5 min read

Product Bundling for Increasing eCommerce Sales

October 21, 2021 by Srishti Arora - 5 min read

Whenever you go to any retail shop today, you see many combo offers with products that are either complementary to each other or have a discount, etc. For example, when you go to buy shampoo, you get a conditioner for free. If you go to buy a smartphone, you get a complimentary charger, etc.

Product Bundling

Some things just go well together. Therefore, sellers tend to sell them together. This technique is known as product bundling. Let’s look at what product bundling is and how you can use it to enhance e-commerce sales. 

What is Product Bundling?

Product bundling is the process of grouping more than two products together in 1 SKU. This way, when the customer places an order on your website, all the products bundled together are added to the cart together. 

Product bundling is a viral marketing and cross-selling strategy around festivals. During festivals like Diwali, Raksha Bandhan, Christmas, New Year, companies sell many bundled products for gifting. It is an overall strategy that is used by businesses to generate more revenue per order.

It is proven to drive a more excellent average order value for your business. These product bundles can be specially curated or just decided based on consumer behavior and psychology. 

However, customers prefer bundle products as it gives them the feeling of purchasing more at a lower price.

Types of Product Bundling

There are different types of product bundling strategies that you can adopt for your business. It entirely depends on your customer expectations and how you want to position your product before the customer. If you sell entirely altogether different products together, there is very little chance that any customer will purchase that. Therefore, you need to be intelligent about the products you bundle and market them accordingly. 

Mixed Bundling

Mix bundling is one of the most common types of product bundling. Under this strategy, items are clubbed together based on the previous sales and order data. 

For example, when you buy a toilet cleaner online, there is a chance that you will be sold a brush and wiper along with it at a bundled price. 

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Same Products

The same product strategy is a tried and tested way to offer a discount when your customer wants to order multiple items of the same product. 

Most D2C brands follow this strategy and encourage their buyers to buy products in bulk rather than spending each time on shipping. 

Pure Bundling

Your bundling means grouping products that you only get when sold together. For example, when you purchase a smartphone, you always get a charger or cable. You can get the charger separately, but you do not get a smartphone without a charger. The only problem with your bundling is that it limits the options for your customer, and it might lead to a dip in sales. 

Excess Inventory

Product bundling can also be used as an effective strategy to get rid of excess inventory. If you store a lot of stock in your warehouses and have a lot of slow-moving inventory, it can lead to an increase in the stock carrying costs 

You can use bundling to similar group items and move them faster.

This way, you can also make room for fast-moving inventory. 

Best Practices of Product Bundling

Product Bundling

You can always make modifications to the product bundle. It also offers you a lot of room for innovation and testing to see which ones sell best. However, if you follow a few best practices, you can ensure that the bundles sell well and get the most relevant results. 

When you start, you always do not have enough historical data to make the best decisions. Utilize this opportunity to try a different group of items and see how it works.

The primary role of product bundling is to reduce friction during checkout and make sure the customer adds more products to the cart at once.

A few best practices for product bundling are as follows- 

Offer a slight discount so the customers can see the value

  • Always show bundles side-by-side with individual products so that the customer can see the advantage of purchasing a bundle
  • Highlight bundles in emails during the festive season
  • Analyze the customer journey thoroughly and then place the bundles where they are most effective
  • Always do thorough competitive research to see what they include in their bundles and the main options. 

Selling Product Bundles With Shiprocket Fulfillment 

Most times, there is a logistical challenge in delivering product bundles. You either have to create the bundle after the order is received or create it before. However, when you outsource to 3PL fulfillment providers like Shiprocket fulfillment, they take care of product bundles and ship them seamlessly. 

Shiprocket fulfillment has fulfillment centers located across prime locations in India. Also, they have a robust strategy for handling product bundles and shipping them without any hassles. Therefore, if you want to sell product bundles, you can ship them to our fulfillment centers, and we will take care of the packaging and shipping of these items whenever you receive an order. 

Not just that, we will optimize the packaging operations for you so that you do not pay any additional cost for shipping based on the extra weight. Along with that, we also have the latest warehouse tech to ensure that your orders are processed fast so that you can deliver to more customers in a shorter period. 

Final Thoughts

Product bundling works as a great marketing strategy for your business if you want to enhance sales or sell more in a short period. Other than that, it is also helpful for getting rid of excess inventory you might have for a particular SKU. We hope this article was beneficial to make you understand the importance of product bundling and how it works.

Shiprocket Fulfillment features
October 21, 2021 by Srishti Arora

4 min read

Understanding the Concept of Backorders and How to Avoid It

October 19, 2021 by Srishti Arora - 4 min read

When e-commerce is taking off and everything is available at the click of a button, nobody likes to see out-of-stock notifications. However, the supply chain cannot be hundred percent efficient, and there will be times when products run out of stock if your supply chain breaks down. What do you do in such situations? 

backorders

For such situations,s we have backorders. Backorders are not the ideal situation. However, they are the most suitable ones when you want to allow your customers to continue shopping on your website. 

The first step should always be to avoid them. But let’s look at what backorders are and how you can prevent them by being proactive about your inventory and supply chain management. 

What is a Backorder?

Backorder refers to items that are currently not in stock but will be available soon. Your customers can buy back ordered items on the website, but they won’t be delivered till they are available in store.

For example, many times on Amazon, you see a small notification of a product that says it will be in stock by a particular date. You can still shop for this product; however, it will only be delivered after being in stock. 

