Fulfillment Operations

Drop Shipping is a popular term nowadays due to the ever-expanding internet era. But is the right eCommerce model for you? Let’s find out!

Ever thought about investing in a 3PL fulfillment service? Want to know how much will it cost? Let us walk you through the charges at every stage of a fulfillment services.

The order-fulfillment process is crucial for an eCommerce business because it decides your customer satisfaction. Learn more about it here.

Ever thought about investing in a 3PL fulfillment service? Want to know how much will it cost? Let us walk you through the charges at every stage of a fulfillment services.

Products that enters the cart but never makes it through the transaction are “abandoned” by customers. Read this article to know why buyers abandon and how you can prevent it to boost your sales and build a reliable and trustworthy brand.

A well-known phenomenon: when you order something online, you, as a buyer, have to pay for everything, even in case of loss or damage. However, have you ever thought if your seller takes responsibility for the package, including the costs, until it is delivered to you? Is it possible? Well, under Delivery Duty Paid (DDP) Incoterm, it is.  Delivery Duty Paid (DDP) is one of the 11 Incoterms widely used in international shipping. It demands sellers to pay for the order fulfillment and take complete responsibility for the package until it is delivered. But why would any seller opt for it? Let’s dig into it.   All About Delivery Duty Paid  International trade has seen a noticeable growth due to the widespread use of the internet and mobile devices. This has benefitted large corporations along with small and medium businesses as well. However, this growth has increased the potential for disputes due to varying import and export conventions.    The International Chamber of Commerce established the 11 Incoterms to prevent such disputes for a clear understanding of shipping terms and risks and responsibilities associated with all the parties involved. Among 11 Incoterms, we are going to discuss Delivery Duty Paid in this article.  Delivery Duty Paid – What is it? The Delivery Duty Paid (DDP) is a delivery agreement whereby the supplier (seller) is liable for the goods until they are delivered to the buyer. The risk and responsibilities associated with the shipment are of the seller. They need to pay for shipping costs, export and import duties, insurance, and other costs.   DDP is one of the Incoterms (International Commerce Terms) that defines the responsibility of sellers and buyers. This is primarily used in international shipping transactions and helps you explore the market’s potential worldwide.  Moreover, as a seller, it gives you a chance to quote prices higher than the usual market rate and increase your profit margins.  DDP Responsibilities – Buyers and Sellers Though it is clear that the seller takes care of everything, there are few responsibilities that the buyer has to take care of. Let’s have a look at both of their duties:    Buyer’s Responsibilities:    The buyer in DDP has minimal responsibilities. This includes receiving goods, and part of it is the unloading process and its fees.   Know More Seller’s Responsibilities:    Under DDP Incoterms, the seller is obliged to:    – Drawing up sales contracts and related documents    – Fulfilling all import and export requirements    – Paying for all import and export duties and taxes    – Cover the cost of transportation from the warehouse to the final agreed-upon destination    – Take care of all government inspections    – Ensure that the goods arrive at the destination    – Incur all damage or losses, if any occurs  Let’s have an overview of their responsibilities:  Responsibilities  Seller  Buyer  General  Deliver