Warehouse and inventory management are two of the most important aspects of running a product-based business. They involve a great deal of calculated decision-making on the part of the warehouse manager, and handled well, they contribute to an organized warehouse operation.
To optimize your warehouse operations, we’ve standardized some key metrics that managers around the world use to understand their inventory. This blog discusses some of these metrics and how they can be calculated.
Inventory carrying cost
The inventory carrying cost refers to the total cost required to maintain inventory over a given period of time. While there are many classifications of inventory costs, such as receiving cost, storage cost, and packing cost, carrying cost is important because it tells you how much it costs to keep your inventory at desired levels.
How to calculate carrying cost percentage:
Carrying Cost (%) = Inventory Holding Sum / Total Value of Inventory x 100
Here, inventory holding sum comprises four components of carrying cost. They are:
Capital cost, and
The formula to calculate the holding sum is as follows:
Inventory Holding Sum = Inventory Service Cost + Inventory Risk Cost + Capital Cost + Storage Cost
You’ll want to keep the carrying cost percentage as low as possible. The higher the percentage, the smaller the profit margins and greater the chance of a fiscal burden.
Rate of return
Returned products cost time and money to process. Understanding why products are returned can help you solve issues early. The Rate of Return (RoR) is the metric that helps you understand how many products you deliver are returned. The formula to calculate the RoR is
Products Returned / Total Products Delivered = Rate of Return
The RoR can be calculated for subcategories of your product so you can begin to understand not only what is returned but why. For instance, you might respond differently to the return of a defective product than to one that was incorrectly delivered.
Click here to read more about how to keep your products flowing smoothly in and out of your warehouse.
Inventory turnover is the speed with which you sell and replace all of your inventory. This is important to track because you need to have enough product on hand to meet demand, but you don’t want so much inventory that all of your money is tied up in a product that might not sell.
The formula for calculating inventory turnover is
Cost of Goods Sold / Average Inventory = Inventory Turnover
When you have a high inventory turnover, you have a small amount of inventory on hand at a given time. A low inventory turnover means you are keeping product in your warehouse.
Days in inventory
Along with inventory turnover, the days in inventory metric helps you determine how fast your inventory is replaced. Days in inventory tells you the average number of days that you have your products on the shelf.
The formula for days in inventory is
_______________ = Days in Inventory
More efficient warehouse management systems will keep products for fewer days.
Orders picked per hour (picking productivity)
Orders picked per hour is a simple but extremely important metric for inventory management. It gives you insights into the hourly productivity levels of your inventory personnel and helps you make data-driven decisions.
Based on the results obtained for various shifts, you can determine how to boost efficiency in your warehouse. For example, you might make changes in team management or overall organizational structure.
Another great use of this metric is that it allows you to calculate the impact of introducing a new technology or picking technique. By recording the productivity before and after the introduction, you can determine how effective the change has been.
Cin7 solutions for calculating metrics
Calculating these metrics manually could be a daunting task. This is especially true if you have a small or medium-sized business.
By investing in inventory management software, you can leverage technology as you grow your business. Book an appointment today with Cin7 to revolutionize your warehouse and inventory management.
Covid-19 has changed the way many businesses operate, and new trends are emerging daily. Many industries have sustained massive losses and others have made huge gains. In fact, entire supply chains have transformed in new and interesting ways.
Here’s a list of key trends that will take over in the supply chain industry in the coming year. In modern times, the supply chain is an essential part of every organization. We expect a year full of supply chain improvement and evolution. Let’s jump right in.
Improved artificial intelligence (AI)
Artificial intelligence (AI) will become a primary driver in the ever-growing supply chain industry. AI algorithms have the capability to automate basic operations by processing data from previous operations. AI has the potential to save a lot of time and remove a substantial amount of human error. These two improvements will make supply chains much more efficient.
AI can also decrease the amount of human capital needed for performing both basic and complicated tasks. Because of this, the potential for AI is enormous. It can help businesses identify patterns in data and give managers access to a range of useful insights. As businesses take advantage of AI, operations in the supply chain will become more accurate and efficient.
Robotic automation, including drones and driverless vehicles, can improve the supply chain by streamlining logistics operations. In the coming year, some executives will start using self-driving drones to make small goods deliveries.
In 2019, nearly half of U.S. companies spent up to $869 million on at least 16,400 robots. Robotic automation is playing a massive role in the supply chain and supply chain management companies.
The emerging scope of IoT (Internet of Things)
Like AI and robotic automation, organizations are increasingly interested in using IoT devices to improve visibility. The Internet of Things will benefit the supply chain industry in many ways. Companies will be able to fit sensors into vehicles, warehouses, and outlets to provide data that enhances visibility in inventory management, production, and maintenance.
End-to-end IoT services are rapidly being adopted by supply chain organizations. IoT will help increase transparency across the entire supply chain. Everything will be tracked in real time as GPS sensors are fitted in different kinds of transportation.
Sensors play a vital role in warehouses by providing visibility into inventory management. It will also play a large role in gauging demand for retailers, too.
Customers want same-day delivery of their products, but this level of speed and efficiency can be difficult to manage for logistics teams. This is where blockchain technology can help supply chain management.
Blockchain can help businesses eliminate intermediaries and communicate directly with potential customers. Blockchain technology can also assist in distributing data transparently. However, blockchain’s most significant advantage in supply chain management is that it offers complete protection for securing information. Because it’s decentralized, blockchain helps keep data protected from unwanted edits. Customers, shipping lines, logistics firms, and vendors can communicate over a single, protected platform where information is stored.
Agility in supply chain management
Thanks to the pandemic, the supply chain industry is becoming much more agile. Supply chains are becoming increasingly flexible, and they now have the ability to deal with changes, disruptions, and challenges that arise.
Thanks to AI and machine learning, many companies can adapt on the fly. Shipments are becoming more personalized as pre-orders specify exact requirements. As industries move forward, customers are becoming more prioritized. The ability to customize is becoming a total necessity. Companies are starting to build infrastructure that permits customized orders in the supply chain without adding any cost.
Automation is escalating in multiple ways. Along with AI and robotic automation, smart contracts are starting to emerge, too. Companies are starting to use smart contracts to settle payments with cryptocurrencies automatically, which removes the need for arbitration and makes the payment process much quicker.
Smart contracts are transaction protocols that are executed when required conditions are met. They can also be useful for generating invoices when shipments reach their destination. The most common use case, however, is when financial transactions are being performed between parties.
Omnichannel is the new trend
Customers are starting to expect better customer experience, and omnichannel can help by providing a quicker, more direct shopping experience. Omnichannel services will help customers as they shop online or in stores.
People want to purchase and receive goods as quickly as possible. This is why the demand for streamlined logistics is increasing every day. Omnichannel supply chains are helping customers get a smoother, more transparent experience.
ScaaS (Supply chain as a Service)
As supply chain management teams become smaller, companies are starting to hire groups of skilled individuals who focus on making strategic, supply-chain-enhancing decisions.
Most businesses still manage their supply chains in-house. However, as trends and technologies evolve, many companies will adopt the ScaaS (supply chain as a service) business model. It’s a great way for companies to outsource logistics, inventory management, packing, and more.
Stay on top of new trends to streamline your supply chains
As new technology emerges, processes will become both smarter and faster. If you follow the trends, your supply chain has the potential to become more sustainable and customer-centric. Trending technologies like IoT, AI, and blockchain can help simplify your current processes and automate your operations.
By staying updated and well-informed on evolving supply chain trends, you can stay flexible and adopt the technology that makes more sense for your business. As you do this, you will reduce supply chain disruptions. Ultimately, this knowledge will help your business boost efficiency and productivity.
With Cin7, you can get real-time inventory insights. You can also automate your purchase orders to avoid stockouts. Cin7 also integrates with 3PL providers to help you streamline your order fulfillment. Book a demo with our experts to learn more about using Cin7’s capabilities for scaling your operations.
Retail and wholesale-based businesses need to realize as many efficiencies as possible to survive in the marketplace. Today, success is dependent upon modern tech stacks with cloud-based software that best suits inventory-centric operations.
The adoption of cloud-based software has helped product sellers succeed in an industry that has been disrupted by COVID-19 and global conflict. By taking full advantage of the move to the cloud, thriving businesses are enabling their remote workforces, automating the increasing demands of digital commerce, and protecting their intellectual property with the latest in web security.
Avoid paying interest on cash borrowed from business credit lines to bolster cash flow
Few aspects of business are more critical than timely and accurate accounts receivable. Meticulous invoicing keeps cash flowing into the business. Leaving such a crucial function to error-prone, manual processes is a mistake that small businesses can no longer afford. And the process doesn’t end at sending invoices to customers. Accurate, real time data supports follow-up on receivables – also key to maintaining cash flow.
When it comes to invoicing, errors and delays lead to lost revenue so it is vital to understand what mistakes businesses often make and how to avoid them. We preface the following tips by generally advising that by adopting cloud-based accounting software from a respected vendor that is custom integrated with an inventory control platform ensures all financial data is managed on an accurate and timely basis. Here’s a comprehensive list of common invoicing mistakes businesses make and the solutions to ensure you can prevent repeating them.
1. Sporadic invoicing
When businesses send invoices to customers inconsistently, it’s easy to fall behind. Invoicing on different dates each month can also lead to receivable delays. This mistake is likely to occur because some businesses only invoice on specific days of the week.
