Jamie C. Winters, Author at Falcon Fulfillment

How to Improve Order Fulfillment to Maximize Customer Satisfaction

In today’s competitive business environment, companies must prioritize delivering the best customer experience. To achieve customer satisfaction with their orders, it is crucial to maintain efficiency and reliability in the order fulfillment process. In this blog post, we’ll explore strategies aimed at enhancing order fulfillment and optimizing customer satisfaction. Specifically, we’ll delve into streamlining the process, minimizing errors, enhancing accuracy, and fostering improved communication between customers and the company. Implementing these order fulfillment tips empowers companies to offer customers a superior ordering experience, ultimately resulting in heightened satisfaction.

fulfillment maximize customer satisfaction

1. Improve Order Accuracy

Maintaining customer trust and loyalty hinges on precise order fulfillment. Errors during order processing not only lead to dissatisfied customers but also result in lost sales and damaged reputations. Therefore, ensuring high order accuracy stands as a pivotal component of any successful fulfillment process, guaranteeing customers receive the correct items punctually.

To enhance order accuracy, several crucial elements should be considered. These include utilizing a dependable inventory tracking system, establishing a comprehensive system of quality assurance checks, and integrating automation where feasible. Moreover, employees should undergo training emphasizing accuracy and attention to detail in order fulfillment.

In addition, implementing a double-check process for each order and batch of orders can significantly reduce errors. Lastly, the automation of specific processes, such as labeling and packaging, serves to diminish the likelihood of human error. By adopting these measures, order accuracy within the fulfillment process can be substantially elevated.

2. Inventory Accuracy

Inventory accuracy is vital to efficient order fulfillment. Accurate inventory gives businesses the information they need to plan ahead, anticipate customer needs and order adequate products to meet demand. With an accurate inventory, it is easier to ensure that orders will be shipped promptly. Inaccurate inventory counts lead to stockouts, delayed deliveries, and unhappy customers. Additionally, accurate inventory reduces the time spent searching for stock and the costs associated with mistakes and returns. Overall, inventory accuracy is necessary for successful order fulfillment and customer satisfaction. Three common ways to improve inventory accuracy include:

Use single SKU systems along with barcode technology.
Schedule regular cycle counts to reconcile system counts against physical counts.
Train staff on how to receive, store, and restock inventory to ensure quality control and improved accuracy.

3. Lower Rates of Return

Lowering the rate of return for an e-commerce business can be difficult, but it is important if companies want to remain competitive in the modern marketplace. According to the National Retail Federation, rates of returns have stayed consistent over the past year, hovering between 16-17%. Nearly 20% of all products sold online are returned, which significantly reduces profitability. The reality is that customers will not return an item they are fully satisfied with. Therefore, to lower your rates of return, ensure that all products are of the highest quality and that customer service is timely and professional.

Provide detailed specifications and size charts. Furthermore, make sure that all products are accurately described and photographed on the website. This can help customers make informed decisions, thus reducing returns due to dissatisfaction.

4. Faster Delivery Speed

Improving delivery speed for an e-commerce business is key to maximizing customer satisfaction. To achieve faster delivery speeds, businesses should prioritize shipping carriers that offer expedited delivery times, such as priority or next-day options. Additionally, businesses can implement a streamlined warehouse process to ensure orders are prepared quickly and efficiently. Furthermore, investing in technology that allows customers to track their orders in real time can be beneficial in providing a seamless customer experience. Finally, businesses should consider offering various shipping options, such as same-day delivery and BOPIS (Buy Online Pickup In-Store), to meet customer needs. With the right strategy, businesses can improve delivery speed and boost customer satisfaction.

5. Better Order Tracking and Communication

Faster delivery times not only enhance customer satisfaction but so does transparent tracking and communication regarding package arrival. The crucial elements in achieving this are transparency and accuracy. Customers seek information on when they can expect their delivery. When a company pledges next-day delivery but falls short, delivering the package the following week, it results in customer frustration. In this aspect, companies are wise to set conservative expectations and exceed them.

To achieve this, employ advanced tracking and delivery technologies that seamlessly integrate with carriers, providing customers with real-time updates on the anticipated receipt of their purchases. Clear and proactive order communication is an investment that pays dividends, fostering trust and reliability with customers.

6. Improved Warehouse Efficiencies

The warehouse is the most oft-forgotten element in maximizing customer satisfaction. Orders are fulfilled: merchandise is picked for individual shipments, packed to ensure against breakage, and shipped according to the customer’s instructions. A mismanaged, unorganized, or chaotic warehouse can lead to slower delivery times, damaged products, inaccuracies, and more frustrating issues. Implementing these ideas can improve warehouse efficiency and boost consumer contentment.

Maintain a flexible layout and workflow. This allows staff and space to be multi-use when orders change.
Utilize the entire space. In other words, use the vertical and horizontal space well.
Be tidy and avoid congestion. Cluttered aisles aren’t just an eye sore; they also are a hazard and significantly slow down order fulfillment.
Schedule teams wisely. For example, have pickers start their workday earliest, followed by packers, followed by the replenishment teams.
Audit performance regularly; this includes order accuracy, order turnaround time, and cost of labor, etc.

7. Personalization (Unboxing/Branded Packaging)

Another brilliant way to improve order fulfillment and maximize customer satisfaction is through personalization. By personalizing the customer experience with customized packaging, customers feel they are receiving a unique, one-of-a-kind product. Branded unboxing also helps create a memorable customer experience, allowing brands to showcase their identity and values within the packaging. These personalized touches make a connection between the customer and the brand, leading to increased customer loyalty and higher satisfaction. Moreover, it has been found that customers are more likely to share their unboxing experience on social media, thus increasing brand visibility and sales.

