10 Ways to Protect Your eCommerce Supply Chain from Future Disruptions
Recent fulfillment disruptions caused by the COVID-19 crisis, including FBA delays, production delays, shipping delays, and countless other supply chain hurdles have further highlighted the need for diversification. While it’s important to diversify your business by selling a variety of products and utilizing different marketplaces and selling channels, it is just as important to reduce your dependency on a certain supplier or a certain fulfillment option. If there is anything we’ve learned, it’s that a diversified eCommerce business also has diversification within its supply chain. Before COVID-19, countless Amazon businesses thought nothing of sending all of their inventory to FBA. Now, you may think twice before committing all of your inventory to one fulfillment partner. Today, having more than one factory produce your products may not be diverse enough. You may need different factories in different parts of the world in order to be fully diversified.
To prepare your business for future surprises and/or unforeseen events, follow these tips:
Invest in Safety Stock
Have a “rainy day” supply of inventory that you only use during times like these — i.e. when you know you won’t be able to get a regular resupply order when you need it. How much to order depends on a number of factors, but a month’s worth of inventory might be a good place to start.
Consider working with a few different suppliers from different areas. That way, if one shuts down in China, for example, you can still keep production going in the US. If you are currently only using one or two suppliers, be sure to have some backups up your sleeve. To find vetted, highly-qualified suppliers, check out Jungle Scout’s Supplier Database.
As we’ve seen over the last few weeks, certain categories are in high demand at certain times — and sometimes unexpectedly. If you diversify, you’ll be more nimble despite demand spikes. For example, you can deactivate listings for products that you’re running low on before actually stocking out, and still meet demand on products that remain evergreen.
Diversify Fulfillment Options
After recent delays of non-essential items, many Amazon sellers may not be as eager as before to send all of their inventory to FBA. No matter what channels you sell on, you can give your business more flexibility and security by utilizing multiple fulfillment options. Maybe you send your fastest selling inventory to FBA and self-fulfill or outsource other items to other fulfillment centers. This may be more cost-effective too as FBA fees can be very expensive if your products sit on the shelves for too long. It may save you money if you outsource your slower-moving inventory to cheaper warehouses.
Even if you don’t use FBA, you should still consider having multiple fulfillment options in place and have a backup fulfillment plan. Luckily, there are a ton of fulfillment options out there for every need and budget. If you plan to outsource your fulfillment to a third party, check out these 6 FBA alternatives. If you plan to fulfill your orders from your own warehouse or from home, explore 8 shipping platforms to help you self-fulfill.
Pro Tip: Self-fulfillment is a great option for eCommerce businesses looking to replace FBA or those who simply want more control over their fulfillment process. However, you will run into issues with both customers and the marketplace if you try to “play the system” by generating shipping labels with no tracking information or shipping confirmation. Or if you mark orders as “shipped” in Amazon without a tracking label.
There’s a bit of a theme here: don’t put all your eggs in one basket. In some cases, sellers who run their businesses on multiple marketplaces earmark inventory for each marketplace. This could help you in the future because, if inventory is running low on one channel, you could borrow from another to prevent a stockout. Amazon expert James Thomson says: “[If you have] inventory that you can take from other channels where the short-term loss of sales isn’t going to hurt you as much as Amazon, take the necessary steps to move the product around. Obviously, other channel partners may not be happy that you can’t fill their purchase orders, but your business off-Amazon is likely to have less collateral damage than the impact of stockouts on Amazon.”
