There is an old saying that “A person who never makes a mistake will never make anything”, and although we can’t deny the truth behind this claim, we would certainly prefer that it didn’t apply to business. This is why we have prepared a quick roundup to examine the 6 mistakes that eCommerce most often makes in logistics.
#1 Too small or too large warehouse
The most frequent mistake made when investing in logistics is renting a warehouse that is too large. Of course when starting out, it’s not unreasonable to assume that a business will maintain its current sales growth, necessitating a warehouse big enough to store whatever inventory might be needed. But it can become a problem if sales forecasts prove to be too optimistic, and the company is left paying for space it cannot use.
Of course, it’s just as easy to make the opposite mistake and rent a small warehouse. Taking into account the scale of business at any given moment, a smaller space could be a solution, but it’s a poor long term strategy. A small warehouse can quickly become outgrown.
So what kind of space would be suitable? In the case of a business that’s not easily scalable (and this is especially true in eCommerce), it’s worth considering outsourcing logistics. By relying on a third party to handle the details, a business can pay for as much space as it needs and still have room to grow.
#2 Chaos and a lack of procedures
When not operating on a large scale, it’s easy for a business to fall into the habit of handling the storage, packaging and shipment of its own inventory. One upside of this is that personnel on the ground can develop a “feel” for what is where. However, this type of knowledge is not based on any kind of objective strategy, and if someone gets sick or leaves for vacation, bottlenecks can occur. When a business begins to pick up this kind of personnel lack can suddenly become a big problem.
A general “mess” in the warehouse is a very common problem among developing eCommerce – says Rafał Szcześniewski, Founder & COO Omnipack. Therefore, it’s worth using the help of logistic operators who have the experience and know-how to help efficiently organise a client’s product processes — from the organisation of transport, through the acquisition of resources, and all the way to the preparation of adequate infrastructure in the warehouse.
It is also extremely helpful to use a system that gives products a unique code, and then “remembers” its location, quantity and even expiration date.
#3 Unfamiliar regulations
Another common problem is a lack of knowledge about any legal provisions that apply to the business. One example is unfamiliarity with hygiene and Sanitary Control requirements. It turns out that it’s not only the sellers of food or supplements who must take care of this type of authorisation, it often also applies to toys and other children’s items as well! Also, products considered to be higher risk (including the sprays and aerosols so popular in the cosmetics and pharmaceutical industries) require special permits. And it’s not just certification issues -- a business must prepare its warehouse and team to handle these and other dangerous products.
The staff must be trained, and there should be formalised instructions in the warehouse on how to handle the product, the so-called “safety data sheet” – says Szcześniewski. Sometimes it’s even necessary to dedicate special zones in the warehouse, but it all depends on what product we store and how dangerous it is – he adds.
More problems arise when young entrepreneurs are unclear about provisions for complaints about their subcontractors, aka courier companies, and neglect to assert their rights. This ignorance is unfortunate, as damage to the product during transport, for example, is a common occurrence.
A business needs to know that the courier company is obliged to accept a complaint within 7 days of delivery. Of course, a courier may very often challenge such an accusation. That is why the acceptance protocol is an obligatory element of every dispatch process. Such protocols are the industry standard for professional logistic operators. Often, photos confirming the condition of the package are also necessary, as well as a record of oversight.
Still, few beginner sellers realize that the implementation of e-receipts will help them save both time and effort. Since the law requires that you add a printed receipt for each shipment, why not automate this element by displaying a digital receipt at the time the order is processed? This is a simple solution, and ensures that in the event of increased orders, the fiscal cash register does not slow the whole process down.
#4 Not enough or too many employees
The lack of a plan for the beginning of a high demand season very often ends up with the owner spending 24 hours a day in the warehouse packing shipments. This is the time that could be invested in marketing and developing the business!
We ourselves have made these mistakes, that’s why we want to protect other online entrepreneurs from similar situations – says Tomek Kasperski, Founder & CEO Omnipack. – I still remember one Christmas Eve, which we spent with Rafał, delivering packages to various courier points and parcel machines.
An opposite, yet equally burdensome situation may be over-investing, i.e. employing too large a team with the thought that soon there will be a lot of work for them to do. Furthermore, you often forget about emergency planning – not being prepared for random situations, such as an accident, a computer crash or an influenza epidemic in the company. A small random case like this can cause company-wide paralysis.
#5 A lack of or just the wrong IT system
When running a small business, we often do not have the resources to invest in IT systems. It may even seem justified not to spend the money, if the current business size does not require any automation of processes. But over time, a lack of improvements can have a negative impact on an e-business, especially in financial areas and customer relations.
The lack of a coherent system of coding and tracking products can quickly end in mistakes when completing shipments for customers. However, not only will customers be dissatisfied with this state of affairs, but also incorrect product coding is a loss for any store.
Imagine that we order the same products from 3 different wholesalers. To stay organized, we should have our own file for every single type of product. Then at the moment when we register a lack of goods, we can order it from the proper warehouse. However, commonly a lack of IT systems and spare time creates a temptation to cut corners. It’s not uncommon for a store to copy files from a warehouse which means that one type of product may have up to 3 different labels. This will cause unnecessary orders and costs.
What’s more, an insufficient IT system doesn’t allow integration with eCommerce platforms, resulting in a delay in the transmission of information – especially for customers who are waiting for their package. A lack of tracking, which allows the customer to check the status of the order, ends with an increased number of emails or calls with questions about the shipment, and – an increased amount of work.
#6 Expensive packaging
A basic mistake is to assume that for the packaging to be attractive, it must be expensive. However, high quality doesn’t have to mean expensive. The basic rule is the elimination of poor quality – repeatedly wrapping a package with adhesive tape or stretch wrap will not improve its aesthetic appearance. Another principle – connected not so much with visual issues but rather with the effective securing of a shipment – is the awareness of how a “safety” material will behave during transport.
For example, if we want to secure a small product to the walls of the container to prevent it from bouncing, the proper type of packing material is essential. That is why an employee’s training is so important. Not infrequently (in good faith), for example, workers will wrap a fragile product with bubble wrap to strengthen the protection. But in reality, it does not change anything except to increase the consumption of materials and costs.
In conclusion … How do you keep from making mistakes?
The examples mentioned above are unfortunately common, especially in the case of eCommerce vendors who are just starting out. What are the consequences of these mistakes? Errors which were initially easy to repair due to a business’s smaller scale, soon balloon out of control and become expensive and time consuming to fix. Is it possible to never make mistakes? Honestly… no...especially when we are building our eCommerce from scratch and we are still learning. However, there are shortcuts that do make it possible to avoid mistakes, and that includes taking advantage of the knowledge of those who have come before you.