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More sales. More products. More staff. This all means one thing: more budget. However, this isn’t practical or scalable. To grow, get ahead of the competition, and gain more sales, you must pursue more cost-effective methods to achieve your goals. Think about “less” to achieve more.
Look at how your business can minimize the two most important resources–time and money:
Spend less time on:
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Managing listings
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Order picking
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Restocks
Spend less money on:
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Cost/profitability
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Oversold, error and return rates
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Storage fees
To start improving, know where your metrics stand and compare against benchmarks. While benchmarks will vary by industry, here are some general guidelines:
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1-2 hours* per product considering all the variables
*depends on number of channels
Reflect on how your business stack up.
Employee pick rate
Based on daily sales volume, you’re aware of how many orders your team picks each day but you’re still looking at the total team’s pick rate vs an individual’s picking productivity. You lack the visibility into whether someone is darting around your warehouse like a cheetah, who is more like a sloth, and who is actually picking accurately. Without a barcoding system, this information is hard to come by.
Arming your warehouse team with a barcode scanning system is a win-win. Guided by the scanning device, it not only helps the employee through the picking process but is also gathering data in the background to reveal pick rate and even error rate.
There are multiple scanning solutions available, so be sure to look out for those that offer a variety of picking methods, has concurrent team scanning, can validate orders, is easy for the team to utilize throughout the warehouse, and can help with other warehouse processes like receiving stock.
Which leads us into our next topic: stockout rates.
Out-of-stock rate
Being out of stock during the year is bad. Overselling during key promotions or the holiday season can be disastrous. From losing customers to getting kicked off marketplaces, providing a good customer experience starts with having the products you say you do. Let’s look at how to get ahead of this.
Ancient Greek philosophy can help improve out-of-stock rates with the saying: know thyself. A few of the most important questions to ask yourself when trying to avoid overselling are:
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What products are (and aren’t) selling?
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What are the product sales trends showing?
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What channel is driving purchases?
To find these data points, start by looking at your sales order data, ad platforms, and site analytics.
Having this data is good, but you should also take steps to be proactive against overselling:
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Set minimum sales thresholds: prevent sales channels from selling your inventory to zero. Create an “available inventory buffer” by reflecting a lower quantity of product available to sell on sales channels.
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Automatically queue purchase orders (POs) when stock levels get low: order new products as needed vs. on a schedule. Work with an inventory management system that will alert you to low counts on products and will issue purchase orders to your vendors.
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Sync stock levels across sales channels in real time: ecommerce is a 24/7 world–your inventory needs to be, as well. Especially as a multichannel or even omnichannel seller (we see you, brick-and-click businesses), having real-time synced inventory will save your business from overselling (and you from headaches).
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Do pre-sales for new, popular restock, or long-lead time products: not sure exactly how a product will take off? Don’t guess: have a pre-order sale of stock to gauge interest so that you can order accordingly.
Return rate
Marketplaces are affecting buyer behavior and expectations for free returns, making it easier and easier for customers to buy without much discretion. So, to be fair, managing your company’s return rate can be tough. However, with real, fixed costs attached to handling returns and needing to factor in losses from returned products that are no longer sellable, it’s important to not feel helpless, given the circumstances.
Here’s how you can get ahead of your return rates:
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Create robust product listings, with detailed descriptions and clear images that present an accurate picture of the product.
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For apparel: offer size guidelines and/or provide the model’s measurements along with the size they’re wearing
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For accessories or home decor: show the product in different, real scenarios to get a sense of scale and color
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For electronics: include clearly articulated instructions for how to use the product
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Monitor customer reviews. If reviews consistently report to “off-sizing” (too small, runs small), own up to it and advise prospective customers to order one size up to mitigate a return.
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Carefully package items to prevent damage. Assume your package will be thrown around during fulfillment. Also consider the package could be left out in the rain. Between more than adequate package insulation and plastic wraps, ensure products will arrive safe and won’t get returned, citing “damaged upon delivery.”
In closing
Growth is about optimizing. To scale your business effectively, it has to be done in a profitable way. Looking at warehouse metrics like staff pick rates, out-of-stock rate, and return rates are a sure-fire way to do more business…efficiently.
For help in managing real-time inventory syncs and achieving scalable warehouse processes, Finale Inventory is a cloud-based solution trusted by thousands of brands and retailers. A top-ranked solution across G2, Capterra, GetApp and more, Finale’s US-based team serves clients through a consultative account management approach to help businesses grow, year after year. Learn more at finaleinventory.com.
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