Jamie C. Winters, Author at Falcon Fulfillment

Inventory Costs Explained and Mistakes to Avoid

Inventory costs are one of the assets and liabilities a company has on its balance sheet. Managing inventory costs is crucial for success. Managing inventory is a complex process that involves multiple vendors, suppliers, fees, and reports. Striking the delicate balance of ordering and storing the right amount of inventory is tricky. Companies don’t want to under-order but they don’t want to over-order. Establishing what to track and when to make adjustments can confuse companies. This article will explain the main inventory costs and common mistakes companies should avoid when creating an inventory management process.

Inventory Costs Explained – Categories

What are the main costs associated with inventory? There are four primary categories of expenses related to inventory management.

Purchasing Costs

Purchasing costs are the price paid to a supplier or vendor for a product. If you purchase 100 vintage-style handbags at $15 per item, your purchase cost is $1500. This line item does not include shipping, handling, taxes, or insurance. Some companies calculate the purchase cost within the ordering cost category. It depends on personal preference and the level of detail you desire.

Ordering Costs

Ordering costs typically encompass labor, fees, and transportation involved in shipping your product from the manufacturer to your storage facility. Although these expenses typically represent minor amounts compared to purchase costs, inaccurate measurement can lead to their rapid accumulation.

Carrying Costs

Carrying costs, also known as “holding costs,” refer to fees associated with maintaining inventory in stock. This category encompasses various expenses, ranging from employee wages to warehouse rents. Carrying costs vary significantly depending on the type of product being sold and managed. Particularly, products with a limited shelf-life or requiring consistent handling, movement, and restocking tend to incur higher expenses.

Stockout Costs

Stockout costs encompass any expenses related to revenue loss due to inventory shortages. These costs can accumulate for various reasons, such as failing to update your in-store or online inventory management system before running out of a product. When a customer purchases an unavailable product, it triggers a refund process, potentially resulting in a lost sale if a suitable alternative cannot be offered. Additionally, stockouts lead to lost sales, as many consumers turn to competitors when a product is listed as “out-of-stock,” representing a missed opportunity cost. Fortunately, many of these expenses can be avoided or minimized. Companies can increase their supply chain resilience by partnering with a competent 3PL.

Inventory Costs Explained – What to Track

Storage Costs

Storage costs include repetitive payments related to inventory storage management. These include warehouse rents, heating and cooling costs, lighting, security, and employee wages. Any fee for maintaining a clean, organized, and pest-free space would be considered a storage cost. Holding onto inventory that is slow-moving or considered deadstock increases storage costs quickly.

Capital Costs

Capital costs are typically the largest upfront investment regarding inventory costs. They are a one-time fee required to physically store and carry inventory to the designated storage facility. Capital costs can include land purchases, building or buying a warehouse, and sourcing inventory equipment (e.g., forklifts, pallets, storage racks/shelves, etc.).

Damage & Obsolescence

Tracking inventory costs closely is crucial as items often get banged, bruised, and battered during the shipping and receiving process. Recognizing patterns of damage enables corrective action; otherwise, it’s akin to wasting money. Similarly, obsolete items represent money left on the shelf, as businesses continue to bear the costs of unsold and outdated products on their balance sheets.

Theft and Fraud

Solving theft and fraud related to inventory costs necessitates meticulous tracking and the use of precise inventory management systems. While it won’t catch every criminal that threatens the bottom line, it will undoubtedly show where items are going missing.

Taxes and Insurance

“There is nothing certain in life but death and taxes.” (Paraphrase Ben Franklin) Inventory costs of taxes and insurance are determined by many factors, including but not limited to; types of product, location, and local ordinances related to product distribution. It is best to consult a lawyer regarding the nuances and costs associated with this category. Alternatively, partnering with a 3PL with extensive experience in your industry can typically provide introductions to legal counsel and help ballpark costings where appropriate.

Inventory Costs Explained – Mistake to Avoid

Understocking

There is nothing worse than missing out on a sale because of stockouts. Proper inventory management systems and tracking can help forecast accurately and avoid losing sales. It is more important to overstock than understock. For one, you miss a sale. Second, you can lose a customer permanently. Third, you have to issue refunds which costs you additional money in employee wages and customer service strain. Include inventory management in product forecasting to help avoid understocking whenever possible.

Failing to Include Inventory Management in Forecasting Sales

The entire process of managing inventory is complicated. Including inventory management in forecasting will improve accuracy and minimize overstock or understock situations. Inventory management data will include product levels, cycles and highlight stock value categories. This helps businesses forecast not based on sales numbers alone but the overall health and movement of products through the inventory management process.

Launching a Product and Retroactively Managing Inventory

Launching the business and then getting around to managing inventory can be tempting. This is a significant mistake because by the time inventory management is a need; it has become a problem. Implementing inventory management before a product launch can help with forecasting, restocking timelines, and reducing stockouts. Accurate sales data, stock levels, and performance are readily available by preparing to track inventory management from the beginning.

Always Buying in Bulk

It is important to buy what you need when you need it. Sometimes bulk purchasing is ideal. Other times, it is a gamble. It might be tempting to buy 1000 units of your most popular product, but it could cost you if that item trends out or becomes obsolete before you can sell them.

Beginner’s Guide to Third-Party Logistics (3PL)

The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is integral to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.

If you would like to learn more about how Falcon can help streamline your inventory costs, get in touch with one of our agents today.

