Cross-Border eCommerce benefits – how to prepare for risks
Every growing brand dreams of becoming a global brand like Nike, Reebok one day. Now that’s easier than ever with growing cross border eCommerce. What Nike did in almost 50 years, internet first brands are doing it in a couple of years by riding the eCommerce wave.
Brands sitting in China and India are selling in the USA and European markets like there is no tomorrow. Some of the fastest growing brands globally don’t even have any physical presence anymore. Amazon and eBay are fueling that international growth for brands.
Regional eCommerce marketplaces like Lazada, SOUQ, LINIO, Flipkart, PayTM provide massive opportunities for brands looking to expand their business globally. If you are a brand having an ambition of growing rapidly, timing cannot get any better to start exploring these opportunities.
In this article, we will talk about how to prepare to go global. We will end with a check-list for you to circulate with your team.
Remember, your summer might be someone’s winter and your winter might be someone else’s spring (hint for fashion brands 😉 ). Staying ahead of your target country time would help you in long run. If you are a brand dealing in beachwear, why restrict yourself to 2-3 months long season only. There is always summer somewhere on this planet.
From a consumers perspective, Cross-Border e-commerce now allows them huge selection that was earlier not possible. Now manufacturers sitting in China can showcase their entire catalog rather than depending someone like Walmart to only sell selected items. Obviously, there are numerous challenges to be able to sell in the US for example for a Chinese brand that earlier only did white label manufacturing for Nike or a retailer like Walmart. Granted, it has become simpler with Google’s translation feature to communicate well in native languages. Still that doesn’t make it 100% straightforward, there are many more things to worry about. We will talk about some of these challenges in this article.
Without wasting any more time, let us dive deep into what a brand or seller requires to go cross-border.
Are you ready to sell Cross-Border?
You should always be prepared for what is coming next. Before jumping into a gigantic loop, here is the initial set of questions to check if you have the basics in place:
– What amount of investment is required to sell international, how much can you really invest?
[Charges for international shipping: taxes and duties, courier charges (DHL/FedEx/USPS) and extra surcharges involved]
– Is your target market familiar with your chosen product?
[If it is not, then you must be prepared to invest in marketing or on educating customers about the product]
– Are you prepared to handle multi-currency, multi-lingual, multi-tax and multi-assortment sale?
[Check if you are prepared to initiate international currency transactions; do you understand their language or have a native speaker on your end; keep a check on applicable taxes on a variety of products you have chosen]
– Are your resources and company flexible enough to handle the initial phase?
[Understand the culture and know your customers, build a relationship, try to live temporarily in the country to know your customers and understand their pricing structure]
I suggest you go through the blog post and then decide if your answers were satisfactory.
While you are working through the initial setup related questions, let me quickly discuss major advantages and challenges along with small tips related to selling globally via eCommerce.
Advantages of Cross-Border business
International reach in eCommerce:
The uninterrupted services by the World Wide Web are already helping users to market their businesses across the globe. With multiple online e-commerce websites like Alibaba and Amazon, you will be able to publish your products and increase visibility and reach.
In the below image, you will see the top 5 Leaders competing in the eCommerce industry. The GMV (Gross Merchandise Value) is based on the total value of products sold on these marketplaces. (Source)
Tip: If you deal in niche products that aren’t available globally, you pretty much have hit a gold mine here. Imagine someone specializing in Jaipuri Quilt which is only made in Jaipur, India. Now Indian diaspora is spread across the world. All over the world, Indian people will want to purchase that. If that manufacturer suddenly starts selling in the US/UK besides Flipkart in India, obviously there will be a huge demand. The icing on the cake is the fact that these customers will not even mind paying a bit more to get the product easily delivered vs carrying it all the way from India on their next trip back home.
Increased revenue by selling internationally:
With an international reach, the audience will increase steadily and with that, you will generate more sales and revenue. The foreign website products might seem cheaper and better to customers than in the home market.
Cutting out the middlemen:
Brands which used to rely on partners to distribute products are now adapting direct to consumer sales. In the past, the products were passed between multiple hands, shipping industries, distribution companies/warehouse and as a result products cost used to go multiple times of the actual cost. Whereas now brands can easily setup their stores online and reach their customers across the globe. That provides brands the ability to interact directly with their customers and alleviate the extra charges associated with middlemen.
Tip: Evolution in the eCommerce industry is making it easy for the brands to launch their online stores. Many brands and manufacturers are jumping on to this opportunity hence competition is already becoming fierce. It’s prudent to have a distinguishing factor in your product or marketing techniques. That will help you capture the market quickly.
You also need to understand the structure behind the transactions and the challenges you will come across.
