micro-warehousing Archives

One rusted cog can derail your entire supply chain, impacting operational efficiency, resulting in decreased margins, lost revenue, slow supply chain velocity – and above all, decreased customer satisfaction. By optimizing your e-commerce supply chain, you can overcome these buffers, and return to maximum operational efficiency.

Before we get to optimization best practices to deal with supply chain kinks, here’s a brief overview of supply chain optimization.

Optimizing e-commerce supply chain: why it needs to be top of mind

Supply chain optimization is the process of fine-tuning your supply chain to remove any trouble spots so that it performs efficiently.

Although your supply chain might seem like an unsung hero that works behind the scenes, the success of your entire online business literally hinges on your supply chain.

Any disruptions in the supply chain i.e lack of visibility in micro-fulfillment operations, ineffective order processing, delayed or wrong orders, all impact the customers. And customers don’t want the constant worry of receiving the wrong or damaged products or delayed delivery.

Ever wonder what Amazon’s secret to success is?

The e-commerce leader owes its success to its advanced supply chain model. What began in Jeff Bezos’s garage give-or-take 25 years ago, with solely books as products, is today recognized as the largest and most efficient supply chain operation in the world.

Supply chain optimization: best practices to eliminate buffers

With fast and free shipping as a key driver for online and cross-channel purchases for the fifth year in a row, the biggest opportunity for brands and retailers lies in creating more efficiencies in the supply chain. (Walker Sands, award-winning marketing agency)

This is to say, a well-organized and efficient supply chain can expedite nearly all major e-commerce micro-fulfillment operations and distribution processes, ensuring that customers’ expectations are fulfilled. Let’s get straight to the optimization practices.

Automate your supply chain processes

It’s true we’re living in the age of smart machines, however, automating the supply chain does not entail bringing on board the likes of HK-47 (the evil robots from the Star Wars franchise) or a very self-aware Ava (Ex Machina).

Automation will help you increase employee productivity, reduce human error and costs, and increase operational efficiency. A report by McKinsey says automation is capable of accelerating the productivity of the global economy by between 0.8% and 1.4% of global GDP annually.

Here are a few supply chain operations you can automate:

Order fulfillment
Inventory management (including updates)
Payments and invoicing
Customer service
Picking and packing
Defining as well as tracking revenue and expansion goals
Using bulk actions to handle high-order volumes

As an example, Ohi’s inventory and order management platform gives DTC e-commerce brands actionable insights into SKU-level demand, enabling brands to automate functions for efficiency and savings. Ohi merchant partners have seen increases of up to 120% in repeat purchases, along with 28% higher conversion and 35% increases in lifetime customer value.

During the pandemic supply chain disruptions, brands like Nike realized the importance of automating operations. Nike, for instance, made a few important changes in its supply and decided to use radio-frequency identification (RFID) technology to automatically identify and track its footwear as well as some of its apparel. What’s more, with greater visibility into its inventory levels throughout its supply chain, the brand was better able to meet demand across its many retail/distribution channels.

Improve your delivery performance

Delivery performance is how successful the supply chain is at delivering products and services to customers.

In a competitive marketplace increasingly driven by instant delivery, customer expectations for delivery speed/timeliness are extremely high. People want to have everything delivered fast, and they have little patience for missing or late shipments. They have plenty of options in terms of marketplaces and other brands, so one delayed delivery can cause them to cancel their order and move on to your competitor.

One dilemma for DTC/D2C brands is that many aren’t capable of delivering orders with Amazon Prime Now-type speed. Here at Ohi, we’ve cracked the formula and are helping our brand partners offer ultrafast delivery via our micro-fulfillment centers. Meanwhile, Ohi’s latest delivery scheduling feature makes it easy for customers to schedule, track and even reschedule when needed – home delivery when it is most convenient for them.

All Ohi brand partners, including leading beverage, CPG, and beauty players – Olipop, Alkaline88®, Health-Ade, and SolaWave – now have access to the delivery scheduling option to help boost their conversion rates and customer lifetime value.

Monitor and interpret real-time data for on-going improvement

Only 6% of companies report full visibility on their supply chain. 69% of companies do not have total visibility. (zippia)

Having access to the right data from an analytics standpoint can help you make educated decisions for supply chain planning. Inventory turnover rate, order accuracy, time to ship, storage capacity used, and the average cost per unit for storage, inbounds, fulfillment, and shipment are all critical metrics to track, as they provide insight into which areas of your supply chain are thriving and which require improvement.

In fact, analyzing the right kind of data that can provide supply chain visibility in real-time will also help foster better risk management.

Staying in the dark and avoiding numbers never helped anyone; without real-time information, you will frequently find yourself looking in the rearview mirror and unable to respond quickly to dynamic supply and demand conditions.

Optimize for sustainability

Your first step is to analyze your entire supply chain process and identify which areas can be improved. Some of these elements will be easy to identify; for instance, delivery vehicles that consume a lot of fuel or wasteful packaging materials.

If you aren’t already, make environmentally-friendly packaging and instant delivery a part of your supply chain. Besides saving the planet, sustainability is also becoming an increasingly important purchase factor for customers nowadays.

For instance, here at Ohi, our instant delivery generates the least carbon emissions because we ship products from micro-fulfillment centers that are located very close to customers. Because we use bike/e-bike/scooter couriers and foot couriers whenever possible in densely populated urban areas, instead of vans or cars, our transportation carbon footprint stays small.

In fact, Ohi deliveries were shown to be 22x more eco-friendly than next-day air and 5x more eco-friendly than 3-5 day ground.