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by Jamie C. Winters

Shipping Dunnage Types: Ensuring Safe Transit for Your Products

Within the logistics systems, an often ignored yet important term emerges – dunnage. This seemingly small element plays a significant role in fulfillment and shipping. Explore the diverse shipping dunnage types, learning its significance, exploring its role as a key element for shippers, and seeing the array of types protecting cargo during its journey from seller to buyer.

What is Dunnage? Shipping Dunnage Types

To the uninitiated, dunnage may seem an obscure term, but to those in the shipping trenches, it’s a familiar and critical ally. At its core, dunnage represents the safety padding materials that play the role of guardians, ensuring the safe travel of goods from point A to B. From the common bubble wrap to the industrial grade solid plastics, dunnage assumes various forms, each with the single mission of securing items in the unpredictable and often hectic environment of transit.

Why Shippers Use Dunnage

Picture this – a package navigating its way through sorting facilities, trucks, ships, and an array of vehicles, subjected to environmental rigors that can test the resilience of even the sturdiest items. This is where dunnage steps into the spotlight, offering a trifecta of benefits that make it an indispensable component of the shipping arsenal.

Damage Protection: Dunnage, often inexpensive, becomes the unsung hero in safeguarding valuable, fragile, and loose items during their turbulent journey.

Moisture Protection: As products traverse diverse climates, the menace of moisture lurks. Dunnage, when wielded right, becomes the shield that protects valuable electronics and sensitive equipment from potential harm.

Shock Absorption: The journey is fraught with challenges – sliding, dropping, squeezing, collisions – and each poses a threat to the integrity of shipped items. Dunnage, strategically placed, transforms into a reliable shock absorber, the last line of defense against the perils of transit.

Shipping Dunnage Types

Understanding the diverse array of materials that can serve as dunnage is crucial for tailoring shipping solutions to the unique needs of various products. Here, we embark on a journey through the common types that form the backbone of secure shipping:

Solid Plastics: Reserved for high-value, industrial shipping, solid plastics emerge as the vanguard against potential damage, albeit at a higher cost.

Bubble Wrap: Versatile, reusable, and a stalwart defender of fragile items, bubble wrap finds its niche as a cushioning agent against impacts.

Wood: Crafting barriers between items, wood becomes the chosen ally for heavy goods that demand a robust shield.

Air Pillows: In the intricate dance of filling gaps and preventing unwanted shifts, air pillows emerge as a practical solution for securing loose spaces in packages.

Kraft Paper: In the realm of cost-effectiveness and eco-friendliness, crinkled kraft paper takes center stage, offering a versatile and reusable option.

Foam: Precision is the name of the game when it comes to padding electronics, medical equipment, and fragile items, making foam a go-to choice for impact protection.

Steel: When the stakes are high, and products tip the scales in weight, steel emerges as a premium option, ensuring the safety of heavier items at an elevated cost.

Corrugated Paper: Marrying technology with functionality, corrugated paper stands as a testament to versatility, moisture protection, and sustainability.

Custom Dunnage Solutions: Uniqueness demands bespoke solutions, and custom dunnage steps in to craft protection tailored to specific dimensions.

Shipping Dunnage Types Pivotal Role in E-Commerce: Safeguarding Shipments and Minimizing Returns

In the expansive domain of freight shippers, dunnage finds relevance within the sphere of e-commerce. Embracing an array of options such as bubble wrap, crinkle paper, air pillows, and recycled paper, the diverse range of dunnage becomes an essential component in delicately averting damage and reducing the likelihood of customer returns.

Beginner’s Guide to Third-Party Logistics (3PL)

The world of e-commerce is always changing, understanding the roll of Third-Party Logistics is integral to keeping up. This beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.

Falcon Fulfillment is your reliable partner in the logistics journey, providing security and unmatched service. Your product’s safety is our priority, ensuring a smooth delivery to your customers’ hands.

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by Jamie C. Winters

6 Signs It Is Time to Outsource Fulfillment

Running a successful e-commerce business is demanding. It requires a lot of time, money, and expertise. Owners are pulled in a thousand directions daily. They manage product development, marketing, order fulfillment, customer service, staffing, and sales, all while remaining focused on future growth opportunities. It’s like running a three-ring circus, only with fewer furry employees. Order fulfillment is a crucial aspect of running a successful e-commerce business. There is a tipping point where order fulfillment can make or break profitability. Here are six signs it might be time to outsource fulfillment.

You Can No Longer Focus on Core Competencies

Focusing on your business’s core competencies has helped you gain success thus far. Continuing to hone and focus on what your company does best will ensure it continues to grow and thrive. There is a business idea that states, “Work on it, not just in it.” Often, a business owner builds the company around their ability to get things done. This works when the business is small but very quickly will bottleneck growth. When your time and attention are being hijacked by order fulfillment more than 20%, you might want to consider outsourcing fulfillment. A 3PL can give you back the headspace you need to refocus on what matters most to you and your customers.

Your Team Cannot Handle the Demand

Orders are rolling in at rates your team is struggling to keep up with. Does this scenario sound familiar? “Everyone is working around the clock to fulfill orders, yet they are getting increasingly delayed. I’m even pulling in admin, sales, and marketing staff to pack and ship product.” You might be laughing, thinking that would never happen to you until your product gets featured on Fixer Upper, or you missed the window to Prepare for Peak. Engaging with a fulfillment company gives you access to an expanded and expert fulfillment team.

