The Fourth Quarter is arriving and if you haven’t made your plans for your ecommerce fulfillment, this is the moment. As the end of the year approaches, many businesses are preparing for the holiday rush. There are special challenges that 2022 Q4 will bring to ecommerce businesses, and if you’re not prepared, you may be caught flatfooted when the busy holiday season begins.
Why Is Q4 Planning Uniquely Challenging In 2022?
Q4 planning is always hectic, but the past several Q4’s have been anything but typical. To make sure we fully understand the unique challenges that Q4 in 2022 will bring, we need to take a look at what happened in Q4 2021.
2021 As a Landmark Year For Ecommerce
A lot of factors came together in 2021 to make it a landmark year. First, people were still largely staying home due to COVID-19, so there was still reluctance to go to physical retail stores. That meant the demand for online shopping was at an all-time high, and nearly every product category experienced crazy sales. We saw this across all platforms, including Amazon, Shopify, custom web properties, and more.
There was an enormous need for physical inventory, and that demand completely outstripped supply, which was further complicated by unheard of supply chain disruptions. Several factors came together to cause these disruptions, including:
- Harsh COVID restriction for freight going out of China
- Reduced capacity in ports and other steps in the supply chain due to record low demand in 2020
- The Evergreen shipping disaster, causing unexpected shipping delays and lost commerce
- Strong spikes in demand for the entire year, not just in Q4
2021 Shipping Challenges
As a result, the unique challenges facing 2021 shipping were:
- Freight costs 10x -20x at their lowest, increasing even further during Q4
- Containers taking 2-3 months to reach their final destination instead of a few weeks
- Chronic product shortages throughout the entire year.
As many ecommerce businesses can attest to, Q4 2021 was a disaster. Many retailers ordered inventory at normal times, only to have shipments delayed by months or missing Q4 and the winter season entirely.
Unfortunately, the problems of Q4 2021 would bleed into 2022.
The Excess Inventory Problem
Businesses didn’t just get to cancel or return inventory that missed Q4 2021. Eventually, those orders came in, which resulted in a huge problem of excess inventory. Ecommerce and physical retail were affected, especially large retailers like Walmart and Target. Not only did many businesses have more inventory than they knew what to do with, but they were met with a deep decline in consumer demand.
Unfortunately, businesses didn’t get to count on the massive consumer demand of 2021. With concerns about rising gas prices, large amounts of inflation (especially on food and other essential products), and spiking housing and rental prices, consumer demand cooled significantly. Even now, with growing concerns about the economy, demand has continued to stagnate. This caused businesses to be stuck with large amounts of inventory with little way to profitably move products.
Inventory Planning for 2022 Q4
Inventory planning for Q4 2022 has been nearly impossible. Between navigating how to handle excess inventory and inconsistent consumer demand, there’s not been a consistent strategy for planning for Q4. The boom of 2021 is done, and without meaningful data, businesses have been left guessing about how to plan for Q4.
Considering how chaotic 2021 was, many retailers are planning conservatively, which creates a new challenge: the opportunity cost of selling out and not having a realistic way to meet unexpected demand, which can be just as costly to a business as having too much stock. This is where leveraging direct shipping from China can give your business an enormous leg up on your competition.
How China Shipping and Fulfillment Services Can Address The Challenges of Q4 2022
DTC brands have increasingly been moving a portion, and sometimes all, of their fulfillment to ship directly from China. If you are already shipping directly from China – good job! You potentially have a significant advantage over your competitors this Q4. They can’t compete if they can’t sell.
If you aren’t shipping directly from China (but are working with suppliers in China), DTC shipping can provide enormous advantages, especially in light of recently supply chain issues and subsequent difficulty in accurate planning.
Shorter Lead Times
Any factory in China can ship to a China fulfillment center in 1 to 4 DAYS. Inventory is ready for fulfillment within days of arriving to the warehouse, significantly shortening planning cycles. This provides the ability to plan for replenishment much later in the season, which is extremely valuable for uncertain demand periods like Q4 2022.
Many of our clients are planning their inventory for the season using local fulfillment, with a backup plan to replenish to our China warehouse if local stock runs out. If you use traditional freight shipping methods, this kind of strategy just doesn’t work in a timeline that makes sense. With China fulfillment, you can find the balance of not overstocking inventory while being prepared to meet an unexpected surge in demand.
Good Enough Shipping Times Worldwide
Many businesses are surprised by how fast direct-from-China shipping can be. Shipping can be as fast as 5-8 calendar days, and less expensive options will still be around 1-2 weeks. While it’s not as fast as 2-day shipping, it’s a much better option than simply not having stock to sell, and it’s still within the general timeframe that provides a quality customer experience.
Shipping directly from China also opens the door to worldwide shipping, which can open up new markets to provide an additional revenue boost at a time when brands really need it. Many businesses are nearly positioned to begin selling to a worldwide market and do not even know it (especially if they already partner with China suppliers).
