Posted on September 05, 2023
by Savitha Padullaparthi

Cost-effective strategies in eCommerce: Unveiling Fulfilment Efficiency

What are cost-cutting strategies in eCommerce businesses?

In the dynamic realm of eCommerce, retailers are perpetually seeking ways to trim expenses and boost their bottom line. As consumers demand nothing less than top-notch products and competition intensifies, maintaining profitability has become an uphill battle. Fortunately, there is a beacon of hope for businesses seeking cost savings – it lies in the realm of fulfilment efficiency. 

Embracing the challenges 

The world of eCommerce is relentless, with constant pressure on retailers to streamline operations. With consumer expectations at an all-time high and the market fiercely competitive, profitability hangs in the balance. However, savvy retailers are discovering that significant savings can be found by optimising their fulfilment processes. 

Controlling costs by Huboo fulfilment

Leveraging current eCommerce trends and statistics 

According to a recent report by Statista, the global eCommerce industry is poised to reach a staggering $6.54 trillion by the end of 2023, a substantial leap from $3.53 trillion in 2019. Furthermore, this report underscores that eCommerce is set to constitute a substantial 22% of global retail sales in 2023. In this demanding landscape, maintaining a profitable business is challenging, making efficient fulfilment a pivotal area for cost savings. 

Strategic advantages

Outsourcing fulfilment operations provides businesses with a potent tool for cost reduction. This approach capitalises on economies of scale and slashes operational costs. Logistics providers, such as Huboo, excel in negotiating improved pricing for warehousing and shipping, enabling more efficient handling of a higher volume of orders. This translates to reduced shipping expenses, fewer costly errors, and minimised shipping delays. 

Furthermore, outsourcing fulfilment liberates retailers to channel their attention towards their core competencies. It guarantees superior accuracy and increased speed, ultimately fostering improved customer satisfaction and repeat business. 

Hard data evidence

Data sourced from Orderhive reveals the tangible benefits of outsourcing fulfilment. Businesses can enjoy cost savings of up to 25% on shipping, handling, and storage expenses. Specialised third-party logistics providers, armed with their expertise, can secure better rates for shipping and warehousing while managing large order volumes with enhanced efficiency. This culminates in a reduction of errors and delays, thereby elevating overall operational efficiency. 

Simultaneously, outsourcing fulfilment frees up invaluable time and resources for retailers to sharpen their focus on core competencies – from marketing and product development to delivering exceptional customer service. A report by BigCommerce highlights that 80% of eCommerce businesses consider customer service as the foremost factor for success. Entrusting fulfilment to experts empowers retailers to enhance speed and precision, directly resulting in higher customer satisfaction and repeat business. 

Controlling costs by Huboo fulfilment-1

Finding the pinnacle

It’s vital to acknowledge that not all fulfilment providers are created equal. Retailers should exercise discernment when selecting a partner and seek providers that offer an array of services and advanced technologies to augment efficiency and accuracy. DHL‘s data reveals that 65% of eCommerce businesses outsource fulfilment, with 64% attesting to an improved customer experience and 63% reporting enhanced customer loyalty. 

At Huboo, we have elevated the pursuit of efficiency to new heights. We offer automated warehouse management systems that optimise inventory levels and reduce handling times. As per a report by MWPVL International, such automated systems can reduce fulfilment times by up to 50% and boost accuracy rates to an impressive 99.9%. Additionally, our real-time tracking and shipment monitoring capabilities empower retailers to maintain control over their orders and enhance predictive analytics. This translates into a seamless customer experience and a competitive edge. 

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Significance of Service Level Agreements (SLAs) 

Retailers should meticulously scrutinise service level agreements (SLAs) with fulfilment providers. Huboo’s SLAs are transparent, measurable, and encompass specific penalties for any deviations. Recent evidence cited by Inbound Logistics indicates that 96% of businesses consider accurate delivery to be an integral part of their SLAs, while 95% prioritise on-time delivery. Upholding these stringent standards, as exemplified by Huboo, ensures retailers extract the utmost value from their investments. 

Reducing fulfilment costs: Key strategies

Here, we present actionable strategies for reducing fulfilment costs without compromising quality or the customer experience, empowering your businesses.

1. Inventory accuracy

Precise inventory management minimises unneeded costs. Accurate inventory counts curtail unnecessary supplier purchases, preventing additional orders for items already in stock. This streamlines your spending.

Moreover, it can significantly reduce labour costs. Implementing an inventory management system or partnering with a fulfilment provider automates tracking, saving hours previously spent on manual inventory counts. The cost savings in labour can be redirected to your marketing efforts, including your PPC campaign.

Accurate inventory levels instil customer trust and reinforce the reliability of your promises. Ads emphasising on-time delivery and customer satisfaction must align with your ability to fulfil these assurances.

Additionally, precise inventory data can guide your marketing campaigns by identifying products for promotion, optimising storage costs for slower-moving items, and driving sales for faster-selling products.

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2. Inventory shrinkage

While some inventory shrinkage is inevitable due to employee theft, lost goods, and damaged items, mitigating it is possible. Measures to minimise shrinkage include:

  • Efficiently moving inventory from the dock to the shelves to reduce theft opportunities.
  • Implementing rigorous checks and double-checks in receiving processes.
  • Investing in employee inventory management training.
  • Creating incentives to enhance employee focus and performance.
  • Clear labelling of SKUs to facilitate shelf navigation.
  • Implementing security systems to deter theft.
  • Reducing shrinkage helps you save money by avoiding the costs associated with replacing lost or damaged inventory.
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3. Better rates with carriers

Partnering with a fulfilment provider like Huboo provides access to superior carrier rates compared to individual arrangements. Close collaboration with national carriers secures favourable deals for your business, resulting in reduced shipping costs per item. These savings can be channelled into your business.

Lower shipping and product costs can also give you a competitive edge in pricing, potentially attracting more customers. Fulfilment providers often have one-on-one relationships with national carriers, making it easier to negotiate improved shipping deals. These relationships, combined with high package volumes and annual contracts, allow fulfilment providers to secure favourable shipping terms that benefit your business.

4. Packaging supplies

Packaging might seem unrelated to cost savings, but it plays a pivotal role. Fulfilment experts like Huboo are well-versed in packaging solutions, offering various box sizes and infill options to optimise your process.

Choosing the right box size is essential to avoid unnecessary costs. Carriers frequently utilise dimensional weight (DIM weight) for pricing, factoring in box size alongside weight. Selecting an appropriately sized box prevents inflated shipping costs.

Additionally, environmentally friendly packaging options can reduce costs and benefit the environment. Some fulfilment providers repurpose cardboard into infill, reducing the need for plastic and packaging expenses.

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5. Increase customer orders

Efficient fulfilment enhances customer loyalty. On-time and intact deliveries contribute to customer happiness, increasing the likelihood of their return. A positive delivery experience is pivotal for customer loyalty, as late deliveries can negatively impact a brand’s perception.

By enhancing customer satisfaction, you can increase customer loyalty, driving more orders. Increased revenue can then be invested in your marketing campaigns and expanded business development strategies.

Enhancing fulfilment efficiency and paving the way to eCommerce success 

In the quest to curtail costs in the eCommerce sphere, myriad challenges emerge. However, the path to cost-efficiency is clear – select a fulfilment provider like Huboo, armed with cutting-edge technology and an unwavering commitment to high SLA standards. By doing so, businesses can dramatically reduce expenses and refocus their energies on their core competencies. With Huboo as your partner, eCommerce businesses are primed for success in today’s fiercely competitive business landscape.

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