Insourcing Your Core: Why These High-Growth Retailers Chose Not To Use 3PL

To 3PL or not to 3PL, that is the question. Third Party Logistics (3PL) has grown tremendously in recent years, mirroring a dynamic and ever-growing e-Commerce market. Whilst 3PL fulfilment can be a godsend for a growing business, it is not a one-size-fits-all solution and many businesses question whether out-sourcing such a critical component of an online business is really the right choice. Given that this decision is usually made by retailers planning for substantial growth, making the wrong choice can have a devastating impact.

Learn from two extremely successful online retailers, St Frock and GoLights who have made the decision to in-source what they believe is the core operation of their business.

What follows is a full transcript of the webinar. If you’re short for time, skip straight to Panel Introductions, or read on for five key take-aways:

  • The Outlook:When it comes to logistics and fulfilment, the experience of new generation retailers is limited. In the days of larger, sort of omni-channel retailers, logistics is the backbone of their business. The focus of the next breed of retailers is on growing and curating a brand, creating an experience for their customers, and on channels like social media to create a successful business.
  • A Core Operation: Fulfilment can be termed, the “core” of any online business. Whether a retailer makes it or not, really comes down to these three critical areas in fulfilment: stock availability, dispatch speed and shipping speed.
  • The Benefits: The key logical benefits when it comes to outsourcing to a 3PL include, network efficiencies, scalability, flexibility and being able to tap into logistics expertise and best practices. These work very nicely for retailers who potentially have a simplified product range.
  • Not A One-Size-Fits-All Solution: There are some nuances and complexities around retailers that would really be a challenge for any third party logistics providers to even be able to modify their processes to service them, without adding costs to their own business as well.
  • Tips On Getting 3PL Right: On how to do 3PL right, it’s important to see if their other clients have similar products and business sizes, having a testing period and being clear on obligations and expectations for an exit plan if things don’t work out.

Read the full transcript below.

Introduction

Rob Hango-Zada: A  big welcome to everybody who’s joined the webinar. Please be gentle on us, it’s our very first webinar. It feels like a backroom production, but we’ve got plants and we’ve got people, so we’re good to go, I guess.

We’ve got a good mix of people on the line. So we do have telco providers, we’ve got retailers, we’ve got solution providers, and a really broad array of attendees. So, you know, I think what James touched a point was, this is a really critical point for a lot of retailers. There’s not a lot of experience that new generation retailers have with logistics and fulfilment. If you think about the days of larger, sort of omni-channel retailers, logistics is the backbone of their business. If you think about it, new generation, new breed of retailers, their focus is on growing and curating a brand, creating an experience for their customers, and focusing on avenues like social media and the like to really create a successful business.

So the whole reason that Shippit exists, and the whole reason that we’re having this webinar today is to really empower retailers to make the right decisions for their business, and to also help them empower them through the journey of creating successful empires themselves. So I’m really thankful to have both Sandradee and Nick in the call today, and I think you’ll learn a great deal from their experiences. So without further ado, I guess, you know, any webinar is only so good as what you can take away from it, so I’ve been very practical and tactical. What I think you can get out of today is really understand the importance of the fulfilment process on your customer, and your business.

Secondly, really about the key benefits of keeping fulfilment operations in-house. There’s a lot of education in the market about the benefits of taking fulfilment out to a 3PL provider that not a lot for the case of, are keeping internally. And it can be a really big black box for a lot of people. So we’ll really like to take the lead on that and understand it a bit further. Also, how to set your business up for success if you do decide to go the route of in-house fulfilment.

And then of course, you know, there are some remarkable partnerships in markets between 3PLs and retailers. And it really is about making the right partnership stick, and that works for anything in the logistic side, partnering with the right carrier is critically important to represent your brand, just as much as it is partnering with the right email provider, partnering with the right website provider, whoever it may be.

So just collecting some tips from, I guess, those that are with us, and then even extending that to those that are on the call with their experiences too. So we’ll talk you through how to choose the right 3PL provider for your business as well. Keeping it nice and open.

Webinar Structure

So the way that we’ll structure the webinar is with three key modules. The first is really explaining why fulfilment is a core activity, and kind of talk a bit about what core activities really are. Secondly, we’ll move to the case for 3PL, you know, and what considerations come to mind and why a business would choose to outsource. And then we’ll come to learning from both St. Frock and Go Lights who have experienced a 3PL type of fulfilment relationship, and have also experienced the other side of the coin of owning that fulfilment journey in-house as well.

So there will be a panel discussion, we’ll go through a few questions there, and then what we’ll do is we’ll flip it over to the audience for a bit of excitement. You know, I’ll try and do my best as a panel, kind of moderate a bit. Obviously I’m no Paul Greenberg, but please bear with me.

Fulfilment As a Core Activity

So to kick things off with understanding fulfilment as a core activity. So no doubt, if you’re an online retailer, fulfilment’s critically important to you. Making the sale is a difficult journey, driving conversion to your website, having the right product mix, all those are critically important to achieving your kind of success with the customer base. But really, the rubber doesn’t hit the road until you get to the, what we call the “arse end” of eCommerce, which is the logistics space. And that’s getting the products to the customer’s hands.

So let’s go on a bit of a journey before we get stuck into things, you know. If you’re somebody with an idea and you’re sitting at home thinking, “You know what? It’d be great if I could start selling candles online.” You know, you start your business, you start looking for suppliers, you start thinking about how you can construct this, how you could style it, what the brand could represent to your customer. You may launch on eBay store, you maybe launch market stalls to test the product fit. The product seems to work, people are talking about your product, it starts to grow. As time progresses, your business starts to gain momentum. Now, you’re starting to stare down the barrel of what could consequently become a really large business, but you’ve got to make the right decisions.

That is where it’s quite important to start thinking about your fulfilment. So what used to work for you as a little hobby, now probably knowing what works for you, so storing things in your garage, you’re probably starting to outgrow that. You know, finding the right office space, which is a mix of office people and product, and you’re now tripping over products in your office. How do you take that and how do you turn that into a scalable business to the photos that you see, the likes of the Catch Group, the likes of Amazon, even. And you think about those types of warehouses. How do you make that leap and how do you prepare for it?

The other question is, at what point in time do you do it? Because you kind of got to build the plane while it’s in flight, so I think those are the types of considerations that people come to us with looking for a solution on. And this is exactly what the experience of both St. Frock and GoLights have kind of gone through.

Critically, what we find is that sustaining growth lies in three core areas. So if you could really think about logIStics, you know, fully modern business for new retail, as it’s kind of framed in the newer language. You know, it’s about three critical things. The first is about stock availability. So selling stock online is terrific, if you don’t have the stock to fulfil that order, I think you’re in a little bit of a mess.

Second piece is about dispatch speed, and this is what separates good retailers from bad retailers. Getting products out to customers and in an efficient manner, not taking too long to get products from the time an order has been placed to the time the carrier picks it up. So, you know, based on all the retailers that ship through our platform, on average, 25% of the total time it takes the delivery to get from order placed to completed status, is sitting in the dispatching progress piece. So if you think about that, a quarter of the time that customer is waiting is due to the business’ ability to get a product out.

Three-quarters, however, sits with the carrier, so that brings me critically to the next point, which is shipping speed. And shipping speed is quite important. You know, today, driving conversions from online sales is really rested in standard deliver. But, you know, the expectation of the modern consumer is, you know, fast delivery, different delivery options, you know, what about same day, how do you enable that? What about next day, how do you enable that? And what about even faster options that matter as we start as we look into the future, with a lot of innovations that’s happening, the point-to-point delivery space as well.

So critically, you know, whether you’re going to make it or not really comes down to these three critical areas in fulfilment. And this is what we term the “core” of any online business. I think if you’ve ever heard any really successful online retailers speak, they always talk about this fact that they’re a logistics business first, and then whatever product they sell is second. John, when he talks about this all the time, you know, there are logistics businesses who happens to sell fridges. And at the same way we’ve got a logistics business that happens to sell dresses, and a logistics business that happens to sell lighting.

So what are the consequences of getting it wrong? We talk a lot about conversion when it comes to the online sale, but we don’t talk a hell of a lot about retention. All the things we talk about here at Shippit is, “What types of activities do drive retention?” And once there’s been a bit of research on it, nobody’s got the hard and fast facts on what actually happens to bad delivery experiences.

If you’re an online retailer, you’re probably pretty familiar with customer complaints. But there’s only a small fraction of customers who ever actually complain. the majority of which who have a bad experience will never complain, or simply silently slip away into the dark and not purchase again. So lifting the lid on that, what we do find is a negative delivery experience, or a negative fulfilment experience results in about two-thirds of all those customers who have that bad experience vow never to buy from your brand again. Two-thirds. Just think about the cost of acquisition, how much time you spent curating your product mix, how much time you spent crafting your brand, only to leave it in the hands of a carrier provider, who results in a negative delivery experience.

So that’s something that’s really critical to understand here. And then, you know, with the age of social media, I don’t need to say it when they have a negative experience, they jump on Twitter, they jump on your Facebook page. You know, they leave Google reviews about the product and brand experience itself, and it can really tarnish your brand. So these are really critical things to get right when it comes to the right partners in the fulfilment journey.

