Compete better, by shipping smarter!
Your freight forwarder should be working with you, to learn your business.
If you are struggling to understand how your competitors are selling so low, try not to think just about your bottom line purchase cost. There’s so much more to lowering your cost that involves smart logistical decisions.
For instance, a recent fact finding exercise with a page follower found that they were paying approx £3.00 per kg by using small courier/airfreight shipment methods. Those shipments were moving at around 150kgs per time, every couple of weeks.
So every 2 weeks, £450 would essentially be spent on Freight which equates to (Lets say 150 products, 1kg = 1 SKU) £3 per item exactly.
Most buyers, even new ones understand that a full container load of stock would dramatically reduce the costs, but never get looked into further until cash/storage and nerves are in an abundance! However it doesn’t have to be that way;
What about LCL?
LCL = Less than Container Load.
We’re going to stick with China as the main area of supply for this example although we can apply it anywhere.
Using LCL means you only pay for the space you use within a container. It’s a ‘consolidated service’ which only some forwarders have, but Every forwarder will say they have it. If they don’t have the service, they’ll buy it from someone that does (Like Westbound) and add a margin. That’s fine as some Freight agents are good at managing your business and should act as your logistics team rather than a supplier.
If you took say 2500kgs of the same product order, and it was FOB terms Shanghai/Ningbo/Qingdao/Shenzhen/Xiamen etc etc.... To any #AmazonFBASellersUK Door location, it shouldn’t cost anymore than £300 total. That’s now a tiny amount of £0.12p shipping per item instead of £3.00!
You’ve just increased your margin by £2.88 per item!! That’s HUGE!
By shipping 2500 items you’ve just earn’t an extra £7200!It doesn’t end there. Of course, it’s nowhere near as bad as splashing out for a 20ft or 40ft container and we’re aware 2500kgs of stock is going to hurt the hip a little more to begin with, but it doesn’t have to start immediately. As long as you understand what your margin should be up ahead, this is one of your first goals to set - build your cash up enough to get to LCL orders!
Make the Sea work for you - It’s a conveyor belt!
You’ll learn your selling trends how much to order and when, so in essence you don’t really need to move up to a whole container anyway. Every single week, from every single port, there is an LCL service departing. Shipping smarter by knowing when to order and how much to order means you can use the sea as a free of charge storage facility & conveyor belt.
You’ll have orders leaving every single week in small batches of 2500 kgs/ 2.5cbm whilst the first batch is hopefully almost sold, then the 2nd batch hits, then the 3rd and so on. You can adjust your buying when your sales increase but still not have to worry too much about hammering your logistical costs and storage needs (If you self store/distribute).
Let the sea work for you, and earn you every single penny it can. As always, our advice is free no matter who you use for logistics. However if you’d like Westbound to review your business more personally, we’d love to help so please get in touch by dropping us a message here on Facebook.