the goods and commercial invoice  Pay the price of the goods as agreed in the contract of sale, after delivery    Delivery  Deliver the goods at the agreed date and time with the preferable shipping method  Take the goods after they are delivered  Risks  Responsible for all of the risks until goods are delivered  Responsible for all of the risks once the seller delivers the goods  Carriage  Make the carrier contract and pay the cost  No obligation  Insurance  No obligation  No obligation  Delivery/transport document  Provide a transport document at own cost  Accept the document  Export/Import Clearance  Responsible for all export clearance expenses along with all the formalities involved Assist with import clearance if required  Checking  Pay for all checking operations like weighting/counting of goods, packaging, etc.  No obligation  Notices  Notify the buyer when goods have been delivered  Notify the seller of the destination and time  DDP Timeline DDP follows a simple timeline where the seller has most of the responsibilities until the buyer receives the product.   Seller picks, packs, and fulfills all the necessary requirements for the goods to be shipped.   Afterward, the seller ships the order with a reliable shipping carrier.   The package is then shipped to the destination via any method of transportation.   The seller is then liable for taxes once the package arrives at the destination.   Once the package arrives, the buyer is now responsible for the actual product and pay the price to the seller on the agreed contract.  Sellers incur the charges in case of loss or damage while buyers pay for unloading fees and everything required after receiving the product.  DDP Fees For sellers, there are various fees associated with DDP. To determine if you will make profits from your sale using DDP, calculate the fees you have to pay. Sellers assume responsibility for all these fees:   Shipping Fees   It can be expensive to ship products via sea or air. Therefore, always know the price beforehand, especially in international shipping.   Import and Export Custom Duties   When shipping internationally, you must know about the import and export custom fees. If you choose a less reliable transportation service that handled your DDP poorly, it is likely to be examined by customs, which causes delays. Hence, choose your shipping partner wisely.   Damage Fees   If any damage occurs to the shipment, the seller has to bear its cost along with the reshipment of the new products.   Demurrage and Storage Costs   Under DDP, the seller absorbs the cost for storage and demurrage in case of delays by delivery drivers, custom authorities, other government agencies, and air/ocean carriers. These are unanticipated costs and can eat into the profits. Hence, it’s better to partner with a reliable logistics partner and know the cost beforehand.  Shipping Insurance   Shipping Insurance is not mandatory. However, some sellers prefer it to lower risks.  When to Use DDP? Due to the disadvantages for sellers discussed above, the ideal time to use DDP is when the supply chain costs and routes are stable and predictable. Therefore, it is better to create a probable shipping quote beforehand and get a customer agreement on it. Moreover, consider using DDP when you have confidence in your logistics company, and they own a successful track record of delivering to other customers internationally under DDP Incoterms.  So, Is DDP Beneficial for Your Business? The answer to this question depends on your product’s costs and customer demands. If using DDP profits you and your customer then, you should opt for it. However, it is better to consider a 3PL for it. There are various benefits that a fulfillment company can offer. Their experience, network, and expertise in the industry can

