How well-managed order fulfillment can sustain brand growth during the recession
By Marina Vassilopoulos reports for Cloud9Fulfillment
As UK inflation rates soar to an average increase of 9% over the past year, many fulfillment companies are struggling to cope with rising fuel surcharges and shipping costs. These rising numbers have come in conjunction with a housing crisis, the lasting impacts of Covid-19 and the consequences of global conflict, such as the current war between Ukraine and Russia. Therefore, with a recession set to begin by the end of 2023, if not sooner, recession proofing your business is essential.
Cloud9Fulfilment, a leading expert in the e-commerce online fulfillment services industry, has used over 10 years of experience to provide its best advice on how to enable your brand to prepare for and survive the recession. imminent.
The negative impacts of missed forecasts – and how to deal with them
A successful business must accurately project sales figures and forecast peaks in customer demand. The consequences of not doing so can impact your business operations, reputation, and even growth.
Examples of failures include mismanaged inventory or failure to test software properly, subsequently resulting in complaints or queries from your customer base. However, while it may seem like a disaster, most companies are guilty of failing to forecast sales accurately.
Whether your business is failing to use data-driven statistics, following the right course of action, missing relevant data, or your managers are failing to coach strategically, there are several solutions to get your business back on track. .
There may be “soft cost” or “hard cost” solutions, depending on the severity of the lack of a forecast. Indirect cost solutions for a company that fails to meet its forecasts can be to reassure your investors and ensure their confidence or boost employee morale to boost productivity. Alternatively, “high cost” solutions are more purposeful – layoffs may be required, while reducing your pace of hiring to protect the business.
Alternatively, a business that exceeds its forecast will also need multiple “soft cost” and “hard cost” solutions. “Soft cost” solutions to overstatement may include reassuring your management team and investors that you are able to forecast accurately, increasing your quotas, and having to reaffirm your CFO/CRO relationship to ensure that there is no there is no stress on the partnership. “Hard cost” solutions could include shifting key hires and investments, adding additional resources to your team, and sourcing emergency inventory to meet consumer needs.
How to Improve Customer Communications to Maintain Customer Demand During a Recession
One of the most valuable tools for ensuring sustained demand and communication during a recession is to increase your marketing, allowing your business to stay at the forefront of your consumers’ minds. The impact of strong marketing presents an image of strength, leadership and determination – reassuring traits that will inspire confidence in your brand to attract customers.
Even if your business is struggling, projecting an image of stability is key to generating new sales. As such, you need to market to existing consumers before targeting a new audience. This method is cheaper and simpler, with marketing examples including offering exclusive discounts to previous customers.
Additionally, you need to promote a consistent brand image throughout your marketing to an engaged audience, which can be achieved by discussing multiple marketing strategies and the direction of your brand. Examples can include blog posts, newsletters, advertisements, emails, and PR content, keeping your brand present and dominant in the market.
As the recession continues and individuals have less disposable income, you may need to change your strategies. You can do this in a number of ways, such as changing your company’s offering to retail essential items, boosting your online presence, and restructuring your budget allocation for marketing. Paying attention to tone and altering your key performance indicators (KPIs) to reflect economic reality can also be beneficial, ensuring you continue to attract the right audience to ensure your survival during an economic downturn.
How to Maximize Efficiency During a Recession
Unfortunately, economic downturns are an inevitable part of doing business – but implementing a plan to increase profitability during these times will give you a greater chance of surviving, and even turning a profit.
The first step to enabling brand growth is to review your current resources, team, and software solutions in practice. Does your software allow you to take an inventory in a simple and concise way, or is it outdated? By ensuring the software is up to date, you can accurately identify any issues in the chain and know which problem areas to target.
Next, you need to assess your resources to determine which are most valuable, deciding which software solutions and assets are most valuable to your brand and its continued growth.
Assessing your brand will therefore allow you to determine where cuts can be effective. For example, if there are order fulfillment tools or licenses used sparingly, these should be canceled for an economic boost. Likewise, such an assessment can reveal if there are staff members who are not functioning as a result. You may find that refreshing their training can be an appropriate tool before proceeding with layoffs.
Finally, you should take an outside look to assess the current market. Are there new innovative tools that will increase the efficiency of your operational market? Has the rest of your industry abandoned the software you rely on due to outdated features? Stepping back to assess what helps similar brands succeed can help you thrive.
Ways to cope with rising delivery costs
Many small businesses are finding shipping costs to be one of their biggest expenses, leaving some brands to panic as external factors, such as product shortages and supply chain disruptions, drive up prices skyrocket.
Unfortunately, shipping is a vital expense for any fulfillment business. Therefore, there are several ways to reduce costs while ensuring that shipping quality is maintained.
- Negotiate with multiple carriers, many of which have volume-dependent price schedules – meaning the more you ship, the less you pay. Some carriers also offer e-commerce payment processing services, which can take some of the heat from small independent businesses or merchants.
- Reduce the weight of your packages by using custom shipping labels, lightweight packaging materials, and packing your products in corrugated boxes to reduce costs.
- Use the correct packing size to ensure that you are not charged extra for empty space, as your shipping costs depend not only on the weight of your package, but also on its size. As such, a simpler container, such as a polybag instead of a box, may be advantageous, depending on the size of your products.
- For those shipping products overseas, it may be worth considering air freight rather than ocean shipping. The obstruction of the Suez Canal in 2021 had lasting and significant impacts on the shipping industry, driving prices to an all-time high. Therefore, it may be worth absorbing the cost difference to ensure that your products arrive on time, which enables on-time deliveries.
- International importers may also wish to move their manufacturing site from China to a similar and viable alternative, such as Vietnam, where costs are lower. Many businesses depend on China because of its capabilities as a global manufacturing power, exposing themselves to risks due to overreliance on the country.
Tips for inventory and supply chain management
Without proper inventory and supply chain management, your brand may not manage inventory effectively, leading to additional costs that can be devastating in a recession. These costs can include increased warehouse requirements, lost revenue due to inventory, or even lost customers due to dissatisfaction.
As such, there are several ways to improve your inventory and supply chain management structure, pursuing empirical or predictive strategies. An empirical inventory management strategy takes your sales history into account to assess future needs, using past data to improve the future.
Alternatively, the forecasting strategy does the same thing as the empirical strategy, while also taking macro influences into account. Such styling is vital for products subject to seasonality or irregular sales, such as holiday products or back-to-school supplies.
Once you have decided on the type of strategy required, you need to assess current processes and find ways to improve them. One of the most vital areas to assess is your stocking processes, making sure you avoid overstocking and simultaneously avoid low inventory, as out-of-stock items can hurt your business flow.
Once you’ve chosen a strategy and assessed inventory, there are several ways to improve your inventory and supply chain management capabilities:
- Use an ABC stock analysis
- Introduce calendar replenishment methods
- Consider your reorder point, or just-in-time (JIT) method for forecasting a minimum stock level
- Pursue adequate replenishment by ordering varying quantities of stock, sporadically restocking low levels of items to meet changes in consumer demand
- Evaluate dropshipping and whether it can benefit your business
- Introduce the “First In, First Out” (FIFO) method, which is particularly beneficial for brands or companies that sell perishable goods, ensuring that your oldest stock is sold first to avoid expiry dates. expiry.
Using the tips and tricks in this article can help your business survive a recession and future-proof your brand for any other economic downturn. By being prepared for any downturn, your business can thrive in times of economic growth, ensuring your brand’s continued growth and profitability.