Business expansion is a sign you’re doing well as an entrepreneur. You’re getting more customers, more orders and improving profits. But growth can sometimes get you in trouble if you’re not prepared. For online sellers and ecommerce brands that are unprepared, that means failing to meet heavy volume orders.
Inventory shortage can lead to fulfillment delays, and fulfillment delays mean unhappy customers. When your business is receiving bigger orders, scaling your operations is the next immediate goal.
Why is expansion good for a business?
Some business owners may hesitate to take the next step because of the sizable upfront investment an expansion demands.
But scaling operations provides you with plenty of benefits, including:
- More sales: Expansion lets you take more orders without affecting operations, potentially increasing sales and overall profit.
- Larger order capacity: Growing your business helps you accommodate larger orders, making heavy volume orders more likely as customers choose you over smaller sellers with limited inventory.
- Growing your product line: Expanding your operations can mean giving your customers more products. Take advantage of the higher sales and increased traffic in your shop by offering more products.
- Cost-effective operations: Suppliers, vendors and third-party partners may offer lower rates and production costs because of your increased orders.
#NinjaTip: Your growing business needs the right partner. Ninja Van provides shipping and logistics solutions tailored to your current and future needs. Discover what we can do for your business.
5 logistics challenges when expanding your business
1. Inventory management
How you handle inventory management must change to accommodate greater demand. Different aspects of your inventory management can be affected, including:
- Warehousing needs: Handling a larger demand requires more storage space for inventory. A bigger warehouse space can be costly, depending on your warehouse providers and their location. Additionally, you need to handle more tasks, like sending your inventory and taking regular stock.
- Supply chain issues: The supply chain for a business seeking to expand must be more responsive. You need to get more raw materials or products to increase inventory or manufacturing. If your current supplier can’t meet your increased needs, it can lead to delays and disruptions.
- Inventory quality control: With more inventory to manage, issues with maintaining quality control will arise. It can be more challenging to take stock, check for damage and spoilage, and avoid discrepancies that can disrupt your operations.
2. An increased need in staff
As your business expands, you’ll need more people. But hiring more employees will mean hiring costs, including compensation benefits.
3. Shipping solutions
Your current order fulfillment setup may not handle the added workload from the expansion. If that’s the case, expect fulfillment delays, slower delivery times and unhappy customers.
These problems multiply during peak season and sales. On top of the added shipping logistics for orders, you also have to manage returns, exchanges and refunds.
4. Additional expansion costs
- Technology: Spend on inventory management software and data analyzing tools to predict and manage demand. This investment can also include costs to upgrade your website to accommodate the larger demand.
- Marketing: Business promotion never stops, especially with an expansion. This investment includes the costs of digital marketing, partnering with influencers and the costs of sales, discounts and loyalty programs.
- Other Logistical Needs: As your business grows, so will the costs of warehousing, transportation, inventory management and miscellaneous expenses, like ordering more packing supplies for order fulfillment.
5. Coordinating with partners
One practical solution for expansion is to outsource some tasks to partners. This can include service providers for warehousing, distribution and fulfillment centers and couriers.
But working with multiple partners can create issues with coordinating and relaying information to different stakeholders. It can be a logistical challenge staying on top of the different tasks while ensuring each partner aligns with your processes.
How a 3PL partner help overcome logistics challenges
1. Addressing inventory management challenges
- Warehousing solutions: Instead of dealing with multiple warehouses to accommodate your growth, 3PLs work with distribution centers to manage the warehouse space you need. 3PLs also help collect inventory, removing the need for you to receive inventory from your supplier and transport it to your warehouse.
- Supply chain solutions: 3PLs understand supply chains and strive to streamline the process for their partners. The right partner coordinates inventory deliveries with your supplier and handles the next stages of order fulfillment.
- Quality control: A reliable 3PL handles quality control measures and offers software that provides you with real-time monitoring, tracking and quality checks.
2. Outsource your skilled workers
When you outsource your logistical needs, you pay a fraction of the cost of an in-house team. Aside from the cost-savings, this partnership benefits your operations for many reasons:
- No hiring and training costs: Instead of hiring and training in-house employees, which take time and money, 3PL’s employees already understand logistical processes.
- Scalable workforce: As your e-commerce grows, your 3PL can handle additional business demands without disruptions.
- Better focus: You can outsource all or some of the logistics, leaving your team to focus on other tasks, like marketing and responding to customer queries.
3. Efficient shipping solutions
3PLs have large logistics networks that provide efficient and cost-effective transportation. After orders are packed, 3PLs handle the steps needed to get your customers’ orders to their doorstep.
Your 3PL can also manage returns and provide customer support, minimizing lost and damaged inventory while keeping customers satisfied with the efficient return processing times.
4. Minimize costs and upfront investments
- Technology: 3PLs provide software platforms for their clients. You can access the latest logistics management technology without paying for licensing fees.
- Marketing: 3PLs can provide services such as branded packaging and customized labeling to improve the customer experience and brand visibility.
- Other Logistical Needs: 3PLs provide solutions for the entire order fulfillment chain, providing business owners various ways to save on operational expenses.
5. Coordinating with partners
Your 3PL partner becomes your single point of contact, and they’re responsible for the entire logistical process. They work with transportation providers, carriers, suppliers and other stakeholders in the supply chain to accommodate your needs. Your business benefits from a seamless process that gets your customers’ orders delivered more efficiently.
Ninja Fulfillment is your partner for cost-effective business expansion
With the right 3PL partner by your side, you minimize the costs and operational tasks as you expand your business.
When you work with Ninja Fulfillment, you have an experienced team handling the heavy workload. We help countless Filipino online businesses expand their operations with logistical solutions that save resources, such as time and expenses.
We’re happy to discuss your plans for business expansion. Make Ninja Fulfillment your partner for growth!
