SKUtopia’s A-Z of Shipping and Order Fulfilment

Know your COD from your FOB? In eCommerce, your supply chain can make or break your customer experience and profitability. But with SKUtopia’s shipping solutions and order fulfilment dictionary, you’ll be fluent in shipping and logistics in no time – and confident that you’ve got the right set up for your business.

# 3PL

3PL or Third Party Logistics providers organise the logistics of online selling including shipping and order fulfilment, warehousing and inventory management. A 3PL can be a single service provider, such as warehouse storage, or an integrated service that manages orders, shipping and fulfilment in one place, such as SKUtopia.

# 4PL

While a 3PL manages order fulfilment, warehousing and/or inventory management, a 4PL or Fourth Party Logistics provider, manages the fulfilment partners you work with, too. At SKUtopia, we’ve gone one step further to include software optimised fulfillment centres – our AI and computer vision tech (smart glasses) recommends where you should place your inventory for fastest and most cost effective delivery. Our software also optimises our storage and warehouse capacity so we can use smaller warehouses that are closer to the customer.

Average Order Value

Or (AOV) is your revenue divided by the number of your customers over a specific period of time (typically a year). It’s one of the most important metrics in eCommerce. Therefore, the higher your AOV is, the more you’ve earned from the same amount of customers, and the more profitable each order becomes.

Backordering

Allows your customers to shop your products when you don’t have enough in stock. If you implement backordering, make sure you meet customer expectations with waiting times to maintain positive purchase experiences.

Batch Tracking

Batch tracking is a quality control technique that is used to monitor a set of stock with similar properties and traits. It’s a system that allows you to group and monitor items based on expiration dates and/or track and trace defective items. This is particularly effective if your goods have a limited shelf life so you can stay ahead of expiring items.

Bundling

Is a marketing strategy where multiple products or services are packaged together, often for a cheaper price than what it would cost to purchase them separately. The products are usually related or complementary, or a business may even offer products in a bundle that cannot be purchased individually.

Cart Abandonment

Is when buyers fail to complete the purchase process. On average, 70% of shopping carts are abandoned before a purchase is completed. Dive into your customer data and analytics to determine at what point the customer is exiting the checkout. Constantly monitor and optimise your shopping experience to improve conversion rates and increase your revenue.

COD

Stands for Cash On Delivery. COD is when goods are paid for at the time of delivery. It doesn’t necessarily have to be cash though, and the service may also allow electronic payments or cheques. If the goods are not paid for, they are returned to the retailer.

Consignment Note

Or a con note is a document that contains all information about goods for shipment, including the details of the goods and their gross weight, the addresses of the consignor and the consignee and who is responsible for insuring the goods.

Cost of Goods Sold

It’s important to look at what your products are costing you as well as understanding how many items you have sold. Cost of Goods Sold (COGS) is essentially the cost of selling each product in your store.

To calculate your cost of goods sold:

  1. Take the cost of inventory at beginning of the year
  2. Add the cost of purchases, cost of labour, cost of materials and any other costs
  3. Minus the cost of inventory at end of year

=  Cost of Goods Sold

This figure can help new businesses evaluate their efficiencies and work towards streamlining costs.

Customer Acquisition

Is the hardest and most expensive marketing activity. It can cost up to five times more to attract new customers than to retain an existing one. Dive into your data and calculate what your cost per acquisition (CPA) is for each channel and work towards improving that cost.

Customer Experience

With expectations rising continually, customer experience is paramount. Because of this, it’s important to find what else you can offer your customers to retain a positive experience and reputation. Consider giving your customers the option for expedited or same-day shipping. Content Marketing can heavily impact your CX. According to the Content Marketing Institute, 51% of people who say brands deliver an optimal customer experience across the engagement journey say their content marketing is extremely or very successful.

Dropshipping

Is an inventory management fulfilment method where a store doesn’t keep their in stock items at their own warehouses or stores, but at a third party supplier. Items are shipped directly from the supplier to the customer. Dropshipping requires minimum capital investment and you don’t need to invest thousands of dollars to stock your inventory. While it’s an easy way to manage inventory, make sure your delivery times are competitive to avoid losing the sale.

eCommerce Hub

Workit Spaces currently has three hubs available offering a range of workplaces including showrooms, storage and offices. They also have goods in and out stations where couriers can pick up your packages at our onsite, hands-free shipping station in Sydney NSW every day. You can save up to 30% when you ship with us.

F.O.B

An important customs term that describes who pays for freight and customs’ duties. The FOB indicates whether the seller or buyer is liable for any costs if goods are damaged or lost during the shipment. If goods are marked FOB Origin, the buyer assumes the risk, whereas FOB destination means the seller retails the risk until the goods are received.

Freight

Goods transported in bulk by truck, train, plane or ship.

Frequency

Frequency is the number of times a customer purchases a good or service from your store in a given period, usually a year. The value also indicates the average customer’s willingness to buy from you again and the strength of their loyalty. When you increase frequency, you increase revenue per customer. Email, SMS and social media marketing are all ways you can increase your frequency metric.

Global

As you grow and consider shipping your products overseas, the regulations can seem daunting. Know what products can and can’t be shipped, and whether they are prohibited or restricted for transport. Don’t skimp on the packaging – you want your goods to get there in one piece! You may also want to consider transit insurance, if your parcels get lost, damaged or stolen during transportation.

High Efficiency Warehousing

High efficiency warehousing are warehouse operations that maximise the flow of goods in and out by using intelligent automation and robotics. Warehouses and 3PL providers that rely solely on people for picking and packing have higher error rates, higher returns and limits on how quickly they can manage dispatch goods. If your business needs to dispatch more than 500 orders per week, a high efficiency warehouse will be essential for continued profitability.