Challenges and their solution with Cross-Border selling
Know about Local Laws and Regulations
– Every country has their unique set of restrictions and limitations based on categories like alcohol, medicines, weapons, relics, raw materials etc. So while shipping products to customers country, you need to meet their regulations to abide by their local laws. For example, there are some products which you cannot ship to
– As a cross-border seller, you must also have all the judicial rights and authorities in place. It’s a must to be on a safer side and having the strength of a legal framework to protect from any legal trouble.
– You can find your country specific shipping details from here.
Tip: The solution here is to know your limitations and country laws before planning to expand your business. So research extensively before you select a country to expand into.
Payment Methods for Cross-Border transaction
– Having a strong payment system is a basic requirement in the e-commerce industry or while dealing in any cross-border business. Check out Paypal, Payoneer, Stripe and choose what works for you.
– Furthermore, there is a possibility of coming across fraud cases in few transactions. Payment might get rejected or the third party application may charge you extra. Having a strong reconciliation in place and identifying such instances early on will be a lifesaver.
– You need to properly safeguard the customer details stored on your website. Hackers can reach your servers and steal customers usernames, passwords, credit card numbers, and so on.
Tip: Ensure your system is PCI (Payment Card Industry) compliant. Accept payment in methods that your customers prefer. The credit card is globally preferrable method to pay for e-commerce transactions. Some of the third-party applications include Payoneer and Paypal.
Logistics & Warehousing Support to sell internationally
– Another main strong point you need to develop is with the logistics part. With a quality product, your strong logistic support will also help you gain trust and make the buyers your repeat customers.
– With this, you need to take care of forward and reverse logistics and make sure the logistics charge do not exceed a reasonable limit. The logistics charges include customs duties & documentation, delivery charges, international shipping if you are drop shipping.
– The main challenge here is with customs clearance, paperwork submission on time, multiple carriers, security of the shipped products, delays due to bad weather etc. So plan in advance and have contingency plans in place. Also, strong communication with the customer will go a long way here, we will discuss that below.
Tip: Contact third party delivery companies like UPS, DHL, NZ post, Royal Mail, etc. Because of the competition
Communication gap with international customers
– Communication gap with customers is because either you do not know their language or is not having a local contact number to communicate.
– With the networks being spread wide, there are more channels of communications opening up. Whatsapp, Wechat, Skype, Google chat etc are becoming increasingly popular ways to interact with your customers.
By now you must have got a good sense of what is required to start selling globally. Now let us see if you are actually ready to go cross border:
Are you ready for Cross-Border eCommerce?
With that being known now, you need to make your systems and processes ready to interact with domestic and international customers and avoid the manual tasks as much as possible.
If you sell on multiple platforms like, your online store, Amazon, eBay, Walmart, Flipkart, etc, you will need to use a system which can help you with multiple requirements.
Your requirements should have the following:
- Inventory management for multiple marketplaces
- Multi-currency support with transactional capabilities
- Easily customizable system
- Logistics partner integration for Domestic/International shipments
Now that you are aware of all your requirements, start your research and get ready for some action with international customers. Furthermore, Get a virtual phone number and email ID of the country you are planning to serve in, this will provide your website with some benefit in local ranking. Also, hiring a native speaker wouldn’t be a bad choice to go with.
Click here to download the checklist for Cross Border eCommerce!
Magento, Shopify, Amazon with best
Purchase order Software
When retail was offline, once a month or quarter purchasing worked. Customers would walk into the stores and buy whatever is available. eCommerce is exactly the opposite in nature. Customers come to your site expecting a certain item to be available. If they don’t find it, It’s not only the loss of business for you, it’s a reputation that the customer carries about your brand.
Managing purchasing has become extremely critical now. Without an efficient process in place, you cannot grow your brand. Amazon has now set a benchmark for companies to manage their supply chain with utmost priority. While the excess stock is going to kill your working capital account, out of stock upsets the customer like none other.
The main challenge with eCommerce business is the necessity of having the right products available at the right time and in the right quantity.
Let us see how inefficient management of purchase order system can affect your sales, ranking on e-commerce websites and more. Let us see how:
Challenges with Purchase Order Management for Amazon and Magento /Shopify powered eCommerce brand portals –
1. Sales momentum loss due to out of stock on Amazon, eBay etc:
Portals like Amazon favor brands or sellers who have inventory available whenever a customer wants to buy. Like I said above, otherwise, it leaves a bad taste in the mouth for the customer. Hence its very important for eCommerce managers to keep track of products with fast sell-through rate. Obviously equally important is to track products that don’t sell well and end up being dead stock. Without any detailed reporting of fast-moving products, you will always end up ordering at whim.
Tip: Consider using an inventory system that auto-suggests how and when to place orders with vendors. It must take into account previous sell-through rate and be able to predict ahead.