So how important is fulfilment on the customer experience? Take Jeff Bezos, right? I’m sure it’s not the first time that somebody’s talked about Amazon and how they fulfil and all that sort of stuff. But a little-known fact, or I guess something that’s coming to light a lot more prevalently lately is that Amazon actually own end-to-end logistics process to truly delight the customer. So I think last year they took a lease out on 20 Boeing 747s to cross the nation of America to deliver their products, to hit their two-day shipping promise. And you know, they own their warehouses, they own the logistics network. They’re really closing the loop on what is that customer transaction. That’s how important fulfilment is to Amazon. So if we could kind of take a leaf out of their book and understand what they do well, there’s so much material out there that if you read up on it, it comes down to three critical things in their warehouse.

So there’s a lot of philosophy around a customer-experienced focused warehouse. Amazon’s a big proponent of customer experience, because that’s what keeps customers coming back.

So the first thing that I have in every warehouse is s traffic lights system on every SKU that they carry. So what that traffic lights system does is it tells them when stock levels are critically low. So touching on that core capability of stock availability, if an item enters that red zone more than once, if anyone’s familiar with Six Sigma, they jump into a Kaizen process. Kaizen workshop, which basically identifies how they can prevent that root cause from ever happening again. So they’re actively working on a daily basis to minimise their out of stocks.

Secondly, their warehouse is organised by a random array of product. So pickers are able to actually put new stock into different areas within the warehouse, and what that does is it speeds up the efficiency of their packing process. So any smaller retailer who’s probably tuned in today, you’re probably looking at your stock room, or your warehouse right now, and you’re thinking, “How do I arrange all of these different products to enable picking inefficiency?”

There was a bit of a YouTube video that kind of came out a little while ago about Amazon’s served bananas next to milk, next to laundry detergent, and why that is the case in some of their dark stores. And that really is because it speeds up the picking efficiency for any pick-up. There’s a bit of science behind that.

And the third piece is a two-day shipping guarantee. So it’s not two days for a carrier to get a product from Amazon to the customer. That’s two days from the time that order is placed to the time it arrives on the doorstep of the customer. So if you could take anything away from Amazon and the way that they’re looking at the market, and the way that they’re going after customers, it’s about maintaining focus on those three core areas by looking at it from a customer’s viewpoint.

If you haven’t yet, go out and get this book, “Delivering Happiness,” which is Zappos, for those that don’t know, Zappos is the world’s largest footwear retailer. So a massive proponent, particularly Tony, the CEO of Zappos and founder, is a big proponent of delivering happiness and about the customer experience. So they talk a lot about the core, and a lot about what the core is to run my business. And they say critically, “Never outsource your core component.” They’ve got a very strong view and, that’s kind of, reading about this story will help you understand why, but they also view call centers, keeping them in-house is critically important. And rather than burying your contact number, kicking it on the forehead of every employee and the forehead of every customer so that anyone can look in the mirror and give them a call. That might scare the pants off a lot of online retailers because that means you’re not actually limiting the number of calls you get, you’re actually increasing them. But they thrive on that, they see that as core to their innovation, the same way that they view warehousing as core to their innovation as well. So if you haven’t yet, go out and get this book, it’s fantastic.

So I hope that kind of frames up fulfilment as a core activity for any online business. Now what I want to dive into is the case for 3PLs. So I guess the deciding factors as to why you’d want to move into a 3PL, or choose to change your fulfilment practices.

The Case For 3PL

So any literature will kind of show this very clearly, and there are some key logical benefits when it comes to outsourcing to a 3PL, and these work very nicely for retailers who potentially have a simplified product range, or have found the right path.

The first thing is network efficiencies. So traditionally, if you think about logistics space, it’s all about throughput and all about economies of scale. So as a small retailer, how do you tap into those efficiencies in a sustainable fashion, and in a way that you don’t have to have the massive amount of business to do that? So it’s about optimising space so you don’t have to go on and sign a big lease on a massive warehouse that you can potentially grow into one day. But you can tap into the space that already exists. How do you tap into high-frequency shipping relationships so you can get better rates? How do you hire staff and scale up staffing quickly? How do you get the right pallet racking? How do you get the right facilities and infrastructure inside that warehouse? So that’s really the bread and butter of the 3PL, and that is the core reason why it’s a strength of a proper third party logistics warehouse.

Second piece is about saving time and money. So, you know, the theory is that when it’s your core business, you should get sort of the fulfilment piece right day in, day out, then you don’t have to waste your time trying to figure out things that have already been solved by others. So reducing your time and energy and money spent on running a warehouse is another core business.

The third one is about expertise in logistics. So logistics is really a tricky space, and traditionally, you’d need a PhD to really figure things out in the logistics space, but it’s all in the name and logistics is quite a logical business. And 3PL providers certainly have that worked out because they run a tight ship. It’s a very difficult space to be in, along with shipping providers, it really is where the pressure and the rubber starts hitting the road, so having the right expert is really critically important. And many 3PLs do this very well.
Scalability and flexibility. So if you happen to have a sales spike and you need to start bringing in more stock, where are you going to put it? 3PLs have enough space to be able to move things around, and with the right seasonal mix of the clients, some clients will contract, while other clients will expand, and they’ll fit nicely within a shared warehouse environment.

And the fifth piece is, obviously, being the bread and butter of that business, they’ll continually improve. So their picking practices will get better, their shipping practices will get better, their warehousing operations will get better, always improving and focused on those best in class practices.

Now, in most cases, this works quite well, but for some businesses it may not work at all. So in the case of Zappos, for example, they’re decision for bringing it in-house, it’s really because they found they had a quite complex business, and they really needed to be as close as possible to their stock. And there’s an underlying current at times where you may feel that a 3PL’s focused more on efficiency, whereas you as a business owner is more about the customer experience. Think about handwritten cards, and you know, the time you’ll take to pack an item. Some 3PLs can actually do that whilst others will choose not to and simplify that journey. So this again comes back to finding the right partner because they could at times be competing priorities that do exist. But obviously the more complex the business, and the greater the focus on being closer to the product, is kind of building the case to more or less keep that service and experience in-house.

Panel Introductions

So at this point I’m going to invite the guys from St. Frock and GoLights to share their experiences, so we’ll shuffle in as we can. I’ll get them to talk to you about their journey as well.

So, Nick, you’re free to come on in, buddy. Say hello to the people waiting at home.

Sandradee Makejev: Hi!

Nick Nicolaou: Hello.

Rob Hango-Zada: It’s all great, come on in, it’s nice and cozy over here at Shippit HQ.

So, I’d like both of these retailers to introduce themselves. I’m sure you’ve heard about them before, they’re quite prolific in the eComm space. And, I really want them to kind of inspire those that have joined the call and really help empower everybody that’s joined the call today.

Sandradee Makejev: So St. Frock’s started out at Bondi markets just over eight years ago. It used to be a little bit market store, and then we had the dust storm in Sydney, so I thought maybe I should start retailing online. A few experiments later, I was doing really well, so I quit my PR marketing job, and then I was just selling online. We opened a store that did well, we relaunched the site, and that was great because it helped increase sales. But 2013 was a big year for us because there was only about five people that used to work at St. Frock to run the markets, the store, and online. We were making about, in the beginning of 2013, we were making only about $20,000/month online, which was quite small. We did a few things for advertising and we were able to have 2,400% growth in just under ten months, so we were making, like, half a million dollars by the end of the year. We had to find ourselves a warehouse, we had to teach ourselves about, I suppose just warehousing, shipping. It was like a massive learning curve, but we took that all in our stride, and then year on year we were growing 100% each year, which was also very challenging as well. So, and I know I mentioned 35 staff, but today we have 45 staff helping us around there in the high season, and then it drops back to about 35 in the low season.

I absolutely love it, I love the problem-solving, I love the challenges, I even love the craziness of it all. It’s not for everyone, but it’s been a fun ride.

Rob Hango-Zada: So that growth seemed to be, I guess would have kind of shocked you in the early days. I mean, how did you get from 2,400% growth? I mean, how did that happen?

Sandradee Makejev: I think when you are in it, I was working seven days a week at that time, so I was living and breathing it, and just taking it in my stride. And I suppose, I don’t know, just wanting to, like, I knew that we were going to be expanding, and I just kept setting things up as I land, so I was always thinking about the future, as almost building and doing, my whole process.

Rob Hango-Zada: That’s amazing. And I guess now it’s sustaining and running this massive sort of business, an office full of 35 or 45 people. I mean I can imagine your challenges are a little bit different these days than what they were when you were at Bondi markets.

Sandradee Makejev: Definitely. The Bondi market, that was just me and one other staff member. But today I work with an amazing team of women and a few men, and I think, as you grow as a boss, I was very green back then, so I used to do everything myself. But now I work with an amazing team that each person is empowered to run their department, and they do it so well. I’m just amazed.

Rob Hango-Zada: That’s fantastic. Well done. And then it brings us to Nick from GoLights, so tell us about the story.