Backorders are different from out-of-stock SKUs as backorder SKUs signify that the order can still be placed and fresh inventory will be restocked soon. For out-of-stock SKUs, a new order cannot be established. 

Benefits of Backorders

Even though backorders are not ideal, they still have some positive aspects and bring in pre-orders for your website. They are the closest you can get to predicting guaranteed future demand. Also, once the customer contacts you for an order, they share their information, and you can connect with them for future orders and ongoing offers, etc. Also, you get the best market insights for any product with backorders as they are telling you what the highest in demand is, and you can ramp up your production accordingly.

Disadvantages of Backorders

The disadvantages of backorders are sometimes a negative customer experience as nobody likes to wait for their orders unless the product is unique and niche. Secondly, backorders mean more chances of cancellations in RTO as many people today do impulse purchasing. If you do not have a product and order it, they might forget about it, leading to higher RTOs. 

Now let’s discuss how you can avoid backorders for your business. 

How to Avoid Backorders?

backorders

3PL Fulfillment Providers

3PL fulfillment providers are a great hack to prevent backorders. To mitigate the risk of backorders, you need to stock inventory in multiple locations so that you virtually never run out of stock. With inventory distribution, you can quickly mitigate the risk of backorders and fulfill incoming orders from different warehouses.

Fulfillment providers like Shiprocket Fulfillment I have fulfillment centers located around eight prime locations in India. This means that you can stock your inventory in multiple locations in the country and deliver to anywhere seamlessly. 

More Warehouse Management Systems

The next most crucial step to avoid backorders is to have warehouse management systems. Warehouse management systems give you a real-time update about where your inventory is and how soon you need to restart. They also help you forecast demand accurately, and you can pre-order your goods in case you are running out.

Demand Forecasting

Forecasting demand can help you stay on top of market trends, and you can quickly determine how soon you need to stock your inventory. Demand forecasting also gives you a heads up about your sales, and you can plan your purchases accordingly. 

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Timely Processing

Timely processing of orders would mean a more unified customer experience, and it would also help you stay on track with incoming orders. This way, there would be no out-of-stock situations as your supply chain will be on track. If you don’t process orders on time, it might show that you still have inventory while you actually wouldn’t. 

Proper Inventory Management

Inventory management systems that are regularly updated and thorough checks and balances are maintained in your inventory. You must follow a strict pattern for inventory valuation so that the goods that come in first I used first or any other method. This way, you will stay on top of your inventory and avoid unfortunate situations like backorders and stock out. 

Conclusion

eCommerce is growing at a breakneck pace & you cannot afford to have unpleasant experiences with your customers. Make sure you avoid backorder situations and ensure that you give your customers an end-to-end seamless experience.

Shiprocket Fulfillment features
October 19, 2021 by Srishti Arora

5 min read

Importance of Order Management Process in Order Fulfillment

September 14, 2021 by Rashi Sood - 5 min read

Once the customer clicks on the Buy Now button and makes a purchase, the order management process starts. At its most basic, the order management process is when the customer places an order and the staff update the inventory records accordingly.

Order Management Process

The process doesn’t look like a task when you have just started a business. You get few orders every day, and you can fulfill them quickly. But as your business grows and more and more orders pour in, it becomes tiring to manage the orders. And at the same time, keep the inventory records updated. The best way here is to take the help of an order management system.

Traditionally, order management was only a crucial step for the internal process. Today, customers are also kept in the loop. For example, many online sellers show the items remaining in stock on their product page to persuade the customers to purchase faster.

Not just this, customers too want to know everything. They want to know multiple delivery options. They want to be updated on the movement of their order and the exact delivery window. They want regular updates on their order. With demands like these, the order management process is no more transactional. It is seen as a value-added process for a business. It can make a huge difference in the over customer experience.

What is Order Management Process?

Order management is the process of receiving an order and tracking and fulfilling it. The process begins when you receive an order and ends when the customer receives his package.

When you scale your business, it is crucial that you automate the process to streamline it with the help of an order management system. It helps you keep a tab on all the orders and manage them in one place. You can use the system to automate and streamline the entire process of the retail supply chain. This means you can track the entire order journey – from receiving an order to delivering it.

In short, an order management system helps organize and automate everything to provide a pleasant experience to the customer and help your business grow.

Steps in order Management Process Flow

The following are the three crucial steps in the order management process:

Order Placement

The first step is when the customers place an order using your website or other sales channel. Here, the customer goes through the catalog, chooses the product, and pays for it. During this process, the customers might also need your help – they might have some concerns or questions.

Once the order is placed and the payment is made, it is updated in the system. Ensure that the payment gateways are trustworthy and that your customer’s data is not compromised. Customers’ experience with you very much depends on this.

It is also equally crucial to update the fulfilled orders quickly to avoid all possible errors.

Customers who order multiple items or orders with considerable value deserve special treatment. So, highlight this to the warehouse to ensure these orders are fulfilled on priority. You can also offer special discounts or offers for a pleasant customer experience.

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Inventory Management

Inventory management steps should be completely automated. When the customer places an order, the inventory should be updated automatically when the order is processed. For instance, you have 100 shoes in stock, and you receive an order for two pairs. The inventory left after the order is 98, and it must be updated automatically in the system. It helps in knowing and planning when you must re-stock the inventory.