Competitive Costs
One of the main goals of any business is to increase sales and income during Q4. This can be a challenge, as there are often many competing businesses all vying for consumers’ attention and dollars. One way to help ensure your business stands out from the crowd is to offer competitive prices on products and services. Direct from China shipping can be a great option for businesses looking to save on shipping costs. By working directly with Chinese manufacturers, businesses can take advantage of lower costs for shipping goods. This can help give your business a competitive edge when it comes to pricing products and services.
Even if the upfront cost of shipping directly from China is higher, there are savings opportunities that can be easy to miss. Businesses will enjoy reduced holding costs and less cash tied in inventory when they include direct-from-China shipping as part of their fulfillment strategy.
Reliable Custom Clearance
Finally, fulfilling directly from China makes customs clearance far more reliable. Sellers can offer delivery duty paid (DDP) methods of shipping for international orders, so customers have a seamless, easy ordering experience. Businesses also don’t need to be concerned with a convoluted customs process, like with traditional bulk ordering and sea freight shipping. That means you’re less at mercy of factors you can’t control when trying to fulfill orders, which is especially important in Q4. If consumer demand spikes across the board during the holiday shopping season, ports will likely become very congested.
How To Effectively Utilize Direct From China Order Fulfillment in Q4 2022
Direct from China shipping can be a crucial tool to navigating challenges for Q4 2022, but it will still require intensive logistical planning and proper execution. Let’s take a look at some common steps to take if you think your business would benefit from direct from China shipping.
Plan For Different Scenarios
It’s hard to over-plan for Q4, and making sure you’re prepared for a variety of scenarios is important. Make sure you have contingencies for worst-case and best-case scenarios, like:
- What if your demand spikes and you run out of stock before Black Friday?
- What if your marketing KPIs / ROAS are incredible but you know you don’t have enough stock to really push the marketing?
- Do you have a plan if demand is much higher than expected, so you can avoid selling out?
- Do you have a plan for excess inventory should you end up overstocking?
Remember, understocking inventory and selling out when demand is high can be worse than overstocking and having excess inventory. Keep that in mind as you create plans to stock the warehouse or replenish inventory.
Communicate With Your Factories
We see too many businesses that don’t invest in being able to clearly communicate with their suppliers. If you want to be as nimble as possible for Q4, you have to be able to talk with your factories. If there are language barrier issues, it’s worthwhile in hiring someone who can bridge the gap (or hiring a 3rd party service that can bridge the gap for you).
For businesses that can directly communicate with factories, you should ask about their available capacity and their ability to produce as small quantities with as quick turnaround as possible. Being able to meet a sudden burst of demand is crucial, and since freight lead time to a China warehouse is two days, you can replenish inventory in small bursts instead of buying 6 months’ worth of stock every time you place an order.
Your supplier may have much shorter lead times with smaller orders. For example, if your typical order is 50K units with a lead time of two months, your supplier may be able to offer much faster lead times for a 5k order. Suppliers may welcome unexpected orders, especially during a period when you or other clients wouldn’t traditionally put in purchase orders (like during Q4).
Analyze Fulfillment Costs
Next, you’ll need to analyze end-to-end fulfillment cost expectations vs available margins. Fulfilling orders directly from China will likely be slightly more expensive than traditional high-quantity sea freight. However, if your demand is high and you have enough margin, direct-from-China shipping will still be a no-brainer.
You still need to make sure that you get as much profit margin as possible, be sure to:
- Estimate costs from your China fulfillment partner carefully, especially if you are planning bundles and/or sales
- Remember that shipping costs tend to increase through peak Q4, between Black Friday and Christmas.
When it gets closer to Christmas you may opt for faster express lines that can be slightly more expensive. Just make sure you have a firm grasp on your profit margins before you utilize those express lines.
Narrow Your SKU Selection
It may feel overwhelming to try to make contingency plans for all your products in Q4, so don’t. Narrow down your SKU selection to the products that matter the most to your business. There’s not much of a point to try to plan for emergency replenishment for underperforming SKUs that don’t add much to margins, even if you think they might sell out.
Focus on top-performing products and SKUs that have plenty of margins to make direct-from-China shipping sensible.
Utilize Reliable Shipping Lines
There are countless shipping line options from China, and most of them are not good. Particularly for holiday sales, you do not want to utilize the lowest cost, less reliable shipping options. If you’re trying to quickly meet sudden demand, the last thing you want is shipping problems that hurt your brand.
Some companies that offer reliable shipping lines during Q4 include:
- Yunexpress
- 4PX
- UBI
While these companies are usually reliable, they have several shipping lines to choose from, and not all of them are appropriate for Q4 shipping. If you don’t have experience using shipping lines for direct-from-China fulfillment during Q4, we recommend partnering with a trusted fulfillment partner who can advise on the best options.