This can be an issue for customers as well. Customers have difficulty planning their cash flow because they have no idea when to expect an invoice. Random invoicing results in delayed payments causing receivables to age beyond 30 days. To rectify this, select specific dates every month on the calendar to regularly send invoices. The best solution is to automate the process with invoicing software. Customers will be well aware and have enough time to arrange the payment.
2. Timely collections
Simply sending invoices doesn’t complete the job. It is essential to follow up with customers who haven’t made payments within agreed credit terms. Organization is key to success here and failing at collections hinders growth and long-term viability.
Once an invoice is sent, it is recommended to set a reminder to follow up on debts. When the time comes, a persuasive email that urges customers to take action immediately can be effective. Best practices encourage the use of accounting software that helps manage receivables and sends reminders of past due invoices.
3. Unclear terms of payment
Always clearly specify Terms and Conditions regarding payment terms. This should include details about late fees, pricing, and other details about products and services. State all payment policies on invoices so that customers aren’t confused and can make payments on time.
Be as specific as possible. For example, a customer may wonder if “net 15 days” excludes weekend days or not. Instead, specifying “net 15 business days” will offer clarity.
4. Lack of company branding
Company branding is an invoice element that can have an impact. Undoubtedly, branding is crucial for every facet of business, and invoicing is no exception. Including branding on invoices means customers can easily identify who the invoice is from.
Moreover, using a company logo and clear branding on invoices ensures that customers can easily spot invoices from your business. Each branding opportunity can help improve awareness in the marketplace. Leveraging the benefits of invoicing software like QuickBooks Online offers custom invoice templates and the ability to add branding elements.
5. Inconsistent back-ups
Invoice data is an important part of an overall back-up plan. Depending upon location, a business may be legally obliged to archive invoice data for a specified period of years. Furthermore, an ability to provide customers with archival invoice data upon request demonstrates that their account is being managed properly.
Every invoice sent should be backed up either as a physical copy or a digital one. Keeping a paper copy is not highly recommended as it is prone to be misplaced or damaged. Backing data up using a cloud storage service or adopting cloud-based accounting software are both compliant solutions.
Accurate and timely invoicing is critical for long-term success and growth.
In this article, we have covered some of the most common invoicing mistakes and how they can hamper receipt of payments. If a business is reaching the point where it can no longer afford to rely solely on error-prone, manual data entry to manage invoicing, or relying upon legacy invoicing software, we suggest upgrading tech stacks to modern, cloud-based solutions.
Intuit and DEAR Systems have recently partnered to offer an Advanced Plan bundle that includes a subscription to both QuickBooks Online and DEAR Systems inventory and order management beginning at $375 per month. This offers the perfect opportunity for growing product sellers to easily enjoy the very latest cloud-based solutions to manage cash flow, inventory, and order fulfillment.
It’s no secret that the holiday season is one of the busiest times of the year for shipping and retail industries. In fact, It’s the most important time of the year for direct-to-consumer (DTC) brands. With increases in technology, ecommerce has become the driving force behind the yearly surge in sales. Shoppers spent $122 billion with online retailers alone in the past year. To keep up with the surge in demand in a short span of time, you need to have a streamlined shipping strategy and fulfillment process in place for the holidays.
These days, customers have high expectations when shopping online. They want free and fast shipping, free returns, and share-worthy unboxing moments. Businesses that are able to keep up logistically both bring in more customers and retain them better.
In this article, we will go through common challenges that DTC brands face during the holiday shipping season, and how you can streamline your shipping process for your online store’s success.
What is considered the holiday shipping season?
The holiday shipping season refers to the time of the year (Q4, or October through December) when order and shipment volume spikes, leading to more orders to fulfill and more returns to process. The holiday shopping season includes Black Friday, Cyber Monday, and general gift-giving that leads into Christmas.
In this period, supply chain management can get disrupted as online brands rush to keep up with demand, manage inventory, and fulfill a massive amount of orders. Shipping carriers get busier than usual and work harder to deliver packages on time.
When does the holiday shipping season start?
The holiday shipping season starts earlier than many people think. The shipping industry and eCommerce sales ramp up as early as October, and high demand continues until the new year. Here is an overview of major milestones and holidays that occur during the holiday shipping season.
Halloween (October 31)
Even if it’s an American holiday, Halloween is popular among consumers in Europe, too. Whether you’re selling “spooky” decorations, costumes, or other items, sales opportunities increase during this time. Many brands will try to capitalize on the holiday by running special promotions.
Thanksgiving (November 24)
Thanksgiving marks the beginning of the holiday shopping season. You have Black Friday, Cyber Monday, and Small Business Saturday all occurring over the same long weekend. That’s when holiday shoppers begin to search for the best deals and try to purchase their holiday gifts early.
Christmas (December 25)
Holiday shoppers expect to get gifts delivered before Christmas Day (or even Christmas Eve). You must take note of your carriers’ holiday cutoff dates and communicate those with customers. They want to know when they’ll have to place orders for on-time delivery.
New Year’s Day (January 1)
Although the holiday shopping season starts to slow down by this time, return volume is at an all-time high around January 1. This often requires more from customer service and logistics operations teams for smooth returns and exchanges.
Other important dates
Black Friday: November 25,
Small Business Saturday: November 26,
Cyber Monday: November 28,
Free Shipping Day*: December 14,
Super Saturday**: December 17.
*Participating merchants provide free shipping on all orders, with promised delivery by Christmas Eve.
**The last Saturday before Christmas is a huge shopping day for brick-and-mortar retailers.
Common challenges during holiday shipping season
Expected or unexpected, whenever there’s a major change in the supply chain, it can throw off inventory management, shipping, and more. That’s why it’s essential to find ways to build supply chain resilience and ensure a successful holiday shipping season — even if there are delays and disruptions. To prepare your supply chain for Q4, here are a few holiday shipping season challenges to be aware of.
Black Friday sales
One of the biggest challenges to growing eCommerce businesses is managing an increase in order volume. Obviously, this is most apparent during the holidays. Black Friday sales add even more chaos to the mix.
Partnering with the right 3PL can take fulfillment challenges off your plate and put it into the hands of experts (even if the volume increases by 1,200% in a couple of weeks). This is a great way to avoid making common holiday season mistakes.
If you decide to keep fulfillment in-house, you must prepare to hire more packers (and be ready to ask family and friends to step in as required). You should also plan your holidays around running promotions and fulfilling orders on time.
Supplier holidays and factory shutdowns
Many brands partner with multiple suppliers and manufacturers to ensure they are not at risk if a primary supplier can’t deliver during shortages or shutdowns. Whether it’s a planned shutdown like Chinese New Year, or an unplanned one like what happened during the pandemic, manufacturers can go through shutdowns at any time.
Unfortunately, this means that receiving and replenishing inventory can be significantly delayed or disrupted — which could affect your entire eCommerce supply chain. As part of your business contingency or continuity plan, partnering with various suppliers can help reduce the risk of the inventory shortage. You can even get ahead by ordering surplus inventory. This helps avoid stockouts and gives you some wiggle room for the holiday shipping season.
If you want to partner with a 3PL, make sure they have the expertise, technology, and experience to deal with the increased volume that comes with the holiday shipping season. The wrong 3PL partner can cause major disruptions in your fulfillment process and lead to mispicks, slower deliveries, and inaccurate inventory levels.
The right 3PL, on the other hand, will always offer visibility and transparency into the supply chain. That includes real-time inventory data, information on shipping and fulfillment performance, and much more.
How to perfectly execute the holiday shipping season
If you are curious about how you can perfect your shipping strategy during the holidays, here are a few things to try.
Break the shipping process down into smaller steps
How long does it take you to fulfill an order? If you can get accurate data on each element, you’ll be able to better answer this question. You can break things down into the following:
Time to pack a product,
Time to take out the packaging material,
Time to collect all items in one place,
Time to print shipping labels.
Once you know where every second of your time is going, you can streamline some of the processes and add some minutes back to your day. Small changes can lead to big improvements in efficiency and customer satisfaction.
Effective communication with customers is a huge part of your relationship with them. As you ship orders you should make sure they receive updates, shipping times, delivery notifications, and more. This practice keeps customers in the loop and makes them feel as though they know what’s going on with their shipment.
Give your customers multiple payment options
Allowing your customers to pay in multiple ways gives you an edge and provides your customers with the flexibility they want. Since many customers use wallet payment options, accepting payment via wallets can simplify your customers’ shopping experience.
Save time with labels
Did you know you can save a significant amount of time by printing shipping labels in bulk? You can also integrate orders with Cin7 to print your labels in seconds.
Keep an eye on your supply
Each seller predicts how many sales they will make during a holiday season. Suppose you offer 50% off on apparel. You’ll need to make sure you have adequate stock lined up to cater to urgent requirements. Print labels in advance and stock your supplies for shipping. Most importantly, make sure you don’t get stopped midway during the peak season. Purchasing supplies in bulk quantities saves you the cost and headache that comes with last minute sourcing and production.
Display a shipping rate calculator
If you don’t offer free shipping, you should provide your customers the exact cost they’ll pay while ordering any given product. You can do this by offering a shipping rate calculator. This is usually based on factors like the customer’s delivery location and is a very important part of the checkout process. In fact, 44% of customers abandon carts due to high shipping costs.
