Blog

How to Survive the 2017 Postage Rate Increases

Postage rate increases happen every year, much to the displeasure of online retailers. Postage is a large part of the costs of doing business in the ecommerce world, so inflation of that cost is rarely welcomed. Of course, the costs are justified: fuel, salaries, and administrative overhead increase every year, as is the nature of those things. But what can you, an ecommerce retailer, due to survive the 2017 postage rate increases? Let’s take a look at the changes and what we can do about them:

2017 USPS Rate Increases

Changes per carrier

As is customary for this time of year, all three major US carriers have announced rate increases. These changes usually take effect in January or February, with some occurring as soon as December of the previous year. Comparing the changes for each carrier is important since it may affect which carrier’s services you’ll choose for a certain shipment type.

USPS

The United States Postal Service’s upcoming rate changes were announced by the Postal Regulatory Commission back in October (PDF link). Most postage rate increases will be effective as of January 22nd. Here are the highlights from the PRC plan:

  • Priority Mail and Priority Mail Express rates are increasing at an average of 3.66%.
  • First Class Package rates are increasing an average of 4% due to changes in weight bands.
  • Parcel Select Ground is going up an average of 2.7%.
  • Global Express Guaranteed will be an average of 5% more expensive.
  • Commercial Plus discounts are decreasing an average of 4.5% across Priority and express services. CPP will now reflect an average 16.8% discount from retail prices.

Note: the PRC announced plans in 2015 to eliminate Commercial Plus Pricing completely by 2017. While that hasn’t happened yet, they haven’t said anything about delaying or canceling their plans. We may still see that happen before December.

FedEx

Federal Express began filling us in on their 2017 plans in September and continued to update their rate guide over the months leading up to the new year. Detailing every change would be quite the essay, since FedEx has over 50 different surcharges for domestic and international services. To save everyone time, here’s a quick overview of what’s happening this year:

  • Business and express rates are increasing at an average of 4%.
  • Dimensional weight calculations are being revised, and will now divide dimensions by 139 instead of 166. This will naturally cause calculated figure to be higher than before, leading to higher rates.
  • The residential surcharge is increasing by 5.1%, while the surcharge for using the Home Delivery service is up 6.2%.
  • FedEx Express’s fuel surcharge will now be revised weekly instead of monthly.
  • The various surcharges imposed across service levels are increasing on an average of 10%.

Most rate and surcharge changes are already effective as of January 2nd. The only listed exception at this time is the new fuel surcharge system, which goes into effect February 6th.

UPS SurePost truck

UPS

Last but certainly not least in our rate hike roundup is the United Parcel Service. UPS competes directly with FedEx, so changes to their postage policies will feel very similar. These postage rate increases are already effective as of December 26th, 2016, with the exception of the new fuel surcharge system. Here’s a quick overview of what’s happened for 2017:

  • Business and express rates were increased at an average of 4%.
  • The surcharge for residential deliveries was increased by 4.6%.
  • Dimensional weight calculations have been revised, and will now divide dimensions by 139 instead of 166. This is identical to the change that FedEx applied in January, and will also lead to higher rates.
  • The Additional Handling Surcharge increased 3% and now applies to packages over 48 inches in length, instead of 60 inches, for Air and International shipments.
  • Ground, air and international fuel surcharges will now be revised weekly instead of monthly, just like FedEx Express’s surcharge. It will also take effect starting February 6th.

Batch picking and shipping

What to do?

