ecommerce

January 15, 2024

Unveiling the Dynamics: FBM vs. FBA – A Comprehensive Guide

SJoyAdmin Blog amazon, ecommerce, fulfillment

In the ever-evolving landscape of e-commerce, sellers are constantly exploring different avenues to optimize their operations and enhance customer satisfaction. Two popular models that have gained prominence in the realm of online retail are Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA). In this blog post, we’ll delve into the intricacies of these two models, shedding light on their differences, benefits, and potential drawbacks.

FBM (Fulfillment by Merchant):

Definition:
Fulfillment by Merchant, as the name suggests, involves the seller taking on the responsibility of order fulfillment. This means that the seller manages the storage, packaging, and shipping of products directly to the customers.

Benefits:

Control over Operations: FBM provides sellers with complete control over the entire fulfillment process. This includes the ability to customize packaging, manage inventory levels, and have a hands-on approach to customer service.
Lower Fulfillment Costs: Sellers may find that fulfilling orders in-house can be more cost-effective, especially for smaller businesses or those with specialized products.
Flexibility: FBM allows sellers to adapt quickly to changes in demand, as they have direct control over their inventory and can adjust stock levels as needed.

Negatives:

Limited Prime Eligibility: FBM sellers may find it challenging to qualify for Amazon Prime, potentially missing out on the significant benefits associated with this program, such as increased visibility and faster shipping.
Storage and Logistics Challenges: Managing inventory, storage space, and the logistics of shipping can be demanding for sellers, especially as their business grows.

FBA (Fulfillment by Amazon):

Definition:
Fulfillment by Amazon is a model where sellers send their products to Amazon’s fulfillment centers. Amazon then takes charge of storing, packing, and shipping the products when a customer places an order.

Benefits:

Prime Eligibility: FBA sellers enjoy the advantage of being eligible for Amazon Prime, giving their products a competitive edge with faster shipping options and enhanced visibility.
Scalability: FBA is well-suited for businesses looking to scale quickly, as Amazon handles the complexities of logistics and allows sellers to focus on other aspects of their business.
Customer Trust: Products fulfilled by Amazon tend to instill a higher level of trust in customers, as they benefit from Amazon’s renowned customer service and returns policy.

Negatives:

Fees: FBA comes with associated fees, including storage fees and fulfillment fees, which can eat into profit margins, particularly for low-margin products.
Less Control: Sellers using FBA relinquish some control over the fulfillment process, relying on Amazon’s systems for order processing and inventory management.

Ultimately, the choice between FBM and FBA depends on the unique needs and goals of the seller. While FBM provides control and cost advantages, FBA offers scalability and the prestige of Prime eligibility. Sellers should carefully evaluate their business requirements, product characteristics, and growth plans to determine which model aligns best with their overall strategy.

June 2, 2020

10 eCommerce Success Factors

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If you are an entrepreneur, you know how vital it is to make sure that you know all of the eCommerce success factors. This article will help you to reduce your expenses and create raving customer experiences.

Cost Per Order

You will need to analyze your eCommerce fulfillment expenses. This will be broken down into six categories.

Freight
Indirect labor
Facilities – including security, maintenance, and your eCommerce order fulfillment providers
Shipping supplies
Management and supervision
Direct labor

In general, you will notice that freight expenses will typically exceed all of the other components. Making these notes will give you a starting point to spotting weaknesses in improving the process.

Reduce Your Freight Costs

If you haven’t negotiated new agreements for a while, now is the chance. eCommerce order fulfillment providers are in hot competition. Which means you do have the upper hand. Conduct some research using all of your data to find whether you’re overspending on your shipping.

Productivity

Your picking and packing need to be quick and effective. In general, your picking and packing department will make up more than 50% of your overall costs per order. This excludes outbound shipping. How can you increase your labor productivity? Are you incentivizing your staff?

Reduce Employee Turnover

Hiring and firing of staff costs money. This comes back to incentivizing. Are there career paths and opportunities for your staff to advance? If not, can you create those pathways?

