Extensiv’s Olivia Frere On How To Reduce Ecommerce Logistics Costs
In this interview series, we are talking to ecommerce managers, supply chain professionals, logistics experts, and anyone with hands-on experience in ecommerce logistics. As a part of this series, I had the pleasure of interviewing Olivia Frere.
Can you tell us a bit about your backstory and how you grew up?
I was raised in a Franco-American household by two entrepreneurial parents who both started and ran their own businesses. My Dad is in property development, and my mom started her own retail store in the early 1990s.
From a young age, I had the opportunity to observe and be part of their business ventures. When my mom first started her business, she set up a “store” in our living room that she called Boutique Chez-Nous. After several years, her business grew large enough (and my dad was tired enough of all the in-home shopping) that she moved the business to a brick-and-mortar location in our neighborhood in Los Angeles. What started as a small storefront soon became three storefronts with a strong industry presence.
At an early age, I watched as my Mom kept up to date on the newest products and often traveled with her to tradeshows. I spent summers and weekends checking in inventory and helping with selling, slowly working my way up to working at the cash register. I loved the interactions I had with her customers and enjoyed helping create processes that made things run more smoothly.
Back in the early 1990s, retail technology solutions started gaining immense popularity. I remember her talking about how these systems seemed "big and complicated" at the time. Despite having thousands of SKUs in her store, my Mom had developed a preference (and trust) in manual processes over technology. Each year, a group of 10 or so of us would get together on a Sunday to manually count and reconcile her inventory. Let me tell you, it was quite a daunting task, but we always managed to get it done.
As I grew older and technology became more ingrained in my life, I would often suggest ways in which new technology could help streamline her processes. However, the success she had achieved over the span of 20+ years with manual processes made it impossible for her to embrace the idea of adopting modern technology.
After graduating from college, I worked for various cultural exchange organizations as I thought I really wanted to work in international business and eventually move abroad. Slowly though, I found myself working back in retail and eventually found my way into wholesale apparel at an amazing women’s apparel brand just north of San Francisco. I worked for two incredibly driven women who taught me the ins and outs of wholesale manufacturing, ecommerce operations, and sales—the eight years I spent at this company laid the foundation for a career in ecommerce.
What led you to this specific career path?
Honestly, I think I was always meant to work in ecommerce. I was exposed to the industry at such an early age, and as technology has developed, it’s become the natural progression of my career. I also love it. I love interacting with customers and suggesting solutions that will help them grow and scale their business.
Can you share the most exciting story that has happened to you since you began at your company?
One standout moment was when I had a chat with a seller at ShopTalk. They were venting their frustrations about their current solution and feeling really discouraged. We spoke for an hour about our platform and the work we're doing. Their excitement for our product (and what’s coming) was awesome. It's true: The days can be long, and like our CEO always says, "software is hard,” but that conversation confirmed that we're on the right track.
What are some of the most interesting or exciting projects you are working on now? How do you think that might help people?
To be honest, the only project I am working on now is centered around making the best product for our customers. We are hyper-focused on creating the industry’s leading single solution for ecommerce brands who are looking to streamline their ecommerce operations. I have had the opportunity to speak with our customers directly and share their feedback with our Product team.
I’m not a technology expert by any means, and it’s been interesting to learn how our Product and Development teams take customer feedback and turn that into a solution that ticks off so many boxes for our users.
What are three traits about yourself that you feel helped fuel your success?
I do my best to work with integrity. It allows me to build trust with my teams, with the people I work with, and with our customers. I focus on being honest, fair, and reliable, and I think has allowed me to build strong relationships with my colleagues and our customers.
In a prior role, I led Customer Support and Operations Teams, and we met regularly to review our challenges and wins and worked collaboratively to address roadblocks. By creating an open and welcoming environment where team members felt comfortable sharing their struggles and opportunities, we created a highly collaborative and functioning team that exceeded our SLAs and had the highest company retention rate.
My drive to succeed has also been a trait that has helped me in my roles. In the ecommerce space, it is important to be constantly innovating and looking for new ways to improve the customer experience.