As for packaging, for many of our rush and same-day deliveries, Ohi uses eco-friendly reusable totes, minimizing the use of cardboard/plastic waste in our packaging.

A healthy supply chain is crucial to e-commerce success.

E-commerce top guns like Amazon and Walmart are not slowing down on innovation and growth – and the supply chain continues to be one of their most powerful levers to outcompete DTC/D2C stores and smaller retailers. Strengthening your supply chain is therefore all the more imperative if you want to stay relevant and grow your e-commerce brand in these times.

About Ohi

At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.

Do you remember life before the Internet? When parcels in the mail were a rarity sent by family members for Christmas and birthdays? As a kid, growing up in northern England in the late ’90s, I remember going into the town center on a Saturday with my Mum to buy new shoes, clothes, CDs and video cassettes, from brightly lit, exciting stores. The internet existed but not in a way that really mattered. Connecting to an old modem and watching pages load line-by-line wasn’t the best online experience.

When I was at university in the late 2000s, the use of the internet was prevalent, but I was still largely shopping in stores. When I did shop online, it was mostly through Amazon, who introduced 2-Day Prime shipping in 2005. For most other retailers, I was still having to wait up to a week for my items to arrive. Due to this inconvenience, I preferred to head to the store to get the item that day.

But today, I barely step into a physical store. Instead, I buy everything from weekly groceries to the latest sneakers on my phone with just a few clicks. I’ve become increasingly impatient — wait 5 days for an order to arrive? Forget it. Close window. See if Amazon has it available to be delivered the next (or same) day.

As my personal shopping habits have changed, I have started to wonder what must have changed behind the scenes to make this possible — how has the logistics infrastructure changed in that time, and what will it look like in the future?

An industry ripe for change

Strangely a lot of the logistics infrastructure hasn’t changed that much in the last 20 years. Warehouses, planes, and trucks are still the backbone of e-commerce holding things together behind the glamour of brands. Back when I was a kid, shopping in physical stores, the inventory was being held in large warehouses, built a long way outside of cities, due to their cost and size. Stores could request weekly or monthly deliveries to replenish stock by truck, so there wasn’t a need to move goods quickly. Lowering the cost of storage, not the speed of delivery, was the priority for these early warehouses. So long as inventory was held on low-cost land, in a place that was convenient, that was good enough.

Come the mid-to-late 2000’s, supply chains had to adapt to the growth of e-commerce, and of 2-day delivery. But the way they did so was to increase the number of trucks driving across the country. They added more capacity to truck routes, increased truck utilization and used air freight if the customer wanted something in two days.

Supply chains were still focused on optimizing shipping around the existing warehouse networks. Warehouses were still in Louisville, KY or Memphis, TN, close to the population centers of the US, but not really close to the people buying. It was a stretch, but two-day shipping was still possible from these locations, albeit it at much higher costs (both financially and environmentally).

Younger generations are the catalysts

Today though, millennials and Gen Zs have come of age in a world where everything is digital and instant. Instant gratification is the new norm. With the click of a button, we’ve been able to send messages to friends around the world, order food, taxis, even dog walkers near-instantly thanks to the wonders of e-commerce and social media. Two-day delivery (the realistic limit of the existing fulfillment networks) is no longer fast enough.

Larger retailers have already started to adapt to this change. Amazon, Walmart, and Target are moving to next day delivery. In the near future, they’ll move to same-day delivery.

This type of fast shipping is great for consumers who tend to shop at one of these three websites. But, what about those who want to order organic makeup from their favorite online store?

Or, what about those who prefer to buy their clothes from an online brand that only uses the finest, sustainably sourced wool?

We’ve stretched the existing infrastructure network as far as it can go — and other direct-to-consumer (D2C) companies don’t have the resources of Amazon to build their own infrastructure to meet that shift in expectations.

What does that infrastructure need to look like to democratize same-day delivery for all brands? My belief is the existing warehousing infrastructure is no longer just stretched; it’s broken. Brands need something different to meet the ever-changing expectations of consumers. For this reason, I founded Ohi to build the next evolution of the logistics network.

The Ohi solution

For over 60 years, the physical infrastructure supporting our shopping habits hasn’t changed, but as the leading micro-warehousing platform in the United States, we’re changing what it means to be a warehouse.

By repurposing unused space within cities, our platform enables brands to position inventory really close to their customers, enabling same-day and next-day delivery for a lower cost than 2-day delivery from existing warehouses.

Today’s millennials and Gen-Zs are not just driven by instant gratification, they’re also increasingly environmentally conscious. This summer, people showed that they are willing to fight for change by staging global protests and demanding that politicians take action on climate change.

Often, instant gratification and environmental consciousness seem to be in conflict with one another. The faster you need to move consumer goods, the more likely you’ll need to do so via plane, which is much worse for the environment.

The more online shopping is broken down into single orders, the more packaging is used to move the goods across the country. I’m sure you’ve received more than one package to fulfill one order from Amazon, right?

Sadly, the faster the delivery gets, the more damaging to the environment it typically is. We’ve therefore put sustainability at the heart of our new platform, aiming to build something that isn’t just serving the needs of consumers today but will serve consumers sustainably for the next 60 years.

As I look back to how my shopping habits have changed, I realize the infrastructure enabling that change has reached a breaking point. Existing warehouses, trucks, and planes cannot be used in a same-day and next-day world. Instead, we should put them back to what they were designed to do, restocking “stores” (or micro-warehouses) on a semi-regular basis, and building a new infrastructure layer that reduces the environmental and economic cost of same-day and next-day delivery.

Want to talk to us about it? We’d love to hear from you at info@ohi.com