2. Losing rank as a seller:
eCommerce is all about consistently delivering quality items within the given timeframe. A happy customer is a customer for life. Hence if you go out of stock for a few products on Amazon and don’t replenish in time, it will hamper your seller account rating adversely. Not having an idea about when to order particular product results in losing your ranking on marketplace platforms like Amazon, eBay, Flipkart etc. Very simply Amazon pushes such sellers down in the ranking algorithm.
Like the above screenshot shows the Amazon sales rank of a product. There were 6 units sold in the first week, and then there was a sudden drop in the sale. With a drop in the sale, Amazon sales rank also drops slowly. (Source)
Tip: Look out for a PO system which can notify you on reaching reorder point of a particular product. Additionally, the system should be able to calculate the time taken for the delivery to reach your warehouse and factor that in the algorithm.
3. Limited storage for brands in Amazon FBA Warehouses:
FBA provides limited storage for brands and having stocked it up with slow-moving products will result in less space for fast-moving products. That might result in a stock out-situation for your must-have products. Again it will adversely affect your overall business. On top of that Amazon storage fees are usually very high as they only store items that move.
Tip: You may consider having a secondary storage warehouse beside FBA. That way you keep the FBA location available for whatever stock is selling fast. Secondary locations are usually cheaper, hence end up saving quite a bit on the storage costs levied by FBA.
4. Unable to track products en-route delivery:
There are circumstances due to which the delivery might be delayed. This can be either due to national holidays/adverse weather conditions/human error. Tracking that is important and accordingly must take actions to manage inventory at the warehouse.
Tip: Consider using a system which can help you keep a track of your delivery partners or reach out to delivery services to check the issue and keep customers updated with the updates.
5. Not staying updated with the expiry date of perishable products:
Dealing with perishable products is tricky for any business from an inventory management perspective. These short-lived items require express delivery. For example, food items, medication, cosmetics or anything else that has a short expiration date, requires special consideration while ordering inventory and shipping to customers.
You must keep track of the expiry date and use
Tip: There are expiry date trackers wherein you can be notified of the products reaching their shelf life. Consider updating it in the tracker along with the product while inwarding.
6. Failure to track stock levels at Freight Forwarder or any interim storage:
If you are importing goods from China / India or any other country, you must have a view of what stock is lying with the freight forwarder. Otherwise, you end up ordering more. That stock must be tracked and handled on a need basis. Freight forward might be able to also do inspection and QC on your behalf. Hence very important to have detailed inventory management there.
Managing all these and coordinating with various stakeholders is a challenging task and calls for a system that can aid in the process. In this article, I am going to talk about EasyEcom solution for inventory holders, Manufacturers, wholesalers to manage their stocks/PO/GRN’s/Reconciliation.
Read further to know more on how EasyEcom can be helpful with resolving all the challenges involved with Purchase Order Management:
Best Purchase order generator software features:
1. Barcode generator for products
Generating Barcode for products is one of the primary things which brands do in-order to track their inventory. EasyEcom helps you in generating barcode and barcode labels, and also stores all the necessary information. This usually helps the product to have a unique identity.
2. Serialize inventory
Inventory serialization helps keep track of individual units using unique serial numbers. Expensive items such as jewelry, mobile phones, laptops etc need more detailed tracking to ensure no inventory shrink.
It is mainly a system generated unique serial number assigned to each item during the inwarding process. EasyEcom platform supports this feature in its enterprise edition.
3. Ability to handle multiple vendors for your product lines
Create, manage and track your vendor list from a single platform. With the help of EasyEcom PO system, handle multiple vendors for the same item along with their pricing structure. This is to make sure you receive your products at the best possible price.
4. Handling multiple currencies and manage Purchase from different countries
If you deal in more than one currency and purchase product from suppliers in other countries then, EasyEcom helps you create the purchase order for international suppliers in their currency.
5. Multi-stage, multi-status, multi-party Purchase Order system
Most companies usually require a staging system to handle purchasing. Purchase plan is usually made by the warehouse team and the finance department approves it. Any system should be able to handle that. In EasyEcom, the approval process can be configured before submitting it to the vendor. After you create a PO successfully, you will be asked to approve the created PO wherein you can check if the right quantity of product is going to the right vendor.
6. QC process at inwarding
Quality Check at
The vendor either refunds the amount of those 10 bottles or send you extra 10 quantities in your next order.
7. Keep a track of products with expiry dates (Perishables)
The concept followed here is FEFO, that is the products with early expiration will be sold first. It is useful for food & pharma companies dealing with the products having a strict shelf life. So to stay stocked up with fresh products in your inventory, EasyEcom helps you keep a track of products nearing their expiry dates. By updating expiry dates during the inwarding process, the system allows you to apply FEFO on these products.
8. Shows suggested quantities to Manage Purchase
With not being aware of quantities to purchase for future sale, the inventory forecasting feature with EasyEcom will suggest you the quantities you should purchase based on your past sale.