Do you know the secret to retaining your customers? There are many of them. However, one aspect of your order fulfillment process impacts it the most, which is Lead Time. It is the amount of time between initiation and completion of any process. For businesses, lead time is the amount of time between a customer placing an order and the services/products delivered to them.  Lead time has many types, and it impacts the way a business operates. It also affects the quality of services. In this article, we will dive into what it is, its types, why it should be less, and how to optimize it. Let’s begin, shall we?  Everything You Need to Know About Lead Time When a customer places an order, they want it to be delivered quickly. One study found that 14% of consumers abandon the seller if they receive a late delivery just one time. Hence, if your e-commerce fulfillment process takes too long, you’ll lose sales. In order to retain your customers, make sure to reduce your lead time. What is Lead Time? Lead time is the amount of time that goes by from the start to the finish of any given process. For eCommerce businesses, it affects every stage of the supply chain. Moreover, it determines the quality of your services. If it gets out of control, it can cause huge issues in inventory management and the order fulfillment process. Hence, it is essential to optimize lead time.  Types of Lead Time There are various types depending mainly on the operations of a business. For example, for an eCommerce business and fulfillment center, there are four important types:   Customer Lead TimeIt is the amount of time taken between order confirmation and order fulfillment. Material Lead TimeThis is calculated after the customer places an order. It is the amount of time it takes to place an order with a supplier (in case you are out of stock) and receive it.  Factory/Production Lead TimeThis time is calculated when you have the product in stock with you. It is the amount of time it takes to pick, pack, and ship a product if all the materials are available.   Cumulative Lead TimeThis is the summation of material lead time and factory lead time. It is the total amount of time it would take from confirmed order to delivery of the product.  Customer lead time is the crucial marker in determining the satisfaction of your eCommerce business, while cumulative lead time affects inventory planning and cash flow.  Lead Time VS Cycle Time VS Takt Time   Lead time is somewhere related to cycle time and takt time, but it also differs from them in certain aspects.  -Takt Time: It is the rate at which you need to complete the production process in order to meet customer demand.   -Cycle Time: It is the amount of time it takes to manufacture a product from start to end.   Takt time is based on customer demand, whereas cycle time depends on the work process. Therefore, always make sure that your cycle time fits your ideal takt time. You can make some adjustments to achieve this. Additionally, it provides you with a shorter lead time, which in turn helps fulfill customer demands.  Importance of Shorter Lead Time in Fulfillment   This determines many aspects of the supply chain. Hence, understanding and controlling lead time is paramount. When it is optimized, it becomes easy to manage inventory and fulfill orders on time.  Customer Satisfaction and Retention   When delivery time is less, your customers receive their orders on time. Hence, customers are more likely to return and rate your services positively.   Enhanced Supply Chain Operations   Delivery time affects supply chain operations. Delay in order-fulfillment is less when lead time is less. Moreover, higher lead time increases the inventory count. Hence, with the help of it, you can optimize your supply chain operations.  Factors Affecting Lead Time There are several factors:   Stockouts   Stockouts can affect any element of your supply chain. If you don’t have products or can’t get them on time, you can’t fulfill orders on time. Stockout can be a result of miscalculating your lead time. Focus on avoiding this situation, if you run an eCommerce business.  Shipping Delays   From human errors to natural disasters, there are many factors that are uncontrollable and can cause a delay in shipping. Unfortunately, it’s impossible to eliminate shipping delays. However, you can always opt for a 3PL like Fulfillment Hub USA that is proactive in finding workarounds for shipping issues.   Inefficient Inventory Management   An inventory management system helps you manage your inventory with ease. When you have an efficient inventory management system, you can easily overcome reorder delays and save your inventory from misplacement, loss, or damage. If you have an inefficient system, it can lead to a higher lead time. Hence, try to implement automated inventory management software to reduce delays and fasten the order-fulfillment process.  Lead Time Variability   The amount of time it takes to get your products delivered from different suppliers is unpredictable. Therefore, a delay from any supplier can lead to a higher lead time for you. To avoid this, consolidate suppliers so that you’ll get all that you need for order fulfillment at the same time.  Lead Time Reduction Higher lead time impacts the lifespan of a business. It determines customer satisfaction, quality of the services, and sales. Hence, it is important to reduce the delayed shipping to scale your eCommerce business. Though uncontrollable factors affect your total lead time, you can take several steps to minimize it.   Know More Use Contract with Suppliers   Start by creating a contract with suppliers that include definite timeframes. Some suppliers promise timely delivery but fail to deliver. This results in a higher lead time. The best way to avoid this is to have a legal agreement that includes the following elements:   – Delivery time for specific orders   – Advance notice of price changes or stock shortages   – Liability for damaged or incorrect goods   – Penalty for delayed shipments   – Agreed-upon delivery time for all orders   Reorder More Often If placing large order demands a higher turnaround time, it’s worth ordering in smaller quantities. Adjust your reorder points and try a different warehousing

