Don’t Fret Freight and Logistics, Scale Faster, Smarter Instead
March 2, 2022
ECommerce businesses rely on multiple stages in the supply chain in order to move products from the warehouse to their customer’s doorstep. Over the past two years, global supply chain disruptions have brought two of the unsexiest parts of the supply chain back to the forefront: freight and logistics.
As ports backlogged across the globe, many eCommerce founders revisited their freight and logistics strategies to see how they could increase speed while reducing costs. We sat down with experts Esther Kestenbaum Prozan of Flowspace, Burak Yolga of Forceget, and Liran Hirschkorn of Incrementum Digital to discuss how to future-proof your business through logistics partnerships, gain a competitive advantage through optimized shipping lines, and much more.
In this blog we’ll cover how to:
- Use technology to stay nimble and resilient
- Understand your insurance and HS codes
- Get creative with your logistics solutions
- Future-proof your business with strategic partnerships
- Gain a competitive advantage by understanding your shipping lines
- Identify the value you most want to bring to customers
Keep reading to learn more or watch the full webinar for free here.
1. Use Technology to Stay Nimble and Resilient
The global supply chain has dominated headlines after COVID-19 exposed vulnerabilities in the systems we’ve relied on for years to exchange goods. Like a domino effect, extreme price gauges and shipping delays followed. Inflation, which recently reached its highest peak in 40 years, is also adding fuel to the fire, leaving many eCommerce founders wondering how to best optimize their supply chain.
“One of the great learnings from last year has been that the supply chain can be very brittle and fragile. And that the constructs that we thought were so strong and were always going to be there for us can fail,” explained Esther Kestenbaum Prozan of Flowspace.
So how can sellers stay nimble in 2022? Advancements in technology are helping online sellers adapt to supply chain disruptions. For example, a virtual warehousing platform grants access to multiple fulfillment centers. Inventory forecasting tools also enable more accurate bulk orders to prevent stockouts.
“Resilience is really what you need to be looking for if you want a strong fulfillment function for your brand,” Esther said. “Rather than having fixed assets that are set in stone and hard-coded, be nimble with your technology so you can optimize yourself over hundreds of locations.”
2. Understand Your Insurance and HS Codes
When dealing with third party vendors, insurance is never an area you want to skimp on. Most eCommerce supply chains span across continents, and you want to be protected in case your product accidentally sinks to the bottom of the ocean or accidentally sets ablaze (like the fate of these 1,100 Porsches just last month).
With more strain on the supply chain comes more mistakes and mishaps. Now more than ever, protect your purchases and reduce liability by wholly understanding your insurance policies and Harmonized System (HS) codes.
Burak Yolga of Forceget is an expert in this area. ““When choosing a freight forwarder, ask what happens if something gets lost or damaged,” Burak advises. “Also make sure you receive an empty container picture before your goods are shipped because it’s the factory’s responsibility to make sure that the container is in good condition before they load product on.”
Insurance and HS codes can also come with extra fees. For private labels getting goods delivered from China, those fees can be up to 35% of the cost of goods.
3. Get Creative With Your Logistics Solutions
When it comes to your supply chain, you should never put all of your eggs in one basket. Take it from Jessica, a 7-figure Amazon seller and 8fig customer who learned the hard way during Q4 just how much logistics disruptions can impact revenue. “Just relying on one supplier and freight forward is the biggest mistake I’ve made as a business owner,” Jessica explained. “We’ve since found another 3PL, multiple freight forwarders, and quicker shipping teams.”
As an entrepreneur, you’ll have to problem-solve in every area of your business constantly. In order to stay profitable and stand out from competitors, you’ll want to think outside the box to come up with strategic solutions.
“Now is the time to get creative with your business solutions,” Burak advises. “Have a Plan B and Plan C instead of just relying on a freight forwarder to the warehouse. That’s why it’s always good to have a service provider that offers more vendor options and custom-made solutions.”
For example, you can reroute shipping containers to ports that aren’t experiencing massive backups to save yourself months of delivery time for only 10% extra cost. You can also look into transloading so once your container reaches the port, the goods are transported to a warehouse close by and then delivered to their intended warehouse via truck.
With the supply chain, a one size fits all approach disadvantages you. Rather, decisions should be based on size, volume, budget, and risk-threshold. “There are a lot of providers that offer a bulk service, but that may not actually be the right solution for you,” Burak added.