For e.g. The system will provide you with the suggested quantities to fill your inventory based on the previous monthly average daily sale or previous season sale. In addition to that, the time taken by the vendor for delivery will also be calculated and factored in.
9. Shipment Tracking
Tracking incoming shipments is equally important in the procurement process. As the products move out of vendors location, until it reaches the buyer, there are plenty of things that can go wrong. Especially when there is no contact or update provided on delivery, it can create complications for the sales team. EasyEcom tracks the tracking number for the incoming shipment and provides options to update the status as the items move along.
10. Get notified when a product reaches its reorder point
Receive system generated notifications on your personal device once a product reaches its reorder point and stay updated with your inventory in order to avoid losing on sales. Here, the sales teams will be made aware by the alerts based on the reorder points for the given SKUs.
The best part?
EasyEcom has easy integration with Magento/WooCommerce/Shopify/Amazon etc…
An automated system like EasyEcom can help you generate an error-free purchase order in a fraction of time. Evidence?
Consider use case of an existing EasyEcom client who uses Purchase Order management to grow their sales.
Luffy pets, being one of the best stores for providing best care foods and toys for our pets have started using EasyEcom to improve its perishable products sale.
Luffy Pets buys pet products from its multiple vendors spread across different countries. The major challenges which company had come across are,
1. Delay in shipments:
Shipments used to arrive at vendors location later than expected, which could either be due to national holidays or bad weather conditions. Because the vendors were not provided with any tracking number of courier services, Luffy Pets had to answer multiple calls if the package doesn’t get delivered on the expected date.
Solution: EasyEcom provided an option to update AWB number with courier service details in Purchase Order approval form. With this, the Package can be tracked on a timely basis and can be coordinated accordingly through courier service directly.
2. Managing expiry dates for perishable products:
The company deals with perishable products on a daily basis. Fresh food, meat, chemicals, and pharmaceuticals are examples of perishable items that used to get spoil or become unusable after some finite time. They had issues with managing similar products with different expiry dates.
Solution: EasyEcom helped them update the expiry of a product during inwarding process and apply FEFO process on these products at the time of shipments. This helped them save a lot of time and products from getting spoiled.
With the upgrades in technology, let us now see how the Purchase orders were managed when there was no system to work with. How this process was manually taken care of.
Comparison of Purchase Order Management, manual v/s automated:
It is important for you to know that it is never late to get started with an efficient procurement process. If you feel like your business needs control of its expenses and improve its profit, then an automated cloud-based system like EasyEcom is a solution for you to keep an active eye on your business growth.
Prepare Yourself for Holiday Inventory Planning, Like a Pro.
Excited for holiday season? That’s a lame question to ask! Who wouldn’t be excited for holidays?
To make our holidays enjoyable, who helps us in making it more exciting? The restaurant owners, caterers, eCommerce companies, shop-owners, event planners, entertainment companies etc so as to make their customers happy and earn profits!
This blog is a discussion on tips and tricks for successful holiday stock planning by retail stores or brands. How businesses do their stock planning before holiday, during holiday and after holiday season will decide their bottomline for that year.
Few tips to be prepared for a successful holiday season
By taking customers survey and feedback on their expectations or requirements will always help companies to understand what is going to make a store more appealing and can plan on strategies beforehand to improve sales.
- Comparing previous year data helps businesses to plan for their upcoming season sales.
- Keeping a note of mistakes done in previous sales period and strategize on making the upcoming sale more productive.
- Keeping up with the recent trend by being updated with social media happenings, upcoming movies, shows and events in order to design products and advertising strategies to successfully attract customer with relevant deals.
- Making the store more customer centric in order to drive repeat business, making it more organized to earn customers loyalty and profits.
- Planning on product promotion through banners, social media sites or by organizing product launch events to reach more people and generate sales.
- Tracking the amount of time taken for a particular product to arrive. This will help in keeping up with inventory level planning.
- Placing orders in advance to be ready with the stocks well before the start of holiday season to avoid any last minute rush
- Using an Inventory Management tool for inventory planning, to be updated with online or offline sales of a particular product.
- For online sale, using a omnichannel platform to maintain multiple channel visibility will help brands to expand their business across channels
What needs to be done as you approach the date of holiday rush or during the holiday?
It is all going to take most of the time in planning out the marketing strategy to attract customers. This is regardless of the fact whether the company is into selling fashion apparels, electronic items, home decor, vehicles or whatsoever. Towards the end of the article, we will talk about a successful product launch by a major electronics brand. It’s interesting to note how their first launch was a major failure and then subsequent launch during holidays brought them to the promised land. Exciting story ahead, but for the time being let’s discuss few things that brands need to be doing as they approach the season:
- Brands will have to carefully plan on marketing their businesses to gain sale through different mediums like: radio, TV commercials, flyers, social media sites or promotional email.