Nick Nicolaou: So our story is not too dissimilar as Sandradee’s. We started the business at the back of a family backyard. We would do five and ten orders, we had an eBay store. At that point we decided to launch GoLights, have our own website. We graduate to sharing a warehouse with a roofing company, with a room not too much bigger than this. You all can’t see but it was pretty small. So you know we experienced very rapid growth. We had to teach ourselves everything, whether it had to do with shipping, or marketing, technology, customer experience, even lighting. I mean, we weren’t really in the lighting space previous to starting this business. So, very steep learning curve, and we had to learn, what, you know, I think Rob mentioned something about building a plane while you’re flying it. It actually feels that way. So we kind of progressed, and the business kept doubling every year, and we kept trying to find ways to grow, but also just to take that growth and not having any experience running a business of that size, you know, most small businesses fall into this kind of abyss of doubting yourself, not really backing yourself to do certain things. You start looking for experts around you to help, you ask advice, you meet other people in the industry. And we did that fairly early on, and at that point we decided that we needed to look at how we could streamline our processes, and one of the things that we decided to look at first was warehouse operations, what we were good at, what we were bad at, and what we should do with it. So I’ll leave the introduction, then we can move on to some of the juicy stuff.

Rob Hango-Zada: So you mentioned that, somewhere in that mix, that you didn’t know much about lights at the time, so you had to learn that in addition to everything else.

Nick Nicolaou: Yeah, that’s right. We wanted to be in the eCommerce space, we wanted to be in the importing game, just for some macro reasons that we thought made sense to try and leverage ourselves to those two areas, and then the product became the third piece of the puzzle. We looked around at different categories, and we liked the lighting space, construction was booming, people became very power consumption-focused, and the increase in power costs. So in any event, one of our co-founders is an electrician. By trade, he had some insight into the lighting category, so we chose lighting, and yeah, we all kind of learnt as we went, and became experts in the product, which I think you need to be to be successful. If you don’t know your product, you’re probably not going to get there in the end.
So the learning curve has been very steep in many categories, but especially in the product category.

Rob Hango-Zada: Amazing.

Sandradee Makejev: Well done.

Rob Hango-Zada: Thank you for sharing that. And look, I’m really honoured to be in the company of two amazing business owners and entrepreneurs. So let’s kick in to it.

The Decision For 3PL

So you’ve both experienced a quite significant growth earlier on in your journeys. You obviously both didn’t have a logistics background, and really the eCommerce background. So let’s sort of start with the first question, I mean, why the decision to outsource fulfilment at that stage, and can you run us through that, maybe Sandradee can kick us off?

Sandradee Makejev: Yeah, sure. The big thing for us was that we were growing 100% year on year, we were worried about the scalability. I’m also worried about the costs involved as the, like, doing it in-house ourselves originally. Basically we thought if we could outsource, we could focus on our core competencies and create the business domestically and globally. We thought that using a 3PL would be more efficient and improve our customer experience. When we thought we could save costs on shipping, warehousing, and staff, we also thought that international shipping would be more cost-effective and seamless, and basically we were running out of space.

Rob Hango-Zada: Yup, and did you find that you guys were looking for similar things? I mean, was cost really important for you guys at that point? Were you looking at improving customer experience, or what was that prompted you guys to look at 3PLs?

Nick Nicolaou: Rob, all of the above. Al of the above. For us, one of the main considerations was we had strategy that we were going to roll out over the next few years. And one of those strategies involved possibly setting up a showroom to be able to showcase that lighting. We were getting started importing some of our own products in the decorative lights space, and we felt that if we had a physical location, even just a boutique showroom that could drive sales online, and get the brand out there.

As a result of that strategy, we had decisions make in… we’ve run out of space in renting a warehouse in Botany in Sydney, which was about 300 square meters office and warehouse, two levels, and we didn’t have any space to put the stock that we were importing. The goods were somewhat bulky, so that became a very critical point to consider. Furthermore, our lease was running out and we had to make the move, so we made the decision to outsource a warehouse operation to allow us to lease a property where we could have our office and our showroom. It was very difficult, especially in the Eastern suburbs of Sydney to find a property where we could have a showroom, a warehouse that was big enough, and office space in the same place.

So for us it was either-or type decision, and we thought, we’ll outsource to a 3PL warehouse operation, for the reasons that we all discussed and focus on rolling out a showroom and putting our team into a nice office space. So we kind of felt like we were in a situation where we needed to make… We were at a crossroads for the business. Strategically we thought it was a good play, and we did a lot of research, we became students of business, and business models, read tons of books, and I believe in the school of thought that you should always outsource to experts. You cannot be an expert in everything you do, and that is the way to scale your business. That still holds true and we still believe that. So ultimately that’s why we made the decision to move to a 3PL.

Rob Hango-Zada: Great. So you mentioned something there in the Sydney house crisis, or Sydney property crisis, all that sort of stuff, so I think that’s big enough for most people, but, yeah. So if I can summarise what we just heard is, obviously it’s sustaining the growth, momentum, and kind of staring back at the boxes that are staring you back, the poles and dresses, and it’s kind of one of the bases that prompts the need to change in operation. Obviously, to save some time and really focus on what we’re good at lead the logistics back to the experts as well. And obviously, one thing that I’ve picked up from Sandradee was something around speed and agility as well, so that you can focus on your core, sort of, business core priorities. Getting the showroom, in Nick’s case, focusing on the product mix, doing your buying trips, all those sorts of things.

3PL Incompatibility

So I guess what I want to understand is, did it suit your business? So obviously, it worked well for lots of businesses, but in some cases it doesn’t work out. I mean how did it work for you guys, and did it suit your business? So maybe let’s start with Sandradee.

Sandradee Makejev: Well, it quickly came to light that it didn’t suit our business, and there’s nothing wrong with that, it is what it is. And then we had to start to really think about what we’re going to do, like, because we exhausted a lot of avenues in trying to make the partnership work with the 3PL, and we had to make that hard choice at the end to bring it back in-house.

Nick Nicolaou: For us, and again, we did look at this very closely. The thesis for us was it was going to be faster, cheaper, less hassle, and more accurate. We’d never run a warehouse before, so we assumed that by outsourcing it we would achieve those four outcomes.

What actually happened was the opposite, and it’s because it didn’t actually suit our business. We were on a somewhat of a hybrid model where we import some of our own product. We buy and resell product from other lighting wholesalers around Australia. And we also use some supplies that dropship product for us. So that comes with its own technological challenges in terms of routing orders to and from, specifically with the warehouse situation, we had somewhere between 10 and 15 deliveries coming in everyday from different suppliers. These are lighting suppliers, they’re not very technologically efficient, so there’s always holes, and that’s basically holes, that’s the space we’re in and  other businesses face the same kind of challenges.

For us what we actually needed was a very agile, robust, flexible warehousing solution to deal with all these issues coming in everyday with all these deliveries. The wrong colour was sent, the wrong globe, the wrong size–these scenarios show up a dozen times a day, and you need to be able to move quickly. Because of our model, whereby if you buy something on our website, we’ll have it delivered from a supplier the next day, and then ship it to out customer, our customer’s already been waiting one or two, sometimes three or four days, so we really have no margin for error once these deliveries show up. So a critical point for us was to get these deliveries inbounded and dispatched right away, so our customers need not wait any longer.

Now that actually conflicts greatly with the way that most 3PLs work, and we worked with two separate 3PL companies, and that’s a long story, but it was the same with both. Essentially, what they try and do is they work towards efficiency. They don’t work towards the customer experience that Rob touched on earlier. And when we have a delivery coming in and there’s some issues with it, the efficient play is to leave the issue alone, put it to the side, and work on everything that doesn’t have an issue. Doing that makes sense, but what happens is the customer that’s waiting for that order for that one product that’s now been put in to the corner to be dealt with at a later date, they’re waiting. And now our customer service team is being bombarded with a call.

So, a long way of saying, “No, it didn’t suit our business,” because there were some nuances, and got some permutations in the workflow that was required because of our model, but the 3PL operators could not handle.

If I didn’t have another 30 customers to deal with, sure, they could handle it, they’re much better at warehousing than we are. But that’s not the case, right? They’re a business, they deal with other clients, and they try and build a solution that does most of what you want for most of their customers. It isn’t customised to our business. And ultimately that’s where we kind of… That’s the mistake that we made in not understanding that. The battle is won around the edges, and it wasn’t efficient. So, yeah, it didn’t suit our business for those reasons, and there are some more specifics that we can go into in regards to cost. We like the idea of variable storage rates, we liked the idea of only paying for the storage that we use, but as far as I’m concerned, that’s a myth. And the reason for that is this: on Day 1 you go in there with 300 pallets, it’s great. A week later you ship, let’s say 20% of your stock, but you still get billed for 300 pallets. Why? Because it takes time, energy, and money to consolidate those pallets. So what we’ve found is, as we get picked with the pallets unconsolidated because that’s not priced into their pricing model. You pay per pick, you pay per order. There’s no consideration for, “Oh, we need to consolidate these pallets.” So in any event, what we found is variable storage rates didn’t help us. We found our source of pain is the same amount, regardless of how much stock we shipped out. In fact, we had staff at both 3PLs doing these for us, which cost us money. So in the end, we ended up taking the same amount as we would have if we had our own space. So that’s one tangible example.

