Smart Ways to Save on Inventory Transfer Costs

by Sarah Smith | eCommerce, eCommerce Fulfillment, eCommerce Strategy

When daily order volumes exceed 20 orders a day, most eCommerce retailers find positive time and cost savings through outsourcing their order fulfillment. However, there may be additional costs added to the balance sheet when inventory is transferred from its original location to the new fulfillment center(s). In addition to the expenses associated with freight, the inventory transfer process may require additional time for planning and organization. However, if you use that time wisely with careful planning– you can save yourself a bit of money.

Your inventory is business capital in the form of product.

Moving inventory from one location to another requires more than simply packing your items and loading them into a truck bound for the new fulfillment center. Moving inventory successfully requires the following steps on the part of the eCommerce retailer:

  • Preparation
  • Counting and Labeling
  • Packing
  • Arranging Freight Services
  • Shipment
  • Tracking

Tip #1: Start by Liquidating Dated or Slow Moving Inventory

 Many eCommerce retailers reduce their inventory levels prior to transferring to a 3PL. This is a smart practice that can help you save in more ways than one. Increased inventory levels will translate into more weight to move. Therefore, the larger your inventory, the more you will pay to move it.

Rather than incurring any unnecessary expenditures, thin out your inventory as much as possible before moving it to a new location. A site-wide “moving” sale offered to an exclusive group of loyal customers is a great way to show appreciation and build positive customer relations.

Tip #2: Get the Most Accurate Weights and Dimensions

After reducing your inventory, you will be ready to begin the inventory preparation that leads to counting and labeling and finally packing. Once your inventory is packed you will be able to take an accurate measurement of your weights and dimensions. Weigh each pallet using a pallet scale and measure the length, width and height of each loaded pallet carefully. Your freight provider will then be able to ensure accurate pricing for your shipment.

Tip #3: Provide the Exact Pickup and Delivery Addresses and Zoning Information

It may seem obvious, but when planning for domestic freight shipments you should be prepared to provide the exact addresses for pickup and delivery. A zip code is fine if you’re simply looking to get a ballpark quote, however the address of the origin is most critical. You should also note whether the addresses are zoned as residential or commercial. Be sure to provide the zoning information for each address when obtaining a quote.

Tip #4: Plan for the Peripherals

Peripherals are the extra items provided by carriers, that you may need to complete your inventory transfer. For instance, will a lift gate be necessary to get the load up off the ground and load it into the truck? Does the recipient need to be contacted to schedule the delivery time? Will the driver need to help the receiver move the shipment from the truck into a building? These are all “extras” that should be identified to get an accurate quote up front. Adding them after the fact can often result in extra charges and premium rates.

Tip #5: Provide Accurate Product Descriptions

In the world of freight shipping, the class of the merchandise is half of the determining factor of the price. Some products have very specific classes while others rely on measurements to determine the class. In either case, the product must be described in sufficient detail so that the appropriate class can be determined. Analyze the products you’re shipping to ensure they are classified correctly. Doing so can save you up to 50% on your duty fees. Ensure your freight complies with all customs codes and federal regulations (CPSC, FDA, FCC, DOT, EPA, PPQ, USDA) to prevent expensive fines and penalties.

Tip #6: Disclose HazMat Classifications

Shipping hazardous materials requires training and extreme attention to detail. Property damages and bodily harm caused by a violation of the laws and regulations governing the shipment of hazardous materials can result in penalties ranging from $110,000 to $175,000. If you are shipping products with a hazardous classification you must inform the provider and provide an MSDS and a Shipper’s Declaration of Dangerous Goods and an Emergency Contact with a phone number that can be reached 24-hours a day, and be prepared to respond appropriately.

Many eCommerce fulfillment providers offer an in-house freight solution. At Rakuten Super Logistics, clients have exclusive access to the SmartFreight service. SmartFreight includes a step-by-step freight plan that is customized for each retailer. The plan covers all aspects of freight management and movement. SmartFreight also includes carrier negotiation with companies such as FedEx and UPS to help mid-size retailers get the lowest possible costs on freight transportation.