Set a free shipping threshold
Many eCommerce sellers offer free shipping during the holiday season. This can help increase sales, but it can also burden you with higher shipping costs. Instead, try the following:
Set a threshold order value before providing free shipping.
Set a countdown for free shipping.
Send coupon codes for free shipping.
Setting a threshold on orders may help increase your average order value and encourage customers to buy items they might not have previously. Plus, opting for lower-cost regional couriers might be a smart option, too.
Offer international shipping
Scaling your business to ship internationally could be an excellent opportunity for sellers during peak season. Even if you haven’t shipped internationally before, there is no reason why you should not ship internationally this holiday season.
Seasonal peaks are an excellent opportunity to expand your options — especially when audiences look forward to shopping outside their borders for holidays. There are many low-cost global shipping options from Cin7, so you can quickly ship with premium carriers like FedEx, Aramex, and DHL.
Partner with an experienced 3PL
Partnering with an experienced 3PL company can help make the chaotic holiday season more manageable, especially for businesses that are:
Transitioning fulfillment from in-house to third party,
Preparing to launch a new brand,
Looking for new inventory management options or a hybrid approach.
Fulfilling holiday demands by your own can be challenging, and leasing a warehouse can be time-consuming and expensive. The sooner you start with a 3PL, the easier the process becomes. Cin7 can help you get onboarded quickly to start preparing for the busy holiday season that’s right around the corner!
One of the best ways to improve customer satisfaction during the holiday season is by making sure your shipping is quick, organized, and transparent. If you want to build your brand, stand out from your competition, and win repeated business — shipping times is a great place to start. Cin7 can help you manage your supply chain and help you reach your goals. Our inventory management software makes the process easy, painless, and profitable. Book a demo now to get started today.
Cost Of Goods Sold (COGS) is a common accounting term or simply called COGS when you meet with your accountant or at a corporate meeting.
If you’ve ever wondered what it is and why it is so important then this article is for you.
Let’s first understand the term cost of goods sold.
What is the cost of goods sold?
COGS is the value of the inventory that has been sold by a business.
It is only recognized upon sale of inventory and is reported in the financial period in which those sales occur.
The value of inventory is the total of the direct cost of the products making up that inventory, which has either been produced or purchased by a company for resale. It includes additional charges directly related to preparing products ready for sale, like packaging and delivery charges. However, it excludes indirect expenses such as sales & marketing.
Therefore, COGS equal the direct cost related to the production of or purchase of products sold.
Keep in mind that the value of inventory on hand is considered an asset until the inventory is sold.
Why is it important to calculate the cost of COGS?
The primary motive of starting any business is to earn a profit. A business can ensure that it earns a profit by knowing the exact income and expenses incurred to sell its products.
COGS inform a business about all the direct expenditures incurred in getting products ready for sale. Therefore, COGS are an important part of the business decision making process.
Here are some of the benefits of calculating COGS:
1. Helps create a pricing strategy
Firstly, your selling price can be determined by knowing the total direct costs you have incurred in producing or procuring products. Once you know these costs, you will be in a better position to judge the price at which to sell products so that you can cover your indirect expenses and also earn a profit from the sale.
Knowing COGS helps you determine how much of a profit margin you can keep on the products you sell.
2. Helps determine the total expenses incurred in selling products
Your profit and loss statement needs to list all your income and expenditures. By taking the direct costs you have spent in acquiring stock, you can arrive at the total expenses incurred by including other indirect expenses such as overhead costs like sales and marketing.
3. Compare the market value of your product with your competitors
Determining profit margin by only considering direct costs incurred is an incomplete picture. Chances are that your prices may be higher than your competitors in the market. In such a situation, fewer customers will purchase your products and you will incur a loss. If your prices are lower than your competitors, then you can still incur a loss since your low profit margin might not cover your indirect expenses.
COGS helps you to sell your product at a competitive price, grow sales and by extension, earn profits.
Now that you know the importance of calculating COGS, let’s learn the formula to calculate COGS.
How to calculate COGS
Here’s the formula to derive COGS:
COGS = Beginning Inventory + Purchases made during the period – Ending Inventory
To calculate the COGS for a reporting period, start with the value of the beginning inventory. If additional inventory was added during the reporting period, be sure to add the value of any new inventory that is produced or purchased to the value of the existing stock. Now, subtract the value of ending inventory from COGS sold for that reporting period.
Note, that this is a basic example and does not take into account items like returns, discounts, obsolete stock, and the inventory valuation method used.
Example of COGS
Let’s assume that company X uses the calendar year to record their inventory. The beginning inventory value was recorded on the 1st of January and the ending inventory value was recorded on 31st of December.
The beginning inventory value was $20,000. During the year, the retailer realized that the business would sell more than the inventory received earlier in the year, so additional inventory worth $7,000. was purchased. At the end of the calendar year, the ending inventory value was worth $4,000.
Now, let’s work out the COGS for the entire year by using the formula.
COGS = Beginning Inventory + Purchases made during the period – Ending inventory
COGS = $20,000. + $7,000. – $4,000.
Therefore, COGS = $23,000.
The COGS equals $23,000, as calculated. Use this formula to help with production, purchasing, and pricing decisions.
Calculating COGS can also help you to calculate your profit for a reporting period and help with decisions to ensure that indirect costs are covered.
Suppose your revenue is $75,000 in a reporting period.
Knowing the COGS, your profit will be $75,000. – $23,000. = $52,000.
COGS – Key business takeaways
The COGS formula can be used at an individual product level to help with decision making prior to producing, procuring, and selling that product.
The COGS for a reporting period is the total of COGS for all product sales for that reporting period. It is a vital metric that is included in your financial statements and is used to calculate your gross profit for that reporting period. Gross profit is a profitability measure that shows how well a business can cover its indirect expenses and earn a profit.
The value of COGS will always depend on the direct costs of the products sold and the inventory valuation method used by the business.
A cloud-based inventory and order management system that has been designed to integrate bi-directionally with your accounting software is key to keeping a close and accurate view of sales performance. Cin7 offers access to real time inventory levels and associated financials that make it easier for product sellers to feel confident that they are earning a healthy profit margin.
To learn how Cin7 can modernize your operations, book a call with one of our experts.
The sales order process is one of the most essential workflows for most businesses. Optimizing the process can save money and time as well as enhance the customer experience. Businesses with efficient sales order processing in place have recognized a boost in cash flow and productivity. However, an inefficient sales order system has direct consequences on business performance – data errors, inability to fulfill orders, and slow cash flow.
So, what exactly is a sales order? How does it benefit your business? And what steps are needed to optimize the process?
Sit tight! We’re going to take you through the entire process including:
What a sales order is and the sales order process.
Why you should automate sales orders.
What the benefits of sales order automation are for businesses.
What the best practices are to optimize sales order processing.
How Cin7 can help your business optimize your sales order process.
What is a sales order?
A sales order is an official document generated by the seller when a customer places an order for a specific product or service. It’s generated in response to a purchase order (PO).
Just as a refresher, a PO is created by the buyer and delivered to the supplier for specific materials at agreed upon terms and conditions. The sales order is confirmation of the PO issued by the supplier and given to the buyer prior to delivery. The purchase order creates the contract and the sales order approves the sale.
The entire process is generally completed in three basic steps:
The buyer generates a purchase order and delivers it to the seller requesting a certain quantity of materials at a certain price. Other items on the PO can include delivery schedule, delivery address, and purchase terms.
Considering the purchase order, the seller issues a sales order for the buyer. The sales order approves the sale, sets payment details, and confirms the items on the PO that are included in the sale.
Once the seller processes the order, the seller generates an invoice from the sales order for final payment from the buyer.
For those businesses that generate a handful of sales orders every few months, the process can be done quite simply using a manual system. However, businesses with a high sales volume cannot successfully generate manual sales orders without risk of errors.
Using manual entry for every sales order increases your risk of human error. Mistakes in quantity and pricing on the sales order lead to accounting errors. Using an automated sales order process dramatically lowers the risk of human error and accounting mishaps.
A sales order is also a critical document used for inventory management. It maintains a record of orders and provides information on inventory status. Using sales orders also allows you to track products in stock and on backorder.
The evolution of sales order automation
In the “old” days, managing orders involved many hands and mountains of paperwork. The lack of automated order management software meant that individuals from different departments needed to work together to manage inventory through the sales process, maintain accurate shipping and receiving details, and generate purchase and sales orders.
Using emerging technologies and innovation, traditional sales order processing has quickly adopted digital solutions. Consumer-oriented sellers like online retailers are aggressively embracing new techniques to extract specifications directly from purchase orders, eliminating manual input.
Electronic data interchange (EDI) systems are fully automated sales order processing applications. EDI uses optical character recognition to extract the information from paper and quickly – and accurately – transform the information into electronic data. Information is automatically entered into a human-related format and flagged should something require a recheck.
This is a far cry from using CRM solutions to generate quotes, orders, and invoices. CRM tools are unable to create new sales orders. At best, they handle customer information and sales history – as well as work for their intended use of contact management.
Benefits of sales order automation for businesses
Using an automated sales order system makes it simple to manage and update orders using a single platform. Moreover, implementing digital solutions increases the capability to respond to orders from all channels. In contrast to traditional sales order processing, automation can offer a wide array of benefits:
#1 Process orders faster
Automation is up to 75% faster compared to using a manual process. Eliminating manual coordination and data entries from the process leads to faster processing. It helps streamline each phase of the process, allowing businesses to pick and ship customer orders more quickly, save on processing costs, and enhance the customer experience.
