After our first interview with eBrands' supply chain expert in the wild, Warren, where we discussed what you can do to lower the manufacturing costs for your product, we’ve had several questions on what eCommerce sellers can do to reduce the cost of getting their products to the customer after they have left the factory. So we thought we’d go back and get Warren’s opinion on another major cost area for eCommerce sellers - transportation.
What are some of the most important things to do when considering how to ship your goods if you want to minimise costs?
Logistics often goes in this order…
• Air freight
• Ground freight
• Ocean freight
What that order is based on… is speed and cost.
There can be some differences depending on the situation, but typically air freight is the fastest and most expensive, and ocean freight is the cheapest and slowest. In terms of the environmental impact, air freight is also a much higher emitter of CO2 emissions (a measure of relative global warming potential). This means that using ocean freight is more cost-friendly and also helps you to limit the CO2 output of transporting your goods to the marketplace. The only thing that air freight is more competitive on is speed – and that means that as long as you forecast your inventory requirements well and plan shipments out carefully, you can remove both the financial and environmental costs of using air freight from your supply chain.
Outside of avoiding air freight, are there other ways to reduce your transport costs?
Whatever transport method you use - freight costs, as well as warehousing costs, are typically based on weight and volume. What that means for you as an eCommerce seller is that reducing these two factors should always be near the top of your supply chain to-do list. There are also some clever options on packaging to reduce both elements, which is often easier than redesigning the actual product. What options you use will depend on your product’s requirements and your manufacturer, so go and have a discussion with them about what is possible and also search for potential packaging sourcing companies that you can work with to deliver packaging direct to your manufacturer. This is not only good for costs but good for the environment, too. Lighter weight and less voluminous products mean potential reductions in resources used to make products, lower CO2 emissions per unit shipped as you can fit more of them into a container.
How do you future proof your shipping methods to make sure you’re getting the cheapest costs?
In a lot of parts of the world, the traditional methods of transportation are now being challenged by new initiatives - which may offer a better mix of lead time and cost. The infrastructure developments of the Chinese-led Silk Road Initiative for example will lead to greater consumer opportunity for a new mix of logistics solutions. As a result, it makes sense to regularly shop around to check for any new options that become available - and always remember: when looking for new shipping opportunities, keep in mind the linkage between time, cost and environmental impact.
