Question 1

How can I improve my order fulfillment?

Accepted Answer

As online shopping continues to evolve, a growing number of businesses are attempting to manage their increasing supply chain and fulfillment operation demands while also staying on top of their product development and manufacturing initiatives. Unless part of your business is set up to include warehousing and fulfillment operations, when your business grows into its next phase of expansion, you’re going to be faced with several obstacles that can derail your growth. You can either spend a lot of time and labor to find, rent, or purchase a warehouse facility, in addition to hiring and training staff to handle your order fulfillment process, or you can partner with a third-party logistics (3PL) company to optimize your fulfillment operations. During the past ten years, the third-party logistics industry has grown significantly as manufacturers and retailers see the cost savings and improvement to their overall fulfillment processes that third-party logistics services bring to the table.

When you join forces with third-party logistics services, such as Phase V, you can turn your focus back to your core business, such as product development and manufacturing. Phase V Fulfillment can improve your fulfillment operations in several ways, such as:

Streamlining your fulfillment operations to expedite your orders and meet increasingly faster delivery demands.
Saving money on everything you need to run a fulfillment operation, including warehouse leases, training for fulfillment staff, packing supplies, shipping costs, and more.
Taking the guesswork out of shipping, as third-party logistics teams are knowledgeable about freight regulations and can cut through the red tape, sending your orders to their destinations securely, as fast and efficiently as possible.
Providing one-on-one customer care with live customer service reps to answer your customer’s questions.
Providing data-driven, user-friendly, dedicated fulfillment technology that allows transparency in your order fulfillment process, with real-time inventory updates and low inventory messaging capabilities.

Question 2

What is included in the cost of inventory?

Accepted Answer

Inventory cost includes the expenditure required to produce or purchase products for resale and the sales cost, order cost and inventory hold cost. The cost of inventory includes the administrative fees, such as purchasing orders and other paperwork needed to purchase raw materials or finished products from various manufacturers. This cost, evaluated by management is part of determining how much inventory to keep on hand. According to accountingtools.com, “This can result in changes in the order fulfillment rate for customers, as well as variations in the production process flow.” Inventory costs can be classified in basic accounting terms, in three groupings:

1. Ordering Costs
Including the wages involved in procuring products, ordering costs also refer to related payroll taxes and benefits for the employees in the procurement department. Creating purchase orders and negotiating with suppliers are activities that are considered in ordering costs. If you are the manufacturer of the finished product, then ordering costs may involve labor costs incurred by your industrial engineering staff, in pre-qualifying new suppliers to deliver parts to the company. Typically, ordering costs are included in your overhead cost pool. There, these costs are allocated to the number of units produced in each period.

2. Holding Costs
When you manufacture or purchase products to sell, you need a physical space in which to store your inventory. Holding costs are expenses related to the space required to “hold inventory, the cost of the money needed to acquire inventory, and the risk of loss through inventory obsolescence,” according to accountingtools.com. These costs are also included in an overhead cost pool and are allocated to the number of units produced in each period. Diving deeper, holding costs include:

Cost of space:
Your largest inventory cost might be related to the facility where you store your inventory. These costs include warehouse rental leases, or the money required to buy a warehouse facility, along with hiring and training a warehouse staff. Included in space costs are warehouse equipment, such as shelving and forklifts as well as other equipment used for material handling. Packaging and shipping supplies are also included in fulfillment warehouse costs. Additionally, warehouse costs include insurance, utilities, maintenance, and depreciation. Safety features, such as fire suppression systems and security systems are part of warehouse costs, as well as the costs required to service these systems. For this reason and others, many ecommerce brands partner with a 3PL fulfillment provider, such as Phase V to defray the costs associated with in-house fulfillment expenses.

Cost of money:
An interest cost is always associated with the cost of borrowing funds used to pay for your inventory items. Reported on income statements as a non-operating expense, interest costs are derived from lending arrangements, such as loans, lines of credit, and bonds. Incurred interest amounts are typically characterized as a percentage of the outstanding amount of principal. To calculate interest expense, use the formula, (Days during which funds were borrowed ÷ 365 Days) x Interest rate x Principal = Interest expense.