In the inventory management system, the following are included:

  • SKU number
  • Product name
  • Description including size and dimensions
  • Weight
  • Price

Upon failing to update the inventory on time, your orders can be delayed, and you can lose some customers. Assigning SKU numbers and barcodes helps in automating the process and easy tracking. Giving SKU to the product helps assign an identifier to the product, making it easy to find and track them.

Order Fulfillment

Order fulfillment is the last step of the order management process flow. Here, the order is placed, inventory is adjusted, and the order is now being processed.

Now, the order goes to the warehousing unit, and the experts process it further. Typically, they perform the following steps:

  1. Once the order is received, the warehouse employee locates the SKU in the warehouse and picks it.
  2. After picking, he packs the order and attaches all relevant bills and shipping labels.
  3. The courier agent next picks the order from the warehouse.
  4. Finally, the order is shipped and delivered to the customer.
  5. In the case of return, the customer raises the return request, and the seller raises the RTO request with the courier company.
  6. The courier agent picks it up from the customer and delivers it back to the warehouse.
  7. Finally, the returned order is updated in the inventory as well.

The entire order fulfillment process can be sped up by using an order management process, preferably the one that integrates with your sales channel as well.

Shiprocket Fulfillment features
September 14, 2021 by Rashi Sood

5 min read

A Closer Look at Perpetual Inventory System

September 9, 2021 by Srishti Arora - 5 min read

For any system to run appropriately, it is essential to have a process in place. If there is no systematic order, there are chances that there will be misses and delays. Since inventory management is a critical aspect of your e-commerce fulfillment supply chain, an inventory management system drives the whole process smoothly.

There are several types of inventory management systems that you can adopt if you want to manage your inventory efficiently. The perpetual inventory management system is one such process that can help you streamline your operations and also reduce costs.

Let’s look at the perpetual inventory management system and how it can benefit your e-commerce business concerning the fulfillment supply chain. 

What is the Perpetual Inventory System?

The perpetual inventory system is an organized order where the data is recorded in real-time when stock is sold or received. This automates the process to a large extent, and it is an efficient way to record any changes in the inventory during a transaction. 

For example, suppose you have 1000 units of product A, and in a minute, you receive 200 orders of the same product. In that case, the perpetual inventory system will enable your entire process to reduce the number of stocks that have been ordered from your master inventory. 

This is also highly beneficial if you have decentralized your inventory and stored it in different locations. 

How Does Perpetual Inventory System Work?

Inventory Level Update via POS

The first step in a perpetual inventory system is the point of a sale system update. Sure, the inventory management system mediately applies the transaction to the main inventory across all channels whenever a product is sold. It is made possible with the help of barcodes and RFID scanners. 

Cost of Goods Updated

The next step is calculating the cost of goods sold. Via the perpetual inventory management system, this value gets recalculated and is updated across channels for a systematic inventory valuation. 

Reorder Points Adjusted

Based on the previous data, up the perpetual inventory system automatically update the reorder points based on the increase or decrease in sales so that you have an optimum inventory level at all times. 

Purchase Order Generated

With an automated perpetual inventory system, if the item or SKU has hit the reorder point, the system generates a new purchase order and sends it to the supplier.

Received Products Added to Inventory

The products are received and added to the inventory based on the purchase order generated after the warehouse employees check. 

Benefits of Perpetual Inventory System

Real-Time Data Recording

When data is recorded in real-time and updated across channels, it avoids confusion to a great extent, and decisions can be made faster. It educates the seller about the current situation and helps them make informed choices. It also reduces delays as all the information is available directly in hand, and there is no dependency. 

Detailed Records

The perpetual inventory system collects all information at a minute level across your e-commerce supply chain. This data gives you more insights about roadblocks and any bottlenecks in the procedures that can also help you audit the whole process better and make changes wherever necessary. 

Reduction in Inventory Management Costs

The holding costs and replenishment spends are reduced as you get real-time updates, not left to the last minute. As the entire process is more planned and organized, it saves on labor costs and avoids errors. 

Accurate Demand Forecasting

With real-time data, demand forecasting is more accurate and realistic. As the trends change by the minute, real-time data can help you analyze information much more straightforwardly and make more insightful decisions for your business

How to Optimize Overall Inventory Management With 3PL Fulfillment Providers?

Even though a picture inventory system may sound like a solution to most of your inventory management problems, it can still be a little costly to set up. I’m not just that. It will also require constant maintenance to ensure that the product is up to date and does not hinder the e-commerce supply chain. Hence, it is an intelligent decision to outsource your inventory management with 3PL fulfillment providers. As fulfillment providers have a robust warehouse infrastructure and a text tag dedicated to only managing your incoming orders, they have the necessary process in place.

Shiprocket Fulfillment is a 3PL fulfillment provider that can help you reduce inventory management costs and deliver products 3X faster. We have fulfillment centers across eight prime locations in the country, and more will be added soon. These enable Shiprocket fulfillment to provide you with an end-to-end fulfillment solution that allows order management, inventory management, order processing, and shipping. 

Not just that, by outsourcing operations, you can also focus on other aspects of your business like marketing, innovation, research, etc. 

Final Thoughts

The perpetual inventory management system is truly a blessing for the e-commerce fulfillment supply chain. It can be beneficial to streamline the process, reduce cost, and improve the inventory management system. The periodic inventory system took into the picture a lot of manual labor that would lead to errors and delay the process by manifold. With real-time data collection and a perpetual inventory system, you can reduce processing time and improve your business’s order to ship time. 

