As any eCommerce vendor will tell you, it’s hardly hyperbole to state that Q4 is crunch time. It can literally make or break your business.
Picture the average seller on Amazon. They might enjoy moderate to successful sales. They might have a well-defined inventory management system in place nine months out of the year. But when Q4 comes around?
Orders come flying in at an unprecedented rate. They may have already anticipated the surge in demand, and subsequently ensured they have sufficient stock in place. But in inventory management, anything goes. During Q4, Murphy’s law holds true: anything can and will go wrong. And you the only thing you can expect from logistics is the unexpected.
The Value Of 3PLs
Third party logistics, or 3PLs, are a key component for sellers during Q4 and beyond. They take the leg work and second guessing out of your supply chain management and allow you to focus more on product development and forecasting. But 3PLs aren’t simply a question of warehousing and transportation. They’re defined by one thing and one thing only: effective order fulfillment—the most critical element in eCommerce customer experience.
Sadly, there’s a certain question of distancing with many 3PL providers which can impact your customer service—as well as your subsequent reputation on Amazon. Under normal circumstances, you may have a predictable and consistent supply chain management solution already in place. But Q4 is never predictable. A surge in orders can generally be anticipated by most vendors. The good news is that most 3PLs are flexible and modernized to meet high customer demand, offering integrated services that can be customized to suit both smaller vendors as well as large brand manufacturers.
The bad news? 2020 has been anything but predictable.
What You Can Expect From Logistics In 2020
As early as April of this year, reports indicated that global eCommerce revenue increased by 37 percent compared to 2019, with orders increasing by 54 percent. The US alone saw a 44 percent increase in eCommerce sales during Q2 of 2020, with Q4 of 2019 seeing a 16 percent increase compared to 2018. What does this mean for Amazon sellers using FBA services?
It’s typical for Amazon warehouses to start backing up between October and November in preparation for Q4. But as early as May, substantial fulfillment delays were reported in spite of Amazon’s decision to start accepting orders of nonessential items after March’s temporary pause. To further add to this frustration, Amazon recently announced changes in FBA policies which limits sellers with an Inventory Performance Index of less than 500 to restocking no more than 200 units at a time.
The result? A reported increase in negative reviews for Amazon sellers by over 11 percent.
It’s been estimated that some 29 percent of sellers on Amazon use both FBA and FBM services, and it’s not unrealistic to expect that number will likely increase as Q4 approaches. While this might seem to defeat the purpose of using a 3PL, FBM services offer you a certain amount of control over customer service; particularly if your inventory management solutions are secure and predictable. However, there are a few practices to consider implementing for Q4 without relying on first party fulfillment.
Minimize Your Available SKUs
Supply doesn’t always match customer demand, even during Q4. If you’re already limited in your inventory storage, minimizing your SKUs allows you to send only your most in-demand products into fulfillment and allows you an accurate way of gauging an active inventory lead time.
Use Alternative 3PL Providers
Using an alternative 3PL provider means having your products listed as an FBM. While in some cases this can affect your sales, the impact usually isn’t too dramatic; particularly if it comes at a price point advantage. More importantly, fees for many alternative 3PL providers are straightforward and transparent compared to FBA. While you may have greater control and flexibility with an alternative 3PL provider, you may not necessarily receive the full scale service you might associate with FBA—particularly if you’re used to a high volume of international orders.
Audit and Review Your Shipping Options
If you’re not expecting a large amount of shipments, small parcel deliveries to Amazon are available. Amazon provides you with two specific options: using a partnered carrier (200 box limits per shipment) or a non-partnered carrier (500 box limits per shipment.) Both come at variable prices depending on both the size and carrier, but both can be slightly more expensive than using less than truckload (LTL) or full truckload (FTL) services. However, small parcel deliveries generally tend to be received by Amazon much faster than LTL and FTL services. Keep in mind that all carriers must be registered with Amazon before they will accept your shipments.
Update Your Listings To Indicate Availability
This should seem obvious; but many sellers assume that inventory management in Q4 is normal. It’s not under any circumstances. And the spike in eCommerce in 2020 means it will only get more complicated. Audit your listings as stock decreases and revise them accordingly. Customers frequently expect business as usual during Q4 and rarely take into account the complexities sellers face managing inventory on Amazon. Don’t risk a negative review because of the rush. And above all?
Don’t get caught in the rush.
Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.