Automation

There will be several places where you can apply automation to your benefit. If you work with specific eCommerce order fulfillment providers, you can check if they have automation. If not, their process could probably be faster. Look for synergy; this might be where you need to hire a consultant to evaluate your full operation.

Packing Supply Cost

A conversation with your packing supplier can help you find the data and possibly reduce the number of cartons and dunnage.

Compare Service Level Metrics

Here are some service-level metrics to compare yourself to.

Dock-to-stock (two hours)
Order fulfillment (100% of orders shipped the same day as ordered)
Returns (Same day)

How did your business compare? Do a deep dive into your processes and make the changes where necessary.

New Systems

Is your warehouse software going to enable you to grow as a business? If not, you’re going to need more robust tools to help you. Having all the data you need will ensure you make the right decisions at the right time. Advance shipping notices, labor management, productivity analysis, and so much more is available on the right system.

Management

Your managers will directly affect everybody’s productivity. It would be best if you found where your managers can make improvements. This will mean all of the work is of higher quality, and you will see more productivity overall.

Outsourcing

Depending on the size of your business it might be more prudent to outsource your eCommerce needs to eCommerce order fulfillment providers.

Continuous process improvement is the requirements of modern-day e-commerce success.

Follow these tips and watch your business thrive! For more details contact us today.

May 5, 2020

eCommerce Business Trends

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As ever, the way that people shop is changing. As it has been for the past decade, e-commerce is leading the way on most of those changes. Now, we’re taking a look at some of the most recent trends in e-commerce. As the digital market continues to grow, here are a few trends you should follow.

AI-driven shopping

E-commerce stores have, for a long time, lacked the helpfulness of the in-store assistant that brick and mortar retail offered. With the increasing use of AI chatbot assistants, that may not be the case for much longer. Companies collect a lot of data on their customers. Now, AI-enable sites are using that data to make more tailored recommendations and provide more specific help.

A more personalized experience

Hand-in-hand with the rise of AI e-commerce is increased personalization. The data we store on customers can be used to make sure the shopping experience is as catered to them as possible. This has already been done for years through product recommendations. However, this is only the tip of the iceberg when it comes to e-commerce personalization.

People are subscribing

A lot of businesses are using subscription plans to keep customers returning month after month. Not only does it allow businesses to better predict profits and fulfillment requirements. It also creates a greater incentive for customers to keep shopping when paired with loyalty programs.

Voice search is growing

Smart speakers such as the Google Home and Amazon Echo are driving a large volume of voice searches. People are getting used to speaking their queries aloud at a pace they never did with smartphones. As such, e-commerce stores are expected to implement voice search functions more commonly in the future. Search engine optimization may rely a lot more on voice search, too.

The rise of augmented reality

Augmented reality is when digital images and overlayed on a real-world backdrop. More stores are starting to use AR-enabled devices to help customers make better choices. For instance, some furniture brands will use AR to show customers how certain pieces of furniture will look in their home. More lifestyle and fashion brands are expected to start using AR previews, too.

Mobile shopping continues to rise

The past decade has already seen smartphone e-commerce rise to overtake the amount of shopping done on laptop and desktop. That rise is continued to only expect more as mobile devices offer smoother shopping experiences and better online connections. As such, many stores are focusing on creating better mobile UE and more efficient customer journeys on mobile.

A choice of payments

Customers expect to be able to pay in their preferred method. Traditionally, e-commerce businesses offer the choice of credit or debit. Then they added PayPal and other online payment services. Now, many are offering cryptocurrency. It’s recommended that business owners keep an eye out for the next biggest payment platform. There could be profit in catering to it first.

The above trends are just some of those expected to shape e-commerce in the coming months. Online businesses that invest in them could see big profits before too long.

May 5, 2020

eCommerce Growth Rate Update

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In the past year, e-commerce business growth has accounted for 16% of total retail sales. This represents a 14.9% growth in US e-commerce sales in 2019 alone. To put a figure to it, this represents over $601 billion spent in e-commerce stores. Not only is this is a recurring rise, but it’s also a bigger rise than seen in 2018. 2019 has been the most successful year in e-commerce business growth yet.

eCommerce as a Part of Retail

E-commerce represents a growing proportion of overall total retail sales. When comparing retail businesses and their online equivalent, digital sales represent a growing part of the whole. In 2017, e-commerce sales were 13.2% of all retail. In 2018, they were 14.4%. At the end of 2019, they are 16%. In fact, 2019 saw the biggest single annual percentage point growth since 2000.

