eCommerce retailers are constantly trying to figure out how to increase eCommerce sales. We are now living in an age of instant gratification, from on-demand entertainment to real-time messaging. Gone are the days of waiting a whole week for the next episode of your favourite show, or sending a handwritten letter and waiting patiently for a reply.
This impatience extends to online shopping, too.
There has been a dramatic shift in customer expectations and behaviours over the past few years, particularly since the beginning of the pandemic. People want to receive their items as quickly as possible, with 29% of online shoppers citing next-day delivery as their primary motivation to buy a product online.
To succeed as an online retailer, you need to make sure you are meeting the expectations of today’s shoppers at every stage of the buying process. They expect speedy service, so shortening the time from order to delivery can dramatically increase your eCommerce sales.
Research has shown that shopping causes a release of feel-good dopamine in the brain, giving us a psychological and emotional boost. The buzz of placing your order, combined with the anticipation of receiving the parcel as early as the next day, makes us feel happy — hence the term ‘retail therapy’.
Let’s explore how you can give your customers that feel-good factor they’re looking for, and how to increase your eCommerce sales by shortening your lead times.
What is lead time and why is it important?
Lead time is the length of time it takes from when a purchase order is generated to when the item is delivered.
There are different types of lead time, namely:
- Manufacturing/materials lead time – the amount of time it takes to have everything to begin production on the product.
- Factory and production lead time – the time it takes for your supplier to manufacture and ship the product to your warehouse.
- Customer lead time – the amount of time it takes from order confirmation to order delivery or fulfilment.
- Supply chain/cumulative lead time – the total amount of time from the inception of a product to the item being in the hands of a customer.
Longer lead times can result in higher costs, inefficient resource use, and excessive inventories, none of which are good news for your eCommerce business.
On the flip side, shorter lead times can lead to an increase in sales, happier customers, and a more efficient supply chain. This generation of shoppers have come to expect fast shipping as standard, and it can be very difficult for small businesses to compete with retail giants like Amazon.
Although next-day delivery is a complex obligation to fulfil, there are things you can do to make it easier.
How to increase eCommerce sales and shorten your lead times
There are some key tactics to implement to effectively decrease your delivery lead times:
Manage your inventory properly
It’s crucial to keep track of your inventory so you always know how much stock you have left and when you need to place an order. If you don’t, then sooner or later you will run into supply issues, which will have a negative impact on your lead time and could hurt your business’ reputation.
Keep the lines of communication open with your suppliers
Communication and collaboration is the key to success, so working closely with your suppliers and building positive relationships is important. It enables you to plan ahead and creates consistency in production and lead times.
Have a lead time contract in place
Following on from our last point, you should make sure that your contracts with suppliers clearly state your lead time requirements, including any penalties that will be incurred for late shipments or damaged goods.
Consolidate your suppliers where possible
If your product has to go through several suppliers before it’s shipped, then valuable time is being wasted along the way. Consolidating your suppliers will enable the supply chain to flow more smoothly, resulting in shorter lead times.
Source materials and labour locally
Ordering stock or having your product manufactured overseas will probably be cheaper, but you’ll almost certainly be looking at a much longer lead time than if you deal with local suppliers. This will reduce your shipping and restocking time, as well as avoid potential delays due to transport disruptions.
Order smaller amounts of stock more frequently
Putting in a large order every month can lead to longer lead times and dead stock sitting in your warehouse. Ordering smaller batches on a weekly basis will enable you to reduce your inventory and increase cash and availability. It also puts you in a better position to adapt to market demands and fluctuations.
Minimise production time
If you can outsource some elements of production, for example, the pre-assembly of your product, this will minimise production time and reduce your overall lead time.
Assess the efficiency of your shipping method
You might end up paying more for a different shipping method, but doing so can greatly reduce your lead time.
Automate your inventory management
You can shorten your lead time considerably by using an inventory management app or software. Instead of manually entering data, you can automate processes like stock-taking and supply chain management.
How To Increase eCommerce Sales With a 3PL Partner
If you have reliable suppliers and an effective process for managing your inventory, you will be able to scale your business without running into lead time issues.
It’s worth taking the time to assess your business and identify any opportunities to shorten your lead time. A few minutes here and there soon adds up and translates into more eCommerce sales.
Choosing ParcelPlanet as your order fulfilment provider is another step towards shorter lead times and more eCommerce sales.
Get in touch with us today to discuss your needs.