What’s not to love about Amazon FBA? List your product on Amazon, send them your inventory, and reap the rewards of the Amazon Prime badge and low shipping costs (though FBA fees are rising in 2022). 

It’s a great deal for those that can get it, but it’s also limited in two key ways: 1) it’s an inflexible point solution and 2) Amazon simply doesn’t have enough space. And no wonder; Amazon added over 750,000 new 3rd-party sellers in 2020, so FBA can’t keep up with demand. Amazon’s response is to limit FBA to work well only for the SKUs that maximize their profit (not the sellers’) and to impose restrictive inventory limits.

Sellers that want to grow both on and outside of Amazon will need an alternative to FBA to keep their growth engine humming. Read on to learn more about what to watch out for with Amazon FBA and your options for other eCommerce order fulfillment solutions.

Why You Can’t Rely on Amazon FBA

Amazon FBA will do a great job of fulfilling a portion of the volume of your small SKUs sold on Amazon, but it falls short otherwise.

Source: Amazon FBA Revenue Calculator, DIY Shipping estimated using discounted shipping rates for Zone 4 Residential shipping, estimated ship date 9/20/2021

The above example is typical of Amazon FBA fees: their price for small and standard items beats other options, but even slightly oversized products like the example 5lb dog bed ends up costing almost double a merchant’s price shipping it on their own. The reason is simple – they’ve optimized their network for small, easy, and efficient products. 

As a result, Amazon sellers that use FBA for their shipping are boxed in when it comes to growth, and they all compete with one another to sell the same small, cheaper items. If FBA is your only good option, you can’t profitably expand your product line to larger, less competitive options because fulfillment fees will eat up your margins. If you raise price to compensate, then you’ll lose to the savvy merchants who have diversified their fulfillment strategies and can get the product to the customer at half the price.

The challenges don’t end there for Amazon FBA. 2020’s unprecedented boom in eCommerce growth has delivered massive returns to Amazon and Amazon sellers, but it’s also left FBA bursting at the seams. To compensate, they switched from ASIN-level inventory limits to product type inventory limits in April 2021, and overnight sellers saw their inventory limits cut by up to 65%. 

Source: US Census Bureau, Marketplace Pulse, Cahoot interviews with merchants

On top of the new, lower limits, Amazon FBA is also experiencing receiving delays of up to three weeks. This creates a huge window of time in which a seller can run out of stock on a key item: even if the seller sent a timely replenishment, receiving delays can create the issue. In the peak selling season, this is an even bigger problem. Demand surges can easily run an item out of stock in a matter of days or even hours, triggering a death spiral in which a product loses its search rank, which lowers impressions and conversions, which in turn lowers inventory limit again. 

It’s clear that Amazon FBA is no longer an all-in-one solution for Amazon sellers. It’s a point solution that can be an important part of a fulfillment strategy, but needs to be augmented to cover for its flaws.

Evaluating Different Amazon FBA Alternatives

Amazon FBA’s structure tells a valuable, if simple lesson: the most cost-effective way to offer nationwide 1-day and 2-day delivery is to create a distributed fulfillment network that always has inventory near the end customer. This setup enables 1- and 2-day delivery with economical ground shipping; the best of both worlds. 

To enjoy the same benefits of Amazon FBA’s network without the same drawbacks, sellers’ options generally fall into three main categories:

1. Open Multiple Fulfillment Centers: Merchants can take it upon themselves to open multiple US fulfillment centers, but today’s environment is extremely challenging. Warehouse space has never been more limited or expensive, and there are an incredible 400,000 open job positions for frontline eCommerce order fulfillment workers. On top of that, opening one’s own centers ties up significant capital and is risky – if a seller picks a sub-optimal location, or a location becomes sub-optimal as consumer preferences change, they’re stuck footing the bill.
2. Third-Party Logistics Companies (3PLs): Another option is to outsource fulfillment to multiple 3PLs. These are generally smaller, independent companies not connected to any specific marketplace. You will have to contract numerous 3PLs to get nationwide 1-day and 2-day coverage. Order routing across disparate 3PLs is complex and labor-intensive, so you may need to invest in expensive fulfillment software to make it more efficient. Fulfillment costs will vary between 3PLs, and not all of them can meet the strict SLAs needed to win the Buy Box on every marketplace, so be sure to use something like a 3PL request for proposal (RFP) template to get an apples to apples comparison.
3. Tech-enabled Fulfillment Network: A modern and affordable alternative to working with 3PLs is to use an e-commerce order fulfillment network. A tech-enabled fulfillment network upgrades the traditional 3PL model to cover the whole country. Merchants will send their inventory to multiple nodes in the network, and then the network’s software will automatically send parcels from the optimal location to the end customer, saving on shipping costs. In essence, these networks are “FBA-lite” – they have the same core functionality as FBA.

Cahoot’s Alternative to Amazon FBA

Cahoot is a robust FBA alternative, and it works just as well as a backup or enhancement of FBA as it does as a full replacement. And it’s much more than that – it’s the most flexible solution in the marketplace and can ship orders for every eCommerce sales channel.

Cahoot is the next generation of tech-enabled fulfillment networks. Unlike other networks that are collections of 3PLs, Cahoot’s innovative approach unlocks empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. 

As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company, and service levels are higher. With a P2P network, multi-channel fulfillment with nationwide 1-day and 2-day delivery is the norm. Merchants can use the network solely for outsourced fulfillment – similar to FBA, or they can choose to fulfill orders for other merchants and offset some of their own outsourced fulfillment costs.

Offer 1-day and 2-day shipping at ground rates or less.

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Fulfillment is often an afterthought for sellers – after all, “sellers” want to sell. Your eBay fulfillment strategy, though, has a much bigger impact on sales than you might realize. If you’re not offering fast and free shipping, you’re severely limiting your growth. And if you don’t have the right provider, you’ll pay an arm and a leg for that shipping, eating up precious profits.

In this article, we’ll highlight the importance of fast and free shipping on eBay (if you’re not already convinced) and give a primer on your different options for eBay fulfillment. By the end, you’ll feel much more confident in your ability to turn operations into a growth driver for your business.

Why is Fast and Free Shipping Important for eBay Fulfillment?

1. Online Shoppers Want Fast and Free Shipping

Thanks to Amazon Prime, online shoppers now expect their orders to arrive quickly and for free. In fact, a recent McKinsey study found that over 90% of customers view 2- to 3-day delivery as the baseline for eCommerce. eBay sellers used to be relatively immune from these rising customer expectations, but those days are over.

Ignore fast and free shipping at your own risk – 75% of US consumers expect free shipping even on orders under $50, and 63% of all cart abandonment is caused by unexpected shipping costs. 

eBay now automatically applies “Free delivery in 2/3/4 days” tags to qualifying products – like the Fast ‘N Free badge that preceded it, this marker gives shoppers exactly what they want. eBay sellers with the tags stand out in search results and convert better, driving higher revenue.

2. Improve your Seller Rating

Fast and free shipping is a key rating factor that can help to boost your eBay seller rating. Shipping time and shipping fees both have their own line item in “Detailed seller ratings” on eBay, and of course, a high seller rating has a huge impact on eBay sales.

Furthermore, qualification for the lucrative Top Rated Seller Program depends in part on fast shipping – so if you want to be in the top echelon of eBay sellers, you’re going to need fast and free shipping.

3. Increase Impressions

Free shipping helps you win more impressions and clicks. 

eBay gives users the ability to filter by “Free shipping”, meaning that if you’re charging for shipping, some buyers are completely excluding you from consideration. Even if they don’t filter out “Free shipping”, many others will sort their search results by “Price + Shipping” – that’s right; eBay’s price sort includes the cost of shipping, so if you undercut your competitor on product price, but have a shipping fee, you’ll still lose out.

On top of that, eBay prominently writes “Free shipping” for products that don’t charge for shipping, making them stand out against others that come with hefty shipping fees.

The combination of filters, sorts, and “Free shipping” copy all combine to make it an excellent way to boost your search page results on eBay.

4. Lower Cart Abandonment and Boost Conversion Rate

The impact of fast and free shipping isn’t limited to the product search experience. In truth, it makes the biggest difference once customers are on the product page itself. Consider the following statistics on online consumer behavior:

• 9 out of 10 people say free shipping is the #1 incentive that would make them shop online more often
• 47% of people say they typically back out of purchases if they realize shipping isn’t free
• 30% of people will wait to purchase until there’s a free shipping offer

Consumer preferences are clear – they convert more often and abandon their shopping cart less frequently when they’re offered free shipping. 

5. Improve Customer Lifetime Value

Shoppers will often go the extra mile for free shipping, which opens up creative strategies to boost your repeat purchase and retention rates.

Invesp found that 58% of customers will add items to a cart to qualify for free shipping, 47% will search for an online promo code, and 31% will join a loyalty program. 

If you don’t want to offer free shipping right off the bat, then you can introduce an order value minimum or offer free shipping to people that sign up for a loyalty program. Both of these actions will improve your customer lifetime value – bigger carts are self-explanatory, and loyalty program members repeat shop again and again.

Overview of Options for eBay Fulfillment Services

So, you’re convinced – you want to offer fast and free shipping on eBay. But how do you do it without breaking the bank? Here are the pros and cons for the different ways you can fulfill orders.

1. Self fulfillment

eBay allows you to ship your items yourself. With in-house fulfillment, you own the process, the profits, and the risks.

The benefit, of course, is that you have full control over the fulfillment process. You can choose where and how your products are stored, ensuring that they’re in the best condition possible when they get to customers. If there are errors in fulfillment, you have the power to immediately fix issues.

The main drawbacks of self-fulfillment are that it’s extremely time-consuming and it isn’t cost-effective in the long run. If you’re fulfilling your own orders, your success comes with a price – more and more of your time will be consumed by managing operations.

If you’d like to learn more about how to go it alone, here’s a more in-depth look at how to offer free shipping and still make a profit.

2. Local pickup

This eBay fulfillment option is ideal if you sell large or bulky items. It allows you to arrange pickup with the buyer so you can avoid shipping costs and price your items even cheaper.

You’ll need to provide a ZIP code, at least one electronic payment method (in addition to Pay on pickup), customer service, and generate your Proof of pickup to protect yourself in case of “item not received” disputes.

Of course, local pickup limits your market to your locality or contiguous areas. Sellers with serious growth ambitions will need to combine local pickup with another fulfillment option.

3. Drop shipping

eBay sellers can also use drop shipping to fulfill orders directly from a wholesale supplier. Under this arrangement, your supplier will deliver orders directly to your customers.

Your supplier handles the entire fulfillment process on your behalf using the buyer information available to them. It’s simple and will dramatically reduce your overhead compared to self fulfillment. However, your customers will still hold you responsible for timely delivery and overall customer satisfaction. If the dropshipper makes a mistake, you’re the one that pays the price.

For quality, you don’t get to inspect the product before it gets to the customer. You have to rely entirely on the dropshipper, and when things go wrong, you’re left on the outside looking in. 

Just as importantly, your customers won’t be delighted by fulfillment provided by dropshippers. Since they’re almost always shipping from one location, the delivery won’t be fast for customers across the country – and as we explained above, that’s a critical piece of modern eCommerce. Since they’re often shipping long distances, the shipping is more expensive than it needs to be as well.

If you choose this option, don’t list an item on eBay and then purchase it from another retailer or marketplace that ships directly to your customer. If you do, you’ll face sanctions ranging from listing cancellations to forfeiture of fees paid or payable to your account.

4. 3PL fulfillment

If you’re looking for a fulfillment service that offers the benefits of self-fulfillment without all the hassle, then using a third-party provider is your best bet.

The best 3PLs will give you access to a nationwide network of warehouses and carriers, so shipping products will take less time than if you were going it alone – in most cases within one or two days. Furthermore, if a 3PL places your inventory across the country strategically, you’ll always pay ground rates for shipping, so fast delivery will come at low prices.