Cost of obsolescence:
Unfortunately, some items in your inventory may never be sold or will sustain damage in storage. These items can be sold at reduced prices or be considered a complete loss. Perishable items and items with expiration dates such as make-up, supplements, and food make the most likely victims of obsolescence. Your 3PL provider should provide real-time technology to flag a need to sell perishable items before they spoil or reach their expiration dates. Phase V partners with you to move perishable items through your supply chain efficiently with effective inventory controls in place to save you time and money.

3. Administrative Costs
Wages paid to your accounting staff are considered administrative costs. These include time paid for compiling the costs of your inventory and the cost of goods sold. Also included in administrative costs are other inventory analysis requests, in addition to defending the results of these analyses to your business’s internal and external auditors. Administrative costs for cost accounting personnel are charged as expenses incurred.

Calculating what is included in the cost of inventory is not a simple task for any business but the numbers must be considered when deciding how to handle inventory management. Contact Phase V to discuss your inventory cost issues and how we can help solve them.

Question 3

What is FBA?

Accepted Answer

FBA, Fulfillment by Amazon, is one of Amazon’s fulfillment platforms for online sellers. Sellers that do not have fulfillment logistics in place can pay Amazon a fee to store their inventory in one of Amazon’s distribution centers. Amazon will then pick, pack, and ship their orders for a fee. This allows FBA sellers to focus on marketing their Amazon stores following Amazon’s marketing guides. For some online businesses, FBA provides turnkey solutions to renting warehouse space and hiring a fulfillment team to meet their increasing order fulfillment needs. Amazon’s popularity offers FBA sellers the opportunity to establish their brands by association with this online juggernaut. FBA sellers are also eligible for Amazon’s Prime status which gives them access to one-and two-day shipping and more of a shot at “winning the Buy Box” with other sellers listed below the “Buy Box.” Research shows that most Amazon Prime members will buy the product that comes up first in a search for the product they are interested in buying.

While all of that sounds like a good solution for your ecommerce business, there are some downsides. For example, right before the 2020 holidays, Amazon instated a 200 item limit of one SKU on FBA shipments. This caused ripples in the Amazon seller community, as sellers were faced with:

Paying a lot more for their products from the supplier, if they ordered only 200 items at a time
Ordering their usual amount of items from suppliers and asking the supplier to send them to Amazon, as needed in 200 shipments
Contracting with a 3PL fulfillment company to store their entire inventory and send it to Amazon, 200 at a time.
Amazon’s limit on inventory storage, during the busiest shopping season of the year put many sellers at risk to lose sales due to lack of inventory and the time needed to replenish it. On top of that, and possibly because of it, many sellers are expressing frustration at Amazon’s delays in getting their products logged into their system. Inventory sitting on Amazon’s loading dock for days, even weeks isn’t helping anyone, least of all, the seller. If your customer can’t get your products when they expect them, they will go elsewhere, at the touch of a screen. If Amazon’s delay causes your delivery times to lag, it not only affects Amazon’s credibility but your seller rating. Remember when Amazon stopped fulfilling orders on anything but essential items during the March 2020 pandemic shutdown crushing many sellers in its wake? It’s their world and businesses need to learn how to navigate it.

The FBA system adheres to strict rules and regulations, with labeling fees charged per item for mislabeled inventory, high fulfillment fees, and long-term storage fees for inventory that remains in their warehouses longer than a year. With these fees and others, FBA can turn into an expensive venture. To add insult to injury, Amazon puts its stamp on everything it touches. No personal touches are allowed on your products or any custom packaging. Does your FBA experience feel impersonal? Can you afford to adapt to whatever changes Amazon chooses to make to its inventory management operations?

Phase V’s tech-enabled 3PL Fulfillment Company will partner with you to:
Receive your inventory, inspect it on arrival and store it in our safe, ambient, and humidity-controlled warehouse
Provide labeling/Bar Coding in-line with Amazon’s specifications
Pack orders according to your specs with branded inserts, packing materials, and shipping documents that reinforce your brand
Provide Polybagging and Re-Packing services
Accommodate a variety of shipping options optimized to save you money on carrier rates and freight regulations
Deliver your orders on-time, with 2-day delivery windows
Ensure your customers are in good hands with our live, personable, and knowledgeable customer service reps
For some FBA sellers, they feel that the loss of control over their business’s fulfillment and customer experience is offset by the increased sales opportunities FBA offers them. For other sellers, a hybrid solution can take the form of partnering with the right 3PL provider, such as Phase V Fulfillment, to store and ship their FBA inventory, 200 units at a time, along with customized, streamlined order fulfillment, transparent inventory management, and two-day shipping for your other multi-channel marketplace orders.