4. Future-Proof Your Business With Strategic Partnerships
Supply chains require collaborating with multiple partners to achieve your objectives. The best way to optimize your supply chain is to invest in these partnerships and find like-minded businesses to work with to achieve your goals.
As new trends in eCommerce emerge, you’ll want to adapt quickly so you can take advantage of every opportunity. An ideal partner will also use advanced technology and your supply chain will gain access to that as a result. For example, if you want to take an omnichannel approach to your supply chain, your logistics and freight partners should help you achieve that goal seamlessly by delivering a seamless customer experience across multiple sales channels.
“As consumer habits change, we are going to continue to see a shift from pure play direct to consumer to more of an omnichannel approach,” said Esther. “Make sure to look for providers that can give you a robust set of technologies and integrations so that no matter what direction you go into, you can future-proof yourself for that.”
To learn more about developing an omnichannel approach and other hot online shopping trends, check out our top eCommerce predictions for 2022.
5. Gain a Competitive Advantage by Understanding Your Shipping Lines
Until the COVID-19 pandemic, most eCommerce sellers focused most of their energy on their marketing strategy. Today, 35% of sellers are spending more than 7 hours a week on their freight and logistics as increased costs and shipping delays complicate other stages of their supply chain.
“A few years ago nobody was talking about freight prices or 3PL connections,” Burak said. “Everybody was focusing on how to rank a product, how to choose the right PPC campaign, and how to take good pictures. Understanding the entire supply chain and managing the cash flow is the only way to be successful in this business right now.”
So what does it mean to understand your shipping lines? Calculating your true cost of goods (hidden fees included), finding and maintaining relationships with reliable suppliers, and deciding whether to prioritize cost, speed, or service all play a major role. Working with a 3PL can give you quick insight into the entire fulfillment process and automate many of the tasks, plus it can save on shipping costs. You can learn more about the ins and outs of shipping lines here.
“Today, if you focus on optimizing your operations including supply chain warehousing and 3PLs, it is a competitive advantage against sellers who don’t,” Liran Hirschkorn of Incrementum Digital said.
6. Identify the Value You Most Want to Bring to Customers
The delivery and unboxing experience can make or break an eCommerce purchase. If you make promises on your website that you can’t deliver on in the real world, customers will lose trust in your brand and opt for competing products rather than repeat purchases.
For this reason, your freight and logistics are crucial to eCommerce enablement. Think through what you want to promise customers and find partners that can help you fulfill this.
“You make brand promises on your website, and that experience has to be continued into the real world: your package has to land on somebody’s doorstep correctly. And it has to come pretty quickly. And unboxing has become a very important thing too,” Esther explained. “Your freight and logistics partners are your unknown face to your customer in that experience.”
Stand out with a memorable unboxing experience. Branded packaging gets customers excited as they unwrap. This will help reduce return rates, especially for higher priced items such as jewelry. It can also generate organic marketing opportunities as happy customers tag your social media channels with photography of the unboxing.
“Ask yourself in an ideal world, if physical locations were less of an object, where should my inventory really be relative to where my customers are?” Esther added. “Where do you stand opposite where you could be if you were fully optimized?”
Throughout this guide, we’ve defined the importance of understanding your shipping lines, future-proofing your business with partnerships and technology, and defining the brand promises you want to deliver on over and over again. Our panelists work at companies that can help at multiple stages of your freight and logistics journey: Flowspace provides a fulfillment platform, Forceget handles digital freight forwarding and insurance, and Incrementum Digital helps you market your product on Amazon through ad spend.
We live and breathe the supply chain here at 8fig, and want to set you up for success at every stage. If you are optimizing or expanding your freight and logistics in 2022, we want to fund it! 8fig will cover up to 90% of your supply chain costs across every stage, including freight, inventory, logistics, and marketing.
Fund your supply chain today! Start by building a free Growth Plan and submitting it for a funding offer. From there, you can decide whether you want to accept the offer or chat with a team member.
Don’t fret freight and logistics any longer. Instead, get great partners by your side and focus on what you do best: selling.
Karlyn is an eCommerce writer and Content Marketing Manager for 8fig. She's on a mission to democratize online retail by empowering small and medium-sized businesses with resources and tools they need to compete in dynamic marketplaces.