Like dropshipping, trusting a third party means giving up some control over your product before it gets to the customer. This challenge can become apparent with 3PLs that aren’t built for eCommerce, as products get damaged in their rush to fulfill orders. Modern 3PL networks that specialize in eCommerce, though, have very low defect rates and may even improve on your own delivery record.

This can introduce complexity and increase your handling fees. A 3PL Request for Proposal can help you to weigh your options.

Why Cahoot Is the Best Option for eBay Fulfillment

Cahoot’s eBay fulfillment service will power affordable fast and free shipping for your listings, increasing revenue and margin. Our best-in-class fulfillment network partners with eBay sellers to make fulfillment a breeze – we can get you up-and-running with an improved delivery experience in as little time as it takes you to send us inventory.

With Cahoot, your listings will automatically get eBay 2-day, 3-day, and 4-day fast shipping tags (formerly Fast N’ Free Shipping), boosting conversion. 

If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait to show you how fulfillment can power your growth on eBay.

Offer 1-day and 2-day shipping at ground rates or less.

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UPS offers a host of services to ensure that your packages are delivered quickly to customers. Small improvements in which service you pick can have a big impact on customer experience and profitability, so in this guide we’ll walk you through your options and how to make the right choice for your business

What is UPS 2nd Day Air?

UPS 2nd Day Air is one of a few expedited shipping options from UPS, and they describe it as their “economical option for shipments that do not need overnight service”. As you can imagine, 2nd Day Air ensures that a package will arrive at its destination in two business days, but the ‘type’ of 2nd Day Air you choose will affect the delivery time. 

As customer expectations for fast shipping increase, services like UPS 2nd Day Air gain prominence. It’s simple – slow delivery speeds blunt online store growth because products with slow shipping are added to carts less frequently, and their carts are abandoned more often than products that ship quickly. A late 2021 McKinsey study of consumer preferences found that >90% of online shoppers see 2- to 3-day delivery as the baseline, and a quickly growing 30% said that they expect same-day for many purchases.

There are two different types of 2nd Day service – the standard service and AM. When someone absolutely needs an item from you first thing in the morning, you need to spring for the much more expensive 2nd Day Air AM. Without it, UPS only guarantees an end-of-day delivery time, which can of course stretch late into the night.

In addition to 2nd Day Air, UPS also offers 1-day and 3-day expedited services. The 1-day service is called UPS Next Day Air, and as you can imagine the 3-day service is called UPS 3 Day Select. 

How Much Does UPS 2nd Day Air Cost?

Cahoot’s internal shipping metrics show that UPS 2nd Day doesn’t come cheap – in fact, we observe that it’s often roughly 2 times as expensive as UPS Ground. 

If you’re used to paying $8 or $9 to ship your packages via Ground and seeing them take a week to deliver, 2-day delivery is going to cost you somewhere in the upper $10 dollar range. In the hyper-competitive eCommerce world, an extra $5-10 in shipping costs can often be the difference between making and losing money on a product. 

UPS 2nd Day Air AM balloons the cost of shipping far beyond the standard version of 2-day. Our data shows that the AM option nearly doubles the cost of standard – so it often comes in at nearly 4 times more expensive than UPS Ground. To us, the small added benefit of an early delivery won’t often justify the large added cost.

How to Ship Fast Without UPS 2nd Day Air

To quickly recap – customers expect fast shipping, so you need to offer it to boost growth. Fast shipping, though, is prohibitively expensive. If you’re like the vast majority of eCommerce merchants and can’t eat $10 extra in shipping on every single item, you need a better way.

The trick is to ensure that you always have inventory close to the customer so that UPS Ground delivers in 1- to 2-days without the extra cost – many call this a “distributed fulfillment strategy”. Typically, this means ensuring that you never ship farther than Zone 4, and it requires ~4 fulfillment locations strategically placed throughout the United States. This simple principle, though, is anything but simple in execution. 

Here’s the three ways that merchants can adopt a distributed fulfillment strategy:

1. Open Multiple Fulfillment Centers: merchants can open multiple US fulfillment centers and manage the four walls themselves. While having control may seem appealing, there’s never been a worse time to try to stand up merchant-operated fulfillment. Warehouse rents are hitting record highs, and if you can even find people to work for you, you’ll have to pay them $22.50 per hour to compete with Amazon’s rates. This strategy is also time-consuming and risky – you’ll spend countless managerial hours on operations instead of selling, and you’ll have to tie up significant capital.
2. Marketplace Fulfillment Services: Amazon and Walmart offer their own in-house fulfillment networks, Amazon FBA and Walmart Fulfillment Services, for sellers on their platform. They enable fast shipping nationwide, and crucially, they allow vendors to place Prime Badges and Walmart TwoDay tags on their listings to boost visibility and conversion. While attractive, these solutions come with significant drawbacks. They’re designed for small products, so FBA is much more expensive for large items, while Walmart doesn’t accept them at all. Additionally, they’ll only solve your fulfillment needs for the marketplace itself. Amazon FBA’s multi-channel solution, Amazon MCF, is significantly more expensive than FBA, while WFS only works for Walmart orders.

3. Third-Party Logistics Companies (3PLs): Your last option is to outsource fulfillment to one 3PL with national fulfillment services, or to multiple single-location 3PLs. The best 3PLs will have 10 or more locations across the United States, so they can strategically place your inventory right near your customer base. Modern 3PLs designed for eCommerce also have built native integrations with all major marketplaces and shopping carts, so you can use one provider for all of your fulfillment needs. Fulfillment costs will vary between 3PLs, though, and not all of them can meet the strict SLAs needed to win the Buy Box on every marketplace. Be sure to use something like a 3PL request for proposal (RFP) template to get an apples to apples comparison.

Cahoot Enables 2-day Shipping at Ground Rates

Cahoot’s nationwide network of over twenty warehouses provides affordable national eCommerce order fulfillment for eCommerce merchants. Thanks to our dense network, we’ll strategically distribute your inventory so that you reach 99% of the country in 2 days, but always pay low ground rates.

Unlike other providers, Cahoot has the flexibility to upgrade existing merchant-owned warehouses (if you have them). We’ll analyze your existing network and customer base, then add a few locations of our own to seamlessly extend your network into a nationwide footprint. With this approach, you can continue to get value out of your existing assets while delighting your customers and your bottom line with affordable fast shipping.

Getting started with Cahoot is fast and easy – with pre-built integrations for major eCommerce channels like Amazon, Walmart, Shopify, and BigCommerce, we can get merchants started in as little time as it takes to send us your inventory.

Talk to one of our experts today and explore how we can be the key that unlocks the next level of your profitable eCommerce growth.

Offer 1-day and 2-day shipping at ground rates or less.

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If you’re shipping large items, then you know the pain of high storage, handling, fulfillment, and especially shipping costs eating up your margin. 

While you’ll always pay more to ship a chair than a pen, you shouldn’t resign yourself to eating sky-high rates. With higher shipping costs come larger opportunities to save money, and cutting a few dollars off cost off of each order goes straight to your bottom line.

In this blog, we’ll cover three of the top ways that you can reduce your cost while shipping heavy items. Implement them, and watch your profit jump and headaches melt away!

Distribute Inventory to Reduce Shipping Zones

To state the obvious, the farther you’re sending a package, the more you’ll be charged. Within the continental United States, shipping distance is governed by Zones. Short trips will be designated Zone 2, while shipping something across the country will usually be designated Zone 8.

If you’re fulfilling out of just one warehouse, you have no choice but to routinely ship to Zones 5 and up, which is especially costly with large packages. Even with two warehouses, much of the country will be outside of the low-cost Zones 2 & 3. 

The simple trick is to ensure that you always have inventory close to the customer so that every shipment originates from Zone 4 or less; many call this a “distributed fulfillment strategy”. It requires 3 to 4 fulfillment locations strategically placed throughout the United States. Cutting your average shipped-to zone will drive savings straight to your bottom line.

Distributed fulfillment also comes with the enormous added benefit of enabling fast eCommerce order fulfillment – after all, if your product isn’t shipping far, then it won’t take more than 1 or 2 days to get to the customer. You can stop worrying about using extremely expensive services such as UPS 2nd Day Air and pay ground rates for customer-pleasing fast delivery.

This simple principle, though, is anything but simple in execution.

Based on Ground Shipping speeds

If you already have one warehouse, then it can be tempting to take it upon yourself to open 1-2 more US fulfillment centers across the country. While maintaining control of your customer experience is appealing, there’s never been a worse time to try to stand up merchant-operated fulfillment. Warehouse rents are at record highs, and Amazon has pushed the cost of labor as high as $22.50 per hour.

If you’re a marketplace seller, then you may already be using Amazon and Walmart’s in-house fulfillment networks, Amazon FBA and Walmart Fulfillment Services. These services will solve the distributed inventory challenge for you and enable fast shipping, but they also come with significant drawbacks. They’re designed for small products, so they both significantly raise prices for large items. Walmart, for instance, charges all items with a side length of over 96 inches or a combined length and girth over 130 inches as at least 90 lb no matter their actual weight, and then they add a $25 surcharge to boot.

Source: marketplace.walmart.com

Your last option is to outsource fulfillment to one 3PL with national fulfillment services, or to multiple single-location 3PLs. The best 3PLs will have 10 or more locations across the United States, so they can strategically place your inventory in the perfect position for your customer base. Be sure to use something like a 3PL request for proposal (RFP) template to get an apples to apples comparison between providers and the best deal.

Ship Heavy Items with the Right Carrier

Not every carrier is created equal when it comes to shipping heavy items, and relatively small adjustments in your package size and weight can have big implications when it comes to choosing the most cost-effective option.

FedEx’s guidelines on how to ship oversize items detail that they add an oversize shipping fee when packages have a girth of more than 130 inches. Note that if a package is over 150 lbs, or if its combined length and girth is more than 165 inches, then FedEx will classify it as freight and apply a completely different set of rules.

UPS governs its large items a bit differently. It will designate a package as a “Large Package” when its length plus girth combined exceeds 118 inches, but does not exceed its maximum size of 157 inches. In addition to assessing a Large Package Surcharge for packages that meet this criteria, Large Packages in UPS are also subject to a minimum billable weight of 90 pounds, regardless of their actual billable weight. 

Finally, USPS is less equipped to ship large packages, and thus has more restrictive rules. Their maximum size for most mailpieces is 108 inches in combined length and girth, but USPS Retail Ground has a slightly larger allowance of 130 inches. Regardless of size, the maximum mailable weight of any mailpiece sent through USPS is 70 lbs. Packages that are between 108 and 130 inches in combined length and girth are subject to a special oversized price on USPS.

These guidelines leave wiggle room for savvy merchants to optimize their shipping costs. Note that FedEx’s oversize charge only kicks in on packages with a girth of more than 130 inches, while UPS and USPS have lower limits. On top of that, the latter two’s limits are based on combined length and girth. If your package fits under FedEx’s bar for oversize, but over the bars for the other carriers, then you know that you can avoid surcharges by shipping with FedEx. 

You can take it upon yourself to negotiate with the carriers separately, or if you’re using shipping software like ShipStation, you can set manual rules and rate shop to scrutinize your orders for the best rates. On the other hand, our next gen shipping software will do the hard work for you by automatically comparing major and regional carriers against each other for each order. Without any manual intervention, the software will take quirks like differences in surcharges into account and ensure that you’re getting the best deal, every time.

Optimize Package Size

Small changes in package size can make a big difference in your final shipping cost. When you’re shipping large and oversize items, every additional pound usually adds $0.30 – $0.50 to your cost, which adds up quickly! 

Package size matters because of Dimensional Weight, or DIM weight for short. Major carriers introduced DIM weight around 2015 as a way to charge more for bulky, yet light products. The calculation is fairly simple: DIM weight is equal to L x W x H of your package, divided by 139. If the resulting number is larger than the weight of the package in pounds, then the shipping weight used to calculate price will be elevated to the DIM weight.

Source: JayGroup.com

In this way, inefficiencies in package design quickly add up to boost your shipping cost to well more than it should be.

