The Lowdown On Logistics
Logistics is arguably the most important aspect of a beauty brand’s business. After all, what’s more important than getting your products in the hands of customers? “It’s essential to get delivery right because your customer will remember it if it’s wrong,” stresses Rachel Whittaker, founder of Indie Beauty Delivers. “It defines whether the customer will come back and recommend you.” But shipping and fulfillment aren’t usually the strengths of beauty brands, often forcing them to depend on third-party logistics providers to send their precious goods to stores and shoppers. “People don’t realize that product fulfillment and shipping is a different niche and industry than beauty. If you are trying to do it all yourself, you are taking on two industries,” says Nancy Henger, founder and CEO of Brilliant Fulfillment. For brands not trying to do it themselves, Beauty Independent picked and unpacked the brains of logistics professionals and brand founders for an overview of the process to find the right partners to store and send your merchandise.
- Choosing a logistics partner
- Like so many things on the backend of an indie beauty brand, there comes a time to move shipping out of your house. Whittaker advises brands to bite the bullet on securing a logistics firm the instant they can swing it. “Logistics is difficult, tiring and takes a long time. The more you are spending time doing it, the less time you are spending on product development and marketing,” she surmises. Henger is less aggressive. She believes brands should hold off until shipping gets too hard to deal with from home. “If you are getting 10 orders a week or up, it becomes a real pain in the patootie, but, if a brand can handle 10 orders a week themselves, they should wait as long as they can,” she says. “The reason people come here is because they can’t keep doing it. It gets insane. They also come if they don’t have room for the stuff. They can’t store it in a garage, it gets too hot.” Once brands decide to hire a logistics partner, Whittaker underscores they should identify logistics firms matching their business models. She explains some logistics firms specialize in e-commerce orders while others are authorities on deliveries to big retailers. It’s difficult to find warehouses that have expertise across e-commerce and traditional retail, but those sorts of multifaceted logistics providers are increasing. Whittaker believes brands should visit the logistics companies they’re evaluating. “Warehouses aren’t just sheds on the outskirts of town holding boxes. You need to be able to meet them, and you want to know they’re clean and tidy, and that you can feel their passion,” she says. Linda Gillette, founder of Parodi Professional Care, visited four logistics firms before settling on Bold Logistics. “Everyone will tell you want you want to hear on the phone, in email or on their websites,” she says. “I didn’t know how the organizations ran until I saw them.” Don’t forge a partnership with a firm that doesn’t seem trustworthy. Additional considerations include whether the firm’s management software connects to your brand’s shopping cart, if they’re authorized logistics partners of retailers that carry your brand and reasonable pricing.
- The indie brand logistics scenario
- Sorry small brands, but you aren’t always a priority to logistics firms. You have to find ones that won’t make your packages secondary to those from larger brands. To ensure her brand wouldn’t be overlooked, Gillette asked logistics firms she vetted, “Are my orders going to get processed in a respectable amount of time?” She elaborates, “There was one company that said, ‘Yes, I can handle this.’ They were moving truckloads with the brands they have and, if I went with that company, I believe my orders would have gotten lost or not shipped on time. Because I’m so small, I have to follow up on everything. I have to build a relationship.” Whittaker recommends selecting a logistics partner that can satisfy a brand’s shipping and fulfillment today and tomorrow. For example, if a brand has QVC in its plans, it should elect for a logistics firm with QVC experience. That firm, though, may not need further accounts. “If you are a startup brand, to some extent, the warehouse is taking a chance on you because they believe you are going to be the next big thing. It’s important for you to sell them on your brand if you want to work with them,” says Whittaker. “It’s not all about you deciding on a warehouse. The warehouse has a decision, too.” At the logistics firm, Fred Fogelman, owner of Freedom Tree Logistics, recommends brands inquire about the contact person or account manager that will be responsible for their business. “Do they have someone who helps them so they aren’t contacting a million people? There should be one contact,” he states. Whittaker suggests brands pay particular attention to the technology capabilities of warehouses. She elucidates, “Lots of warehouses are giving live online access to stock levels and orders. That’s an amazing tool to have. Ask about what IT solutions can they bring to you as a small brand. They can give you a lot of data.”
