Getting big fast. It’s what many young startups want to achieve. To do so, they’ll need smart logistics to fulfill the sales pipeline with the goods that retailers have ordered. When the logistics get fouled up, the customer service desk lights up and cancelations fly in left and right. At that point, all hopes for building a great brand reputation and hitting the company’s optimistic growth targets for the year fall by the wayside.
Here are some ways that using logistics sensibly helps fuel business growth while avoiding problems.
Logistics Strategy to Handle Big-Box Stores.
When you’re getting into retail in a big way, your logistics strategy has to be forward thinking to help you pace ahead of the competition. Your sales team might be doing an impressive job getting meetings with the big-box stores and supermarkets like Costco, Safeway and Walmart, but if the logistics aren’t in place to deliver as the order volumes ramp up, everything will fall apart.
It’s quite possible that your company has only ever dealt with single retailers like Amazon where sending in a larger amount of stock in a single delivery handles most stock fulfillment requirements; at least for a few weeks, anyway. However, when dealing with retailers with hundreds or several thousand stores nationwide, when they make a serious commitment following an initial trial, you need to be ready to fil it. Delivery times must be fast, or they’ll cancel and chargeback their pre-payment too. Then you’re left holding the bag.
Expansion Growing Pains.
Once your company has grabbed as much of the local market share as possible, it moves state-wide and then to neighboring states, and finally, nationwide. That’s the typical, well-worn path that growing physical goods brands follow. The main factor that creates the growing pains is distance.
There’s a reason why Amazon has opened up numerous regional warehouses across the US. The closer their nearest warehouse is to both a major US Postal Service distribution depot and the national parcel couriers, the quicker their Amazon Prime deliveries will be. Speed is everything to them. And, so it is for new brands; realizing the need to cover distance for wholesale deliveries whilst still maintaining a service standard that matches the expectations of companies acquiring and stocking the product in their warehouses. It’s a lot to handle.
Use the Resource of Other Facilitators.
When your warehouse isn’t large enough to match capacity and you cannot find a suitable long-term lease for a larger warehouse, make other arrangements. Sometimes, a company needs to sub-lease half their warehouse because demand has fallen for their products and their rent is killing their bottom-line. Take advantage of that to expand your company’s storage and daily delivery capacity with faster inventory turns.
When packing goods in house and reaching a crunch point with space and capacity, look for partners that offer co-packing facilities nearby that can pick up the slack. Use the value of motivated partners in related industries that can provide complementary facilities and services to allow your business to scale faster. This applies not just locally, but also nationwide.
Finding a suitable new warehouse with all the right pre-existing zoning laws can take a year or longer even when working with specialized agents. Dealing with facilitators helps to bridge the gap in capabilities and facilities when nearing capacity to avoid a bottleneck between order volume and distribution. Find a way to make the logistics work for you, not against you.
Being Careful with New Product Creation.
When creating new products, it’s easy to get carried away after a handful of lucky product launches. There’s still a need to be careful about what products the company chooses to develop and put into full production and those it decides aren’t a good fit. Keeping a firm grasp on the details avoids a costly mistake.
Consider things like whether the product is a consumable; if it’ll be an oversized item for retailers to store and your company to pay to transport; if it’s likely to be breakable and what the failure rate will be. Shipping and careful handling of goods is a major concern as losses can mount up when a product isn’t as robust as necessary to withstand warehouse storage and transportation teething problems. A difficulty with one ill-conceived product could lead a major big-box store to cancel all orders with your company regardless of the fact the issues only relate to the latest product.
Ultimately, keeping on top of all the logistical details is crucially important if your physical goods business is to expand at a rapid pace. All companies eventually hit bumps in the road including unforeseen problems that they have to deal with. Having a good handle on both product development and logistical concerns, and how they are often surprisingly interrelated, ensures the company can weather any storms successfully. For ambitious companies, the logistics matter.
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