🟣 Issue No. 14: Turn Your eCommerce Operations into a Profit Powerhouse

Hey, friends! Want to turn your eCommerce operations into a profit powerhouse?

I’m breaking down a few key strategies to help you streamline your logistics, boost efficiency, and turn fulfillment from a cost center into a profit driver. Whether you're running your own warehouse or working with a 3PL, the right approach can save you time, money, and headaches. Plus, I’ve got some automation hacks and tips for optimizing your supply chain to make sure you’re maximizing profitability.

Bottom line: optimize, automate, and scale smart to keep those profits flowing.

Keep reading…

On the Pod 🎧

Lastest episodes:

• Turning Operations into a Profit Center → Kunle Campbell
  

• How to Win this Q4 → Kunle Campbell

• How to Maximize Your eCommerce Marketing Efficiency with the PROFIT Framework → Kunle Campbell

• S9 EP54: Product Innovation Deep Dive: How to Develop a Best-Selling SKU → Kunle Campbell

• S9 EP53: The New Playbook for Scaling Health & Wellness eCommerce Brands in 2024 → Kunle Campbell

• S9 E52: From $10M → $20M: How Tiege Hanley Doubled Revenue While Staying Profitable → Kelley Thornton, CEO

• S9:E51: Ex-PepsiCo Strategist Unveils Brand Positioning Frameworks that Transform DTC Brands → Kathy Guzman

COMMERCE TIPS

How to Turn Your eCommerce Operations into a Profit Center ⚙️→💰

Running a profitable eCommerce business is about much more than just great products and clever marketing—it’s about operational efficiency. When your operations are lean, automated, and well-optimized, you’re turning logistics and fulfillment from a cost center into a profit engine.

Today, I’m going to break down how to streamline your eCommerce operations and boost profitability, drawing from the latest episode of the 2X eCommerce Podcast. Whether you run your own warehouse or rely on third-party logistics (3PL), these strategies will help you get ahead.

Warehouse vs. 3PL: Choosing the Right Fulfillment Strategy

When it comes to fulfilling orders, there’s a major choice to make:
Do you run your own warehouse, or do you outsource to a 3PL?

Both come with pros and cons, so let’s break them down.
Running your own warehouse gives you complete control over inventory, shipping speed, and packaging quality. You get the real-time advantage of adjusting stock levels as demand fluctuates. But there’s a catch: managing your own warehouse is expensive. Labor costs, tech investments, and space requirements scale quickly as your business grows.

On the flip side, outsourcing to a 3PL removes many of these headaches. A good 3PL partner takes care of the warehousing, picking, packing, and shipping, freeing up your time to focus on growing the business. The challenge here is picking the right partner; get this wrong, and you risk delayed shipments, inventory mismanagement, and frustrated customers. For many, a hybrid model (handling high-priority orders in-house, while outsourcing the rest) can be the best of both worlds.

Selecting the Perfect 3PL Partner

Choosing a 3PL is a major decision that can make or break your fulfillment process. Here’s a quick checklist to ensure you’re making the right choice:

1. Seamless Integration – Your 3PL should connect effortlessly with your eCommerce platform (like Shopify or BigCommerce), giving you real-time visibility over inventory, orders, and shipping.

2. Scalability – As your business grows, your 3PL should grow with you. Make sure they can handle your volume, especially during peak periods like Q4.

3. Transparent Pricing – Watch out for hidden fees that eat into your margins. Ensure you have clear pricing on pick-and-pack fees, storage, and returns.

4. Real-Time Reporting – Your 3PL should provide real-time data on order processing times and shipping performance, so you can make decisions fast.

5. Reliable Support – Things go wrong sometimes. You need a 3PL with responsive support to help you resolve issues quickly.

6. Shipping Capabilities – Evaluate their shipping speeds and whether they offer same-day or next-day delivery options. This can be a game-changer for customer satisfaction.