- Targeting right customers when planning for campaign through Google / Facebook PPC and in social media. Segmenting the right audience and then aggressively going after them results into increased sales vs mass marketing.
- The more the offers during holiday season, more customers get attracted towards the store. Offers can include heavy discount on products, while ensuring minimum required profit margin, providing freebies to customers on spending particular range of amount in shopping from their store.
- Urging buyers to post a selfie with product and coming up with a contest on social media for them to win free goodies from store. This can be a game changer for consumer brands. Consumers have a habit of following social media religiously. Getting few early adopters to post their selfies on social media can create a viral effect that too organically. Brands can also create mass following by getting celebrities to post selfies on social media using their products. This has a huge pull and can bring in exponential high sales.
- Readiness to procure items in short notice, they can plan to set their reorder point and be ready with stock replenishment plan. Otherwise, can buy extra inventory in advance and maintain safety stock.
- Store with multiple locations should be ready with a plan to transfer their stocks from one location to the other if last minute surge happens at one location. In case of eCommerce, quickly the fulfilment can be routed to the other location. You will require a multi-location WMS solution for that.
What if the stocks are still left in bulk after the season rush? What should stores be doing in order to avoid huge loss on the left out or unsold products?
Managing Business after Holiday Season
After holiday season is all about clearance. If the inventory level looks easy and the stock is almost cleared, plan on restocking the store with new goods. If not, then you need to plan for clearance sale on slow moving products.
- Providing heavy discount on slow moving products. Companies can plan to sell overstocked products at low prices.
- Strategizing on selling products with one on one offer. Brands can apply offers applicable on these products as one on one or one on two sale offers in order to clear the stocked up items.
- Distributing discount coupon to employees as a token of appreciation for successful implementation of holiday rush.
- Open a poll with employees to suggest clearance idea and provide goodies to the employee and family for the best suggestions.
- Making a note of mistakes done this time will come handy with the start of next holiday planning.
At last this is all about maintaining profits and improving sales and marketing in the retail (online and offline both) industry.
We are sure there is a lot more to these suggestions. It is not that easy to carry out the above process. The main issue is definite on practical implementation. Ones the brands start getting hands on experience, it starts getting nonchalant in executing the plan successfully.
It is always imperative to start planning as soon as possible for the big holiday rush like, Christmas, New Year, Halloween etc for a successful year ahead.
Now let’s talk about the major brand that used holiday season to promote their new product line.
Successful Product Launch by Phillips during Holidays
Philips being one of the largest electronic company across the world came up with a new product launch, Philips Air fryer, in July 2012. The company thought it would be a great success without running a whole lot marketing campaign or promotions. As, this product provides healthier and tasty food with 80% less oil consumption, company thought more customers would be interested in buying without much persuasion.
Problem with Initial Launch of Philips Air Fryer
They faced lot of issues with the launch in the market as the cost of the product was high and was used to prepare only 2 to 3 dishes only. Also, the big question was, how cooking without oil would make the food taste good.
This failure was right before the holiday season. A failed product during holiday means dead inventory and end of life for the product. However Phillips didn’t want to wind down so easily on its Air Fryer, hence assorted to a bunch of aggressive moves to drive much higher sales during holidays.
Subsequent Actions and then the Final Launch of Philips Air Fryer
So the company came up with an idea to launch smart marketing campaigns for the product to educate the customers.
In order to improve search results on Google, Philips marketing team came up with an idea of promoting on social Media and YouTube channels by starting an online cookery show.
The YouTube channel featuring healthy daily recipes through an online chef celebrity and sharing it on social media, promoting the recipes with 80% less oil.
After their campaign was live across the social platforms, they started getting engagement from customers and their sale started boosting up.
Digital media is a huge platform to grab the attention of the targeted audience only if used correctly. Philips Airfryer has used it wisely whether it is targeting audience through video, creating interactive contents on Facebook, uploading videos or opening a community forum. They have used it all to leverage the product recognition and to create awareness about it.
The whole campaign helped them to connect with more audience and increase sale by 266%.
Below is a beautiful picture of Philips Air Fryer.
Happy Frying Without Frying 🙂
International Order Routing for Amazon Multi-Channel Fulfillment (MCF)
Finding it difficult to manage orders from multiple channels? Or is it an issue of setting up warehouses to expand your business internationally?
Not to worry, Amazon FBA has it all sorted for the brands wanting to multiply their business across geographies and channels.
Amazon MCF – Boon for multi-channel sellers
Amazon FBA has expanded further allowing its sellers to use FBA for non-Amazon orders as well. Being a seller using multichannel fulfillment (MCF) at FBA, a lot of companies have been utilizing it as an advantage and running their businesses across channels. They drive sales on products from eBay or other online websites and web stores on Shopify / Magento etc. Amazon takes care of warehousing, shipment & return process.