Unboxing a package isn’t just an occurrence; it is an experience. YouTube and other social media platforms have made ‘unboxing’ an incredible moment in today’s digital age. Hence, delivering a satisfying experience has become a priority to businesses, no matter big or small. Creative custom packaging is one of the best options to cater to this experience for your customers. Read this blog to know more about custom packaging.&nbsp Stand Out With Custom Packaging In today’s crowded market, it’s challenging to create a long-lasting impression on customers. Hence, to stand out, you must provide a unique experience to your audience. You can achieve this with the help of custom packaging. It is a simple way to retain customers and build brand value.  &nbsp The global personalized packaging market is expected to generate revenue of $35,513.95 million by the end of 2024. This swift expected growth makes today the best time to invest in custom packaging. Continue reading this article to know why and how to create customized packaging for your business.&nbsp Reasons to Opt for Custom Packaging Custom Packaging is an underestimated aspect of product branding and marketing. It isn’t just a container for your product; it plays a variety of roles. Here are some reasons for your e-commerce business to start using custom packaging today!&nbsp Great first impression   Creating a unique impression is the only key to gain traction in a world full of brand messaging. It is said that don’t judge a book by its cover but, let’s be honest, we all do that. But unfortunately, that goes for evaluating the service of a brand with the first product delivery as well. Hence, custom packaging is a way to save yourself from getting discarded for poor service and experience.&nbsp Custom Packaging creates a great first impression and tells your customers that you care about their experience.&nbsp Enhanced Retention   When you provide unique packaging to your customers, they are more likely to remember you at the top of mind at the next purchase. Give them a positive unboxing experience and something to remember, and they are more likely to come back. &nbsp Make your brand stand out  It is always best to represent your brand with colors and display them everywhere, even on your packaging material. Your packaging is your brand ambassador, representing your brand around. It captures your brand’s personality. &nbsp Design it wisely as it defines your brand voice and, ultimately, your customer’s experience and retention. Know More Design wisely When you are designing your customized packaging, keep your customers in mind. Will they like a homemade design or prefer luxury packaging?  &nbsp Fit it into the box   When you opt for creative packaging, make sure it looks good and is according to the product size. It may take some time to figure out the right combination of size, shape, material, and security of the boxes but don’t miss out on creative packaging. &nbsp Be Careful with Fragile Items   Your product packaging makes a huge difference in whether or not your product arrives broken to your customers’ doorsteps. Make effective use of dunnage to add some additional cushioning to the product. However, make sure you are not over-spending on packaging material. &nbsp Pack Wisely, Save Happily / Freely  Your customer shouldn’t receive a comb in a larger shipper box layered with million sheets of bubble wrap. That is a waste of material and can increase your logistics and shipping costs. Instead, you can create different packaging options for your various products but make sure the overall packaging looks good and keep the product safe.&nbsp Build Value With Custom Packaging When you provide custom packaging to your customers, you show them that you care about their experience. This helps you in value-addition for your brand.  &nbsp Increased Perceived Value   Packaging impacts your overall brand perception. People tend to remember visuals more, and hence, when you serve them with attractive and efficient packaging, they are more likely to remember you the next time they want to buy a similar product. &nbsp More Social Media Traction  With the increase in ‘unboxing’ videos on the internet, people are capturing their unboxing experience more than ever now. If you provide a media-worthy experience to your customers, it leads to an increase in your brand reach on various platforms and free word-of-mouth promotion.  &nbsp Build better brand loyalty   When you deliver an upgraded experience to your customers, they come back to you happily. Hence, custom packaging enhances your brand loyalty.&nbsp What’s Included in Custom Packaging? There are various ways you can provide custom, unique packaging to your customers. You can customize the packaging of your products inside and out. Let’s dive into what and how of it.&nbsp Exterior Printed Packaging   Exterior printed packaging gives you a chance to be creative and showcase your brand voice with colors, prints, or any additional material. You can creatively utilize branded tapes and stickers or go all together into a product-based packaging. &nbsp Filler and promo materials Inside the box, you can be much more creative than outside it. For example, you can put personalized notes, filler, tissue papers, other product samples, promotional discount coupons, special offers, and more.&nbsp You can also be creative with fillers; use confetti as a filler just like The Bees Knees. They put colorful bee confetti, and inside of their box is printed with bees as well.&nbsp Cost – Is It Worth It? Custom packaging may sound like an expensive investment. However, it isn’t necessary if you are trying to cut costs. If you are not ready for custom packaging, unbranded wrapping can still be a great option. &nbsp If you decide to go with custom packaging, prices can range from $0.10 – $10.00 per box. It depends on the quantity as well; as the quantity goes up, the price goes down. Moreover, many factors go into custom packaging, including size, filler materials, quantity, ink coverage, materials, and tooling. Decide all these beforehand to save costs later on. &nbsp To conclude, investment in custom packaging is worth it if you want to stand out in the crowd. Start slowly with personalized notes and coupons in the box, and note the difference in your customer’s experience with you.