Shiprocket Fulfillment features
September 9, 2021 by Srishti Arora

5 min read

Role of Buffer Inventory in Effective Warehouse Management

August 31, 2021 by Srishti Arora - 5 min read

The retail and eCommerce space is highly dynamic today. Requirements are changing daily, and customer expectations are more volatile than ever. In such cases, every aspect of your business needs to be strengthened if you want to succeed. Since inventory is your biggest asset, you need to have a cushion to absorb the impact of any harm. This cushion is what is known as the buffer, and it can help you prevent shortages and delays in the overall supply chain fulfillment process. 

With the increasing demands of e-commerce in India, it is essential to have a buffer in your plan to reach out to the maximum number of people and be resourceful. Thus, let’s look at what buffer inventory is, and its role is in eCommerce inventory management and supply chain fulfillment operations. 

What is Buffer Inventory?

Buffer inventory refers to the safety stock that is a surplus of the inventory stored in a warehouse. This is used as a safety net in an emergency, delays, a supply chain failure, or an unanticipated surge in demand. 

The amount of buffer inventory stored is not a random value. It needs to be carefully estimated by keeping in mind the types of products, production date times, historical trends, etc. 

A great example of needing a buffer inventory was when everyone ordered hand sanitizers in 2020, just when COVID-19 struck. 

Those who had a safety net of their buffer inventory could deal with this surge and focus on mass production of new ones. Others left struggling and had to face the unfortunate condition of a stockout. 

Why Do You Need Buffer Inventory?

Buffer inventory acts as a safety cushion for your e-commerce fulfillment supply chain. Your entire supply chain depends on the amount of inventory that works in synchronization with the incoming orders. However, if you ever face the unfortunate condition of a stock out, you will have to bear additional costs to ensure that your stock is replenished on time. Getting higher sales than expected is good, but if you run out of inventory, it is never good for your business. Even the forecasted demand can be deceptive if you do not account for losses and emergencies. 

Moving forward, let’s have a look at some of the techniques using which you can calculate buffer inventory levels for your business. 

Tips to Calculate Buffer Inventory Levels

Safety stock calculation

The safety stock formula is excellent for determining the right amount of buffer inventory for your business. You will need to know the maximum daily usage, maximum lead time, average daily usage, average lead time for calculating this value.

The formula is as follows – 

(Maximum daily sales x Maximum lead time) – (Average daily usage x Average lead time)

Historical demand-based buffer inventory

Another technique to calculate the buffer inventory is accessing and assessing historical data by determining the inventory and order data. When you know the inventory turnover rate, SKU performance, and other insights, you will be able to make informed decisions about your safety stock. 

How Can You Simplify Inventory Management?

Not just maintaining buffer inventory, but inventory management as a whole can be challenging. It has several minor aspects that need to be catered to daily. Let’s look at how you can simplify our overall inventory management process to ensure maximum yield and results. 

Outsource to 3PL Fulfillment Providers

3PL Fulfillment providers like Shiprocket Fulfillment take care of all your eCommerce Fulfillment operations. These operations include inventory management, order management, packing, processing, and shipping. 3PL fulfillment providers have robust inventory management software that can help you significantly improve your forecasting and help improve your sales. 

Barcoded Operations

The next step for simplifying your inventory management operations is bar-coded operations. If you add a barcode to your product SKU and the storage bin, it will be easier to locate products within the warehouse, and you will be able to simplify the overall operations. This will help you improve the efficiency of the floor, and your staff will be able to follow a standard operating procedure for every order rather than randomly allocating stuff. Moreover, your inventory management software will function better with regular incoming data that is synced with the products placed on the shelves. 

Regular Inventory Valuation

Regular inventory valuation will help you stay on top of the inventory you have the amount of inventory you need. With rich insights, you will strike the perfect balance between the two and avoid situations like the accumulation of debt stock and stockout.

Use Inventory Management Software

Last but not least, it is essential to use inventory management software where you can track and manage inventory from multiple channels. If you have inventory stored in multiple warehouses, inventory management software can be a central point for accessing the data for all these warehouses. This can help you optimize costs and make better decisions when you are planning to meet incoming demand. Furthermore, you can also reduce logistics costs and ensure that you have enough safety stock whenever required. 

Conclusion

Having buffer stock is essential for your business since it can help you save on additional order fulfillment costs and give your customer a seamless regular shopping experience without facing any backorders. Like any other safety net, the buffer stock can be beneficial if you want to optimize your operations. 

Shiprocket Fulfillment features
August 31, 2021 by Srishti Arora

6 min read

Understanding Pick and Pack for Efficient Fulfillment Process

August 19, 2021 by Rashi Sood - 6 min read

Successful order fulfillment is not just about neatly stacked products and on-time delivery of the orders. The pick and pack methods also play a crucial role. Inventory management and the right pick and pack method help in shipping the orders accurately at the maximum speed.

pick and pack

The fundamental functions of warehousing involve receiving, storing, picking, packing, and shipping the orders. However, pick and pack are the fundamental concepts that form the foundation of the entire process.

In this blog, we shall discuss what pick and pack are. We will also talk about the pick and pack methods.

The Basics of Pick and Pack

Take a look at the definitions of pick and pack in the supply chain to get a deeper understanding of the terms:

Pick

The picking function begins after the buyer places an order. It involves the process of locating the items in the warehouse and picking their right quantities from each respective location in the warehouse.