Consider a package that is 24 x 24 x 24. This 2 ft cb package’s DIM weight is 99.45 lbs. If you’re shipping two pillows in that package, the actual weight is probably less than a tenth of the DIM weight. In that scenario, DIM weight increases your cost by $30 or more! What if you could shave 4 inches off one of the sizes by more efficiently compacting your pillows? 

Those 4 simple inches cut the DIM weight all the way down to 82.88 lbs, a nearly 20% reduction. That package would fall into FBA’s “Medium oversize” category, with a shipping weight between 70 – 150 lbs. FBA’s fulfillment fee rises by $0.44 for each pound in that category, so shaving the 4 inches off of one side of the package would save you over $7 per order.

Cahoot Ships Heavy Items at Low Cost

Cahoot’s nationwide network of over twenty warehouses provides affordable national eCommerce order fulfillment for eCommerce merchants. 

We cover each of the three key pillars of reducing the shipping cost of heavy items for you:

1. We’ll strategically distribute your inventory to 4+ locations
2. Our next-gen shipping software automatically finds the lowest cost shipping label that meets your delivery SLA
3. We work with you to shrink package size

Unlike other providers, Cahoot also has the flexibility to work alongside existing merchant-owned warehouses (if you have them). We know that many merchants with oversize goods carefully manage fulfillment themselves due to how difficult the process can be. Cahoot will analyze your existing network and customer base, then add a few locations of our own to seamlessly extend your network into a nationwide footprint. 

With this approach, you can continue to get value out of your existing assets while delighting your customers and your bottom line with affordable fast shipping.

Getting started with Cahoot is fast and easy – with pre-built integrations for major eCommerce channels like Amazon, Walmart, Shopify, and BigCommerce, we can get merchants started in as little time as it takes to send us your inventory.

Talk to one of our experts today and explore how we can be the key that unlocks the next level of your profitable eCommerce growth.

Offer 1-day and 2-day shipping at ground rates or less.

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It has been a difficult year filled with price increases for Amazon sellers that rely on Fulfillment by Amazon (FBA), and it’s about to get even more difficult.

On August 16th, Amazon announced that for the first time ever, they will implement a Holiday Peak Order Fulfillment Fee to take effect from October 15th, 2022 to January 14th, 2023. Per Amazon, the fee will be an average of USD 0.35 per item sold using US and Canada FBA. Even in isolation, a 35 cent increase in fulfillment fees can be difficult for sellers to absorb. Considering the enormous pressure that inflation is already putting on sellers and other FBA price increases, this could be the straw that breaks the camel’s back.

How has Amazon ratcheted up the price pressure on FBA sellers this year, and what can sellers do to fight back and protect their margins?

Amazon FBA Price Increases in 2022

Amazon has raised prices across the board for FBA sellers multiple times in 2022. How do they add up?

Source: Amazon Seller Central, Cahoot analysis

Annual Amazon FBA Fee Increase

It started with annual FBA fee increases that kicked in on February 1st. Order fulfillment fees increased from 2% on the low end to as much as 12% on the high end. Sellers with items in the Small Standard categories saw increases of 8%, or $0.22 to $0.27. For small products selling under $20 or even $10, this immediately shaved off a few points of margin.

On top of that, FBA Storage Fees increased by $0.08 per cubic foot, or 10.6%. Again, this increase can shave off a point or two of margin, making enduring profitability that much more difficult.

Finally, Amazon increased Removal and Disposal Fees by over 100% for many items. For instance, a SKU between 1-2 lbs will increase from $0.35 to $0.75. Sellers don’t usually plan on having to pay for removal, but nevertheless some products will fail to sell and need to be liquidated – especially in the cutthroat environment of Amazon’s 3P marketplace. This change raises the overall cost of doing fulfillment business.

Amazon Fuel and Inflation Surcharge

Just two months later, Amazon added a 5% “fuel and inflation surcharge” on top of the previously announced price increases. This kind of surcharge was a first for Amazon, and like the previous changes it adds another ~20 to 50 cents in cost to most items. Taken together with the Q1 increases, by this point FBA had already added a dollar or more to total fulfillment costs for many items.

Amazon Holiday Peak Order Fulfillment Fee

The new fee in question, the Holiday Peak Order Fulfillment Fee, will be applied on top of both of the February price increases and the Fuel and Inflation Surcharge. It will be in effect from October 15th of this year to January 14th in 2023, so for the entirety of peak.

At an average of another 35 cents on top of the other increases, there are few, if any, items that haven’t shot up over a dollar in cost to fulfill through FBA this year. When you consider that many smaller items only cost $3 or $4 to fulfill through FBA, that’s a staggering 25%+ increase in one of the most important operational costs in one year. Sellers with small, $10 items have now likely seen over 10% more of their revenue disappear in FBA fees in just over half a year. That, unfortunately, is fatal to most sellers.

The Top Amazon FBA Alternative: Cahoot FBM

Cahoot has created an Amazon-like ecommerce order fulfillment services network that makes low cost, fast and free shipping a breeze for every eCommerce sales channel – including Amazon FBM.

Cahoot is the next generation of tech-enabled order fulfillment networks. Unlike other networks that are collections of third party logistics warehouses (3PLs), Cahoot’s innovative approach empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. Since they fulfill their own DTC orders, they know how important top-notch fulfillment is, and they put the same care and energy into your orders as they do for their own.

Because Cahoot is leveraging excess capacity in merchant-owned warehouses, we’re less pressured by rising warehouse and labor costs than Amazon is. As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company. With a P2P network, multi-channel fulfillment with nationwide 1-day and 2-day delivery at economy shipping rates is the norm.

Still unconvinced? Here’s a deep dive into how you can make the choice between Amazon FBM vs FBA – or decide to use a mixed strategy.

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In the vast and competitive world of e-commerce, staying ahead of the game is essential for business success. Whether you’re a seasoned Amazon seller or just starting out, one of the most valuable strategies you can adopt is investing in thorough market and product research. This investment can significantly boost your online profits and help you make informed decisions about which products to sell and how to sell them. In this comprehensive guide, we will explore the importance of market and product research on Amazon and how it can maximize your return on investment (ROI).

Understanding the Amazon Marketplace

Amazon is the world’s largest online marketplace, offering an extensive range of products to consumers across the globe. This immense platform presents both opportunities and challenges for sellers. To succeed, you must first understand the dynamics of the Amazon marketplace:

• Competition: Amazon hosts millions of sellers, and each product category is highly competitive. Knowing your competition is essential to carve out your niche effectively.
• Consumer Behavior: Amazon’s search algorithm, A9, determines product rankings based on various factors, including customer reviews, keywords, and sales history. Understanding how customers search for products can help you optimize your listings.
• Fulfillment Options: Amazon offers different fulfillment methods, such as Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM). Each has its pros and cons, and your choice can impact your profit margins.
• Pricing Strategies: Dynamic pricing is common on Amazon, so keeping an eye on your competitors’ pricing strategies and adjusting yours accordingly is vital.
• Reviews and Ratings: Positive reviews and high ratings can boost your product’s visibility and credibility, increasing sales.

The Foundation of Successful Amazon Selling

Before delving into the specifics of market and product research, it’s crucial to understand why it’s the foundation of successful Amazon selling. Here are some key reasons:

Avoiding Costly Mistakes

Without proper research, you’re essentially operating in the dark. You may invest in products with little to no demand or are oversaturated with competition. These mistakes can result in significant financial losses. Market research helps you avoid these pitfalls by providing data-driven insights into what products will likely succeed.

Adaptation and Growth

E-commerce is a dynamic space. Consumer preferences, market trends, and competitors’ strategies can change rapidly. By investing in research, you not only identify opportunities but also adapt to changing circumstances. This adaptability is crucial for sustained growth in the long term.

Enhanced Decision Making

Data-driven decision-making is the hallmark of successful Amazon sellers. With the correct information at your fingertips, you can make informed choices about product selection, pricing strategies, and marketing efforts. This increases your chances of success and profitability.

The Benefits of Market Research

Market research involves analyzing the Amazon marketplace as a whole to identify trends, opportunities, and gaps in the market. Here’s why investing in market research is crucial:

• Identifying High-Demand Products: By analyzing search trends and historical data, you can identify products with high demand but limited competition. These niches present lucrative opportunities.
• Evaluating Competition: Market research helps you assess the strength of your competition. You can identify weaknesses in their offerings and develop strategies to outperform them.
• Pricing Insights: Analyzing price trends can help you set competitive and profitable product prices.
• Understanding Customer Needs: By examining customer reviews and feedback, you can gain insights into what customers like and dislike about existing products in your chosen niche.
• Seasonal Trends: Market research allows you to identify seasonal trends and adjust your product offerings accordingly.

Understanding Market Trends

Understanding current market trends is one of the first steps in effective Amazon market research. Market trends encompass consumer preferences, product demand, and industry shifts. Here’s how to harness this knowledge:

Track Seasonal Variations

Many products experience seasonal fluctuations in demand. You can optimize your product listings and marketing efforts by tracking these patterns. For example, if you’re selling holiday-themed items, you’ll want to prepare well in advance to capture peak seasonal demand.

Analyze Historical Data

Historical sales data is a goldmine for understanding market trends. It can reveal long-term patterns and help you forecast future demand. Analyzing this data can guide your inventory management and product selection strategies.

Competitor Analysis

Competitor analysis is another critical aspect of Amazon market research. Understanding your competitors can give you a competitive edge. Here’s how to go about it:

Identify Key Competitors

Start by identifying your main competitors in your niche. Look for sellers with similar products and target demographics. Tools can provide a comprehensive list of competitors.

Analyze Pricing Strategies

Study your competitors’ pricing strategies. Are they pricing lower to capture market share, or do they maintain premium pricing? Understanding their pricing approach can help you position your products effectively.

Monitor Sales Volumes

Knowing how well your competitors are performing can inform your own strategies. If a competitor is consistently outselling you, it’s worth investigating their marketing tactics, product listings, and customer reviews.

Product Research: Finding Profitable Products

While understanding market trends and analyzing competitors are crucial components of Amazon’s success, product research is equally important. Here’s how to identify profitable products:

Niche Selection

Start by selecting a niche that aligns with your expertise and interests. Look for niches with a balance between demand and competition. Avoid overly saturated markets where it’s challenging to stand out.

Identify High-demand Products

Use tools like Algopix to identify high-demand products with the potential for consistent sales. Look for products that are evergreen and not subject to seasonal fluctuations.

Evaluate Profit Margins

Calculate potential profit margins by considering the cost of goods, Amazon fees, and shipping costs. Ensure that your chosen products offer a healthy profit margin to sustain your business.

Check for Trends and Seasonality

Examine whether your chosen products have consistent demand throughout the year or if they are subject to seasonal trends. Seasonal products can be profitable but require careful planning.

Optimizing Product Listings

Optimizing your product listings is a continuous process that involves keyword research and customer-focused content. Here’s how it can impact your profitability:

Keyword Research

Identify high-performing keywords for your products. Incorporate these keywords naturally into your product titles, descriptions, and backend search terms. Effective keyword optimization can improve your product’s visibility in Amazon’s search results.

Compelling Product Descriptions

Write compelling product descriptions that highlight the benefits and features of your products. Use high-quality images and ensure that your listing is complete and informative. A well-optimized listing can lead to higher conversion rates.

User-generated Content

Encourage customers to leave reviews and answer questions on your product listings. Positive reviews and helpful answers can build trust and boost sales. Respond to customer inquiries promptly to provide excellent customer service.

Minimizing Risks

Investing in market and product research isn’t just about increasing profits; it’s also about minimizing risks. Here are some strategies to reduce potential losses:

Diversify Your Product Portfolio

Avoid putting all your eggs in one basket. Diversify your product portfolio to spread risk. If one product experiences a downturn, others can help balance your overall profitability.

Monitor Your Inventory

Overstocking or understocking can lead to financial losses. Regularly monitor your inventory levels and adjust your orders accordingly. Consider using Amazon’s Fulfillment by Amazon (FBA) program to streamline your inventory management.

