2X eCommerce Podcast

How to Turn Your eCommerce Operations into a Profit Center → Kunle Campbell
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Kunle Campbell: [00:00:00] This episode is brought to you by ShipAccel. Cut your shipping cost, gain insights with detailed analytics, and automate your shipping process seamlessly with ShipAccel

So welcome to today's episode of the 2X eCommerce podcast.

Introduction
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Kunle Campbell: Today, we'll be diving into one of the most critical concepts for running a scalable eCommerce business, which is operational efficiency. If you tuned into our previous episode on the marketing efficiency ratio and profit framework, you'll remember how we tied marketing spend to revenue generation and then profitability.

Operational efficiency works in much the same way. It directly impacts your contribution margin by reducing waste, optimizing workflows, and improving overall profitability. Well, in today's episode, we'll be covering the essential aspects of operational efficiency for eCommerce businesses. So if you're [00:01:00] running your own warehouse, a warehouse fulfilled operation, or using a third party logistic service for your fulfillment, or even making use of both in a hybrid model, we'll discuss The pros and cons and exactly how to select a 3PL, fulfillment partner.

We'll be talking about supply chain optimization, breaking down sourcing, inventory management, and supplier diversification. I'll be covering a lot on automation to help you save time, reduce costs and scale operations efficiently, we'll be talking about shipping and just that last mile optimization to improving customer experience while cutting your cost.

And about outsourcing non core tasks and why outsourcing can free up internal resources so stay tuned.

This is the 2X eCommerce podcast hosted by Kunle Campbell.

Warehouse vs. 3PL: Choosing the Right Fulfillment Strategy
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Kunle Campbell: Okay, first, let's break down the difference between warehouse fulfilled [00:02:00] operations and 3PL based operations. The choice between the two will significantly affect your operational efficiency, especially as your business scales. So with warehouse fulfillment, managing your own warehouse gives you complete control over inventory.

order fulfillment and customer experience. You can control the speed and accuracy of shipping, fine tune the packaging process, and make decisions about stock levels in real time. That being said, scaling a warehouse fulfilled operation comes with high overheads like warehouse space, cost of labor, and technology.

And as your order volume increases, these costs actually pile up and can erode your contribution margin. So well run warehouse can actually increase your profitability, but it requires constant optimization and the ability to handle fluctuations in demand. So if processes aren't [00:03:00] automated or efficient, you're likely going to face bottlenecks leading to slower fulfillment and higher costs.

Now with a third party fulfillment or 3PL, you have providers that take on the responsibility of warehousing, picking and packing and shipping, which frees you to focus on growth activities like marketing. Many eCommerce businesses find that moving to a 3PL solution allows them to scale faster without the overhead of running their own warehouse.

However, finding the right 3PL partner is crucial. Poor 3PL selection can lead to inventory mismanagement, not necessarily inventory management, but inventory mismanagement, delayed shipments and dissatisfied customers. Now with a hybrid model. You could handle certain fulfillment tasks internally while outsourcing others to a 3PL.

For example, you may keep high priority products or VIP customers [00:04:00] in house while outsourcing bulk fulfillment to your 3PL. With this approach, you get the flexibility and control over critical aspects of your operations while still leveraging the cost of the 3PL.

Selecting the Perfect 3PL Partner
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Kunle Campbell: Choosing a 3PL partner is a major decision. And the poor choice can lead to operational disruptions. So here's a checklist to help you evaluate and select the right third party fulfillment partner. First is the integration with your eCommerce platform.

This is very basic. Most 3PLs should seamlessly integrate with your Shopify, WooCommerce or BigCommerce to ensure just real time visibility of inventory, order status and, and shipping information. The second really is scalability. Your 3PL needs to scale as your business grows, ensuring that you handle increased order volumes, especially during peak times like Q4 or the holiday sales period.