Another example where a 3PL didn’t suit us is, we’ve got 15,000 products. Some of them are globes, some of them are one-meter-long chandeliers. We found that it was very cost-effective for us to package products in a certain way to take advantage of our dead weight due to the Australia post, where we only pay for the per kilo rate, so we could package together a few different boxes that didn’t weigh too much and save a lot of money. Again, that doesn’t fit in with the 3PL workflow. They make a margin on the freight, they make a margin on picking an order, they don’t make a margin on consolidating your shipment so that you can save money. And you don’t begrudge them for it, that’s just the model that you signed up for. So we found that it didn’t suit our business for that reason as well, when we could reduce our freight costs greatly by utilising that strategy. And that was for our business. Doesn’t really apply to fashion, I don’t think. So those are a couple of tangible reasons why it didn’t suit our business.

Rob Hango-Zada: Thank you for sharing that, Nick. You’re right, there are some nuances and complexities around your business that would really be a challenge for any third party logistics providers to even be able to modify their business to service without adding costs to their own business as well. I guess the complexity of lighting, I’d imagine, Sandradee, in fashion…

Sandradee Makejev: Very similar experience to Nick, especially things like the way that we used to package our items to lower the weights and size as well, so we could get cheaper shipping, or like combining things. It’s a very, very similar experience.

Rob Hango-Zada: I imagine there’s quite a few SKUs coming and going when it comes to seasonal fashion items as well.

Sandradee Makejev: Yeah, well basically, we get all of our fast fashion styles in, and then we pretty much have to clear them by the end of the season. That’s like new stock every season.

Nick Nicolaou: Some other challenges that we had as well revolved around, you mentioned SKU complexity. Some of our SKUs can be 20 characters long, so it takes a lot of time and attention to detail to actually get that inbounding and dispatch correct.

Another reason it didn’t suit our business is you’re restricted by the hours of 3PL operators. And this is very important, and it was lost to us at the beginning, but became very apparent as we got more involved. So when you’re really busy, and you’ve got a backlog, what I would do is get down to my warehouse, pack some models, and get them out. I’d come in on a Saturday, do the same. Come in on a Sunday, and do the same. You can’t do that when someone else runs your warehouse. And they don’t pack on weekends, obviously they tend to be more expensive, but most of them don’t. If there’s a backlog, you just have to live with it, and you move on to the next day and hope to clear the backlog.

So we were in situations, especially when we moved into these 3PLs, where we couldn’t get an order out for a couple of weeks while they got set up. And in the world of eCommerce, that’s just disastrous to not be able to do that. And the frustration kicks in, when it’s as simple as, “Can’t we go down there and pick the order ourselves?” No, for all the other reasons that involve insurance, and OHS etc. So we found we were restricted by their workflows, their regulations. When we did it ourselves, we didn’t have those problems. The team came in and we just dug in there and we got things done. And in business, nothing always goes the way that you plan it to, so you need to have a contingency for what happens when it goes wrong. Doing nothing is just not a strategy, and waiting for Monday to roll around.

So I think I just wanted to add those couple examples.

The Case For In-Sourcing

Rob Hango-Zada: Ok, fantastic.  So I guess just with time in mind, we’ll just flick through a few more of the slides and get to the other detail but I guess we have heard a lot about the complexities, the key risks and challenges. You’ve got a big business, it’s growing, there’s lots going on, even more so now than probably what was going on before you outsourced your warehouse. So why on earth the decision to bring it back?

Sandradee Makejev: I think the biggest decision for us to bring it back was that we wanted complete control over our customer experience and our business processes again. We didn’t feel that with our 3PL we were able to…we felt helpless, quite helpless a lot of the time. So it was really important for us to bring it back because at the end of the day no one is going to care as much about your business as you do. As Nick said, putting in those extra hours before 9am, or after 5pm, or on the weekend, no one will care as much as you do.

There’s a few things, like the company was failing their KPIs, we lost thousands of customers over a four-month period, our phones were non-stop ringing, four lines at a time, we had to increase our own customer service team which we were still retained, threefold, just to cope. So it was a very stressful and disruptive time for my business. Resolution times were, instead of a few hours to fix a customer problem, it was days, weeks, or things never got resolved and I had to refund customers. My refund rate increased 57% and things like we were in a chokehold, because there were long lead times to receive stock.

Fast fashion, you’ve got to put up new stock all the time, new styles, you’ve got to remain relevant, you’re got to remain fashionable, its like churn and burn. So long lead times to receive in stock, which would take us a few hours, would take them over a week, so we were losing customers as well, because there wasn’t enough new stuff to shop from. Things like trying to get stock transferred to our boutique, it just never happened or it was wrong so our boutique stuff hurt a lot with sales and probably one of the big things at the end we had to seize international shipping.

We had been growing that organically for quite a long time over the years and we were doing quite well, we had 300 international orders a week, and that was without trying. So having to seize international shipping for several months was quite hard, and probably the staff morale, that was really hard as well. Staff were stressed, we felt helpless, so we were like, let’s bring it back, let’s take control, we can fix this, we can win back those people. If we have control we can fix those processes and get back to business.

Rob Hango-Zada: Got it. So I guess there’s a whole variety of reasons in there but predominantly it’s about bringing back control and being able to intervene personally is key, right Nick, would you share that?

Nick Nicolaou: Yes, very similar, I would answer the question in a couple of words, why we made the decision to bring it back. We didn’t have a choice. We would have folded. That’s the plain and honest answer, and there’s a lot of reasons for that, most of which Sandradee touched on. Our refund rate tripled, so that affects cash flow, in a disastrous way, especially when you’re in a capital intensive industry like us where we are importing some of our own stock which is quite expensive.

So our customer experience rating went from 97% to 85%. 85% is a pretty high number, but it’s pretty bad when you’re talking about customer experience, if you’re pissing off 15% of your customers and they are all going on Facebook or online, writing bad things about you and your staff, you’re just not going to survive too much longer. So for us we had no choice, we had to bring back the warehouse, and as Sandradee said, being in control of the customer experience, and being in control of our own destiny is very very important. One of the things that we didn’t consider when we went to a 3PL was what happens we you have a dispute with your partner. In most instances the customer has the power.

You’re in a dispute with someone, you don’t like what’s happening, you walk out the door, and business is over. Unfortunately with a 3PL you can’t really do that because they’ve got your stock, and that puts you in a very vulnerable position when it comes time to negotiate during disputes. Disputes happen every day in every business, we all live with it, we deal with it, you negotiate through it. Very, very difficult to do that when a company has your stock. You can’t get orders out, and at that point you need to make a concession, just to ensure that the business continues. So the risk of that for me is the biggest downside and the biggest risk to outsourcing any core competency, could be marketing, could be your customer service, it doesn’t matter what it is, for us, if we weren’t in control of our warehouse, and we didn’t have the ability to go in there and fix issues ourselves, we were not willing to bear that risk any longer.

How They Did It

Nick Nicolaou: Ultimately we put a plan together and we moved. We moved fairly quickly and we brought it in house. We bought a building, in Sydney, which isn’t too fun. But that’s just what we had to do, I was very fortunate to have a Co-Founder in Vince Hansimikali who we kind of sat down with, and we talked about it we just said let’s pony up a ton of money and go buy our own building so we don’t have to deal with this again. Also need to mention our team, our staff, they kind of went through a lot and they’re still with us. That’s how you get through it, you just come together as a team and you move on. So ultimately we just had to do it to keep the business afloat.

Rob Hango-Zada: So importantly, so how do you bring it back?

Sandradee Makejev: One of the key things like if you’re in this situation where you need or want to bring it back in house, or even if you’re considering using a 3PL, I actually hired a 3PL consultant, which was great for me because I only had my experience, up until I moved to a 3PL, then had the experience of the 3PL, in which I needed to bring it back in house.

So having that 3PL consultant just prepared me for like all the different scenarios that could happen, from good to bad, so when I went into the situation to terminate, to move, to organize the whole thing, make it fit back into my warehouse. I had someone there that was able to guide me through the whole process and give me confidence, and also prepare me for whatever may happen.

Rob Hango-Zada: What about I mean, obviously then shifting into your own warehouse, what types of tools, what type of processes, I mean how did you do that whole piece?

Sandradee Makejev: One of the main things, and not to promote Shippit, but Shippit was very instrumental in helping us move back. Very seamless, easy, no-fuss, it was actually the one thing that I didn’t really have to worry about when transitioning back in house. I was able to focus my whole energy on how I was going to move from one warehouse back into another one. Just basically setting up a whole new side to the business again. But that was great because we were able to set it up better than ever.

Rob Hango-Zada: That’s great to hear.

The Result

Nick Nicolaou: Yeah, like I said we bought a building and we just decided to bring all our stock back, set it up, in an inefficient way, because we’re not experts at warehousing. We definitely don’t do it in a way that… we don’t do it in a way that is very scalable, but at least we get it done. We will deal with the problems as they arise. Shippit was also instrumental for us, it just helped integrate very seamlessly into, we use Magento so we were fortunate they had already built that integration and it allowed us to use a variety of carriers.

We’ve actually been able to decrease our freight costs greatly, on account of the Shippit platform. We’ve got some of our own freight deals which was very good, but Rob and the team have done a good job of bringing onto the team some quality partners. We found out freight costs decreasing drastically. When we first moved which was about 10 months ago, but also in the last few months with some of the work they’ve been doing, bringing on new partners. So essentially what we did is rip the band-aid off and we didn’t hire a consultant, which I wish we did. Because it would have been a little bit easier, but we got there and now our warehouse is doing more orders than we ever did, our dispatch rates have dropped, our refund rates have dropped, our customer satisfaction has increased.