Pack

Packing is the process of adequately packaging the ordered items/products along with bills or other documents. For example, putting a product in the bag first, then in a box, and finally, attaching a label to it.

A label carries crucial information like shipper name and address, customer name, address, and contact number, purchase order number, SKU number, tracking details, bar codes, etc. Once the product is packed and labeled, it is ready to ship.

Pick and Pack Methods

When you pick and pack your products, you use methods that you use in your life. You might use the ways to organize inventory the way you organize clothes in your closet. Put all shirts together and pants together. Or you can also put products that go together to make it easy to pack them. And that’s it! Gather the items when you receive an order and pack them to process the order further.

This way may work for you if your business is in its initial stage or smaller in size. But, as it will grow, you will require new and professional strategies. Adopting better pick and pack strategies can help reduce mistakes and returns and save money. Besides, with efficient operations, the customers will also be happier.

However, the pick and pack strategy that will work better for your business will depend on the products you sell and your business size. Also, you can change or adopt new strategies as your business will grow. Here are some strategies that you can employ:

Piece Picking

A piece picking is a simple method where you take the packing slip and process a single order. You locate the product in the warehouse and pick it off the shelf for further processing. Once you have everything, you take the product to the packing station for its packaging. This method is ideal if the business is smaller in size and/or you receive only a few orders daily. In this case, it is the easiest and most effective method.

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Batch Picking

As the name suggests, batch picking is used when you have to organize orders into batches. A batch is allocated for items that are in the same area of the fulfillment center. The main goal of batch picking is to pick orders efficiently – pick all the SKUs together and in one go that are placed together. If one SKU is required for different orders, it only makes sense to gather them together rather than repeatedly going for each product. This will make the process efficient, faster, and save time.

This method can be used for smaller businesses, considering your pick and pack all orders at one time of the day. However, this method is only efficient if you don’t pick and pack an order each time you receive an order. You can also take the help of software to help you with the efficient batch picking process.

Zone Picking

Zone picking is the technique used by most of the larger warehouses. Each zone is assigned a picker, and they pick the products when you receive an order from their zone. Then they pass the product to the picker in the next zone – this way, the product moves through all the zones to finally reach the packing station. This method employs coordination and requires skilled and experts to handle the process. Or you can also have warehouse management software to help you manage the picking process.

Wave Picking

This method is a combination of batch picking and zone picking. Pickers pick the products in batches and pass them from one zone to another until they reach the packing station.

Best Practices for Order Picking

There are a few best practices for order picking to improve your overall warehousing operations.

  • When you organize the SKUs in the warehouse, focus on the facility flow. The flow should be from receiving SKUs for storage to order picking and from sorting them to packing for shipping. Each area should be in logical order – next to each other to eliminate double back.
  • No matter where you have stored your products – on shelves or racks, ensure that you have divided with totes or dividers. It will help in finding them faster. This is ideal for sorting and storing bulk SKUs that are smaller in size.
  • Another best practice is to place SKUs in zones next to each other that generally go together. For example, you can place shampoos and conditioners closer. This will save time make the picking process efficient.

Best Practices for Order Packing

Several things require consideration when you pack the products:

  • You can re-scan the products before packing them to ensure that you put the right product against each packing slip.
  • Don’t do the guesswork in choosing the right size of the packaging. Have pre-decided boxes for each product, or you can simply use some software to calculate the right size of the box required for packaging.
  • Don’t forget to use packaging inserts while packing the products, specifically if the products are fragile.
  • Ensure that the right label with correct information is placed on each product.

It is crucial to have a proper pick and pack process to ensure that you have an efficient fulfillment process in place. You can use the strategies discussed above or also use technology to make the process easier and efficient.

Shiprocket Fulfillment features
August 19, 2021 by Rashi Sood

6 min read

Reasons Why Customers Return Products & How To Prevent It

August 5, 2021 by Rashi Sood - 6 min read

Customers returning products is an inevitable part of the business. However, it can be a costly affair for an eCommerce business due to the return shipping charges. There are steps that can be taken to reduce or prevent returns. But, at the same time, you must also know how to manage the returns to offer a pleasant experience to the customers.

customer return

Processing returns efficiently not just makes the customers happy but also encourages repeat orders. It also keeps the costs down.

Let’s take a look at the reasons why customers return products.

Why do Customers Return Products?

customer return

A product return is not a bad thing. It does not always mean that the buyer didn’t like the product he received. The following are the reasons why customers return the product:

Incorrect Product Size

Incorrect product size is the most common reason why customers return products. While it may seem uncontrollable for an online store, you can very much have control over it.

In a brick-and-mortar store, people actually have a look at the product. They get an idea of the size of the products. For clothes, the customers can even try its size and fittings. For shoes as well customers can try the size and even walk a few steps to check comfort.

For an online store, the size of the product is mentioned. However, the size can vary from product to product and brand to brand. So, you can offer excellent product descriptions that include all the product details in brief. Include everything in the product description that the customer might want to know about the product. You can also include how-to-use descriptions if the product is a bit technical. This will lead to the customers buying the right products as per their needs.

Product No Longer Required

Many customers order the product online. But when it is shipped or delivered, they no longer require it for various reasons. For example, a customer might order artificial flowers. But when they are delivered, he might have got his vase broken, thus not requiring the flowers anymore.

Or sometimes an upgraded product is available. The common products that fall in this category are electronics, like chargers, mobile phones, tablets, laptops, etc.

