How Well-Managed Order Fulfilment Can Maintain Brand Growth During Recession

By Marina Vassilopoulos reports for Cloud9Fulfilment 

With inflation rates spiralling in the UK to average a 9% increase over the past year, many order fulfilment businesses are struggling to cope with rising fuel surcharges and shipping costs. These rising figures have arrived in conjunction with a housing crisis, long-lasting impacts from Covid-19 and the consequences of global conflict, such as the current war between Ukraine and Russia. Therefore, with a recession predicted to start by the end of 2023, if not earlier, it is vital to recession-proof your business.

Cloud9Fulfilment, a industry-leading expert regarding e-commerce online fulfilment services has resultantly utilised over 10 years of experience to provide their top tips on how to enable your brand to prepare for and survive the incoming recession.

The negatives impacts of missed forecasts – and how to deal with them

A successful business needs to accurately project sales figures and forecast peaks in customer demand. The consequences of failing to do so may impact your business’ operations, reputation and even growth.

Examples of failures include mismanaged inventory or failing to adequately test software, subsequently leading to complaints or questioning from your consumer base. However, while this might sound catastrophic, most companies are guilty of failing to successfully forecast sales with accuracy.

Whether your business is failing to use data-driven statistics, pursue the right course of action, missing relevant data or your managers are failing to coach strategically, there are several solutions to get your business back on track.

There may be ‘soft cost’ or ‘hard cost’ solutions, depending on the severity of missing a forecast. Soft cost solutions for a business that is failing to hit their forecast may include reassuring your investors and guaranteeing their confidence or boosting employee morale to bolster productivity. Alternatively, ‘hard cost’ solutions are more resolute – layoffs may be necessary, alongside reducing your hiring pace to protect the business.

Alternatively, a business that is overshooting their forecast will also have several ‘soft cost’ and ‘hard cost’ solutions needed. ‘Soft cost’ solutions to over forecasting may include reassuring your executive team and investors that you are capable of accurately forecasting, increasing your quotas and having to reaffirm your CFO/CRO relationship to ensure there is no stress on the partnership.‘Hard cost’ solutions could include pulling forward key hires and investments, putting additional resources into your team and sourcing emergency stock to meet consumer needs.

How to improve customer communications to maintain customer demand during a recession

One of the most valuable tools to ensure sustained demand and communication during a recession is increasing your marketing, enabling your business to stay at the forefront of your consumer’s mind. The impact of strong marketing is presenting an image of strength, leadership and determination – reassuring traits that will instil trust in your brand to attract custom.

Even is your business is struggling, projecting an image of stability is vital to generate further sales. As such, you should market to existing consumers before targeting a new audience. This method is cheaper and simpler, with marketing examples including offering exclusive discounts to previous customers.

In addition, you should promote consistent branding throughout your marketing for an engaged audience, which may be achieved by discussing several marketing strategies and the direction of your brand. Examples may include blog posts, newsletters, advertisements, emails and PR content, keeping your brand present and dominant within the market.

As the recession continues and individuals have less disposable income, you may need to alter your strategies. There are several ways in which you can do this, such as altering your business’ offering to retail essential items, reinforcing your online presence and restructuring your budget allocation for marketing. Attention to tone and shifting your key performance indicators (KPIs) to reflect the economic reality may also be beneficial, ensuring you are continuing to attract the correct audience to guarantee survival in periods of economic downturn.

How to maximise efficiency during a recession

Unfortunately, periods of economic downturn are an inevitable part of business – but implementing a plan to increase cost efficiency in such times will give you a higher chance of surviving, and even making a profit.

The first step to enable brand growth is examining your current resources, team, and the software solutions in practice. Does your software allow you to take inventory in a simple and concise manner, or is it outdated? By ensuring software is up to date, you can pinpoint any problems in the chain with accuracy and know your problem areas to target.

Next, you should evaluate your resources to determine which are the most valuable, deciding which software solutions and assets are most valuable to your brand and its continued growth.