Mastering Supply Chain Optimization

A smooth supply chain is essential to keeping operations efficient, but it’s also a huge topic that often requires specialized knowledge to manage properly. Each aspect, whether it’s sourcing, inventory management, or supplier diversification, can be complex and, if done optimally, usually needs a dedicated specialist or even a team of experts. That said, here are the first principles you should understand to get started.

• Supplier Sourcing: Finding the right suppliers is a critical foundation. When you’re just starting out, you may be handling this yourself, but as you grow, you’ll need someone focused entirely on sourcing to ensure your suppliers meet increasing demand while maintaining both quality and cost control. This is where a dedicated sourcing manager becomes invaluable.

• Inventory Management: Real-time inventory tracking is key to avoiding stockouts and overstocks, both of which can drain your profitability. The right tools, like Skubana or DEAR Systems, allow you to sync inventory across channels and forecast demand. This process requires constant monitoring and optimization, so as your business scales, having someone or a team in place to manage inventory is essential.

• Supplier Diversification: Depending on a single supplier is risky business. A disruption with one partner—whether due to price changes or a supply delay—can cripple your operations. Diversifying your suppliers is a critical risk management strategy, and this often requires ongoing relationship management with multiple vendors to ensure a steady flow of products.

While these are just the fundamentals, each of these areas can make or break your business, and over time, bringing in experts to handle them is crucial to scaling effectively.

Harnessing Automation for eCommerce Success

Automation is a game-changer when it comes to operational efficiency. Here are six key areas you should automate:

1. Inventory Management – Tools like Skubana help automate stock level updates, notify you when levels are low, and forecast demand.

2. Order Management – Platforms like ShipHero can automatically route orders based on location and stock availability, improving order accuracy and reducing manual errors.

3. Customer Service – Automate basic inquiries like order tracking or FAQs through chatbots or automated email responses, freeing up your customer service team for more complex issues.

4. Returns Processing – Use tools like Loop Returns to automate the entire returns process, from label generation to inventory updates, making it simpler for both you and your customers.

5. Supplier Database – Platforms like Airtable can help you manage supplier data in one central place, making reordering and performance tracking more efficient.

6. Shipping – Tools like ShipAccel (shoutout to our sponsor!) automate the selection of shipping carriers based on rules like cost or speed, cutting costs while ensuring timely deliveries.

Outsourcing Non-Core Tasks for Growth

As your business grows, outsourcing non-core tasks like customer service and bookkeeping can free up your time to focus on strategy. For customer service, look for third-party providers who offer multi-channel support and can handle busy periods. For bookkeeping, services like Bookkeep or Bench can handle everything from basic accounting to real-time financial reporting, letting you focus on scaling the business.

Conclusion and Key Takeaways

Operational efficiency is a direct path to profitability. Whether you’re running your own warehouse or using a 3PL, optimizing your supply chain, automating key processes, and outsourcing non-core tasks will help you scale sustainably.

Remember, the key is to keep optimizing, keep automating, and scale smartly. If you found this guide useful, please share it. Until next time, stay efficient and profitable!

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MINDSET OF WINNERS

Mental Rehearsal: Train Your Mind Like You Train Your Body

Just like you go to the gym to build muscle, you can train your mind to perform better. Mental rehearsal is like doing reps for your brain. By visualizing key moments—whether it’s a pitch meeting, a difficult conversation, or a big presentation—you’re preparing your mind to act with precision and confidence when the time comes.

Michael Phelps, one of the greatest Olympians of all time, relied heavily on mental rehearsal. His coach, Bob Bowman, would instruct him to “put in the mental videotape” of his race every day. Phelps would visualize everything—how it would feel to dive in, the water on his skin, and even how the race might go wrong. This consistent mental practice helped him stay calm and execute flawlessly under pressure. “When I would visualize, it would be what you want it to be, what you don’t want it to be, what it could be. You are always ready for whatever comes your way,” Phelps explained/

Takeaway: Repetition sharpens execution. Just like in the gym, the more you practice in your mind, the sharper and more automatic your real-life performance becomes.

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