ideas-and-tool: Selling to retailers / EDI

Are you considering EDI software for your business?

Posted on | by Cin7 team | Leave a Comment on Are you considering EDI software for your business?

If you are a business owner, you must communicate with other organizations, including your suppliers, customers, and stakeholders. Communicating in an old-fashioned way using a ton of paper is slower, less secure, and less efficient. With the world moving towards digitalization, business communication should also be digitized. This will not only improve the speed, security, and efficiency of communication but will also leave a legitimate document trail for future reference. So, if you are considering EDI software for your business, you are in the right place.

The electronic format for these basic business exchanges is called Electronic Data Interchange, or EDI.

 

What is EDI?

Electronic Data Interchange (EDI) is an automated system that puts documents like invoices, shipping bills, purchase orders, and payment confirmations into a standard digital format that can be read by both the senders’ and recipients’ servers and transfers the files directly from one business’s computer network to another.

 

What are the benefits of EDI?

Instantaneous communications

When you’re ranking the advantages an EDI system can provide you with, speed probably comes out on top. EDI-generated documents go from being produced to the intended destination in practically the blink of an eye. The automated system saves time, and as a consequence, money.

Greater efficiency

EDI streamlines and improves the tasks it takes care of. It also sharply decreases human intervention to make the whole process of sending and receiving documents much more efficient. What’s more, it’s the level of efficiency in communication that impacts all the other areas of an organization. With EDI, employees can do other things, like focus on activities that will grow the company; communication gaps become virtually nonexistent; and more business can be generated.

Security

Most companies that have not yet automated their business management systems, use basic spreadsheets, like Excel and Google sheets to maintain inventory records. Documents are sent to various stakeholders via emails or printed hard copies. Although this method is cheaper and simpler in some ways, it has its drawbacks.

Inventory management software, like Cin7, can offer EDI benefits by securely transporting the required data to other networks using standardized and encrypted methods. Cin7 also builds two-way connections and our experts carry out compliance testing for you.

Sustainability

Climate change isn’t something that can be ignored anymore, and any steps taken to mitigate it count. EDI can be considered one of those steps. It cuts paper use to practically zero since it does away with the need for mail or transport systems to get documentation from one company to another. This reduces the carbon footprint of the organization significantly and contributes to making it more sustainable.

 

How does EDI work?

Put very simply, a document is first put into a digital format that makes it readable by another computer system; then it’s converted into a format that will actually get it to the other computer system.

Step 1 – making documents readable:

One company might conduct business in one currency, another might use a different one; similarly, measurement systems may differ – metric vs. imperial. EDI overcomes this by giving documents a standardized format that creates uniformity. While there are several of these  formats, the rules they adhere to are recognized globally.

Called EDI standards, these formats are:

  • American National Standards Institute (ANSI): ANSI defines the standards for products, services, processes, systems, and personnel in the United States.
  • United Nations/Electronic data interchange for administration, commerce, and transport (UN/EDIFACT): UN/EDIFACT is a standard developed for the United Nations and approved by the International Organization for Standardization (ISO) as ISO 9735. It provides syntax rules for data structure, standardized message format between multiple countries and industries, and interactive exchange protocol (I-EDI).
  • Trading data communication standard (TRADACOMS): TRADACOMS is an older UK standard that is on the brink of being obsolete today. However, it is still in use in the UK.
  • Electronic business extensible markup language (ebXML): ebXML is an exhaustive standard for secure business communication. After a couple of upgrades, ebXML is presently in its 3.0 version.

Sometimes, of course, the company sending a document may use a different standard than the one receiving it. For cases like that there’s EDI translator software. This puts the document into an EDI standard that allows it to be transmitted; the computer that receives it is able to convert it into the format it uses and recognizes.

EDI follows an envelope structure. Rather like paper envelopes, this structuring of the data puts one piece of information inside another. A design that has security in mind, the outer envelope shows the sender and receiver along with general information about what’s inside.

Typically, there are three types of envelopes: interchange, functional group, and transaction set. The first contains several documents; the second several of the same type of document, like associated invoices; and the third has something transactional inside.

Step 2 – Getting one computer system to speak to another

This is done with what’s called EDI protocols. The most popular of these protocols are:

  •  SFTP – secure file transfer protocol
  •  SOAP – simple object access protocol
  •  AS2 – applicability statement 2

For the interchange to work, both systems have to use the same protocol.

 

Transmitting documents with EDI

EDI uses the Internet to transmit documents. It does this in two basic ways:

  • Direct connection: This is a point-to-point connection. Put simply, a document goes from a computer in one company to a computer in another. The secure protocols described above are in place during this.
  • Value-added network (VAN):  VAN is a third-party intermediary, an EDI broker that converts the original document into EDI data and then routes it to the receiver. Again, a secure protocol is used.

 

How to make your business EDI compliant

In essence, this means adopting an EDI system that lets you communicate digitally with your trading partners. Trading partners include all the organizations you exchange data and documents with: your suppliers, customers, and contractors. Many large corporations have specific EDI requirements for their trading partners, and if you want to do business with them, you’re going to have to comply.

Did you know Cin7 inventory management software is equipped with built-in EDI that’s EDIFACT and X12 of ANSI compatible?

 

To sum it all up…

If you are considering EDI software for your business, you are not alone. When you’re aware of the speed, efficiency, transparency, and security digital gives you, you’ll wonder what took you so long to convert.