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.

Working with a trusted 3PL can improve order fulfillment and maximize customer satisfaction.

Working with a 3PL for order fulfillment can dramatically improve customer satisfaction. 3PLs, or third-party logistics providers, consist of professionally trained experts in order fulfillment. These experts ensure the accurate and prompt fulfillment and shipment of orders, reducing delays and errors and guaranteeing timely delivery to customers.Additionally, most 3PLs can improve shipping costs and have detailed tracking systems to ensure accurate delivery windows. Furthermore, 3PLs can offer various services, such as custom packaging, returns management, and value-added services, that can help create an even more seamless customer experience. With a 3PL, customers can be sure that their orders are taken care of and arrive on time, leading to improved satisfaction and loyalty.

Improving order fulfillment isn’t easy, but maximizing customer satisfaction is worth the effort. Order fulfillment has become a way to differentiate your business. While your customers may not notice your hard efforts, they will notice when something goes awry.

To see how partnering with Falcon Fulfillment can improve your order fulfillment get in touch with one of our friendly agents today.

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by Jamie C. Winters

The Pros and Cons of Outsourcing Your Beer and Wine Fulfillment

The craft beer and wine industries have seen significant growth in the last few years. In fact, craft beer alone has grown to an almost $300 billion global industry. Craft brewers, by definition, must produce less than six million barrels of beer; therefore, many lack the resources to distribute their beer outside a local region. As a result, more businesses have been outsourcing their beer and wine fulfillment needs. While this approach can greatly reduce costs and streamline processes, it also comes with risks and challenges. To help you decide if outsourcing is the right choice for your business, here is a look at the pros and cons of outsourcing your beer and wine fulfillment.

Pros: Outsourcing Your Beer and Wine Fulfillment

1. Cost Savings

The most obvious benefit of outsourcing beer and wine fulfillment is that it can help you save money. By outsourcing, you won’t have to pay for all the overhead costs associated with hiring, training, and managing staff. You’ll also be able to save on the cost of purchasing and maintaining the necessary equipment.

2. Increase Efficiency

Outsourcing your beer and wine fulfillment can also help you increase efficiency. It removes the need for a business to manage its own staff and maintain the infrastructure needed for beer and wine fulfillment. Professional fulfillment companies have the experience and resources to quickly and accurately distribute orders, allowing you to focus on the core competencies of your business.

3. Expertise

When you outsource your beer and wine fulfillment, you gain access to a team of experts. Professional fulfillment companies understand the industry’s complexities and can provide valuable insights and advice that you may not have access to otherwise. Not only can they streamline transportation and distribution, but they can also help your company expand into new markets effectively.

4. Compliance

Beer and wine production and distribution are monitored by different regulatory bodies. The larger the operation, the greater the risk of serious non-compliance issues, particularly in the United States. Production, storage, and transport must all observe regulations, production processes, workplace safety, and environmental impact. Not only that, but even the definitions of what qualifies as “beer” are in flux. Compliance and regulatory issues concerning local and global laws concerning alcohol transport are reason enough to outsource fulfillment.

Cons: Outsourcing Your Beer and Wine Fulfillment

1. Loss of Control

While outsourcing can greatly reduce costs and increase efficiency, it can also lead to a loss of control. When you outsource, you rely on another company to handle vital aspects of your business. This can lead to delays, errors, and other issues that can negatively impact your business.

2. Quality Issues

Another downside of outsourcing is that you can’t always guarantee the quality of your products. A small producer with a hyper-local customer base can ensure their craft brews meet the expected taste and quality standards. As sales and customer demand increase, outsourcing fulfillment becomes a viable option, but some 3PLs may not have the same standards as your own business. This can lead to quality control issues and dissatisfied consumers.

3. Unpredictable Costs

Finally, it’s essential to remember that outsourcing can lead to unpredictable costs. Depending on your fulfillment partner, you may be subject to unexpected fees or charges that can quickly add up. This is especially true if your fulfillment teams have confusing specialty fees.

E-commerce satisfaction shipping delivery

The Impact of Shipping and Delivery on E-commerce Satisfaction

In the evolving world of e-commerce, customer satisfaction hinges not only on product quality and price but also on the efficiency and reliability of shipping and delivery services. Understanding the significance of these factors is crucial in enticing potential e-commerce leads. In this blog, we delve into the key takeaways from a recent survey regarding shipping and delivery experiences, and how these findings can shape your approach to enticing e-commerce businesses.

Outsourcing with Falcon Fulfillment

We have been in the business of delivering beer and wine for years. We offer same-day processing and shipping, and we can offer higher margins than wholesale and retail. Lastly, fast transport from your brewery or vineyard via temperature-controlled FTL to our large KY distribution center. These are just a few benefits of outsourcing your beer and wine fulfillment with Falcon.

Ultimately, the decision to outsource your beer and wine fulfillment is a personal one. It can be a great way to reduce costs and increase efficiency, but it comes with its own risks and challenges. Before deciding, it’s important to weigh the pros and cons and decide if outsourcing is the right choice for your business. Get in touch today to find out more about outsourcing your beer and wine fulfillment with Falcon.

If you’re ready to start shipping your beer and wine with the professionals, contact us to learn more about our services.