Though this product return is beyond your control, you can convince them to keep the current product as it is in their favor. You can do it by showcasing the benefits of the products that other products don’t possess. So, the product description must be elaborated and include everything about the product.

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Mismatch Between Product & Description

Many times the products appear different in reality than what they are described as in the description. The customers might also file a dispute for a misleading description. This represents bad business practices. The product description must be detailed and accurate.

Put some effort into crafting complete, clear, and accurate descriptions that answer customers’ all questions. Also, proofread the descriptions and images before you publish them – the first impression matters the most. So, write, read, edit, re-edit, and proof the descriptions before publishing them.

Wrong Product Shipped

Product picking is an essential task in the fulfillment process. And you can get a lot of returns if this process is not carried out diligently. Ensure that you sort and select the correct products. If you don’t perform these tasks properly, you will lose a lot of money on labor and shipping costs. You can also partner with a 3PL fulfillment provider where experts handle the products and pack and ship them. They also store the products and sort them, and when you receive an order, they process it on your behalf.

How to Reduce Product Returns?

customer return

High-Quality Product Images

When you list your product online, don’t just add a single product image. Capture product images from different angles and display them on your listing. Ideally, you should add a minimum of four product images – images from the front, back, and both sides. Also, ensure that you only add high-quality images. It helps the customers in decision-making as they can judge the quality from the product image. If required, you can also add videos.

Also, highlight the weight, size, and material of the product in the product descriptions. Keep the product descriptions up to date as well to avoid any possible confusion. All the information helps the buyer make a decision. And if a well-thought decision is made, the likeliness of product return is reduced.

Size Guides & Fitting Tools

You can audit the size guides and fittings tools from time to time to ensure that they are up to date. Besides, they must also be easy to read on desktop and mobile. This step ensures that the customers don’t order the products in any wrong size and return them later.

Introducing this will help remove most size-related returns and prevent customers from ordering the same product in multiple sizes and then returning the wrong fitted ones.

Outstanding Customer Service

Provide easy and convenient ways for customers to reach out to your customer service executives. Or allow them to write product questions or issues on the listing. If you give ways to clear their doubts, you prevent them from getting frustrated or returning the product because they may think the product isn’t working while in reality, they might not know how to use it.

Also, use the conventional methods of emails and phone calls or instant messaging. Connect with the customers in real-time, solve their queries, and prevent all possible unnecessary returns.

Appropriate Packaging

Consider different types of packaging for the products as per their requirements. The rule of thumb is to buy packaging as per the product’s journey from in transit to delivery. The majority of products are broken or damaged during transit because of insufficient or inappropriate packaging. And it is also one of the primary reasons why most customers return products.

Add cushioning to the packaging like bubble wraps, foam sheets, and packing peanuts for fragile products. You can also pack them in double or triple layer packaging. Besides, you can also mark ‘handle with care’ on fragile items like glass products.

The Final Words

A business can never escape returns; it is a part of the business. However, you can work towards reducing them by following the steps we have outlined above. Take time to analyze why most of your customers return the products and work on those points. The bottom line is always to ensure that your customers are satisfied with their purchases.

Shiprocket Fulfillment features
August 5, 2021 by Rashi Sood

5 min read

What is Inventory Turnover Ratio and Why is it Calculated?

July 20, 2021 by Srishti Arora - 5 min read

Inventory management is an essential part of your fulfillment supply chain as the inventory is your biggest asset. You need to be updated with every aspect of your stock so you can manage it effectively. Understanding the statistics and analysis of inventory can help you make more informed decisions, increase efficiency, and improve cash flow. 

Inventory turnover ratio is one such niche that you must check to ensure that your inventory is in sync with the supply chain. Let’s look at the inventory turnover ratio and how you can calculate and optimize it for your requirements. 

Understanding Inventory Turnover Ratio

Inventory turnover ratio refers to the number of times inventory is sold and then replaced in a specific period.

For example, suppose you have 10 quantities of product X and want to check the inventory turnover for six months. In that case, the inventory turnover ratio will refer to the number of times X was sold and then replaced within six months. 

Inventory turnover ratio is an essential metric as it can help determine business performance, sales, and the cost management of the supply chain. 

Why is Inventory Turnover Ratio an Important Metric?

Inventory turnover ratio is an important metric because it talks about the products restocked. This has a direct impact on the sales and gives you a more clear picture of the products that were successfully sold. You can also analyze the business performance and allocate the correct costs to supply chain management operations.

How Can You Calculate it?

The inventory turnover ratio is calculated by finding the cost of goods sold for the defined period, finding the average inventory value, and dividing the goods sold by the average inventory.

So the variables involved are –

  1. Cost of goods sold for the period (COGS) 
  2. Average inventory value –  It is calculated by adding beginning inventory and ending inventory and dividing by 2. 

Inventory turnover = COGS / Average Inventory Value

Let’s understand this with an example.

If COGS = 500000

Average inventory value = 250000

Then, Inventory turnover ratio = 2

Significance of Inventory Turnover Ratio

Now that you have calculated the inventory turnover let us understand the significance of low inventory turnover, high inventory turnover, and its impact on your business. 

Ideal Inventory Turnover Rate

The ideal inventory turnover between 2 to 4 is suitable for most businesses. Although this varies from industry to industry, the ratio between 2 to 4 indicates that the inventory restocking is close to your sales cycle. You are maintaining a balance between demand and supply. It also means that your sales match up to the amount of inventory you are restocking, and there is synchronization within your supply chain. 