Cin7 can be the right stepping stone for you. Book a call with one of our experts by clicking here.

 

 

 

A quick and easy guide to good retail management

Posted on | by Cin7 team | Leave a Comment on A quick and easy guide to good retail management

When shoppers find exactly what they’re looking for in a store, they leave happy. And when they leave happy, the store management is happy because the chances are those customers will come back again, or better yet, give a good recommendation to one of their friends.

It takes a lot of work and planning to get to this point, of course. The store has to have the right look and be open and inviting, and merchandise has to be displayed appealingly. The inventory also has to be managed well. This means having enough of an item in stock to be able to replace it quickly in the store when it’s sold – because it looks better if everything is well-stocked – and having enough of it in storage to be able to do this. This means ordering more, knowing when to do this, and doing it early enough to cover lead times – the length of time it’ll take a supplier to turn purchase orders around. The umbrella term for all these activities is retail management. In this blog, we’re going to break down the areas that make up retail management and look at them in detail.

Understanding the importance of retail management

The word retailer comes from the Old French retaillour or retailleor, and it translates as someone who sells items in small quantities. This interpretation pretty much stands today: store owners stock goods in limited amounts, and their customers usually buy items in ones and twos.

You may be wondering why we’re going into etymology. Well, it’s to give an understanding of the scope of the businesses we’re talking about. And when you get your mind around that, we can delve into the challenges and decisions that are specific to retail stores.

The central challenge of a retailer is to give their customers a good experience, to let them know they’re welcome, understood, and appreciated. It’s how you get them to come back. This experience runs from creating a look that reflects the interests of the shoppers to streamlining the checkout. For instance, a book store will have subtle color tones, be crammed with books, have quiet areas to check out reading material, and could be playing easy-listening classical music in the background. A shop selling clothing to young people, on the other hand, mayl use bright colors to decorate their interior, should have the right mood lighting, and may be playing Top-Ten music hits very loudly.

Differences aside, there are aspects that all retail establishments have in common. First among these is internal organization. When a customer walks into a store, they should very quickly be able to work out where everything is. In our bookstore example, the works will be categorized by genre, each one having its own section; and within that each book will be placed on a shelf alphabetically. In the clothing store, it’s garment type – jeans will be on one rack, coats on another – and to make everything even easier to find, each rack will have its clothing grouped by size.

The second thing all stores have in common is salespeople. There’s an art in choosing the right sales people, but more on that later.

The third characteristic shared by retail is the checkout. paying. Nowadays, there are several options for this: cash, card, or online via an app on a cell. It should be a smooth, simple process.

Taken together, all these facets add up to what’s called retail management, and when it’s done well, it’s good retail management.

The process of retail management

If you own or manage a retail store, you’re responsible for everything that goes into the running of it, from getting the right inventory to giving customers a good experience to handling employees. We’re going to break your job description down into its component areas and take a close look at each one.

#1 Planning

Like any endeavor, the first step in any retail enterprise is to plan it out. This covers everything from interior design and layout to choosing what goods to get from suppliers.

We’ve already covered design, so let’s get down to layout. As described in our examples, depending on the kind of items you’re selling, a potential customer has to feel comfortable in your space. If you’re selling tech, that means spacing out your devices and lighting them brightly to invite those entering your store to “play” with each one; if you have a thrift shop, you’ll want your items to be thrown together in batches to appeal to your customers’ bargain-hunting instincts. It’s all part of driving foot traffic to your establishment.

Irrespective of the kind of items you’re selling, you have to give careful consideration to where you place your checkout. You’ll want your shoppers to be able to see it easily, but you won’t want it to block the free flow of customers. For these reasons, it’s probably not a good idea to place it near the entrance. Similarly, if you run a clothing store, you shouldn’t put it near the changing rooms – that would not only block access, it could look like a brazen grab for a sale and put customers off.

Keeping the interior of the store clean and tidy is also important. It’s part of making your walk-ins feel they’re welcome.

Another major consideration when working out layout is shoplifting. Arranging items so that your employees can see as many of the areas as possible is a good way of preventing this. If shoplifting becomes a serious problem, however, surveillance cameras should be installed.

#2  Choosing suppliers

When you’ve worked out your layout, you need to get your products in. You’ll probably know what kind of store you’re opening when you sign a lease for the space, so buying comes down to finding suppliers and setting up accounts with them. Then it’s a matter of working out your markups, guesstimating returns, and researching your competition. Purchasing inventory is such a crucial part of store management.

When you’re looking around for suppliers, you should be checking out the following:

  • Their selling price – best to go with someone who offers the lowest price,
  • Whether they can deliver to your store,
  • Length of time it will take them to deliver items to you – their lead time – this has to be taken into account when reordering,
  • Their after-sales service,
  • Their return policy,
  • Terms of their invoices – specifically length of time they give you to pay, and
  • How much credit they’ll give you.

It’s a good idea to find several suppliers to work with. This way, if one doesn’t have what you want or can’t deliver, you have a fallback.

Then it’s a matter of working out your markups, guesstimating returns, and researching your competition.

#3 Receiving, storing, and displaying

First thing when a shipment comes in from a supplier is to check the goods against your purchase order and their invoice to make sure you’ve received everything you’re being charged for, and you should inspect each item for quality. If anything is damaged or incorrect, you send it back.

Next comes storage. If you have a small shop, this could be a back room; but if your business is larger, say something like a box store, you’re going to need a bigger space, a much bigger space, something that’s more like a warehouse.