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by Jamie C. Winters

Dealing with E-commerce Inflation

Prices are going up on almost everything. This pattern began during the COVID-19 pandemic and has continued without many indications that the tides will turn soon. According to the Adobe Digital Economy Index, e-commerce prices as of July 2021 were up 3.1% year-over-year. Before this, e-commerce consumers enjoyed a deflationary environment, with prices declining at 3.9% YoY. E-commerce retailers have to pivot their strategies, pricing, and fulfillment to help minimize the impacts of inflation; as consumers’ discretionary spending dries up, the competition for the remaining dollars increases. Dealing strategically with e-commerce inflation is necessary to ensure survival.

What is causing e-commerce inflation?

The COVID-19 pandemic triggered an imbalance in supply and demand. As consumers were quarantined and unable to spend money on experiences, they turned to physical products online. Demand for gym equipment, entertainment centers, and furniture soared as people were stuck at home—this overburdened suppliers.

The pandemic caused a massive shortage in the number of shipping containers. This was caused by the increased demand for goods and the lack of port staff, ships, and containers to transport products. Sea freight continues to cost more than pre-pandemic prices.

Lastly, Chinese suppliers are still struggling to meet production demand. Lockdowns and restrictive policies have led to significant delays in getting raw materials and manufactured goods out of the country. Many savvy e-commerce brands have diversified their supply chain by partnering with more local vendors. However, China is still the world’s largest manufacturing producer, responsible for just over 28% of the global output.

Effects of Inflation

An inflationary period is marked by an increase in the cost of goods and services that decreases the purchasing power of consumers and companies alike. In other words, a dollar doesn’t get you what it did yesterday. What specific price increases and reductions in spending are we experiencing?

Price Increases

Increased cost of raw goods and materials
Increased labor costs
Increased shipping costs

Consumer Spending Changes

Overall spending reduction
Drop in discretionary spending
Shift to generic brands
75% of consumers are spending less due to inflation
The top three industries experiencing a drop in sales – Women’s apparel, Men’s apparel, and Electronics
Increase in recommerce

Solutions to Deal with E-commerce Inflation

Raise prices

As prices rise for goods, services, labor, and shipping, one of the quickest and most obvious solutions is to pass the price increases to customers. It is vital to decide how and when to implement a price increase strategically. Consumers are not heartless, and most expect a fair price for their product and a reasonable profit for the seller. If you must increase your prices to maintain profitability, make sure you:

Communicate openly and honestly – let them know why your pricing needs to increase.
Determine fair pricing by researching competitors and checking for underpricing in existing price models
Cut costs where possible.
Consider offering a smaller amount for the same price. Some customers would rather have fewer products than have to pay more.

Keep a safety stock

Avoid stockouts and extended supply chain delays by overordering products that are consistent sellers. Work on building up safety stock and keep a six-month supply of goods. The quantities you can purchase today might be more than what you can get for the same price next year.

Manage cash flow

Small businesses with the most working capital at the end of an economic downturn end up on top. Prioritize revenue generating while cutting costs. Now is the time to apply for financing. Having a business line of credit available before you NEED it can make the difference between growing or drowning.

Diversify your supply chain with local vendors

Because Asia is still struggling with production and fulfillment, now is the time to find local vendors and suppliers. The closer a supplier is to your customer base, the less you will need to spend on shipping. Local manufacturers who were cost-prohibitive might be more competitive in this environment. Inflation has hit shipping carriers hard, and they are passing along the fees to customers through fuel surcharges and labor charges. When dealing with e-commerce inflation, every penny counts.

Partner with a 3PL

While it might not be an obvious strategy to deal with inflation, partnering with a 3PL can help. 3PLs can help negotiate better shipping costs and options due to their high-volume discounts with major carriers. Furthermore, if they are like Falcon Fulfillment, they can help implement an automated inventory management process to avoid stockouts. Lastly, with flexible warehousing available, you can store safety stock with ease.

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

Contact one of our agents today if you’d like to learn more about how we can help you position your eCommerce well in this inflationary environment.

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by Jamie C. Winters

10 Types of Fulfillment Costs

Types of Fulfillment Costs

Fulfillment costs are any fees associated with storing inventory, processing orders, and delivering products to the end consumer. They include reverse logistics (returns processing), restocking fees, pick and pack, kitting, and receiving costs. Furthermore, fulfillment costs vary based on the company and the products being sold. Managing fulfillment in-house can be costly and time-consuming. It is crucial to be completely aware of all costs to maximize profitability and accurately calculate ROI. This article will focus on the ten types of fulfillment costs typically charged when working with a 3PL.

Initial Setup

Working with a 3PL involves taking the first step in the initial setup. Subsequently, this process requires integrating your point-of-sale systems with their fulfillment software, inventory tracking, and order tracking programs. Furthermore, most 3PL companies typically charge a flat fee for this service and offer initial training. Falcon Fulfillment, notably, assigns a designated account manager to assist with the initial setup and throughout the relationship.

Account Management

The account management fees cover the administrative costs of handling your order fulfillment. Additionally, this includes customer service fees, technical support, and other ancillary activities aimed at serving your business and clients.

Inbound Shipping

Inbound shipping is the cost of shipping your product to the fulfillment warehouse. Products can ship via land, air, sea, or a combination, depending on the location of the supplier or manufacturer.

Receiving Cost

Receiving costs, also sometimes called intake fees, include every aspect of processing your product when it arrives. 3PL companies charge by the hour or flat rate (by the unit/item quantity). When your shipment arrives at the warehouse, the staff will review your order for accuracy in quantity and check for damages. Lastly, the receiving crew will scan your inventory into the system, so they are available to be sold.