You Have Outgrown Your Warehouse Space

It’s challenging to stage receiving and fulfillment when you don’t have the space required to pick, pack, store, and ship products. This is especially difficult when you experience significant fluctuations in order volume. Holiday sales might fill your warehouse capacity and be virtually empty by January. You can utilize flexible warehousing to ebb and flow when you outsource fulfillment.

Order Errors are Increasing

Order errors are apt to happen, but they become more and more common when staff and management are stretched too thin. Whether the mistakes stem from a lack of time, staffing, space, or technology failures, they are costly. A rise in unhappy customers is directly related to order accuracy and promptness. One bad review will cost you 1 in every ten potential customers. For example, if you receive 300 visitors to your online store daily, one lousy review costs you 30 customers per day. Can you afford that loss? 3PL fulfillment teams can provide almost 100% order accuracy, and they can offer fast shipping.

You Know You are Paying Too Much for Shipping

Shipping is expensive. Leveraging every avenue to ensure you get the lowest shipping rates is good business practice. 3PL order fulfillment companies have preferred high-volume discounts with shipping carriers. They pass along those preferred rates to clients. If you are paying the same or more for shipping as your competitors, it might be time to outsource your fulfillment.

You Want to Expand Internationally

Expanding your business to a new country is a huge undertaking. Expert knowledge is helpful whether you are launching in a neighboring country or taking your business worldwide. Fulfillment companies know how to navigate international customs, export and import law, and other complicated areas. They have managed fulfillment for others and can help create and streamline your process to have the most success in your new market.

Beginner’s Guide to Third-Party Logistics (3PL)

Talk to one of our agents today to see how we can help you scale.

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by Jamie C. Winters

Top Digital Commerce Skills to Master for E-commerce Success

Building Key Skills for Long-Term Digital Commerce Success

The rapid evolution of digital commerce has dramatically shifted how businesses operate, from product marketing to fulfillment services and beyond. While technology, platforms, and consumer behavior change quickly, one core truth remains — businesses need highly skilled teams to compete and succeed. Mastering digital commerce skills is critical for companies aiming to grow revenue, improve operational efficiency, and stay ahead in an increasingly competitive online landscape.

Let’s break down the essential digital commerce skills modern businesses need, and how they tie into broader operations like third-party logistics (3PL), e-commerce fulfillment, and supply chain management. Focusing on these capabilities will ensure your teams are not only ready for today’s challenges but are also prepared to adapt to future trends.

1. Strategic and Analytical Thinking

At the foundation of digital commerce success lies strategic thinking and data literacy. Without clear strategies, even the best fulfillment services or order fulfillment solutions will struggle to meet customer expectations and drive long-term profitability.

Developing Strategic Mindsets

Digital commerce leaders must hone their ability to analyze data, interpret market trends, and align their strategies with evolving customer demands. This involves skills like:

Defining omnichannel strategies for multi-channel fulfillment.
Conducting fulfillment cost analysis to optimize budget allocation.
Using inventory forecasting to align supply with demand.

Since order fulfillment metrics and reporting provide crucial performance insights, teams need both the tools and analytical know-how to evaluate their performance objectively. Moreover, incorporating inventory tracking software ensures real-time visibility into inventory levels, reducing costly errors.

Data-Driven Decision Making

Data fuels digital commerce strategies. From tracking customer behavior to optimizing shipping and delivery, the ability to analyze data and make informed decisions is invaluable. Businesses should leverage:

Cloud-based warehouse management systems (WMS) to collect and interpret warehouse data.
Order tracking and management systems to monitor the full lifecycle of customer orders.
Transportation management systems (TMS) to analyze and optimize carrier selection and management.

By combining strategic thinking with analytical capabilities, teams can create more resilient operations and improve order accuracy and quality control.

2. Fulfillment and Logistics Expertise

As customer expectations for fast, affordable delivery continue to rise, expertise in warehousing and distribution, last-mile delivery, and cross-docking is no longer optional. These operational digital commerce skills directly impact customer satisfaction and profit margins.

Mastering Fulfillment Operations

Efficient e-commerce fulfillment requires a deep understanding of:

Vendor-managed inventory (VMI) for improved supply chain efficiency.
Reverse logistics for seamless returns processing.
Kitting and assembly to enhance order customization and value.
Bulk shipping strategies to minimize per-unit shipping costs.

Digital commerce teams must also understand packaging optimization to balance protection and cost, particularly for international shipping and import/export orders. These digital commerce skills enable businesses to compete on both price and service.

Seamless Integration with Fulfillment Partners

Since many brands rely on third-party logistics (3PL) providers to handle fulfillment at scale, businesses need to develop expertise in 3PL technology solutions. Understanding how to leverage fulfillment centers and freight consolidation helps companies maximize efficiency while maintaining visibility into inventory and order status.

Collaborating with a 3PL also requires familiarity with:

Customs brokerage for cross-border shipments.
Freight rate negotiation to secure competitive rates.
Freight audit and payment services to validate transportation costs.

These operational digital commerce skills ensure smoother collaboration between internal teams and external partners, ultimately driving better fulfillment outcomes.

3. Future-Focused Skills for Long-Term Growth

To stay competitive, businesses need to develop skills that go beyond the basics. These future-focused digital commerce skills will ensure your teams remain agile and innovative as the industry evolves.

Enhancing Customer-Centric Capabilities

Customers now expect hyper-personalized, seamless experiences across all channels. This requires developing skills like:

Personalization strategy development.
E-commerce integration services expertise to connect platforms.
Expertise in order splitting and routing to optimize multi-warehouse fulfillment.