When it comes to displaying items in your store, several matters should be taken into account. Things that are more likely to catch a customer’s eye should be right up front, near the entrance.If some of the things you sell are heavy, they should be on shelves that are near the floor, not on high levels; items that are similar should be grouped together; and small items that could be last-minute purchases, like socks or small packets of candy, should be next to the checkout.

The placement of any discounts you’re running is also important when trying to encourage sales.  These should always be clearly labeled, preferable on their area of the shelving as well as individually on the product. Essentially, you’re building goodwill with your customers, and if an item they pick up—thinking it’s discounted—turns out not to be, they’re going to be upset. For some types of things, like clothing, however, it’s a good idea to have a dedicated area for all discounted items.

Of course, as a retailer selling in ones and twos, you’re probably going to be stocking a lot of different items in different colors and sizes. This makes keeping track of everything  a challenge. Technology can come to the rescue here, technology like Cin7’s inventory management software. Cin7 tracks inventory in real-time, letting you know exactly what you have and how much of it you hold. It can also automate your purchase orders, registering when your stock is low enough to warrant reorder and taking care of it. 

#4 Hiring and managing employees

This is important because a salesperson can make or break your retail business. Number one when checking out prospective hires is that they should like people. They have to have bright personalities and show a degree of patience. In short, they should enjoy interacting with customers, be happy to help them find what they want and be willing and able to answer any questions. Plus, they should be able to calmly listen to complaints and be willing to resolve issues. It also helps if they have knowledge of your business category. Thus, if you have a hardware store, you’ll want salespeople who know a lot about home improvement; if you have a beauty store, you’ll want salespeople who love and are up-to-date on things like make-up trends.

Your sales staff should also be adept at using your checkout, otherwise known as your point of sale system. Depending on the size of your store, you may have an employee dedicated to taking customer payments, so it’s important they be well-versed in whatever system you use.

And for you as a retail manager, once you’ve selected the right people to work for you, it’s your responsibility to keep a subtle eye on them to make sure they’re not taking advantage, and to resolve conflicts and grievances they may have. If your staff is content in the workplace, it’s reflected in the way your business performs.

#5 Service and sales

As indicated in the section directly above, your sales staff should be able to give your customers a gentle nudge when they’re undecided about whether to buy or not. That, essentially, is what a good sales person is defined by.

To make your customer experience complete, a smooth checkout is the cherry on the cake. While a point of sale (POS) can be defined as an old-time cash register, today much more sophisticated, online-based systems are the norm. In addition to adding up the cost of items, if several are purchased, these modern-day systems can scan barcodes and process different payment types, from cash to credit cards and cell-phone apps. They can also store your customer’s information – useful if there are returns or you want to send them marketing materials – and keep track of your inventory.

Cin7’s POS can do all this and more.

 

Optimize your retail operations with Cin7

To sum up, when a retail store is run well, customers have a good experience and walk out happy with the item they want, and your staff are content and put in that extra effort for you.

Then there’s control of your inventory, getting the right stock in and ensuring you have enough of it at all times to satisfy demand. That’s where Cin7 can be helpful. Cin7’s cloud-based software gives you a bird’s eye view of all your inventory, and can produce data to keep you on top of what items are selling best. Cin7 can also create loyalty programs and, as discussed, streamline your checkout.

If you want to learn more about Cin7 and how it can bring improvements to your retail business,  call one of our experts today and book a demo.

How to perfectly execute the 2022 holiday shipping season

Posted on | by Cin7 team | Leave a Comment on How to perfectly execute the 2022 holiday shipping season

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.

Inexperienced 3PLs

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.

Communicate effectively

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!

 

Conclusion

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 and how to calculate it

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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.

 

Closing remarks

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.

 

7 considerations for EDI success

Posted on | by Cin7 team | Leave a Comment on 7 considerations for EDI success

Technology has drastically improved how we interact with the world. Transportation has evolved from animal carts to fast cars; data transmission has changed from postal letters to instant emails. With the advent of the Internet, the world has turned into a connected village.

In such a connected world, your business needs to be able to share relevant information with stakeholders like suppliers. Thanks to technology, this process can be streamlined using EDI. You can electronically share information about purchase orders, invoices, and status information with your stakeholders using EDI.

In this article, we will discuss what EDI means and what challenges you may face while using EDI for your business. Let’s get started.

 

What is EDI?

EDI stands for Electronic Data Interchange, and it facilitates the computer-to-computer data transfer between two (or more) parties. In layman’s terms, EDI is similar to a chat messenger that delivers information from your device to your friend’s device.

The parties that exchange information through EDI are EDI trading partners. EDI software allows its users to create templates so that they can standardize documents shared with EDI trading partners.

Suppose you integrate EDI with your ERP (Enterprise Resource Planning) tool or inventory management system (IMS). Once complete, your EDI can automatically fetch the necessary documents from the ERP/IMS database and send it to trading partners as required. This way, you do not have to create documents from scratch.

In the absence of EDI, businesses had to rely on the postal service, faxing, or email all of which had drawbacks. Let us understand EDI better with the help of an example.

John runs an apparel business, and he replenishes the inventory by ordering goods from David – the manufacturer. In the past, his purchase manager would draft a purchase order, print it, and then postal mail to David to reorder stock. The order would be received by David’s sales representative, who would manually enter the items being ordered along with the respective quantity into the system to finalize the sale.