And we’re still not very good at it, but at least we’re in control of our own destiny and we’ll become great at it, like every other aspect of the business we have taught ourselves. So we got back to our growth, we actually grew 77% in the year that we were in 3PLs, despite all the issues. We made the BRW Fast Starter’s List, so the team’s much happier, and everyone, everyone is happy and focused on the way things are going. So yeah, that’s essentially how we brought everything back, and that’s what the results have been so far.

Rob Hango-Zada: That’s very well done guys. It couldn’t have been easy, the whole piece, but to really be empowered enough to run your own operation is no mean feat. So tremendous job to both of you. So I guess Sandradee, how were the results for you, how did that turn out?

Sandradee Makejev: Well basically just having greater control over the customer experience, and that was really exciting for our team, because it was so stressed for such a long period of time, that everyone was all in, arms, legs, tongues, everything, because they wanted to see the business succeed. We’d had such a great journey, up until outsourcing it, that everybody just wanted to succeed again. So we were able to knuckle down, we improved our costs for warehousing, shipping, staff, our customer satisfaction has never been higher, our pick accuracy have never been higher.

We’re on track to grow another 120% this year, which is massive considering we’ve had negative growth of 20% the prior year, which is quite upsetting when we had always been growing 100%. We were able to re-launch international shipping, same-day delivery, a whole bunch of cool stuff. We wanted the big things to me, I was determined to win back those customers we had lost, so we did like a win back campaign where we managed to re-activate 30% of those customers, and 50% of them are repeat purchasing, so it’s all down to the hard work of the team. Obviously it’s my business, but I’ve got some amazing, amazing women that just really wanted to see Go Lights get back to previous success levels.

Rob Hango-Zada: Amazing guys, well done.

Nick Nicolaou: Our combined costs for freight, fulfilment, warehousing, including your rents and all this was about 15% from when were at the 3PLs, we’re currently 8.5%. So that’s significant when you’re thinking about financials, when you’re thinking about cash flow, profitability, how do you grow the business? Well, you need to be profitable to do it. So that’s been very important for us, being able to get our costs back under control so we can fund all our growth strategies.

Tips For Nailing 3PL

Rob Hango-Zada: Amazing. Well I know we’re tight on time, if you could finish just on tips and tricks on how to do 3PL right. Obviously, it’s a tricky balance for all, but if you could just summarise the top tips in how to choose the right 3PL partner, if that’s the right solution for your business, and then what we can do is throw questions back to the audience. Sorry we’re running a bit behind schedule, but hopefully we can cover these off, because I think these are really important too.

Sandradee Makejev: Basically, do the clients have the same kind of products and business size as me? That’s really important, have a look at their other clients, sometimes it’s great to be with a specialised 3PL, versus someone who has mixed different businesses. Can they handle the order volume and the varying demands of multiple clients? That was probably a big mistake for me because there we so many different kinds of businesses that had varying demands, that it meant that I only got a small part of their customer service team, and it felt like I got pushed to the back of the queue a lot.

My problems were really severe, like our order levels would come up during our busiest season. I was helpless to actually get anything done. Can they handle complex SKUs? How do they conduct their rolling stock take? A big thing if I ever considered a 3PL again would be, I would want a list of all the clients, and I want to check their Google reviews and social media accounts, I don’t just want the standard three references, I want to see what the customers are saying about their business, because that’s going to be a true indicator for me. Is it working well for all these other clients? What expectations does your customer have for delivery and do they align with their other clients, and for that business.

For fast fashion, we have to get it out within a few hours, or it has to be to the customer within 24 hours. We need to compete against iconic, all the other online stores, that’s super important to me. A clear indication of monthly admin, receiving in time frames and hourly costs, because they can blow out. Make sure you get an itemized account of all charges each month, and question them, don’t be afraid to. Probably the last thing would be to get quotes from different 3PLs, compare price, process and make sure you understand it.

Nick Nicolaou: Yeah, I’d add a couple of things to that. I think getting a list of their current clients and checking the clients, the customer’s Facebook and other social media platforms is imperative because you can’t hide that. If someone is at a 3PL and they are not doing a good job, their customers are going to tell everybody.

Sandradee Makejev: And Google reviews. You can’t delete those, they are there forever.

Nick Nicolaou: So that, I would put that right at the top of the list, because it’s fairly easy to do and no one can fake it. I would also say just a point on when considering 3PL. For us, we were under duress when considering 3PL, it was a rush decision. We felt like we had to make a move, you’re growing a business and you’re looking at different ways to do it. So I feel like most people are in that frame of mind, when they’re considering 3PL, doubting themselves, or we can’t do it as good as these guys.

So I feel like we end up drinking the Kool Aid, of all the different stats that people put in front of you, and all the different strategies that they employ, so I think what I would say is: Don’t be rushed, don’t feel like you’re not doing it well enough, and that you are forced to go and get some experts involved. Take your time, really look at the problem, don’t make a decision under duress. And I think most people, for us, if we weren’t under duress, we probably wouldn’t have made the mistake.

I would also add that you should test them. I realise that it’s no fun running shipping from two locations, and it’s hard with tech, and it’s hard with a few other things, but it’s just so important, it’s a core competency. I would test them for 3 months, give them a certain set of SKUs, a certain set of orders, and just stress-test their systems. Again, once you’re actually in play, there’s nowhere to hide, all the inefficiencies and all the conflict, and all the areas where it may not suit your business come to light, and then you can make a decision whether you want to solve them or whether you want to abort the operation, that’s not an easy thing to do.

I would also add that having lawyers go over the contracts, and being very clear about obligations and expectations when exiting. Exiting for us, especially in one of the instances, was an absolute nightmare, where we needed to go legal, and at the end of the day when someone’s got the stock and you’re looking at contracts and the lawyers want to negotiate, it’s irrelevant, because the stock’s not getting out, your orders aren’t getting out, so good luck trying to fight it. You can fight it but you won’t, because you can’t wait 6 weeks and not ship an order. But I would get some lawyers involved up front, go through the contract, add things to the contract, that gives you a very easy and seamless way out, in the event that you’re in dispute, and that happens, it doesn’t mean anyone did anything wrong, sometimes it just doesn’t work out, and you need to be able to get out in a very seamless way that doesn’t hurt your business.

Sandradee Makejev: And I think one more thing I just want to quickly add, make sure you have an exit plan if things don’t work out, to bring it back in house, have a think about what you would do if, it’s great to have all the ideas for moving into 3PL, but you also have to be well are about what would you have to do if you are going to bring it out.

Q&A

Rob Hango-Zada: Thank you for sharing guys, we have a variety of 3PL partners ourselves, so if you are looking for advice, and you are looking for some further information, either from myself, Sandradee or Nick, please connect with us on LinkedIn. We’ll share this presentation out with the audience as well, but let’s flip to questions if we have time, if there’s any burning questions in the audience?

James Webber: We’re a bit short on time, there are a few questions that have come through the pipeline, and I think we can hopefully get back to people with those off-air because clearly we are five minutes over-run, I think it’s been a really interesting discussion and clearly Nick and Sandra have been through the mill on the whole logistics front and it’s not too dissimilar from something I have experienced, I think people talk about 3PLs or not being suitable for them.

I wonder at times whether the business is ready for a 3PL. Certainly I actually had a very good experience with a 3PL, but they were experts in my category, and they were very focused in the category. I think there would have been a time where I would also actually outgrown that 3PL and brought it back in house, due to the fact that my major competition was international eComm players therefore my major differentiation was speed of delivery, and in order to get that, that meant I needed to own that customer interface.

So I think there’s lots of reasons for doing one and the other, but the key thing is making sure your business is ready for a 3PL, and to do that you’ve got to really understand what they need from you and how you’re going to integrate those. All credit to you guys for going through that and coming out the other side, many don’t. Great learnings for everyone on this webinar. Please come back and send your questions in and we’ll try and get those answers back to you outside the webinar. Thank you, Rob, Sandra, Nick.

Rob Hango-Zada: Thank you, more details about us, the website, details are here, feel free to connect with us on LinkedIn, hope to speak to you soon. Thank you very much to Sandradee and Nick.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

6 Simple Ways To Keep Your Customers Coming Back

For retailers these are turbulent times ahead. With consumer expectations and technology continually evolving, there is no longer a standard playbook for retailers to rely on to survive and thrive. The one certain fact is – it’s never been more important to understand the motivations and actions of today’s demanding, tech-savvy shopper. Excelling at the fundamentals these very shoppers insist on will be key for retailers to lift their game, and remain competitive.

Who knows what’s around the corner? No matter what else is in store, nailing the six essentials listed below will give your website a competitive edge this year. Don’t be left behind.

#1. Your customers care more about their product search experience than ever.

Making sure that your customers can find your products online and have a high-quality search experience is essential in 2017 (and every year!). Not only do 70% of consumers want to find, search, and filter for products on your site, 73% of respondents want the ability to find and read good/bad customer reviews before making the purchase.