How US eCommerce is Growing

From 2010, the rate of growth in e-commerce, in general, has remained relatively steady. Then, it was roughly 17%. In 2014, it had dropped to around 15%. In 2017, it rose to grow at a rate of 16% again. It has risen and dropped within that range throughout the years. However, when compared to the growth of the total retail market, this is a significant increase in growth. From 2010 to 2019, total retail growth has fluctuated between 2% and 5%. As such, e-commerce sees levels of growth not seen in the total retail sales figures.

Quarterly eCommerce Spending

US e-commerce business growth lead to sales of $187.25 billion in fourth-quarter spending. This was a rise from the $160.89 billion in 2018. This represents a growth of roughly 16.4%. This is in part due to the decline in growth seen in 2018, the lowest growth rate since 2008. Q4 saw the highest rate of growth out of all quarters in 2019. By comparison, e-commerce only increased by 11.6% in Q1 sales and 13.6% in Q2 sales. Q4 led to e-commerce business growth levels of 18%, the highest rate yet recorded

The Role of Amazon in eCommerce Business Growth

Of many of the stats mentioned above, Amazon accounts for the lion’s share. It is the number 1 grossing e-commerce business, dominating the market at an accelerating pace. In 2018, Amazon saw transactions totaling to $177 billion. In 2019, this rose to nearly $222 billion. This is a rate of growth of 25.3%. That’s a significantly higher rate of growth than general e-commerce sales. As a result, Amazon accounted for a third of all e-commerce sales in the US in 2019.

As the stats above show, e-commerce is here to stay. While growth slowed in 2018, it picked up the pace in 2019. Not only was this year the highest-grossing year in e-commerce. It was also the best year for e-commerce business growth overall. While Amazon continues to exert growing dominance over the market, there are still retail gains across the whole market.

May 5, 2020

Order Fulfillment Trends

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Recent years have seen a significant shift in the way consumers shop. This has led to notable changes in order fulfillment trends across seller landscapes. In e-commerce, especially, supply chain managers are starting to serve consumers directly.

According to Ryan Kelly of FedEx, this has led to a drive for ‘fast and free’ fulfillment solutions. “Consumers love fast. They love free. They overwhelmingly prefer free, but their expectations are that free gets faster.”

Unsurprisingly, then, online retailers with the best shipping, cost, and speed are all coming out on top. Companies looking to compete must find ways to work around them. But, what exactly are the order fulfillment trends that you should be looking out for?

Small Sellers In The Big-Time

According to third-party logistics providers (3PLs), it’s no longer enough to assume small customers have simple needs. Instead, the rise of social media and celebrity endorsements mean small brands can explode at any time. This, along with the fact that small online businesses stand side-by-side with global brands, means fulfillment is changing fast. And, 3PLs need to account for this in their warehouse solutions.

According to Kelly, a long-time FedEx employee, much larger order fulfillments are now standard in short time frames. She reports that “…small merchants are competing with really, really large companies and so they have got to meet the consumer expectations.” And, keeping on top with order fulfillment is their best chance of doing that.

The Onset of Omnichannel Sales

Remember, customers right now want ‘fast and free.’ Omnichannel sales achieve that by offering faster solutions than ever. Using localization from key’ flow centers,’ brands like Target are already better able to provide speedy delivery. And, they do it all with less cost to them or their consumers.

This is because such omnichannel focuses shorten lines between stores and warehouses. Far from outdated single orders, retailers now need single order management systems. These allow them to optimize shipping for sales and increased margins. As speed becomes ever-more the name of the game, that’s an order fulfillment trend guaranteed to pay.

Augmenting Reality

As with every industry, technology has infiltrated warehouse solutions. This is evident in cloud computing, but also augmented reality. After all, the need for speed doesn’t start once products leave the space. Warehouses also need to implement efficient processes.

