Managing inventory effectively is an ongoing challenge for e-commerce brands. Rapidly changing trends, the expectation for regular product drops, and even unforeseen weather events can drastically change what items a shopper is interested in.
When discussions about inventory management ensue, value-added fulfillment services are probably the furthest thing from a brand’s mind. After all, what do customized packaging or garment repair services have to do with inventory planning?
Running an e-commerce fulfillment operation is time-consuming and expensive, so it’s tempting to only focus on those core fulfillment services that are essential. However, value-added services can hold the key to optimizing your inventory and reducing losses as a result of excess stock or slow sales - if you partner with the right 3PL provider.
In this blog, we’re going to cover what value-added services mean and why they play such a key role in boosting your inventory management capabilities. Plus, how the Toolio + Ryder E-commerce By Whiplash partnership can help your brand to take merchandise planning and fulfillment to the next level.
What are value-added services in e-commerce fulfillment?
Value-added services refer to any additional fulfillment services offered by 3PLs beyond the core services required to complete e-commerce orders. These core services include receiving and storing inventory, picking and packing, and shipping. Value-added services can range from order customization, such as branded packaging or return label insertion, all the way to quality control of products before they are allowed to hit the warehouse floor.
Because value-added services need to be tailored to a brand’s precise needs, they’re much more costly and complex to implement than standard fulfillment services. As a result, not every 3PL has the manpower or expertise to offer value-added services to clients. Moreover, value-added services are almost always charged at an additional rate to core services.
So, why do 3PLs choose to offer value-added services? Put simply, well-resourced e-commerce fulfillment providers recognize that basic fulfillment services don’t assist brands in differentiating themselves from competitors or offering a memorable customer experience. By offering value-added services, a 3PL partner not only helps businesses to fulfill orders, but also to build lasting brand loyalty and sustainable revenue.
Why do value-added services make inventory management easier?
When brands are scaling, it’s easy to dismiss value-added services as a waste of resources. After all, value-added fulfillment comes at a cost, and isn’t strictly necessary to get orders out the door.
But there’s a lot more to value-added services than just making orders look pretty upon delivery. When actioned right, value-added services give your brand much more control over your inventory and open up more strategies to combat common challenges.
Value-added services give brands more levers to pull when problems arise
Even with the best possible demand planning, SKUs don’t always behave as you expect them to.
A slower-than-expected holiday season can leave behind excess inventory with an extremely short shelf date. A poorly-timed promotion could deplete your inventory levels before your next shipment arrives. Even a shipment arriving earlier than expected can prove challenging for a crowded warehouse.
It’s the tools you have to respond to these situations that determine whether your business is facing a loss in revenue or an opportunity to boost sales. So, having access to value-added services through your 3PL partner can make a world of difference to your ability to navigate inventory concerns. For example, it’s far easier to repurpose holiday inventory as a gift with purchase or product bundle if your fulfillment provider can support you by creating a new SKU identifier or re-packaging products together.
Curate fresh and exciting offerings
Today’s e-commerce merchants have far more selling strategies available than just sticking a single product on their store and seeing how it performs. Even a slow-moving SKU can be revitalized by value-added fulfillment services. Think of fun promotional packaging to catch the eye of potential customers, a gift with purchase, or including it as part of an influencer kit to supercharge your marketing strategy.
Because they require a high level of inventory visibility, all of the above strategies represent a value-added service that a 3PL partner can help you to implement. With these in your arsenal, your business won’t be left at the mercy of fickle trends or unforeseen events.
Building additional revenue streams
Subscription services have rapidly grown in popularity, especially during the pandemic when consumers were seeking out the most convenient and accessible options. They make it possible to add new products/services to your line-up by repurposing inventory as a new offering, providing an ongoing source of revenue alongside one-off sales.
However, subscription e-commerce involves executing a complex set of value-added fulfillment services, including kitting, custom packaging, inserts, and more. This is why the majority of subscription offerings never realize their potential, especially from smaller brands that struggle to scale their product as subscription numbers rise. By choosing a fulfillment partner who offers value-added services, initiatives like this can stay on the table.
4 Value-added services to consider implementing in your business
With so many value-added services out there for e-commerce brands to consider, which can make a meaningful difference to your inventory management efforts?
Product bundling. This is when a brand brings separate products together into a combo to boost sales, often of underperforming products. A common scenario is pairing a highly popular product with a slower-moving SKU to create more exposure with an attractive price point.
Kitting/subassembly. Kitting is both a sales and inventory management strategy where several items are grouped and sold together as a single product under one SKU. This differs from product bundling, which is a grouping of SKUs that are being packaged and shipped together. Kitting products include gift sets, subscription boxes, pre-assembled kits, and more. As a process, kitting requires a 3PL to gather items, scan and label finished kits, and store them until required to fulfill an order.
Product sampling. Including samples with orders, whether selected by the shoppers or by your brand, is a great value-added service that shows customers that you are invested in their post-purchase experience. Plus, consumers love having the chance to try out new products for free - it’s one of the best ways to inspire a fresh purchase! Product sampling strategies require brands to have the inventory management capabilities to classify certain SKUs as promotional items,
Custom packaging/inserts. Attractive, visually-pleasing packaging and inserts are the key to offering customers a memorable unboxing experience that promotes brand loyalty and repeat purchasing behavior. However, unboxings can be tough to execute if you have a high volume of orders, as this lengthens packing time. This is when it can be advisable to partner with a 3PL that can coordinate e-commerce order fulfillment on your behalf.
Why businesses should partner with a 3PL for value-added services
Scalability. One of the biggest challenges of value-added services is that they are difficult to scale as your order volumes increase. For example, creating a memorable unboxing experience in-house is straightforward when you only have a few orders per day. But once this expands to 100 per day, you’re going to need some extra help to maintain the experience your customers have come to expect.
High-powered automation. Technologically-advanced 3PLs can streamline value-added services through the use of advanced systems like WMS (Warehouse Management System) and real-time inventory management, making them much more efficient to execute.
Cost savings. Although outsourcing value-added services to a 3PL is expensive, this can actually help a brand to reduce the costs associated with costs such as warehousing, storage, shipping, and other essential activities needed to run an e-commerce business. These savings can be reinvested in other parts of your business that are easy to neglect, such as marketing and brand awareness initiatives.
Achieve better inventory management with Toolio and Ryder E-commerce by Whiplash
As one of a brand’s most expensive assets, you don’t want to leave the management of your inventory to chance. Even with the best demand planning in place, it’s important to have the right tools at your disposal to turn an underperforming SKU into a best-selling product.
Together, Toolio and Ryder E-commerce by Whiplash offer businesses the ideal ‘before’ and ‘after’ solutions to manage their inventory. Achieve more complete, streamlined omnichannel inventory planning by combining Toolio’s advanced assortment planning (the ‘before’) with Ryder E-commerce by Whiplash’s full spectrum of value-added services and best-in-class fulfillment network (the ‘after’). Together, we make inventory management and demand planning an opportunity for success, rather than failure.
Find out more about the Toolio + Ryder E-commerce By Whiplash partnership here.
Author: This article was written by Beth Owens. Beth Owens is a content marketing professional specializing in long-form B2B content. Her primary subject area of expertise includes ecommerce, customer experience, sustainability, and digital marketing. Some of Beth’s clients in the ecommerce and logistics industry include BigCommerce, ShipBob, Storefront, ShipStation, Big Cartel, Shippit, Modern Retail, and Easyship.