Amazon MCF is available in USA, UK, Canada, Germany, Spain, Italy, France and Japan. To be eligible in MCF, brands have to list their inventory on Amazon for sale as well unless they are registered with their Pro Merchant accounts. Using their Pro Merchant accounts in MCF, brands are allowed to sell on non-Amazon sites without listing their inventory on Amazon.
Now let us see how multi-channel fulfillment works with FBA:
Step by Step Guide for MCF Process:
- Open a merchant account on Amazon
- Selected inventory is submitted to Amazon fulfillment center
- Create inventory listings for those products on required websites (other than Amazon)
- Customer buys the product from another channel
- Create a shipment order with Amazon as per chosen shipment option along with customer details,
Standard (3-5 business days)
Expedited (2 Business days)
Priority (next day)
- The order gets picked, packed and shipped by Amazon
- Tracking details get shared with the customer In order to process the return, Amazon receives the returned product and adds it back into the inventory if it’s in sellable condition.
How FBA handles International Amazon Orders
Brands wanting to sell in multiple Amazon sites such as UK, France, Italy etc can create a connection between their primary FBA location (for example US) and other international Amazon sites using Build International Listings tool:
- By clicking on the above link, start with building an international listing
- Select your source and target marketplace
- Create offers to be applied on inventory
- Define pricing rule as per your currency
- Set the shipping priorities, whether by self-fulfillment or FBA
- Review the settings and continue.
Source Marketplace is where sellers have set-up their primary Amazon seller account such us USA. Target marketplace is the place where sellers want to expand their business to such as European Amazon sites.
After setting up their pricing and shipping settings according to the International Shipping charges, the listing done in source marketplace will be shown in the target marketplace where they can change and adjust the prices accordingly.
Clicking on Language switcher at the top right of the page, one can switch between the marketplaces where changes in settings are required.
Selling Internationally outside of Amazon and fulfilling using MCF from Single FBA location
Amazon allows shipping international orders from supported FBA locations. So for example, if you are running a Shopify store focusing on UK, you can still fulfil those UK orders from the USA FBA. However as the volumes increases, this becomes increasingly more expensive to ship internationally. Hence brands need to analyze their order patterns and establish local FBA locations.
International FBA setup
Amazon has separate warehouses available in different countries. So, if you receive an order from Canada, you will want to have your products delivered from Canada FBA; on receiving an order from Mexico, you will want it to be delivered from Mexico FBA to avoid extra charges applied for distant delivery. In order to do this, follow the following process:
Open local FBA locations in countries wherever major volume is coming from.
Link the local Amazon store with the local FBA setup
Selling Internationally and fulfilling using MCF from Multiple FBA location
Once a brand opens multiple FBA locations and is generating orders through sources other than Amazon in local markets, it creates a problem to route the orders. Amazon doesn’t provide any solution currently to dynamically route orders to different FBA locations.
This can be solved using a dynamic order management solution that has advanced order routing capabilities. If the solution has ready integration with FBA and other channels from where the brand is getting orders, it can help to reroute the orders to nearest FBA warehouse.
This order rerouting feature will help you avoid extra charges involved in distant delivery with FBA. At the same time, reduced delivery timelines will ensure happy clients and hence better brand perception.
Detailed Process of Order Routing between Multiple FBAs for MCF:
The brand registers with the order management solution
Integrates the required FBA accounts along with other channels
On receiving an order which needs to be fulfilled by Amazon, it can fetch the customer details and depending on the distance and stock availability can route the order to the nearest FBA location that is able to fulfill the order.
This is a powerful capability in a competitive market. Brands are increasingly going global both via Amazon and through other sources. This setup enables them to grow their business across geographies without having to worry about opening fulfillment centers on their own and also save tons of costs by doing local fulfillment using FBA enabled MCF.
Spotlight on your key business objectives with Amazon MCF and proceed further with a favored opinion. Go selling!
Proven Method to Inventory Forecasting and Accurate Budgeting – By EasyEcom
Let’s have a look at this graph which is a typical supply chain management lifecycle curve. This graph explains the inventory management system cycle for SKU ID 100324. After we consider various factors affecting inventory levels for the SKU across geographical locations, competition, feedback, promotions, Supplier time, etc they reach four critical numbers.
- Maximum Stock Level:
This is the optimum stock level for the particular SKU. In this case, it is 100.
- Reorder Point:
At this stock level, a new purchase order is generated. This number is arrived after considering the time taken by the supplier to deliver the goods in the warehouse. Here the reordering point is 42.
- Low Stock Warning Level:
This level is the warning level for the SKU going out of stock. In this case, it is 15.
- Restocking Level:
This is the level after the reordered quantity is delivered in the warehouse. In this case, the number is 90.
Now imagine doing this for all the SKUs in your catalog. In a supply chain, the above graph poses some difficult questions. The biggest dilemma that an organization faces is related to the inventory levels for its products.