Other important search aspects that respondents noted are the abilities to zoom in on images, to create an account to store personal information, and to access their cart from a previous session. If you can implement all or some of these tools to your site in 2017, you’re going to impress those savvy shoppers out there.

#2. Get that community going with customer-generated content.

The fact of the matter is – your customers want to see content before they make the purchase. From product reviews to videos on YouTube, shoppers are more knowledgeable and careful about their purchases than ever before. For example, let’s take one of your customers, Joe. Joe is on your site, looking at a certain product, but can’t find any reviews of it or pictures uploaded by other customers. What’s he going to do? He’s going to head back to Google and search for the product on another site. On the other hand, let’s say he sees plenty of content on your site for another product. In that case, Joe will be more likely to go for your product.

However, many online companies are not allowing enough user-generated content. That shows with only 57% of shoppers being satisfied with the amount of content or images uploaded by other customers. Ensure that your site has plenty of options for consumers to upload their own content about the product to earn their trust.

#3. Put the power in the hands of your consumers.

Today’s shoppers want the power to be in their hands. And this is done through the use of online self-service and web-based tools – tools that allow consumers to find answers to their questions, interact with online customer service reps, and own their shopping experience.  Especially when it comes to Millennials, the most desired online customer service option is the Q&A section, where customers can ask and respond to different product questions.

Other options that are highly desirable for these customers are on-site FAQs, call centres, and live chats. If you want to get those customers to make the purchase in 2017, make sure your web-based service tools are up to the challenge.

#4. Mastering the art of inventory management and product selection.

Managing the amount of inventory you have on hand is truly an art. It will take you a while to really understand how to properly manage your inventory, but this is crucial if you don’t want to disappoint those last-minute shoppers.

And customers really value you having enough stock for them. It’s been shown that 58% of customers find it important to see your inventory status when making purchases online and 53% view back-in-stock product alerts valuable to them. And if they find out a product is not in stock, 41% of customers will drop their carts altogether.

In addition, no matter where you go in the world (the physical or digital one), your customers want plenty of variety in your inventory. In fact, 74% of those people shopping online rate product selection as the most important aspect of their product search.

This means that you should be offering a variety of products that fit your customers’ needs. Most shoppers will browse various sites to see what the selection looks like. And if they see a better selection on your competitor’s site, you risk losing their business.

#5. The power of a product warranty.

Product warranties are one of the most important aspects of running an Ecommerce business. Especially when it comes to big-ticket items like kitchen appliances, customers are much more likely to purchase a warranty plan with them. The top three items that customers are most likely to buy warranties with are: computers, major appliances, and mobile phones.

No matter what product you’re selling, online businesses should always provide the option for a warranty to minimise the perceived risk, and to close the sale.

#6. Make Returns Painless

Returns represent the next differentiation battlefield when it comes to your Ecommerce business. Online consumers really want a simple and transparent returns process that’s convenient and easy to use; 49% of respondents confirmed that an online merchant’s returns policy had deterred them from making a purchase. And as your business grows, you definitely have to deal with returns – no matter how great your product is. In fact, returns are three times more common in online retailers than with physical retailers and that has led to a lot of dissatisfaction among customers.

You will have to balance between two things: the customer and your business. For example, can you give the customers free returns and still turn a profit? Because returns can get costly for any business, you’ll want to minimise any chances of returns.

Want to get your store off to the best start possible?

Keep the above points in mind when you’re working to improve your website. That way you’re in the best position to keep your customers happy and build a loyal consumer base.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.  

5 Ways To Kill It At Discounting, Without Killing Your Brand

Retail in the 21st Century is not just about your product, your price, or even your service, no – it’s all about your brand. Discounting can be a great way to attract new customers and stay ahead of lower-cost competition, but it can also enter the consumer psyche as ‘poor quality’.

So will discounting to seek out the more cash-conscious shopper tarnish your brand? Or is it a savvy tactic to bump up sales?

Well the good news is you don’t have to choose, you just have to be strategic, Stephen Wunker from consultancy firm New Market Advisors recommends a five step approach.

Step 1: Go incognito

Launch your down-market product range under a new identity. New identity = no preconceptions, so if the new offering doesn’t take the world by storm, no-one is any the wiser that this brand is connected to yours. If all does go according to plan, keeping the distance between the two lines shouldn’t be a problem, as Wunker states; customers care less about corporate ownership than you’d think.

Take fashion brands for example, they are the masters of disguise when it comes brand ownership. Who knew that the Cue Clothing Co. also owns Veronika Maine and Dion Lee? Or that Country Road is a proud parent to Mimco and Witchery, as well as Trenery?

Step 2: Be loud and proud

Keep talking, well, shouting actually, about why your core products deserve their price point. The underpinning culture of buying will never change; from ancient bartering in the street markets of the Middle East, to 2016’s Black Friday queues; consumers are still looking to make sure they’re getting value for their money.

Enlisting PR for this purpose could be all you need, getting a tactically positioned article gushing about the industry award your core product just won in front of the right customers, would do just the trick.

Step 3: Move in different circles

Target your new offering to a different market and focus the discount incentives solely to the needs of that customer. This stops you inadvertently marketing to existing customer and tempting them to swap their usual purchase for its down-market cousin.

Look no further than The Just Group to see how to do this very well. With brands such as Portmans, Jacqui.E, Dotti, Just Jeans and Jay Jays under their oversized umbrella, they have a large cross section of demographics, all contributing to their profitability without necessarily knowing it. 

A lower price point will usually attract a younger audience, and as any big bank will tell you, hook in the young savers and they’ll grow up to be life-long customers. By tapping into the millennials who are just forming their buying habits, you could gain a loyal following for life.

Step 4: Mix it up

Appealing to a different market can go hand in hand with using a different sales channel to sell your down-market offering. You may create a new website just for the new product line, or limit its distribution outlets to specific locations.

For example, you may continue to sell your original line instore or online direct to your customers, but use an online marketplace, such as Amazon, to sell your discounted range indirectly, check out this article  from ecommerce gurus PracticalEcommerce for hot tips on getting the right channel for the right audience.

Step 5: Charm the early adopters.

Finally, Wunker recommends ensuring your new market segment is raving about your product. To sustain the success, you need to be getting positive reviews from the right influencers, then just watch it cascade down to their peers.

So how do you do this? Well firstly you could just ask them! Get a contact at point of purchase and follow up; ask them what they thought and if they’d review it. Or offer them a freebie of a different product from the range.

Whichever path you chose, there’s one golden rule – once your new friends have started the conversation, keep engaging with them – tell them why it’s the hottest new product, why they should be using it and telling their friends to use it too. Then make sure you’re adding the reviews to your website, to your social media and to your marketing plan.

Remember the old adage; by the time you’re sick of your campaign your customers are only just noticing it? Same applies here, early adaptors may catch on fast but it can take months, even years for the rest of the flock to follow. This great article explains more ways to net those all-important reviews and keep ‘em coming.

Discounting shouldn’t be the only trick in your box; it should form part of your overall marketing plan, nor are all strategies right for every brand. Retail performance management gurus, Boomerang Commerce, suggest that Amazon is almost every retailers’ arch-rival when it comes to price, and in order to beat them short term discounting won’t work.

So what to do if discounting isn’t for you? Boomerang Commerce suggest pricing your most popular products competitively (and by competitively we mean aggressively) and this drives perception that you’re a price leader across the board. Meaning when your less popular items actually don’t quite compete with the likes of Amazon, it goes relatively unnoticed. Sneaky.

Retail is a fickle game, our advice; do your homework, be strategic and think big picture. Like anything in life; generating sales without diluting brand value is all about a healthy balance.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.

The Recap: 2017 Telstra Retail Innovation Summit

Earlier this week Team Shippit heard from the industry’s brightest minds at the 2017 Retail Innovation Summit.

With technological disruptions shaking up the rapidly changing retail landscape, the traditional competitor playbook is now a thing of the past.

At this year’s Innovation Summit, industry leaders explored the opportunities, challenges and importance of embracing innovation in the digital age.

Here’s our recap of the key insights and their implications on retail:

Retail in the Digital Age

On rethinking your business for the digital age, author of The Digital Transformation Playbook, David Roger believes, “Digital transformation is not about technology…it’s about strategy, leadership and new ways of thinking.” The roadmap to digital transformation involves rethinking of 5 domains: customers, competition, data, innovation and value.

Australian retailers have a long way to go

AfterPay’s CEO and co-founder, Nick Molnar, draws comparisons between US and Australian physical stores to highlight the shortcomings of Australian retailers in allowing the convergence of physical and online. Whilst American stores have digitised POS systems that are seamlessly integrated with online stores, many Australian shoppers still struggle to refund an online purchase in-store.

Nick also touches on the criticality of providing same-day delivery: “When you fill instantaneous gratification of receiving a parcel within a couple of hours, that’s really unique.” Offering same-day will also lessen the delineation between physical and online. To enable same-day, real-time inventory visibility and ship-from-store are key pre-requisites.

Building and leading an innovation culture

For Showpo’s CMO, Mark Baarste believes leading an innovation culture is about, “thinking bigger, and challenging my own thinking.” According to Afterpay’s Nick Molnar, it’s about, “maintaining raw authenticity to make innovations.” For Nick, the biggest component of leadership is being able to, “dare yourself to be brave and go after it.” Another important aspect is around planning, “what you want to do in 6 months, and doing it in 1 month.”