The process seems lengthy and time-consuming, right? With EDI, sending information takes seconds rather than its postal counterpart – which can take days (even weeks!).

John’s purchase manager simply needs to add order information – product specification, quantity – in his EDI software, which will be automatically forwarded to David’s (manufacturer) EDI software. David can easily integrate the EDI tool with his order management system, such that an order can be directly placed when John sends a purchase request through EDI.

 

 

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It is evident that EDI can streamline the purchase process which is better than doing it manually. The manual process also has room for many errors; for starters, the sales representative can enter incorrect order quantities into the system.

EDI not only saves your processing time, but it also helps in boosting the accuracy as it minimizes human error.

EDI also brings labor cost savings, as you do not need to incur the charges of printing the order details and the cost of postal handling/faxing/email the documents. Even the recipient does not need to endure the hassle of sorting and storing the physical copies for the record.

 

Common EDI challenges

Now that we are clear about the use and benefits of EDI let us also discuss the challenges faced while implementing EDI.

#1 Compatibility with trading partners

Deciding to implement an EDI system involves revamping your database. This challenge can multiply if you choose to create and administer the EDI in-house. Even after successful implementation from your end, the challenges do not end.

As EDI facilitates the transactions between trading partners in real-time, it is essential that your EDI system successfully synchronizes with their system for accurate data transfer.

Another hurdle could be that some of your suppliers may not be so keen to implement an EDI due to a lack of knowledge and hesitation about data sharing.

Apart from the stakeholders, it is also essential to train your internal staff to work with the EDI system. You do not want your purchase manager to order 1,000 items instead of 100 accidentally! The repercussions of mistakes can be huge, and thus it makes sense to fully acquaint your employees with the relevant features of the EDI.

As the stakes are high, it is advisable to consult an EDI expert rather than trying to figure things out on your own.

#2 Standardized formatting

The complexity of EDI integration can be challenging when your trading partners customize the formatting guidelines to cater to their unique needs. For instance, the invoicing transaction code is referred to as EDI 810.

Some invoice fields are common across all trading partners. However, the partner may likely add some additional EDI segments specific to their business.

In such scenarios, compatibility can be an issue that can lead to transaction errors. Here the experience and support of EDI providers become crucial as they are experienced with handling such issues.

While doing B2G (Business-to-government) transactions, your EDI should be compliant with the document formats legislated by the government. For example, Since 2020, the majority of European governments have been mandated to accept invoices electronically. Even the federal German public bodies have stopped accepting unstructured invoices – PDFs, printed documents – and only accept e-invoices.

As your business expands, it is essential to comply with government standards to avoid penalties. The standards can be region-specific – like the VDA format in the German automobile industry – or industry-wide.

These are some widely adopted standards in the EDI industry:

  • UN/EDIFACT (Electronic Data Interchange for Administration) was devised by the United Nations in 1987. It created standards for the syntax and structure of the messages to ensure that EDI is compatible with multi-industry transactions.
  • GS1 is essentially a subset of EDIFACT, and it is widely used to standardize product data. It uses GS1 identification numbers to help identify each product, location, and trading partner. The GS1 identification numbers are usually in barcode format, which can be scanned to add the physical products into the database, and movement can be tracked.

You must also ensure that your EDI can accommodate various transmission protocols such as FTP, HTTP, SFTP, and AS2. AS2 (Applicability Statement 2) has gained popularity in the retail and consumer goods industry since its adoption by Walmart. AS2 is used to transmit EDI messages quickly, safely, and cheaply!

#3 Security considerations

Despite its wide adoption across various industries, some partners may still be concerned about implementing EDI due to the nature of information sharing.

These concerns may arise from various factors such as lack of trust and risk of information leak due to security breaches. International laws can further add to the challenges by introducing legal frameworks and data protection rules.

You must ensure that the information is shared via encrypted transfer protocols. It is best to discuss your security measures with your partners, to ensure that everyone is on the same page and comfortable with your business practices.

It should be noted that the sensitivity of the information varies, like your order data may not be as sensitive as the invoices (which can contain vital billing information). You need to take extra precautions while dealing with highly sensitive data – as with healthcare customers, for example.

A value-added network (VAN) is a hosted private network that is used to offer connectivity between EDI trading partners. It acts as the gateway to sharing documents between parties – in other words; it is like a digital postal service. You need to check the security certifications of your VAN network, like ISO 27001 accreditation.

#4 Rising EDI cost

EDI helps lower your operational costs and optimizes logistics; however, you need to spend to get started. A substantial investment to purchase the necessary infrastructure – hardware and software – for EDI transactions will be required. If you decide to build an in-house EDI, you also need a dedicated IT team for its maintenance.

If your EDI implementation does not go well, it could also tarnish your reputation amongst your trading partners. Your manufacturing vendors may even penalize you for incorrect ordering as it can impact their production lines.

To lower your costs, you can outsource to a cloud-based EDI system provider. In this case, you won’t have to invest in a dedicated set-up and transactions run in the cloud, leading to cost savings.

Additionally, a provider updates the EDI automatically, so it saves you from any hassle when scaling up.

#5 Data errors

According to a study by the University of Tennessee, 60% of B2B transactions are suspended or declined due to some anomaly in the data. This makes it crucial to take necessary steps for data governance, to make the most of your EDI’s potential.