#2 Maximize productivity and profitability
Using inventory and order management software, businesses can easily automate the entire sales order process. With this software, you can instantly create sales orders, shipping orders, and invoices thereby speeding up your order to cash process.
Another benefit of using automated sales order software is that it automatically counts and tracks your inventory. Additionally, you can set automatic notifications to alert you when your inventory levels are low.
In a nutshell, the faster you process and ship orders, the faster you get paid. Automation is one of the keys to a healthy cash flow.
#3 Improve accuracy and reduce errors
Automation can minimize or eliminate human interference in sales order processing resulting in improved accuracy. Moreover, some sales order processing systems can automatically extract information from purchase orders and generate sales orders without any manual involvement.
These smart systems are integrated with such features that use keyword detection to prioritize urgent or important orders, ultimately resulting in greater customer satisfaction and fewer returns.
#4 Streamline workflow using cloud-based solutions
Whether you’re a single or multichannel sales environment, cloud-based inventory and order management software can streamline workflow. Cloud-based management solutions provide a central location for all departments, regardless of location, to have real-time access to inventory levels and sales orders. Additionally, cloud-based solutions eliminate the risk of data loss.
Undoubtedly, implementing an easy-to-use software solution to automate your sales order process is a brilliant way to boost productivity and cash flow.
Best practices to optimize sales order processing
There are definitive ways to improve your sales order process. To make the optimization process simpler and easier, many businesses opt to outsource to a company specialized in customizing sales order automation. However, if you are considering the process in-house, here are the best practices that you need to know:
#1 Invest in an order management system
As your business grows, workflow becomes more complex. That’s where implementing an order management system helps minimize manual inventory and order processing tasks to increase sales from multiple locations with complex workflows.
Switching to order management systems means having a single unified platform to manage inventory. It automates the entire order-to-cash cycle. A cloud-based system is accessible anytime from anywhere.
Making the investment to secure an order management system can ensure better profits in the long run as it requires fewer involvement of internal resources. Automating the process with an order management system will facilitate better communication between teams, improve workflow, and enhance the customer experience.
#2 Automate the entire sale order process
Manual processing is vulnerable to human errors that can quickly turn the sales order process into an expensive blunder. Automation eliminates human error and repetitive tasks.
Automation is able to:
Generate the sales order when inventory is confirmed.
Show a flag or other warning when inventory level is low.
Send purchase orders to suppliers for restocking.
Send picking requests to appropriate warehouse managers.
Generate customer sales orders.
Schedule pickups and estimate shipping costs.
Communicate with customers to keep them in a loop.
To manage these processes, you will need to know more about inventory management software and order management systems. With the implementation of these two systems, you can handle the sales process, control inventory, and manage supplier requests from a single platform.
#3 Scrutinize your existing process
To optimize your process, you need to address exactly what you want or need to fix. Therefore, your initial step should be mapping out your current sales order process using a flow chart. Get into the details of each step to reveal all the nuances involved in the process. Include details about how long the process takes. Use this audit to easily address potential holes in your process.
These are just a few of the best strategies you can use to streamline your sales order process.
Cin7 can help you optimize your sales order process
Automating the sales order process can help establish a workflow that requires less human involvement and minimizes processing time – from initiating a sale through delivery. Automation fosters business growth. So, instead of implementing standard solutions, allow Cin7 to empower you with the flexibility to design a platform to match your business needs – and grow as your business grows.
Cin7 sales order management software makes it easy to manage your entire sales process from anywhere at any time. Offering a cloud-based system helps your team be more efficient and productive. By implementing Cin7 you can create automated workflows to keep your team connected and informed.
Want to learn more? Let a Cin7 representative walk you through the benefits of our order management software. Book a FREE demo today!
When ordering online, customers have many expectations. They want faster delivery, no transit damage, live order status, and most importantly, they expect to receive the correct item.
You’ll have to optimize your operations to meet these expectations, which comes at a cost. Shipping fees cover transportation. But what about the cost of packaging items so they don’t break in transit? What about the cost of safely storing and maintaining inventory in your warehouses?
That’s where handling fees come in. In this article, we’ll break down handling fees, show you how to calculate them, and explain why they’re necessary.
What is a handling fee?
A handling fee is an amount charged to a customer on top of the order subtotal and shipping fees. It covers fulfillment expenses such as:
Warehouse storage: The amount charged by the warehouse to securely hold your inventory, ensuring there is no quality deterioration.
Packaging: This includes boxes, tape, and protective material. It also includes other minor details you may add to make the brand stand out, such as branded tissue paper, gift wrap, stickers, etc.
Labor: The time it takes for your warehouse team to fulfill an order.
Helpful tip: Handling fees are charged once per order, not per each product in the order.
Handling charges may differ depending on whether deliveries are domestic or international. International orders might have additional expenses such as insurance or extra packaging to preserve the products throughout a longer journey.
How to calculate handling fees
Calculating the handling fee is a straightforward process.
Step 1: Determine the average number of minutes it takes to prepare each item for shipping.
This step will help you determine the time it takes for your employees to prepare a package for shipping. It includes the time needed to pick the ordered items from the warehouse shelves and package them. The more efficiently your warehouse team works, the lower this number will be.
For this example, let’s assume it takes approximately 15 minutes to prepare an order.
Step 2: Divide the result by 60.
Convert the time from minutes to hours. Continuing the example: 15 / 60 = 0.25.
Step 3: Multiply the result by the employee’s hourly rate.
Assuming the hourly rate of your warehouse team is $10: 0.25 x $10 = $2.50.
So for this example, the handling fee for the order is $2.50.
It is best to also include the packaging cost in the handling fee — after all, bubble wrap and boxes expenses. For this example, the packaging material for the order costs $1.50.
If your handling fees are high compared to competitors or you have had customer complaints, you may need to assess your fulfillment costs and streamline your process.
Shipping costs include postage, fuel charges, surcharges, and additional fees for certain shipping options like expedited delivery. The cost of shipping depends on package weight and location.
If you outsource your shipping to a carrier (e.g., FedEx or USPS), you should factor in their fee. Compare prices to find the ideal shipping provider.
Setting shipping and handling fees
While setting prices that keep your online business in the black, consider the fact that high shipping and handling fees may be enough to convince customers to abandon their shopping carts.
Some sellers roll the handling fee into the overall price, while others make it a separate line item on the invoice. If customers can see the shipping and handling fees at checkout, that may impact their perception of the product prices.
If you list shipping and handling as a line item, make sure it’s clearly labeled on the invoice. Cin7 inventory management software offers various integrations that allow you to customize your invoices easily and add or remove shipping and handling fees as needed.
Benefits of charging handling fees
Here are the advantages of charging handling fees:
#1 Fulfillment cost recovery:
A business cannot sustain itself without covering costs. Let’s better understand this with examples from the service industry. The service industry doesn’t deal with physical products but it’s common to see a “service charge” on services provided. This allows businesses to recuperate administrative, processing, or labor costs. For example, the service fee added to concert tickets covers the costs of offering venue security and mailing the physical tickets to the customer. A service charge added to meals and drinks at food and beverage establishments covers the cost of offering fine glassware and storing and serving wine.
If you don’t recover fulfillment costs with handling fees, you’ll need to compromise on fulfillment quality by using cheaper packaging or making other concessions in quality. In the long run, this will hurt your business’ reputation.
#2 Better pricing breakdown
If you do not charge handling fees, you will need to add the costs of packaging and fulfillment to the final price of each product. Instead, adding the handling fee as a line item separate from the subtotal can help simplify the pricing for single items.
#3 Possibility to upsell and cross-sell products
Handling fees apply to the entire order rather than individual items. This opens up opportunities to sell more and increase your overall profit margin.
Customers love free shipping — it can even be a deal breaker — so you can set up a minimum order amount to make orders eligible for free shipping and handling. This way, if the original order amount was $30 but an order is eligible for free shipping and handling at $40, a customer is more likely to spend an additional $10.
To encourage customers to spend more, use their order history to recommend specific products they might be interested in purchasing. They might buy something else and spend more to get free shipping, making a happy customer and raising your profit margin.
Use Cin7 to fulfill your orders with ease
After calculating the shipping and handling fee, you can set up the invoice template via various integrations offered by Cin7 inventory management software, such as QuickBooks Online, which will automatically add the fee to each online sale.
Cin7 has several other features that streamline your order receiving and fulfillment process, such as printing pick lists or batch tracking. Cin7 will help you set your business for multichannel sales and long-term success.
Are you interested in trying out Cin7 for your business? Book a free demo with our experts now.
Businesses can effectively manage company finances by using purchase orders, also referred to as POs. POs help businesses stay within their budgets for planned purchases. Using POs also allows businesses to easily track purchases.
Businesses rely on their vendors to get the supplies they need when they need it. A purchase order helps clearly communicate supply requirements and purchase terms. This helps eliminate errors and delays.
This article explains four common types of purchase orders, provides examples of each, and describes their best use.
The purpose of purchase orders
Purchase orders are a vital part of the procurement process. POs specify pertinent information including what you’re buying, how much you’re buying, and other relevant information – mode of delivery, payment method, and terms of service.