Surviving and Thriving In The Age of Amazon

Founder and Executive Director of NORA (National Online Retail Association), affirms, “There’s plenty of space between what Amazon does and doesn’t do to provide opportunity for retailers to compete.”

In discussing points of differentiation retailers can make against competing with Amazon, Peter Knock, former CEO of The Co-Op believes it is important to use, “data to support service as a differentiator.”

Elain Vaughan, COO of APG & Co, said “the first thing is mindset,” stating that the advantage of the Australian industry is “our agility and ability to move quickly, and change course. We have to play to our strengths.” She concluded with a thought that resonated with many, “Change is inevitable but progress is optional.”

Whilst also being a competitor, Amazon is also perceived as an important sales channel, teacher and as an enabler to help retailers go global.

“When it comes to retail, what’s the one thing keeping you awake?”

Forever New’s General Manager IT, Angela Ryan said it was, “Staying relevant,” and being able to “constantly being able to tap into what customers spend their hard earned dollar on.” She also noted that it “takes discipline to keep a customer-centric focus.”

For Afterpay’s Nick Molnar, it is Millenials, having said, “I think Millenials should keep people up at night – they change often and quickly, and are the fastest growing group. I think millennials are scary and operate differently to us.”

Reflections on Innovation

Industry leaders unanimously agreed on the importance of building, nurturing and leading an innovative culture to be successful in the future of retail.

Speaking from experience, PWC’s Global Retail Advisor, Paul Zahra believes, “diversity of thought drives innovation, innovation drives growth,” and that “diversity is insurance against disruption.”

Peter Knock, former CEO of The Co-Op, maintains, “innovation is around the attitudes people bring to work, their ambition to be successful and everyone being a leader.”

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.

Everything You Need To Know About 2017’s Ecommerce Trends

From Baby Boomers to Millennials, tech-savvy online shoppers around the world are profoundly disrupting ecommerce yet again. Everything from the mobile-first mentality to the perpetual chase for the perfect omni-channel experience, to China paving the way for shopping trends, find out what evolving consumer behaviours are driving the next retail revolution – don’t be left behind.

The stakes have never been higher for retailers. Consumers around the world are pushing the envelope of what shopping means. To stay ahead of the curve, retailers must be at the forefront of industry changes, plan strategically and tweak their brand’s trajectory to suit.  

 

Here are 8 key insights to keep front of mind for 2017:

Mobile Becoming The Ultimate Purchasing Tool

Mobile used to be a great pre-purchase tool for research and price comparison, and it’s now well on its way to being the purchase tool of choice. 2017 marks the tenth anniversary of the smartphone and the likes of Goldman Sachs are predicting that  almost half of online sales will be contributed by a mobile device. The race is on for online retailers to simplify the checkout process for mobile-first to convert more shoppers. Amazon’s one-click shopping button is a great example of this.

Online Shoppers Want Connection

Building loyalty in the era of ecommerce isn’t easy. Retailers must look past loyalty programs, towards more creative ways to meet consumer needs to be apart of a specialised retail community. Whilst the 3 most popular perks of loyalty programs in 2016 are members-only promotions, reward points and free shipping; survey data hints at a demand for deeper customisation and exclusive, unique benefits (think personalised marketing offers and special member events). While SMS is gaining momentum, email remains at the top of leaderboard as the preferred method of being informed about promotions.

Social Media – The Big Influencer

Customers are increasingly looking to social media when deciding on a purchase and gauging brand authenticity. According to a recent survey, 37% of Australians use social media to access reviews and feedback when shopping online. Interestingly, the rise of social media’s impact isn’t bad news for advertisers – 22% of the Australian sample said that “viewing advertisements” positively influenced their online shopping behaviour.

Cross-Channel Conversion Rates Are Key

With keen shoppers hopping between sales channels, and the rise of ecommerce, retailers must craft an in-store experience that drives conversions – regardless of what channel the purchase is made on. Whether it be transforming stores into experiential showrooms or fulfilment centres for local online orders, retailers must reconsider the purpose of the physical space for its seamless integration into omni-channel shopping journey. In maximising the in-store experience, having service-focused retail assistants with profound product knowledge, ease of checkout, the capacity to check online stock and a welcoming ambiance are crucial.

Price is King

Slow economic growth in recent years have contributed in a value dynamic across the globe. Regardless of income bracket and nationality, affordability is the largest decision driver behind online shopping behaviour, followed by convenience. When asked why consumers shopped at their favourite retailer, price was the most important factor (60%), followed by product range (32%) and brand trust (32%).  Not only are online shoppers looking for the best deal, 56% of the sample in the survey are willing to shop internationally if better prices were available.

Want To Stay Ahead Of The Pack? Look to China

Known for their readiness to take on board new technologies and shopping habits, the online shopping behaviour of Chinese customers from years ago aligns with the behaviour of international shoppers today. On mobile adoption trends alone, data shows that global customers are approximately three years behind.  A key driving force behind China’s advancement in mobile commerce is the mobile personalisation capabilities of major ecommerce players, Baidu and Alibaba. Whilst they’re on the go, driving or walking, Chinese customers are sent personalised information and offers based on their historical shopping habits, income and location. As a proven leading indicator of global shopping behaviour, looking to trends in China will be pivotal for staying ahead of the curve.

This short article was written by Dara from the team at  Shippit.com.

Shippit.com is the shipping engine for modern retail. Learn more about our how our software can save you time, money and keep your customers happy.

Shippit Partners with Australia Post, Here’s the Skinny.

Our new partnership with Australia Post almost broke the internet late last week – in case you missed it, you can read all about it here, here and here.

In short, the new deal means that Shippit users can now activate Australia Post Standard and Express Post as delivery options by connecting their existing eParcel accounts to the platform.

This new capability now means that you can book and track all of your Australia Post deliveries in one platform without needing to toggle between multiple carrier booking systems. It also means your customers will enjoy the same tracking experience powered by Shippit’s industry-leading technology. Finally and most importantly, you leverage the power of Shippit’s multi-carrier shipping technology to save even more money!

Frequently Asked Questions

  • Will Shippit offer discounted Australia Post rates?
    Unfortunately not. Australia Post must have a direct billing relationship with all senders. 
  • Do I need an eParcel account to book Australia Post deliveries via Shippit?
    Yes, if you don’t have an eParcel account, please contact your local Australia Post representative for details.
  • How do I resolve customer delivery issues pertaining to Australia Post bookings?
    Since Australia Post maintains the billing relationship, Shippit is unable to assist in support queries. All delivery issues must be resolved via Australia Post’s own customer support channels.
  • What is the cost of booking Australia Post deliveries via Shippit?
    To cover the cost of booking, labelling and notifying your customers, Shippit charges a BYO carrier fee that relates to each of the different pricing tiers. See http://www.shippit.com/pricing for more information.

How to Connect Your eParcel Account

What happens when a customer misses a delivery?

Are bad delivery experiences slowly killing your business? Research has shown that 84% of  shoppers will still buy online, even when they know they could buy the same item locally (NSW Fair Trading, 2012). They favoured shopping online for 2 reasons:

It’s more convenient and generally it costs less. So, just how convenient is it for your customers to buy from your store?

Firstly, it’s probably helpful to define convenience

When it comes to buying online, convenience can be defined in two ways:

  1. Your prospective clients can make a purchase when and where they want
  2. Your clients can receive their items when and where they want

There has been a lot of research proving the importance of responsive design in driving revenue for online retailers, making the browsing and buying experience more convenient, so shoppers can buy on any device; making purchases anywhere, anytime possible.

However this still leaves the question of receiving goods when and where customers want largely unanswered. The major issue is that the responsibility to solve this has mainly been left to delivery companies which results in your customers receiving the all too common, ‘Sorry, we missed you’ calling card.

So, what happens when a customer misses a delivery?

Their online purchase turns from a convenient buying experience into an inconvenient collection experience, as they now need to find a collect point; stand in line for half an hour listening to elevator music; while they wait for the parcel they have paid good money for. This doesn’t bode well for customer satisfaction or loyalty.

A 2014 study by UK-based MetaPack found that a bad delivery experience reflects poorly on the retailer, not the delivery provider. In fact, up to two-thirds of all shoppers who had a poor delivery experience said that they would “never buy from the retailer again.”

A simple search of Twitter for the words “missed delivery” reveals loads of angry customers who were let down by a bad delivery experiences – it’s easy to see why getting the delivery experience right is critical in maintaining customers satisfaction (and quite literally, not ruining Christmas).

COnvienc

There are several ways to solve missed deliveries. This includes giving customers more choice in delivery options but simpler than that, by just sharing more accurate information regarding their delivery (like an ETA, an option to provide ATL etc.). Isn’t it time your customers benefited from greater transparency and flexibility during the delivery process?

What Are You Waiting For?

Request a demo or get an instant quote with Shippit today to see how much better your shipping strategy can be this year.

 

Visit shippit.com for more info and to finally sort your ship out!