The report further suggests that 16% of the orders placed in a month contain an incorrect price and 20% of orders are for items that are either discontinued or not available in stock. Surprisingly, 8% include a duplicate purchase order.

Such situations can be dealt with by adding EDI rules that monitor transactions for variables like price differences and PO validity. This way, the system can send alerts to your team whenever a discrepancy is found.

There are times when a manufacturer needs to increase the price of a particular product. Needless to say, it is crucial to alert the buyers so that they can alter their order quantity.

For instance, the purchase manager gets a specific budget (say $100) to order a quantity of goods. Presently, the manufacturer sells each unit at $10, so the buyer can avail of ten units ($100 budget / $10).

However, if the manufacturer increases the price from $10 to $20, the purchase manager will need to reduce the quantity from ten units to five units ($100 budget / $20). But if the manufacturer does not promptly inform the buyer about the price change, it could lead to disputes and damage their relationship.

Price changes are inevitable; to solve such issues, businesses use EDI 845 – the price authorization acknowledgment document. Vendors use it to communicate price changes to resellers. EDI 845 is used primarily in the pharmaceutical industry, but manufacturers and distributors also utilize it.

As your business operations scale, so does the volume of your EDI transactions. With greater volume, it can become challenging to avoid errors or spot missing fields. Popular EDI formats such as EDIFACT were not meant for humans to comprehend, and that is why spotting errors can be tricky.

Even if you somehow manage to do that, manual error inspection is time-consuming. Thereby, automating the error detection process can help you save time and increase your profit margins.

#6 Integration with your inventory management system

EDI should be flexible to adapt to your way of doing business instead of the other way around. The technical integration should allow you to use the formats that you prefer or commonly used by your trading partners.

Many businesses already use an ERP (Enterprise Resource Planning) system or inventory management solution to gain insights into their business processes. Look for an EDI that also integrates with your existing system so that you can directly process the EDI orders.

Instead of manually pulling the documents from EDI and then feeding them into your inventory system, you can do this in real-time by integrating them together. This helps you meet increased customer expectations.

#7 Offering transparency

As the complexities of the supply chain rise, the need for transparency between trading partners is more important than ever.

The functionality of EDI has evolved over the years. What started as a means to improve the B2B transaction process has now evolved into a tool that provides better inventory management.

You can adopt some EDI transactions that provide inventory information to boost transparency. EDI 846 can provide information about inventory levels, and EDI 214 offers buyers shipping status notifications.

With the right system, you can share alerts and notifications with your trading partners. Offering transparency ensures that information is not siloed and helps everyone to be on the same page.

 

Wrapping up

We live in a period where the supply chain is constantly getting disrupted by various factors – be it pandemics or political factors. During such a period, investing in technology that can help optimize your supply chain – such as EDI – seems an obvious choice.

Implementing EDI can be beneficial as it streamlines your B2B transactions and provides much-needed transparency. Choosing the right EDI that integrates with your ERP can do wonders for your organization.

Vetting the best EDI is also vital as it contains sensitive information that can affect your business’s overall profitability.

To learn more about Cin7’s built-in EDI capabilities, request a demo.

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Sales order benefits and best practices

Posted on | by Cin7 team | Leave a Comment on Sales order benefits and best practices

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:

  1. 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.
  2. 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.
  3. 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!

Purchase orders: How to know when and which type to use

Posted on | by Cin7 team | Leave a Comment on Purchase orders: How to know when and which type to use

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.

PPOs include:

  • 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.

 

Wrapping up

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.

CRITERIA SPO PPO BPO CPO
Established terms and conditions Yes Yes Yes Yes
Specifies details regarding goods and services Yes Yes Yes No
Specifies pricing information Yes Yes Maybe No
Specifies quantities identified Yes Yes No No
Predefined accounting distribution Yes Yes No No
Established delivery schedule Yes Maybe No No
Can be encumbered Yes Yes No No
Can encumber releases N/A Yes Yes N/A

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.

7 Reasons why B2B businesses should use ecommerce

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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 trend of ecommerce for B2B transactions is on the rise, and it has a bright future. A study from Forrester Research shows that online B2B sales will reach $1.8 trillion by 2023.

If you are considering implementing a B2B eCommerce platform for your business, examine the nature of the benefits that your business can avail by going digital!

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What is B2B ecommerce?

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.

 

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Benefits of B2B ecommerce

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.

A survey conducted by Merit showed that 73% of millennials are now involved in making purchase decisions for the organization. As millennials prefer using digital channels for purchasing, having an online presence is necessary. B2B buyers have turned tech-savvy, where the demand for a B2C-like shopping experience exists in B2B ecommerce.

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.

Being a preferred supplier brings the privilege of repeat purchases, resulting in an increase in your income. To further entice sales, you can make it easier for your clients to make a purchase from you. Research by McKinsey shows that just 15% of the B2B buyers wish to speak to the salesperson while reordering the same item.

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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?

A study by Unbounce shows that nearly 70% of the consumers admitted that webpage loading speed affects their buying decision.

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.

Helpful hint: It is also forecasted that 72% of the B2B customers expect brands to understand and predict their needs. Even this can be made possible by using AI and machine learning to enhance personalization.

 

In summary

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.

Book a call with our experts to learn more about using Cin7 for your B2B business.

How to create gift guides that drive ecommerce sales

Posted on | by Cin7 team | Leave a Comment on How to create gift guides that drive ecommerce sales

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.

Demographics

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.