Use a Shenzhen-Based Order Fulfillment Center
If you’re going to ship from China, you need to make sure you ship out of the best place in China. For companies that rely on ecommerce, or for companies that are generally interested in direct fulfillment from China, the best location to choose is Shenzhen.
Shenzhen has made a reputation for being one of the best locations in China for direct fulfillment. There are an enormous number of factories and warehouses, and its proximity to Hong Kong makes it easy to ship to a worldwide customer base. Businesses that use a Shenzhen warehouse will still get the same general benefits as those using a China fulfillment warehouse, like:
- Avoiding disruptions caused by shipping congestion
- Having the flexibility to accommodate unexpected spikes in Q4 demand
- Being able to better avoid over or under stocking
And a Shenzhen-based warehouse will amplify these benefits, since:
- There are more suppliers in closer proximity, helping to cut down on lead times between the factory and the warehouse
- More suppliers to choose from will help to find a better fit for your business at a more attractive price
- Shenzhen is a shipping hub, opening doors to far more shipping lines
If you’re serious about shipping directly from China, Shenzhen is where you need to start looking.
Customize Your Tech to Support China Fulfillment
Finally, you need to make sure that your ERP and backend systems can actually support China fulfillment. This is particularly important if you use both local and direct-from-China fulfillment. Your fulfillment partner needs to be able to identify which SKUs and which orders should be fulfilled from China, and which should be fulfilled from the local warehouse.
This usually involves customizing your existing tech infrastructure to connect to a more, robust fulfillment system while avoiding duplicate shipments, failing to fulfill orders, or fulfilling orders from the wrong warehouse. If you know you’ll need customized tech solutions with a fulfillment partner, make sure to choose a provider that has experience customizing backend systems for clients.
Conclusion
Q4 in 2022 is going to be a challenge for most ecommerce businesses, but incorporating direct-from-China fulfillment might be the tool you’re business is missing to accommodate hard-to-predict demand. Remember, with China fulfillment, you can:
- Avoid excess inventory without worrying about selling out too quickly
- Provide an excellent customer experience in a season where shipping delays and other frustrations are common
- Create better relationships with suppliers by making purchase orders during typically slow seasons.
If your business is new to China fulfillment or working more directly with China-based suppliers, then you may want to partner with an expert to guide you through the process (especially if you’re starting in Q4). China fulfillment is our specialty, and we’d love to talk with you to see if the services we offer are a good fit for your business needs.
Fill out this form, and EcommOps will be in touch about how we can partner with you to crush Q4 2022!
FAQ
1. Does EcommOps offer Q4 planning services?
Yes! EcommOps offers support throughout the year for clients in need, including Q4 planning. If you’re interested in how EcommOps can offer Q4 support unique to your business, fill out our contact form to get started with creating a plan for a successful Q4 season.
2. How can I get in touch with EcommOps?
You can contact us through our website. You can also reach us through our social media pages, such as LinkedIn and Facebook. We are always happy to speak with you!
3. Can I plan my Q4 with EcommOps providing warehousing fulfillment services?
Yes, you can plan your Q4 with EcommOps providing warehousing fulfillment services. Planning out your final quarter will help you avoid making errors that can have heavy costs both on the business and you personally, as well as your team members.
4. When is the deadline or latest time to start working with EcommOps for Q4?
There is no specific time, but to work as efficiently as possible, we accept new clients up until the end of November. Whether or not we’re able to partner with you will still depend on the specific service you need. If what you need is more complicated, we might not be able to provide support within that timeframe. We suggest starting your Q4 planning and conversation with us by at least October.
5. Is the MOQ for Q4 different from EcommOps’ general MOQ?
No, our MOQ is the same year-round. The difference is that Q4 is the busiest time of the year, so if you’re thinking of a particularly complicated enterprise, contact us as soon as possible so we can begin to create a Q4 plan.
6. Where is EcommOps’ fulfillment warehouse located?
Our fulfillment warehouses are located in Shenzhen, which is an enormous ecommerce hub in China. It’s an ideal location both for finding ideal suppliers and having access to the best shipping routes.
7. Does EcommOps offer dropshipping fulfillment?
No. While this is a service we have offered in the past, the focus of our services have changed. We providing warehousing services for direct-fulfillment, but we require clients to operate in a more traditional supply chain, like maintaining inventory in a China warehouse.
8. What countries does your order fulfillment service ship to?
We fulfill orders to more than 30 countries worldwide. If you’d like to know more about the services we provide to a specific country, we encourage you to reach out to use through our contact form.
9. What shipping companies does EcommOps works with?
We work with most major shipping companies when fulfilling orders. Our expertise allows us to choose the specific shipping company and shipping lines that is best for your product and customer base.
10. If I use EcommOps’ China fulfillment center, can I still use Shopify or my preferred Ecommerce platform?
Yes! We can integrate with your existing platform, provide a ready-made integration with Shopify, WooCommerce, or other major ecommerce platforms, or we can create a customized tech solution that is catered to the needs of your specific business.