 

8 E-Commerce Trends to Watch Out in 2016

2015 was undeniably an epic year for e-commerce; with online shopping at its peak. However, with both feet now solidly in 2016, it’s time to have a look at some of the key trends emerging across e-commerce that you can leverage to your advantage. Hopefully this info will help you to re-evaluate your business strategies and soldier on through the new year.

Here are 8 e-commerce trends that will be big this coming year:

  1. Mobile phones and tablets lead the way. Customers love the convenience of being able to shop while commuting in a bus or sitting in a coffee shop or even while having a leisurely evening watching TV. Although, desktops and laptops haven’t still lost their relevance in e-commerce, optimising your website for mobile and tablet users boost your sales numbers.
  1. Shorter & flexible delivery timelines: Courier vehicles zooming by you on the roads will become a common occurrence, as they are perhaps meeting their 3-hour or same-day delivery deadline. The shoppers are moving towards faster and more convenient delivery options and don’t mind spending a few extra bucks to get their hands on their parcel sooner.
  1. Rise of the Millennials AKA Gen Z. It is this generation of shoppers who will be a mighty force in your e-commerce business in 2016 and in the years to come. Millennials come with a strong suite of technology knowledge and the power to purchase. It is this demographic that craves convenience, faster deliveries and don’t hold back when they like to share their like or dislike of a shopping experience.
  1. Flash sales have been around for a while but will enjoy bigger success in 2016. Customers have had a taste of it in the past years and now expect it often. As a business owner, these flash sales are like winning a lottery as you can expect sales to soar on that particular day. If you think harder, it is a great way to do away with excess stock and make way for the new.
  1. Personalised shopping experience will lead the way. Who doesn’t love a shopping experience that is a perfect match to their expectations? Many websites will offer easier checkouts, product suggestions and fuss-free purchase process in 2016. It is about the customer being the king and making them feel so. By giving them a fair amount of control, you get conversions and loyalty in the long run.
  1. Virtual Sales Forces will become more prevalent to try and plug the gap between online convenience and in-store customer service. Many think that the instore experience cannot be replaced, but at least a good virtual sales force can see them through the process with Live chats. It is annoying to wait (with never-ending music playing) on a phone call to be connected to a customer service executive just to get some product information. Live chat is instant, accessible, hassle-free and here to stay.
  1. Content still remains king in 2016. Content – pictures and text will take a whole new avatar. The focus will be more on improved photographs, bite-sized yet comprehensive information on the product page and overall improvement in user experience. To make the experience richer, many websites will have videos to give customers a sense of the product they are buying.
  1. Social media will be more than just a tool to connect with customers. It will be generously used to sell and promote products. Remember the Millennials we spoke about in point no.3? They will have a great influence on the social purchase patterns. Brace yourselves for more Twitter, Facebook and Instagram action in the years to come.

2016 is fully underway and you can make it your year of success. Pick the trend(s) that will click for your business for the years to come.

 

What Are You Waiting For?

Request a demo or get an instant quote with Shippit today to see how much better your shipping strategy can be this year.

 

Visit shippit.com for more info and to finally sort your ship out!

The Art of Flash Selling – This is How to Boost Sales in an Instant

After the height of intense drama of silly season sales, the natural follow up is for your business to slow down, or even dry up. So it’s important for you to have some tricks up your sleeve to keep the cash flowing in. Luckily, we’ve learned from the best in the trade and can share some tips on how to keep your store ultra competitive.

Here’s how to add an oasis to your sales desert

We know all too well, the panicked and desperate vibe most retailers give off post holiday season sales – discounting products and slapping bright red sales stickers on every item in store. Don’t get us wrong, general sales are a proven way to shift last seasons stock, but how sustainable are they and is this really the best way to stand out from the crowd?

Enter: the Flash Sale. This is the most effective way to give your sales that stand out quality. Flash Sales are useful in both shoring up sales for both the short and long term. In its rawest form, a flash sale implies that there is a limited set of products on sale for a limited period of time – normally 24 hours. Most importantly, it is a tool to help create a sense of excitement in what would otherwise be “just another sale”.

1. They help you stand out without shelling out

The most effective flash sales typically feature products from a store’s current line up. Customers don’t naturally expect to see exciting offers on new products, so these sensational offers help to differentiate your sale from the same old discounts offered by your competitors.

2. Build a cult following where its not just about price

Flash sales are a great reason to message all of your customers and advertise your sale (and yourself) through your newsletter or even create hype via social media. Social media naturally encourages people to share the news of your flash sale with their social circles, enabling your customer base to expand rapidly and organically. This drives traffic to your site, and increases visibility of your other products as well. There are online retailers out there who ONLY sell their products via flash sales and it’s easy to see why they are such a viral success.

3. Start a relationship with new customers

Get interested visitors to sign up to your newsletter or VIP programme to access the sale. The appeal of the sale item is incentive enough for your customer to exchange their details with you. This will bring you a whole new group of people to market to, that you didn’t previously have access to. What’s more, because the appeal in a flash sale is more about scarcity than it is about the discount, these customers weren’t simply chasing a low price. Studies have proven that these customers will be more likely to buy new, non-sale items from you then and there or will return to do so in the near future.

4. It shows your customers that you care

The exclusive nature of a flash sales means that when you inform your customers of the offer, they feel a deeper sense of connection with your brand. You’ve considered their interests and have especially, let them know about an exclusive offer they can take advantage of.

Why do they work so well? Our psychology nerds here at Shippit have uncovered that scarcity and urgency are key factors in encouraging people to take action, so when people know a sale is for a limited time they will be encouraged to make a purchase decision much faster than via traditional means.

How to apply this sales tip at your store

Flash sales are all about keeping it simple. The most important thing you should do in planning your flash sale is to set a clear objective for the sale and keep the offer single-minded. If a customer has to think too hard about the mechanics of qualifying for the sale then you’ve got it all wrong. The best flash sales are focused around one central product type and are easily redeemed.

Finally, stay focused on great customer service as this is the first time many of them will shop with you. A successful flash sales has the potential to grow your business exponentially during a very short period of time.  This makes it absolutely critical to ensure you are ready for the monumental fulfilment task that will be waiting for you the next day.

Need help scaling your fulfilment capabilities? Shippit can help you streamline the process of not only shipping your orders but also managing customer queries and complaints due to shipping. We’ve helped hundreds of businesses scale their operations overnight, find out how we can help you by visiting Shippit now.

Write your list!

3 Ways Smarter Shipping Can Boost Your Sales This Silly Season

It’s the biggest week of the year for online retail. Do you know the best ways to capitalise on closing critical sales using smarter shipping tactics? Don’t let the Grinch steal your Christmas vibes, here are some tips we’ve rounded up from around the inter-webs that will help you ship joy this holiday season.

1. Free-shipping without the loss

Consider this – we all know that free shipping is the easiest way to close a sale online, but did you ever think about the true cost impact this has on your business? Here are two fast tips you can implement right now to keep costs low this Christmas:

  • Lower-cost shipping options. Don’t let your buying power stop you from reducing shipping costs. There are plenty of services out there that will give you access to faster shipping and lower rates than what you can get over the counter at your local post office. Do your own research here.
  • Profit maintaining shipping caps. Having a clear understanding of how much profit you make on each basket is critical to understanding how much you can give away on shipping. Here is a simple calculation to help you make the right decision on just how much your customers need to spend to qualify for free shipping:
    1. Calculate your average spend on shipping per order, let’s call this number x
    2. Calculate your average gross profit per order and we’ll call this number y
    3. Determine how high your basket size needs to be so that y is comfortably greater than x and you have your magic number. Incentivising customer’s to spend to that number is an entirely different question, which we will cover in a a later blog series.

2. Order cut-off times to nail the pre-Christmas delivery

Your customers will take their biggest gamble this week – choosing you over your competitor. With a clear date in mind to shop for, customers will rely heavily on your estimated shipping times to make their buying decision. That means you’ve got an important job to do once that purchase has been made: deliver their purchase by the time you promised you would.

  • Clearly point out cut-off dates. Whilst it’s providing that extra layer of transparency, it also helps give customers the added incentive to make the purchase decision sooner. Rebel Sport and Harvey Norman are two fantastic examples of using shipping cut-off dates to their advantage.
  • Understand trading hours of your shipping suppliers. Most suppliers will have set days where service will be limited and this will impact your ability to deliver. Be aware of these limitations and how this will impact delivery times.

3. Don’t underestimate the importance of customer experience

Once the purchase has been made, your customer’s anxiety levels will be at an all time high – we’ve all been there asking ourselves “will this get here in time or do I need to spend more money on a backup gift?” If you mess this one up, the consequences will be costly – just check out these tweets.

  • Provide transparency during fulfilment and delivery. Ensure customers are kept in the loop of every stage of their order being fulfilled. Take advantage of Shippit’s delivery tracking for some ideas of how to do this well.
  • Don’t ignore your customers. Things won’t always go to plan so ensure you have clear ways for customers to get in touch when things go wrong and prepare some back up options for express delivery.

Hopefully these tips give you some inspiration as to how to use shipping to your advantage this silly season. Don’t forget that a fast despatch is 9/10ths of the battle, so fulfil your orders the moment they come through the door. If you don’t have time to fill in delivery details and generate labels the old-fashioned way, perhaps its time to consider an automated shipping solution like Shippit.