Customer satisfaction also hinges on delivery speed and transparency. That’s why teams must develop expertise in:

Same-day and next-day delivery coordination.
Real-time order tracking and management for improved communication.

Leveraging Automation and Technology

Automation is increasingly crucial to driving efficiency in digital commerce skills development. Skills related to warehouse automation, inventory cycle counts, and demand planning allow companies to work smarter, not harder. These skills reduce reliance on manual processes while improving accuracy and speed.

Additionally, a forward-thinking team should understand:

Scalable fulfillment solutions for growth-stage flexibility.
Advanced use of order fulfillment metrics and reporting to identify operational gaps.
Emerging tech trends like AI-driven inventory forecasting.

Bringing It All Together

Ultimately, success in digital commerce relies on blending strategic, operational, and forward-looking skills into a cohesive workforce strategy. By investing in digital commerce skills development, businesses enhance their ability to adapt to change, meet customer expectations, and achieve sustained growth.

Moreover, effective skill-building doesn’t happen in isolation. Strong collaboration between marketing, logistics, and fulfillment teams ensures that third-party logistics (3PL) partnerships, fulfillment services, and internal capabilities align to create seamless customer experiences.

Continuous Skill Development

Because digital commerce will only grow more complex, ongoing training and development programs are essential. Whether it’s mastering inventory tracking software or understanding the nuances of reverse logistics, every new skill adds resilience and flexibility to your operations.

In conclusion, companies that prioritize building digital commerce skills—spanning strategic planning, fulfillment operations, and future-readiness—are better positioned to thrive in today’s fast-paced e-commerce environment. Combining these skills with strong fulfillment and supply chain optimization practices creates a foundation for sustained success.

Beginner’s Guide to Third-Party Logistics (3PL)

Reach out to Falcon Fulfillment for help building a supply chain supported by skilled teams and quality partners.

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by Jamie C. Winters

Quality Control in Supplement Manufacturing With the Right Partner

Quality Control in Supplement Manufacturing: Choosing the Right Partner

As economic instability leads supplement consumers to intensely evaluate purchases, brands must align with contract manufacturers boasting ironclad quality control in supplement manufacturing. Per data from market research firm NEXT, over 50% of consumers maintain strong values convictions, “willing to pay more for ethically and responsibly-made products.” However, with ongoing supply chain turmoil ratcheting up costs, consumers also demand affordability and value. Contract manufacturers excelling at stringent quality assurance (QA) and quality control (QC) protocols allow brands to deliver premium quality without sacrificing accessibility.

Rigorously Vetting QA/QC Protocols

Validating contract manufacturers on quality measures begins with reviewing both external and internal benchmarks. Externally, certifications from respected third-party auditors like NSF International, UL-STR, and the Natural Products Association validate foundational best practices. As FDA regulatory scrutiny accelerates across the supplement industry, checking for spotless facility inspection records and no serious 483 observations or warning letters gives added confidence in quality infrastructure.

Internally, key performance indicators (KPIs) reveal more granular adherence to standards. Brands must scrutinize order fulfillment accuracy rates, inventory cycle counting precision before shipments, first pass quality yield percentages, recall readiness drill success rates, and more. By regularly monitoring such manufacturing, warehousing and distribution metrics, brands ascertain whether technologies, automated equipment, and cloud-based platforms effectively support standardized quality control end-to-end.

Sustainability Commitments Uphold Brand Reputation

In supplier selection processes today, quality assurance capabilities cannot be divorced from ecological values. Per Packaging Digest research, over 80% of consumers now review sustainability claims before purchases. Moreover, over 50% of boomers and millennials confirm they are willing to pay more for responsibly-sourced components, eco-friendly manufacturing practices and minimalist packaging reflecting corporate commitments to Circular Economy principles. Contract manufacturers like Soft Gel Technologies advancing solvent recycling technology, water recovery systems and innovative low waste packaging design align with both emerging regulations and consumer preferences – keeping brands a step ahead.

Vetting Supply Chain and Logistics Experience

In choosing a manufacturing partner equipped for growth amid economic uncertainty, Soft Gel CFO Hiroshi Kishimoto explains, “pay close attention to the quality unit and how decision-making around standards is implemented for consistency across multiple facilities.” Whether addressing demand surges or materials shortages, the most resilient contract manufacturers proactively invest in digitized ecosystems providing end-to-end supply chain visibility – the foundational data layer informing agile responses using predictive analytics.

Seasoned partners constantly refine core safety protocols, upgrade automated controls and traceability infrastructure, install the latest high-precision equipment, implement cybersecurity controls and refine business continuity programs. Continually evaluating potential failure points through rigorous quality risk assessments. This fixation on incrementally identifying and closing process vulnerabilities before finished products are impacted spurs continuous improvement imperative for establishing trust with scrutinizing consumers.

Cultivating an End-to-End Culture of Quality

To deliver finished supplements warranting premium price tags, a commitment to quality must permeate every link in the supply chain. Firstly, standards for carriers, freight handlers and 3PL partners should mandate real-time shipment tracking across legible chain-of-custody documentation. Additionally, formal contracts outline acceptable facility audit scheduling and codify compliance with published quality guidelines. Without diligent vetting and training reinforcement of outsourced production, packaging, transportation and logistics teams, preventable errors risk compromising integrity-driven brands. Finally, proactive relationship management procedures and open communication channels allow manufacturers to swiftly address any emerging component, raw material or packaging quality issues observed.