Inventory Storage

Whether you fulfill in-house or partner with a 3PL, storing inventory involves a cost. You calculate paying for warehouse space based on the size and quantity of the products one stores. Additionally, most fulfillment companies charge additional fees for large, irregular, or bulky items that require special equipment. The notable benefit of working with a 3PL for your inventory storage needs is that, typically, you have flexibility in how much storage you use. This flexibility enables you to scale up or down based on your storage needs for seasonal sales or one-off promotions without being held to a long-term lease.

Pick-n-Pack

Picking and packing orders is another service that many 3PL fulfillment companies provide. After an order is placed, the notification is sent to your fulfillment partner. Subsequently, a staff member selects the items from inventory storage and packages them for shipping. Typically, costs are connected to the type and number of items, as well as whether any special care is required for shipping.

Packaging

Inbound shipping arrives in bulk. Therefore, someone repackages individual products for individual resale. The total packaging cost depends on size, the number of items, box dimensions, dunnage required, and whether one uses standard or custom packaging.

Kitting and Item Assembly

Some orders require light assembly or what one knows as kitting. Kitting refers to a process where one packages and ships individual but related products together as a single product. This is where a product may contain several components to complete a set. Think about things like furniture or small appliances. While they arrive in a flat shipping box, they must be put together at home to function properly. Another example of things requiring kitting or assembly would be product bundles or subscription boxes.

Outbound Shipping

Fulfillment costs typically include high outbound shipping costs. 3PL companies can offer some of the most cost-effective shipping options because they extend their high-volume discounts to their clients. However, outbound shipping costs constantly fluctuate with fuel costs, seasons, and supply chain delays. Calculating shipping costs involves complexity. The calculations include variations based on dimensions, weight, speed of delivery, distance from the distribution center, and special instructions. Partnering with a multi-site 3PL can help clients minimize shipping costs and maximize shipping speed.

Return Management Costs

Only some fulfillment companies offer a returns management service, but it is a valuable and desirable amenity when considering types of fulfillment costs. Managing your customer’s unwanted or damaged goods requires good customer support. In addition, return management costs handle restocking inventory and adding it back into the inventory management system.

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

If you want to learn more about our pricing structure and how we can help your business scale, get in touch with one of our agents today.

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by Jamie C. Winters

Minimizing the Risk of Lost and Stolen Packages

Minimizing the risk of lost and stolen packages

If you order many household goods online, you probably have experienced a lost or stolen package. 1.7 million lost or stolen packages are reported each day in the United States. About $5.4 billion in lost revenue is attributed to theft alone. A significant amount of money is being misplaced or taken from e-commerce businesses and consumers. There are a few things both the shipper and receiver can do to minimize the risk of lost and stolen packages.

An estimated 90,000 packages disappear daily from New York City alone.
NY Times

E-commerce tips to minimize the risk of lost and stolen packages

Over Communicate

Ensuring the highest probability of successful package delivery requires over-communicating. At a minimum, consumers expect clear communication about the status of their deliveries. Nothing is more anxiety-inducing than waiting until the end of a two-hour delivery window only to receive no updates or package. When possible, automate the following delivery notifications:

The package leaves the warehouse
Time updates on ETA for delivery
Pictures of where the package was left.

These communication strategies will help thwart porch pirates and improve recovery efforts if a package is lost somewhere in between.

Accurate Shipping Labels

Ensuring every package has an accurate shipping label is the first step in minimizing the risk of lost packages. It is too easy to miss a tiny detail that makes the parcel undeliverable. While each carrier has its specific label design and criteria, a label should contain the following information:

The package tracking number with a corresponding barcode
Destination address and return address, including postal code, street, city, state, or county, and any suite or apartment number
The shipping class
The package’s weight

Ensuring the information is 100% accurate is the first crucial step in creating compliant shipping labels. Moving on to the second aspect, it’s important to print the labels with non-smear, weatherproof ink. Considering that the weather is not always sunny and 70 degrees, it becomes vital to ensure your packages reach customers even in a downpour to maintain label clarity in case of exposure to moisture.

Additionally, use high-quality adhesive on the back of your shipping labels to prevent them from getting ripped or torn off the package. In the event that the carrier struggles to identify the package’s destination, they will send it to “over goods,” essentially a shipping lost-and-found. Subsequently, photograph and open the box, meticulously cataloging the contents. To further enhance the chances of successful recovery, consider adding an “in case found” document within the package. This document allows a carrier to open a box if it has lost a label, providing the necessary information to complete the delivery or return it to the supplier.

Address Verification

It is essential to double-check the delivery address to ensure the shipping label has all the necessary information to reach its final destination. Humans are prone to errors. Typos, missing numbers, and zip code errors are responsible for many packages being returned to the vendor. These returns cost e-commerce businesses money, and customer satisfaction scores can suffer even when the customer is responsible for the error. The USPS developed the Coding Accuracy Support System (CASS) to gauge the accuracy of addresses in the United States. This easily implemented software can minimize errors and maximize successful delivery completions.

Plain Packaging

Porch pirates are even more tempted by a brightly colored branded box. Even though a memorial unboxing experience can boost customer satisfaction, it can also be a beacon for thieves. If you want to maintain a fully branded experience, enclose your product in a plain outer box. Plain packaging helps parcels blend in with other packages and protects customer privacy.

Parcel Insurance

Parcel insurance can protect your business and consumer from replacement costs. When selecting insurance, consider whether free options will cover the value of your goods. Carriers like UPS and FedEx offer free insurance on goods valued up to $100. It increases modestly up to the $300 value. High-value products should have adequate parcel insurance purchased.

Partner with a Fulfillment Company

Partnering with a logistics expert can ease the burden of ensuring your packages are delivered quickly and accurately. If your business struggles to establish dependable delivery protocols, it might help to partner with a 3PL fulfillment partner. These companies are experts in final mile delivery, accurate address, and labeling; some even can manage returns.

