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 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 20, 2022

4 Ecommerce 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.

Sept 15, 2022

The 3 Tmall Metrics That Every Brand Needs to Know

If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.

At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.

What is Tmall’s Detailed Seller Rating (DSR)?

Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.

Why DSR Determines Success on Tmall

DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.

Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.

DSR Score Elements

1. Service

Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.

So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.

2. Delivery

Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.

So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.

3. Content

As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.

The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).

Expand Internationally With Pattern

As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter. 

It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.

Set up a call to get your international expansion strategy in motion.