Products like AR glasses achieve that by simplifying picking processes. Early trials have even revealed increased employee satisfaction. This technology is so promising that DHL supply chain is already testing various pilots. Further, MHI expects such technology in 70% of their facilities in the next five years.

Going Global

Online sales also allow companies to trade globally. Order fulfillment trends need to account for this to make the most of new markets. That means implementing tools to simplify everything from cross-border taxes to transportation expenses. Remember, after all, that consumers want items fast and free. Only by learning markets and adapting can 3PLs satisfactorily meet this order fulfillment trend. And, only then can e-commerce sellers truly compete.

March 30, 2020

Coronavirus and eCommerce

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As of the writing of this article, the current COVID-19 outbreak case count is over 500k worldwide. As the cases grow in number, keeping safe and preventing further spread is key to fight the virus. From the reports out of the CDC, the COVID-19 virus can be transmitted in ALL AREAS, including areas with hot and humid weather. The best measure to fight against COVID-19 is by frequently washing your hands with disinfectant soap.

This blog serves as a small guide on preventive measures to protect yourself, your co-workers, and family members. Also serves as insight to why the e-commerce business sector is due for a rise despite declines in the financial markets.

People of any age range can be infected by COVID-19. Older people, and people with pre-existing medical conditions (such as asthma, diabetes, heart disease) appear to be more vulnerable to becoming severely ill with the virus. The WHO advises people of all ages to take the following steps: bathe twice per day, eat foods that boost good immunity health, take multi-vitamins, and regularly have 8 hours of deep sleep.

This plus frequent good hand washing hygiene will improve your chances of not being infected by the virus. Lastly is the use of masks or other protective facial medical gear. If you are healthy, you only need to wear a mask if you are taking care of a person with suspected COVID-19. Wear a mask if you are coughing or sneezing frequency. Masks are effective only when used in combination with frequent hand-cleaning with alcohol-based hand rub or soap and water. If you wear a mask, then you must know how to use it and dispose of it properly to ensure the spread of the virus is not caused by neglectful disposal.

Recent reports have shown a drastic decline in various industries in their sales and overall production numbers due to many citizens staying home to self-quarantine. eCommerce is one of the few select industries performing well despite the current market conditions due to the current outbreak. Main reason for this being the need for essential supplies and goods for day to day living.

People are fearful of going to commercial centers to purchase supplies due to the increase risk associated with large crowds. Thus, many are opting to shop digitality from the safety of their home and have their goods ship to them. This limits the exposure risk while bringing business to the e-commerce store and their associated suppliers. While many store fronts and centers are closing down or shorting operation hours, e-commerce business are afforded the opportunity to take up a lot of clients and market share by being able to operate 24/7.

For more insights and guidance, contact ShipJoy today!

March 24, 2020

Coronavirus and eCommerce: Risks & Opportunities

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Coronavirus and eCommerce

The covid-19 pandemic has affected every facet of life, and eCommerce is no different. If you are running an eCommerce business, you are going to need to know how the Coronavirus is going to impact you and the industry at large. Indeed, according to US government data, in the last quarter of 2019, online sales accounted for 11.4% of total retail spending. Here are some things to consider that are going to influence your business and your decision.

Some Believe eCommerce Will Thrive

Due to things like social distancing, as well as the issues with the economy and the closing of businesses, many believe eCommerce is set to thrive in the coming months. Titans of the industry, such as Amazon, are well-placed to take full advantage of this in the near future. However, this is not an exact science, and there are many who are sceptical about the future of online shopping as well.

It’s a Little More Complex

The future is unclear and uncertain at this stage, and there is every chance that eCommerce businesses could feel the full effects of this as well. If the economy tanks, and businesses have to close it is going to be much more difficult for eCommerce businesses like yours to source and order products. What’s more, supply chain problems and declining customers could all play a role as well. And with only 20% of businesses saying they are taking aggressive action in the face of the virus, we could run into more problems.

The Future

At this stage, the future is a complete unknown, and this can be scary. And, despite the government’s plans to offer aid and support to businesses and employees, it is unclear what to expect. This is a scary and worrying time for a lot of business owners, but the resources offered by the government may provide some relief and respite from the financial burdens of a potential recession.