Consumer tips to minimize the risk of lost or stolen packages

Minimizing the risk of lost and stolen packages doesn’t lie solely with the shipping carrier. Consumers can take extra precautions to help thwart thieves and get their products on time.

Use a digital locker

A trend in e-commerce fulfillment is the use of digital lockers. Amazon lockers are popping up in convenience and grocery stores and traditional shipping locations. UPS has also implemented a digital locker system in some consumer stores. You can install one outside your home if a digital locker is unavailable through your carrier. Bench sentry has a few package lockers that are aesthetically pleasing and deter even the most motivated porch pirates.

Have packages delivered to your workplace

If you know that you are at your office nine times out of ten when deliveries occur, have them delivered where you will be. Most employers don’t mind receiving packages on behalf of staff. Check with your upline that this is acceptable. Also, ensure that whoever is receiving your delivery knows you are expecting it.

Install a security camera at your front door

Submitting a theft claim is far easier when you have footage of a package taken from your front door. Having documentation can also help authorities catch and prosecute perpetrators.

Require a signature on delivery

When a person has to receive a package personally, it is far less likely to be stolen. Adding the extra protection of a signature helps to ensure successful delivery.

Schedule delivery or reschedule if you will not be home

It is difficult to steal if you are home to receive your package. If you are notified that a package will arrive hours before you get home, contact the carrier to reschedule delivery. Sitting packages are easy pickings.

Purchase extra insurance

Purchase the additional protection of insurance, especially when purchasing high-value items. This is crucially important if you live in an area where package theft is high. Even though you might have to go through the hassle of submitting a claim, you won’t be out of money or the product if you purchase the additional insurance. Many carriers don’t have a policy that will replace stolen goods, which is why insurance can protect your purchase.

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

If you’re ready to start the transition or have questions, contact us to learn more about our services.

Let’s Talk!

Connect with us!

by Jamie C. Winters

The Basics of Demand Forecasting

Reasons for Demand Forecasting

Demand forecasting involves predicting future sales data using historical data, market research, and other influential factors. It allows businesses to create more precise sales predictions. There are many types and methods of creating a demand forecast for your business. Determining which will work best for your e-commerce business is challenging, but it is well worth the investment. Creating a demand forecast is not 100% accurate but will inform better business decisions, strategy, and cash flow. Subsequently, let’s get into the basics of demand forecasting; the types, benefits, and steps to create one. Specifically, demand forecasting predicts future sales by examining historical data, market research, and other factors. As a result, businesses can make more accurate sales predictions.

While there are many forecasting methods, choosing the right one for an e-commerce business can be difficult but valuable. Ultimately, demand forecasts, while not completely precise, allow for better decisions, strategy, and financial planning. Moving forward, we will explore the fundamentals of demand forecasting including the different types, advantages, and how to put one together.

Demand Forecasting – What Is It?

Failing to plan is planning to fail.

Benjamin Franklin

In e-commerce, demand forecasting is a collection of techniques and the collation of multiple data points to help make educated guesses on future sales. The data typically includes; market research, historical sales, market trends, both historical and predicted, and internal and external factors. Creating an internal demand forecasting model is unique to each e-commerce business. Furthermore, different demand forecasting models will be required for various purposes. For instance, you might use a micro-demand forecast to determine future sales for a specific seasonal item and a more extensive Delphi method when you launch a new product.

Specifically, in e-commerce, demand forecasting utilizes various techniques and brings together data points like market research, past sales, market trends, internal and external factors, and more to help estimate future sales. In particular, every e-commerce business creates a unique internal demand forecasting model. Additionally, different forecasting models will be necessary for different needs. For example, a micro-demand forecast may be used to predict sales of a seasonal product while a broader Delphi method could be implemented when launching a new item. Essentially, demand forecasting is the process of gathering data to calculate educated projections of future e-commerce sales.

Benefits of Demand Forecasting

Why should e-commerce owners create and consistently refine their demand forecasts? To strike the right inventory balance and ordering cadence. To stabilize and plan for cash flow fluctuations, among others.

Optimize Inventory

Planning supply chain fluctuations through demand forecasting will help you order appropriate amounts of inventory to avoid out-of-stock situations and limit overstock. Both conditions create suboptimal profitability.

Optimize Pricing Strategy

Reviewing historical sales data will reveal seasonal spikes and dips in sales. This will allow you to make modifications to the pricing accordingly. For example, if you see a drop in sales every year after Labor Day, that might be a good time to offer a promotional discount to keep customers engaged.

Higher Customer Satisfaction Scores

A quick way to lose a customer is to run out of inventory. Reduce stockouts and maintain trust and reliability with proper demand forecasting.

Rationalize Cash Flow

A solid demand forecast model will help determine when and how much cash will be available to order new inventory, manage seasonal operating costs, scale the business, or launch a new product.

Required to Secure Business Funding

Every e-commerce business needs capital to expand. Whether that finance comes from existing profits or outside investment, accurate demand forecasting will allow key stakeholders to estimate the ROI and timeframe for success.

Types of Demand Forecasting

Passive

Passive forecasting is a review of objective historical facts and data. It uses past year’s sales data to predict future sales. (Great for companies that have solid sales data) Passive forecasting works well for companies looking to maintain stability. Many eCommerce brands will include this data in their overall demand forecast strategy.

Active

Active forecasting is a more objective strategy. This type of demand forecasting includes market research, focus group outcomes, global trends, and even emerging technologies or events to determine the sales potential of future products. Both startups and veteran eCommerce brands can utilize this type of forecast. It is an excellent choice for companies looking to grow or with very little historical sales data.

