Build scalable logistics plans for e-commerce businesses

Recently, CBIP’s own Nick Bartlett was a guest on the EcomPartner Podcast. In Episode 23: Why Innovative Logistic Strategies Can Save Your Business From Spiraling Down, host Stefano Puddu and Nick discussed the relationship between supply chain disruptions and Amazon sellers, how to scale e-commerce operations, and much more. 

Here are the key takeaways.

What’s going on in China

Although much of the rest of the world seems to have moved on from COVID-19, but much of the East hasn’t. In fact, for those living in China and Hong Kong, the pandemic is still part of everyday life. And that means there are still some significant challenges for companies operating out of the region.

The Hong Kong-China border remains very disrupted due to ongoing, significant COVID protocols that require shippers to transfer freight from the mainland into Hong Kong. CBIP, for instance, has had to make quick adjustments to deal with the significant number of disruptions in the northeast part of the country like port closures in Shanghai and Ningbo. 

On top of all of that, China is still being hit hard by the pandemic, especially in terms of labor shortages. But it’s not all bad news: there’s likely a lot more positive growth coming in the second half of the year. 

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“Anyone looking to manufacture from a remote destination should certainly have someone that is close enough to what's happening on the ground. You need realistic advice about things to either avoid or to focus in on in a respective region.”

The variances across factories in southern China stem from restrictions on facilities related to provincial protocols. Thus, having the right partner to help businesses navigate the risks related to the changing landscape is crucial. 

There’s no substitute for on-the-ground experience and expertise, and putting in the work to understand your market and consumer base early on pays dividends. As time goes on, more and more people are choosing to explore other promising markets like Taiwan, Malaysia, and Vietnam — but the only way to ensure success is to get a realistic view of the marketplaces and norms where you plan to operate.

Shipping by air vs. sea

Trying to decide between shipping by air or sea? As outlined in the interview, it comes down to the economics of your product and the breakeven points for pricing. These will determine which mode of transport suits you best and, in turn, how to maximize efficiency throughout the shipping process. 

There are tradeoffs to each, but it’s also essential to keep an eye on developments in the industry. If massive, self-flying cargo drones become the norm, we’ll all need to go back to the drawing board.

What stands in the way of sustaining cash flow 

“Obviously volumes are really imperative. It’s probably the first crucial metric. Then, you also need to account for operating margins.”

There are two important factors to keep top of mind when it comes to sustaining cash flow: volume and operating margins. 

But besides these business basics, there are other key metrics that don’t fit neatly in an excel spreadsheet. For example, customers' needs play a huge role. Do they expect a product right away? Would they be willing to pay a premium for quick shipping? How important is free delivery in their decision to make a purchase?

It’s a difficult time to find balance. Inflation is disrupting prices for consumer goods, and the effects are felt everywhere. But before you go drastically raising prices, it’s worth taking a long hard look at where your customers’ expectations stand today and where they might be tomorrow.

The biggest challenges for today’s Amazon sellers

Moving forward, the role of a typical Amazon seller will change. The economics are also getting even more difficult. Let’s break that down. 

Amazon sellers are getting squeezed from both the percentage that Amazon takes plus the current inflated costs of freight. That said, the sellers who have a decent volume and good outputs will be able to survive. But what about the smaller players? They’re generally forced to play a waiting game while waiting for costs to come down.

In all likelihood, this will lead to a lot more aggregations taking place with bigger buyers in order to build efficiency at scale. Amazon sellers need to be wary of this and, if necessary, begin thinking about alternatives. 

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Need a resilient supply chain? Get an adaptable logistics plan

“A big part of our company positioning as a provider is that we believe all businesses and brands should be focused on having agile logistics, which means that they should know that they can change parts of the logistics program if they need to.”

The importance of staying agile can’t be overstated. It’s imperative to be proactive and keep on the lookout for solutions as you encounter new issues — and take action as quickly as possible.

This may, for example, involve utilizing satellite warehouses with different key locations depending on your peak season. That’s why having a network of on-the-ground, regional experts is a smart choice.

For instance, if all your volume is going to the US, there may not be a benefit of paying fees to ship out of an expensive or complicated region. On the contrary, if you are fulfilling orders to various countries around the world, then a strategic hub will pay off (even if the fees add up). 

Want to hear the rest of Nick’s thoughts? Check out the full episode here. 

CBIP gives your supply chain what matters most: options

Multi-channel selling is key to success in a competitive e-commerce environment. That’s why CBIP works to stay up to date on marketplaces around the world. We’re ready to formulate a custom plan based on your unique business needs and help you stay agile.

Our team of regional experts is ready to help you expand to new markets with confidence, all while integrating industry-leading technology across our operations. 

Whether you’re a first-time seller, an Amazon veteran, or simply looking for general advice on how to build a scalable global logistics plan, schedule a free call with one of our experts.