When I worked for a large dropship retailer, I found several process gaps that were slowing down our order processing time and costing us hundreds of thousands of dollars annually. While our IT leader was against seeking out a technology solution to help us streamline processes, I built a business case and was able to share how order management technology would help us cut costs and improve our customer (and employee!) experience. While I was met with significant resistance from our IT leader, by persisting and sharing what I knew was right, I was able to help the company reduce logistics costs and increase margin.
A passion for customer experience is the third trait that has helped me in my career. I really enjoy working with customers, and I am always looking for ways to make their experience better. This has helped me to build a strong reputation for customer service and to create a loyal customer base.
In my current role, customer feedback plays a huge role in what we do and how we make decisions. Speaking with customers and meeting regularly with the teams that work directly with our customers have been really important to our efforts. While these conversations give us incredible insight and data, it is equally important to our customers as they recognize how much we value their input. They can see the changes we make that are directly related to their feedback.
What was the original vision for your ecommerce business? What pain point(s) were you trying to solve for your customers?
From the shopping cart to the warehouse floor, Extensiv provides a suite of products with integrated warehouse, inventory, and order management systems. You can rely on Extensiv throughout your growth journey for end-to-end visibility.
What are some of the biggest challenges you currently face regarding ecommerce logistics costs?
One of the biggest challenges ecommerce businesses are facing is the increasing rates of parcel carriers. In 2020, the surge in online shopping led to volumes that well exceeded carrier forecasts and capacity, resulting in significant operational challenges for carriers. As a result, these carriers focused on building out an infrastructure that could handle the increase in volume.
As volumes return to normal levels, increased infrastructure costs still exist, and consumers see these costs passed down in their parcel rates. Both FedEx and UPS increased their base rates and assessorial charges in 2022 and 2023, and ecommerce businesses are feeling this.
Ecommerce continues to face challenges caused by disruptions in the supply chain. Factors like labor strikes, adverse weather conditions, and economic fluctuations can all contribute to increased logistics costs. To effectively tackle these issues, it’s important for businesses to create contingency plans that enable them to quickly address and avoid the impact of such disruptions on their operations.
Returns also continue to be an added expense for businesses. Additional transportation, packaging, handling, inspection, and storing, all related to returns, drive up logistics costs. In 2022, just over 16% of purchases resulted in a return. As ecommerce continues to grow, this is not likely to change, and it’s important for businesses to develop strategies to manage these returns while not impacting their operational costs.
What role do technology and automation play in reducing ecommerce logistics costs, and what specific tools or solutions have you found most effective in achieving this?
A few years ago, I read an eye-opening statistic that the average cost to fulfill an order with a fulfillment center can be as much as 70% of the average order value. Inefficient order management, lost inventory, and poor operational processes can add dollars to logistics costs, and leveraging technology to keep these costs down is really important.
Technology solutions help reduce logistics costs by optimizing operations, improving efficiency, and streamlining processes. When businesses implement these kinds of software solutions, we typically see they are able to significantly reduce their operational costs. Two software solutions I speak to businesses about regularly are order management and warehouse management software solutions.
Order management solutions empower businesses with the ability to have end-to-end visibility, insight, and control over their sales channels and fulfillment networks. The key here is automation and centralization.
Order management systems help eliminate manual touchpoints by automating workflows and reducing costly errors, overhead costs, and time. Additionally, these platforms give businesses a real-time view of their inventory levels, order statuses, and fulfillment efficiency across different sales channels and fulfillment networks. Real-time visibility not only helps increase operational efficiency but gives customer support teams the information they need to quickly address and resolve customer issues as they arise.
Warehouse management software is designed to help businesses optimize their warehouse layouts and operations, in addition to having real-time visibility into their inventory. When inventory is received in a warehouse, this software enables businesses to receive products against a specific purchase order and then efficiently put away the product with scanning technology, automated conveyors, and guided put-away processes. This not only helps automate the receiving and put-away processes but ensures businesses are optimizing their warehouse space and layout.
As orders are fulfilled and shipped, warehouse management solutions that allow you to leverage strategies like zone picking, batch picking, and voice picking help businesses enhance their operational efficiency, greatly reducing operational costs.
How do you ensure that your logistics providers deliver the highest quality of service at the lowest possible cost, and what metrics do you use to measure their performance?