Stay Informed and Agile

Keep a pulse on industry news, changes in Amazon’s policies, and emerging trends. Be prepared to pivot your strategies when necessary. Staying informed allows you to make proactive decisions.

Conclusion

In the competitive world of Amazon e-commerce, success isn’t guaranteed, but it’s attainable with the right strategies. Investing in market and product research is a smart move that can significantly increase your online profits. By understanding the Amazon marketplace, identifying high-demand products, and thoroughly researching potential offerings, you’ll be better equipped to make informed decisions, optimize your listings, and ultimately grow your e-commerce business. Remember that continuous research and adaptation are key to staying competitive in the ever-evolving world of online retail.

Or Hillel, Algopix

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At Cahoot, we believe today’s eCommerce industry needs next-generation shipping software. But before we talk about this amazing technology, it’s first worth asking – why is now the time? After all, legacy shipping software has been around for years. Thousands of sellers are already using these tools – why make the switch? 

We believe the present moment is perfect because eCommerce is dramatically different from how it looked just twenty years ago. The event that changed everything was the introduction of Amazon Prime in 2005. Just like the first iPhone revolutionized society’s experience with personal technology, Prime’s introduction transformed everything in the eCommerce industry. Sellers had to throw out old strategies and create entirely new ones to run their businesses. 

The differences are stark, but we’ve summarized them in this table: 

Let’s begin by going back to the 1990’s and early 2000’s to see what the ‘old world’ of eCommerce looked like, for sellers and customers. 

The ‘Old World’ of eCommerce

Lower Complexity

Just One Channel to Manage

In the old world, Amazon was not the ‘everything store’ yet. It was largely a first-party seller of a few products like books, CDs and DVDs. They did not face much competition – Walmart and Target restricted themselves to physical stores, while shopping cart platforms like Shopify and BigCommerce did not exist. All this meant that sellers did not have multiple sales channels to sell and take care of customers on. There was usually just one channel – their own website. With just one channel to support, it was also possible to operate with smaller sized teams. 

Minimal Competitive Pressure

In the 1990’s, online marketplaces did not exist. Amazon launched their third party marketplace only in 2000. In this environment, customers did not have a lot of choices. Sellers had to ensure they drew customers to their website through good marketing. Once they found you, it was not easy to do comparison shopping across different listings, brands or platforms. There was little pressure on sellers – it was unlikely a competitor would undercut you on price, or beat you on shipping speed. 

Low Customer Expectations

Perhaps most importantly, customers had no expectation of free and fast shipping. Before Prime’s introduction in 2005, customers had never tasted that experience. They were willing to wait 7-10 days for orders, and covered the cost of shipping. Even if they did not like this experience, there was no social media platform at the time where they could share their frustration.

Single Warehouse, Single Carrier

The combination of lower customer expectations and sales through a single channel meant that sellers could get by with operating from a single warehouse location, or two if they really needed the space. Customers living far away were okay with waiting as long as 1-2 weeks for their orders. And because customers were willing to cover shipping costs, sellers saw no reason to compare and find the lowest rate among multiple carriers. It was easier to just sign a contract with the one carrier with whom you could negotiate decent rates. Why bother with cost optimization when it was the customer paying the bill? 

Small and Simple Orders

In the old world, lower basket sizes (units per transaction) were common because customers were yet to trust making payments over the internet. The least risky way to test eCommerce was to just buy one item. As customer confidence grew, so did basket sizes. In the old world, Multi-Line, Multi-Quantity (MLMQ) orders were less frequent. MLMQ orders require sellers to provide workers on the warehouse floor with various kinds of boxes. Workers also need to spend more time on MLMQ orders, figuring out the best sized box to use. In the old world, order processing complexity was lower – you could order a few boxes of standard sizes, and your team in the warehouse could pack orders faster. 

In summary, sellers faced little complexity in running their businesses in the old world. The environment was favorable – they had to sell on just a single channel, faced minimal competitive threats and could easily satisfy their customers. All of this translated into simpler operations across the shipping lifecycle – be it warehouses, carriers or packing boxes used.

Lower Costs

We’ve taken a look at how operationally simpler it was to run an eCommerce business in the old world. But this was not the biggest advantage sellers had – we’ll now explain how costs were lower back then. 

Shipping Cost was Cheaper

Carrier General Rate Increases (the annual rate hikes made by the shipping carriers) held steady at 4.4% to 4.9% through the entire 1990’s, well into the 2010’s. This provided sellers better predictability and control over operations. 

Labor was Cheaper

In the old world, Amazon did not have a massive logistics network, requiring hundreds of thousands of workers. Walmart and Target did not have eCommerce operations. Without a large proportion of the labor pool being diverted to these large players, Sellers could easily staff their warehouses at wages that protected their margins. 

Space was Cheaper

The number of warehouses in the country has stayed relatively flat between the old world and the new world of eCommerce. But back in the old world, there were far fewer sellers requiring this space. Warehouse space has never been easy to find – after all, they were not lying around vacant, waiting for the eCommerce boom to happen. However, because the competition for limited space was much lesser back then, sellers could find space more easily, and at lower lease rates.

Across the order fulfillment workflow, sellers had lower costs, which gave them more certainty and confidence. They could have reasonable confidence that carrier rates, labor wages and warehouse lease rates were going to stay steady. They did not have to worry about any of these expenses creating a negative impact on margins.

Inefficiency in Operations Did Not Impact Margins

In a world without marketplaces, there was no significant threat forcing merchants to optimize costs. With customers willing to pay shipping fees and no social media for them to voice their feelings, there was no need to creatively innovate to find savings. And with it being comparatively much easier to hire workers and lease warehouses, there was no pressure to maximize resource utilization, or scrap to cut costs. After all, margins were protected without having to do any of those things.

The ‘New World’ of eCommerce

Now that we’ve taken a look at the old world of eCommerce, it’s time to remind ourselves of the world we live in today – Prime’s launch in 2005 changed everything about eCommerce, for both sellers and customers.

High Operational Complexity

Many Channels to Manage 

Today, Amazon’s massive third party marketplace has made it the ‘everything store’ it dreamed of becoming. Major retailers – including Walmart and Target – have now expanded into eCommerce, while shopping cart platforms like Shopify and BigCommerce help merchants sell directly to customers. Even firms like Macy’s and Nordstrom, which stayed focused for a long time on their physical department stores, are now aggressively investing in eCommerce. This means sellers now need to run marketing, sell, and support customers on multiple channels. This has also meant they need to hire larger teams to manage this complex operation.

Intense Competitive Pressure

The rise of online marketplaces has meant that sellers now face more intense competition than they ever did in the old world of eCommerce. Today, no seller can relax once their marketing has attracted a customer to their listing or website. Customers have almost infinite choice and constantly compare products, prices and shipping speeds across different platforms before they checkout. There is a constant threat of someone undercutting you on price, or offering faster shipping. Worst of all, there is a growing trend of knock-off products which erode the sales of the original brand by shipping faster or being lower priced.

Sky High Customer Expectations

 The biggest change is that customers are now used to the 1-day and 2-day free shipping experience. They abandon their carts if they do not see free and fast shipping offers. And if they see any drop in quality, they can use the power of social media to hurt your brand equity and customer sentiment. 

Multiple Warehouses, Multiple Carriers

Free and fast shipping has become central to today’s customer experience, but making it happen is neither easy nor economical for sellers. Prime raised customer expectations to a whole new level. To highlight just how dramatic the shift has been, consider this. When Prime introduced free 2-day shipping in 2005, it took competitors like eBay and Walmart over a decade to catch up, with the launch of their competing services in 2017. However, when Amazon announced its plans to move Prime from 2-day to 1-day shipping in 2019, competitors responded almost immediately. This highlights just how important free and fast shipping has become across every channel today. However, offering free shipping on every order is not an easy task. The only economical way for sellers to make it happen is through distributed fulfillment. Inventory needs to be spread across a strategically located network of warehouses. This ensures that products are placed closer to customers, shortening transit times. It also ensures a reduction in the number of shipping zones packages must cross, making operations more economical for sellers. To preserve margins and profits while still offering free shipping, sellers must now also work with a wide mix of carriers to ensure they can pick the cheapest label on every shipment.

Large and Complex Orders

Orders are more complex to process in the new world of eCommerce, with a higher proportion of Multi-Line, Multi-Quantity (MLMQ) orders. This has been driven by two major reasons. The first is that not everyone is deep-pocketed enough to offer free shipping on every single order. To make the economics work, sellers set high free shipping thresholds (you’ll get free shipping if you order $50 worth of items). This means orders are likely to be larger and contain multiple items. The second is that consumer confidence in making payments and purchasing products over the internet has increased significantly today. Customers are more likely to add multiple items to their cart today than they were in the old world of eCommerce. However, with more complex orders, you need to provide your team on the warehouse floor with more boxes of various sizes. This also means your team has to spend more time on orders, figuring out the best box to use to pack them. 

Today, sellers face a lot of challenges running their business. The environment can seem hostile – there are multiple channels to sell on, competitive pressure is unrelenting and customer expectations are sky high. All this has resulted in having to reinvent every step of the shipping workflow – through distributed fulfillment, multi-carrier rate shopping and figuring out how to effectively process larger orders.

Rising costs

We’ve now seen how complex it is to run an eCommerce business today. To compound the problems of sellers, costs in the new world are significantly higher. 

Shipping Cost is Expensive 

It is becoming increasingly difficult for sellers to absorb the costs associated with making deliveries. Carrier GRIs which held steady for nearly three decades are now increasing. UPS and FedEx imposed a 6.9% GRI for 2022, while their 2023 and 2024 increases are 5.9%. These increases are significantly higher than historical trends and exceed the prevailing inflation rate, making it difficult for sellers to handle the impact. These increases after years of stability have provided sellers with little time to adjust their operations and budgets. 

Labor is Expensive

Sellers also have to deal with increased competition in the warehouse labor market, which is driving wages up. Amazon is no longer the only major employer of warehouse workers. The company is now facing competitive pressure from Walmart, Target and other retailers getting into eCommerce. Workers now have a variety of options to pick from – driving up the wages and benefits packages that companies must offer workers. Warehouse staff now expect to be paid $19 / hr on average. At this rate, this is no longer a minimum wage occupation. And with the pool of workers being diverted to these major players, it has become very difficult for other brands and retailers to staff their warehouses sufficiently. 

Space is Expensive

Lastly, warehouse availability is at an all-time low, driving leasing rates up. Conventional wisdom would suggest that the number of warehouses would have increased proportionally with the growth of eCommerce, ensuring sellers today paid roughly the same to lease warehouses as those in the old world. The reverse is actually true – the number of sellers is ever increasing, while the construction of warehouses lags well behind. According to research from real estate firm JLL Inc, the average US warehouse is 42 years old! A 2021 Cushman and Wakefield LLC study found that as many as 70% of America’s warehouses were built before 2000. This has meant that a huge number of sellers are now competing for the same limited space – driving leasing rates up. 

Sellers today are caught in a tough spot – while they’re trying really hard to catch up to customer expectations, they’re also facing cost pressures on many of the elements required to make it happen. With carrier rates, leasing rates and labor wages all beginning to climb upward after years of relative stability, it adds to the stress and uncertainty that sellers are already facing in today’s deeply competitive environment.

Efficient Operations Essential for Margins and Profits

In the world of marketplaces, sellers need to constantly find innovative ways to drive down costs to stay ahead of competition. If they do not find creative ways to offer free and fast shipping, customers will simply abandon their carts and go to a competitor. And in a world where everything has become more expensive, maximum resource utilization is vital. Today, scrappy and smart solutions to pool resources and cut costs are essential. In the new world of eCommerce, it’s the only way to preserve margins, stay competitive and win.

Why Sellers Need to Switch to Next-Gen Shipping Software

Now that we’ve taken a look at the old and new worlds of eCommerce, you might be wondering what role does shipping software play in all of this? 