Psychographics

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:

Sales history

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:

  • Audience
  • Niche
  • Region
  • Time of sale
  • Purchase intent

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 marketing

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.

Why your offline business needs an online store

Posted on | by Cin7 team | Leave a Comment on Why your offline business needs an online store

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

If you’ve followed all these steps, you’re almost there! Your offline business has an online presence, but it won’t run smoothly until you have 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.

Why wait? Book your demo now.

The top 8 ecommerce trends of 2022

Posted on | by Cin7 team | Leave a Comment on The top 8 ecommerce trends of 2022

Ecommerce has revolutionized the way we shop. In today’s world, you’re just a click away from ordering anything and then receiving it at your doorstep within days. You can order products at nearly any moment — when you’re watching TV, listening to music, or doing household chores.

Recently, lockdowns and work-from-home arrangements have only accelerated the switch to online shopping. It’s estimated that the number of online shoppers will soon reach 2.14 billion. When you take into consideration the world’s population (around 7.8 billion), that means approximately 1 in 4 people shop online.

Because of this, online businesses need to be aware of the latest ecommerce trends to stay both relevant and competitive. For example, Amazon was the first to offer free shipping and quick delivery. Today, many of the major ecommerce players have done the same.

To make sure your store is as competitive as possible, here’s a comprehensive list of emerging ecommerce trends in 2022. Let’s dive right in!

 

Trend #1: Accepting crypto payments

There’s an unspoken rule in the ecommerce industry — customers should have the flexibility to choose their preferred payment method. This is exactly why most online stores offer multiple payment options including credit cards, EMI, PayPal, cash, and gift cards.

Cryptocurrencies like Bitcoin and Ethereum are also emerging as viable methods of payment. Even though crypto started off as fringe technology, it’s now accepted by the masses. On top of that, there’s a growing percentage of people who consider crypto the future of currency.

Prominent banking and payment platforms (such as PayPal and Visa) now allow their customers to transact with crypto, and US-based customers can also use PayPal’s “Checkout with Crypto” feature. Through PayPal, your customers can convert their crypto into fiat currency (like dollars and euros) based on the current exchange rate.

A survey conducted by Hartford Steam Boiler (HSB) found that around 36% of small to medium-sized businesses in the US now accept Bitcoin as a form of payment. There are even governments trying to launch their own cryptocurrencies, such as El Salvador, which has started to accept crypto as an official form of payment. 

Tech giants like Microsoft have also adopted crypto. Customers can load up their Microsoft account using Bitcoin, which can be used to pay for Microsoft apps, Xbox Live, and other digital content. The wide acceptance of crypto from governments and prominent companies will surely act as a catalyst for making crypto mainstream.

This is precisely why you should adopt crypto, too. Here are some benefits of allowing your customers to pay with cryptocurrency:

  • Better security – It’s incredibly challenging to counterfeit and steal cryptocurrencies, due to their complex encryption. Using blockchain to validate transactions can reduce the risk of digital payment fraud.
  • Lower fees – Transaction charges can add up with credit cards, especially through third parties. Cryptocurrencies have lower transaction costs and allow ecommerce businesses to increase their profitability. Cryptos can also make international transactions much easier and faster.
  • New customer acquisition – Accepting crypto payments can help you increase your target market and attract customers who prefer to pay with crypto.

Cryptocurrencies leverage blockchain technology, which does more than simply accept payments. Blockchain keeps safe records — like a ledger — and keeps track of transactions that cannot be altered. Blockchain’s implementation in the supply chain, and the increased transparency that comes with it, can provide greater confidence to your customers.

To stay ahead of your competition, your ecommerce business should make sure to embrace this new and exciting form of payment.

 

Trend #2: Leveraging artificial intelligence (AI)

We’re all in the middle of a transition from product-centric business models to customer-centric business models. Businesses are delivering what the customers demand — rather than creating a product and finding customers who want it.

The current market is both competitive and filled with similar products, and that means winning customers requires you to offer tailor-made solutions that really resonate with them. AI and machine learning algorithms allow businesses to deliver the personalized shopping experiences customers crave.

So, how does AI work? When customers purchase items, the AI captures their data. AI harnesses this data to learn about customers’ buying behavior – like how they shop and what they search for – and uses that information to curate product recommendations. Analyzing that much data in real-time is not feasible for humans, but it’s no problem for AI. And that’s just one reason Artificial intelligence can be extremely lucrative for businesses.

Since AI is able to make unique recommendations to each buyer, the likelihood of customer purchases also becomes much higher. Customers expect businesses to treat them like individuals, and AI can make that happen.

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Trend #3: Using chatbots

Like crypto, chatbots are becoming mainstream. Studies show that more than 2/3 of online customers interacted with them in 2020. Chatbots are becoming more and more personalized, and they’re able to offer a much-improved shopping experience for online shoppers.

In the fast-paced world we live in, customers can get frustrated if they don’t find the product they want in a few clicks. Chatbots can help make personal shopping recommendations that lead to sales.

Just as in-store sales agents assist shoppers, chatbots can do the same for your online shoppers. They help you cross-sell, upsell, and make recommendations based on past purchases.

Apart from becoming valuable sales associates, chatbots have also been widely utilized to offer 24/7 support and reduce expenses that come with hiring a round-the-clock support team. You can add answers to frequently asked questions (FAQs) in the chatbot’s system so they can instantly solve the most common problems. By integrating the live chat function, you can also let your support staff monitor conversations and jump in when the bots are struggling.

