You’ve put together a killer Back to School (BTS) marketing plan and optimized your site and landing pages to convert new customers.
You’re now ready to handle the online sales rush, right? Not so fast.
If you don't plan ahead to make sure you have enough inventory in stock and that you can process an influx of orders (either in your warehouse or with a 3PL or dropshipping supplier), you may not be able to meet increased demand.
No one wants to place an order only to find out that the item is no longer in stock.
Unhappy customers means lost sales and new acquisitions for your competitors.
To help you avoid that unfortunate scenario, I recently spoke with Harrison Dromgoole, Content Creator at Ordoro, a Web-based shipping, order management, purchasing management and inventory management system to gain his insights on the must-have logistical strategies and solutions for a successful Back to School fulfillment process.
Projecting Your Increased BTS Inventory Needs
The first step in preventing stockouts is to project the increased demand that you’ll likely get on your site during the BTS season. There are three factors that you need to consider to do this successfully:
1. Evaluate the increased demand for specific items across your site during last year’s BTS online rush and project what you expect this year’s increase to look like. Shopify Plus blog contributor Ott Niggulis breaks down exactly how to develop a seasonal plan to prevent out-of-stock situations.
2. Factor in projected industry averages for growth during this year’s BTS shopping season. Emarketer predicts “US ecommerce retail sales during the core back-to-school shopping months of July and August will grow 15.3% this year.” Likewise, overall “U.S. retail sales will be up 2.6% in 2016.”
3. Identify the most popular items that you sold last year, plus any hot trends for the 2016 season and make sure you stock up on those items based on your increased sales projections.
Preparing for Increased Demand and Fulfillment
Once you’ve projected the increased demand on your inventory for the BTS shopping season, it’s time to call your suppliers and any inventory management partners you work with to ensure they can help you succeed during the busiest online shopping days. In the case of Back to School, those days tend to be in late August and September when parents and college kids are buying last-minute items.
Your strategy will vary slightly based on whether you handle your inventory In-house, outsource to a third party logistics provider (3PL), or use dropshipping. Here’s what to do for each scenario:
In-house Inventory Management
If you manage your own inventory in-house, you have the most control over whether or not you can store enough inventory to be packaged and delivered on time to customers. If you don’t have a warehouse, Dromgoole recommends renting a temporary storage space for heavy online shopping seasons. He also suggests to “speak with your suppliers and order enough stock ahead of time.”
For Back to School, he suggests that you should stock up at least a month in advance -- that means right now (likely early August). For Black Friday, consider ordering stock at least two months in advance (September time frame).
If you work with a third-party logistics provider (3PL), you need to do a little more work up front. That’s because you have less control over your fulfillment processes. Since 3PLs store your inventory in their warehouse, then fulfill the orders for you, you need to do two things:
- Ensure that the 3PL is aware that you will be sending more inventory their way leading up to the Back to School online rush. That way, they can confirm they have the appropriate storage space on hand for your increased needs.
- Call your suppliers in advance (as per above) to make sure they can meet your inventory needs.
Dromgoole recommends doing these steps two months in advance to ensure you don’t have any unexpected problems to solve on the fly. Here’s a helpful article on how to sort out your outsourced fulfillment strategy.
If your business uses a dropshipping model, meaning that you market products on behalf of a supplier who stores the inventory on their end, you have even less control over how much inventory you’ll have on-hand during heavy online shopping days.
So, you need to make sure that supplier has enough inventory to meet your customers’ demands -- on top of other dropshippers’ with whom they work. Send them your sales projections at least a month in advance, so they know what to expect for your ecommerce store.
Something to keep in mind: Dromgoole says it’s imperative to communicate to your customers that there’s a limited supply via your website. For example, indicate when there are only a few more items in stock. That way, customers won’t be surprised and pissed off if they order a product and then find out that it will not be delivered for a month -- until your supplier gets more items in stock.
Logistical Solutions Must-Haves
If you sell your product across multiple storefronts (e.g. Amazon, Shopify, Facebook), you’ll need to sync your inventory across every channel. That means all of your inventory levels for each store need to feed into one central hub.
Dromgoole recommends setting up an Order Management System (OMS) to optimize your multi-channel product fulfillment. An OMS should integrate with all of your sales channels to collect inventory information and report on the product quantities on hand -- allowing you to manage it all in one place.
Also, you may want to connect your entire logistics network with your OMS. If you manage your logistics in-house, the OMS will handle all of it. However, if you work with a 3PL, an integration with your OMS means seamless, automated relaying of inventory and order information to and from it. If that integration isn’t possible -- it can be pricey -- spreadsheets with updated inventory counts can be regularly sent to you by your 3PL, and uploaded into the OMS.
Here’s a helpful diagram to help you visualize what this might look like:
Image via Ordoro
For example, the your (OMS) would interface with all sales channels which would communicate with the 3PL system. That system tells the OMS to hold a 3% increase in inventory (projected for BTS in September). The 3PL then stocks the inventory for you and does regular inventory counts which are then updated through their API integration with your OMS. As you sell through channels, and your inventory goes down, all sales channels will reflect the quantity changes as required.
An example of how it all works for BTS:
- A merchant tells their 3PL to expect a 3% increase in inventory (projected for BTS in September).
- They ship the inventory to the 3PL who stocks it.
- As orders flow in through sales channels, an integration with the 3PL lets the OMS automatically send order information their way.
- Once the 3PL fulfills those orders, it alerts the OMS and relays shipment information, like tracking numbers.
- The OMS writes back that information to the order’s appropriate sales channel, and adjusts inventory quantity accordingly.
- The OMS writes back that updated inventory quantity to every sales channel.
Your OMS can also connect to your shipping carriers (e.g.via a Shopify app like AfterShip for organizing tracking information), who are alerted that an order has come in and needs to get to the customer by the desired shipping date.
However you set-up this system, you need to ensure it all works seamlessly across channels to avoid stockouts and keep customers happy.
Syncing it All Up with a Multi-Warehousing Strategy
If you are a large scale merchant that sells across the country, North America, or other continents you’ll have to deal with an even more complex fulfillment strategy to meet high BTS online shopping demand.
Let’s say that you fulfill shipments in-house and have warehouses on the East Coast and in Kansas and California. You’ll need to develop a multi-warehousing strategy that ensures all your fulfillment channels are aligned and synced. That means there needs to be visibility into the inventory and orders in every warehouse to keep everything organized.
So, if you have an inventory shortage in the Kansas warehouse, your OMS can notify another warehouse to ship more inventory to you. Likewise, orders for out-of-stock products can be transferred for fulfillment by another warehouse.
The scenario described above is similar if you outsource fulfillment to a network of 3PLs. If you are running out of a product on the East coast but work with another 3PL on West coast, your OMS would help to solve your inventory issues.
Optimizing your fulfillment strategy for heavy online shopping days is critical and Dromgoole says “it should be your biggest logistical investment.” But if you’re anticipating a rush in online orders, you must also ensure that your shipping carriers can deliver to a customer’s doorstep in a timely and reliable fashion.
The Shopify App Store can help you identify solutions to track and manage inventory (e.g. Inventory Source), manage free shipping (e.g. Free Shipping Bar), and help you get the best price with the most reliable carriers. For more information on how to optimize the shipping portion of your logistical plan, check out this helpful guide to shipping and fulfillment.