If you’re interested in learning more about Phase V Fulfillment’s alternative to FBA, contact us today.

Question 4

Does ecommerce slow down in the summer?

Accepted Answer

Traditionally, retail sales slow down in the summer, as consumers are taking vacations and spending their money on traveling and relaxing by the pool and at the shore. Some segments that do well in the summer include clothing sales, due to consumers buying new items for their vacation destinations. However, according to intuitsolutions.net, on average, ecommerce retailers sell 30% less during the summer months than they do in the fall and winter. With sales slowing down in the summer months, ecommerce vendors can take advantage of this downtime to:

Give your website a summer look and feel with seasonal graphics, etc.
Feature summer sales on clearance items and host a sale for discounted winter items as a limited-time offer.
Optimize your website for mobile devices since 72.9% of ecommerce purchases are made on mobile devices.
Plan for the upcoming holiday season by analyzing data based on previous seasons to forecast demand for the upcoming holiday rush.
Try out some new marketing and sales tools, before the busier seasons to keep your marketing and sales teams engaged.
Take a look at your Google Analytics reports and determine why visitors are abandoning your site on certain pages. Maybe you can add more content to certain pages that could use more images and product reviews. Online shoppers notoriously abandon their carts at checkout, due to limited payment options, finding out there were shipping costs involved, and/or not finding desired delivery dates for their orders. Working out these issues in the summer can increase your conversion rates throughout the year.
Taking the time to optimize your ecommerce company’s operations during the slower summer months will better prepare you for a more successful 2022 holiday sales season.

Need another secret weapon in your toolbelt to ensure the summer sales slowdown doesn’t hurt too much? Contact Phase V Fulfillment Company! We’re ready to partner with your ecommerce business to improve your fulfillment operations all year long. We work with your growing ecommerce business to help you save money and time every season of the year.

Question 5

How can ecommerce improve merchandising?

Accepted Answer

E-commerce can improve merchandising in a variety of ways including optimizing your website for easy navigation and more visual appeal, automating data analysis to collect more specific information to better target merchandising efforts to your audience, optimizing your site for mobile devices, and working with a 3PL service provider for your order fulfillment operations.

Most important information up top – A general rule of thumb is to design your landing pages with the most important information about your company’s goals or products in the first half of your page. If you offer free shipping, it is good to include that as up to 55% of online shoppers say they will abandon their carts when they learn they’ll be required to pay extra costs for shipping, taxes, and other fees, during checkout, according to a Baymard Institute study.

Create a sense of urgency – Design your landing page with clear calls to action (CTAs) that motivate your visitors to convert to customers on the first visit. E-commerce vendors need to show striking images of their most popular products on their landing pages. Some offer deals that may contain a time-sensitive element, such as “today only,” or something else that creates a sense of urgency, such as, “only 2 left in stock.”

Easy navigation – Your site navigation should easily connect your customers to the products they are searching for and like brick-and-mortar merchandising, display your category products in montages that include complementary products available on your site. This can encourage cross-selling and improve average order values, (AOVs). You also can include links to cross-selling opportunities or include images and links to these items on your “View Cart” or “Checkout” page. Action buttons such as “Buy Now” and “Proceed to Checkout” should stand out from the other objects on your pages, by using unique shapes and vibrant colors.

Product pages – Unlike brick-and-mortar merchandising displays, online customers cannot touch or feel the products they are interested in buying. Including several images of your products from every angle is critical. Also, include pertinent information or specifications about your products, and build in zoom in and zoom out functions. Also include customer reviews, influencer endorsements, and how-to videos for your products and services.

AI and Virtual Reality – More ecommerce companies are investing in AI and Virtual Reality technologies to create more of an immersive experience for online shoppers along with Live Chat, virtual try-on, and avatar sales associate features to help shoppers with purchasing decisions and speed up purchases.

More targeted analysis – Using a variety of automated data analysis tools to learn more about your audience helps to personalize your customer’s experience. By using an array of diverse data sets, you can target potential customers by geographic location, income, shopping behaviors, age, etc. You can better target your brand’s base to find out what types of merchandising works better for them. 54% of ecommerce brands have already invested in AI to get to know their customers better, according to Sli-systems.com’s  “Q3 2017 E-commerce Performance Indicators and Confidence Report.”

