In the style of Dear Abby, we’ve asked DCL partners their advice on top ecommerce topics. We’re calling our series: “Dear Ops.”
This post was written by Brian Harrist, the Logistics Manager at Shokz and a veteran in the operations business with over ten years experience working directly in distribution and inventory control.
At Shokz, we have pioneered a new kind of headphones, second to none on the market. To keep up with the pace of the innovation of our products, Shokz is also innovative in their marketing and fulfillment.
In recent years, we’ve been implementing new fulfillment projects that require special kitting, assembly, and new inventory to delight our customers and keep them coming back for more. Read along for all of the ways we’ve figured out how to leverage our fulfillment provider’s value-added services to increase cart size and raise our overall revenue.
Deciding Which Types of Promotions to Offer
There are many ways that have been proven to increase cart size and give your brand a revenue boost. The Shokz team uses a multi-faceted approach to get the results we want. We love trying out new ways to excite our customers with creative promotions like BOGO (buy-one-get-one). We recently did a campaign where we added Shokz-branded swag to orders over a certain amount as a special treat to our customers.
To make these specialized promotions come to life, we work closely with our fulfillment provider, DCL Logistics, and leverage the customized solutions they provide.
Here are a few examples of the ways we’ve done this:
- We extended our holiday sale so customers get reduced costs for longer than other competitor brands.
- We began to offer a gift with purchase.
- We provide customers a place to leave personalized gift notes during the ordering process (they are often hilarious, sweet, thoughtful, and kind!).
- We also offer next-day air and second-day air shipping options for customers who want their products to arrive faster.
Benefits of Specialized Fulfillment Projects
There are many benefits to leveraging your fulfillment provider’s value-added services for special fulfillment projects.
For our customers, they get the feeling they are getting more value out of their purchase. With increased satisfaction, our customers are more likely to recommend our product, post their unboxing experience on social media, buy more of our products, or buy our products as gifts for their loved ones.
At Shokz, we have easily increased our average cart size by implementing these processes, which naturally increases our profits. Plus, we get the benefit of knowing we’ve delighted our customers and given them something special.
Coordinate Efforts Early Between Departments
One of the best things your operations team can do to ensure smooth fulfillment is to get in brainstorming meetings with your marketing and sales departments early. Creating a special fulfillment project, that involves kitting, special assembly, or even just a new set of work instructions, requires the coordination of many people and departments. Having everyone on the same page early on is key.
Oftentimes, a promotion is the brainchild of the marketing or sales team. They are constantly thinking ahead to what customers will want and how to move more products based on trends in the market.
For the operation team, it’s so important to be included in the early discussions, before any actions get set in place. With everyone at the table from the beginning, the new ideas can be understood, and also vetted by the operations team for a realistic timeline and process for execution.
If you outsource your fulfillment, it’s critical to communicate these early ideas to your fulfillment provider, as well. They are the ultimate expert on what will work best, so giving them advanced notice about a new project will help execute in the best way possible.
What are the Key Milestones When Building a VAS Project?
It can’t be stated enough that adding new items to packages—whether for a sale, promotion, or exclusive offer—requires the coordination of many people, departments, and materials. When working with a fulfillment provider these special projects are often called value-added services or VAS. They can range from product bundling, to re-kitting for shipping cost reduction, using special eco-friendly materials, adding marketing materials to packages, or reworking returned items to go back into inventory.
Here are some of the steps that are not to be missed when building a new fulfillment project.
1. Get New SKUs into Your Inventory
When we put Shokz-branded swag items into orders that were over a certain amount, they weren’t yet in our inventory. This includes getting the products to your fulfillment warehouse, but before that making sure the items are properly added as SKUs into the inventory management system. If your swag isn’t added accurately before arriving at the warehouse, it won’t be able to be processed, causing a major delay and many headaches.
2. Build a Mock Shipment
Before officially implementing a new fulfillment project, your fulfillment provider should conduct a mock shipment. They will take the directions you’ve given them and build the swag into one package. Often for us at Shokz, DCL will take a few photos of it, will send the photos to me to verify, and we’ll go back and forth on any changes to ensure the most efficient and seamless processes.
