eCommerce business owners, listen in! In this episode of The Agent of Wealth Podcast, host Marc Bautis is joined by Irina Poddubnaia, Founder of TrackMage, a software for eCommerce sellers that helps them track packages, and a business consultant who specializes in operations and processes optimization. Irina shares tips for growing eCommerce companies that need help optimizing their process and standing out in the highly competitive market.
In this episode, you will learn:
- Current challenges in the eCommerce business, including the impact of COVID and supply chain disruptions.
- Possible, future challenges in the eCommerce business,
- Three strategies that allow companies to survive and thrive in a recession (automating processes, reducing operational costs and getting extra revenue from existing customers).
- How eCommerce companies can improve their revenue stream.
- And more!
Resources:
Trackmage.com | Schedule an Introductory Call | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000
Disclosure: The transcript below has been lightly edited for clarity and content. It is not a direct transcription of the full conversation, which can be listened to above.
Welcome back to The Agent Wealth Podcast, this is your host Marc Bautis. On today’s show, I brought on a special guest, Irina Poddubnaia. Irina is the founder of TrackMage, a software for eCommerce sellers that helps them track packages. Her journey started from running a fulfillment center in China for two and a half years. She then went on to launch a SAAS company completely remotely without external funding. She is also a business consultant who specializes in operations and processes optimization, and her efforts there have helped over 50 companies deliver outstanding results.
Today, Irina is joining me to share tips for growing eCommerce companies that need help optimizing their process and standing out in the highly competitive market. Irina, welcome to the show.
Thank you. I’m glad to be here today.
So how did you get into optimizing business processes?
It kind of grew organically because originally, when I left my nine to five, I went to China and started a fulfillment center. I thought it would be a good idea to get into the product businesses, but I sort of stumbled into logistics.
Previously, I was working as a sales or expert manager in a company that sold frozen berries in bulk, so I had experience working with containers, shipping abroad, invoices, bill of lading, etc. So it was quite different working in China because I had to deal with smaller batches – or just packages – sent from person to person.
What are some of the challenges that you’re seeing in eCommerce businesses right now?
Current Challenges in the eCommerce Business
Well, due to COVID-19 and the impact of the supply chain crisis, eCommerce businesses have had to restructure their entire sourcing strategy. Previously, it was possible to source from China and the delivery times were not as drastic as they are today. But right now, you need to plan three to five months ahead of time to get the inventory to the warehouse or on premises.
Previously, it wasn’t as drastic, and you even had the opportunity to dropship from China. Customers didn’t mind a two week delivery time.
Now, with a beginner eCommerce businesses, there usually isn’t enough funding for inventory to keep a stock, so they have to invest upfront before knowing if a product will sell. Because if they don’t invest upfront, they’ll have to deal with long shipping times which will likely lead to customers complaining or refunding their order.
That makes sense. Are you seeing more businesses opting to deal with the long fulfillment times? Or are more looking for other avenues to source outside China?
It’s a mixture of both. If they can source the products from local companies, they will definitely go that route. If a company is selling in the US market, it’s common for them to source from US suppliers. That used to be more costly, but now it’s pretty comparable to sourcing outside of the US. The only US products that are wholly dependent on China are basically private labels, which cannot be sourced elsewhere.
I see how the business is becoming more complex as a result of COVID, especially with the lead times, like you mentioned. Another concern is an impending recession in 2023… Which I’m sure companies are worried about. If they have to invest upfront to create inventory, and then don’t make enough sales, they’re in the red. How should companies think about 2023 in terms of their planning?
Strategies for eCommerce Business to Employ
Well, I believe eCommerce companies can employ some mixed strategies.
First, they can source some of their supply from local companies, which I mentioned earlier.
Second is to optimize the cost whenever possible, because you don’t want to lock all your funds in inventory or transit. I recommend shifting from more of a push strategy (where you pre plan inventory by forecasting sales) towards a 50/50 push and pull strategy (where you measure how the market is reacting, then order more product).
With the 50/50 push and pull strategy, there is a risk that you’ll run out of inventory, but that risk is preferred over being stuck with inventory you’ve invested in upfront.
Now, remember, people buy products not only for necessity but also for leisure. So it’s important for a business to make their products interesting enough to buy. If they succeed at doing that, they will be in the green regardless of a recession or not.
But I say that primarily for products that are not in the luxury price range. If you are selling luxury products, it might be a good idea to forecast (instead of the 50/50 strategy) so you can survive a recession, since in a recession people tend to stop purchasing luxury products.
Those are great strategies… Is there anything that you recommend an eCommerce business does to manage customers’ expectations? Going back to the lead time, I know there are many customers who won’t purchase a product that will take weeks to come in – which I’m sure has been exacerbated by websites like Amazon. What can a small business do so that they don’t have to deal with disgruntled customers complaining about shipping delays?
How eCommerce Businesses Can Manage Customers’ Expectations
Well, first and foremost, I recommend sourcing/selling products that customers can’t easily buy in shops nearby – sell something unique. This way, customers will have more patience in waiting for the product. Now these customers are going to be patient, yes, but they’re not going to wait forever…
If you have a long delivery time, you just have to manage the expectations. Businesses should notify their customer about delays and about the whereabouts of the parcel. That’s exactly what TrackMage does.