For more on diversifying your online sales channels check out the following resources:
- Where to Sell Your Unsold Inventory
- How to Become a Walmart Marketplace Seller
- How to Choose the Right Online Marketplaces to Sell On
- Everything You Need to Know about eBay Managed Payments
Conduct Quality Inspections
It’s important to make sure your products are exactly what you and your customers expect before you pay to ship them to your fulfillment center and long before they get in the hands of customers. eCommerce businesses can protect themselves and their product quality by sending inspectors to their factories overseas. You can hire companies such as Movley to do it for you. Inspections are conducted by every major manufacturer and all of the top Amazon sellers. They are the bedrock of the entire quality control process. Inspections are so vital that they have been embedded and codified into standardized quality control processes by organizations like the ISO. Inspections allow businesses to:
- Catch defective products before they get to customers
- Ensure products will withstand daily use
- Maintain the aesthetic quality of products
- Gain insights into the production process
Especially now during the global pandemic, it has become even more important to conduct rigorous product inspections. We recommend now in the time of COVID-19 that:
- If you aren’t conducting inspections you should start immediately
- If you are already conducting inspections, be more stringent than ever
- Employ larger sample sizes
- Set smaller limits on accepted defects
- Do more rigorous product testing
According to Movley, an inspection company that uses tech for highly effective quality control, customizable processes, video and photo reports, and an English-speaking back-office, now more than ever, inspections are the best way to protect your business from the danger of poor product quality. Inspections end up costing just a few cents per unit of product, and they can end up saving you a fortune by making sure products are up to standard before they get to customers.
Create and Revise Processes
If you run your business alone, write down your processes. It doesn’t have to be anything fancy. If you repeat something three or more times, it’s a process. Write it down so if you need someone to jump in and help for a while, they would be able to repeat the process and keep your business afloat. If you have employees, make sure they also write down their processes.
Also, consider revising your vacation policy to assure employees that they won’t lose vacation time or their jobs if they have to stay home sick.
Develop and Maintain Relationships with Suppliers
It’s never been more important to grow and maintain positive relationships with your suppliers, venders, and fulfillment partners. At the end of the day, businesses are run by people and people enjoy doing business with people they like. Relationships are so valuable that it’s hard to put a price on them. Businesses tend to prioritize the clients they have the best relationships with alongside their biggest clients. It’s not difficult to build relationships with your suppliers and any of the other companies you do business with. Just be polite, prepared, and easy to work with. Face-to-face meetings can be really powerful when it comes to building relationships. However, if you can’t meet in person (like during a global pandemic), opt for a video call.
Pro Tip: If you really want to impress your suppliers and quickly build a lasting working relationship, you may want to try paying them early.
Have an Emergency Plan in Place
Now that you and your employees have written down your processes, you should decide who should fill in for whom should someone be unable to come to work. If you run your business by yourself, go over your processes with someone you trust and depend on who can fill in for you if you temporarily can’t work. If you have your own brand that you promote through weekly emails, social media posts, YouTube or other content platforms, it’s best to have a couple backup newsletters, videos, posts, etc. that are fully written, produced and ready to go. Should you fall ill or something were to happen, you would not lose sales or traffic. You can just post your backup posts as you take the time you need to get better.
If you are unable to find someone to do more complex tasks such as run your Amazon PPC campaigns, there are several agencies or in-house consultants that can run them for you. So even if you’re not looking to hire one right now, look into different options and find someone you trust that can help you in a time of need.
Boost Cash Flow
As you’ve likely experienced as an eCommerce seller, cash flow can be tight — what with funds either tied up in inventory or on a payout delay. At Payability, we understand how your business works. Our financing solutions are designed to meet your specific needs so you can maintain a steady flow of cash to buy inventory last-minute, pay rush shipment fees, invest in growth, or even manage through emergencies. Instant Access gets you daily payments on your sales, so you can get paid in real time (the next day, every day, in fact); Instant Advance gets you a large lump-sum of cash (Payability buys a certain amount of your future receivables up front and at a discount); and the Seller Card lets you access your marketplace income 24/7/365, including on-the-go as well as on weekends and holidays. The application process is simple, requires no credit check, and, if approved, you could get funding in as fast as 24 hours.
Hopefully, you’ll be able to look back on this moment as an opportunity to further strengthen your business. After all, it’s never too late to be more agile so you can keep momentum going, even in times of crisis.