If you aren’t using chatbots for your ecommerce business, now’s the time to start.

 

Trend #4: Leveraging augmented reality (AR)

Despite an online store’s convenience, there are still some factors where physical stores outperform ecommerce. A study shows that around 30% of consumers prefer physical stores so they can see and feel products before purchasing.

Augmented Reality might help bridge this gap. Through AR, potential customers can see items they plan to purchase as a 3D model. This can be a gamechanger in the fashion and home decor industries, as customers are able to really understand the product before purchasing.

IKEA’s Place App is an excellent example of using AR, by allowing customers to test out furniture at their homes or offices before purchase.

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A primary concern when purchasing furniture is figuring out whether certain pieces fit into certain spaces. Shoppers also want to know whether or not potential pieces would complement existing furniture. IKEA Place solves these issues. Customers can simply point their camera at a location they’d like to put an item they’re thinking about purchasing, and then they can browse through IKEA’s product catalog and “place” it in their desired spot.

In the Place App, customers can see products from different angles, try out different colors, and ultimately find the most suitable piece for their space. By taking “try it before you buy it” to the next level, AI allows customers to see furniture where it would go — without having to actually move it there.

As you can see, augmented reality provides an immersive buying experience for your customers, and has a real potential to increase your sales.

 

Trend #5: Emphasizing sustainability

We’ve all witnessed the adverse effects of global warming and climate change, and as governments become more proactive in conserving the environment, consumers are also becoming more conscious of the environmental impact of their purchases.

According to Shopify’s Future of Commerce Report, approximately 50% of customers prefer to purchase from brands that demonstrate a clear commitment towards sustainability.

Simply put, promoting sustainable products boosts your sales. As more businesses adopt this strategy, it can be challenging to determine which brands are “greenwashing” their brands, and which ones are truly taking initiatives. Because of this, customers prefer visibility over companies’ supply chains.

They want to know where products are produced, how they’re distributed, and how they’re managed. Pangaia, for example, is a clothing brand that shares the science behind the sustainable materials they use.

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By honestly communicating your business’ impact on the environment, you have the chance to gain the trust of your customers and maximize your revenue.

 

Trend #6: Collecting zero-party data

As the trend of data privacy proliferates, businesses are getting serious about data protection. Last year, Apple launched iOS 14.5, which allows users to opt out of sharing data with Facebook. ecommerce brands have suffered since they can no longer access accurate data for ad targeting.

This iOS update drastically reduced ad efficiency and led to a big dip in revenue. As data from third parties like Facebook gets phased out, brands need to explore new ways to collect information about their customers.

The most effective way to achieve this is by collecting data directly from their customers — which is called zero-party data – and use that data to personalize their shopping experiences. Using zero-party data gives brands greater data control and makes them more self-reliant.

There are several options when collecting zero-party data. You can conduct quizzes, send email surveys, and add conversational pop-ups to your site. Post-purchase feedback from your customers will also allow you to get valuable nuggets of information.

 

Trend #7: Implementing voice search

Increasingly, voice assistants like Siri and Alexa have gained popularity and are becoming a big part of many people’s lifestyles. Customers are getting much more comfortable conducting searches with their voice, too. That’s why your ecommerce website should be optimized to allow users to search for products using voice — especially from mobile devices.

As more people adopt smart speakers, voice assistants are being used to take care of daily tasks and online shopping. This creates an opportunity for you to optimize keywords and rank for voice searches. At the bare minimum, you should make sure your address, phone number, and email are available through voice search.

As per Juniper Research, the total number of digital voice assistants will reach 8 billion by 2023, and the value of voice commerce will exceed $80 billion. That’s exactly why you should invest in technology to upgrade your conversational commerce capabilities.

 

Trend #8: Social commerce

Social media platforms used to be predominantly populated by Gen Z. However, due in part to the lockdowns and pandemic, even the Millennials and Baby Boomers are now highly connected on social media.

Social Media content creates opportunities for people to both discover and buy your products. It’s estimated that social commerce sales will reach $2.9 trillion by 2026. On top of that, around 36% of US social media users make direct purchases through social media channels.

Social media platforms are making a strong push towards social commerce. From Facebook Marketplace, to Pinterest boards, Instagram shop, and even Whatsapp business, brands should make sure to take advantage of these platforms.

Using data from social media, brands can also better understand consumer behavior and use that data to target people who are most likely to purchase the products. Each social media platform has its pros and cons, and there is no one-size-fits-all solution.

Deciding which platforms to target — and what kinds of communities you want to build — are strategic decisions that shouldn’t be taken lightly.

Ultimately, brands need to get creative while using social media. In order for your content to resonate with your audience, you must understand them thoroughly — and then deliver the correct message in their preferred language.

 

The power of inventory management software

Now that you’re aware of the latest ecommerce trends, you should try your best to adjust your business strategy accordingly — and reap the benefits! As the volume of your ecommerce transactions increases, it’s crucial to efficiently manage your inventory and deliver on time. These two factors can severely impact your reputation.

As a savvy business owner, you should use inventory management software to get real-time visibility of your inventory and on-time stock replenishment. By integrating this software with your ecommerce store, you can also gain valuable insights into your store’s performance and metrics.

If you’re interested in inventory management software for your ecommerce business, book a call with our Cin7 experts to see how we can help scale your business.