First and foremost, I can’t emphasize the importance of setting clear expectations with your logistics provider(s) enough.
Being very clear about what you expect from them in terms of support, SLAs, and cost is imperative. Be sure to share reports that help your partner plan for increases in sales and receipts. Sharing sales and receiving forecasts is important to ensure you are not only giving your logistics partner time to staff up but also pulling back on staff when you expect sales to soften. If you are overstaffed, you are paying for a headcount you don’t need, and if you are understaffed, get ready to pay for overtime which will eat right into your bottom line. Not fun.
As for KPIs, be sure you are getting regular reporting on order accuracy and cycle time. You want to be sure you are meeting your customers’ expectations, and these reports will help you understand how your logistics partner is impacting that experience.
Be sure to also look at metrics around inventory: Inventory accuracy is critical to be sure your partner is keeping accurate records for your inventory. By keeping your inventory records accurate, you reduce the chances of stockouts and also being overstocked, and carrying additional storage costs. Accurate records allow you to place better inventory buys.
What are some of the key factors that influence your decisions when selecting logistics providers, and what advice would you give to other ecommerce professionals looking to make similar choices?
Look for a partner whose operation is the right size for your business. While larger 3PL companies will sell you on their innovative fulfillment operations and strategies, these come at a cost. You may find yourself quickly becoming the small fish in a large pond, with little support and an operational model that doesn’t match your needs.
As you evaluate partners, be sure to find a company that works in your industry and has experience handling your product category. Their expertise in handling and transporting these goods can help to smooth operations and ensure you aren't adding on additional non-compliance charges and fines.
As you think about space, don’t overlook your future sales projections. Moving into a warehouse is a significant expense, and the last thing you want to do is move into a space that you will quickly grow out of.
In my experience working with various companies, they often put a lot of effort into finding a logistics partner that's located closest to their customers. It's definitely a good strategy, but it's also important to think about the balance between fast shipping and real estate costs.
Sometimes, you can get more value for your money by choosing a warehouse that's a bit further away. This means you might have slightly higher shipping costs, but the savings you'll make in terms of warehouse expenses can outweigh that. So, it's about finding the sweet spot where you can save on operational costs while still providing reasonable shipping times to your customers.
Finally, don't forget to speak to the carriers who service the location you are planning to expand to. While your new logistics partner may have space, that doesn’t guarantee the carrier will. Be sure to ask your carrier representative if they have the capacity at their terminal for your order volume. If you are shipping trailer loads, can they guarantee you a daily allotment of trailers each day? This is especially important during peak season when carrier networks get jammed.
Can you please share five innovative or unconventional strategies you’ve employed to reduce ecommerce logistics costs?
During the COVID pandemic, the closure of offices and schools prompted a huge shift towards online shopping for home projects. It seemed that, overnight, everyone was redoing a room in their home.
At that time, I worked for a manufacturer who was fortunate to be able to keep up with the demand in sales. What was not expected was the increase in returns as a result. Not only did we have to bear the high freight bills for transporting the items back to our warehouses, but we also incurred additional costs for hiring additional staff to process them.
After several months of grappling with this issue, we realized that we were actually losing money on many sales due to the associated returns. To address this challenge, we decided to partner with a clearance company.
This partnership allowed us to send our returns to their distribution center, where they would handle the sale of the products at discounted prices to their customers. In return, they paid us a percentage of the sales. This collaboration relieved us of the headache and financial burden of managing a large volume of returns.
About 15 years ago, I was working for a quickly growing brand that shipped 95% of our product in 12x12x4 boxes. We thought we were being so smart as we were getting a bulk discount on supplies because we were ordering so many.
Little did we know, we were paying nearly double what we should have been in shipping costs. Shortly after we got our largest freight bill, we looked into shipping our product in small mylar bags with USPS shipping and found ourselves saving not only on the shipping cost but the material costs, too. Our materials bill went down by over 50%, and our shipping costs went down by nearly 30%.
3. Multi-client relationships
Leveraging multi-service client relationships can be incredibly cost-effective for ecommerce businesses. This strategy allows businesses to share storage space and resources, which means they can make the most of their capacity and save some costs along the way.