We believe that legacy shipping software was designed and built from the ground up for the old world of eCommerce. We are not saying these tools are bad – they worked well in the old world that they were designed for, but we believe they are not well-equipped to handle the challenging demands of the new world of eCommerce. We’ve already seen how costs were lesser, hiring was easier and operations were simpler in the old world. Legacy software does not provide sellers meaningful automation or cost savings, because there was no need for it in the old world. In the new world, it is actually adding to the problems sellers face by increasing costs and consuming their time. Rather than automating and simplifying, their technology creates more problems.

We think a small tweak or minor enhancements will not cut it. Today’s sellers need purpose built, next generation shipping software designed for the new world of eCommerce. As we all know, operations are complex, costs are rising and staffing is harder today. Sellers need all the automation and cost savings that technology can generate. They need technology that helps, not hinders. 

The next generation eCommerce shipping software must solve 3 key problems which are at the heart of the differences between the old and new worlds: 

• Simplify the operational complexities of the new world of eCommerce 

• Drive operational efficiencies and productivity gains for your team

• Generate meaningful cost savings across each step of the shipping and order fulfillment workflow 

In the coming sections, we’ll dive deeper into each of these aspects, and explain how legacy software fails to solve these challenges. We’ll also explain how our next generation software is purpose built to address these key requirements.

The differences are many, so we’ve summarized them into this table for a quick overview: 

Simplifying Operations: Making Today’s Complex eCommerce Effortless

Based on research we’ve conducted, a merchant seeking to cover the continental US (the lower 48 states) with 2-day shipping requires inventory to be positioned in 4 strategically located warehouses. If they’re seeking to achieve 1-day delivery, that number rises to 9 fulfillment centers.

As the number of sales channels and warehouses increases, the operational complexity increases exponentially. Legacy shipping software was built for the old world, where fulfilling orders from just a single warehouse location was the norm. It was never built to handle the complexities of distributed fulfillment. Too many things at the core of the software would have to change to elegantly handle distributed fulfillment. This means merchants often try to get by with complex, convoluted workarounds that keep breaking. 

Today’s multi-warehouse, multi-channel environment creates many problem areas for sellers to manage: 

• When inventory is spread across such a large number of warehouses, which location should each order be routed to? 
• Distributed fulfillment offers possibilities if there are problems at any one warehouse location – such as receiving orders after the cut-off time, running out of inventory or inclement weather. How can software make identifying such exceptions and rerouting them easier?
• How can fulfillment be handled across multiple sales channels while ensuring a consistent, cohesive experience for customers?
• Can the system natively integrate with best-in-class fulfillment networks to unify your logistics technology and operations?
• With eCommerce growing all the time, people are sharing more sensitive data than ever online. With an increased consumer demand for privacy protection, how does your shipping software keep data secure?  

We’ll now take a look at each of these, examining the differences in the way legacy and next-generation eCommerce shipping software handle them.

Automatic Order Routing and Label Generation

Legacy Software – Crude and Primitive Routing

Many of today’s popular legacy software have automated order routing features. However, do not be fooled – these capabilities are limited and prone to error. 

In systems like ShipStation, a “Ship From” location can be set based on specified criteria – such as the SKU ordered or the customer’s address. However, a large number of clunky automation rules have to be written – for example, writing a rule to have all orders from West Coast customers be shipped from your California warehouse. Similar rules mapping other states to respective fulfillment locations have to be manually written. Similarly, if you have certain SKUs available only in specific locations, you need to write rules to assign orders accordingly. 

Creating such a large number of automation rules is an error-prone, painful process for many reasons. Here are a few of them:

• So much to configure. Merchants need to ensure they’ve captured every business process through a rule. If they forget to set up any rule (quite possible, given the high levels of operational complexity today), it can create problems and cost leakages. Even the simplest of workflows require rules to be defined. For example, imagine that you wish to use only certain carrier services to make deliveries to residential addresses. Even in that case, you need to define automation rules mapping the address type to appropriate services. 

• You’re guessing and hoping. Because your rules are manually defined by mapping SKUs or customer addresses to fulfillment locations, there could always be cases where the rules don’t make the most optimal decision. Without doing a deep, time-consuming manual investigation, you’ll never be able to actually tell.

• Requires constant maintenance. Rules become obsolete if carriers change or update their services. For example, when USPS introduced Ground Advantage, your rules don’t automatically update to factor in the new service. This means you’ve to spend hours updating and rewriting them.

Slow process. Sellers don’t feel comfortable beginning shipping with the software until they’re confident they’ve captured all of their processes through automation rules. This delays go-live, ultimately increasing your time to value.

Next-Gen Software – Intelligent, Powerful Routing Technology

Cahoot’s next generation shipping software comes with end-to-end intelligent automation. When you receive an order, the system intelligently compares multiple warehouse locations, inventory levels, carriers and shipping services to pick the cheapest label that will meet the delivery SLA committed to the customer. 

With our technology, you won’t face the automation problems that we’ve highlighted with legacy software. Our intelligent order routing capabilities provide sellers with many benefits: 

• Nothing to configure – it just works. You don’t need to spend time worrying whether you’ve captured all your business workflows through automation rules. Cahoot factors in all variables like shipping services, warehouse locations and inventory levels to pick the optimum fulfillment location on every order automatically. 

• Based on the lowest cost, no more guessing. There’s no need to worry about whether your automations have been configured correctly to truly pick the best location every time. You can rest assured knowing that the decision is in the hands of technology, which makes the right choice on every order.

• No maintenance. The system automatically factors in any changes that carriers make to their services. There are no hand-written automation rules to update or overwrite. When new services like Ground Advantage are launched, the system factors in this additional information, and continues to automatically route orders correctly. 

• Ready-to-go.Sellers can begin shipping in days or weeks, not months with our software. There’s no need to spend time wondering whether you’ve captured workflows through elaborate automations. This means you’ll be able to go live faster, and shorten your time to value.

Multi-Warehouse Exception Management

Legacy Software – Limited Rerouting Capability

With legacy software, it’s difficult to plan for the unexpected. Let’s imagine you have 2 warehouses – one in Chicago, and the other in Southern California. Suppose a blizzard strikes the Chicago location. 

When working with legacy systems, you don’t have an easy way to temporarily suspend locations. All you’re looking for is a way to temporarily put fulfillment from your Chicago location on hold, while you wait for the weather to improve. 

In legacy systems like ShipStation, each SKU is mapped to a list of warehouses from where it can be shipped. You will need to update this mapping between SKUs and fulfillment locations to stop fulfillment from one of your warehouses. This is a painful workaround that you have to perform for a very short period of time – once the weather improves, you’ll have to repeat the process to restore the original configuration. 

 All this adds to what is already a stressful time, making it difficult for your business to quickly adjust to, and recover from unexpected events.

Next Gen Software – Agile, Flexible Order Rerouting

With next generation shipping software, adverse events don’t have to mean disaster for your business. If one of your fulfillment locations goes down, you can quickly toggle it off – and Cahoot will do the rest. The system will automate shipping from the other available locations, helping you keep your customer promises and continue selling. 

There are other scenarios when you might require intelligent exception management which need not be emergencies – for example, if one of your warehouse locations needs to close for a holiday, the system can exclude that location and continue to simplify shipping for you across the other active locations.

There are no automations to undo or rewrite. You don’t have to spend a lot of time restoring your system to its original system once the affected location is back up and running again – it’s just a simple toggle to flip on. This ensures that your business can continue operating normally during such events, and quickly recover from them with minimal impact. 

Multichannel Capabilities

Legacy Software – Many Integrations, but of What Value?

One advantage that legacy software has by virtue of having been around for a longer time is its long list of integrations. These tools, such as ShipStation, Desktop Shipper and Shipping Easy all have a long list of integrations with shopping cart platforms, online marketplaces and other tools that eCommerce sellers use. 

However, while this is definitely a positive, we think this is a case of winning the battle, but losing the war. In the above sections, you’ve seen some of the limitations of these tools (keep reading to see more deficiencies), and how they can hamper your productivity and hurt your costs on every single order. You might save a little time with out-of-the-box integrations to more platforms, but does it really matter if these tools negatively impact your bottom line? 

Next-Gen Software – All the Integrations You’re Used to

Cahoot’s next-generation shipping software is tightly integrated with all leading online marketplaces and shopping cart platforms, including Amazon, Walmart, Shopify, eBay, BigCommerce, WooCommerce and Magento. We’re also integrated with all leading shipping carriers and eCommerce tools that sellers use today. 

What really matters is the depth of integration between the channel and your shipping software. A simple integration may fetch orders from Shopify or Amazon into your shipping software, but fail to sync inventory or push back tracking information. With our integrations, Cahoot automatically fetches all information required to fulfill an order from the sales channel, and intelligently pushes back tracking information to the channel. We also maintain an inventory sync, ensuring that you won’t accept orders on out-of-stock items, preventing overselling. The system also provides you with color-coded alerts to quickly alert you to dipping inventory levels, enabling timely, proactive replenishment rather than reacting to customer frustration on canceled orders.

While our list of integrations might be comparatively smaller (but growing!), you won’t feel the difference – our API allows you to connect Cahoot with any other system you’re using. And as we’ve highlighted in the above sections (keep reading for more!), the system offers real cost savings and productivity gains on every single order.

Integration With Fulfillment Networks

Legacy Software – Cobbled Together and Disjointed

Legacy eCommerce shipping software works well if you’re fulfilling a small number of orders from your own warehouse location. However, if you’re partnering with multiple 3PLs, have a combination of in-house and outsourced fulfillment, or are working with order fulfillment networks, cracks start to emerge. This stems from the lack of native integration with fulfillment networks that legacy software have. 

With tools like Deliverr, you can’t expand nationwide coverage through their network while still running your own operations. For example – what if you wish to fulfill certain orders from your own warehouses if you have inventory and rates are cheaper? Deliverr seeks to capture all volume even if it is inefficient to do so because they don’t integrate with all your fulfillment nodes. Many legacy software have a similar problem, where they find it difficult to manage a combination of in-house and outsourced fulfillment. Rather than the system intelligently identifying which orders need to be outsourced, the seller has to define this – which is time consuming and error-prone.

Other forms of chaos can emerge when you’re trying to force a legacy shipping software and 3PL vendor (like Flexe, for example) to work together. The 3PL might require you to figure out which orders you’re going to ship with them, generate a PDF with all that information and send it over to them. If you’re trying to participate in a program like Seller Fulfilled Prime, you have tight cut-off times and very little room to maneuver. Imagine scrambling in the limited time you have between the cutoff time and the carrier pickup to send over this information to them. You have to hope and pray that you haven’t made a mistake, and that you’ve sent the information in time for your 3PL to process the shipments. 

Lastly, let’s imagine a scenario where you’ve partnered with multiple 3PLs to achieve nationwide coverage. You’ve to either use the shipping software to print labels manually and hand that over to each of the 3PLs, or share your credentials with all of them. This increases the number of parties your carrier credentials go to, increasing risk and vulnerability for your business.

If you’re experiencing some of these frustrations and want to migrate from your existing fulfillment partner, we know that it’s easier said than done. The process can be uncertain, confusing and stressful for your business. We’ve put together a step-by-step guide to help you make the switch from one fulfillment partner to another, which you can read here!

Next-Gen Software – Natively Integrated

Cahoot’s shipping software is tightly integrated with our order fulfillment network (having over 100 warehouses in the US). The system is also flexible enough to accommodate any fulfillment locations you run your own operations from – making handling scenarios where there is a combination of inhouse and outsourced fulfillment easy to manage. In such cases, the system is able to intelligently and automatically identify the orders where fulfillment is cheaper through outsourcing rather than being handled at your own warehouse. This frees up your time and ensures you’re getting the best deal on every order.

You also don’t need to spend time acting as the middleman between your shipping software and 3PL, where you drown in busy work generating PDFs and handing them over to your fulfillment partner. With us, your fulfillment partners see all orders instantly, and can print labels in one click. This agility and simplified workflow is just one of the reasons that help sellers using our fulfillment network meet and surpass the challenging cut-off times and demanding criteria that Amazon expects them to meet on Seller Fulfilled Prime. 