When your vendor formally accepts the purchase order, it turns into a legally binding agreement between you and the vendor. Therefore, it is best to be detailed to ensure that the terms and conditions related to products, pricing, and delivery are fulfilled are accurate. In the event, the PO is not fulfilled in compliance with the terms, you can file legal action against the offending party – just understand both the business or the vendor can be the offending party!
The following components should be included in your purchase order:
An internal PO number linking the transaction to other documents and records in the system,
Description of the type of goods being purchased,
Quality and quantity specifications,
Detailed vendor information,
Mutually agreed upon pricing information,/li>
Terms and conditions associated with the delivery, and
Payment-related terms and conditions.
Purchase orders can vary, just keep in mind that more detail is better. Purchase orders can also be used to audit overall spending and the financial health of your business.
Before jumping into the types of purchase orders, here are some basic terms you should be familiar with:
Legally binding. Once approved, all purchase orders become legally binding, meaning both parties are responsible for adhering to the terms and conditions or legal ramifications may apply.
Accounting distribution. This refers to the monetary amount issued to the vendor account after placing the order.
Encumbrance. A burden or impediment. This is the money set aside to fulfill your obligation under the purchase order. The PO encumbered a certain amount of money to pay for the goods listed.
Release. A written notice from the buyer authorizing the supplier to process the order.
Types of purchase orders
Below are the four basic types of purchase orders. Once you understand the purpose of each, you’re better able to select which will work for you.
1. Standard purchase order
Standard purchase orders (SPOs) are the simplest and most common type of PO used. Businesses typically use SPOs for infrequent, irregular, one-time purchases, which they do not expect to incur regularly.
Because SPOs are used for one-time or infrequent purchases, the approval process can take longer. SPOs require more detail. The vendor is expected to fulfill the one-time order without any assurance of future orders.
SPOs includes these components:
List of items to be purchased,
Quality and quantity of each,
Individual item price and extended price,
Delivery date for the items ordered,
Delivery location for the items, and
Terms and conditions associated with the order.
Here are a few examples of when to use an SPO:
Replace tables and chairs for those that are broken or worn out at a restaurant.
Purchase a 3D printer for an architect’s office.
In some cases, businesses may elect to expense basic items rather than initiating the purchase order process.
2. Planned purchase order
A planned purchase order (PPO) is used to replace or regularly restock inventory. PPOs include everything in an SPO except delivery details, i.e., the date and location of delivery. Because items are often restocked at irregular periods, a schedule release is used to confirm delivery and details of delivery. The PPO guarantees the products will be available and the release informs the vendor the buyer is ready to receive those items.
Also included in the PPO is purchase frequency and whether items are purchased batches, sets, or bundles.
List of items to be purchased,
Quality, quantity, and sets (batches, sets, bundles),
Price of each,
Purchase frequency, and
Terms and conditions associated with the order.
These items are not included on PPOs:
Confirmed delivery location of the items ordered.
Confirmed delivery date of the items ordered.
There may be instances where the PPO can include some tentative schedules. However, such schedules must always be confirmed by a release before the order is confirmed for delivery.
Here’s an example of how to effectively use a PPO: A restaurant that uses 20,000 disposable placemats annually can use a PPO to secure purchase of those placemats. The PPO will provide details of the order as well as a tentative release schedule. A release is used when the placemats are needed that details delivery information.
3. Blanket purchase order
Use a blanket purchase order (BPO) to order specific items of unknown quantity or timeframe. BPOs are also referred to as standing purchase orders and can prove helpful to lock down pricing terms with the vendor before making any purchase. When it’s difficult to accurately predict product forecasting, blanket purchase orders can be useful.The difference between a BPO and a PPO is that a PPO has an undefined delivery schedule. A BPO has both an undefined delivery schedule and an unidentified quantity.
Blanket purchase orders can be beneficial for buyers, but they can pose fulfillment challenges for vendors. Because quantity is unknown, vendors often set a maximum number of units available per BPO. Vendors can also limit ordering timeframes and, in some cases, provide discounts for meeting quantity thresholds within the lifespan of the BPO.
Releases created against BPOs are called blanket releases. Just like PPO, a release against the BPOs is required before delivery takes place.
Here is what is typically included on BPO:
List of items to be purchased.
Terms and conditions associated with the order.
A BPO does not include:
Confirmed delivery location of the ordered items,
Confirmed delivery date of the ordered items, and
Confirmed quantity of the items.
However, the vendor and the buyer can mutually negotiate and confirm pricing details for each item, along with any quantity discounts.
Here’s an example of when to use a BPO: In the previous restaurant scenario, the restaurant estimated an annual need for 20,000 disposable placemats. However, in the case of a new restaurant, it can be tricky to estimate how many placemats will be needed. In this case, the restaurant can place a blanket purchase order for disposable placements to secure a better price even through recurring purchases even though the quantity is unknown.
4. Contract purchase order
Of all the purchase order types, the contract purchase order (CPO) is the most complex. It also contains the fewest details. The purpose of the CPO is to establish a relationship between the business and its vendors – it establishes the contract between the two.
CPOs take the place of drafting individual purchase orders. They create long-term agreements with specification about terms and conditions of future purchases without specifying any product or delivery information.
CPOs are beneficial when you’re unsure of what, when, and how much to order. Contract purchase orders do not come with an expiry date and can be used as a baseline to create a framework for future purchase orders. As such, CPOs contain:
Negotiated terms and conditions that act as a foundation for creating other purchase orders in the future.
The CPO does not include:
Details about items to be purchased,
Quality and quantity of items to be purchased,
Price of items to be purchased,
Delivery dates for ordered items to be purchased, and
Delivery location of items to be ordered.
A contract purchase order is flexible, and generally benefits both parties. While there’s a wide range of possibilities to serve as examples of a CPO, here’s just one: A CPO can establish an agreement between a business and a vendor where the business hosts several events throughout the year. During the events, the business purchases items from the vendor at a 20% discount in exchange for listing the vendor as an official sponsor.
Knowing which type of purchase order to use largely depends on your business, how long you’ve been in business, and being able to accurately forecast inventory and business needs. Often businesses will use more than one type of purchase order throughout the lifecycle of the business.
Use this easy table to compare the different purchase order types to identify which will work best for you and the needs of your business.
Established terms and conditions
Specifies details regarding goods and services
Specifies pricing information
Specifies quantities identified
Predefined accounting distribution
Established delivery schedule
Can be encumbered
Can encumber releases
Technology plays an important role in the inventory process, including automating the purchase order process. Implementing an order management software allows you to streamline your purchase orders.
You can configure reordering points whereby a purchase order would be automatically placed to your vendor whenever your stock falls below a predetermined threshold. That way, you do not have to worry about running out of inventory.
Schedule a free call with Cin7 experts to discover how we can help you streamline your purchase orders.
In today’s economy, small to medium sized businesses are competing with global conglomerates. Efficient inventory and order management is one way for solopreneurs, entrepreneurs, and small business managers to level the playing field and grow their brand.
Inventory management functionality is what fast-growing businesses need to stay competitive. This article is your definitive guide to inventory management to scale your business efficiently and effectively.
What is inventory management?
Inventory management is the process of ordering, storing, using, and selling business inventory. It is a system that tracks raw materials, components, and finished products to ensure enough supplies are on hand to meet the purchasing demands of the customer.
Inventory management is measured as inventory turnover. It reflects how often your products are sold within a specified time period. A measure of business health is maintaining adequate inventory turnover where your business does not have more products than sells – or excess inventory. Poor inventory turnover leads to deadstock or unsold stock/product.
Retail inventory management
Retail is a general term used to describe businesses selling physical products to consumers. Although not exclusive to retail, inventory management plays a more critical role in this industry over others.
There are a growing number of ways to sell products including the following:
A company uses a physical brick-and-mortar location to sell its products.
A company sells its products over the internet using an ecommerce website or marketplace.
This employs multiple ways a company sells to its customers including an online store or marketplace or a physical location. Increasingly, companies also use social media sites to sell products. With multichannel selling, each channel operates independently of each other.
This way of selling creates a unified, integrated experience for customers across all offline and online channels. Where multichannel selling operates independently, omnichannel is focused on a seamless experience for the customer.
Wholesale distributors sell products to other businesses rather than individual consumers. This form of selling is referred to as business-to-business (B2B) or B2B ecommerce. B2B selling can include any of the above methods.
Regardless of how a company chooses to sell its products, inventory must be managed. However, inventory management is different depending on the constraints of how products are sold.
Importance of inventory management
Good inventory management is an essential part of running a successful retail business. It provides a seamless customer experience, maximizes profits, and improves cash flow.
A company’s inventory management system should optimize fulfillment and avoid shrinkage and waste. Without an effective system in place to manage inventory, retailers risk running out of products during peak demands from their customers.
Good inventory management includes the following:
Enterprise resource planning (ERP). ERP software manages key business operations including human resources, accounting, procurement, warehousing, production, marketing, and sales. ERP systems optimized for inventory management help maintain optimal levels of stock by combining the inventory needs of staff, customers, and suppliers.
Proper warehouse management. The barcode system, first-in-first-out (FIFO), and last-in-first-out (LIFO) techniques offer a clear picture of present and past inventory available with the company and optimize warehouse functions.
