How Smart Sellers Avoid Supply Chain Snowballs
January 11, 2022
As an eCommerce seller, unexpected hiccups in any stage of the supply chain can impact your revenue, product rankings, online reviews, and more. But every online store owner runs into some supply chain snags as you place product reorders and scale your business.
Experience is the best teacher, so we’re talking with members of our 8fig community about what they’ve learned navigating supply chain snowballs.
Here’s their best advice on how to avoid supply chain disruptions.
1. Prioritize Your Supply Chain
When building out an eCommerce store, supply chain management is an often overlooked piece of the puzzle that can make or break success — and many sellers learned this the hard way during the 2021 supply chain crisis. After all, a good marketing strategy doesn’t matter if your products have a lengthier shipping lead time than your competitors or your goods show up damaged and you have to execute mass exchanges and returns.
“When you are a high growth eCommerce brand, your limiting factor is supply chain. All that matters is that you have a product to sell to customers consistently as you grow,” explained Jacob, Cofounder of Glitch Energy. “We have been able to stay really lean by having good partners that help manage the supply chain side for us.”
As an online store owner, prioritize learning as much as you can about every stage of you supply chain to ensure that logistics is never an obstacle for scaling. Also remember that you won’t be managing your supply chain alone — you’ll have to collaborate in order to execute, so finding partners you trust is key.
These partners include everything from manufacturers to shipping companies, 3PLs, and funding solutions. Reliability, transparency, and expertise are just a few of the qualities to consider when evaluating potential partnerships. You should also look for partners that can provide useful tools for managing and automating your supply chain, such as 8fig’s planning software that gives you an above-the-clouds view of your logistics payments and is free to use.
2. Negotiate Better Terms with Suppliers
Don’t be afraid to negotiate with your suppliers, especially when you’ve experienced online store growth. Once you’ve proven yourself as a seller who will grow in volume and be around for a while, your suppliers are much more likely to give you favorable terms such as longer payment schedules and priority on manufacturing lines.
A funding partner can help improve your negotiating positioning by providing capital so you can buy inventory in bulk, put down a larger down payment, and sign on for a longer-term contract. 8fig Growth Plans are designed specifically for eCommerce sellers and can fund up to 90% of your supply chain, helping lower your overall costs.
Alex, a successful 6-figure Amazon seller and 8fig customer, buys inventory in bulk to save big and invest her revenue in other areas of the business. “Our 8fig Growth Plan has allowed us to buy inventory on a quarterly basis. This brings our costs down, impacting our bottom line directly,” Alex explained. “We never have to worry about running out of stock again, which means we can continue to build momentum and expand the breadth of our product assortment.”
3. Diversify Your Logistics Chain
Supply chain disruptions with key partners are bound to happen, which is why you should always have a plan B and plan C. Building relationships with multiple logistics teams — from manufacturers to 3PLs — help keep your supply chain moving even if one or multiple partners are experiencing delays, so you can avoid stock outs or other issues that could derail your online business.
“Just relying on one supplier and freight forward is the biggest mistake I’ve made as a business owner,” Jessica, a successful 7-figure Amazon seller and 8fig customer, warned after experiencing supply chain hold ups that impacted her Q4 sales, setting back revenue for months. “We’ve since found another 3PL, multiple freight forwarders, and quicker shipping teams.”
Even when things are going well, shop around for better rates — at the very least, you can use those to negotiate lower costs and faster manufacturing from your preferred supplier while giving yourself a backup solution in the event of an emergency.
4. Plan to Your Demand
Stockouts can be detrimental to an online store. Successful eCommerce entrepreneurs understand that planning and ordering inventory ahead of time gets you out of crisis mode so you can focus on growth instead. But inventory is expensive, so scaling orders usually means working with a growth partner like 8fig.
“Selling out is the most painful experience an eCommerce store can have so we understood we needed to get more inventory,” Felix Lesho, co-founder of Underoutfit explained. So he and his partners started to shop around and evaluate funding offers. That’s when they found 8fig. “When we were able to double and triple our orders, it enabled us to look at growth on a different level.”
For Underoutfit, ordering a large quantity of inventory and storing it in a U.S. factory meant that their brand didn’t have to deal with the global shipping crisis other eCommerce sellers faced in 2021. They also didn’t stock out of their best sellers, and were able to scale from 0 to 7 figures in just months. You can read more about how Underoutfit beat inventory stockouts by partnering with 8fig.
5. Join Online Groups to Share Knowledge
In the dynamic world of eCommerce, change is the name of the game. Avoid supply chain missteps by learning from other brand owners who have been there before. The Internet makes establishing connections easier than ever, offering tons of social media groups, virtual events, and message boards that you can access from the comfort of your home.
Online communities allow you to get personal recommendations from other sellers by posting questions like “My container prices surged. Does anyone have an affordable company they recommend?”.
In addition to forums, you can listen to podcasts, Youtubes, discords and more to level up your selling knowledge fast. Conferences, whether online or in-person, also give you lots of opportunities to collaborate with like-minded people.
“I love learning from people outside of my space because it gives me a different perspective on how to look at things,” Jacob, Cofounder at Glitch Energy explains. “A huge testament to our success this year and fast growth has been being able to learn from other brand owners.”
Here are some seller communities and podcasts we recommend:
- ECommerce Fuel: This selling community, hosted by Andrew Youderian, is capped at 1,000 members to create an intimate and engaging environment for sellers to learn in. There is a monthly membership cost to join.
- ECommerce Mindset: Hear from successful eCommerce business owners on how they built their business and shifted their mindset to become successful in all areas of life, hosted by Liran Hirschkorn of Incrementum Digital.
- Million Dollar Sellers: Once you’ve crossed the 7-figure threshold, you’re eligible to join this online community and learn from top eCommerce sellers around the world. There is a monthly membership cost to join.
Being a successful eCommerce seller in the middle of a supply chain crisis requires you to adapt to any situation thrown your way. Finding a partner who can provide continuous cash to fund backup solutions and larger inventory orders will help you stay nimble and competitive.
Set up an 8fig Growth Plan to apply for flexible, equity-free funding dispersed at every stage of your supply chain, whenever you need it. You’ll also join a community of smart and scrappy sellers who are looking for new ways to scale their online stores and are open to sharing the latest eCommerce tips and trends so that we win together.
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.