It’s not just SFP where requirements are challenging. On Walmart, merchants hoping to see increased conversion and sales must offer free nationwide 2-day delivery with over 95% of orders expected to reach customers by the promised time. 

And while you may scale to use many warehouses on the Cahoot network, none of our fulfillment partners know your carrier credentials – you share that only with us on the platform. This reduces risk and keeps your credentials safe, while scaling nationwide fulfillment for you.

Information Security and Data Protection

Legacy Software – Poor Security and Privacy

Legacy eCommerce shipping software provides minimal data protection measures. Everything is fine if you own your own warehouses and are using these tools to fulfill orders. However, if you’re partnering with a 3PL (and they use legacy tools to process orders), you’ve handed over all your brand and customer data to them. 

While you may sign agreements to prevent misuse, personally identifiable information about your customers (full name, email) and proprietary business data is openly available to your 3PL. While they may operate with good intentions, your confidential data is now at the mercy of their information security practices. 

This increases the risk and exposure for your business, with little safeguards in place to protect sensitive information.

Next Gen Software – Robust Data Protection and Governance

With next generation shipping software, we ensure that only the essential information needed for order fulfillment is transmitted to your fulfillment partner. We hold back or redact other information – for example, even on a shipping label, your fulfillment partner sees only the initial of the last name of the customer – making it difficult for them to reconstruct personal customer data. 

We also keep non-essential customer, brand and product information walled off and accessible only to you. This ensures that your data is secure and accessible to only one party – you. 

Efficiency: Supercharge Productivity for Your Team

We’ve now discussed how shipping software needs features that help you simplify the complex new world of eCommerce. But sellers are not just focused on simplifying operations inside their businesses. Pressure from outside continuously bears down on them – whether it’s rivals on online marketplaces, multiple channels to market and sell on or demanding customers. 

And all this is happening amid a competitive labor market, where staffing has become expensive and challenging. It isn’t good enough if an eCommerce shipping software is capable of reducing operational complexity. It must do so in a way that requires minimal human intervention and resources, allowing you to do more with less. Crucially, the software must unlock productivity gains for today’s small teams, allowing them to focus their attention on value-adding higher order work.

In the previous section, you might’ve seen that legacy software has features that can simplify operations complexity. However, those features are often painful and convoluted to implement by a small team of seasonal or part-time workers. We think there are 3 major areas where shipping software must streamline workflows efficiently: 

• Does the software have humanless automation across shipping workflows? Can it free up your team to concentrate on other work, or does it require constant babysitting? 

• In a world with increasing basket sizes, your team on the warehouse floor loses time on every order, figuring out the best packaging box to use. Can it unlock time savings for your team, allowing them to get orders out the door faster? 

• How easy is it to use the product? Can it be used by seasonal or part-time workers, or does it need staff with specialized training to take care of it?

In the coming sections, we’ll take a look at each of these areas, examining how legacy software reduces productivity and consumes your team’s time in deploying and managing it. We’ll also highlight how next-generation shipping software is built to ensure your team gets back time they’ve been losing, boosts their productivity and drives greater efficiency across your business. 

Automated Shipping Workflows

Legacy Software – Labor Intensive and Painful

The most important thing that teams do inside shipping software is route orders to fulfillment locations, and identify the cheapest label to use to ship an order.

Legacy shipping software has manual processes for printing labels which are labor intensive, repetitive and prone to error. On most of these tools, the process takes multiple steps and clicks, and looks something like this (after logging in, and identifying the orders that need to go out today): 

1. Open an order
2. Fix address issues 
3. Identify which warehouse has the SKU in stock 
4. Assign a Ship From location based on customer address
5. Make packaging choice 
6. Rate shop across all carriers and services
7. Pick the cheapest service 
8. Print Label 
9. Go back to step 1 for the next order

Some of these steps can be automated through crude, hard-coded automation rules but those are time consuming to configure and can still be inaccurate. A rule is needed for almost every single workflow. Here are some reasons why this process is so elaborate and painful: 

• Automations in most legacy software require certain criteria to be defined. When orders meeting these criteria (for example, orders for a certain SKU) enter the system, the rule is triggered to execute certain actions (like assigning a certain carrier or service). But what are all these rules defined for? Their ultimate aim is to find the lowest priced shipping label on every order. These rules simply trigger certain actions to occur, rather than rate shopping for the cheapest label by comparing carriers and services. 

•  Even simple steps of the process need a rule. For example, if you’re delivering to a residential address, then only certain services can be used – like FedEx Home Delivery, for example. A rule needs to be written to ensure this mapping is considered by the system. All this makes it enormously difficult to cut down the number of keystrokes and clicks. 

• ShipStation’s ‘Auto-routing’ feature which is currently in Beta, only factors in which locations have a product and their distance from the customer before assigning orders to a fulfillment center. It still does not support comparing shipping carriers and services to actually make a full and final decision, based on the actual rates.

In our estimation, it would take the average human over 5 hours to print labels for 1000 orders! 

And as we all know, a human is not a computer. When doing a repetitive task for such a long period of time, fatigue and the possibility of errors increase dramatically. It’s also worth asking – why should a human be engaged in such repetitive, low-value work all day long?

Next-Gen Software – Humanless and Seamless

With next generation shipping software, the difference is like night and day. The system intelligently compares warehouse locations, carriers, shipping services, inventory levels and packaging boxes to instantly and automatically generate shipping labels for every single order. 

Here’s the sequence of steps to accomplish the same goal on Cahoot (after logging in) 

1. Verify the address corrections made by the system 
2. Print labels in bulk 

The system automates multiple steps that legacy software doesn’t – it spots potential issues with addresses and makes suggestions to fix them, only considers warehouses that have inventory available, makes packaging choices and rate-shops for the cheapest service. 

It’ll take the average human just 15 minutes to print labels for 1000 orders on Cahoot. We’ve made a video where you can get a glimpse of how this works, and how we stack up against popular legacy shipping software ShipStation (if you’d like to see a little more about how Cahoot compares to them, read our comparison here!) You can sit back and relax, knowing that the optimal selection was made using technology on every single order. You can also free up your time to be doing other tasks that add more value to the bottom line. If you’re finding it difficult and expensive to hire more people, you can ensure that the people you do have are focused on the problems that matter the most.

Making Large, Complex Orders Easy to Handle

Legacy Software – Left to Humans and Heuristics

Legacy shipping software is mainly focused on one portion of the fulfillment workflow – printing shipping labels. In a world of rising basket sizes, merchants have complexity in other steps of the shipping process, including packaging selection. 

This is a common problem that customers of legacy software like ShipStation face. On complex orders which might require multiple boxes of various sizes, they are forced to enter the box dimensions manually each and every time based on the SKUs in the order. The customers from their forums below are requesting for a pull-down list of the common boxes they use, so that they can quickly make the selection rather than manually entering dims.

The customer is also highlighting a more important issue – they can add a set of boxes as a “base” in ShipStation. This feature aims to serve as a default, which can be applied on most MLMQ orders. However, unless you’re lucky that most of your MLMQ orders consist of the same unique combination of SKUs, such a feature is pointless.

The list of hard-coded automation rules (mapping SKU combinations to boxes) to write can be dizzyingly long, and involves you having to figure out all the possible SKU permutations.

As the classic saying goes, customers are great at highlighting problems, but not identifying solutions. We think this is a big pain point which next generation software can solve for. 

Next-Gen Software – Powered by Machine Learning

Cahoot’s next generation shipping software solves both of these problems. We don’t think the solution is a drop-down list, because you’re just replacing keystrokes with clicks. It’s still human effort. 

Our software remembers the box selection you make the first time, and applies it by default the next time. This ensures you’re freed up from repetitive manual entry and clicks. 

We don’t believe the solution to pick the most optimal box on every MLMQ order is an arbitrary default or crude automation rules. Our system comes with breakthrough innovation, with our 3D Package Manager. Whenever you receive MLMQ orders, the software uses 3D Bin Technology to intelligently evaluate the % fit of items in boxes, making sure the most optimal box is selected every time.

This frees up your team’s time from data entry and having to spend minutes on every order figuring out which box to use. This unlocks time savings for your team to focus on more valuable tasks that grow your sales and business.

Savings: Stay Ahead and Boost Margins Despite Rising Costs

We’ve now identified two key things that a next-generation eCommerce shipping software must do – it must simplify operations in today’s complex world, while also doing so in a way that boosts your team’s productivity and frees up their time. 

However, the biggest pressure merchants face today is around costs. In a world where carrier GRIs, worker wages and warehouse leases are all going up, sellers need to scrap to save every penny, to protect and increase their margins. It can make the difference between going out of business and finding success. 

Legacy software does a poor job of unlocking savings because it was built for a world where resource optimization or cost-cutting was not needed. We believe there are 3 key areas of the shipping workflow where software must be able to unlock cost savings: 

• Does the software pick the cheapest shipping label every time? 

• Does the software optimize packaging and shipping costs in a world of large, complex orders? 

• Is the software easy to use, with minimal human oversight? Does it allow you to do more with limited resources? Can it work even if those resources are untrained, seasonal or part-time labor? 

Pick the Cheapest Label Automatically, Every Time

Legacy Software – You’ll Never Know if You’re Saving Money

As we’ve seen in the sections above, legacy software requires a lot of manual automations to be written to capture workflows. But why do merchants go to all this trouble and take the time to do so? The answer is simple – identify the cheapest shipping label on every order.

However, the automations (mapping SKUs and customer addresses to fulfillment locations and carrier services) are simply a means to an end. There is no way to actually tell whether the rules are ensuring that the cheapest option is being picked every time. 

To actually identify that, manual and deep cost comparison analysis has to be done to figure out the reality. The possibility of cost leakage is a real one. And in a world where customers expect free and fast shipping on every order, every last dollar and penny matters. You need certainty and confidence in the labels your shipping software is picking. 

Next-Gen Software – Savings on Every Label

Cahoot’s software eliminates the maze of complex human-defined, hand-written automation rules. With these rules gone, you don’t need to worry about whether you’ve optimized your automation rules for maximum savings. The system intelligently factors in all available parameters to make the right choice, every time. 

It’s possible to overlook many possibilities when defining automation rules by hand – for example, a 1 unit order of a certain SKU might weigh less than 1 lb, allowing you to use USPS Ground Advantage. But what if someone orders 3 units? Or 6 units? In each case, the system factors in all data and parameters to make the right decision. 

You don’t need to spend time doing a deep, detailed investigation into whether you’re actually saving money. You can rest assured knowing that you’re getting the best label every time. 

Pay the Right Shipping Fees, Even on Complex Orders

Legacy Software – Cost Leakages From Human Error

We’ve highlighted how legacy software makes it more complicated for your team on the warehouse floor to handle Multi-Line, Multi-Quantity Orders. By leaving the judgment of which box to use in the hands of humans, you don’t just sacrifice productivity – you could also lose money on every order. 

The shipping carriers set their rates based on dimensional weight. If your team uses a box of a larger size than is actually needed, the item can have higher DIM weight, costing you more money on the rates you pay the shipping carriers. 

With no automation or decision guidance from your shipping software, the decision is left to the eyeball judgment of your team, which increases the possibilities of errors.  

Next-Gen Software – Pay the Optimum Rate Every Time

With Cahoot’s 3D Package Manager and powerful automations on Multi-Line, Multi-Quantity Orders, you can rest assured knowing that you’re using the right box on even your most complex orders. 

This means that items go in the most optimum boxes, and that you pay only what’s needed to the shipping carriers. With decision making guided by technology, the possibility of errors is reduced, ensuring that you save every last penny. 

Ease of Use

Legacy Software – Needs Staff to Babysit the Tool

As we’ve seen, legacy software is clunky and complicated to use. At every turn, the tool requires manual data entry, workflow configuration and updating by humans. Once you configure these tools, you can’t ‘set it and forget it’. Changes from the carriers or updates to your product catalog break automations and configured workflows, requiring someone to constantly babysit and oversee the tool. 