Now that you know what postage rate increases are occurring and when, but what is there to be done about them? Fortunately, ecommerce retailers do have options to minimize the impact that these cost hikes have on their bottom line. These tips are very quick to implement, and can reduce your costs even more than is needed to offset this year’s postage rate increases:

  • Diversify your carriers. Far too many retailers only ship using one or two shipping providers. Not only should you be comparing rates between the big three (USPS, FedEx, and UPS), but you should also consider other providers like DHL Express and regional providers like OnTrac and LaserShip.
  • Compare rates for every shipment. It may be a general rule that USPS is cheaper for small and light packages while UPS is the best choice for heavy ground shipments. However, the rates are constantly changing across the board, so it would be reckless to assume without double-checking. Use a multi-carrier shipping solution like SKULabs to compare rates before you buy your postage – you might be surprised by which service comes out on top!
  • Keep your other fulfillment costs low. Review your costs per order fulfilled. It’s not just the product and postage – factor in your employee’s paid time, how many hands touch the order, how long it takes to process, and other material costs like packing material. You may be able to improve your margins by optimizing your fulfillment process or packaging per shipment. Even going paperless will shave off some cost!

Fulfilling Orders with your Smartphone

Fulfilling orders with a smartphone

Smartphones are everywhere today. Over a billion Android and iOS devices are in use around the world today, and more than two out of every three Americans own a device running a mobile OS. There are obvious reasons for this mass adoption: smartphones and tablets are easy to use, and they are capable of doing a lot. Their fast, intuitive touch-based interface make even complex computing tasks easy for a wide range of people.

Smartphones also have great potential in business and commercial environments, thanks to their portability, wireless capabilities, and ease of development. It is now very common to see smartphones and tablets in point-of-sale, mobile payment, inventory and receiving, and other tasks that benefit from mobility and intuitive interfaces. But what if a smartphone or tablet could be used in order management and order fulfillment in place of a desktop?

Scanning Order Items

Your method of verifying the contents of a picked order likely falls under two categories: you either use a paper packing slip with the items marked off one by one, or you might use a desktop computer with software that helps confirm that the order was picked accurately.

While either method may be working for you, there are some pros and cons worth considering. Using a packing slip frees you from your computer and allows you to take an item list with you into your warehouse or store. However, there is no way to confirm with 100% accuracy that you have picked the correct items every time. Meanwhile, the desktop route alleviates that accuracy concern, but restrains your ability to freely pick orders on your feet.

Using a mobile device with the right software platform gives you the best of both worlds. A mobile picking interface would allow you to pick orders on your feet, without having to return to a computer to make sure the order is picked accurately. The order checker from SKUlabs allows you to verify an order item by scanning its barcode; you’ll receive instant feedback for each scan, letting you know if the scan was correct and marking that item off of the order.

Shipping Packages

Ecommerce shipping is an industry that has improved by leaps and bounds in recent years. The advent of web applications and fast server communication means that there is no longer a need for small businesses to drive their shipments to the post office or pay heaps of money for shipping software solutions.

However, most of today’s shipping solutions require the use of a desktop or laptop computer and a direct connection to the printer used for shipping labels. While this method does have its benefits, it restricts where you are able to pack and process orders for shipment. Unless you invest in a dedicated shipping area with a computer and printer in place, you may be stuck processing orders in a less than ideal space, like an office desk.

Fortunately, there are better alternatives. SKUlabs includes shipment processing in its order fulfillment interface. This means that as soon as you are done picking and packing an order, you can quickly and easily set up a shipment and print a shipping label right from your smartphone or tablet. We support any printer that is set up on a Google Cloud Print account, so any printer in your office that is configured will be able to print your shipping labels and other documents.

Mobile devices are quickly taking over the business world. It’s time that the order management and fulfillment industries caught up with the times, and SKUlabs aims to lead the way.

5 Wholesale Inventory Management Tips for Ecommerce Distributors

As a wholesale distributor, you face unique challenges that other ecommerce businesses don’t. Your orders are larger, your daily shipping volume is greater, and your long-term customers are more demanding. Your wholesale inventory management solution needs to be up for the challenge. Here are some tips to turn your warehouse into a lean, mean turnaround machine:

Wholesale inventory management

Centralize your sales channels

Most wholesalers take orders through several separate channels. Many only take orders by phone, email, or fax. Others have a wholesale shopping cart where approved accounts can place orders online. Some ecommerce retailers have a separate price list available through their consumer-facing store. Those retailers tend to fulfill orders for wholesale customers alongside orders for retail customers.