Every merchandiser wonders about these questions:
How much should I order/manufacture?
When I should start the reordering process?
Inventory forecasting is the process adopted to efficiently answer these challenges.
What Is Inventory Forecasting:
Inventory estimation (forecasting) may be defined as a process of predicting inventory in future time periods. More specifically inventory forecasting is a scientific approach of predicting sales during a specified future period based on the proposed marketing plan and a set of uncontrollable and competitive forces.
All this may sound very difficult. But this becomes really straightforward if you implement the right solution. Below I will show you an example of the same.
Factors affecting inventory
There are several internal and external factors affecting sales of an organization:
- Seasonality of inventory
- Technological failures
- Labor issues
- Supply chain related factors
- Change in government laws
How to use Inventory Forecasting Software To Predict Demand Accurately
Forecasting inventory will ultimately determine the fate of your retail business as it’s a big factor in profitability figures. Any system used, needs to consider purchase or sales made in the previous month; previous season or any custom duration depending on the upcoming time period.
To illustrate this better we are going to use the examples of EasyEcom’s Inventory Forecasting software.
EasyEcom software helps to overcome hurdles involved with calculating the sales and planning inventory with ease. It helps you to plan future sales based on your previous history.
Let us look at scenarios where EasyEcom can be helpful:
Inventory Forecasting Scenarios:
Inventory planning based on previous month sale
In order to plan your inventory for next month based on previous month sale, you need to provide the number of days you want to plan the inventory for (in this case, 30 days) along with the range of days you want the inventory planning to be done based on (in this case, previous 30 days).
To be specific with a particular product or vendor, you can further apply a filter based on the brand name, SKU or vendor name.
The system will then provide you with the suggested quantities to fill your inventory with, based on the previous month average daily sale. The suggested quantity also calculates the time taken by the vendor to deliver the products.
Inventory planning based on previous season sale
Similarly, the system will provide you with the suggested quantities to plan on upcoming Christmas holidays, based on the sales made during last Christmas. For this, select the number of days you need to plan for (in this case, 60 for December and January month) and date range based on previous year custom month, December and January.
With that being done, you also have to look after the fresh stocks currently available and are moving out faster. For Christmas season inventory planning, applying a few additional factors (for holiday rush) on fresh stocks can help you avoid losing new/existing customers.
Iterative Inventory Forecasting
So, when it comes to forecasting, a lot of uncertainty is involved in any organization. In order to reduce the adverse effect of these uncertainties, an organization can take an iterative approach towards determining the inventory projected in the future.
For example, a subscription-based web business ought to be able to project website views based on its organic search placement, paid advertising, email marketing, and other alliances & promotions. Make a projection of traffic by summing up your sources, then estimate the conversion rates, and that gives you unit sales.
Now as time moves on, we need to make changes in the assumption. For example, if we predicted 10% month over month growth rate by spending $5000 per month on advertising. However, due to budget cuts, the company can only spend $3000. That will cut down the traffic by 40%.
Similarly if suddenly a competition decides to discontinue their services, suddenly the conversion rate might shoot up by 30-40% hence boosting the inventory demand. Generally quarterly or monthly revisions in predicting mechanism are recommended. This depends on the nature of the company products and time required for a feedback cycle to complete for that particular assumption.
Advantages of Inventory Forecasting:
- Happy Customers:
When a customer gets the product without a delay, they tend to trust you more for their needs. This helps in repeat purchases and loyal customer base. Consider a scenario where the customer would require a product on a regular basis which, if not procured on time may affect his business. If he is able to purchase the product and get this delivered on time, he will be a loyal customer for life.
- Reduced Stockouts:
This is one of the most talked about yet common issues among retailers for sales loss reasons. Factors need to continuously optimized to get a better estimate trend. An accurate forecasting method not only ensures lower inventory idle time in the warehouse but also the less operational cost is required.
- Efficient Production Cycle:
Forecasting involves closely monitoring present inventory to understand the future. Responding to and adapting to the changes or pattern of consumption by the consumers gives a better idea of how the future is going to be.
- Lowering Safety Stock:
When your inventory forecasting process is accurate, it increases your reorder capacity and thereby reducing the safety stock level to free up capital. If a business is using proper forecasting to plan then you don’t need to carry high safety stocks to manage your inventory.
- Reduced Idle Stock:
Obsolete inventory is a big burden on the margin of any business. To reduce the burden, it’s very essential to identify, repurpose or removal of obsolete inventory. It decreases the volume of inventory on hand and subsequently both direct and indirect costs of keeping the obsolete inventory will be reduced. Having a reliable forecasting inventory method will reduce ordering any excess stock and increases net profitability.