Micro

Micro-demand forecasting investigates a subset of data within an industry or customer segment. For example, you might evaluate the sales of a skincare product as a whole and benchmark it against sales tied to a celebrity influencer. This can help an organization make decisions about verticals within their product line, marketing effort expectations, etc.

Macro

Macro-demand forecasting looks at external elements that influence eCommerce sales. This can include economic trends, consumer trends, supply chain delays, and global events that impact market stability or growth. Understanding these external forces can help a business prepare for shifts in product availability, financial challenges, and vendor diversification.

Short-term

Short-term forecasting includes the next 3-12 months of potential sales. This is beneficial for companies with products that change frequently. A longer timeline is needed when considering growth potential, launching new markets, and entering new partnerships.

Long-term

Long-term forecasting makes predictions one to four years into the future. This aspirational model determines growth potential, marketing efforts, capital investment, and supply chain adjustments. Businesses that have expansion goals should consider using this type of model.

The Basic Steps of Demand Forecasting

Set Goals and Objectives

A demand forecast predicts product demand and sales in future cycles. The first thing to determine is the objectives of creating the estimates. Next, decide what data should be included to ensure the report will help accomplish the goal.

Collect and Record Data

It sounds obvious, but once you determine the goals of your demand forecast, you must then populate it with data. Because demand forecasting is customized, data collection is pulled from disparate sources. Having a software program or data hub can be helpful if you don’t have extensive forecast modeling in excel.

Analyze the Data

It is crucial to create and copy a standard analysis for predictive forecasting. The data in its raw form is unhelpful. Year-over-year reporting cannot be trusted if the way the model is interpreted changes. That is not to say adaptations shouldn’t be made (in fact, they should be made to improve accuracy), but it is vital to maintain an awareness of data sets and changes as you grow.

Set New Business Goals and Budget

Once you have a reliable demand forecast, it is time to consider new business goals, and choices are possible based on the evidence. Create a budget to meet or exceed past sales goals and determine growth trajectories for new products and sales channels.

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

Get in touch with one of our helpful agents today.

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by Jamie C. Winters

Common Mistakes to Avoid When Creating a 3PL RFP

E-commerce brands seeking scalable order fulfillment often issue RFPs (Requests for Proposal) to assess potential 3PL (Third-Party Logistics) partners. But faulty RFP processes lead many retailers to select the wrong fulfillment provider, resulting in headaches that sabotage growth.

What crucial errors must e-commerce companies avoid when creating 3PL RFPs to choose a fulfillment partner able to scale in tandem with sales trajectories? This definitive guide covers the 8 most common mistakes brands make when creating RFPs for selecting 3PL partners, and how to steer clear of them.

Rushing the 3PL RFP Process

Scrambling brands often hastily create RFPs seeking quick fixes to fulfillment fires. But rushed RFPs overlook critical diligence, leading to misaligned partnerships. Allocate ample time for strategic development, even if interim measures are required.

Casting Too Wide a Net

Don’t spread efforts thin by approaching countless prospects. Thoroughly vet providers first to narrow the field to five or less specialized 3PLs warranting closer inspection. This filtering allows more strategic dialogue to avoid mistakes when making a RFP for a 3PL.

Excluding Business Vision & Outlook

While outlining functional requirements, 56% of RFPs neglect furnishing context on business objectives, growth plans and vision for the ideal partnership. This big picture perspective allows prospects to better evaluate long-term synergy.

Supplying Incomplete Operational Statistics

Accurate historical volumes, peaks, inventory detail and more enable prospective 3PLs to build pricing models sans speculative assumptions that can necessitate future escalations. Supply robust intelligence upfront.

Prioritizing Low Cost Above All

Lean too narrow on obtaining the rock bottom rate and risk alignment gaps that undermine customer loyalty and retention. Conduct balanced assessments weighing cost, projected growth impact, and satisfaction enablement.

Discounting Future-Proofing Needs

Another great way to avoid mistakes when making a 3PL RFP is to rigorously assess each prospect’s ability to seamlessly scale, adapt and flex in sync with explosive growth without declines in service quality or necessitating migration downtime and restarts.

Minimizing Data & Analytics Factors

Ceding control of operations makes order visibility and decision-driving analytics essential. Scrutinize and compare intelligence functionality and transparency across all contenders.

Disregarding Automation Investment

Evaluate and compare process automation capabilities across providers. Heavily manual operations will struggle with efficiently accommodating growth. Favor significant technology investors.

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.

Looking for a fulfillment solution? Submit an RPF to Falcon and we will get you the best options available.

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by Jamie C. Winters

e-commerce fulfillment infrastructure scales

E-commerce Fulfillment Infrastructure that Scales

As an e-commerce business owner you are well aware of the ups and downs that coming with running a successful company. When you first launch a business you can get by with manual effort and a small team, however as you scale systems, processes, and thoughtful partners are needed to grow. In this article we are going to cover five key elements of e-commerce fulfillment infrastructure that scales as you grow.

Warehousing

Warehousing is the physical space where inventory is stored and distributed for e-commerce fulfillment. Ample storage space is a crucial component in fulfillment infrastructure that will scale. The importance of good warehousing cannot be understated. It facilitates efficient inventory management. Adequate space allows easier and faster inventory intake, storage, and order fulfillment. It provides enough room for a clean and organized stock room where products are easier counted and found as orders are received. Alternatively, inventory management becomes cramped, chaotic, and ineffective when a company lacks warehouse space. Deficient warehouse space increases the risk of stock damage, inventory shrinkage, and incorrect product reporting. As a result, customer experience is threatened.