All of that said, if you are running a eCommerce business, now is the time to be bold. Now is the time to find the right partners. Now is the time to make your move.

70% of the Fortune 500 was started during a recession. Your brand might be the next one on that list.

Contact ShipJoy today to capitalize on this opportunity.

March 4, 2020

How to Reduce Your eCommerce Costs

SJoyAdmin Blog costs, ecommerce, profits

ecommerce, cut, costs When you can reduce the operational costs of running an eCommerce store, you can pass these savings on to the customer and generate more profit for your business too. This article will help you reduce eCommerce costs.

For eCommerce entrepreneurs, shipping is often one of the most significant costs your business will encounter.

Furthermore, today’s consumers are vocal about their shipping expectations. In addition to wanting a range of expedited delivery options, the majority of consumers expect free shipping to be included with their purchase.

High shipping costs and limited delivery options are top reasons for abandoned carts. By focusing on your shipping options, you can successfully increase your sales. For business success, however, you need to ensure that your shipping costs are reduced as much as possible, without negatively impacting the customer’s experience.

Fortunately, there are a variety of ways to minimize your shipping costs and boost your sales, including:

Use fulfillment services

Fulfillment companies take the stress out of running an eCommerce store by storing your inventory and picking, packing and shipping products directly to your customers. This negates the need for you to rent your own premises and hire in-house staff, which reduces your expenditure.

In addition, fulfillment companies operate on behalf of hundreds or thousands of clients. This means fulfillment firms, like ShipJoy, can negotiate more attractive prices with carriers. When these savings are passed on to you, it means your shipping costs can be significantly reduced.

Size reduction

The weight and size of your parcels play a major role in the cost of shipping. By reducing these as much as possible, you can minimize your shipping costs too. To achieve this, however, you’ll need to have a range of packing materials on hand and the expertise to ensure products are securely packaged using minimal materials.

While these could be a costly system to set up yourself, you can access these facilities straight away when you choose to partner with an established fulfillment service provider.

Reduce shipping distance

The cost of shipping depends on a number of factors, such as the size and weight of the parcel, the speed of delivery and how far it needs to be shipped. Sending a parcel from Houston, TX to Dallas, TX, is cheaper than sending a shipment from Houston, TX to New York, NY, for example.

If you handle your own shipping, launching multiple inventory sites can be a major investment. For most eCommerce store owners, the costs involved make this an unattractive option. However, choosing the right fulfillment company will enable you to access multiple inventory sites and dispatch centers around the country. With your goods stored at strategic locations, you can dramatically cut your shipping costs and facilitate faster deliveries.

Minimizing the Costs of Running an eCommerce Store

Reducing delivery charges is a sure-fire way to attract more customers while minimizing operational costs ensures you can keep more of your revenue. Partnering with an established fulfillment provider could be the most cost-effective and efficient way for you to successfully grow your business and reduce the cost of running your eCommerce store.

For more information contact ShipJoy today.

March 4, 2020

How To Grow Your eCommerce Business

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Generating sales and increasing revenue are the top priorities for eCommerce stores. For business owners, a successful eCommerce store is one that attracts new customers and increases the lifecycle value of existing buyers.

However, the digital landscape is continually evolving, which means you need to modify your marketing strategy to ensure success. To grow your eCommerce business, take a look at these top tips now.

Target existing buyers

As well as enticing new customers to your store, nurture your existing customer base too. Loyal customers are already familiar with your brand and products, which means it’s easier to guide them through the sales funnel.

Generally, it is faster and more cost-effective to target existing customers than it is to attract new ones. By targeting your existing customer base, you can boost sales figures swiftly and significantly.

Optimize your webpages

If you want to attract new customers, they need to be able to find your store and products. The most reliable way to ensure they can do this is to optimize your webpages. By practicing good SEO techniques, you can ensure your webpages appear when users search for relevant content online.

As users are already searching for related products, the traffic you generate from targeted keywords equates to warm leads. This shortens the sales funnel and enables you to grow eCommerce store more effectively. From keyword research and on-page SEO to backlinks and social media integration; eCommerce SEO is essential for business success.

