Business Guy that is scaling his business and is happy

Growth Story: Tyler, Million Dollar Dreams

Common Inventory Mistakes Multi-Channel Fulfillment Ecommerce Business Owners

You start in your garage with a product, some packing labels, and a frustrated wife. After a few months of selling on various marketplaces, you finally have enough traction around your product to finally move out of the garage and make your wife happy again! Yet, you are becoming overwhelmed with keeping track of accounting, operations, and inventory. What now?

That is where Tyler found himself when he reached out to Clearinity. Tyler was two years into his business. He was grossing around $800,000 in revenue and growing faster than he knew how to keep up with. He constantly felt like his hair was on fire, and knew he needed to make his business more manageable.

Before Tyler came to Clearinity he was selling clothing from a wholesaler and having Amazon FBA complete fulfillment of his products. He had some business knowledge but was too overwhelmed to continue learning about the things he didn’t understand. Tyler was frustrated and didn’t know where to start.

Clearinity helped evaluate Tyler’s business. By looking at his biggest pain point, inventory, we brought him from a Stage 2 eCommerce maturity to Stage 3. He is now on his way to clear 2 million dollars and is able to spend more time with his wife.

        

Maybe you are further along in your business than Tyler but still feel like you will have a premature heart attack from inventory problems, check out Tara, Tiffany, or Trip’s growth story. 

     Using SKUs Properly 

  • Impact: 8/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

A SKU  (stock keeping unit) not only helps you keep track of inventory that is selling well but it also helps identify key information that customers ask about the most. Using SKUs properly means architecting your SKUs to display specific attributes that are wanted the most from your customer. Additionally, they can help track your inventory more efficiently creating less “out of stock” statuses.

We helped Tyler identify what specific characteristics his customers were looking at in his products when they purchased. By identifying his popular items, and then creating a product-specific display of those popular items, he increased his sales as well as gained loyal customers. When he created a specific product structure display on his landing page with his most popular SKUs, his customers were able to find similar items and add them to their orders more easily. This in turn made his customers keep coming back.

Actually using a Purchase Order

  • Impact: 9/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 3

  • Ecommerce Maturity Stage WITHOUT: 2

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

 

Tyler has been a one-man show for a while now. Reconciling transactions takes time and resources that Tyler didn’t think he had. When we helped Tyler understand the value of using purchase orders, he is now losing less money every month from unaccounted fees and his warehousing has clear tracking of what was purchased.

 Counting Inventory

  • Impact: 7/10

  • Timeline to resolution: A week of research and switching products over 

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

Counting inventory sounds more tedious than it can be. If done monthly and correctly, counting inventory should be as normal as any other day in your warehouse. Many business owners do this once a year, and although productive, it doesn’t yield the same quality control or inventory control as performing counts quarterly. Counting inventory frequently allows you to assess your debts and assets; it also allows you to see early on any inventory problems that might arise if left untreated. 

Tyler ships his products via Amazon FBA. He never had a comprehensive view of his inventory counts because of Amazons frequent but unpredictable counts. Tyler was always playing catch up. With the help of Clearinity, Tyler found a 3PL fulfillment service that better suits his inventory counting needs. Tyler now is able to forecast his inventory needs now and is spending less time in out-of-stock status. 

Product Separation 

  • Impact: 6/10

  • Timeline to resolution: 

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

Separating our products into appropriate categories and subcategories allows your customers to recognize their needs in a product from a brand they trust. On the back end, separating your products allows for more accurate accounting methods. 

Tyler’s clothing line comes in various colors and sizes. It was important that he was separating his products by these subcategories. In turn Tyler regained loyal customers who not only enjoyed the shopping experience on his platforms but also were able to be suggested other like items from the products they had purchased.

                                 

 Organize your Warehouse

  • Impact: 7/10

  • Timeline to resolution: 6 months

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

Multi-Channel Fulfillment business owners have left their organization in their warehouses to Amazon. The benefit of this is often space and the “people power” comes at a lower cost. Amazon has made an enticing offer to small businesses just starting out like Tylers with their FBA model. They popularize the idea of a “hands-off shipping” approach. This approach allowed Tyler to get out of his garage but now is hindering his business growth. The downside to this approach is that Amazon may not have the customer support Tyler needs, may not communicate low inventory items, and cost you the control of your own fulfillment.