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Low Inventory Turnover Rate

A low inventory turnover ratio of one or less indicates that you might have excess inventory. For instance, if you sell 40 units over 1 year and always have 40 units remaining in hand, it means that your inventory is piling up & you need to forecast demand accurately. You must avoid accumulating debt stock as it will be more expensive to get rid of it later on. 

High Inventory Turnover Rate

Inventory turnover can indicate that the sales are good in a given period and your inventory is moving fast. However, if a balance is not struck, it can lead to situations of stockouts. Sellers must aim to achieve a high inventory turnover rate as it means that they will sell the inventory they have and re-purchase fresh stock more often. 

Even with a high inventory turnover rate, you must keep a close eye on the average inventory value of products that require a longer time to be replenished. 

Tips to Optimize Inventory Turnover Ratio

Solutions for High Inventory Turnover Ratio

If you have a high inventory turnover ratio, you need to order more inventory beforehand. In such cases, thorough demand forecasting can help ensure that you don’t run out of your products very soon. If the product is selling out very fast and replenishing will take time, it is intelligent to make fewer sales for a while. The negative customer experience is more dangerous than a few days of no sales. 

Solutions for Low Inventory Turnover Ratio

A low inventory turnover ratio can be a difficult situation. There are several ways to go about increasing this number. First, you can offer promotions to get rid of the existing inventory by growing sales at a lower cost. You can also use this opportunity to drive customer loyalty, improve word-of-mouth marketing, and reach a large customer base.

Next, you can buy less stock and audit more often than purchasing a stock for an extended period and storing it. If the inventory is fast-moving, you can re-stock products, and if it is not, you can just get rid of the existing stock. 

Signup With a 3PL Fulfillment Provider

A great way to maintain the ideal inventory turnover ratio is to get started with 3PL fulfillment providers like Shiprocket Fulfillment. 

Shiprocket Fulfillment has thoroughly equipped fulfillment centers located across the country in eight major cities. These fulfillment centers share regular reports from their warehouse management systems and give you a detailed analysis of your inventory. Soon, we will also be providing you an accurate demand forecast with the help of predictive analysis. With the help of comprehensive data at your fingertips, you will keep track of your inventory and work better. 

Conclusion

Inventory turnover ratio is an important metric to define your sales success, fulfillment supply chain operations, inventory management efforts, etc. We hope this blog helped make you understand how to calculate the inventory turnover ratio and apply it in your daily business operations. 

Shiprocket Fulfillment features
July 20, 2021 by Srishti Arora

5 min read

What is Work In Progress Inventory: Everything You Need to Know

July 8, 2021 by Rashi Sood - 5 min read

All the products manufactured in this world are made of several other components. These other components can also be manufactured from other components. For example, think of a car. It looks like a whole product but if you actually look at it, it has machines, seats, mirrors, and a lot of other components. These components themselves are made of other components.

Work in progress inventory

The cost of the products depends on what was required to make it, including raw material, labor, and overhead costs, and this is what Work-in-Progress is. Thus, WIP or Work-in-progress inventory is crucial for a business.

In this blog, we shall discuss, what is Work-in-progress inventory, the different types of inventory, and the difference between work-in-progress and work-in-process.

What is the Work-In-Progress Inventory?

WIP inventory is used to refer to the partly finished material. Essentially, it is the cost of the unfinished products currently in production. It is an asset for a company and is mentioned in the balance sheet as well. For a business, that sells customized or hand-made products, WIP inventory becomes all the way more important than a business that purchases a finished product from a manufacturer.

WIP inventory, raw materials, and finished goods are different from each other. To help you understand the difference, we have discussed the types of inventory.

Types of Inventory

Work in progress inventory

Understanding different types of inventory are crucial to make sound financial and production choices. There are four main types of inventory, namely:

Raw Material

Raw materials are the materials that are required to turn the inventory into the final product. For example, nuts and bolts might be required to make the final product, i.e., a machine. Or if you sell food, vegetables or spices can be a raw material for you.

WIP – Work-In-Progress

Work-in-progress is the inventory that is being worked on. If we talk about cost-wise, WIP includes not just the raw material but the labor and overhead cost as well. The inventory under this category is the part of something bigger – the end-product. If you sell medicines, their packaging can be work-in-progress. You cannot sell medicines without proper packaging.

Finished Goods

Finished goods are the final product. It is the most straightforward of all the types of inventories. It the inventory that you put on the shelf in your shop to sell, that you put on sale on your website. They are the finished goods that are ready to sell. Simply put, any product or inventory that is ready to be sold comes under this category.

Notably, in the above-discussed example, nuts and bolts can be a raw material for a business that is selling machines. But they can also be the final products for a business that sells nuts and bolts only. It just depends on the business that is selling the products.

MRO / Overhaul

MRO means maintenance, repair, and operating supplies. Many people don’t consider MRO inventory as a type of inventory. MRO is the inventory that is required to assemble, finish, and sell the finished products. So, gloves required to paint the product can be considered MRO. Or MRO can be also pens, papers, and highlighters required in an office.

Important Terms Related to WIP Inventory

Work in progress inventory

It is a bit complex procedure to determine the cost of WIP inventory. Before trying to evaluate their value, it is important that you understand a few terms related to WIP inventory:

Beginning WIP Cost

The beginning WIP inventory cost is the cost of the assets (WIP inventory) in the previous accounting section of the balance sheet. To calculate it, you need to determine the value of the WIP inventory in the previous period and carry it forward as assets in the financial year.