Be mobile-friendly

Increasing numbers of people are using mobile devices to access the internet. In fact, the use of mobile technology has increased so much that Google has introduced a mobile-first indexing algorithm. Due to this, it’s vital that your eCommerce store is mobile-friendly and offers a great user experience on mobile devices.

While launching a separate mobile website is one option, using responsive web design can be easier and more effective. By creating a responsive eCommerce store, you can meet Google’s mobile-first indexing requirements and ensure users have a superb experience when visiting your store, regardless of what type of tech they’re using.

Keep up to date

Even if your inventory remains the same, it’s important to update your product descriptions and content regularly. As well as refreshing the text on a regular basis, add new images and videos to your eCommerce store too. This gives existing customers a reason to keep coming back and helps to promote certain products and ranges.

Launching loyalty programs and time-limited discounts is a great way to keep your website feeling fresh and gives users an added reason to make a purchase. The Fear of Missing Out is a major factor in the buyer’s decision-making process, so be sure to capitalize on it.

Increasing Sales Online

To grow your eCommerce store and your business, attracting new customers and creating loyal fans is essential. By using a range of marketing techniques, you can successfully increase your reach, explore new markets and achieve your target sales figures.

Want to know more? Contact ShipJoy today.

March 4, 2020

Improve Your Customer Experience with Expert eCommerce Fulfillment

SJoyAdmin Blog ecommerce, fulfillment

eCommerce Fulfillment

It’s safe to say that eCommerce is more than a trend. Almost 2 billion people regularly shop online across the globe. If you have an online business, that statistic might have you jumping for joy.

But, it should also make you realize the importance of eCommerce fulfillment. Simply put, because there are so many online shoppers, your business may also have a lot of competition.

So, what is eCommerce fulfillment and why is it so important to your customers’ experience?

A “Prime” Example

We live in a fast-paced world, and giants in the eCommerce industry have spoiled consumers when it comes to getting the items they order as quickly as possible. Perhaps no one has done it better than Amazon, especially when it comes to its Prime service.

Amazon Prime offers two-day shipping in most cases. Now, thanks to warehouses across the globe, many people can even get their Amazon packages on the same day if they live in a larger city. It’s an “I want it now” mentality that those in the eCommerce industry need to be able to keep up with, or they might fall behind when it comes to sales.

If you don’t think that’s true, consider this: 25% of shoppers have canceled an order because the shipping speed was too slow.

It doesn’t just stop with the shipping speed. Consumers need to feel valued from start to finish throughout the buying process. If your business has hidden fees or extra shipping costs, customers are more likely to abandon their carts.

What Can Your Business Do to Improve the eCommerce Experience?

There are a few things to keep in mind when you’re considering how you can improve eCommerce fulfillment for your customers.

First, you have to consider your receiving options. Of course, it’s exciting whenever someone places an order. But, if you don’t have the inventory on hand to process that order and get it out quickly, you’ll likely end up with an unhappy consumer. Having inventory on hand typically either means housing it at a warehouse or having a third-party company take care of it. Always plan to have enough inventory to cover your sales so you can ship things out quickly.

Order processing includes everything from retrieving the items from where they are being stored to packaging them correctly before shipping them out. In many cases, aspects of the processing timeline can be streamlined through automation or other advancements in technology. This helps to prevent user error and can make the process faster.

One of the best things you can do to keep your customers happy once a product is shipped is to keep them informed. Tracking technology is easy to implement, so once a customer is given a tracking number, be sure to update them on where their package is and when they can expect to receive it. Being as detailed as possible will help the customer to be more patient with their delivery because they’ll be more “in the know” about the shipping process.

There are many things to consider when it comes to eCommerce fulfillment, from where to store your inventory to whether or not to offer incentives like two-day shipping. While it’s important to keep your own costs in mind, a good rule of thumb is to consider the needs of the consumer first. If you can cater to those needs, you’re more likely to receive more orders, find more success, and grow your fulfillment solutions.

Want more help with delighting your customers with advanced eCommerce fulfillment? Contact ShipJoy today!

Image courtesy of macrovector.

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