Add another layer to your #Business literacy. We at Serebral360° would love to know if the Forbes – Entrepreneurs article was helpful, leave a comment, like and share. Let’s dive in and discuss the information and put it to use to grow your business. #BusinessStrategy #ContentMarketing #WebDevelopment #BrandStrategy
Info@serebral360.com 762.333.1807 www.serebral360.com
Grap a copy of our NEW Business Stratgety Books #FFSS VOL1 and #FFSS VOL2
I was the CFO of a heating, ventalation, air conditioning and refrigeration (HVACR) wholesale distribution company in a large metro area for over seven years. One of my biggest goals was finding ways to grow the business and expand into new territories without investing a lot of additional capital (because we didn’t have it). Then one day it occurred to us that the metro had two stores within 15 minutes of each other. We thought, “What would happen if we closed one of those stores?”
The idea of closing a profitable store seemed crazy, but the team and I believed it would save resources that we could invest in a new territory. We also felt that we could retain our existing customers by offering free delivery for one year. So we closed one of the metro stores and opened a store in a new territory. In the first year, the new store made over $2 million in profits, and we didn’t lose significant business from the closed location.
We bet that our metro customers didn’t need, or even want, to go to a physical store if we could deliver the parts and products they needed. And the bet paid off.
Our Changing Expectations: Online Ordering & Fast Delivery
In the last 10 years, the customer journey was flipped on its head. Before, when we needed groceries or clothes or household essentials, we’d drive to the nearest store. Now, with Amazon, BiteSquad, Postmates and other services, we simply grab a smartphone, order our products and wait for them to be delivered. These new technologies forever changed our expectations about the customer experience.
The shift happened quickly for large retailers and individual consumers, but business to business (B2B) companies and smaller retailers have lagged behind. They often lack the resources and infrastructure for online ordering and efficient, cost-effective delivery.
Now the CEO of a company that offers on-demand courier services, I think a change is coming. As technologies continue to advance, B2B companies and small businesses are gaining access to the ordering and delivery tools they need. Additionally, as labor costs continue rising, it will become increasingly untenable to send specialized employees on deliveries. I predict that in the next few years, more and more B2B companies and small businesses will close physical storefronts to invest in online stores and new order fulfillment processes. And I think, in many cases, this will be good for business.
The Benefits of Fewer Stores
Amazon forever changed the way we do business by recognizing the costs of physical stores and the value of bringing the products to the customers. They built an intuitive online platform, streamlined the ordering process, built or purchased massive distribution centers and found ways to make their deliveries increasingly efficient.
Now, other retailers, B2B companies and small businesses are seeing the benefits of this model:
• Reduced Overhead
The costs of managing and maintaining a physical location can be large and unpredictable, including building costs, taxes, utilities and maintenance, equipment (transport, storage, technology) and staff. All of these costs drain capital that could be used to grow your business, expand into a new sector or territory or develop new products.
• Streamlined Inventory
When you manage multiple locations, and you have no way of knowing which store your customers will visit, each store needs to be stocked with a minimum number of each item. This leads to redundancy and, in most cases, carrying more inventory than you need.
• Expanded Reach
By closing stores that are clustered in an area and rethinking your distribution model, you may find that you have the resources to expand into new territories without investing a large amount of capital.
Rethinking Distribution And Delivery
The risk of closing physical stores is losing customers and revenue. But this risk shrinks as customers grow increasingly accustomed to online ordering and distribution tools continue to advance. Here are a couple of different options for managing distribution and delivery:
• Get a delivery fleet.
If deliveries are a core part of your business, then building your own fleet may be the most obvious solution. Maintaining a fleet can be costly and time-consuming, though, so it’s important to weigh the costs of vehicles, fuel, maintenance, insurance, storage, hiring and training drivers first. To get started, purchase or build a dedicated storage facility, carefully plan the type and number of vehicles you’ll need, and develop comprehensive fleet maintenance and driver training programs.
• Partner with distribution and delivery services.
Partnering with a courier service can be a good way to make deliveries without needing to maintain your own fleet of delivery vehicles. It’s important to look for a courier service that provides transparency into delivery schedules, prices and customer experience.
Startups are rethinking the old distribution and delivery model. Small businesses and B2B companies often need warehouse space and warehouse management software (WMS) to manage inventory and orders. Both are expensive. Stord is a startup that leases warehouse space and provides access to its WMS. It also connects you to third-party logistics providers to manage order fulfillment and delivery.
Companies like ShipBob connect your online store to its order fulfillment centers, then store your products, process orders and manage deliveries. Technology-based on-demand couriers, including my current company, connect you to local drivers to schedule deliveries, track deliveries with GPS and bring transparency to the process. However, keep in mind that working with a technology-based startup will require you to adopt new technologies and adapt your processes.
Keeping Pace With A Changing World
The world is constantly changing. We’re doing everything we can to keep up. For those of us in the B2B or small business sector, this means finding ways to simplify logistics and maximize efficiency. Fortunately, technology startups continue developing innovative solutions to help manage distribution and delivery. It’s been amazing to be a part of that journey and I’m excited to see what the future holds.
January 25, 2019 at 09:03AM
Forbes – Entrepreneurs