With all the different ways that orders can be placed, how can you keep your wholesale inventory management system intact? The answer for many businesses is to reconcile inventory at the end of the day by counting orders manually. As you can imagine, this can take up a lot of time in a work week. On top of that, there’s a large margin for errors when manually adjusting inventory.

Fortunately, there is an easier way to consolidate your multichannel orders for your wholesale inventory management needs. By using multichannel inventory management software, you can bring all your orders together. Connect your shopping carts, marketplace listings, and even your direct sales together. As goods are purchased, inventory is deducted, and can be synced to the other channels if needed.

Reserve inventory for sales orders

Few things hurt wholesale sales more than running out of stock. Even if you offer backorders, many retailers would have to cancel and seek an alternative. However, you don’t have an infinite supply of everything you sell. You also can’t predict every order and their volume before they are placed.

There are still ways that you can reduce overselling and being forced to turn away sales. One simple method is to reserve inventory for orders as they come in. This allows you to keep track of the inventory quantities that are available for sale in addition to the total on hand. If the free count reaches zero, you’ll know that it’s time to stop sale until new inventory comes in. You can even synchronize that free inventory count to your sales channels instead of the total on hand counts.

Keep on-hand inventory at a minimum

Many wholesalers have been bitten one too many times by out-of-stock episodes. They may respond by ordering much greater amounts of stock than they really need. Often, this ordering method is encouraged by suppliers that offer attractive bulk discounts. However, while overselling can certainly harm profitability, overstocking your on-hand inventory isn’t the answer.

On-hand inventory is, by nature, a decaying business asset. After you’ve paid for the goods, their value will only depreciate over time. You’ll also need to pay the costs to store the inventory until it’s sold, and deal with shrinkage as time goes on. Wholesale inventory management is all about lean, cost-effective stock control. Don’t dilute that by overstocking.

You don’t want to waste space and money sitting on slow-moving stock. To avoid these issues, calculate the demand of each SKU to determine your stocking needs and adjust your orders accordingly. Once you have your base requirements, stick to them! Avoid buying too much of any SKU, even when the quantity discounts offered by the supplier seem worth it.

Establish an inventory count schedule

Wholesale inventory management is often a balancing act for a warehouse team. On the one hand, you want to keep inventory accurate and reduce shrinkage. On the other, you don’t want inventory management to get in the way of actually running your business. That balancing act may tip you away from certain inventory tasks, such as counting stock.

Inventory counting is an important but painful process for any warehouse. Counting is the best way to keep your inventory accurate and to catch discrepancies. But no warehouse wants to dedicate the time or resources to pulling everything off the shelves to count them.

Luckily, there is an alternative method that makes inventory counting a more digestible task. Cycle counting allows a warehouse to count inventory in one small fraction at a time. Cycles are usually done on a per location basis, where a certain area of the warehouse is counted each time. By rotating (or cycling) through each location, you’ll be able to cover your entire inventory with less downtime and headache.

Calculate reorder points and set alerts

Wholesale inventory management is all about keeping a lean and efficient warehouse. But as we discussed before, overstocking and overselling can both cause real damage to profitability. Carry too much of something and you face depreciation. Carry too little and you risk running out of stock too soon.

To address these opposing concerns, it’s important to put together an inventory reorder strategy. Setting regular reorder points for each SKU can help you keep track of how much of each item you want to keep in stock, as well as when to reorder that item. But how do you calculate the reorder point for a SKU?

This area of logistics management is called inventory forecasting, and is a very complex and scientific field. Luckily, there are some simple formulas that can be used with some basic assumptions in mind. You can use historical sales data to figure out the average daily quantity that you expect to sell of a product. Multiply this average daily demand by your average lead time to receiving goods to calculate your lead time demand. With a combination of lead time demand, ongoing demand between reorders, and a safety stock amount, you can set a realistic reorder point for your catalog items.