The third point you should definitely look [00:05:00] into is transparent pricing. You want to ensure that the pricing structure is transparent with clear breakdowns for pick and pack fees, storage costs, Shipping short charges and returns processing. You want to watch out for hidden fees that could erode your margin.

Number four is real time reporting, a really good 3PL partner would provide real time reporting and analytics, providing you insights in order processing times, inventory levels, and shipping performance. The fifth thing to look at is just how reliable their customer services or customer support is.

It is crucial, especially when something goes wrong. Ensuring the 3PL offers responsive support during business critical periods is absolutely necessary. The sixth is their shipping capabilities. You want to evaluate their shipping speed and carrier partners.

Whether they can offer same day or next day delivery and what [00:06:00] their solutions for last mile delivery is. ​

Boost Your Visibility with Reviews.io
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Kunle Campbell: Remember our chat in May, earlier this season, episode 33 with Sam Pelleiro about scaling from $1M to $10M with Google Ads. If you're already using reviews, but feel like you're not getting enough, there's a faster way. With REVIEWS.io's review booster, you can collect reviews, not only from new customers, but also from past customers.

So you're not waiting around for fresh orders to start building trust.

So all you need to do is upload a list of customer details and REVIEWS.io will handle the rest automatically sending out review request with customized email invitations. This means that you can get more reviews on your site quickly helping boost your credibility. One of my personal favorite ways to extend the reach of our reviews is through their Review [00:07:00] Management feature allows us to distribute reviews to third party platforms like Trustpilot or Facebook.

You can either send 100 percent of your reviews there or let REVIEWS.io automatically spread them based on. Where you need the most visibility. It's a smart way to amplify your brand's presence across multiple channels and build trust with potential customers. And if you're stuck in a long term contract with another provider, like Yotpo or Okendo, Loox or Stamped, REVIEWS.io makes switching easy for listeners of the 2X eCommerce Podcast with their Contract Buyout Program. There's no need to overpay for a service that isn't delivering the results you expect. REVIEWS.io will buy out your current contract and offer flexible, no commitment monthly plans. So you can switch today without the hassle of being locked in.

So ready to make your reviews work harder for your business. [00:08:00] Get 10% off your first year with REVIEWS.io by mentioning 2X eCommerce when you sign up. New customers only terms and conditions apply.

Mhm.

Mastering Supply Chain Optimization
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Kunle Campbell: So now that we know how to select a 3PL next, I want to break down supply chain optimization. We have about three main components in supply chain.

Supplier sourcing, inventory management, and then supplier diversification. So I'm going to start out with supplier sourcing. The process of finding and onboarding suppliers is critical to the profitability and efficiency of your operations. For smaller founder operated businesses, the process is often more hands on. The founder of the head of product is usually responsible for sourcing suppliers, vetting them and negotiating terms.

It involves researching potential suppliers, comparing [00:09:00] pricing and quality and visiting factories, if applicable. As your business skills, however, a dedicated sourcing manager role might emerge and might be responsible for constantly searching for new suppliers who can meet your growing demand.

Typically the head of product often serves as a key figure in sourcing new suppliers, especially when developing new products. Once they're satisfied with a supplier, that relationship can then be handed over to the inventory team or the ongoing management.

So the second bit of supply chain is inventory management. Inventory management is a continuous balancing act between meeting demand of your customers. And keeping your costs down. So whether you're running a warehouse or using a 3PL, real time inventory management systems are essential.

You want to look at tools like Scubana or DS systems, depending on the size of your business, that [00:10:00] will sync up with your stock levels across all channels. Preventing stockouts and also overstocks. Inventory management is a different role from sourcing because it requires an ongoing relationship with suppliers to ensure your stock is available when needed, particularly during peak periods like Q4.

A well managed inventory can increase your profitability by reducing storage costs, minimizing stockouts, and allowing you to optimize order replenishment. The third aspect I want to talk about in supply chain management is supplier diversification. Relying on a single supplier is risky. One disruption in their operations, whether it's a supply chain delay, quality control issue or sudden price increase can cripple your business.