Inventory is an asset to a company but when not managed properly, it can become a liability. Inventory management is a crucial part of warehousing and fulfillment centers. It ensures smooth, accurate, and timely order fulfillment. There are many inventory management methods, out of which Perpetual Inventory System is one of the highly adapted methods among businesses.  Perpetual inventory system manages the inventory ‘perpetually’ i.e., in real-time. It helps businesses stay up-to-date and provides better insights into inventory. But is it the best choice for your business? Let’s find out!  All About Perpetual Inventory System  Inventory management of a business defines the quality of its order-fulfillment service. It has to be accurate and smooth to retain customers and stay ahead in the industry. Unfortunately, choosing a suitable method for your business isn’t easy. According to Compunnel Digital, 21.6% of companies are unsure which inventory management method suits their business.  Many businesses favor the perpetual inventory method because of its real-time updates and accuracy over other traditional methods. Continue reading this article to know more about it.  What is Perpetual Inventory System?  A perpetual inventory management system is an inventory accounting method that uses real-time tracking. It updates the data as soon as stock is added or shipped through every point of sale. Records get automatic updates for purchases and returns as well. The president of Max Muller & Associates LLC and Author of “Essentials of Inventory Management,” Max Muller says,  “Perpetual inventory systems keep track in real-time. It uses software to follow the rules, keep the system up-to-date, and it works great. I recommend doing 3D-counting, where you count cross-sections often enough to account for the whole over time. You could consider this perpetual, but it would need to be software-driven and follow the rules or do a variation.”  To track inventory in real-time, a perpetual inventory system makes use of barcode scanning, radio frequency identification (RFID) scanners, and inventory management software. All the technologies and modern cloud-based software make perpetual inventory systems more practical. Additionally, it empowers financial and accounting departments and speeds up the process.  Process of Perpetual Inventory System In a perpetual inventory system, inventory accounts are updated in real-time as soon as goods are bought and sold. Here is a quick run-through of how this system works:   1. Point-of-sale systems update the inventory levelsAs soon as a sale happens, point-of-sale systems apply the debit to the inventory accounts across all sales channels.   2. Cost of goods sold is updated automatically The cost of goods sold (COGS) gets calculated every time goods are sold or received. COGS is calculated as   3. Frequent monitoring of reorder pointsA perpetual inventory system automatically updates the reorder point based on sales to keep an acceptable amount of inventory all the time.  4. Purchase orders are automatically generated Whenever a reorder point is hit for a product, a purchase order is generated automatically and sent to the suppliers.  5. Received products are scanned and updated into the inventory When new goods arrive at the warehouse, a warehouse management system (WMS) scans them and updates them automatically in the inventory accounts across designated sales channels. Difference between Perpetual Inventory System and Periodic Inventory System Businesses that use Perpetual Inventory System Automation is becoming a significant part of many businesses as it reduces human errors and improves accuracy within the system. However, when it comes to a perpetual inventory system, it is beneficial for few types of businesses.  The perpetual inventory system is best for businesses with multiple warehouses and large amounts of inventory. The system helps them maintain transparency and process the order quickly.  For example, you own clothing business and you receive an order for a Halloween costume in the month of March, which is rare. Now how will you find the costume across all your warehouses? Well, with the implementation of a perpetual inventory system, you can sit back and relax because with one click you can look for the costume across all your warehouses and fulfill the order with ease.  Small and medium-size businesses (SMBs) that are looking to grow rapidly can adapt to this method of inventory management. Additionally, it is a good solution for drop-shipping companies. Their products are always moving and to keep track of them, it is better to have real-time tracking in place.   Different Types of Perpetual Inventory System There are different ways to track inventory in a perpetual inventory system. It depends on the type of cost-flow assumption method you are using.  A cost-flow assumption is a method of inventory accounting that uses the original value of products from the beginning inventory of a period and purchases of new inventory during that period to calculate the value of ending inventory and COGS. There are three types of cost-flow assumptions: FIFO, LIFO, and WAC. Let’s dive into them! FIFO Cost-Flow Assumption FIFO is an abbreviation for first-in, first-out. It is a cost-flow assumption where you assume the first item added to the inventory is the first item sold. Hence, the inventory left at the end of the period is the recent purchases or products. This method has maximum profits. Thus, it displays a higher bottom line and fewer COGS investments. Companies use this method to increase the share value.   LIFO Cost-Flow Assumption LIFO is the last-in, first-out where you assume the last item added in the inventory is the first item sold. Thus, the leftover inventory is the first purchased stock. Businesses use this method to calculate the worth of their inventory. It has higher COGS expenses and lowers net income/profits. Hence, companies use this method in tough times to decrease tax liabilities.  Weighted Average Cost-Flow Assumption The weighted average cost (WAC) method uses the average cost of the entire inventory at the time of any purchase or sale.   The average cost is assigned to each unit when you make an inventory transaction. It also calculates ending inventory and COGS for a period. It yields a mid-range cost, hence, a mid-range profit. Moreover, businesses that don’t have inventory variation in their inventory prefer this method as it is simple and easy to apply.  Pros and Cons of Perpetual Inventory System A perpetual inventory system makes the inventory management process smooth. However, to decide if this method suits your business or not, here are some pros and cons:  Pros A

Expedited Shipping is getting a lot of traction, but what makes it so special? And how can you, as a seller, take advantage of it? Find all the answers in this blog post and exceed your customers’ expectations with FHU.