When I worked for a highly seasonal brand, we leveraged these relationships to reduce our logistics costs. By sharing warehousing space when we didn’t need it and then borrowing space from them during our busy seasons, we were able to not only reduce our logistics costs but create a supportive community within the industry.
Plus, working closely with warehouses on these relationships builds strong partnerships. It's all about long-term, collaborative relationships with reliable warehouse partners that lead to smoother operations, cost savings, and, ultimately, happier customers.
4. Leverage data to create efficient fulfillment networks
While not necessarily unconventional, I think it’s critical to talk about leveraging forecasts and data to optimize and expand your fulfillment network. By using accurate forecasts and analyzing all that valuable data, businesses gain a clear understanding of customer demand, seasonal fluctuations, and market trends. It's like having a crystal ball that helps make smarter decisions.
With this knowledge in hand, businesses can strategically plan their fulfillment network, making sure they have the right distribution centers in place, optimizing where they store inventory, and even finding the most efficient transportation routes.
5. Reevaluate the importance of experience to your customer
In 2023, we’ve seen an interesting shift in consumers being less interested in expedited shipping and more in delivery visibility and control. As consumers tighten their spending, they are more willing to wait a few days to receive their orders. It’s important for businesses to adapt their strategies and prioritize providing delivery visibility and control to meet consumer demand.
This may involve implementing advanced tracking systems, offering real-time updates on the shipment status, and providing flexible delivery options that empower customers to have more control over when and how their purchases are delivered.
Looking ahead, what are the biggest challenges and opportunities in reducing ecommerce logistics costs, and how do you plan to address them in the coming years?
Logistics costs are rising, and consumers are more price-conscious than ever. This is a challenge for ecommerce businesses that will need to find ways to keep prices low while their costs are going up. Streamlining the supply chain and reevaluating fulfillment strategies, in addition to adding technology solutions, will be critical as businesses look to reduce their operational costs to avoid impacting the customer experience.
If you could start a movement that would bring the most good to the most people, what would that be?
Consumers are demanding more sustainability, and I think ecommerce and logistics businesses have a huge opportunity to impact this movement. I would like to see more legislation around sustainable packaging, reducing fuel consumption, and waste processing, as I think we have an opportunity to make a positive impact.
What "next big thing" tactic or strategy should leaders in ecommerce be digging into?
As ecommerce becomes more competitive, businesses leverage technology that enables real-time visibility into fulfillment.
What is everyone wrong about in ecommerce?
Fulfillment strategies don’t matter.
What are you reading right now?
I have two young kids—my reading list is mainly Peppa Pig and Elsa.
What product, tool, or service do you wish existed?
A product to teleport me to see my family in Europe.
What product are you obsessively using right now?
I love podcasts and listen to them daily.
How can our readers further follow your work online?
On LinkedIn.
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More logistics insights from ECM:
- A Guide To The Global Order Fulfillment Process
- Ecommerce Warehouse Process Guide: Expert Tips & Advice for Success
- An Easy Guide To Ecommerce Shipping: Process, Strategies, Methods & Costs
- How To Offer Free Shipping On Your Ecommerce Store: Examples & Solutions
- What Is 3PL (Third-Party Logistics): Definition & Top Companies to Use
- What Is Reverse Logistics In Supply Chain Management? Best Practices & How-To Tips
- Ecommerce Returns Best Practices: How To Handle & Solutions (Guide)
- Last Mile Delivery: 5 Tips To Solve the Silent Killer of Supply Chains
- What Is BOPIS: Pros & Cons Of Buy Online Pick Up In Store
- What Is A Transparent Supply Chain: Trends, Benefits & Solutions
ECM recommends:
- 10 Best Fulfillment Services In 2023
- 10 Best Order Fulfillment Software For Ecommerce In 2023
- 10 Best Ecommerce Shipping Companies For Ecommerce Sellers In 2023
- 10 Best Ecommerce Shipping Software For Ecommerce Sellers In 2023
- 10 Best Warehouse Management Software In 2023
- 10 Best Inventory Management Software For Ecommerce In 2023
- 10 Best Cloud-Based Inventory Management Software in 2023