Managed sales operations. Sales is a continuous process that depends on manufacturers for goods or services. Efficient inventory management minimizes the risks of unavailability of raw materials needed in manufacturing.
Understanding the customer buying journey mitigates risks associated with insufficient stock to fulfill orders.
Shrinkage results in inventory loss attributed to employee and customer theft, administrative or cashier error, vendor fraud, damage, and spoiling.
Inventory levels are key to maintaining a good cash flow that ensures all aspects of the business run smoothly. Excess inventory ties up cash in products that could rather be spent on operations including salaries and other fixed costs.
Product availability is essential for fulfilling orders quickly. A good inventory system delineates where products are along the supply chain.
Types of inventory management
There are numerous types of inventory management systems. Which is best for your organization depends on budget, cost, utility, and accessibility.
Barcode inventory management
The barcode system is an automated and simplified way to manage inventory. A unique number or barcode is assigned to each product. Data points assigned to that number can include information about the supplier, the product, and the inventory or stock.
When a product is sold, the barcode is scanned and inventory adjusted automatically. Additionally, management can find key inventory metrics by scanning the barcode to bring up the item on a computer database.
Continuous/perpetual inventory management
A continuous or perpetual system manages inventory in real time, recording changes in inventory at the time of the transaction. It uses radio frequency identification (RFID) to passively identify tagged objects (inventory) for tracking along a supply chain.
Periodic inventory management
This is a manual process used to determine the inventory at a particular time point such as end-of-day or year’s end. This form of inventory management is most time-consuming as it involves physically counting the products on the shelves. Periodic inventory management is used primarily for inventory valuation and accounting purposes.
Identify actual stock on hand and the inventory requirements for the goods sold to determine if gaps exist between demand and supply, and reasons for those gaps.
2. Analyze spending patterns and consumer demand
Market demand forecasting helps organizations estimate production quantity to determine what is needed to maintain adequate inventory.
3. Evaluate the cost involved
Cost of goods sold includes different expenses like warehousing, maintenance, bulk discounts, transport, and supply chain costs. Each of these needs to be well analyzed.
4. Identify the extent of process automation
It is not possible for each organization to completely automate the inventory management process. However, it’s important to identify those particular areas where automation is possible.
5. Inspect supplier’s performance and practices
The supply chain is critical for maintaining adequate inventory. Identifying any holes in the supply chain or supplier’s performance is necessary. And, if needed, identify additional or alternative suppliers.
6. Classify inventories into various categories
Products must be segregated into categories based on the product type, maintenance cost, customer class, or profit margin.
7. Set objectives for all inventory categories
Set benchmark objectives and goals to efficiently track and manage the performance of all inventory categories. This can identify any issues within each of the categories.
8. Prioritize the areas of improvement
Analyzing goals and objectives allows companies to prioritize improvement needs. Improvement prioritization should be based on the impact of problems identified. Implement a hierarchy to address those areas.
The final step in implementing a good inventory management strategy is consistent and timely evaluation to determine what changes and improvements are necessary to add value and create an improved customer experience. These changes can be based on a number of factors, most notably supply and demand.
Choosing an inventory management system
Which inventory management system is right for your business depends on a number of factors. Here are just a few things to keep in mind.
There are various signs you have outgrown a standard inventory system including inventory errors and constant over stocking. When you find you’re spending more time on manual, operational tasks than growth, it is likely time to automate your inventory process.
Prepare a list of “must-haves” for your inventory management system. Do you ship orders or use digital packing? Does your company process both wholesale and retail orders? Are you manufacturing your products? All of these affect which type of inventory management system is best for your company.
Customer support is essential for set-up as well as troubleshooting should things go wrong. Support includes phone, chat, and/or email contact. Consider support hours – is the support team available when you need support?
Ease of use
Determine your staffing needs and the technical prowess of your staff. Will the inventory management system meet those needs and ability levels? The system you choose needs to be easy to use as well as transferable between departments.
Prepare a list of must-have integrations, e.g., ecommerce platform, accounting, shipping, marketplace, POS, 3PL, etc. It’s essential that the new inventory system integrates directly without requiring additional applications, middleware providers, or software managed by third parties.
Your inventory management system will manage a critical part of your business. Finding innovation-driven software using the latest technology is vital.
Cin7’s inventory management solution for multichannel selling
Cin7 was built with modern businesses in mind. Its inventory and order management software offers a cloud-based solution that integrates all your sales channels into a single platform. Cin7 provides advanced automation processes to create seamless transactions centered around a positive customer experience.
Ditch the spreadsheets and stop manual data entry. Reach new markets with Cin7’s inventory and order management system.
As a consumer who shops online, you are aware of the benefits that an ecommerce platform provides, including convenience, discounts, wider variety, and more. As a business owner, leveraging ecommerce can bring a plethora of benefits.
Yet despite the documented success of ecommerce, many business-to-business (B2B) owners still use antiquated methodology to sell their products. They still lean on exchanging business cards and using account managers and sales representatives to make the sale.
The origin of ecommerce can be traced back to the 1970s, and it was predominantly for business-to-consumer (B2C) transactions. However, ecommerce adoption in B2B is gaining traction.
B2B ecommerce influences the digital platform to perform commercial transactions. While B2B ecommerce focuses on facilitating the transfer of goods and services amongst manufacturers, wholesalers, retailers, and distributors, B2C emphasizes directly transferring it to the consumers.
Unlike B2C businesses, B2B businesses have not leveraged much of ecommerce since their operations rely upon networking with other companies, building rapport, and then providing their offerings.
The lockdown related to the pandemic forced many businesses to shun their physical stores, acting as a catalyst to progress toward online transactions. The trend of B2B ecommerce is on the rise, and businesses cannot afford to not adapt to this shift.
Let’s explore seven benefits that B2B businesses can avail themselves through ecommerce.
#1 Flexible payment
Offering multiple payment options to customers enables them to select one that best suits their budgets. While multiple payment options ease the payment process for the customers, it can be challenging for the B2B vendor to keep tabs on all the payments and orders.
In such a scenario, having a B2B ecommerce platform can be the best option for your business as it more efficiently manages your accounts receivable and reduce the administrative burden. Moreover, payment flexibility can be far more in B2B than in B2C. Apart from conventional card payments, there can be credit lines, installments, deposits, and mixed payments.
Altogether, having an ecommerce platform allows you more flexibility in managing multiple payment options.
#2 Eases cross-border transactions
To increase your profits, you need to either lower costs or increase the number of customers. There is a threshold to the amount of cost reduction, but when it comes to acquiring new customers, the sky’s the limit!
Businesses strive to reach as many customers as possible, but they face severe limitations such as competition, geographical boundaries, and limited working hours. Thanks to technological advancements, increasing customer reach is possible (in fact, it is easier than ever).
With the help of B2B ecommerce, you can enter new markets filled with opportunities without needing to incur the hefty investment of setting up a brick-and-mortar store. ecommerce is a fantastic way to attract new customers, educate through product descriptions, and learn more about your company through an ecommerce website.
By utilizing SEO (search engine optimization), you can organically grow the presence of your B2B business and generate inbound purchases. As a result, the ecommerce platform will empower you to build your brand locally and globally.
With the help of a B2B ecommerce platform, you can not only perform cross-border transactions easily, but it can also solve plenty of international logistical issues. Local law compliance becomes easier, and customs and taxation are streamlined (since the buyers are required to pay purchase-related customs only at the time of receiving the product).
Unlike stores, an ecommerce website does not shut down, and customers can make purchases anytime and anywhere. Having a B2B ecommerce platform can do wonders and handle payments, take care of logistics, and sell while you sleep!
#3 Omnichannel customer preference
Gone are the days when people would hesitate to make an online purchase. Today, many consumers prefer the convenience and ease of shopping online.
There is a great likelihood that your close competitors are already using B2B ecommerce to sell online. If you fail to adapt, you will end up losing to the competition. In such a time, building an ecommerce platform for your B2B business brings you one step closer to making your future-proofing your business.
“Customer is the king” is a popular business saying, referring to how companies need to meet a customer’s preferences to become successful. Today’s customer comes from a new generation.
As buyers now prefer to use different channels to shop online, it is essential to use an omnichannel strategy for B2B eCommerce. Your platform should be easy to use on mobile and desktop.’
Omnichannel presence includes unifying data and breaking silos. It integrates different channels like websites, social media, email, chatbots, and even brick and mortar stores. It is all about offering a holistic buying experience to the customer.
Customers today do not frequently shop in a linear fashion. Instead, they move across multiple devices and platforms. This makes it crucial for you to use an omnichannel strategy.
Helpful hint: An example of a company excelling in this approach is Amazon which allows its customers to shop on the website, mobile app, tables, and even voice assistant Alexa.
#4 Cost mitigation
If you have ever shopped online, you know that there is a seemingly unlimited number of promotional offers that can lead to savings and offer the product at a rate cheaper than retail outlets. So how can ecommerce help B2B sellers to mitigate their costs?
For starters, it can help minimize the costs to acquire new customers. With the help of SEO and social media, you can organically find new customers (which is predominantly done in B2C). Even for existing customers, it is relatively easy to provide services and support through chatbots and automation.
If your B2B business relies on intermediaries, having an ecommerce platform would help cut costs by reducing their role. Intermediaries act as a bottleneck, as they eat away a chunk of your profit. It is little wonder, then, why brands are now adapting D2C (direct-to-consumer).
