Woman CEO in team meeting

Growth Story: Tara, $2MM/year Multichannel Superhero-In-Training

Your heart is beating fast.

You are sweating.

You have just received a whole list of foul-mouthed, negative customer reviews. One customer claimed they had received your orange peeler with bugs and rotting orange peels in the box. You try to reach your warehouse all morning and can’t get a hold of anyone. When you finally do, it seems like the error happened from someone returning the item in a sealed box and Amazon shipping the returned box out to a new customer. A headache and a huge breach of trust. What can you do? 

This story happened to Tara. She was a single mom with a disabled son who hit the jackpot with a kitchen product. 

Tara’s son often needed an extra hand or two doing simple kinesthetic tasks like peeling oranges. That’s when Tara invented the orange peeler. A device that peeled oranges easily, conveniently, and was disability friendly. 

Three years later Tara reached 2 million dollars in sales and was struggling to keep up with orders. She was shocked that her “little orange peeler” took off. She had been selling her product on Amazon and was having Amazon fulfill her most of her orders (known as Amazon FBA). Tara outsourced her manufacturing because she didn’t know much about business and was recommended by a manufacturer that would deliver straight to Amazon. She found this to be the most efficient way to be a business owner and a mother.

When Tara came to us, she told us of the horror stories her customers were going through when receiving her product. Because of Tara’s lack of initial business knowledge she was becoming quickly overwhelmed by all the moving parts as well as supporting her customers and even her family. We helped bring Tara from a Stage 4 maturity to a Stage 6. She is now grossing over 5 million dollars and can finally sleep at night! 

Take a look at Tiffany, Trip, or Tyler if you are not a star multichannel seller with a private label product!

USE SKUS PROPERLY

  • Impact: 7/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

    SKUs are resourceful for your fulfillment team, accounting team, and your customers. They help identify key characteristics of your product, allow reorder points to be noticed quicker, and help your warehouse team deliver the correct product to your customers. Choose SKU architectures that reflect what your business needs as well as what your customers are looking for. We suggest using SKU generators to help identify some of the key characteristics while you can adapt and mold them to your business needs.

   Tara did not come from a business background but she is intelligent and resourceful. Tara is an amazing leader who really trusts her team, she gave this task to her operations lead and they have met weekly to make sure the new process is working out well.

Not sure the best way to structure your SKUs? Take our proprietary Ecommerce Maturity Assessment and we’ll give you some tips!

USE A PURCHASE ORDER

  • Impact: 7/10

  • Timeline to resolution:  1 day of training with accountant

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 4

   Purchase orders help reconcile between sales orders and invoices. They allow the opportunity to compare the amount of your purchase to what you were invoiced. Purchase orders eliminate surprise costs when it comes time to pay your vendors, they help the warehouse know what inventory to expect and they help your bottom line.

  Tara hired an accountant long ago to help manage her abundance of money. She also noticed that her accountant really doesn’t care when extra fees get tacked on randomly. Because Tara didn’t know much about eCommerce before launching, she didn’t understand the value of purchase orders. She then assumed that her accountant was reconciling these transactions from the invoices to what was actually purchased. With help from Clearinity, Tara changed her margins significantly by negotiating extra fees and packing rates. 

COUNT YOUR INVENTORY REGULARLY

  • Impact: 6/10

  • Timeline to resolution: 4 days of training

  • Ecommerce Maturity Stage WITH: 5

  • Ecommerce Maturity Stage WITHOUT: 4

   

Counting inventory is a necessary task your warehouse should be doing quarterly. By counting your inventory regularly you can predict future “out of stock” statuses, check the quality, and assess your assets and debts appropriately. Amazon FBA counts inventory all the time; Tara had a small warehouse that only counted once per year. This is not conducive to most businesses because it lacks accountability for the rest of the year. There are other options, like third-party fulfillment warehouses (often called 3PLs) that do count more frequently and have better accountability measures in place. 

Tara would like to regain control of Amazon over her product. She has had mistakes happen before. She would like to know more about how she can do this without fulfilling herself. By evaluating her business needs and wants, she was able to ask the right questions when finding a new fulfillment service. 