For Tyler, Multi-Channel Fulfillment through Amazon wasn’t the answer. We helped him scale into a 3PL or third-party logistics warehouse that he can trust and allows him the flexibility to control his inventory and the processes he needs for better customer satisfaction and business decisions.

Building a Team and a Process

  • Impact: 10/10

  • Timeline to resolution: 6 months 

  • Ecommerce Maturity Stage WITH: 5

  • Ecommerce Maturity Stage WITHOUT: 3

Many times our business owners have an amazing and powerful small team helping them grow. Often we see their power and amazingness falter because of a lack of process. Creating a team with a process is essential for maintaining productivity and efficiency. When creating a process, we suggest looking at what is already working and what is missing. Documenting your team’s already successful process helps boost team morale and it helps everyone know what is expected of them.

Tyler was a one-man show for a very long time, he just recently hired a partner to help with accounting. When we spoke with his partner we found out that he was not only doing accounting, he was head of marketing, he was customer service and he was playing personal therapist to Tyler whenever something went wrong in operations. After some leadership training, Tyler understood that they both must start creating processes so they could start building a team of people to handle the roles each of them was taking on. Now they have a small team of people helping each other and processes are clear in the event a team member leaves or would like to take time off. 

Adding Technology 

  • Impact: 8/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

In a world where instant gratification is highly valued, it is easy to see the initial potency of adding a technology to help you manage your inventory. Unfortunately, many of these eCommerce inventory management systems and software are not easy to navigate and can often be a waste of money and time if not implemented correctly.

Tyler was used to doing things on his own and figuring out any problems along the way on his own. When he came to Clearinity he had invested in software that didn’t meet his business needs. By evaluating his business and inventory needs we found him an inventory management system and helped him implement the technology. He now knows how to operate the system that gives him the tools he needs to keep growing even without Clearinity around. 

Understanding Cogs

  • Impact: 5/10

  • Timeline to resolution: 

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

  

Cost of Goods Sold ( or COGS ) allows us to determine our gross profit. COGS helps us identify the health of our business as well as know-how to price our products appropriately. At the end of the year, COGS can really have a major impact on your taxes.

Tyler struggled with when to account for his COGs. He believed once he made the product that he could write off his expenses. His partner who he handed his accounting off too disagreed with him and waited far too long to account thus losing track of valuable data. We helped them understand to account for his COGS when the product had been sold, allowing his cash flow to be more accurate.

   

Writing SOPS 

  • Impact: 5/10

  • Timeline to resolution: 1 Month for the most critical SOPs,  then monthly and quarterly maintenance

  • Ecommerce Maturity Stage WITH: 3

  • Ecommerce Maturity Stage WITHOUT: 2

Whether your team is new or is established, having standard operating procedures or SOPS help reduce mistakes and allow for team members to take time off without harming production. Often employees don’t know the full scope of work their co-worker performs day today, this is a problem not only for accountability reasons, it also means efficiency is lowered. Not having SOPS does not only harm productivity it also tends to lead to company culture issues as people never know their specific expectations.

Tyler and his partner were wearing the hats of many people in their company. When it came time to hire people, they had no idea how to communicate the expectations and processes to their new employees. Clearinity helped them with their workflows and in turn their new team is extremely happy. Tyler finally got to go on vacation with his wife! 

    

Retain Control of The Company 

  • Impact: 10/10

  • Timeline to resolution: 1 Week 

  • Ecommerce Maturity Stage WITH: 4

  • Ecommerce Maturity Stage WITHOUT: 2

Multi Channel fulfillment again 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 is much more advantageous for growing businesses. 3PL companies, provided they match your business needs, offer much more personal and quality fulfillment methods.

For Tyler, this was a huge transition point in his customer’s experience. It allowed for returns and faster shipping times. This in turn increased Tyler’s revenue and made him feel more in control of his quality of products he was shipping out. This also allows Tyler and his partner to manage operations and accounting more congruently.

So What Now? 

We hope that these top ten mistakes 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.