- Shipping isn’t free
- Invoices from logistics firms can appear as complex as Walmart’s supply chain. Fogelman says he’s tried hard to simplify them, but warns brands to watch out for hidden fees in their logistics bills. Breaking down the fees, Freedom Tree Logistics charges $2 for every order and 50 cents a pick. Brilliant Fulfillment’s rate is $3.45 per order and 50 cents a pick. Storage at Brilliant Fulfillment is $17 to $20 per pallet monthly, and there’s a $70 administrative fee as well. Freedom Tree Logistics’ per pallet rate is similar, but it also provides a $2 per bin option if a pallet isn’t required. Brilliant Fulfillment’s software setup charge is $500 and, after setup, there’s a monthly technology charge of $30 to $50. At Freedom Tree Logistics, pallets are received at $50 per pallet for up to four stockkeeping units and, for pallets holding five SKUs and up, $20 is tacked on for each extra SKU. Brands cover freight and, at Freedom Tree Logistics, Fogelman says a fee of .75% or 1% of the MSRP rate is charged to ship. All told, Gillette figures she pays $1,000 a month for logistics. In her examinations of logistics firms, she estimates rates varied 18% to 20%. Whittaker says the $1,000 per month amount could be a tad on the high side and notes that rates go down as a brand’s logistics loads mount. Fogelman specifies, “When clients get to the point where they are shipping 5,000 units per month, their rates drop.”
- Logistics considerations beyond the norm
- Beauty products shipped in ugly packages aren’t likely to garner great reviews. Be certain your logistics partner can arrange your boxes in a manner that suits your brand. “We go above and beyond with placement. If a brand wants a different color tissue paper or thank you cards, they want to find someone who will take those extra steps and not charge them an arm and a leg for them,” says Henger, emphasizing, “Make sure you teach somebody to package the product the way you want it to be packaged.” Order a box to be shipped to you to assess that your logistics partner is doing your bidding in packaging. Beauty products stored in hot environments may not hold up well. Both Brilliant Fulfillment and Freedom Tree Logistics offer temperature-controlled warehouses appropriate for beauty merchandise. Whittaker mentions brands using glass bottling may face higher shipping charges, and that brands shipping products listed as dangerous goods such as aerosol sprays and nail polishes should confirm their logistics partner is comfortable with caring for those goods. And Whittaker is adamant brands obtain insurance on their stocks. “Don’t rely on the warehouse’s insurance because they won’t cover you up to the value of your products,” she says. Another precautionary measure that can be worthwhile is to diversify the geographic footprint of your warehousing. Especially if you are in an area prone to natural disasters, it might be wise to have at least a portion of your product storage in a facility not as disaster-prone.
- Shipping in the e-commerce age
- Speed is of the essence in the Amazon-dominated world brands operate in, but pricey next-day delivery may be impractical for many small brands. Parodi informs its customers that they will receive products within five days. However, they frequently end up receiving products in two to three days. The leeway is an effective measure to keep customer disappointment at bay. It’s beneficial to clarify your shipping timeline expectations for your logistics partner. Amazon has put tremendous pressure on brands not only to ship quickly, but also to ship at little to no charge to customers. Most indie brands don’t absorb the entire cost of shipping. Parodi charges $5 per box to ship and that charge is $3 less than its shipping costs. “Shipping is expensive. I am hoping my consumers are OK to pay that $5. Small businesses get hit on all sides. Because you are small and don’t have huge volume, you have to find a way to make people at least share in the cost,” she says. For purchases $50 and above, Parodi zeroes out the shipping costs to customers, and that’s a common e-commerce tactic. Maia Singletary, founder and owner of Astrida Naturals, says, “Having a minimum threshold for free shipping helps to maintain a certain profit margin while also giving the customer value and increasing the average dollar amount per order. Free shipping outright affects profit initially, but offering it occasionally does boost sales.” Singletary counsels fellow brand owners to know their numbers. “You never want to be in a position where you're losing your blouse,” she says. “Find out what your profit per unit is. If that number is higher than the average cost of shipping an order, then you can offer some form of free shipping and still be profitable.”