Proactive relationship management procedures and open communication channels allow manufacturers to swiftly address any emerging component, raw material or packaging quality issues observed. Moreover, integrating supply chain management best practices with steadfast quality culture builds reputations and consumer loyalty that withstand the test of time. Overall, by combining proactive vendor relationships with integration of quality across supply chain partners, manufacturers can foster enduring bonds of trust with end consumers that are unaffected by temporary market turbulence.

Key Takeaways on Quality Control in Supplement Manufacturing

As scrutiny of supplement purchases further intensifies into 2023, integrity-focused brands should align with contract manufacturing partners delivering:

Independently-certified QA/QC protocols confirming cGMP rigor
Supply chain transparency established through blockchain or other track and trace analytics
Proven expertise traversing volatile market environments through clarity at scale
Environmental stewardship transcending what regulations mandate
Future-proofed supply chain agility preventing disruptions

Beginner’s Guide to Third-Party Logistics (3PL)

Reach out to Falcon Fulfillment for help finding quality partners for your supply chain.

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by Jamie C. Winters

4 Ways to Maximize Your 3PL Partnership

Maximize Your Partnership With Your 3PL

E-commerce brands today rely heavily on Third-Party Logistics (3PL) providers for scalable order fulfillment solutions. As your operations grow, choosing the right 3PL partner is critical for success.

A maximized 3PL partnership allows you to tap into the 3PL’s expertise in fulfillment services, warehousing and distribution, inventory management, and supply chain optimization. This lifts a heavy operational burden so you can focus on sales and marketing.

But how exactly can you maximize the 3PL partnership for peak performance? Here are 4 key ways:

1. Align Goals and Create Transparency

Getting alignment on goals, expectations and processes is crucial upfront. Prioritize open communication channels right from the start.

Provide visibility into your sales forecasts, inventory needs, and growth projections. In return, get clarity on the 3PL’s fulfillment capabilities, warehouse locations, automation and technology infrastructure.

Setting defined SLAs (service level agreements) and KPIs for order accuracy, on-time delivery, and inventory accuracy also creates accountability on both sides.

Ongoing transparency through fulfillment metrics and reporting ensures potential gaps are addressed proactively before they impact customers. This allows for scalable and flexible solutions as needed.

2. Leverage the 3PL’s Technology Capabilities

Advanced 3PL partners offer e-commerce brands far more than just bricks-and-mortar warehousing and shipping services today. Technology is a key component to consider when maximizing your 3PL partnership.

Look for providers that offer integrated inventory management platforms, Cloud-Based WMS, shipment consolidation tools, TMS integration and more.

The right technology stack gives you end-to-end visibility and timely insights to optimize inventory planning, demand forecasting, and omnichannel order orchestration across channels.

Automated inventory tracking and order management also minimize overhead while enabling faster fulfillment, fewer backorders and higher product availability.

This is especially valuable for e-commerce brands selling across multiple online stores, marketplaces and retail channels.

3. Treat the 3PL Like an Extension of Your Team

Think of a maximized 3PL partnership as essentially adding a fulfillment and supply chain management extension to your internal team.

Tap into their expertise through regular check-ins and strategy sessions. Seek input on inventory optimization, freight cost management, custom kitting solutions, daily order orchestration and more.

This approach allows you to benefit from capabilities and experience that are too expensive to build in-house during early growth stages.

You also gain flexibility to meet seasonal or unexpected order peaks seamlessly without lengthy talent acquisition and training. Enable your team to focus intensely on sales, marketing and product development instead.

4. Prioritize Agility and Continuous Improvement to Help Maximize 3PL Partnerships

Even with alignment and robust processes in place initially, brands and 3PLs must collaboratively adapt to evolving needs.

As you grow, fulfillment requirements may change needing solutions like white glove services, custom kitting, or a West Coast warehouse for faster nationwide delivery.

Be ready to add or modify services, integrate new technology, improve workflows and more. Keep an eye on fulfillment KPIs together and leverage root cause analysis for continuous improvement.

Also anticipate and collaborate on capacity planning for big sales events or new product launches. Quickly activating overflow supports and contingency plans prevents chaotic catch-up during peak seasons.

The Perfect 3PL Partner Powers E-commerce Growth

While this covers four major areas of focus, maximizing your 3PL simply requires seeing them as an integral strategic partner rather than just a vendor.

Approaching engagement with collaboration, transparency and leveraging their supply chain expertise at every step sets you up for optimized success as partners.

Beginner’s Guide to Third-Party Logistics (3PL)

Does your brand need scalable fulfillment solutions to achieve ambitious omnichannel commerce goals? Reach out to discuss your needs and we’ll provide solutions tailored to your unique requirements.

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by Jamie C. Winters

Advanced E-commerce Overstock Prevention Strategies

Optimizing Inventory: Advanced E-commerce Overstock Prevention Strategies

In e-commerce, mastering inventory management is king and is essential for sustained success. This comprehensive guide meticulously explores the complexities of preventing overstock. It delves into unraveling its root causes, understanding downsides, and introducing advanced strategies for prevention. Join us on this enlightening journey as we delve into Falcon Fulfillment’s innovative solutions, meticulously designed to revolutionize your approach to inventory management and optimize your business for unparalleled success.