Manufacturing Process Costs

The manufacturing process cost is associated with the cost incurred while manufacturing a finished product. This includes overhead costs, raw material, and labor. The higher the WIP inventory is used in the manufacturing process, the higher the value is of raw material and labor. This simply affects the total cost of manufactured goods. Its formula is:

Raw Material + Labor Cost + Overhead Cost = Manufacturing Cost

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Cost of Manufactured Goods

As discussed above, the cost of manufacturing includes the cost of raw material, labor, and overhead cost. It is the cost incurred to manufacture the final product. COMG is required to calculate the value of WIP inventory. So, the COMG is the addition of manufacturing cost and beginning WIP inventory cost less ending WIP inventory cost. The formula for it is:

Manufacturing Cost + Beginning WIP Inventory – Ending WIP Inventory = COMG

Work In Progress VS Work In Process

Many people refer to both the terms interchangeably, but knowing the differentiation is necessary. Work in progress inventory, as discussed above, is the cost of unfinished inventory. It includes the cost of raw material, labor, and overhead. The WIP cost is listed under the assets in the balance sheet at the end of the financial year.

On the other hand, work in the process represents the partially completed goods. It is the inventory that is incomplete and still in progress. Work in process is essentially referred to as the products that move from raw material to finished product, they are the unmanufactured products in progress.

Shiprocket Fulfillment features
July 8, 2021 by Rashi Sood

5 min read

What is Minimum Order Quantity (MOQ) & How to Calculate it for Your eCommerce Business?

June 11, 2021 by Srishti Arora - 5 min read

In any eCommerce business, inventory is your biggest asset. You cannot run a business without it and how well you manage your inventory determines your success rate. Therefore, you need to focus on the minor aspects of inventory management to ensure that you do not exhaust your resources by buying, storing, and managing them alone. 

Hence, activities like forecasting demand and auditing your stock become an integral part of your inventory management plan, and you must do them diligently if you want to succeed. One such necessary process is the sourcing or buying of products from suppliers. Most D2C businesses in India rely on sourcing products from third-party suppliers and then sell them under their brand name. Therefore, you must determine the minimum order quantity for every SKU. If not, you will either be buying too little or too much. In both scenarios, you are at a loss. Hence, let’s go through this brief blog to understand the minimum order quantity and calculate it for your business. 

What is Minimum Order Quantity?

Minimum order quantity refers to the lowest number of units required to be purchased at a given time.

For e-commerce businesses, minimum order quantity can refer to the supplier’s number of products or purchases. It can be used in the context of the minimum order a buyer can purchase from your store. Usually, the former is more focused on. 

Let’s look at an example to understand it better. If you sell 10 varieties of socks on your website, you might be sourcing them from somewhere. Minimum order quantity refers to the fewest number of socks you purchase from your supplier for every variety. The MOQ can be different for every type. 

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Why is Minimum Order Quantity Important?

Minimum order quantity is vital for your business as you need to own only a limited amount of inventory at all times. If you own excess inventory, it can lead to an unnecessary accumulation of dead stock for which you might need to pay extra to maintain or sell-off. If you have less inventory, you will face the situation of a stockout where you might not have enough to sell to your customers. 

Both the scenarios are disappointing as they leave you with a lot of stress. They also impacted the overall supply chain negatively as you have to either source products rapidly or make space for already existing ones.

In such cases, a pre-decided or forecasted minimum order quantity helps procure the items so that you do not have to guess or predict the number you buy from your supplier. 

Let’s have a look at how you can calculate the minimum order quantity for your inventory. 

How is Minimum Order Quantity Calculated?

Forecast Demand

The first step in calculating the minimum order quantity is by calculating the demand. Demand forecasting plays a significant role in inventory management. It helps you consider factors like the product type, seasonality, competition, etc., when estimating how many SKUs or units you might sell.

Such rich insights can help you predict the number of SKUs you might need in a month or six months. 

The minimum order quantity that you procure from your buyer should match the number that you sell. 3PL fulfillment providers like Shiprocket Fulfillment provide you with a robust platform that can help you forecast demand efficiently. 

Calculate Break-Even Point

The next step is by calculating the breakeven point for your business. This will help you understand where your industry is heading and how many SKUs you might need to procure from your manufacturer if you want to continue with the product you are selling. 

This number can only be calculated after a few transactions have been done and recover the customer acquisition cost. 

Analyze Holding Costs

Moving forward, you need to understand the holding costs involved. Holding cost refers to the total amount you spent in storing all of your inventory, and it must not be costly. 

Since some products are more expensive than others, it is beneficial to ensure they are not stored in your inventory for long. 

An ABC inventory management technique can help manage varied search types of products. 

Determine MOQ

Lastly, you can decide your MOQ by keeping in mind the factors like holding cost, breakeven point, and the demand forecast. 

Conclusion

Minimum order quantities are a problematic term when it comes to purchasing. However, it is relatively short-term to deal with when you’re selling, as you call the shots. Decide on a suitable MOQ for selling your products based on the previous sales data, and do not go overboard with keeping your MOQ high. An analysis is critical, and you must derive your conclusions from data to prepare well for the incoming demand.

Shiprocket Fulfillment features
June 11, 2021 by Srishti Arora