- Managing Manpower Better:
When a business suddenly starts to grow, manpower requirement is also increased to handle the operations. So an inventory forecasting report helps the organization be better prepared for a sudden growth in future inventory with a proper manpower planning in place. For example in the case of a subscription business, if the inventory is going to shoot up in few weeks’ time, the recruitment effort has to start immediately in order to be able to fulfill the inventory.
- Better Pricing and Promotion Strategy:
With a better co-ordinated and planned promotion strategy always yields better results. With integrated distributor-level promotions and related forecasts helps to improve the flow of goods. It also achieves better results in terms of availability and stock fill rates.
- Better Supplier Negotiation:
When you know exactly when and how much you are required to order; the negotiation becomes easier for you. The supplier is also aware of the kind of business he can expect from you and hence gives you a better price. By having a negotiation based on logic and research you are positioning yourself as a credible customer who wants to have a long-term relationship rather than one-off spot buy.
- Plan Sales Strategies:
Forecasting is very helpful with Product Management, Marketing and Product Design planning. Decisions on promotions, pricing and purchasing are made with data derived from inventory forecasting. This has a positive impact on the sales and profit margin.
Benefits of using Inventory Forecasting with software like EasyEcom:
- With inventory aging report, we can identify stale inventory. End of season sales offers can be created for such inventory to free up the working capital
- Plan inventory based on multiple sales channels and offline sale combined together
- Flexibility in planning inventory based on different time frames (sales velocity during holidays vs regular time)
- Receive automated alerts at inventory reorder point
- Ability to accept backorders in case demand goes over the board. New purchase orders can be created for respective vendors for the backorders.
How to Measure Inventory Forecasting:
When you have data available, anything can be measured but to accurately forecast inventory, the focus should be on those data points which are relevant. Before we jump into how to do inventory forecasting, we need to consider a few crucial points.
A Forecast Accuracy Metric That Is Objective, Quantitative, And Manageable.
Deciding what to forecast?
Level of aggregation: Individual products or product groups? Weekly, monthly, or quarterly inventory? Units of measurement: units or dollars?
Determine How Often It Should Be Measured
Feedback cycles of each assumption used in forecasting
But one thing the management needs to understand that no matter how sophisticated the forecasting techniques you use, forecasts will never be 100% as it involves factors that are not controlled by you and a lot of uncertainty involved in it.
Techniques Used To Measure:
While forecasting inventory, there will be two sets of products. First is for the products that has stable inventory and has past data available. It can be forecasted more accurately. The second type of products are items that are new, low volume and innovative products. It is very hard to predict an accurate forecast with considerable uncertainty involved. And to make the problem more complex, there are zero historical data and some assumptions have to be made to calculate inventory.
The techniques used can be broadly divided into 4 different categories.
- Trend forecasting:
These are forecasting methods. When a particular type of upward or downward trend for a particular product is involved, this method is used for forecasting. The double exponential smoothing, regression, triple smoothing etc are few techniques popular in this category.
- Graphical forecasting:
When you have data and you convert them into a graphical representation, it conveys the pattern visually. Visual representation of data is easier to comprehend. This technique can give you a general trend without getting too much into understanding the data. Previous inventory exploration, trends and patterns help you forecast easily.
- Qualitative forecasting
When historical data is unavailable or irrelevant or are scarce, the forecasting is done based on an intuitive or judgmental evaluation. When a new product or a new innovation is launched, this scenario arises. Some typical qualitative techniques are based on personal insight, sales force feedback, panel consensus, market research, visionary forecasting, and the Delphi method.
- Quantitative forecasting
When a historical inventory data is used to project future inventory, it becomes more accurate and relevant. The available data and the other relevant factors are taken into account while forecasting the future inventory in these methods. The popular methods adopted by organisations are the Extrinsic and intrinsic techniques, time series forecasting methods (relying on past data) supplemented by qualitative judgements.
Inventory Forecasting Best Practices:
Keeping a few very crucial points in mind while calculating inventory forecasting gives maximum output.
- Get input from various stakeholders. Take input from Sales, Marketing, and Finance.
- Competitors sales data
- POS data
- Amount of obsolete stock
- Frequency of stockouts
- Measure Forecast Accuracy at the SKU, Location, and Customer Planning Level
- Adjustments Based on Feedback of Current Cycle & Focus on exceptions
- Talk with customers
- Review the data for trends
It is always very beneficial to have a great inventory forecasting team who work on a regular interval to understand the trend and derive accurate inventory forecasting method.
It is important to understand what kind of data is more important with respect to forecast accuracy. Is it the external data like competitor sales, POS data, sales team forecast or the internal data like stock-outs, shipments, orders, etc?
Apart from this, it is also important to determine which time buckets are most suitable for forecasting. For example, whether to use monthly time buckets or weekly time buckets for planning. All these factors changes from organisation to organisation.
Nobody can predict 100% accurate inventory forecasting every time. It is very essential to understand this and review the past forecast, learn from the trends and improve the accuracy.