Understanding Overstocking in E-commerce

Overstocking in e-commerce occurs when businesses accumulate surplus inventory beyond what they can effectively sell. This excess can lead to increased storage costs, reduced working capital, and potential losses from expired or obsolete goods. E-commerce overstock prevention strategies help when striking the right balance between having enough stock to meet demand and avoiding overstocking is crucial for sustained profitability.

There are several key reasons why overstocking tends to occur in e-commerce. Forecasting errors is a big one – if sales projections are too optimistic, companies will order or produce more inventory than they actually end up needing. Also, sudden changes in consumer demand or buying trends can catch businesses off-guard, leaving them overstocked with products that end up not selling well. Out-of-date data analytics that fail to capture seasonality, product cycles, and market dynamics can likewise contribute to distorted visibility and excess inventory building up across the supply chain over time.

The financial impacts of overstocking can be significant for e-commerce businesses. Excess inventory ties up substantial working capital in products that face diminishing value as they remain unsold. Continued warehousing and storage costs accumulate as well, shrinking profit margins with little revenue to show for it. For products with short lifecycles like electronics and apparel, old overstock faces rapid obsolescence in a matter of months. Overstocked perishable goods or fragile items also face expiration well before reaching customers. Plus, the opportunity cost of capital locked into stagnant stocks could otherwise be invested into more productive business expansion and growth initiatives.

Navigating the Downsides of Overstock

The repercussions of overstocking extend beyond financial impact. Increased storage costs, tied-up working capital, and potential loss of products with expiration dates contribute to a cascade of challenges. Furthermore, overstocking can lead to diminished cash flow over time as inventory sits unsold. Likewise, it limits a business’s agility to respond to shifts in consumer demand. Additionally, warehousing excess stock drives up operational costs. In the same way, short-lived goods like electronics or fashion items face rapid obsolescence when overstocked, creating impairment charges. Navigating this terrain successfully requires businesses to be vigilant in their inventory management practices. Specifically, they need real-time visibility into sales velocities and inventory positions across distribution centers. Similarly, accurate demand forecasting and production planning helps align stock levels with consumer needs. Through proactive monitoring and data analysis, companies can avoid the pitfalls of overstocking.

Defining the Threshold of “Too Much” Stock

Determining the optimal inventory levels for your business requires a nuanced approach. Firstly, by monitoring the inventory turnover rate at the SKU level, businesses gain a key indicator. Moreover, a low turnover rate signals overstocking, prompting the need for SKU rationalization to discontinue slow-moving items. Delve into the nuances of what constitutes “too much” stock, and explore how businesses can find their optimal balance.

Identifying the Root Causes of Overstocking

Five prominent reasons drive businesses to overstock inventory. Fear of stockouts, improper inventory management, seasonal demands, lack of demand forecasting, and overcompensating for supply chain issues each contribute to this challenge. Understanding these root causes is crucial to formulating effective prevention strategies.

Preventing Overstocking with Falcon Fulfillment: A Holistic Approach

Falcon Fulfillment’s e-commerce overstock prevention strategies offer a holistic approach to eliminating overstocking challenges. Through efficient fulfillment services and tech-enabled features, Falcon Fulfillment provides real-time visibility into inventory movement, advanced SKU tracking, and demand forecasting capabilities.

Proactive Demand Forecasting: Falcon Fulfillment’s software analyzes historical sales data and current inventory performance at the SKU level, enabling businesses to forecast future demand accurately. This proactive approach prevents both overstocking and understocking.

Real-time Inventory Insights: Gain access to real-time inventory tracking with Falcon Fulfillment, a crucial tool that empowers businesses to make informed decisions about reordering. This feature plays a pivotal role in ensuring that inventory levels align precisely with actual demand, thereby preventing unnecessary accumulation and optimizing operational efficiency.

Precision in Inventory Level Calculation: Falcon Fulfillment’s detailed reports on inventory costs and performance facilitate the calculation of safety stock availability and optimal inventory levels. This precision allows businesses to maintain a balanced inventory while considering production lead times.

Strategic Inventory Distribution: Leveraging a distributed network of fulfillment centers, Falcon Fulfillment enables businesses to store inventory strategically. This approach improves order fulfillment turnaround time, potentially increasing sales. The software aids in calculating optimal inventory distribution across different locations, mitigating the risk of overstocking.

Beginner’s Guide to Third-Party Logistics (3PL)

Embrace the future of inventory management with Falcon Fulfillment and ensure your business stays ahead in the competitive world of e-commerce.

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by Jamie C. Winters

7 Necessary E-commerce Integrations When Getting Started

7 necessary e-commerce integrations when getting started

There are many things to consider when setting up your online store. There are a few basic integrations that every e-commerce business needs. Here are 7 necessary e-commerce integrations when getting started.

Website Builder

Your website is your storefront. Furthermore, utilizing a website builder integration allows you to create a professional-looking website without hiring a custom developer and designer. Additionally, many website builders come with various applications, features, and integrations that help streamline sales and fulfillment. For example, some of e-commerce’s most popular website builders include Shopify, BigCommerce, Square, and Wix. Specifically, Shopify offers an easy-to-use platform with lots of built-in features for managing an online store. Likewise, BigCommerce provides powerful tools for creating an online presence and selling products. Ultimately, choosing the right website builder depends on your business’s specific needs and budget. But in general, these services make it simple to get an e-commerce store up and running quickly.

