Did you know that 63% of shoppers say the reason they backed out of a purchase was because the shipping charge was too high? Have you looked into your shipping costs and done everything you can to reduce them?
We bet you haven’t looked into inventory tracking. If we are right, then you are missing a big piece of the shipping cost puzzle.
By practicing effective inventory management, you can help keep your shipping costs down. Don’t believe us, that’s ok, keep reading and we’ll show you how.
Calculate Your Logistics Costs
Have you calculated your logistics costs taking into account both shipping and inventory costs? If not, you aren’t getting an accurate view of your logistic expenses.
This ratio of shipping and inventory costs can tell you if you need to reduce your shipping costs or reduce the amount of inventory you currently have on hold.
How to Calculate Your Cost
First, figure out your shipping costs for a specific amount of time. Then figure out what your average inventory numbers were during that same period of time.
Now, take those two numbers and divide your shipping cost by the inventory total. The number you get is the shipping cost as a percent of the inventory.
Accurate Inventory Tracking Helps Your Business
When it comes to online retailers, accurate inventory tracking has an overall positive effect on your business. This positive influence translates to a better bottom line.
Companies that accurately track their inventory tend to have better market feedback. This is because they have lower warehouse and customer service costs. They also have fewer out of stock items, returns, and mis-picks.
By reducing all of these, you have lower shipping and operating costs.
Reduce Human Error
One of the most famous idioms we have is “to err is human”, meaning that making mistakes is an inherent part of being a human being. But you don’t want to make mistakes when it comes to your inventory numbers.
So to fix this consider shifting over to a barcode and scanner system. This can significantly improve your inventory counts. You’ll see the results in the lower occurrences of “out of stock” items.
Sync Your Channels
Do you sell your products in more than one location? If so, how are you ensuring that the inventory counts are accurate from one channel to the next?
If you sync your channels, you no longer have to update the others when one sells an item. The first thing this will do is save you a ton of time, reducing labor costs.
The second thing it will do is reduce the number of times a customer orders an item, only to find out that it is out of stock afterward.
Reduce the Paper
Are you using two different sheets of paper for your pick list and the packing slip? This may seem small, but think about the amount of money you would save by only using one sheet for both?
When looking at inventory management systems ask if they let you customize your pick list. This reduces the number of steps to fulfill an order and the number of resources required.
Look to the Pros
Sometimes the best thing you can do is let the professionals handle the heavy lifting. By working with a company that provides warehousing and freight you effectively streamline your logistics process.
This means you are no longer paying top dollar for warehousing as you are leveraging their much large space. They also already have a system in place for storage, pick/pack/ship, barcodes, and archiving.
This lets you consolidate the process into one bill, reduce your overhead in-house, and utilize their expertise. You can also sync their system to yours, which reduces the lost productivity and training costs required in adopting a new system and software.
Location Is Everything
Now let’s assume you have more than one warehouse. If you aren’t tracking the inventory at each location, you may be spending too much on shipping.
Say a customer orders a widget. Instead of shipping it from the nearby warehouse, you ship from the further away one. This means a higher shipping cost for you. Then if you promised delivery by a certain day, the cost gets even more expensive for expedited shipping.
If you knew the widget was in the closer warehouse, you could have spent less, and probably not expedited it. This is because the closer warehouse would have gotten the widget to the customer within the promised time with regular shipping.
By knowing where your inventory is you can plan our shipments strategically. This will save you on logistics by not shipping products from further away than necessary.
Take Control of Your Inventory!
By taking control of your inventory management system, you will reduce your overall shipping costs. Inventory tracking is vital for ensuring that you have the right amount of product to meet customer demand at any given time.
When you can meet customer demand you have fewer returns, exchanges, and mis-picks. This translates to happier customers and lowers costs for your business.
Make the switch over to scanners so that you lower the rate of human error. At this same time, you can plan to sync all of your sales channels to give you real-time updates to all channels.
You can then also use this new system to create a single pick and packing list. This will save you on paper costs.
You’ve reduced shipping costs with inventory management, now contact us to reduce your shipping rates for even more savings.