Case study: Order Consolidation for new startup companies
Today we will be discussing the process of order consolidation and how it can save costs for your business. Due to the high cost that new start-up companies often incur (through courier packaging, custom clearance and courier delivery) the first half kilo of a shipment is usually the most expensive for international shipments. Thus, new start-up companies need to ship packages separately in order to ensure each package adheres to a minimum charge in the first half kilo. In the forthcoming paragraphs I will be discussing Max's story and how he save money through the process of order consolidation.
Meet Max, an online merchant that sells a variety of products. He needed help with his international purchases. He needed to combine multiple orders onto one tracking number so that all his packages would be delivered together while still being in there original packages.
Max wanted to ship his orders from multiple suppliers in a single shipment, so that he could receive all the packages at the same time and reduce his costs. He also wanted the added benefit of his packages being checked before they were sent to the destination country. If this process was completed individually it would cost Max a fortune! Below, I will discuss three options that I offered Max.
Solution Options - Order Consolidation
The following options are the different solutions that I provided Max with:
- Basic Package Consolidation
This option is often used whenever we need to take out small items from there boxes and then put them together in one large box. If the items won’t fit in the largest box, then an even larger box from our warehouse is often used for the items. This allows for each of Max's products to be shipped in one box to one destination.
- Package Consolidation Using Original Shipping Boxes
This option is often used when our clients want to keep the original shipping boxes. This usually occurs when the package is ordered from a specialty store with very niche boxes that can be reused. It is also used if the buyer ordered for several people and wants an easy way of identifying which package goes to whom.
For this option, we consolidate with the original shipping boxes. Based on the size and shape of the boxes, an extra-large box from our warehouse can be used while the original boxes will be arranged in it. The costs incurred here is still less than shipping the packages individually.
- Package Consolidation To Avoid Customs and Import Duties
This option involves repackaging the items to avoid costly import duties. This usually applies to designer goods such as shoes, handbags and clothing or having boxes that are branded with popular designer logos. These boxes can be discarded while we repackage your items in plain cardboard shipping boxes. As a result, your declared invoice will indicate the packages’ value when the shipment is being inspected during customs clearance.
After we received Max’s request, we retrieved his packages personally to ensure that we obtained the correct items. We then sent him a notification with the weight, measurement, tracking number and the information of the supplier. These were done so that he could easily identify each package.
Since he was planning to resell the items, we kept the original product packaging. One problem that any buyer can encounter in this process is damaged packages. This usually occurs during the process of shipping the packages to us by the suppliers. Below is a snapshot of Max’s packages that we received from different suppliers:
After consolidating each of the packages using the most efficient method, we measured the new package and weighed it again. We also took a photo of all the items that were consolidated for greater efficiency.
We then shipped the consolidated items using Max’s preferred shipping method. The items were shipped to the specified shipping address.
- Lower Shipping Costs
Our order consolidation service significantly reduced Max’s shipping costs by up to 33%!
- Scheduled Delivery For Greater Efficiency
The order consolidation service translated to an efficient shipping method which helped in optimizing the entire supply chain.
- Enhanced Relationship With Clients
We helped to improve Max’s relationship with his clients by ensuring that his requirements and preferences were met. Our service ensured that order preferences were met, orders were accurately fulfilled and that continuous fulfilment strategies were executed. This led to an improved on-time delivery, improved purchase order compliance as well as shorter lead times that allowed for more frequent orders with a reduction in inventory carrying costs.
- Better Data, Accuracy and Detailed Cost Information
We helped to improve the accuracy of data that Max had at his fingertips. He was also able to see the status of his various orders in real time. This provided him with better, more granular information on shipping fees. Access to this enhanced data enabled him to make more informed decisions about his shipping and logistics choices.
- Reduced Risk of Order Errors
Our highly accurate order consolidation process ensured that mistakes such as wrong volume of product ordered, damaged products and late deliveries were avoided. We were able to service Max’s orders correctly and on time to minimise the risk of service errors.
- Shorter Lead and Transit Time
We reduced the transit time by reducing the need for separate pickups. We also ensured a shorter lead time from when Max placed his orders until they were fulfilled.
- Reduced Risk of Damaged Items
Our order consolidation service reduced the risk of items being damaged in transit. By reducing the transit times, the risk of items being damaged was reduced. We reduced the likelihood that the orders would shift in transit and this helped in reducing the risk of a product arriving damaged.
- Save time to focus on your core business
Max was able to tell us which suppliers he preferred to deal with and we were able to negotiate the order for him according to his requirements. We ordered the samples and sent him the photos of the samples.
After confirming the samples were ok we were able to send it on to Max for further inspection. If the sample didn’t meet his expectation we could communicate the recommended changes until the sample was as he required.
This enabled Max to focus on his core business and enabled him to achieve his order on time, with no errors and at a low cost.
- Profitable Bottom Line
By reducing the shipping costs, eliminating the need to build in-house expertise and reducing the risk of damaged items Max was able to save money and thus increased revenue for his new business.
In summary, with our expertise in all areas of order consolidation, we were able to save Max time, reduce the likelihood of error and the cost of error from the supplier. We also helped him to improve his supply chain, decrease labour costs and improve transportation times. By leveraging our expertise and utilising technology Max now conducts international trade efficiently and effectively for his new business.
Bonus: How Does Max's Small Business Work?
Passion: Max came up with the idea for slacklining and an adventure sports equipment business because of his passion for the outdoors and his love for slacklining. Not sure what slacklining involves, click here and see for yourself!
The pain point: The idea was born when he wanted to buy a slackline kit for himself but it was very complicated to buy as he had to buy different parts from a number of suppliers and many of these products could only be bought from overseas. This was a pain point for Max as he wanted simplicity. He wanted to buy the product from one website without the hassle of finding all the different parts himself.
Understanding the customer: As Max knew the slackline community and was a customer himself he could understand the perspective of a buyer.
A good partnership: Max partnered with Shawn who was leading the push in the slackline community and understood the market better than him. He concentrated on the sourcing of the product while Shawn marketed the product. This allowed them to move faster as they could focus on what they did best. In a short space of time they were able to test the products and get the final product to market. Max complimented sourcingbro in reducing the time in which it took to deliver sample product and bring the business to market
A niche market: the market for slacklining is very small which makes it difficult to solely focus on this. However, slacklining has many crossover sports (sports that are similar and help improve ability in other sports) so it gave Max leverage to bring the product to market.
Examples include skiing, yoga and rock climbing. Slacklining really helps build stability, strength, and balance. They needed to build and expand the market by offering workshops directed to people who were already into these sports.
They began workshops so that people could get an understanding of what slacklining was and help them improve their ability in a short space of time by demonstrating to them the correct techniques in a safe environment. Max recently informed us that "the feedback has been fantastic with people finding a love for the sport, the challenges it offers and the focus state it puts you in.”
Order consolidation provides many benefits to small buyers and it holds the key to growth and ultimate development of their businesses. It saves time and money and also maximises the efficiency of the ordering process. Feel free to leave a comment with any questions you have. If you would like help with your business please click here and contact us directly. We would love to help you!