With ecommerce, your buyers can visit your website and make the purchase without ever interacting with an intermediary. However, it may not be feasible for all businesses to eliminate their distributors.
But even in that case, integrating your ecommerce platform with an inventory management system can offer a centralized hub to track your sales funnel, offer you much-needed visibility in your inventory transmission, and help you identify the inefficiencies in the processes that increase your cost.
#5 Retaining recurring buyers
If you are into B2B, your success depends upon fostering better relationships with your clients and offering timely delivery of the products. As you provide better services, your clients are more likely to make you their preferred supplier.
Rather than mandating them to contact your salesperson, your business can provide an ongoing subscription service. With the help of a B2B ecommerce platform, you can allow your customers to speedily purchase/repurchase your offering without even contacting a salesperson.
Artificial intelligence can also be used on your ecommerce platform to upsell or cross-sell your other offerings to repeat buyers. An ecommerce website generates useful data that can be used to segment your customers to offer specific discounts, memberships, or create loyalty programs.
#6 Faster fulfillment
B2B businesses can leverage the ecommerce platform to speed up their order fulfillment process. As the ecommerce store would be using a cloud-based solution to keep track of the inventory and order processing, it can streamline the fulfillment process.
Integrating your B2B ecommerce platform with an order management system can help you connect with the suppliers and makes it a smooth process to transfer the inventory from your end to the customer.
Considering order management software is also cloud-based, it can minimize the technical errors in the process of order placement and tracking. Another advantage of using a cloud-based system is that your software provider can automatically update it, and you do not need to have a dedicated technical team for it.
Altogether, integrating the order management software with your B2B ecommerce platform will allow you to monitor the received orders and inventory in hand and offer transparency to show the exact delivery time to the B2B users.
Helpful hint: You can even automate the reordering process to ensure that you do not run out of inventory.
#7 Better customer experience
In today’s competitive marketplace, having a good product is simply not enough. You also need to create a good buying experience for your customers. For example, if you had to purchase shoes online, would you prefer to buy them from a speedy website that looks easy to use or from a site that tests your level of patience with long loading times?
Failing to improve the user experience can seriously hinder your business by causing existing customers to switch to your competitors who offer a better web-based experience. Today’s consumer researches products prior to purchasing, and technology has made it easier to look up information instantly.
You should provide all the necessary product-related information in an easy-to find-location on your ecommerce website. Using ecommerce turn your website into a self-service portal, where your customers can easily track their order history, product availability, shipping conditions, and reviews from other fellow buyers.
Using third-party marketplaces to sell your products digitally may appear to be a lucrative low-cost option, but it comes at the cost of losing margins to the marketplace, and most importantly, you do not get the data of your customers.
You can gain complete control over scaling your B2B business’ online presence by creating an ecommerce platform. You can use its data to understand your customers’ buying behavior better and adjust your products accordingly.
The eCommerce platform will boost your efficiency by automating several manual processes that are prone to human error. Considering the size of B2Borders, such mistakes can cost you dearly.
Now is the perfect time to upgrade your B2B business through ecommerce. Avoiding this can cost you several potential customers and stunt the growth of your business. If you keep relying on the traditional approaches to selling your products, you will lose your competitive advantage to the new entrants that use modern technology for B2B sales. If you are looking for a modern product to optimize your B2B business, try Cin7!
With Cin7, you can easily create a B2B website to showcase your product catalog. It syncs your sales and inventory in real-time, giving you a bird-eye view of B2B operations. You can also generate invoices and collect payments from customers.
Cin7 has over 700 integrations that will cater to all the requirements for successfully operating your B2B business – be it accounting, shipping, or fulfillment.Cin7 is loved by more than 8000 product sellers.
Gift guides are a great way to make your ecommerce store more appealing to customers. They can be used for any niche, but they are particularly effective in the food and beverage sector.
Essentially, a gift guide is a list of products that are offered at a discounted price. They can be used as an incentive to encourage customers to buy specific products, and they’re a great way to push sales in e-commerce.
However, gift guides are not always easy to create — and there’s a lot of strategic thinking that goes into the process. This article will explain how to create an effective gift guide that can be used to boost ecommerce sales and improve customer satisfaction.
Benefits of creating gift guides for your eCommerce business
A gift guide is a collection of products that are specifically designated to be given as gifts. These guides are useful tools for people who are buying for their friends, family members, and even for themselves.
Gift guides are a great way to increase sales, brand awareness, customer retention, and customer satisfaction. Not only do they help customers stay on your site, gift guides also remind them that they can buy multiple gifts from the same place.
People tend to get overwhelmed when selecting gifts due to the huge number of options available and their preferences-budget constraints — which is why a gift guide is a great solution.
By understanding the reasons that people love gift guides, you’ll be able to create a gift guide that is highly relevant and increases sales.
Gift guides boost brand awareness
Gift guides are extremely useful for boosting brand awareness. They have been used in many industries including banking, retail, healthcare, food and beverage, automotive, and construction.
Gift guides can show off popular or unique products and services. They can be used for both ecommerce sales and social media marketing.
Gift guides boost sales
Gift guides can be used in a variety of ways — depending on the type of gifts you want to highlight and the number of people that you want to reach out to. When people are buying gifts, they usually want something unique and exciting.
The more unique your gift is, the more likely it is to be bought by your target audience, and the higher your sales volume will be. Gift guides can be used as a marketing tool and a way to advertise your company. They make your customers feel special, and they give them a reason to spend more time on your site and make more purchases.
Gift guides generate blog and social media content
Gift guides are also a great way to generate content for your ecommerce site. Since you should leverage blogging as a marketing tactic, gift guides are a great source of content for your blog, social media, and more.
Gift guides generate interesting content that you can use to promote your business on social media. Promoting a good gift guide provides your customers multiple channels to connect and helps gain their trust.
How to create a gift guide for your eCommerce site
Now that you know why you should create a gift guide, here’s how to create one.
Identify your audience
In the ecommerce industry, it’s very important to make sure that your content is relevant to your target audience. Remember, the target audience for gift guides is usually not the same as your recurring customers. You need to understand your target audience for your gift guide, and then figure out the best way to reach them.
To understand your audience, you need to identify their needs and wants, and then craft a message that meets them where they are. The more you understand what your audience wants, the more tailored and effective your message will be.
Demographic data like age, gender, income, and location are all very important to understanding your target audience. Different demographics will occupy different niches and market segments, and you’ll need to communicate them differently, too.
Psychographic data is a set of characteristics that describes how people respond to different aspects of advertising. The main motivation behind psychographic research is to understand the different types of people that purchase products, how they buy, why they buy, and the different ways in which they shop.
Psychographics include personal values, ideas and beliefs, affinities, personality types, and preferences.
What items should you feature in your gift guides?
To make sure it’s easy for your customers to get what they want, you need to include the right products in your guide. When you select a product, you should consider various factors like price, quality, and unique features. The following parameters can be helpful when selecting products for your ecommerce gift guide:
One of the most important factors to consider when building your gift guide is to have a clear understanding of your sales history. You can look at what sold well last season and try to pick out similar items.
You should also consider product popularity in different regions, buyer segments, and lists of products that were bought by customers during the same timeframe in previous years. Your Inventory Management System can easily provide you with this data and give you key insights into which products should be included in your gift guides or sold as bundled items.
Social media trends
Social media can also help provide insight into your customer’s preferences. You can do a quick search on Pinterest or Instagram to see which type of products are getting more pins, shares, and likes.
It’s also a good idea to keep an eye on products advertised by influencers, as well as their respective engagement rates. That way, you’ll be able to more easily understand a certain product’s selling potential.
Your eCommerce website’s search history
Last but definitely not least, your ecommerce store can also be a goldmine of data. Your customer’s search and navigation history is extremely valuable information. Generally, a user searching for multiple products may plan to use them together, which makes them mutually relevant. You can also use popups that allow your customers to provide suggestions as well.
Leveraging your suppliers
Suppliers can also provide you with valuable information — especially since they deal with multiple ecommerce stores and have a broad understanding of the market. You can ask them about the fastest-moving SKUs and the items with highest demands that are most commonly being ordered in groups.
Build your gift guide’s content stack
Once you finalize the list of products that will go into your gift guide, you should start to develop your content stack. Make downloadable collateral that you can leverage on social media, in blogs and emails, and more.
We recommend building your content in hierarchical order. You can create the most elaborate content first and gradually reduce and repackage information to suit your needs, based on the following factors:
Time of sale
By the way, you should make sure to have the product pictures available and edit for ideal dimensions for each platform.
How to market your gift guides
Include them on your blog
It’s important to market your gift guides by publishing blogs on your website, which help you generate traffic and result in more purchases. You should definitely use your gift guide to make a series of blogs that helps bring people to your website.
Leverage social media
With the advent of social selling, marketing your gift guide on social media is an excellent opportunity to generate revenue and connect directly with your buyers. Depending on your product, you should use Instagram, Tik Tok, Facebook, Pinterest, and Twitter. These platforms can be a great way to promote your gift guide through both paid advertising and unpaid posts.
Email has been around for decades, and it continues to be the most reliable, popular, and profitable marketing channel for ecommerce. Make sure to send your gift guides to your audience as part of a dedicated email campaign.
