Stocking up to avoid stocking out? Think again

By Regina Baily
Published in Solutions
October 13, 2022
4 min read
Stocking up to avoid stocking out? Think again

A lot of merchants have the same strategy to stave off peak season snafus- stock up to avoid stocking out. This works well enough during some years, but with the 2022 peak season projected to be more hectic and pricey than ever before, we’d like to suggest some alternative solutions. Although stockouts can indeed be expensive, storage costs are proving to be at a premium this year in the face of inflation and climbing prices, so it’s more important than ever to utilize all the resources at your disposal to make smart calculations and maintain a business balance. Read on for our overviews of ways to save money whether you’re shipping or storing this holiday season.

Minimize shipping zones

The jury is in- an inefficient choice of 3PL provider can lead to hundreds of thousands of dollars in additional costs tacked onto your bottom line, leading to a situation where your business can struggle to scale. In this post-Amazon world where speedy, cost-effective shipping is not only a nice-to-have but rather the expected norm, long shipping distances not only translate to delays, but to extra costs.

Reducing shipping zones isn’t as difficult a task as you might expect. First of all, if you’re handling everything yourself through the in-house fulfillment model, you can already get more people on the ground by outsourcing your fulfillment operations. Although you maximize control by picking, packing, and shipping everything, boxes can quickly overwhelm your living quarters and have you struggling to keep up. What’s more, unless you live in an extremely central and well-connected locale, you’re far more likely to encounter situations where you have no choice but to ship to the costly and far-flung zones 6-8. The simple act of reaching out to a 3PL can go a long way towards reducing these unnecessary costs.

Estimate order volume with demand forecasting

Inventory planning, or forecasting, is the practice of using predictive analysis of historical sales data to estimate and make educated guesses about future customer demand for a product or service. It’s about far more than Googling how to manage inventory in Excel. This enables businesses to make better decisions regarding supply and the amount of inventory to keep on hand. It’s by no means an exact science, and will almost certainly never be 100% accurate. Because of the number of factors that can affect a customer’s willingness and ability to purchase a given product over time, the actual mechanics and techniques involved in demand forecasting can be quite difficult. It’s for this reason that many businesses use some sort of software or artificial intelligence to make the calculations on their behalf and track matters such as seasonality.

What’s seasonality, you may ask? Seasonality refers to changes in order volume throughout a set time. Seasonal products usually spike in order quantity at specific times of year (think about all the purchases made for trees, ornaments, and gift wrap in December!) but remain relatively low for the remainder of the time. That’s not to say, however, that you’ll only have to deal with seasonality if you’re selling items such as skis or bathing suits. Demand for all products waxes and wanes with the year. The holiday rush is one such example.

What is supply chain visibility?

The importance of supply chain management can’t be overstated. A good handle on it can mean the difference between getting your necessary materials on time, and being left in limbo for weeks on end. But what is visibility in supply chain contexts? Strictly speaking, it refers to the ability of parts, components or products in transit to be tracked from manufacturer to final destination. End to end supply chain visibility aims to improve and strengthen the chain by providing data to all stakeholders, customer included. Once manufacturers and merchants have the data, they have the information and knowledge necessary to take needed steps to handle any hiccups before they pose a serious problem, such as improving their physical distribution.

What is physical distribution?

The physical distribution definition is less complicated than you might think. Put simply, it refers to the delivery and shipment of goods from the manufacturing center, out to warehouses and distribution centers, and then eventually through delivery routes to the customer’s door. Meanwhile, supply chain management refers to the flow of goods and services, and refers to all steps in the process from the acquisition of raw materials to the final delivery. These terms are fairly similar, but do have slightly different definitions that it pays to be mindful of. Think of a square and a rectangle. Physical distribution services are a part of supply chain management distribution, but not all supply chain and distribution services are necessarily physical. Supply chain visibility benefits physical distribution by making sure merchants are able to see which geographic areas are struggling to meet order volume.

In conclusion

P2Pseller is dedicated to helping you jump these shipping hurdles as we draw nearer to the holiday season. Our unique and thorough algorithm helps you choose the absolute best fulfillment partner for last-mile deliveries and for fulfillment in general, making sure you choose a company that has the chops to help you avoid those costly zone 6-8 deliveries. We require our warehousing partners to provide the locations of all their facilities so you can make sure to choose businesses with central, well-connected locations. What’s more, our inventory tracking and demand forecasting software will help you make the smartest decisions possible right from the start. Register a free account with us today on our website or app to see exactly what we can do for you and the efficiency and long-term health of your ecommerce business, one optimization at a time.


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