5 secrets to negotiating price with suppliers

Posted on | by Cin7 team | Leave a Comment on 5 secrets to negotiating price with suppliers

In today’s market, the supply and demand environment is more volatile than ever before. To make sure that you are not paying more for your stock than necessary, you will have to negotiate with suppliers more effectively.

It is said that the more you negotiate, the better the outcome for your balance sheet – but this suggestion should be taken with a grain of salt. After all, anyone can negotiate, but to successfully do it, it should be understood that the concept of supply and demand is the foundation for any negotiation. Failing to keep this in mind may end up straining or fracturing your relationships with suppliers, diminishing your reputation within the ecommerce community and placing your business in peril. 

So how should you negotiate with suppliers for your ecommerce business? There are myriad negotiation hacks that will help you secure the deals you seek and build your reputation as a shrewd business owner. The experts at Cin7 have created a list of five negotiating tactics to help you get better deals with a win-win outcome. Let’s get started!

#1 Research before negotiating with suppliers

Before you begin negotiations with a potential supplier, you must first conduct comprehensive research. Since they are selling you the product(s), they will have a thorough understanding of its market costs, demand, importance in the product value chain, and they know about your competitors. You should have a fair understanding of these factors too so that you bring credibility to the negotiating table and have a productive discussion. 

Doing the due diligence in researching a supplier, as well as their competition, will help you get an idea of market prices while keeping the sales goal of the supplier in mind. Based on your research, your proposal could involve promising long-term business, a shorter credit cycle, or changing the frequency of payments. Therefore, it is important to do your homework in order to proffer potential suppliers a fair, tangible, and mutual benefit in doing business with you.

Helpful Hint: As you research, be sure to note industry-specific terminology. Using it will help enhance your credibility and may be the difference in reducing the chance of suppliers quoting inflated prices.

#2 Calculate your purchasing needs 

Once you have a better understanding of the supplier’s business and its needs, your next step is to make sure your proposal fits both their needs and yours. 

To construct that proposal, determine the quantity of what you want to purchase, the order frequency, and the total cost of the purchases you would make during a given year. Having this information handy will provide you with more negotiation leverage and give the supplier a better idea as to how much potential you have as a business opportunity for them. The more your proposal meets the needs of the supplier, the more likely they are to offer you the discounts you seek.

Helpful Hint: Ask for bulk discounts. If you have a large order, you are in a great position to negotiate prices. Request to see their discount grids, as most suppliers use them regularly to manage sales. Be sure to refer to data gathered from your  inventory management software when finalizing your tentative order size. 

#3 Offer partial advance payments and deferred discounts

The next tip is to offer a partial or full advance for the first order. This is one of the best ways to establish trust and help the supplier decide to start working with you. You can always switch to their standard credit cycle down the line.

This also presents an opportunity to demonstrate a commitment to a mutually beneficial business arrangement. Specifically, when offering an advance payment, remember to ask for a discount on a total purchase volume after achieving a milestone, i.e., meeting a certain sales threshold. This is considered a deferred discounting mechanism, and it helps suppliers ensure that they are going to reach their sales goals before activating your agreed-upon discount. 

#4 Be honest and transparent

There are all sorts of reasons to seek a better price for products. For example, you might urgently need a product at a lower price to keep up with the competition or to have enough profit margin to meet your own sales goals. You might be a small business owner who needs a discount to remain profitable or a combination of any of these scenarios and yet not have much to offer in terms of value to the supplier. One thing you can offer, however, is full disclosure of your status. This is a gesture of good faith and will lay the foundation for a solid professional relationship. 

It is imperative that you do not use any deceitful tactics like negotiating under false pretenses or making hollow promises to get discounts from your potential suppliers. A business is only as good as the word of those who represent it, so make sure you are earnest in your negotiations. 

Helpful Hint: Sometimes a negotiation results in a stalemate. Don’t shy away from pausing a negotiation in the event of a failure to reach an agreement. Keep in mind that the number of sellers for the items you need may be limited based on your purchasing capacity and expected price range.

#5 Once an agreement is reached, get it in writing

One of the most important qualities of a good negotiator is to close the deal in writing. All too many businesspeople make the mistake of not signing agreements after they have completed the negotiation simply due to procrastination or lack of operational knowhow. This can lead to a situation where the other party forgets the details of your conversation, and hence, you may have difficulty reminding them. Also, if the decision-makers forget about certain details that you previously negotiated, you may miss out on the deal you thought you had secured. Therefore, it is in your best interest to finalize and ink the deal as quickly as possible.

Helpful Hint: You may use document signing tools available online to expedite the process and then email a copy of the signed agreement to the supplier. Place your first order reflecting the explicitly stated terms and conditions. 

With an inventory and order management system like Cin7, you have the option of connecting to your suppliers via a custom EDI connection streamlining future orders by placing them electronically.

In summary

Negotiating is a tough skill to master in any industry, but as an ecommerce business owner, you will put that skill into practice quite often, thanks to the shortening life cycles of various SKUs and sudden surges in demand for products. While you will naturally get better at negotiating over time, it is crucial that you apply the five tips to be a successful deal broker. Keep your eyes open for discount opportunities, negotiate your way into the best deals with your suppliers, and watch your ecommerce business thrive. 

Enter into supplier negotiations armed with accurate sales data gathered from a robust inventory and order management solution like Cin7 that updates in real time with your accounting software. Request a Cin7 demo today.