How to Speed Up Order Fulfillment with Batch Picking and Shipping

Batch picking and shipping

Most ecommerce businesses pick and ship their orders using the same general workflow. A warehouse manager may start by printing out paper pick lists for each order waiting to be shipped. This paper slips are then taken into the warehouse for order picking. Once each item in an order has been picked, it’s handed off to the shipping department. The shipping crew then packs and weighs the order, then prints a shipping label.

The warehouse management industry refers to this workflow as discrete order fulfillment. It’s a simple and easy to adopt way to fulfill orders of any amount. This makes it a clear choice for ecommerce businesses that are just starting out and growing. But businesses that are facing an increasing order demand need a way to speed up their order fulfillment. If this sounds like your business, batch picking and shipping may be the answer.

Problems with discrete fulfillment

There’s no mystery to why almost every ecommerce business starts off with discrete fulfillment. There are no up-front costs outside of the bare necessities: all you need is a printer hooked up to a computer. From there, it’s a simple task to pick up a packing slip, read the items listed, and find them in your warehouse.

As simple as discrete picking is to adopt, it’s just as simple to find flaws in its efficiency. First, there is little to no verification of accurate picking. You have no way to know right away that the item you grabbed from the shelf is the correct item for the order. Sure, you can check and double-check from the packing slip, but that’s not 100% reliable.

There’s also no streamlining of your movement through the warehouse while picking discrete orders. A multi-item order may cause you to zig zag from one picking location to another as you move down the list. This may not seem like a big deal at first glance, but that extra walking around will add up to a lot of wasted time. Time is money, especially when it comes to order fulfillment.

The worst offense by discrete fulfillment workflows is at the beginning. Printing out paper pick lists ahead of time and sorting them by hand is a criminal time sink. It’s a chore that robs your business of productive time every day. The sooner you throw out the paper slips and switch to an automated electronic order picking solution, the better.

Barcode-based order picking

The first step to a more efficient order picking workflow, for most warehouses, is to implement barcoding. This simple switch will ensure that all your orders are picked with 100% accuracy. Order picking software can deliver instant feedback when an item is scanned. Your pickers know right away if they pulled the right items or not.

As we’ve already discussed, paper packing slips are your worst nightmare in order picking. The lists take too long to print out and organize in the morning. They also present way too high of a margin for error when verifying order items. Replace those slips with an electronic order picking solution powered by barcode verification.

Barcode scanning makes it easier to train new warehouse employees to start order picking. New pickers don’t need to learn through trial and error what each item’s SKU refers to. They can simply pick the line items and scan their barcodes to confirm they picked the right stuff.

Barcode-based order picking

The first step to a more efficient order picking workflow, for most warehouses, is to implement barcoding. This simple switch will ensure that you pick all your orders with 100% accuracy. Order picking software can deliver instant feedback when you scan items. Your pickers know right away if they pulled the right items or not.

As we’ve already discussed, paper packing slips are your worst nightmare in order picking. The lists take too long to print out and organize in the morning. They also present way too high of a margin for error when verifying order items. Replace those slips with an electronic order picking solution powered by barcode verification.

Barcode scanning makes it easier to train new warehouse employees to start order picking. New pickers don’t need to learn through trial and error what each item’s SKU refers to. They can just pick the line items and scan their barcodes to confirm they picked the right stuff.

Switching to batch picking

Ready to take your order fulfillment to the next level? Batch picking may be your business’s next big step. Batch picking is a process in which a picker fulfills several orders at once. This is done by grouping similar orders together into batches and handing each batch off to a picker.

As you pick items for a batch, you won’t need to walk to the same picking location more than once. Since the batch will often include multiple orders requesting a certain item, you can just pick the total quantity of that item needed. This is especially helpful for the many single-item orders that involve your top-selling products.

You can make batch picking even more efficient by using organized warehouse locations. With a location-based batch picking system, your pickers will be directed from one location to another. This ensures that they move through the warehouse in one smooth loop, rather than zig-zagging from shelf to shelf.

Once you’ve finished picking items for an order, you can ship all those orders at once. With barcode-based picking, there’s no need to double-check orders before packing and shipping them. That means that a batch is ready to be shipped as soon as it has cleared the picking process.

