. Ecommerce-friendly packaging can also make it easier for you to resell returned items.

Ecommerce penetration into retail is only growing, so think about the future. There is no profitable way to ship air or empty space. So if you sell something like coolers, start thinking about collapsible or fabric coolers now, and making it ecommerce-friendly. Otherwise, you’re on a collision course for non-profitability in the future.

Amazon’s limited shelf

Everyone talks about Amazon unlimited shelf, but that’s becoming less of an option. So be critical of what you’re listing. Listing a product but not giving it the love and attention it needs to grow won’t do.

Conclusion

Here at Pattern, we’ve helped brands dramatically increase revenue and units sold and expand into international markets. If you need help rationalizing your logistics, why not talk through your pain points with our experts today.

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Sept 27, 2022

Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)
Sept 26, 2022

Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.

Sept 20, 2022

4 Ecommerce Marketplace Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.