Evaluating your brand will resultantly enable you to determine where cuts may be efficient. For example, if there are order fulfilment tools or licences used sparingly, these should be cancelled for an economic boost. Similarly, such an assessment may reveal if there are staff members that are not performing accordingly. You may find that refreshing their training may be an appropriate tool before conducting any layoffs.

Finally, you should take an outward look to assess the current market. Are there any new, innovative tools that will boost efficiency for your operational market? Has the rest of your industry abandoned the software you rely on due to its outdated features? Taking a step away to gauge what helps similar brands succeed may help you to flourish.

Ways to deal with rising delivery costs

Many small businesses find that shipping costs are one of their largest expenses, leaving some brands panicking as external factors, such as product shortages and supply chain disruption, cause prices to skyrocket.

Unfortunately, shipping is a vital expenditure for any fulfilment business. As a result, there are several ways in which you can trim the costs while ensuring shipping quality is maintained.These include:

1. Negotiate with several carriers, many of whom have pricing schedules that are reliant on volume – meaning the more you ship, the less you pay. Some carriers also offer e-commerce payment processing services, which may take some of the heat from smaller independent businesses or merchants.
2. Reduce the weight of your packages by using custom shipping labels, lightweight packing materials and packing your products in corrugated boxes to slash costs.
3. Use the right size of packaging to ensure you aren’t being charged extra for empty space, as your shipping costs are not only dependent on the weight of your package, but also the size. As such, a more streamlined container such as a poly mailer instead of a box may be beneficial, depending on the size of your products.
4. For those shipping products overseas, it may be worth looking into air freight rather than ocean shipping. The Suez Canal obstruction in 2021 has had lasting and significant impacts upon the shipping industry, causing prices to rise to an all-time high. As a result, it may be worth absorbing the difference in cost to ensure your products arrive on time, enabling on-time deliveries.
5. International importers may also wish to move their manufacturing location from China to a similar, viable alternative, such as Vietnam, where costs are lower. Many companies are reliant on China due to its abilities as a global manufacturing powerhouse, leaving themselves liable to risk due to over dependence on the country.

Inventory and supply chain management tips

Without adequate inventory and supply chain management, your brand may not be managing inventory effectively, resulting in additional costs that may be devastating in a recession. Such costs may include increased warehouse requirements, lost revenue due to stock or even loss of customers due to dissatisfaction.

As such, there are several ways in which you can improve your inventory and supply chain management structure, pursuing empirical or forecast strategies. An empirical inventory management strategy takes into account your sales history to evaluate future requirements, using past data to improve the future.

Alternatively, forecast strategy does the same as empirical strategy, while also taking into account macro influences. Such a style is vital for products that are subject to seasonality or irregular sales, such as holiday products or back-to-school supplies.

Once you have chosen the type of strategy required, you should assess current processes and find ways to improve them. One of the most vital areas to evaluate is your stocking processes, ensuring that you avoid overstocking and simultaneously avoid low stock, as items being out of stock can be damaging to your business flow.

Once you have chosen a strategy and evaluated stock, there are several ways to improve your inventory and supply chain management capabilities:

1. Utilise an ABC analysis of stock
2. Introduce calendar replenishment methods
3. Consider your reorder point method, or just-in-time (JIT) to forecast a minimum stock level
4. Pursue adequate restocking by ordering variable quantities of stock, replenishing low levels of items sporadically to meet changes in consumer demand
5. Evaluate dropshipping and whether this may benefit your business
6. Introduce the ‘First In, First Out’ (FIFO) method, which is particularly beneficial to brands or businesses that retail perishable goods, ensuring your oldest stock is sold first to avoid expiration dates.

Utilising the tips and tricks throughout this article can aid your business to survive a recession and future-proof your brand for any other periods of economic downturn. By being prepared for any downturns, your business can resultantly flourish in periods of economic growth, ensuring the continued growth and profitability of your brand.