Payment Gateway

Making sales online requires a way to receive and refund money. Your payment gateway is a necessary e-commerce integration when getting started. There are many to choose from, and your website builder probably has a few preferred payment gateway options. To decide on which payment gateway integration is right for you, consider the following:

What payment methods do you need
Best ways to accept money
Available payment options (the more, the merrier)
Integrations available for your website
Customer data security
Cost-effectiveness
How chargebacks are handled
Customer support resources

Accounting Software

Every e-commerce CEO loves counting their cash from sales but loathes crunching numbers, especially when taxes get involved. You should consider accounting software a vital e-commerce integration when you start. Things to consider when you select an accounting solution are the number of users, regular updates (to stay current with best practices), an easy-to-use format, and getting started training, as well as automated billing, payments, and cash forecasting. Ensure your software can either provide your accountant with essential reporting or your accountant or their team can easily access it. Lastly, your accounting software must integrate easily with your e-commerce platform and payment processing systems.

Customer Support Software

When you start selling online, you must deal with unhappy or confused consumers. A robust customer support system will ensure customers get help and support immediately. Here are some of the best customer support software implementations in 2022, according to Snov.io.

Hubspot
Zendesk
Gorgias
Help Scout
LiveAgent

Inventory Management

If you have a product, you need a way to manage your inventory. Inventory management systems integrate seamlessly with your sales systems. Ensuring your stock is updated-to-date, accurate, and tracked in real-time will prevent stockouts, missed sales opportunities, and optimal ordering. A fulfillment service provider typically offers this type of software integration. Make sure they can integrate with your POS systems or they are willing to build custom APIs.

Shipping and Fulfillment Software

Customers want to know where their orders are at all times. The “Amazon Prime Effect” has led to consumers expecting orders delivered in 2-days or less. This isn’t always possible but keeping a consumer informed when their package will be delivered minimizes frustration when things take a bit longer. You can only offer this “satisfaction” boosting information if you have detailed, real-time shipping and fulfillment integrations. Your carrier can offer some level of insight, and if you work with a white-glove fulfillment team, they can provide this detail, and many will have a system that can notify customers on your behalf.

Beginner’s Guide to Third-Party Logistics (3PL)

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by Jamie C. Winters

US Shoppers Confront China Package Fees Crisis

US Shoppers Brace For China Package Fees

US shoppers are increasingly facing unexpected challenges when ordering products from overseas, particularly from China. Rising import costs and new regulatory measures have introduced what many refer to as “China Package Fees.” These additional charges are affecting consumer spending and disrupting international shipping and fulfillment processes. As businesses scramble to adapt, the entire logistics ecosystem undergoes significant changes. In this blog, we explore the origins of these fees, analyze their far-reaching implications, and examine how supply chain management experts respond. We also review trends in order fulfillment solutions, e-commerce fulfillment, and advanced inventory management techniques essential in today’s competitive market.

Rise of China Package Fees and Their Impact on Consumers

Understanding the New Fee Structure

Over recent months, policy changes and tariff adjustments have led to significant charges on packages from China. Firstly, third-party logistics (3PL) providers updated their processes to meet stricter customs regulations and enhanced customs brokerage practices. Furthermore, fulfillment services have experienced increased processing fees, while warehousing and distribution centers reassess cost structures. Consequently, order fulfillment solutions face pressure as e-commerce fulfillment operations struggle with profitability. In addition, inventory management and shipping and delivery systems are being revamped to meet updated standards. Businesses must now navigate complex supply chain management challenges, including last-mile delivery, cross-docking, and freight forwarding procedures. Ultimately, the traditional model of international shipping is evolving under the weight of escalating China Package Fees—truly transformative.

Real-Life Implications for Shoppers

American consumers have felt the impact of these fees firsthand. Many shoppers report that additional charges sometimes exceed the cost of the items they purchase. Moreover, small businesses relying on vendor-managed inventory (VMI) and dropshipping solutions face increased financial strain. Unexpected fees often result in order cancellations or returns, which complicate reverse logistics and disrupt order tracking and management systems. Consequently, companies are investing in same-day and next-day delivery options to mitigate delays, while exploring freight consolidation and value-added services (VAS) to reduce expenses. As a result, both consumers and businesses are rethinking their approaches to international shipping and import/export. This shift has made the challenge of China Package Fees more acute and unavoidable. These rising fees continue to pressure market strategies and consumer confidence, undeniably challenging for all parties.

Challenges in Global Shipping and Fulfillment

Complexities in Supply Chain Management

Today’s international shipping landscape is marked by increased complexity and rising costs. Businesses confront challenges managing both outbound and inbound logistics, especially with the burden of China Package Fees. Moreover, companies are adopting advanced inventory tracking software and implementing safety and security measures in warehousing to mitigate risks. Additionally, robust 3PL technology solutions along with strategic carrier selection and management practices are streamlining operations. Packaging optimization and freight rate negotiation have become essential for lowering expenses. Furthermore, freight audit and payment services are under review to ensure shipments meet strict order fulfillment metrics and reporting standards. Overall, supply chain optimization has evolved into a critical necessity. Organizations must also consider bulk shipping and comply with international shipping and import/export regulations to stay competitive, ensuring sustained growth in a volatile market.

The Role of Fulfillment and Inventory Management

As global logistics challenges intensify, efficient fulfillment and inventory management have become indispensable. Retailers are increasingly investing in e-commerce integration services and cloud-based warehouse management systems (WMS) to maintain high order accuracy and quality control. Furthermore, innovations such as shipment consolidation, demand planning, and streamlined outbound and inbound logistics are prioritized to meet evolving customer expectations. Advanced order splitting and routing, along with return merchandise authorization (RMA) processing, are critical for ensuring on-time delivery. In addition, scalable fulfillment solutions and regular inventory cycle counts help streamline operations.

