Making money isn’t just about selling and sales revenue, it’s all about bottom line profit.
As they say in the real estate industry: “You don’t make money when you sell, you make money when you buy.” In ecommerce, we’d add: “you only make money when you buy and fulfill smarter than the other guy.”
Revenue pressures in ecommerce are intense. Winning the Buy Box is driven entirely by the race to rock-bottom pricing. Marketplaces and suppliers become competitors. Listings are matched almost as soon as they are posted. Tough marketplace penalties are levied for the slightest – often unintentional – infractions.
Top sellers know the key to defending – and expanding – your territory in today’s constantly changing marketplace comes down to one thing: the efficiency of your operations.
Online success isn’t just about sales. It’s also about margin – what’s left over after you buy and fulfill an order. The competitor with the best operational efficiency and resulting higher margins wins. It’s complex work, especially across multiple sales channels. Real-time responsiveness is an absolute necessity. There are thousands of decisions to be made – order routing, purchasing, shipping service levels, pricing and repricing, listing management – every day.
How to Beat Your Competitors and Dominate Your Category
The sellers who rely on spreadsheets, standalone repricers or entry-level marketplace, order, or inventory management software are going to lose. Those who want to win need to make it their mission to:
- Support as few processes as possible: Every area of your business – from purchasing to fulfillment – must be connected. True end-to-end integration provides the data centralization and data integrity that process automation requires.
- Decrease operating costs and lower prices: Because your system does the work that employees normally do, your business can be run for less than your competitors. Because your operating expenses are lower, and your net profit margin is higher, you can offer lower floor prices on the marketplaces.
- Increase sales volume and lower product costs: Because you can outprice your competitors, you will outsell them. Use this sales volume increase to negotiate lower product costs with suppliers. This will allow you to lower prices even further and completely dominate your category.
Choosing the Right Ecommerce Operations Software
Many merchants today work with several disparate software applications – order management, inventory management, catalog and listing management, shipping and repricing. While this approach costs less upfront, it slows down decision making and can increase operating expenses – putting your business in a highly uncompetitive position down the road. Ideally, you want these different systems and functions to be replaced with one unified platform – a single source of truth.
Change is something that most merchants tend to avoid. But there comes a time when what you have, no longer does what you need. With countless solution providers all claiming to be just what you’re looking for, finding the right replacement can be challenging. With so much noise and mis-information, it seems that avoiding a bad choice becomes more important than finding the right technology partner. Here are some questions you can ask to identify the companies who can actually help improve your operational efficiency.
Ensuring Data Integrity
- Does the platform contain all the modules needed for ecommerce operations: order management, inventory management, catalog and listing management and repricing in a single integrated platform?
- Is the platform fully integrated so data doesn’t need to be reentered at any point in the process?
- Does the platform support scanning for inventory receiving to ensure accuracy?
- Can the platform automate data exchanges from all of your suppliers?
- Can the platform allocate inventory by channel and automatically update all channels when an item is sold?
- Can the platform manage inventory across multiple locations including FBA and 3PLs?
- Can the platform provide visibility to inventory throughout the supply chain: on-hand, in-channel, in-transit and at all locations?
- Can the platform support complex operations like just-in-time cross docking, assemblies and kitting?
- Does the platform offer tools to reconcile inventory received across multiple shipment with purchase
Order Management and Fulfillment
- Does the platform support all ecommerce fulfillment options (shipping from stock, drop shipping, cross
docking, 3PLs and Amazon FBA, FBM, MCF and other programs) so you don’t need to replatform as your business evolves?
- Can the platform temporarily pull down listings when you don’t have inventory to prevent ordering and the
risk of overselling?
- Can the platform split orders and optimize each item in terms of supplier cost, fulfillment methods, shipping time or other criteria you set?
- Can the platform aggregate orders from all channels?
- Can the platform automatically create and verify purchase orders?
Catalog and Listing Management
- Can you streamline listing management by fully automating data exchanges with suppliers?
- Can you import product catalogs from suppliers and automatically create listings across all channels?
- Does the system automatically retrieve supplier price and availability feeds and instantly update listings
- Can the platform automatically remove listings for products restricted by the marketplace and block creation of new listings for restricted items?
- Can the platform automatically create new listings by matching other Amazon listings?
- Does the system provide tools to analyze supplier catalogs and determine which products are profitable to list?
- Is repricing integrated with supplier data feeds and adjusted based on total, actual costs – including the cost of fulfillment?
- Can the platform intelligently choose the lowest cost supplier and fulfillment method for every line item on
- Can the system automatically route orders to the vendor or warehouse to take advantage of location specific shipping advantages like negotiated shipping rates?
- Does the platform offer rate shopping among shipping options?
- Can the platform fully automate routine tasks such as PO issuance to allow for growth without adding overhead?
- Does the platform provide integrated Business Intelligence tools, reports and dashboards for forecasting and better decision making?
Implementation and Support
- Does the platform provide professionally managed implementation?
- Does the platform provide live training with your own data?
- What’s the platform’s online reputation for responsiveness?