So diversifying your suppliers allows you to mitigate these risks and maintain a steady flow of products and also avoid disruptions caused by local issues [00:11:00] like natural disasters. So whether sourcing locally or internationally, you need to ensure you have backup suppliers to step in when needed.

Okay.

Harnessing Automation for eCommerce Success
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Kunle Campbell: So let's talk about automation. It is key to scaling your operations efficiently and reducing manual tasks. I'm going to discuss six key areas where automation can drive efficiency.

One, automating your inventory management. We've discussed this before. Real time inventory management tools like Scrubanner will help you automate Stock level, updates, notify you when stock is low and help forecast demand based on sales trends. It also helps you prevent over orders and stock out, saving you money and improving customer satisfaction.

The second bit is automating your order management. So platforms like ship hero allow you to automatically route orders based on customer location, stock availability, and shipping [00:12:00] preferences. It helps you reduce manual intervention and improves your order accuracy and speed. The third area you want to start thinking about automating is your customer service.

So automating basic customer service tasks like tracking orders Or answering product FAQs can reduce the strain on your team chatbots Or automated email responses can handle common inquiries Freeing up your customer service team for more complex issues.

The fourth bit is automating your returns process Returns are inevitable, but they don't have to be a headache. Automating returns process using tools like return knee or loop returns, simplifies the process for both you and your customers. Your customers can initiate returns, print labels, and process refunds themselves as a self service through an online portal.

These tools also integrates with your warehouse. All [00:13:00] three PL updating inventory as returns are processed and providing data insights on return reasons. The fifth thing you want to automate is your supplier database.

You want to look at tools like air table to store and track supplier data to help you manage your relationships efficiently. You can store key information like SKU pricing and performance history in one central database. thereby simplifying reordering and tracking supplier performance. The sixth thing you want to automate is shipping automation.

Platforms like ShipAccel, who are a sponsor of this podcast, automate the shipping process by selecting the fastest or most cost effective carrier for each order based on rules you define. You can prioritize shipping methods based on order value or delivery location, which improves delivery times and reduces shipping costs.

Speaking of shipping costs, shipping costs can make up a significant portion [00:14:00] of your operational expenses and optimizing this part of your business is critical to increasing profitability.

For warehouse based businesses. Negotiating better shipping rates with multiple carriers is essential. Using technology that provides real time tracking for your customers improves transparency and satisfaction while offering different delivery options help meet diverse customer needs.

For businesses using 3PL providers, ensure your 3PL can handle various shipping methods from standard shipping to same day delivery. Because these partnerships with carriers should give you access to competitive rates while maintaining fast delivery times, make sure the 3PL provides real time updates on orders and shipping statuses.

Outsourcing Non-Core Tasks for Growth
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Kunle Campbell: So I want to talk about outsourcing non core tasks. As your business grows, outsourcing non core tasks can help you focus on [00:15:00] growth activities.

Outsourcing customer service can reduce strain on your internal team. Especially over busy periods. So look for third party providers that can offer multi channel support on phone, chat, social media, and have a strong understanding of your brand voice.

Bookkeeping and financial management are the second no brainer things to outsource as soon as possible. It ensures accurate financial tracking and reporting, Freeing up your time for more strategic decision making services like bookkeep who've been on this show before and bench can help you handle everything from basic bookkeeping to generating real time financial reports.

Conclusion and Key Takeaways
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Kunle Campbell: Okay, folks, that's a wrap for today's episode of the 2X eCommerce podcast on operational efficiency. So whether you're running your own warehouse or working with 3PL, optimizing your supply chain, automating processes and making data driven decisions will help you increase [00:16:00] profitability and scale your business sustainably.

If you found today's episode valuable, please leave us a review and share it with your network. Don't forget to subscribe for more insights on scaling your eCommerce business. Until next time, keep optimizing, keep automating and scale smartly.