We have a functionality that notifies the customers:
- When the package is in transit.
- When the package gets delivered to the local post office.
- Where the package can be collected or when it gets delivered.
TrackMage also helps businesses collect reviews from the customers – and we make sure to request reviews after the package has been received by the customer. There are certain other platforms or cases in which an automated email fires out to a customer requesting a review before the product has been received. How can they submit a review for a product they haven’t seen?
Yeah, I know reviews are super popular now. A lot of online shoppers use them to make that crucial decision of whether or not to purchase a product. How does TrackMage acquire reviews, and what does it do with them once they’re collected?
So here’s what happens: When a customer receives a package and TrackMage is connected to the store, an email goes out to that customer with a form to leave a review. They will be able to leave a star rating and submit a comment. The review then gets stored in TrackMage – it doesn’t get published on the company’s product pages or website unless they want to. If a review is negative, the company can address the concern of the customer by reaching out via email or the phone number.
Reviews are great because they allow an eCommerce business to evaluate how they’re doing. One important thing for business owners to note is that only one in five happy customers will leave a review. I’ve seen this at scale: In 10,000 orders, I’ve witnessed there be only 2,150 positive reviews. This happened with one of our clients…
Customers, when they are happy, they are less inclined to leave a review. But when they’re not happy, they’re going to tell everybody – so they’ll leave a review almost 100% of the time. When you are dealing with negative feedback, it’s better to address the issue right away by reaching out to the customer. Because one negative review can become a part of a company’s history.
So it’s important to manage your reputation and also manage the customer’s expectations.
That definitely makes sense. Another question for you: Whether a recession is coming or not, what are some things a business can do to cut operational costs?
Well a lot of eCommerce businesses use mainstream shipping suppliers like UPS, FedEx or DHL. They don’t diversify channels, they don’t use multi-carrier shipping. If they’re interested in optimization, I recommend they select shipping suppliers that aren’t so mainstream, because they might offer better prices, shorter delivery times and better logistics.
For drop shipping businesses, I recommend finding reliable suppliers because in drop shipping, you have to closely monitor how your suppliers are shipping the products: Are they doing it on time? Are there any complaints?
So you can look for different suppliers and different shipping companies.
Are there any tips you have for automation? Between when a customer places an order to when they get it, what parts of that process tend to be automated over others?
Well, it depends on the model of the business. If you are working in wholesale, 100% can be automated. The customer places the order, it goes to the supplier, the supplier fulfills the order and it gets shipped. That’s in the ideal world.
Unfortunately, we all deal with people and people respond better to a real person reaching out versus computer automation.
With retailers, there are various ways they can optimize their logistics times, purchasing and delivery, etc. The more tools you employ, the better: For example, TrackMage.
And another thing that companies could do is review their analytics to see which destinations are more popular, and then double down on whatever is popular.
Optimization does not always lead to cutting costs, but it improves the process.
So we’ve talked about operations, logistics and expenses. What about revenue? What are some things that an eCommerce company can do to create more revenue?
How eCommerce Companies Can Improve Revenue
I’m glad you asked.
Selling to existing customers is a frequently untapped part of revenue. I recommend a business puts their effort into retaining every customer at all costs. Because once a customer buys from you, the probability of them buying from you again skyrockets with every single purchase. From +27% to +47%, then +57%. By the third purchase, it’s likely that the customer becomes one for life – unless you really offend them or royally screw up.
So making the customer journey as seamless as possible will help keep a customer loyal to the brand. That is a great long-term strategy.
Again, reviews are important because not only are they social proof, but they bring in customers from other outlets – sometimes even just by word of mouth.
And you can always upsell existing customers… What we’ve seen with TrackMage is that while a customer is waiting for an order, they’re 5-10% more likely to purchase more product because they checked the businesses’ product package when checking on their package. I’ve been one of those inpatient people before – I remember checking a tracking page maybe seven times. So I’ve tracked my own behavior to find this to be true.
On that topic, how does a company figure out how to assemble data to interpret and improve their process?
Well, having some tools in place to keep track of all orders is important. I’m spoiled by systems like Shopify and WooCommerce, which provide the analytics and information. But I understand that not all businesses have access to those platforms.
If you haven’t already, I recommend creating consolidated reports to measure overall performance, where you can see the end-to-end analytics. The idea here would be to see where you are losing money. The more leaks you fix in this process, the bigger the outcome will be.
But again, don’t jump to conclusions. Usually, people don’t bother asking enough “why’s” when optimizing their processes – they just jump to a conclusion like, “Oh yes, we’re losing money because the shipping time is too long.” But maybe it’s not the shipping time, maybe your customers just need to be notified of any delays. That’s just one example.
Yeah, that makes sense. Well, we’re just about out of time. Irina, I want to thank you for being on the show today. You provided some great information on optimizing eCommerce businesses and surviving a recession. How can an Agent of Wealth listener reach out to you or find out more about TrackMage?
They can visit our website, TrackMage.com. We’re also on social media @TrackMage. Thanks for having me.
Perfect, we’ll link to all that in the show notes. Irina, thank you for being on The Agent of Wealth Podcast. And thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review of the show. We are currently accepting new clients, if you’d like to schedule a 1-on-1 consultation with our advisors, please do so below.
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