In anticipation of strong holiday season demand, Kettlebell Kings switched its fulfillment operations midway through 2019 to ship products faster to shoppers and cut its costs.
The retailer of kettlebell weights now uses two fulfillment centers operated by third-party logistics providers (3PLs). Previously, the web-only merchant fulfilled orders out of its warehouse in its Austin, Texas, headquarters, says Jay Perkins, co-founder and managing partner at KettlebellKings.com.
The fulfillment centers are in Los Angeles and Chicago, allowing the retailer to deliver products to 90-95% of its shoppers within 3 days of placing the order, Perkins says.
“It’s a powerful offering when you separate yourself from a competitor and Amazon,” Perkins says. “That we can reach customers within 3 days is a very strong offering.”
From the get-go, Kettlebell Kings has offered customers free shipping as a way to differentiate itself. Over the past few years, Kettlebell Kings has discovered—via reading about what customers want to experience and being consumers themselves—that shoppers want their orders fast.
Before using 3PLs, it took the retailer 3-5 days to ship orders to customer, and it was fulfilling most of the orders with its own staff or seasonal employees, he says. “Now, we ship enough volume where it makes more sense and is cheaper to rent fulfillment centers than to have the labor during the holidays,” he says.
With the fulfillment centers, if a shopper places an order by 1 p.m. local time, the product will ship out the same day, Perkins says. Plus, Kettlebell Kings does not need to hire seasonal labor.
“Because of the nature of what we ship—we ship weights—being closer to consumers saves us quite a bit of money,” Perkins says. “30% of our shipping spend is cut by having those fulfillment centers.”
Kettlebell Kings had anticipated saving this amount when it started using the 3PLs in Q3 2019, and the retailer was pleased when the results matched its expectations. These savings are likely higher than what an average retailer might save and unique to Kettlebell Kings because of its heavy products, Perkins says.
Although Perkins doesn’t have actual data that faster shipping leads to more sales, anecdotally, shoppers will comment in reviews how impressed they were with the fast shipping, he says. And for the holiday season, faster shipping means more days to sell before Dec. 25. For the 2019 season, Kettlebell Kings extended its order-by date to Dec. 21 compared with Dec. 19 for the 2018 holiday season. On these two extra days, the retailer continued to have elevated holiday sales, compared with last year when sales dropped off after the guaranteed delivery date passed.
During the four-day stretch of Black Friday through Cyber Monday 2019, Kettlebell Kings generated a month’s worth of orders, Perkins says. When sales spiked like this in previous years, Perkins had to help ship orders himself. But with fulfillment outsourced, Perkins had more time this holiday season to drive other parts of Kettlebell Kings’ business, such as an upgrade to NetSuite software for better order routing, he says.
The change is not without challenges; the retailer now has less control over its operations than when the warehouse was attached to its business.
For example, Kettlebell Kings formerly had a less than 1% error rate for products in packages, but now it is roughly 1-2%, Perkins says. While this is “very negligible” and Perkins is still happy with the 3PL, he knows it would be better in-house. If there were issues in the past, Perkins could just walk in the warehouse and figure out the problem. Now, it takes time with emails and phone calls to rectify an issue, with trust placed in another party, he says.
From a business standpoint, Kettlebell Kings now has its inventory in two locations, compared with just one before. Now, the retailer has to work to get rid of split shipments, or when an order comes in two packages because one fulfillment center didn’t have all of the inventory needed for the order. Split shipments are known to erode margins as the retailers has to pay for shipping twice.
Kettlebell Kings has worked to increase inventory in both locations, as well as speed up its inventory replenishment so this doesn’t happen, Perkins says. Plus, over time, its software will learn demand patterns for each location and work to have each facility stocked with what it needs, he says.
“Generally speaking, having 3PLs is a very good thing for us, and I would encourage others in our position to examine it,” he says.
Overall, online sales during the 2019 holiday season (November-December) increased 30% year over year, Perkins says. The retailer did sell out of certain SKUs on Black Friday, so Perkins is unsure how much sales could have increased if it had more inventory. To recover, Kettlebell Kings took pre-orders of products and featured on its website and marketing emails in-stock products or the digital workouts it sells.
In terms of shipping, the retailer did not experience any challenges because of weather or delays from its shipping carriers. It did have a slight uptick in lost or stolen orders, where the carrier says a package is delivered but the customer says she doesn’t have it, but nothing out of the ordinary for the holiday season, he says.Favorite