Inventory Management Systems

Inventory management plays a significant role in meeting and exceeding customer expectations. Businesses can keep track of their inventory levels and orders in real-time. Many inventory management systems integrate with standard POS systems. It is possible to track inventory manually, but it isn’t scalable. To build a fulfillment infrastructure that scales, it is necessary to invest in an inventory management system that has the following capabilities:

Lot and serial tracking
Shipping and Receiving
Barcoding and Scanning
Label Generation
Mobile Accessibility
Reporting Capabilities

While these features should be available in most inventory management systems, also consider your needs. Do you want to automate inventory management processes? Do you need a Saas program or on-premise, or both? Regardless of which system you select, ensure that it will meet your current needs and provide expansion possibilities.

Shipping Platforms

Logistics or shipping platforms have become widely used by businesses of all sizes because they offer vital insight and cost savings. Online shipping platforms are used to compare shipping rates, label printing and tracking services, and other logistics services. They can help meet ever-growing customer demands, boost revenue growth, and help to stay competitive. Implementing an advanced shipping system can help you find the right carrier service at the lowest cost. Additional benefits include: streamlining transportation by leveraging zone skipping, managing compliance issues, tracking and resolving delivery problems in real-time, and helping make data-informed decisions with ease.

Payment Processors

These platforms facilitate online payments from customers, such as credit cards and online banking services. Basically a payment processor is a mediator between the merchant and the bank by managing credit card transactions. It validates and authorizes payments by ensuring that the buyer has enough funds and that the card they use is valid for transferring the funds into the seller’s account. Additional benefits of using a quality payment processor:

Allows retailers to accept debit and credit card transactions
Offers alternative payment methods like PayPal or Apple Pay
Integrates with your POS systems
Ensures customer payments are properly validated

Every e-commerce business will need a solid payment processor and an integrated payment gateway to capture sales and refunds when necessary.

Returns and Refunds Management

Returns management, also known as reverse logistics, involves the same steps as “forward” logistics and therefore requires similar processes. Therefore, investing in returns management systems allows businesses to seamlessly process returns and refunds, including tracking and communication with customers regarding their orders. Handling returns well improves overall customer satisfaction, provides for faster turnaround, reduces waste, and can improve profitability.

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

Build E-commerce Fulfillment Infrastructure that Scales with a 3PL

Almost all of the systems and infrastructure pieces mentioned above are available through a quality 3PL partner. Not only can a 3PL provide ample warehousing, but they often allow flexibility in scaling up and down with storage, so you only pay for what you need. Additionally, a 3PL typically offers high-tech inventory management systems that include barcoding, WMS, shipping, and receiving. A fulfillment company like Falcon Fulfillment will leverage the most advanced shipping processing to reduce costs, expedite deliveries, and ensure proper labeling and compliance. Your business could also benefit from a more comprehensive network of carriers and lower shipping costs due to volume discounts. Similarly, even returns management can be bundled into your 3PL logistics offering.

Building e-commerce fulfillment infrastructure that scales becomes exponentially easier when partnering with a solid 3PL. If you want to spend more of your valuable time building and growing your business and less time managing the logistics, let Falcon Fulfillment help. Find out if we are a good fit today.

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by Jamie C. Winters

The Impact of Trump’s Tariffs on Costs, Choices, and Strategies

The global supply chain is facing a significant shift as the Trump administration’s new tariffs take effect. These policies, intended to boost domestic manufacturing, have triggered disruptions across industries, affecting costs, availability, and logistics strategies. Businesses relying on international sourcing must now rethink their supply chain management to maintain competitiveness in a rapidly changing environment.

The Rising Costs of Imports and Supply Chain Adjustments

One of the most immediate consequences of the Trump Tariffs Impact is the increase in costs for imported goods. Higher import duties on materials like steel, aluminum, and electronic components have driven up production expenses, forcing businesses to seek alternative sourcing solutions.

Companies involved in third-party logistics (3PL), freight forwarding, and order fulfillment solutions are experiencing increased operational costs, which ultimately trickle down to consumers. Additionally, businesses that rely on multi-channel fulfillment and e-commerce fulfillment are particularly vulnerable to these changes, as supply chain delays and price fluctuations create uncertainty in shipping and delivery timelines.

Fewer Choices for Consumers and Retailers

Another critical aspect of the Trump Tariffs Impact is the reduction in product variety. With tariffs making imports more expensive, businesses are being forced to cut back on international inventory, limiting consumer choices. For example, companies utilizing inventory management systems to track and optimize stock levels are now restructuring their product offerings based on cost efficiency rather than consumer demand.

This shift is particularly evident in industries that rely on vendor-managed inventory (VMI) and supply chain optimization to maintain just-in-time delivery models. With rising costs, some businesses are transitioning toward bulk shipping and freight consolidation to maximize efficiency while reducing expenses. However, these strategies come with trade-offs, including longer lead times and potential inventory shortages.

Strategic Responses: Nearshoring and Supply Chain Diversification

To counteract the Trump Tariffs Impact, companies are increasingly turning to nearshoring and supply chain diversification. Many businesses are moving production closer to home, leveraging warehousing and distribution centers in Mexico, Canada, and other neighboring countries to reduce dependency on China and other tariff-affected regions.

Furthermore, cross-docking and reverse logistics are gaining traction as companies attempt to minimize costs while optimizing transportation routes. Some are investing in fulfillment center expansions in domestic markets, ensuring a more resilient supply chain structure.

