Fulfillment Center Data: The 2 Most Important Impacts on Your Bottom Line
Choosing the right fulfillment center and ensures you have the flexibility you need to grow your business seamlessly. Chad Buckendahl, Lime Light ’s Director of Analytics, owned and ran his own fulfillment center for seven years. He shares his insider knowledge to help you understand how fulfillment center data impacts your bottom line.
Expedited fulfillment reduces chargebacks
When running a risk-free trial or RFT, Time in Home is a critical piece of fulfillment center data. The quicker you can get the product in-home and in the hands of your customer, the less likely they are to cancel or chargeback. Over time, we started to see an important correlation; the longer the delay in getting the product to the consumer the higher the rate of chargeback, returns, cancels and generally dissatisfied customers.
RFT’s are impulsive purchases. It only makes sense that the longer a customer has to wait to enjoy this kind of product the lower their satisfaction with the product will be. It is critical to get the product into their hands as quickly as possible or else they simply lose interest.
This is the important connection between fulfillment center data analytics and chargebacks. I had a unique window into how fulfillment can influence your bottom line and therefore the importance of putting the right metrics and analytics in place.
Managing inventory with smart fulfillment center data
When launching a new offer with a specific CPA, the trick is being able to predict – to the best of your ability – which offer is going to take off and which is not. This limits your exposure to product and or ensures you don’t leave any potential revenue on the table by not being able to fulfill orders.
The moment you launch a new campaign you’re at your most vulnerable and may find yourself asking, “How much product should I order?” If the offer does not take off you are stuck with inventory. But that’s not the only risk. If the offer takes off, you still have potential problems. For example, you fund five thousand bottles of Product X and get a number of affiliates to pick it up. The product takes off and within two days, five thousand bottles are depleted and you have to shut off your affiliates. The affiliates then move on to the next offer and getting them back is like pulling teeth.
There’s always going to be that conundrum in the beginning of lighting up an offer. Suppose you’ve got a product offer that is taking off and your inventory gets misaligned because someone on your team (internal or external) makes a bad forecasting decision and doesn’t order enough product. You now have one-hundred affiliates running this offer and you’re out inventory. You have no choice but to pause that group of hard-earned affiliates. One-hundred percent of those affiliates are going to run other offers because that’s what they have to do to make money. Then when you get inventory back, it then becomes harder to convince them to come back – because there is a loss of confidence in your ability to ramp up the offer.
Having a really solid inventory management system is vital to ensure you know when to order a product in a timely fashion. Product inventory is one of your biggest variable expenses and being able to accurately determine and maintain appropriate inventory levels directly impacts your bottom line.
Looking for a new fulfillment center?
Here is a complete list of Lime Light’s integrated fulfillment center partners. They will ensure you have the data you need at your fingertips to run your fulfillment operation smoothly.