Optimizing for Mobile Devices – As of February 2022, 79% of online shopping occurs on smartphones and tablets, according to outerboxdesign.com. Interestingly, 80% of in-store shoppers consult their smartphones while shopping. Since mobile devices account for three out of four ecommerce sales, optimizing for mobile devices is crucial to maintain your relevance as an online brand. Make sure your page loads quickly on mobile and keep your checkout page simple and short, using autofill for customer information, and offer popular forms of payment.

Partnering with a 3PL service provider – As companies grow, getting orders to customers accurately and on schedule is challenging. Over 60% of ecommerce companies are choosing to partner with 3PL service providers, such as Phase V Fulfillment, for their order fulfillment operations. Leveraging the skill, experience, and advanced data-powered technology, along with deep carrier discounts, and significant packing supply discounts, expanding companies can avoid the need to lease warehouse space, invest in fulfillment equipment, and are spared the time and expense of hiring and training a fulfillment staff. Partnering with the right 3PL automates and streamlines your order fulfillment operations so you can concentrate on optimizing your website’s merchandising strategies and focus on growing your company.

Looking for the right 3PL to partner with? Look no further! Phase V Fulfillment is ready to partner with your ecommerce business as you grow to help take it to the next level. Call us for a free quote today!

Question 6

How can you reduce packaging costs?

Accepted Answer

Tighten up Packaging Area
Organizing the packaging area in your warehouse so that the packaging process flows from one activity to the next, seamlessly, can help speed up the packaging process and cause less damage in product handling. Organizing your packaging supplies so that the most often used supplies are easily accessible and separated from the seldom-used materials can save time locating supplies.

Automating Your Packaging Processes
As your business’s sales increase, due to limitations in time and labor capacities, automating parts of your packaging operation can help reduce human error and avoid accidents or injuries caused by repetitive actions that can result in staff shortages and raise worker compensation premiums. Instead, automatic and semi-automatic devices can free up your packaging personnel to perform other tasks vital to the packaging process and keep your staff out of harm’s way. Automation can speed up your box erecting, taping, and sealing processes, as well as create consistency in packaging that reduces waste, improves accuracy, and enhances your brand’s image.

Optimize shipping costs
You can customize your boxes and packaging materials to minimize extra space that may result in higher shipping costs, as carriers charge the larger of the dimensional weight and the actual weight of packages that are large but light-weight. You can also ask your carriers to work with you to offer you the best discounts for your business. When you choose FedEx, UPS, or DHL as your primary carrier, you can receive further shipping discounts as well. Smaller boxes also allow you to ship more orders at one time.

Package Design can Help Reduce Costs
Diversifying your package design can help reduce packaging costs by utilizing less expensive packaging. Using padded envelopes for clothing items, supplements, and other items that don’t need excess protective padding to ship can reduce your packaging costs. Printing logos and graphics directly on shipping boxes can save money on costly labels. You can use 3D printing techniques for packaging design and customization. You can also utilize software solutions that can provide optimized packaging schemes for your orders.

Using a 3PL Service Provider for Your Fulfillment Operations
Many ecommerce vendors are opting to partner with a 3PL service provider, such as Phase V Fulfillment, to handle packaging their orders, along with working with you to design a customized plan that streamlines your entire fulfillment process – eliminating the need for you to invest in a warehouse and automated fulfillment equipment, in addition to hiring extra staff to fulfill your orders. E-commerce vendors can also leverage the skills and experience of fulfillment pros as well as take advantage of advanced warehouse management systems, proprietary technology, and real-time inventory management tools.

Partnering with a fulfillment company streamlines your fulfillment operations for consistently accurate on-time deliveries, while also reducing packaging costs to optimize your fulfillment processes. Are you interested in discussing how to reduce your packaging costs while improving your fulfillment process? It’s a winning combination when you partner with Phase V Fulfillment. Call us today!

Question 7

What does a 3PL company do?

