What is scalability?
This is important for almost any entrepreneur who wants to improve their business or start a new one. The whole point of scalability is to increase profits while keeping costs down. It seems simple enough, but there is a lot you need to consider to ensure you are doing it the right way for your business.
Is my business scalable?
It’s all about choosing the right business model. Think about your answers to the following 2 questions. Do you hire more people for every department whenever your sales increase? Do you have to spend more on your business to produce more output? If the answer to these questions is yes then you definitely aren’t scalable which means your business model should change. You don’t want to spend more money every time you want to expand.
How to scale my business?
To have proper scalability and reliability for your business start with the exponential growth model. Imagine for a second that your business is growing and your profits are increasing but your costs remain the same. This doesn’t happen right away, it does take time to get to this point but over time you will.
If you are just starting the business it can help you get investors as well. Scalability is much more attractive especially since the focus is always on what the profit margins will be. Many large companies like Google use this model and have done a great job of implementing it.
It’s important to invest in technology to help you achieve this level of success. For example one of the largest costs to any retail business is the fulfillment process. Consumers expect fast and free shipping. Omnichannel fulfillment services is the way to go to save you a lot of money and time. Depending on what business you are in there is a technology that can make things a lot smoother. It can be a ready-made or custom software made just for your business.
You want technology that will help you increase your output. Getting products to customers faster, automated warehousing tools to help you store, pack, and ship efficiently so you can accept more orders than before, and of course marketing technology that convinces potential customers to actually buy.
What is something I can use to achieve scalability for my business?
Automation is going to be a lifesaver. Many parts of your business can be switched over to automated software. Look at every part of your business and analyze every employee and system you currently use or want to use. You will find many areas where you can use these automation tools.
Whether it is something you will be implementing into an already existing business or a new one there is a cost associated with doing this. Once you are all set up and running you will see very little cost increases as your need for personnel and other office expenses will be less necessary.
How to scale my eCommerce business?
Although scaling can help most businesses, it’s incredibly beneficial to eCommerce businesses. About 60% of online shoppers won’t complete their purchases if taxes and shipping prices are too high. Over 50% of online shoppers take delivery speed into account when deciding to go through with the purchase. Almost 40% said if they faced poor delivery services they won’t shop with that retailer again and about 25% have canceled orders because delivery speed was too slow.
Although scaling can be quite difficult in eCommerce due to all the logistics requirements and implementation complexities, it’s worth it. There are some things you should do in order to be successful and grow.
No matter what you should be getting your name out there and it doesn’t matter if you have been selling products for a while or are just starting. You should always be marketing yourself. You should have a strong digital presence with a profile on every social platform. You should focus a lot on SEO. Make sure you offer special incentives which make your customers want to complete their purchase. All of these items can be done automatically as well through various programs saving you a lot of time.
2. Order Fulfillment
Order fulfillment is simply the storing of inventory, selecting and packing the items, delivering it to the consumers, and returns of the goods. Each of those components has multiple variants that can happen which makes this such a complex system. You can choose to do this in-house or through a third-party company. This is for both B2C and B2B. Getting this process right has never been more important than it is now.
If you are or considering doing manual fulfillment of orders, stop. That is a waste of time and resources. The entire process from start to finish can be done automatically. There are services that literally do everything from storing your goods, then does all the work to send it out to the customer who made an order and deal with returns. Amazon fulfillment is a pretty well-known one that many brands use. This is the best way the scale your eCommerce business. Make sure you use a company who can do the fulfillment but also the marketing and customer support as well.
How do I create the right fulfillment strategy?
You must thoroughly plan this out to ensure you put the correct systems and infrastructure in place. Keep the following in mind:
Think about where you are going to store everything and how you will meet customer expectations. Think about where most of your customers will come from to help you decide the best places to be located to save you money on the distance your package travels. You should consider urban fulfillment centers because it’s more affordable. This will allow you to ship faster and cheaper to major cities.
There are a large number of software services out there which allows you to integrate it with your system online. It can automatically manage all of your channels with a very low amount of human interaction. It also keeps track of all inventory and when something needs to be replenished.
It can definitely get expensive to offer it for free but you can take the average shipping cost and work it into the price of the item and offer free shipping. Another option is to have a minimum amount ordered to get free shipping. The key really is to have the option for them to get free shipping and for it to be 2 days. You will see your purchase rate increase with this especially since many customers use this as a deciding factor.
Finding the right model for your company should be based on the types of products you sell, how many orders you get, how you want everything to be managed, and more.
If you decide to do it in-house you do everything yourself with no third-party providers involved. If you are a very small company just starting out this is probably the way to go. Yes, you have complete control over everything and it can be less expensive for a smaller company. The problem is if you start out this way it makes it very difficult to grow without spending a lot of money on personnel and other items to help you get everything out. It can also take up a lot of time doing all the prep, packing, and shipping and eventually you will need to get some software help.
If you decide on the third-party route you save a lot of time by handing off all the responsibilities to someone else who has the proper experience to execute all your needs. Every company has its own unique services so pick one that works best for you. This helps you allow for more orders to increase profits, decrease investment, and save time. However, sometimes things are out of your control and go wrong. It can decrease customer satisfaction so you do need to be aware of what is going on at all times.
You can also avoid warehousing all together by doing drop shipping. You don’t ever see the product but instead just have it shipped directly from the manufacturer. It’s incredibly easy to do and requires very little money or development on your end. This really allows you to focus on customer relationships and marketing versus logistics. The biggest problem is that you have no control over anything including the product itself as you can’t do anything special for customers, the quality could be lower, and you don’t really stand out as a brand.
3. Customer Service
It’s a statistical fact that the more you sell the more complaints you will have. You need to be prepared to deal with customer complaints. Customers who feel that their problem is being listened to and helped tend to refrain from writing negative reviews. If you can help them, it will satisfy them and could keep them coming back. You can use tools like Chatbots to help with customer service complaints and even just simple customer questions. It also helps with scaling in that it can take on higher volumes of complaints and questions without you having to hire additional people.
All of these factors lead to scalability and reliability of your company. It’s all about putting the right system in place. The best people to talk to about your business and how you can properly scale it is companies like SDI who specialize in implementing technology that will allow your business to scale.