Inventory Management

Is a system to keep track of goods in and goods out of warehouses. Inventory management helps you track the lifecycle of your stock as it enters and exits your store. It’s vital for a successful eCommerce business. Using an inventory management software gives you the ability to create personalised integration based on the needs of your business.

Just-In-Time (JIT)

Is an inventory management strategy where you work closely with your suppliers so goods are delivered when production is scheduled to begin. The aim of JIT is to have the minimum amount of inventory on hand to meet demand. You’ll need to accurately forecast your demand and frequently revisit and update this data to implement a JIT strategy.

Kitting

Is an inventory technique where individual but related products are packaged and shipped together to the customer as a single bundle. Kitting offers increased warehousing efficiency, lowe labour costs, increased sales and faster shipping. In a warehouse, Kitting can also mean the physical act of finding multiple SKUs, bundling them into a single package, and creating a new SKU for that package before shipping.

Last Mile Delivery

Describes the final step of the delivery process when a good is moved from a transportation hub to its final destination, i.e. the consumer! It is important that you match expectations with last mile delivery – don’t risk a poor review after you’ve worked so hard to get that customer through the sales funnel.

Manifest

Is a vital piece of shipping information! In short, a manifest is a summary of one of more consignments that details the information used by the carrier to invoice you for your freight services and to track the delivery of consignments.

Networks

It is vital to uphold a strong network of couriers to get your products from A to B. Nurture those relationships as a great network of couriers can be more important than other resources.

Order Fulfilment

Is the entire process of getting an order delivered to a customer. Order fulfilment includes receiving and storing inventory, processing orders, picking and packing items and transporting them to the customer.

Packaging

Consider your impact on the environment and cut down on wasteful packaging. Many 3PLs offer automatic cartonisation, saving both money and trees. Consumers are more environmentally savvy than ever with 85% wanting retailers to be more transparent about the sustainability of their products.

Pick and Pack

Picking and packing is when your inventory is located and taken from inventory and is then packed to be ready for shipment. Modern inventory management uses robotic technology and AI to fulfil picking and packing to reduce time and increase efficiency.

Perpetual Inventory Management

Perpetual inventory management is the inventory management method that tracks when stock is received or sold in real-time through an automated process. The inventory management system used will track changes in inventory at the point of sale. As goods are bought and sold, inventory is counted and continuously updated . This method is the most basic inventory management technique because it can be done manually or using a spreadsheet.

Proximity

The proximity of where you store your goods will have a significant impact on your delivery time. SKUtopia offers micro-warehousing facilities close to CBDs to offer lower delivery times as well as a lower carbon footprint due to less transportation.

Quote

Requesting a freight quote? You’ll need to know what type of transportation your shipment requires, your delivery options and the method of loading your containers. You’ll also want to look into the government taxes on your goods if you are importing and whether insurance is right for you.

Returns

At present, online sellers suffer from costly handling errors and returns of up to 30%. Returns erode margin through extra shipping, time and resources. Consider the impact on the environment and try to minimise your returns.

Self Fulfilment

Is when you do the pick and pack yourself, but need a third party to help you book your couriers. SKUtopia offers Self-Fulfilment options if you manage your shipping and inventory in-house but you still want access to great rates across 300+ couriers.

SKU

Stands for Stock Keeping Unit and is a product code you can use to search and identify stock on hand.

Shipping Management Software

As a vendor, you’ll need to manage many aspects of your supply chain. Look for an all-in-one software, such as SKUtopia, that combines all three different data sets and use that time on scaling your business. Shipping management software helps businesses coordinate and streamline their shipments to customers, manage returns, automate processes and access courier networks.

Supply Chain Management

Is the management of the process of goods, data, information and/or finances related to a product or service from acquiring raw goods to delivering the completed product to its final destination, i.e. the consumer. The five components of Supply Chain Management are:

  1. Plan
  2. Source
  3. Make
  4. Deliver
  5. Return

Modern platforms help businesses to manage their suppliers to 3PL and order fulfilment.

Transit Time

The total time it takes for goods to get from Point A to Point B and can be measured in hours and/or days.

Updated Technology

Research the latest technology in inventory, fulfilment and warehouse management because technology is rapidly evolving. Perhaps AI or robot technology will be suitable for your pick and pack strategy.

Vendor

The manufacturer or distributor of an item or product line.

Warehouse

Depending on how much space you need to store your items, a warehouse may be for you. There are many options available if you are looking to self-fulfil, or you may even look into a 3PL to take care of logistics for you.

Xmas Sales

Christmas is typically one of the busiest times of the year for eCommerce businesses as demand skyrockets. Make sure you promote these sales so your audience is aware and prepare early for demand increases and delivery delays.

Yield Management

Is when businesses use dynamic pricing to control profitability around fixed inventory supply. Yield Management is effective at managing your demand. For example, a hotel offering cheaper prices for a room on a weeknight as opposed to a Saturday night. The demand for the rooms is higher on a weekend, so the hotel can implement a higher price point.

Zone

Get to know the costs of shipping to different zones. In Australia, shipping costs are based on destination zones based on postcodes. Australia Post offers a comprehensive list of zones by postcode.

Enjoyed our Shipping dictionary? If you think we have missed any shipping and logistics terms, let us know via Facebook, Instagram or LinkedIn or check out our eCommerce resources here.

Riarne Gale
Riarne Gale

Riarne Gale is the Head of Content & PR at SKUtopia. She’s passionate about sharing great tips, resources and strategies for all things eCommerce, shipping and logistics.