3. Iron Out the Details with Your Company
This is the time that you’ll want to ask how this new product addition will affect fulfillment operations. Be very specific so you don’t get hit with any surprise fees or delays. There will be new fees involved no matter what. However, you’ll want to make sure you know how they’ll get dispersed, whether they’ll come from the marketing budget or somewhere else.
To ensure these details are noted, I always ask the following:
- How will this addition change the throughput or orders?
- Will we need a different box or new packaging for this add-on?
- How are you will these orders get executed (pre-build and ship, or fulfill-as-you-go)?
- Will this slow down our production or affect our SLA (service level agreement)?
- What will the extra fulfillment and labor costs be?
Once you have clear answers to all of the fulfillment questions, you can take the extra cost to your team. At this point, you may decide that it’s not worth it in the end to add-on new items. Or you could decide that it’s still a perfect idea to execute as you planned.
4. Build the Work Instructions and Sign the SOP
Once the mock shipment looks great according to your standards (and sales and marketing, too!), then you’ll need to work with your fulfillment team to create really awesome work instructions so that each build looks exactly like you want.
You’ll set a date to begin the new project and with that comes a formalized SOP (or standard operating procedure) which is the way your fulfillment provider’s operations will seal the deal to start the new project.
5. Train the Workers & Go!
Once everyone is set to start, your fulfillment provider will train their warehouse staff on how the new products get added. For one of our Shokz BOGO promotions last year, we allowed the customer to pick two items they wanted added. DCL put a large quantity of these accessories next to each shipping station and then trained each individual on adding them to the packages the fulfill in a particular way. With other promotions we’ve made the process more formal, but it can go either way depending on the specific project. Once the staff is trained, when that start date arrives you just let it all happen as you’ve planned!
Leverage Your Fulfillment Provider for More Than Their Services
If you truly have a good relationship with your 3PL, there will be more ways than just value-added services that they’ll be able to help you grow your customer base.
If they have distributed warehouses, work with them to get your products in more than one region. This will increase your shipping speed and get products to customers faster. With a distributed inventory model, orders get automatically routed to the warehouse that will get the product to that customer the fastest.
If your 3PL has modern technology and integrations, they’ll be able to help smooth out many operations processes on your behalf. We’ve used virtual bundles for some of our promotions, which saves so much time. It’s been really easy to create a product bundle through DCL’s eFactory platform, instead of manually doing it.
If your fulfillment provider has good relationships with shipping carriers, they should be able to help get you the best rates possible. When you’re not overspending on transportation fees, you are more likely to offer your customers faster shipping options. And every needs to be able to compete with the Amazons of the world these days. DCL often tells us when to switch orders to different carrier services. They are great about giving us shipping cut-off dates in advance of our sales and promotions, so that we ensure customers are always getting products when they expect them.
How Do You Know If Adding the Promotion Will be Worth it?
While many promotions may be a great idea, they might cause more issues than good or could become costly quickly when executed.
It’s important to keep these four benchmarks in mind as you build each new fulfillment project:
- Shipping cost: Will the additional items increase your shipping costs? Higher shipping costs will either need to be absorbed by the customer (which is a deterrent to purchase) or your brand, which may end up being a big expenditure for you. It’s a rookie mistake to undo the revenue increase of a promotion with more shipping fees.
- Fulfillment cost: How labor intensive is the new project? If your fulfillment cost or production costs will go up significantly because of intricate work instructions or additional labor needed, that’s a cost you’ll have to absorb, which may cut into your profits.
- Production time: If your production time slows down that means customers get products later which leads to more resources spent on answering customer service questions.
- Inventory accuracy: Many add-on items may not already be in your inventory, or you may be doing a promotion to help get rid of some old inventory. Make sure at the end of the project run you don’t have any lagging SKUs around that we need to be chased down, because that costs time and money.
About Shokz
Shokz audio products deliver premium stereo sound and the safety and comfort of an open-ear design to consumers worldwide. Shokz are engineered with patented bone conduction technology to improve situational awareness and keep users connected to their surroundings. Since 2011, Shokz has used its proprietary technologies and signature open-ear design for endurance, lifestyle, and communication audio products, priced for everyday use. Learn more about the brand that inspires users to #beopen at www.shokz.com.
Tags: Articles About Value Added Services, Expert Advice & Tips