Accepted Answer

3PL companies, or third-party logistics companies, offer an array of services to assist growing businesses by providing outsourced warehousing and fulfillment operation logistics to those businesses. Traditionally, businesses partnered with 3PL service providers when they’re so large that they could afford to hire an outside company to pick, pack and ship orders that the business lacked the time and personnel to handle. Now that consumers prefer to shop online more than ever before, many ecommerce vendors are experiencing growth beyond their capacities to store their inventories and fulfill their increasing orders. Instead of stopping all forward movement by leasing or purchasing warehouse space and creating an in-house fulfillment department, many retailers are realizing the time and monetary savings that 3PL service providers offer growing businesses.

Many small- and medium-sized companies save money with 3PL service providers as logistics companies can assist companies in automating their processes to streamline their fulfillment operations. 3PL service providers can pack and ship your orders at a reduced rate, buying supplies at bulk rates, and maintaining shipping logistics teams that are up to speed on shipping regulations and know how to source the most efficient and affordable ways to get your products into your customers’ hands. 3PL service providers help clients manage their inventories, as well as perform a variety of administrative and analytical tasks. With dedicated software that your company can access through the 3PL’s easy-to-use dashboard, your business can generate data analysis and forecast projections for upcoming seasons. 3PL service providers take the tedious work of order fulfillment out of a growing business’s day-to-day, allowing these companies to focus on their core values and continuing to grow into their next phase of success while saving your company money and time in the process.

Contact Phase V Fulfillment to learn more about how we can help your growing business with your fulfillment needs.

Question 8

Why should I use a fulfillment company?

Accepted Answer

The choice to use a fulfillment company usually occurs when your company grows beyond its current capacity to fulfill outgoing orders in-house. For around a decade, online shopping has been carving out a larger part of the market share as consumers prefer to shop online. As most ecommerce retailers don’t have a large physical presence, when ecommerce companies began to grow, they were faced with the decision to buy or lease a space for their inventory, along with developing the infrastructure necessary to perform their fulfillment processes in-house. Along with a fulfillment facility, online retailers need trained staff to perform their fulfillment operations, in addition to purchasing packaging materials and hiring someone with in-depth shipping knowledge to get their orders to customers in a timely fashion.

When ecommerce companies compare the cost of labor and materials needed to perform their fulfillment operations in-house, they find that the costs and benefits associated with partnering with a 3PL service provider, saves them money and that they have more time to focus on their growing business. Using a fulfillment company, e-retailers gain access to deep discounts in packaging supplies and shipping rates as well as leveraging the expertise of a trained 3PL service provider to pick, pack, and ship orders to customers, streamlining their fulfillment operations.

With drastic increases in online shopping, outsourcing to fulfillment companies has become a necessity to keep up with increasing demands for faster delivery times. E-commerce companies realize that to keep up with this growing demand for their products and shorter delivery times, outsourcing to a fulfillment company allowed them the opportunity to scale without experiencing the growing pains that can so often blind-side expanding businesses, disrupting their upward motion.

Call us today to discuss the services that Phase V Fulfillment can offer your ecommerce business.

Question 9

What is online order fulfillment?

Accepted Answer

Online order fulfillment is the process that occurs after customers place orders online through ecommerce sites. Once orders are placed, items are picked from the warehouse inventory and packaged then shipped to the customer via various carriers. Online shopping has increased exponentially in the last decade, creating a need for many online retailers, as well as traditional brick and mortar businesses, to partner with third-party logistics (3PL) companies to get help with fulfillment services in order to meet the demand for increasing order volumes. Fulfillment companies, such as Phase V, help growing businesses save time and money by removing the need for leasing or purchasing a warehouse and maintaining skilled warehouse and fulfillment teams. Third-party logistics companies also save businesses time and money by allowing companies to focus on their core objectives, such as developing new products instead of using their talent for fulfillment operations. With the increase in online shopping, consumers have started expecting faster and faster delivery times for their orders. Partnering with third-party logistics companies, businesses can streamline their fulfillment operations towards faster deliveries and further increase their sales, as satisfied customers help build brand loyalty with return orders and referrals. Third-party logistics companies can also funnel multi-channel orders into one coordinated effort, creating consistency in your order fulfillment processes. When all of a company’s orders are packaged and shipped from one central location, it simplifies the fulfillment process, increasing the speed of fulfillment that is reflected in faster, more efficient delivery times. As a third-party order fulfillment expert, Phase V also negotiates better shipping rates on behalf of its clients – further increasing the savings for its partner businesses.

Frequently asked questions

Find all the answers to your fulfillment questions, answered by our logistics professionals.