Most sellers hire dedicated resources or even teams just to configure, deploy and maintain their eCommerce shipping software. In a world of rising costs, this means you lose money on expensive staffing. To make matters worse, those members of your team are perpetually stuck maintaining legacy software, rather than contributing in other, more valuable areas.

Next-Gen Software – Anyone Can Use it

With Cahoot’s next generation software, most workflows are taken off your team’s plate and are automated by the system. Changes that occur at your end or from the carrier’s are easily factored in by the system’s automation. This ensures that you don’t need to deploy dedicated resources to implement or maintain the system. 

It is possible for untrained, part-time or seasonal employees to quickly learn and use Cahoot. In today’s competitive labor market, this can unlock competitive advantage by allowing you to do more with less. Your team members are also freed up to focus on more value adding tasks, rather than spending all day ensuring that your shipping software doesn’t fall apart.

Conclusion: Next Generation Software is Critical to Winning in the New World

We believe everything has changed in eCommerce, and highlighted how Prime has changed the industry in a manner comparable to how the iPhone changed society’s experience with technology.

Prime transformed one aspect of eCommerce more than any other – shipping. However, as we hope you’ve seen from the sections above, this is the area where the least technological advancement has occurred. We believe legacy tools are costing sellers time, money and productivity on every order. In a world of competitive online marketplaces, sky-high customer expectations and rising costs, sellers have it extremely hard as is. They don’t need technology adding to their list of worries. They need software that helps them compete and win in this world. 

Such a tool must be capable of addressing some of the key challenges of the new world of eCommerce – simplifying operational complexity, providing efficiency and productivity gains for your team to focus on the things that matter most and providing savings that restore margins in an intensely competitive environment. We believe our tool does exactly that.

We believe this tool can provide you with strategic and competitive advantages in today’s complex eCommerce industry. Are you ready to make the switch?

Offer 1-day and 2-day shipping at ground rates or less.

Recent Blog Posts

The best eCommerce brands and sellers are constantly looking for new sales channels to expand their footprint. Most people think of Macy’s and its sister brand Bloomingdale’s as retailers that are heavily focused on their brick and mortar stores, who trail well behind the likes of Amazon in eCommerce. Therefore, they are likely not the first names that come to a merchant’s mind when they consider expanding beyond Amazon. However, in recent times, Macy’s has begun to catch on to the surge in eCommerce and realizes that it represents an opportunity through which it can boost sales and revive stalling growth.

In 2022, Macy’s reported it has around 45 million active shoppers, of which 29.1 million are Star Rewards members – a sizable audience for an online seller to target. In a bid to increase the product mix that it offers, the company launched its online third-party marketplace in late 2022. Unlike Amazon’s marketplace, where nearly anyone can start selling, Macy’s platform is curated. This could be done to ensure they serve their customers with the brands and products they think will most appeal to them. If you’re reading this, it probably means you’ve been selected by them to feature your assortment – congratulations! 

One of the key benefits of this 3rd Party Marketplace is its Vendor Direct Program – which allows merchants to receive orders that customers place on Macy’s website, and fulfill those orders on their own. This offers significant advantages for a couple of reasons.

Why is The Macy’s Vendor Direct Program Great For Sellers?

Simplified Inventory Management

As Macy’s allows sellers to fulfill their orders independently, you do not need to send some of your inventory to a Macy’s warehouse. This is a welcome relief for sellers who might already have sent some inventory to Fulfilled By Amazon (FBA) or Walmart Fulfillment Services (WFS), and are overwhelmed by keeping track of all these different marketplace-specific order fulfillment solutions. Macy’s allows you to manage your order fulfillment entirely on your own, just like you might be doing for your Shopify storefront, for example. This ensures that you don’t have to work with another logistics solution that is specific to a single sales channel. 

Whatever The Logistics Setup, Everyone Has a Fair Chance

Amazon’s A9 algorithm for search rankings, as well as the Buy Box algorithm, both assign high preference to listings that are fulfilled by the company’s inhouse FBA logistics network. Additionally, when delays or issues occur with FBA, Amazon faces no penalties – whereas Sellers fulfilling their own orders face severe penalties if they make a mistake, including having their product listings suspended. With Macy’s, there is no such competing network that stacks the odds against you – everyone competes equally, and the brands with the best products who achieve the highest order fulfillment excellence will win.

While all this offers sellers and their businesses operational and strategic advantages, the program still has high expectations from participating brands. Your choice of a 3rd Party Logistics Provider is a crucial factor in determining your success, and there are a few key factors to consider. 

What Should You Look For in a Macy’s 3PL?

Full Compliance With Macy’s Vendor Direct Fulfillment (VDF) Tech Stack

Macy’s requires that sellers integrate with their platform via CommerceHub. Within 1 hour of a purchase order being made, sellers must push acknowledgement to Macy’s via this integration. Also, the order must be shipped within 2 business days, and merchants must push confirmation that the order was fulfilled to Macy’s via this connection (with carrier tracking information). Your Macy’s 3PL fulfillment partner must be able to work with this configuration and ensure your orders are shipped on time. 

““Cahoot is very responsive and organized in all aspects. Everything is prepared to give anyone the best experience ever. They’re the right partner to help you accomplish your business purpose.” 

–Italian Food Online Store 

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Flexibility to Work With The Carrier Account Macy’s Provides

Macy’s will provide you with a UPS account for you to use, that must be used exclusively for fulfilling VDF orders. Your 3PL partner must be able to have flexibility and agility in both their software and operations which supports sellers bringing their own accounts.

Ultrafast Shipping

Macy’s requires that 98.5% of orders are shipped (leave the warehouse) in under 2 business days. However, the consumer expectation today is for fast, free shipping across every channel – when you operate either from a single warehouse you own, or work with a traditional 3PL (usually with just a couple of fulfillment center locations), aiming to cover the entire country from a limited number of locations becomes extremely challenging. Additionally, with Macy’s carrier accounts, you can only pick the UPS SurePost or Ground services to fulfill orders. Imagine if your 3PL only has a California fulfillment center, but you’re having to ship orders to New York – customers will have to wait 4-5 business days to get their order in the era of ultrafast same or next-day delivery. With a platform like Cahoot, you can leverage a network of strategically located warehouses to place your inventory closer to your end-customers and shorten delivery speeds. 

Adherence to Macy’s Packing Requirements

The little things are often the most important – merchants are required to place a Macy’s branded packing slip inside every carton shipped to customers. You need a fulfillment partner that is fully aware of all these requirements, and will sweat the details to ensure you are compliant with all aspects of the VDF program. 

Responsive and Reliable Customer Support

As part of the VDF program, Macy’s audits and reviews the performance of sellers on the program – any mistakes or errors that your 3PL commits directly affects your brand reputation and customer experience. It becomes essential to have a customer support team that is responsive and ready to resolve any issues that you may run into.

Experience Working With Macy’s Sellers

As we mentioned before, Macy’s marketplace is curated – meaning that there’s not a huge number of brands or sellers on it, unlike Amazon. This therefore means there are a limited number of order fulfillment services out there that have experience working with merchants who are part of Macy Vendor Direct. Make sure to identify a company that has demonstrable social proof of its track record supporting Macy’s merchants. Here’s what one of our customers, Glo International, had to say about their experience shipping Macy’s orders with Cahoot:

“Cahoot allowed us to reduce the monthly shipping cost and the support service is really responsive and efficient!” 

–Glo International

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Top Macy’s 3PL Companies

Amazon Multi-Channel Fulfillment

Amazon Multi Channel Fulfillment (MCF) is a service through which you can deploy Amazon’s logistics network to fulfill orders on other channels, such as Macy’s. 

ShipBob

Cahoot: The Best Macy’s 3PL

Cahoot’s order fulfillment network is built for the future of eCommerce. Our network of warehouses is strategically located at different locations in the US, enabling Macy’s merchants to offer ultrafast shipping. Our fulfillment centers are well equipped to handle all types of SKUs (including the ones that the typical Amazon fulfillment center may struggle to process) – small, lightweight, seasonal, slow-moving, heavier and oversized. 

We are also fully compliant with Macy’s technology and packing requirements – and provide you the flexibility to use the UPS account provided by them to you without any hidden fees. Lastly, our US based customer service team is always available if something needs to be fixed – ensuring that you’re continuing to sell more and delight your customers. 

Cahoot is committed to helping Macy sellers grow their businesses with fast and affordable ecommerce order fulfillment service.

If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We can’t wait to show you how Nordstrom order fulfillment was meant to be.

If you are selling on multiple sales channels and are interested in 3PLs that can help you with fulfillment, you can read our other articles:

1. How to Choose the Best 3PL for Your Shopify Store
2. How to Choose the Best 3PL for Wayfair
3. How to Choose the Best 3PL for Target Plus
4. How to Choose the Best 3PL for the Nordstrom Direct Drop Ship Program

Offer 1-day and 2-day shipping at ground rates or less.

Recent Blog Posts

Nordstrom is one of the most iconic department stores in the US. As of 2017, the company had 9 million shoppers. For most people, the first thing that comes to mind when they think of Nordstrom are its brick and mortar stores. The company serves American customers through 352 locations. Most eCommerce sellers might therefore ignore the retailer in pursuit of players with a larger digital presence, such as Amazon or Walmart. However, online is becoming an increasingly important part of Nordstrom’s operations – according to Statista, 38% of the company’s sales were driven through digital channels in 2022. In 2020, the company had the 3rd largest online revenue among department stores in the US, raking in $3.34 billion in sales. 

The Direct Drop Ship program is a way for you to access this large segment of shoppers. Through the program, sellers can feature their product assortment on Nordstrom’s website. When customers place orders, merchants must pick, pack and ship the products either from their own warehouse, or through a 3rd Party Logistics Provider (3PL) to the customer. 

Before we dive into how you can find this 3PL partner, it’s worth asking an important question – why is the program worth doing? 

Why is the Direct Drop Ship Program Great?

Invite-only Marketplace Where You Can Grow Sales

Nordstrom’s Direct Drop Ship program is currently invite only – like the 3rd party marketplaces at Macy’s and Target. Nordstrom may be doing this to simplify the product assortment customers see, making it easier for them to find things they really like. For sellers, this is great because it provides them access to Nordstrom customers with much less competition compared to a sales channel like Amazon, where nearly anyone can sell.

Nordstrom Provides Full Assistance With EDI Integration

Nordstrom requires transmission of information between themselves and their sellers through Electronic Data Interchange (EDI). The company does this through a CommerceHub platform called DropShip Commerce (DSCO). Whenever purchase orders are received, Nordstrom will transmit the information via EDI to the seller. Similarly, sellers must pass updates from their side (acknowledgements of Purchase Orders, Advance Shipment Notifications with tracking information etc.) through the DSCO platform. 

Some retailers require the seller to take care of configuring this technology on their dropshipping programs. Nordstrom provides both the platform and assistance in integrating it with their systems. 

Nordstrom Covers All Shipping Costs

One of the great advantages of the program is that shipping fees are paid for by Nordstrom. While other elements of order fulfillment, such as packaging and storage fees are still the responsibility of the seller, shipping labels are a significant cost that Nordstrom takes off their shoulders. 

Sellers must make sure that they use the UPS billing account that Nordstrom provides them – so long as merchants comply with this, they will be reimbursed shipping costs across a variety of services – including Ground, 3 Day Select, 2nd Day Air and Next Day Air Saver. 

What Should You Look For in a Nordstrom 3PL?

Achieve a Fulfillment Rate of 98%

Nordstrom requires that sellers keep cancellations extremely low – 98% of orders must be fulfilled before the defined due date on the DSCO system.

Traditional 3PLs that operate with a single warehouse location may not be ideal – in the event of any disruption at that location (extreme weather, carrier services disruption etc.), your ability to ship products on time to customers will be impacted. 

