tag:blogger.com,1999:blog-66755554662390043012008-12-26T12:53:47.183-08:00Best practices in Free Shipping, Shipping Cost reduction, Warehouse and Returns management, Dropship Fulfillment and Margin optimization for Online Retail. Leverage our experience and have us convert your Logistics into a Profit Center.Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.comBlogger30125tag:blogger.com,1999:blog-6675555466239004301.post-52785563565786678082008-12-21T20:50:00.000-08:002008-12-21T21:01:14.469-08:00

Liberal customer return policies drive sales, no doubts. However, how nice is nice enough? Where is the line between generating extra sales and losing money? Here is a a simple framework to evaluate impact of your return policies on well-being of your business. Your return costs = product cost + shipping + marketing Product costs: half of your vendors don`t accept returns, others charge 15 %

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com4tag:blogger.com,1999:blog-6675555466239004301.post-87389380480052950102008-12-14T10:10:00.000-08:002008-12-14T10:58:35.398-08:00

It`s a well known fact that UPS and FedEx increase their rates every year for 6-7 %. They are not alone in this "beat the inflation game", freight companies do the same plus they have a few more unobvious ways to balloon your shipping costs without you noticing it. Let`s take a look at a typical transportation contract and how LTL companies can charge you more: Base Rate - Freight companies more

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-39358293434970741202008-12-01T13:50:00.000-08:002008-12-05T14:45:41.298-08:00

Economy 101 and common sense suggest that there are people out there willing to pay extra for expedited delivery. But can you profitably sell to these people? Does extra revenue bring you more margin or expose to potential disasters? As Christmas approaches do you want to go extra mile and offer 2nd day, overnight or special services deliveries? In my experience, most of the companies are

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-41303840778991714212008-11-28T09:17:00.000-08:002008-11-28T09:23:44.418-08:00

Most of the people who started e-commerce businesses were expecting to earn at least 35% margin. The reality is disappointing. To grow you need to price competitively; your fulfillment costs accumulate quickly and actual gross margin drops to low-twenties. But, can you keep high margins and grow? Many product categories can deliver 35% plus margins. For furniture, for example, reasonable COGS is

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-2552459471130699502008-11-23T13:24:00.000-08:002008-11-23T13:39:56.223-08:00

Stan`s article on Returns Policies has been featured in PracticalEcommerce (a leading online retail magazine). Here are some of the advices on elements of simpler and more effective return policies... If there is one thing that every online retailer hates and fears, it’s returns. Many great stores fight to keep return rates below 2 percent of total shipments. Those merchants work with the

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-2402122307583032132008-11-13T11:50:00.000-08:002008-11-13T12:38:09.325-08:00

We are in the recession. Consumer spending is decreasing and many experts expect bad times to last for at least next 12 months. Naturally, companies are looking for the ways to reduce burn and many of them are cutting staff. I want to argue that there is a better way to survive the stormy times and letting people go undermines your perspectives. 1. Numbers Let`s say your G&A is 9 % of sales (

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-79855383387802434552008-11-02T08:49:00.000-08:002008-11-07T22:51:20.798-08:00

It`s quite common to think of "damage in transit" is an inevitable part of the business and that little can be done about it. My experience is quite the opposite: 10 % of the vendors are responsible for 90 % of the damage and a couple of simple solutions can half your costs in just a few weeks. So, why damage is a big problem for some manufacturers and is not for others? First of all, much

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-18950207032655729422008-10-26T14:42:00.000-07:002008-10-26T15:43:47.933-07:00

If you ever reconciled your shipping costs on a product level - you`ve ineviteably seen situations when Chair A costs you $50 to deliver and Chair B of the same weight shipped from the same manufacturer only $15. These single incidents start happening daily as you grow. Shortly you lose control over your shipping costs and can`t tell anymore if you should be selling this product line at all.

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-16265836185037412762008-10-18T09:54:00.000-07:002008-10-18T11:29:44.527-07:00

How can we ensure we are being invoiced accurately at all times, are all the rules and discounts in place? These are some of the challenges every retailer faces, the solution really is to regularly verify your invoices and make sure we are not overpaying the supplier.When a supplier signs an agreement to fulfill your orders, it is important to ensure both parties agree to the set deliverables.

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-89459728039728728022008-10-09T18:56:00.000-07:002008-10-09T19:56:59.393-07:00

Every retailers challenge is to always keep his suppliers happy; the success of your business revolves around the supplier's ability to source products in a timely manner. Signing deal with a new vendor and further steps ahead to set up a profitable relationship requires a well structured set up, there are many ways to make the vendors job easy at the same time obtain the relevant info that you

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-27844189787352494532008-10-07T16:37:00.000-07:002008-10-07T16:45:59.274-07:00

Lost Sales is a bit of an enigma for every company. How can you know for sure how much revenue did you lose due to uncompetitive pricing and operational inefficiency. I want to share our way of addressing both issues. Uncompetitive pricing. COGS and Shipping cost reconciliation will equip you with data necessary to optimize your pricing. In another article on my blog I spoke about some of the

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-12463873511367454452008-10-02T08:56:00.000-07:002008-10-02T19:36:56.177-07:00

In any retail business having a concrete policy on returns is very important; this could ensure the loss is minimal due to returns.It is very difficult to consider all aspects of returns in your policies especially when one is selling multiple sku's that are different in nature from one another, there are however ways to derive policies based on the type of return.Returning a defective itemA

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-9624521216794380532008-09-25T02:47:00.000-07:002008-09-25T04:21:46.711-07:00