SKULabs offers an all-in-one batch picking and shipping solution. You can set up a unified catalog with barcodes for all your sales channels. Then, you can import orders from every channel and automatically sort them into batches. Try it out today and see how much time you can take back from your order fulfillment workflow.

Introduction to Serial Number Inventory Tracking

Serial number inventory tracking through barcode scanning

Inventory management is most often handled on a per-SKU basis. All units of a SKU are summed up into one large quantity. Sales, shipping, and receiving then deduct from that lump sum. This is the ideal inventory management solution for most online retail businesses. It’s fast, simple, and serves your warehouse’s needs without getting in your way.

But what if your business requires you to track individual units in your warehouse? This is something that even the most advanced inventory control workflows can struggle with. How can you track single units that are being lumped together under their shared SKU? The answer for many businesses is serial number inventory tracking:

Product serial numbers compared

There are many different types of product serialization that you may wish to track. Some are assigned directly by the manufacturer, while others may be given after production. Some retailers will even choose to serialize products themselves. This unique identification can be useful for tracking products through the production line or for warranty and recall purposes.

You handle products with serialization every day. Every cell phone on the market today ships with a unique IMEI. Every major electronic device, such as laptops and TVs, has a serial number printed on a label. Even the cash in your wallet features unique serial numbers. Some currency serial numbers are highly sought after by collectors.

When to use serial number inventory tracking

Whether to track inventory by individual serial numbers or not can be a tough choice. Retail business owners must decide if their inventory control needs mandate serialization. If that’s not the case, the drawbacks may outweigh the benefits.

Some retail niches are required by their industry to adopt serialization. If you sell laptops, smartphones, or other valuable electronics, you’ll want to keep track of those serial numbers. Records tying serial numbers to customers will be useful for warranty claims and product recall notices.

There are often legal requirements to keep record of serial number inventory. Vehicles, pharmaceuticals, and firearms all have legally required identification. If you sell these types of products, you’ll need to keep track of those unique sales and inventory.

Photo credit: mrbill (Flickr)
Photo credit: mrbill (Flickr)

Many retail situations are less clear in their need for serialized inventory. Some warehouses may choose to adopt serialization to better manage custom, made-to-order goods. Others may keep record of identifiers that are not legally required, but assist with customer support matters. Finally, retailers of vintage or luxury collectibles often consider the serial numbers to be a core part of the products for sale.

It’s important to identify a real need for serialization before you consider adopting it. Inventory management is much simpler without involving unique serial numbers per unit. If your business doesn’t benefit from serial number inventory tracking, you can avoid a lot of headache by skipping it.

How to track serial numbers effectively

Perhaps by now you’ve made the decision to put serial number inventory tracking in place. Next, you’ll need to come up with an effective workflow for your warehouse. Serialized inventory is something that needs to be tracked from start to finish. Ideally, you can track a serial number from the moment it is added to inventory to the moment it ships out.

Serialized inventory management starts when you receive new inventory. As you process purchases from suppliers and add the goods to inventory, you should record all the included serial numbers. From then, you’ll have a record of which serial numbers you have in stock, and can begin tracking them through your warehouse and shipments.

Some times, you’ll want to track serial numbers as they move through your warehouse. If your business involves product customization or assembly, keep record of where each unit is in the production process. This will give you data to help audit your workflow’s speed and effectiveness. If you have a large amount of serialized inventory, it may help to keep track of serial numbers by their location within the facility.

One common benefit of serial number inventory tracking is tying a serial number to a shipment. Keep a record of which serial numbers have been picked from inventory for each order. As the order is shipped out, you can tie the shipped serial numbers with the customer’s record. A database of customers and their serialized purchases can be invaluable when dealing with warranty issues.

To make serial number inventory tracking easier on you and your business, consider using inventory management software that supports serial numbers out of the box. SKULabs makes it easy to document serial numbers when receiving inventory, and scan out serial numbers when picking orders.

Start your free 14-day trial: (No credit card required.)