Emails can provide you with a good amount of information regarding your audience’s preferences, which in turn can help you shape your overall outreach strategy.
Gift guides boost your sales and keep your customers happy
Gift guides prove to be highly effective for two main reasons: Firstly, the market is flooded with gift choices, which makes the decision-making process tough for the average person. Gift guides make that process easier.
Secondly, it can be a tiring process to browse through entire catalogs of different brands — and it’s even more complicated when they have to make multiple purchases. Gift guides make multiple purchases more likely.
Having a gift guide to curate the most relevant products in one place — and then making it easier to purchase those products right away — helps to provide a great deal of convenience to customers.
A better understanding of your inventory can help in shortlisting the products for gift guide recommendations. Cin7 is a cloud-based inventory management tool that allows you to track your inventory with better accuracy. It provides real-time insights about your stock levels and generates inventory reports.
The inventory reports will offer you valuable insights about your best sellers, and you can integrate them into the gift guide.
Book a call with our experts to discover how Cin7 can streamline your inventory management process.
Online shopping has become an integral part of the post-pandemic era. If you had a business with one or more stores, you probably had to shut your doors during the lockdown. While most brick-and-mortar stores had to close, online stores continued to flourish. Experienced companies got creative and started selling online, on social media, and more.
However, selling online begins with an ecommerce website. During the pandemic, these websites became a vital complement to a physical retail space. Moving forward, online stores will be indispensable for companies, including those that never needed them before. ecommerce is open 24/7 and attracts buyers from anywhere you have the ability to ship to.
An online store doesn’t only expand your potential customer base. It also gives your existing customers an easier shopping option, and it allows them to encourage their friends and family to do the same. ecommerce stores diversify your selling channels, reduce costs, and make it easier to scale your business.
Here’s why your offline business needs an online presence.
Reason #1: It improves your company’s image
This reason alone is enough to start a new website today. It’s a crucial factor, as prospective clients might wonder how serious your business is without a website, blog, or online presence.
Today, companies of all industries and sizes need to establish an online identity. Without one, your potential customers might not take you seriously, and you might lose business to competitors who are active, professional, and effective online.
Reason #2: You’ll provide better customer support
Having an online presence allows you to interact with more customers in real-time. Just having a website isn’t enough — you need to manage it, too. For most brick-and-mortar businesses, there simply isn’t an option to offer 24-hour service to customers.
Your online store can use live chats or contact forms to communicate with your customers. You can also create a space for them to leave reviews, post comments, and ask questions. It’s very important that your customers and prospects are able to get the information they need at any time —and being online is a great way to do that.
Building relationships is part of your job, and one of the best ways to do so is by making customers feel at home while using your site. Online customer support allows you to be quick to respond and apologize, especially if people are experiencing issues.
Communicating with new customers, and especially customers that have complaints can be stressful. Always make sure to stay positive and ask if they have any unanswered questions. Here are some tips for better online customer service:
Make it easy for people to contact you
Nurture relationships as much as possible
Provide upfront access to information
Be available to help in real-time
Walk customers from problem to solution
Invest in your customer service team
Direct your customers to both offline and online customer experiences
Reason #3: Your employees can work remotely
Brands should utilize multiple distribution channels to better connect with customers. The “bricks-and-clicks” business model means that you operate both on- and offline, and it allows you to be more effective in multiple ways.
Why operate in both spaces? A physical presence helps humanize your brand and offers memorable shopping experiences, while an online presence helps maintain convenience and excellent customer service.
Businesses with a great digital presence can also allow some personnel to work remotely— as long as they have a solid internet connection. This enhanced flexibility boosts productivity, saves time, and increases profits.
Some areas of work may be impossible or difficult to do remotely. That’s why traditional offline businesses can begin small and scale up later to support brand recognition, customer service, marketing efforts, relationship building, and more — and do it all remotely.
Reason #4: You can target both local and global markets
When your business is online, you can market to the masses and increase the number of direct relationships with your customers. You can also effectively target your local market by getting valuable online data.
So, how do you find the right balance between local and global targeting? As your business grows, so must your market. You don’t want to limit yourself from the beginning. That’s why establishing an online presence should be your first step in this journey. A website or an app allows you to access various markets, attract new customers, and have a higher chance of converting more people.
Reason #5: You’ll have lower start-up costs
How much does it cost to establish your brick-and-mortar brand’s online presence? Truthfully, not much. Building an online presence and marketing yourself takes time, but the costs are very low compared to launching an offline business from scratch.
Physical businesses demand high rental costs and several employees, while your selection of goods are always limited by physical space. You can eliminate or reduce those costs by establishing an online channel.
Plus, you don’t need to spend thousands of dollars on your website or mobile app development. In fact, a good website or app can be quickly made for somewhere between a few hundred to a thousand dollars.
And, if you contact Cin7, we’ll quickly get you an estimate for your true startup costs.
Reason #6: You’ll gain an edge on your competition
The sooner you have an online presence, the more of an edge you can enjoy over your competitors. As the saying goes, “Either you have to be first, or you have to be best.” And being the best is really hard.
When your company is online and your competitors aren’t, you have the chance to dominate. Even if you’re not the first, we highly recommend having an active and growing presence on all major social media platforms. At this point, a website and social media presence is almost mandatory.
How to get your business online in 4 simple steps
Now that you’re ready, let’s jump right in. This is how you get your business online in 4 simple steps.
Step #1: Set up your ecommerce website
Setting up your ecommerce website is not as complex as it used to be. You can easily do it yourself, or you can pay someone to help. First, choose a domain name (for the website’s URL). If you want to do business internationally, it’s a good idea to buy a “.com” domain name.
You’ll also need to use an ecommerce platform, and the one you choose depends on what you need. We partner with some of the best ecommerce platforms that make the process fast and simple: Shopify, BigCommerce, Magento, and WooCommerce.
Shopify is great because it has themed templates to select, and you can make a great-looking website in minutes. If you need any additional help building your website, no problem. Simply go to https://experts.shopify.com for a directory of professional website builders.
Another good practice is to look for other ecommerce websites from similar businesses. You can share those examples with a professional of your choice and tell them to imitate the look, feel, and function of the website.
Step #2: Upload your products and prepare to sell
Your online store is where many of your customers will first encounter your products. Make sure your products have good descriptions, accurate sizing, and excellent product images.
If you sell apparel, it’s worth noting that it sells better when customers see it being worn. You should also provide text that includes details you can’t see in the image. Make sure to use a decent camera and find a good space with a clean background.
Product images on a white background are great, or you can try to obtain high-quality images from your suppliers. Also, make sure you’re ready to ship your products. Our partners StarShipIt, ShipStation, and others will help make this process seamless.
Step #3: Make your logo and create your brand
It’s time to make your website’s logo. Modern logos are simple to produce on your own, but if you’re feeling “design-challenged,” it isn’t hard to get help from professionals via gig sites like Fiverr and Upwork. Alongside a logo, you should consider some basic branding, too. It’s important for a brand to have a consistent message and experience.
It’s also essential to set up some basic web pages from day one. There should be “About Us,” “Shipping Information,” “Contact Us,” and “Returns Policy” pages. You’ll also want to promote your physical store’s location and opening hours.
Making these pages tells your customers about your brand. Who are you, and what are your values? More than ever before, consumers base their purchasing decisions at least partially on whether or not a company aligns with their values.
A final tip: never let perfection get in the way of a web store launch. The key is getting online fast. You can always update and improve your website as you move forward.
Step #4: Promote your online shop
If you have a healthy customer database, you should try to contact them via email, phone, and mail. Sending emails and branded postcards is a good way to personalize your website’s launch.
You can also use social media networks to promote your online store. For instance, if you are on Instagram, you can create a post and tell customers that they’ll be entered into a raffle for store credit by tagging three friends.
Marketing is about getting creative and thinking outside the box to raise awareness. For instance, it doesn’t hurt to try to get an article published by the local newspaper or news. You can also advertise your new online store at your existing physical store.The more exposure, the better.
Post-launch, you should send a monthly email to customers. We recommend using Mailchimp to send bulk emails with mobile-friendly layouts and solid branding. Mailchimp also helps manage your unsubscribe list. That way, you’re not sending unwanted emails.
Finally, digital marketing plays a crucial role, and it includes:
Paid advertising like Google Ads and Facebook Ads.
SEO, which increases the chance for your website to appear in Google search results and help potential customers find you.
Content marketing, like writing blogs and adding helpful web pages to help attract potential customers.
Social media presence, such as Facebook, Instagram, LinkedIn, and even Twitter.
Step #5. Get your automated Inventory Management software
Properly managing inventory can either make or break your business, so it’s crucial to have insight into your stock levels at any given time. With the right inventory software, decision-makers can manage their inventory effectively and cheaply.
Cin7 is great because it offers a suite of tools to track inventory in multiple locations. You can determine reorder points, manage stock, and cycle counts. Plus, you’ll be able to find the right balance between demand and supply across your entire organization with our demand planning and distribution requirements planning features.
These solutions are a perfect fit for businesses of any size.
See what Cin7 can do for you
Keeping track of your inventory and understanding your sales data is vital to making a multichannel business a success. Cin7 can integrate your ecommerce and brick-and-mortar businesses in one easy system. You’ll be able to manage your inventory and ship without an issue — as long as you have the right tools.
Remember, our team is always here to help — and we’d love to show you exactly how today.