Separating Goods and Products

  • Impact: 6/10

  • Timeline to resolution: 2 weeks

  • Ecommerce Maturity Stage WITH: 5

  • Ecommerce Maturity Stage WITHOUT: 4

Tara gained a lot of insight by simply adding more structure to her list of products. How? She grouped them by their various attributes! She sorted them by color, size, product line, and several other aspects.

At the end of the 2-week sprint we spent with her, she could make more strategic decisions about what products to sunset, which to keep, and which to push during a sale.

Organize the warehouse in an efficient manner

  • Impact: 8/10

  • Timeline to resolution: 2 weeks 

  • Ecommerce Maturity Stage WITH: 5

  • Ecommerce Maturity Stage WITHOUT: 4

Organizing a warehouse is important for both the customers and your employees. By organizing for your business needs, the customers receive faster shipping times with less quality issues. Your employees are also grateful that they are not spending time searching for inventory. 

Again, Tara understands that Amazon is doing this to some extent (well, Amazon does A LOT of this actually). When evaluating her business needs, she found she needed more communication and more of a personal touch to her own warehouse team (again, she eventually closed that and went to a 3PL instead). Tara felt better after investing time in organizing the warehouse, which also gave the customers a better experience.

Build a team AND a process

  • Impact: 8/10

  • Timeline to resolution: 6 week leadership course 

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 4

Tara actually knows this very well. Tara understands the needs and wants of her employees while guiding them to the production and fulfillment of the business goals. Tara leans heavily on her staff to keep the ship moving but in a way that no one feels burdened.

With our leadership training, she was able to clarify her communication with her employees and change the dynamics of how they worked on a daily basis.

Add technology for long-term success, not short-term wins

  • Impact: 3/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 5

We don’t want more pain in the end. After investing a process with your team, it’s time to invest in some technology to help yourself stay organized. Short term wins are instant gratification; it may feel good now that you have a process and an understanding team on your side but until it can be managed appropriately it won’t matter.

Tara is growing rapidly. She needs to regain control over her business from Amazon and diversify a bit. Implementing technology means that Tara can see the bigger picture of all working parts in one place and under her control. For Tara, she didn’t need much else, just a tune-up of her current software.

Understand COGS and the relationship to inventory

  • Impact: 7/10

  • Timeline to resolution: 1 day of training with accountant 

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 4

Because Tara didn’t know much about business, she hired an accountant and it’s been going great. Tara will show this little piece of the article to her accountant as support that they could improve the process. 

In short, Tara needed to work on bringing her products onto her balance sheet at the right cost. We helped her sort out if that was supposed to be buy cost or landed cost, FIFO vs LIFO, and several other factors besides. 

Write SOPs

  • Impact: 6/10

  • Timeline to resolution: 2 Weeks

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 5

Writing down your standard operating procedures is the best way to mitigate errors and ensure a communicative environment for your staff. Standard operating procedures, or SOPs for short, should be reviewed and updated often. Doing so helps facilitate training and cross-communication between your departments. It is a quick way to evaluate efficiency as well as keep everyone informed of expectations. 

Tara takes a few days to train her admin to help write some SOPs and now Tara sees fewer inventory mistakes occurring every month.

RETAIN CONTROL OF YOUR COMPANY (IS AMAZON GOOD FOR MY BUSINESS?)

  • Impact: 10/10

  • Timeline to resolution: 1 month

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 4

Amazon FBA is an appealing option for many small and new business owners. Unfortunately, you are a small fish in a big pond in Amazon’s world and that means you won’t have the highest quality of care when it comes to customer service, communication, and product quality control. Moving to a 3PL system can be much more advantageous for growing businesses. 3PL companies, provided they match your business needs, may offer a more personal interaction without sacrificing the high-quality fulfillment methods. 

For Tara, this was a clear deciding factor to move away from Amazon and diversify a bit when she realized her inventory problems were stemming from her fulfillment warehouse. Since moving to a 3PL fulfillment model, she increased her sales, has better support in her warehouse, and her customers also have better service. 

So What Now? 

We hope that Tara’s top ten learning lessons helped you look at your own business from a new perspective. Here at Clearinity, we acknowledge that this is a journey and not an overnight fix. Start at your highest-impact changes and begin there. As always we are here to help you along that journey and continue to push for your business to reach its highest potential. Reach out to us and stay tuned for more tips and tricks.  Not sure where you’re at? Start with our Ecommerce Maturity Assessment!