Maintaining logistics and supply chains are some of the most essential components of running a successful eCommerce business. However, due to the complexity involved, supply chains and logistics are also the most challenging part, especially during the global Covid-19 crisis.
What’s worse, no one knows when these kinks in the supply chain will work themselves out. Experts predict it’ll take at least six months or possibly longer for the global supply chain to return to normal.
On top of that, our client, a Chinese apparel and footwear brand was also dealing with several internal challenges:
- Unsure of how to transition from B2B to B2C logistics and supply management to meet the high frequency, low volume shipment needs of online business
- Aged inventory pressures and best-seller products that were “out of stock.”
- High transportation costs and low efficiency, leading to low profits
After onboarding the client and performing a thorough analysis, we applied our full-cycle logistics and supply chain management and optimization services. In six months, we not only solved their problems but also helped them build an internal B2C logistics and supply chain team.
So, how’d we do it? Maybe we’re born with it, or maybe it’s Maybelline. But we took these key steps to give our client (ocean)wings.
Even before the Covid-19 crisis began, few brands managed to pull off airtight supply chain and logistics management. To make matters even more complicated for our client, they had no Amazon selling experience. They didn’t even have experience with shipping products overseas.
#1 The challenges of transitioning from a B2B to B2C business model
With traditional retail businesses, many brands choose to sell their products directly to franchise vendors. This is an effective B2B business model because brands can utilize franchises’ retail channels and focus more on products.
But when brands start to think about building their own eCommerce channels, such as Amazon, Walmart, Shopify, etc., they quickly realize that the B2C business model is more complicated:
- Frequency and volume — In a B2B business, the brand sends all its products to franchise vendors every six months or 12 months. But in an eCommerce B2C business, Amazon, for example, the brand needs to send products to FBA every month according to its sales performance.
- Manufacturing processes — B2B businesses receive orders from franchisees first and then start manufacturing. But in B2C companies, the brand does the manufacturing first and then sells their products. This requires the brand to make accurate sales forecasting.
- Managing deadlines — It’s okay for a delay of a few days or even weeks to send the products in a B2B business model. But in B2C businesses, the wait will lead to severe out-of-stock problems, and the cost of losing customers due to out-of-stock issues takes time to recover.
#2 The challenges of stale inventory, out of stock issues, and poor sales forecasting
Before reaching out to us, our client had sent six months’ worth of products of certain SKUs to FBA all at once. Unfortunately, their sales forecasting was wrong. As a result, these products turned into aged inventories. And because of Amazon’s FBA inventory storage limits, the brand didn’t have more inventory space for their best-selling products.
So, our client was dealing with two major problems — the high cost for aged inventory and no space for best-selling products which were “out of stock.”
#3 The challenges of overcoming high cost and low logistics efficiency due to the global crisis
The Covid-19 crisis has snarled global supply chains and has drastically impacted logistics. By the end of 2021, ocean freight rates were 385 percent higher than a year ago and more than 7X the pre-pandemic norm.
And because of labor shortages, brands need to book transportation at least six months ahead, and the shipment takes longer than ever before. As a result, it’s incredibly difficult for brands to manage every step of the logistics process and its transitions — especially for cross-border sellers.
What’s more, Amazon keeps increasing the FBA inventory storage limits and raising the fees. This puts even more pressure on sellers.
Keeping the profits and restocking on time is the most urgent problem to be solved.
After Oceanwing’s diagnosis, the brand found it had difficulties managing its logistics and supply chains — both internally and externally. So, we established full-cycle logistics and supply chain management services for them.
With this particular solution, we wanted to solve their current issues and help them improve and strengthen their sales for the long term.
Here’s what we did.
#1. Designed a streamlined workflow for a smooth transition from a B2B to a B2C model
First, we thoroughly analyzed their past sales performance and made accurate sales forecasts on a per month basis. Additionally, we helped them manage the order of materials and work with their manufacturers to set a monthly manufacturing process under MOQ (Minimum Order Quantity) requirement.
To make the transition successful and ensure orders would be delivered on time, we set meetings with their different departments each week to check the data and progress. We also set alert systems to solve unexpected problems immediately.
For example, at one of our weekly meetings, we found their packaging box supply was abnormal. These unqualified boxes could lead to a costly delay. So, we immediately helped them connect to another provider, and the boxes were delivered on time.
#2. Reorganized inventory based on accurate sales forecasting
We applied professional supply chain models, including multi-factor authentication, the balance of supply chain triangle, etc., to guarantee sales forecasting accuracy. We also ran all channel reports, including inventory aging reports, to monitor their inventory status.
Based on these data and reports, we made an integrated sales plan.
Considering their aged inventory problem, the old stock would take two years to sell. So, we made a clearance sales campaign first and cleaned up the aged inventory in just four months. And after calculation, we reset and managed their restock frequency from every six months to every two weeks.
#3. One-stop logistics management from manufacturer to the consumer
The whole path of logistics is complicated and full of unexpected emergencies. It’s also challenging to manage the transition between each step. That’s why we provide a one-step logistics service that’s effective at saving our clients’ time and money. In this particular case, we utilized Anker’s partner system to find our client the fastest route with stable services.
For example, when the brand came to us, they couldn’t ship products to warehouses after products arrived at LA harbor from China. Long queues of container ships outside major US ports were the culprit behind this snag.
So, we contacted our partner immediately and quickly got our clients the trucks they needed to transport their products to the warehouses on time.
The results are in, and you’ll love to get these for your brand.
After just six months of collaboration, our client learned how to better manage their logistics and supply chain and built a stellar team to support it all. What’s more, with our assistance, the client also achieved the following results:
- Saved 10 percent of the total cost
- Shortened international shipping times by seven days
- Maintained a healthy inventory and turnover rate
Are supply chain snags and logistics SNAFUs eating into your bottom line? Contact us today.
We’ll detangle the supply chain issues that have got your brand in a pinch, and we’ll also help you iron out those annoying logistics wrinkles. See how quickly you can achieve these same results when you contact our Amazon selling experts.