Additionally, traditional 3PLs may be limited to basic spreadsheets or worse, manual bookkeeping to keep track of your inventory. If you run out of stock and purchase orders continue flowing in, you will be forced to cancel them, affecting your fulfillment rate metrics. Cahoot’s software intelligently decrements the count of inventory as it leaves our warehouses, and provides color-coded alerts to you on a dashboard so that you always replenish products in time to keep your sales going. 

Ability to Ship 97% of Orders On Time

Nordstrom defines its shipping SLAs based on whether the order requires Standard or Expedited Shipping. 

Achieving this high level of performance comes down to ensuring that your fulfillment partner has excellent pick/pack and order fulfillment practices to get every order out within time.

Make sure to conduct extensive research into the standards at your 3PL’s warehouse. On Cahoot’s order fulfillment network, warehouses must pass a 44-point checklist to be eligible to fulfill orders for our sellers.  

“The Cahot team have been great to work with — always trying to provide great service and address any concerns and issues quickly and effectively. We’ve been very impressed with their shipping performance and communication on status of delivery for packages.” 

–Fenix Light Store

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Have a UPS Account, and Experience Working With the Carrier

Nordstrom requires that sellers use their own UPS account – your 3PL must provide you one, or give you the flexibility to use your own UPS account. Perhaps more importantly, the 3PL must have experience working with UPS – this will ensure that daily pickups and carrier scans are conducted in a timely fashion – thereby streamlining your Nordstrom order fulfillment. 

Help you Meet Nordstrom’s Eco-Friendly Packaging Standards

In Nordstrom’s words, they ‘strive to be an environmentally friendly company’. They also encourage sellers to avoid excess packaging. 

With many traditional 3PLs, you may find that items often ship in boxes larger than the SKU actually needs. The problem is that most traditional 3PLs have a very limited configuration of boxes of standard sizes. Items are simply thrown into the next available box, without taking care to identify if it is truly the most optimal one. 

The problem worsens with Multi-Line, Multi-Quantity (MLMQ) Orders. These orders can often be unnecessarily split into multiple boxes. With Cahoot’s MLMQ automation features, our system learns from SKU and box dimension data, as well as past data to intelligently identify the most optimal box for every order. 

This ensures that you save costs across every order, while also meeting Nordstrom’s (and the customer’s) expectation for more environmentally responsible, sustainable packaging.

Fully Compliant With Nordstrom Packing Slip Requirements

Nordstrom requires every shipment sent to customers to have a branded packing slip, as well as a return label (the company will bear the cost): 

This is how an example packing slip looks like

This is how a return label looks like:

Your 3PL fulfillment partner must sweat the details and ensure that this requirement is complied with – the little things matter enormously toward ensuring both continued enrollment in the Direct Drop Ship program, as well as customer satisfaction. 

Fully Compliant With Nordstrom EDI Technology

The 3PL must be able to work with the Direct Drop Ship Program’s tech stack (DSCO platform) and ensure that you comply with all the requirements around data transmission to Nordstrom. 

Responsive, Reliable Customer Support

Order fulfillment is a complex operation, involving multiple, intricate steps in the process from click to delivery. Things don’t always go as planned, but what is crucial is ensuring that your 3PL has a responsive, reliable customer support team whom you can rely on to fix problems fast, with minimal disruption to your business operations. 

Most traditional 3PLs may not have personnel with the experience and expertise required to troubleshoot and fix problems fast – costing you precious time and sales. It is important to identify a Nordstrom fulfillment partner with a reliable, responsive customer support team – who will be ready to dive in and solve problems quickly, so that you’re always selling and keeping your customers happy.

So now that we’ve taken a look at the important criteria that guide your choice of a 3PL for Nordstrom, let’s look at the options that are actually available to you, and the pros and cons of each of them:

“Cahoot’s support is prompt and personal, not monolithic and apathetic as some large companies tend to be. Cahoot is not only a great 3PL provider but also a strategic partner that goes above and beyond for its clients. They are a 5-star team of people who make it their business to care about yours.” 

–VERSACART

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Top Nordstrom 3PL Companies

Amazon Multi-Channel Fulfillment

Amazon Multi-Channel Fulfillment (MCF) is Amazon’s service through which you can fulfill orders on sales channels outside Amazon, such as eBay and Target Plus. 

The service deploys the same infrastructure and resources that power Amazon’s in house Fulfilled By Amazon (FBA) logistics network.

ShipBob

Cahoot: The Best Nordstrom 3PL

Cahoot’s peer-to-peer order fulfillment network is built for the future of eCommerce. Our network of warehouses is located at strategic locations across the US, enabling Nordstrom Direct Drop Ship merchants to offer their customers ultra fast shipping. Our fulfillment centers are well equipped to handle all types of SKUs – including heavier, seasonal, larger-sized and slow moving ones (which the typical Amazon Fulfillment Center may struggle to process). 

We are compliant with all aspects of the Direct Drop Ship program. Our US based customer support team is always ready and responsive to ensure that your order fulfillment operations are running smoothly all the time.

Cahoot is committed to helping Nordstrom sellers grow their businesses with fast and affordable ecommerce order fulfillment service.

If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We can’t wait to show you how Nordstrom order fulfillment was meant to be.

If you are selling on multiple sales channels and are interested in 3PLs that can help you with fulfillment, you can read our other articles:

1. How to Choose the Best 3PL for Your Shopify Store
2. How to Choose the best 3PL for Your Macy’s Orders
3. How to Choose the Best 3PL for Target Plus
4. How to Choose the Best 3PL for Wayfair

Offer 1-day and 2-day shipping at ground rates or less.

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Wayfair is commonly referred to as the “Amazon of the Furniture and Home Goods” industry. As of 2022, the company has 22 million active customers. While this may seem a small number compared to the number of people shopping at the likes of Amazon and Walmart, Wayfair is unique. The company has managed to retain its dominance in the Furniture and Home Goods category despite these massive competitors. In its latest financial results, the company brought in $3.17 billion in revenues. 

The company’s business model is similarly unique. While Amazon has invested heavily in building its inhouse logistics network, and Walmart and Target are slowly growing eCommerce in addition to the brick and mortar channel that fueled their growth, Wayfair is different. The company relies heavily on a drop-shipping model. In this model, when Wayfair customers place orders, they are sent directly to sellers to be picked, packed and shipped. According to estimates, the company drop ships as much as 95% of the products that it sells to customers. 

Given how top of mind it is to consumers looking for products in its focus category, Wayfair is an attractive channel for sellers and brands. In a channel where 95% of sellers are drop shipping, it becomes crucial to identify the right 3PL partner – one that can both help you scale revenues and delight customers. 

Before we jump into finding a 3PL, it’s worth asking – why is selling on Wayfair great for sellers?

Why Selling on Wayfair is Great For eCommerce Merchants

Lesser Competition Than on Other Marketplaces

Wayfair sources its products only from 23,000 suppliers, which is miniscule compared to the 2.5 million 3rd party sellers on Amazon’s marketplace and still very low compared to the 150,000 on Walmart. This allows brands to be much more prominently featured and visible to customers, enabling increased sales and profitability.

No Marketplace Referral Fees

Wayfair buys products from its suppliers at wholesale prices, and then charges retail prices to its end customers. This can be a more attractive model to sellers, compared to the referral fee based model that Amazon operates on.

Wayfair Covers Shipping Fees

Like other marketplaces, Wayfair covers the cost of shipping for its sellers. All shipments are billed to Wayfair’s Small Parcel (FedEx), LTL or White Glove shipping accounts. Merchants can either choose to use prepaid shipping labels from Wayfair or print their own shipping labels and then bill Wayfair for the associated charges. 

“Cahoot has a great app and tech platform for e-commerce and has been a great partner. I evaluated numerous competitors and they provided by far the most compelling combination of good pricing and service. Their people are top-notch and there to help you succeed as a partner.” 

–VENTAPAK

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What Should You Look For in a Wayfair 3PL?

Automated Inventory Level Monitoring

Sellers on Wayfair are encouraged to send Inventory Feeds (updates on how much stock of product is available at warehouses) as frequently as possible. This is because Wayfair wants to ensure a good customer experience by only shipping products that are in-stock.  

With traditional 3PLs, stock-keeping of inventory levels is often conducted on spreadsheets, or worse, by hand. These inefficient tools create many problems in staying on top of the inventory levels in your warehouses. 

If you overcommit on orders you cannot actually fulfill, then you’re forced into cancellations that ruin your relationship with both Wayfair and your customers. 

With Cahoot’s intelligent software, inventory is automatically decremented and you get color-coded alerts as you start running out of stock – this ensures you’re always proactively replenishing your inventory and boosting your sales, rather than scrambling to fix problems. 

Ability to Offer Late Same Day Cut Offs

Wayfair encourages sellers to deliver a great experience to their customers by ensuring that cut-off and pickup times are set as late as possible, so that customers can experience fast shipping. This might also be Wayfair’s attempt to keep themselves competitive and relevant in the era of ultrafast fulfillment. 

Most traditional 3PLs struggle to meet the demanding expectations from today’s customers. Cahoot is used to meeting expectations for late cutoffs, weekend pickups / deliveries through our expertise in helping Amazon sellers thrive on the Seller Fulfilled Prime (SFP) program. Through our network’s best-in-class fulfillment capabilities, you can meet and surpass the expectations of Wayfair customers. 

Minimum Lead Time – Every SKU Ships Fast

If different SKUs will ship in different timelines, Wayfair expects merchants to proactively communicate that to customers. However, today’s demanding customer expects ultrafast order fulfillment across every SKU. To meet that, you need to ensure that your 3 PL deploys excellent pick-pack practices and has high quality order fulfillment operations in their warehouses. 

Consider working with a partner like Cahoot – to fulfill orders for our sellers, a warehouse must pass a 44-point checklist. This ensures that only the very best fulfillment centers join our network. These fulfillment centers are well equipped to handle a variety of SKUs – small, light, slow and fast-moving, heavy, larger-sized and seasonal. 

“I highly recommend Cahoot to anyone looking to outsource fulfillment for their business. They go above and beyond to help make sure your needs as a business are met. I reached out to 20 other 3PL’s, and fulfillment centers. Cahoot was the best option for business relations, services, and pricing by far.” 

–GN Products LLC

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Responsive, Reliable Customer Support

Needless to say, order fulfillment is a complex operation and things don’t always go to plan. When you run into issues, customers or Wayfair won’t blame your 3PL – it’s your relationship and brand equity that’s at stake with these key stakeholders. While things can go wrong, it is crucial to ensure that your 3PL offers responsive, reliable customer support to fix the problem and restore your operations to normalcy quickly. 

Most traditional 3PLs lack personnel with either the experience or expertise required to quickly troubleshoot issues. It is essential that you identify 3PLs that have a dedicated and qualified support team, ready on hand to resolve problems and ensure you’re constantly selling more to your customers.

Cahoot – The Best 3PL for Wayfair

Cahoot’s peer-to-peer order fulfillment network is built for the future of eCommerce. Our network of warehouses is located at strategic locations across the US, enabling Wayfair merchants to offer their customers ultrafast shipping. Our fulfillment centers are well equipped to handle all types of SKUs – including heavier, seasonal, larger-sized and slow moving ones.

We are compliant with all expectations Wayfair has from its dropshippers. Our US based customer support team is always ready and responsive to ensure that your order fulfillment operations are running smoothly all the time. 

Cahoot is committed to helping Wayfair sellers grow their businesses with fast and affordable ecommerce order fulfillment service.

If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We can’t wait to show you how Shopify order fulfillment was meant to be.

If you are selling on multiple sales channels and are interested in 3PLs that can help you with fulfillment, you can read our other articles:

1. How to Choose the Best 3PL for Your Shopify Store
2. How to Choose the best 3PL for Your Macy’s Orders
3. How to Choose the Best 3PL for Target Plus
4. How to Choose the Best 3PL for the Nordstrom Direct Drop Ship Program

Offer 1-day and 2-day shipping at ground rates or less.

Recent Blog Posts