Returns management is a big challenge for any retailer; you always wonder how to ensure customers don't return the item. Well it's quite possible with a strong process - read on..In this part I want to share a little more specific steps to diminish returns. The aim should be to have a return rate of less than 2% for any type of sku in any given month. I want to discuss three different catogories

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-17853901836905494152008-09-18T20:56:00.000-07:002008-09-18T21:09:39.189-07:00

In the second part I`ve argued that most of the retailers call COGS is a sum of actual Cost of Goods Sold and costs of fulfillment inefficiencies (for some of which vendors should issue credit memos). In this part I`ll share some of the benchmarks and cost reduction practices for shipping costs. Shipping costs are likely to be your second biggest cost on P&L statement. They range from 10 % to 25

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-3053792868139209722008-09-16T11:54:00.000-07:002008-09-16T13:17:22.068-07:00

Purchase order is a basic component of the retail order flow yet flawless communication between you and your manufacturers is essential to reduce errors and be able to properly reconcile costs with your sales data. The format used to raise PO’s should be carefully reviewed; you could save a lot of steps in re-confirming the details of your order each time to the supplier. Let us look at two

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-20474522126429498702008-09-09T12:20:00.000-07:002008-09-10T11:24:12.113-07:00

Often you need to make a decision - buy products into inventory or dropship. In this article I review some basics of inventory management and share a couple of hints to help make this decision. Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-19980028054071611862008-09-04T16:32:00.000-07:002008-09-04T18:12:26.912-07:00

There are two most commonly used strategies to reduce shipping cost: negotiate volume discounts or shop around each time for the best price. While both strategies produce results consolidation is better one for rapidly growing online retailers. Strategy 1. Consolidation Do an assessment of your current shipping agreements. Are you shipping on your account? Using vendor`s accounts? Working with a

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-7407407529154055212008-09-02T10:29:00.000-07:002008-09-02T11:03:10.233-07:00

Claims as a whole could get very complicated if it is not done correctly. When we set up the process for the first time our recoveries were below 20 % of the product value. By identifying specific issues and reworking the process we have increased recovery to 35 % of retail price. Our damage rate was about 4 % of sales, so process improvement resulted in savings of (4 % * (35 % - 20 %)) = 0.6 %

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-80854431694949799572008-08-28T15:36:00.000-07:002008-08-30T15:25:21.524-07:00

In the first part we looked at a P&L statement and identified biggest cost saving opportunities. Now is the time to look into Cost of Goods Sold and share some of our best practices making it accurate. Cost of Goods Sold (COGS) - 59 % of sales When was the last time (if ever) you compared vendor invoices against the costs in your system? Were your expected costs close to the invoiced amounts? Or

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com1tag:blogger.com,1999:blog-6675555466239004301.post-12413812499478334252008-08-26T12:33:00.000-07:002008-08-26T12:55:34.878-07:00

It sounds counterintuitive, but reducing your shipping costs is in the shippers’ best interest. Lower shipping costs allow you reduce prices, your sales increase and so does your shipping volume. As a result, by giving you better discounts carriers increase their sales and total margins. Shipping contracts negotiation is never a zero sum game. It is a great opportunity to understand the other

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-54507401990008715372008-08-21T15:48:00.000-07:002008-08-28T18:46:03.598-07:00

You started a business to make profit, right? Buy for $50, sell for $100 and net at least $20 after all the expenses. Well, what looked good on paper is more complex in the real world. Suddenly, you realize that competitors sell for $90 and your costs are out of control. Let`s look under the hood of your business and tune it up. 1. Start with the P&L Profit and Losses statement is the ultimate

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-35376019502018295132008-08-19T15:18:00.000-07:002008-08-19T15:55:47.811-07:00

Have you realized that Canada is the 7th largest economy and close to California in terms of population? Weak dollar drives more and more Canadians to buy cross-border. So, unless your sales to Canada are about 10 % of your US sales – you are overlooking a significant opportunity. Here are three components of the Landed Cost (full price customer pays) that Canadian customers need to get from US

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com0tag:blogger.com,1999:blog-6675555466239004301.post-89371438598872025932008-08-15T13:06:00.000-07:002008-08-15T16:04:46.908-07:00

Most of the retail companies consider returns and damages to be unavoidable cost of doing business. Every return refused by the manufacturer is deadweight for a retailer. Good news is there are simple ways to reduce your return rate and recover some hard cash from the trash. 1. Prevent "negative value" liquidations Pre-calculate value of each return scenario; train your returns specialists on

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com1tag:blogger.com,1999:blog-6675555466239004301.post-77038056934374529142008-08-11T00:54:00.000-07:002008-08-13T12:30:51.238-07:00

Products damaged in transit tarnish retailer`s reputation. To make the matter more complicated - customer`s cooperation and help are needed to recover the damages from the carrier. We created a very efficient damage management system to reduce customer dissatisfaction and recover 40% of the retail value from carriers. In just 8 months our recoveries surpassed $300K. Efficient claims management

Stanley Arulhttp://www.blogger.com/profile/00998325537051643910stanley.arul@gmail.com0tag:blogger.com,1999:blog-6675555466239004301.post-1248642800708012562008-08-06T14:32:00.000-07:002008-08-25T11:50:42.849-07:00

Every retailer knows that customer conversion is critical. It costs you money to attract customers to your store and you want to do whatever it takes to have them make a purchase. Free Shipping is one of the well-known ways to make one`s purchasing experience smoother but requires per product cost info when applied to your entire catalogue.While product wholesale costs are usually more or less

Maxim Mironovhttp://www.blogger.com/profile/12295929673668988002max@optimalogica.com2