Notably, businesses that integrate same-day and next-day delivery systems with comprehensive order tracking and management can better address the rising costs imposed by China Package Fees. Consequently, incorporating fulfillment cost analysis and FBA strategies is essential for sustainable growth in a challenging economic environment. This proactive approach drives remarkable efficiency and long-term profitability.

The surge in China Package Fees has disrupted traditional international shipping. It is essential for consumers and businesses to adopt innovative strategies and embrace modern technologies. Focusing on supply chain optimization, enhanced order fulfillment solutions, and robust inventory management can mitigate these extra costs. Leveraging advanced logistics tools and systems is critical in adjusting to an evolving market. Ultimately, proactive adaptation secures a future competitive advantage and sustained growth, ensuring long-term, consistent success in today’s extremely volatile economy.

As we move forward, it is evident that the global marketplace remains in constant flux. US shoppers and businesses must remain agile, adopting advanced logistics strategies such as reverse logistics, freight forwarding, and cross-docking alongside conventional shipping methods. The persistent rise of China Package Fees is driving industry-wide transformation. Through continuous adaptation and strategic investment in cutting-edge technology, organizations can turn these challenges into opportunities for efficiency and profitability, ultimately securing a competitive edge.

Beginner’s Guide to Third-Party Logistics (3PL)

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by Jamie C. Winters

5 Strategies for Eco-friendly Fulfillment

As the e-commerce industry continues to expand, so have consumer concerns around environmental impact. E-commerce waste is becoming a serious problem. In 2018, the EPA estimated that packaging accounts for about 30% of all household waste. Increased social awareness has magnified the importance of minimizing our carbon footprint. Today, nearly 90% of Gen X consumers said they would be willing to spend an extra 10% or more for sustainable products or services, compared to just over 34% two years ago. Brands that reduce their carbon footprint have a unique advantage in the marketplace. You can build strategies for eco-friendly fulfillment even if you don’t sell “eco-friendly” products. Every decision made toward a more sustainable future benefits us all.

Sustainable Packaging

Sustainable packaging is packaging that produces the least amount of pollution regarding manufacturing, production, and disposal. Making a switch to more eco-friendly packaging instantly reduces environmental impact. The myriad of biodegradable, recycled, and compostable packaging options can be dizzying to select the best choice for your brand. Download our “Sustainable Packaging Guide” for more detailed insight on determining what is suitable for your company.

There are three main types of eco-friendly fulfillment packaging.

Compostable packaging – made from renewable plant-based materials and or biopolymers and must break down within 90-180 days in commercial composting conditions.
Reusable packaging – can be used multiple times and intertwines with sustainable packaging design.
Recycled packaging – typically sourced from plastics that have been reprocessed at a recycling facility and given a second life.

Optimized Transportation

Another area to boost eco-friendly fulfillment is optimizing transportation, as it contributes significantly to growing greenhouse gas emissions. Ways to streamline transportation include reducing trips, ensuring a high fill rate on shipments, and utilizing local distribution centers. A 3PL partner can provide strategic transportation solutions to build a sustainable e-commerce business. They can boost the fill rate per transport vehicle, which reduces overall gasoline consumption and CO2 emissions. Furthermore, a 3PL can eliminate stages of the transportation journey by leveraging multi-site distributions and optimized route planning.

Streamlined Inventory Management

While streamlining inventory management might not be an obvious strategy for eco-friendly fulfillment, errors can be costly in time and resources and create inefficiencies. Every improperly labeled, categorized, or shipped product must be returned, restocked, or discarded. Therefore, ensuring your fulfillment team has a streamlined inventory management system will reduce errors, time inefficiencies, and returns or exchanges. Consequently, a fulfillment team that implements the following inventory management protocols will be more effective and, as a result, more eco-friendly.

Automated processes
Single SKU (QR coding/barcoding etc.)
Accurate and real-time reporting
Integrated technology
Open communication within supply chain partners

Developing an inventory management process that incorporates as much automation and digitization as possible helps reduce human error, but it isn’t 100% necessary. Businesses managing inventory manually can still be eco-friendly if they create processes that are mindful of reducing waste and include checks and balances to ensure accuracy.

Domestic or Localized Supply Chain

A hyper-local supply chain is a way to create a more eco-friendly fulfillment strategy. If the raw goods you sell can be sourced from suppliers closer to your customer base, it reduces your carbon footprint. It takes a lot of energy and money to ship goods from overseas. Furthermore, issues with supply chain delays and gridlocks are mitigated more easily with domestic vendors.

Eco-friendly Fulfillment Partner

Certainly, enhancing your company’s eco-friendly score is crucial. Therefore, opting for an environmentally-minded fulfillment partner becomes a significant decision. To achieve this, consider partnering with a 3PL that has established processes promoting sustainability. Falcon Fulfillment, in particular, provides optimized transportation, various sustainable packaging options, multi-site distribution, and automated inventory management. This strategic move can contribute significantly to your overall eco-friendly initiatives.

Beginner’s Guide to Third-Party Logistics (3PL)

If you want to learn more about eco-friendly fulfillment, get in touch with one of our agents today.

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by Jamie C. Winters