May 16, 2018
Online shopping is booming and seeing massive growth across a variety of industries. The beverage industry, however, has been one of the slowest major consumer sectors to expand into the ecommerce space and is just starting to take off. There are some areas of the beverage industry that are growing at a higher-than-average rate: specialty water, ready-to-drink coffee, bottled water and energy drinks are in particularly high demand. But too often the challenges associated with food and beverage logistics.
According to the Boston Business Journal, “Today, sales on direct-to-consumer sites and third-party e-commerce platforms account for 36 percent of specialty food and beverage sales.”
Beverage companies face some unique ecommerce challenges; damaged product, low margins and logistical difficulties (i.e. heavy product) must all be addressed…while meeting customers’ delivery expectations.
Millennials represent a major consumer market for the food and beverage industry, and in addition to demanding fast and convenient delivery options, their tech-forward, subscription-based shopping habits are driving the way sales are realized. The following trends are emerging:
- Food and beverage buyers are keen on easy access to information and nutrition labels.
- Consumers are interested in more than just research — they consider the opinions of other consumers, which means social media is a valuable marketing tool. Connecting consumers via social media can boost buyer satisfaction and increase overall sales.
- In the world of Amazon Prime, food and beverage buyers are demanding expedited delivery timelines.
One of our largest customers is a beverage company called LIFEAID. I recently had the opportunity to interview the CEO, Orion Melehan, and got some insider tips about how the company has overcome challenges in the world of ecommerce fulfillment.
There is a level of fragility involved in shipping liquids, so packaging is key to avoiding damages during the shipping and fulfillment process. For LIFEAID, damages were a big issue in the beginning. “We spent years really dialing in our packaging and kind of iterating to where our packaging is today, so the product can arrive undented and resellable to retailer doorsteps,” Orion explained. Quality materials and smart product configurations can reduce the potential for drop height damages and movement by eliminating void space, and good packaging can save your company money (and improve the customer experience). Damaged beverage shipments are typically unrecoverable and no one wants to lose entire pallets of product due to packaging problems.
Another necessity when managing any kind of consumable product is efficient inventory management so that product compliance is maintained. It’s important that inventory levels are properly managed as to avoid product expiration dates, and many beverage companies rely on features like lot control, FIFO (first in, first out) and temperature control to maintain the health of their product. LIFEAID relies our order management platform, Shipwire, to track their inventory and set alerts for when SKUs reach a minimum level. Having high visibility and effective systems to control and monitor inventory data in real-time helps beverage companies avoid aging product, reduce storage and make better purchasing decisions.
Orion Melehan, CEO, LIFEAID, shared two great pieces of advice to help other beverage companies with the outbound shipping:
- Diversify your fulfillment center locations to cut down on transportation costs and delight your customers with expedited shipping. By using four Ingram Micro Commerce & Lifecycle Services facilities, LIFEAID can deliver orders to 90% of their domestic U.S. customers within two days.
- Consider your order configurations to help reduce costs. “[…] look at ways of increasing the minimum order quantity so that you can achieve some efficiencies in small parcel and recover some of that margin that is inevitably lost to shipping,” Orion says.