How Logistics Companies Are Adapting

Logistics providers and fulfillment services are at the forefront of these changes. To remain competitive, they are implementing warehouse automation and integrating inventory tracking software to streamline operations. Additionally, carrier selection and management strategies are evolving, with businesses negotiating better freight rates to offset increased costs.

The Role of Technology in Mitigating Tariff Challenges

Technology is playing a crucial role in helping businesses navigate the Trump Tariffs Impact. The use of cloud-based warehouse management systems (WMS) and transportation management systems (TMS) is increasing, allowing companies to optimize order fulfillment metrics and reporting for better decision-making.

Additionally, investments in order tracking and management are helping businesses maintain transparency with customers despite delays in same-day and next-day delivery services. These advancements are crucial in sustaining consumer trust and operational efficiency amid ongoing supply chain disruptions.

International Trade and Customs Brokerage Challenges

With tariffs reshaping international trade, businesses engaged in international shipping and import/export are facing new compliance hurdles. The complexity of customs brokerage processes has increased, leading to potential delays and higher administrative costs. To navigate these challenges, companies are leaning on fulfillment cost analysis and freight audit and payment services to track financial impacts and optimize their shipping strategies.

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

Preparing for the Future: A New Era of Supply Chain Management

As businesses continue to adapt to the Trump Tariffs Impact, the importance of strategic planning and supply chain agility cannot be overstated. Companies investing in demand planning, outbound and inbound logistics, and shipment consolidation will be better positioned to mitigate risks and sustain profitability in a shifting global trade environment

While tariffs present significant challenges, they also offer an opportunity for businesses to rethink their supply chain strategies, embrace new technologies, and strengthen their logistics networks. Those that proactively adjust will not only weather the storm but emerge stronger in an increasingly complex and competitive market.

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by Jamie C. Winters

80/20 Inventory Management Rule

Determining how to prioritize inventory for maximum profits can take some trial and error. However, a mathematical theory has been successfully applied to multiple industries. It is known as the 80/20 rule. The rule suggests that 80% of results come from 20% of causes. In the case of inventory, it typically shows that 80% of profits come from 20% of products sold. Therefore, the primary purpose of implementing the 80/20 inventory management rule is to maximize profits. Let’s understand what it is, its advantages and drawbacks, and how to implement it.

80/20 Rule Definition and History

Italian economist Vilfredo Pareto first discovered the Pareto Principle in the early 1900s. He observed that 80% of the land was owned by 20% of the population. The principle states that 80% of effects are derived from 20% of causes. Pareto originally applied the principle in the area of economics. The nature of the 80/20 rule is a power distribution law that can be used in many circumstances. It’s super cool, consistent, and profit-boosting math. The rule demonstrates that 80% of sales come from 20% of clients.

Advantages of using the 80/20 inventory management rule

When the principle is effectively applied to inventory management, it can help maximize profitability and increase inventory efficiency. You’ll increase sales when you accurately identify top performers and emphasize them over slower sellers. If you further sort to favor higher-margin products within that 20%, you optimize your inventory for both volume and profitability.

Drawbacks of the 80/20 inventory management rule

The main drawback of using the 80/20 inventory management rule is that it can obscure up-and-coming products that haven’t YET broken into the top 20% category. This is why it is essential to evaluate items against trend reports. Reviewing the products gaining traction will help keep future best sellers in the system long enough to prove their value.

Steps to implement the 80/20 inventory management rule

Integrate and utilize an inventory management system

A system of tracking inventory and sales is required to generate accurate reports of top sellers. The more high-tech your system, the more detail you can generate. Small business owners can run manual inventory reports so long as it is consistent in the type and timeframe. As SKUs and sales increase, implementing an automated inventory management system becomes crucial to success. Here are 7 types of inventory reports that can help implement the 80/20 inventory management rule.

Inventory performance report – includes sales performance hierarchy as well as year-over-year growth.
Inventory profitability report – includes SKU profitability, listing profitability, and trending profitability.
Inventory value report – a quick snapshot of the value of goods stored in your warehouse; this report’s modifications can determine product performance, sitting age, and inventory turnover ratios.
Stock level report – includes critical levels to determine reordering patterns and prevent stockouts.
Inventory forecasting report – includes estimates of future sales based on historical data within a set timeframe.
Sales report – includes a holistic approach to revenue generated from each sales channel, customer, and product vertical.
Cost of goods sold (COGS) report – helps determine the bottom line on each product, necessary to identify the most profitable products.

Identify 20% of top sellers

To determine the top sellers in your inventory, firstly you must decide what to track and which reports will give you the most accurate picture. At a minimum, it is necessary to consider the following data points:

ABC is a popular method to categorize inventory. Simply put, it is a way to prioritize product performance into three distinct buckets. Using the ABC method helps determine your top sellers’ popularity and profitability.

A items: Top 20% of your products that result in 70% of sales
B items: Middle 30% of your products that result in 20% of sales
C items: Bottom 50% of your products that result in 10% of sales

Refine mid-level performers

Once you discover your top performers, some products will be in the mid-level range. Specifically these are your “B category products” and can include your trending products. This information highlights an opportunity to explore how to make them profitable and change marketing efforts. If modifications don’t move them forward, then it might be time to sunset.

Sunset slow or underperforming products

Once you have tiered your inventory according to profitability and performance, it is time to sunset or liquidate deadstock. Products that are taking up valuable storage space and are slow-moving despite efforts to modify marketing or sales efforts should be liquidated to free up capital for more profitable products. Letting go of slow-moving or deadstock can be difficult, but keeping a healthy bottom line is essential.

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

If you’re ready to start the transition or have questions, contact us to learn more about our services.

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by Jamie C. Winters