In this week's edition of The Backorder, you can find:
- The latest in global supply chain news
- 5 handy tactics for widening your profit margins
- Advice from the Director of an edible seaweeds brand
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In supply chain headlines
- Victoria seeks to cut down on Australian waste with reusable crates initiative. The Guardian reports that the Victoria Unboxed project will hope to eliminate invisible waste from supply chains by replacing cardboard produce boxes with reusable plastic crates.
- US manufacturing activity expands for first time since 2022. The latest ISM Manufacturing PMI report registered an unexpectedly high 50.3% in March – up 2.5% from February.
- Baltimore bridge disaster adds new stress to global supply chains. The accident affecting one of the US’s busiest ports for car shipments and coal exports could create a ripple felt worldwide, writes Christy Cooney.
5 tactics for fattening your profit margins
- Increase average order value (AOV) with enticing offers. When shoppers to spend more on each purchase it has a desirable effect on your profits. That's why AOV is an essential metric to improve. Consider offering volume discounts and free shipping incentives to lift AOV. Other tactics include upsell, cross-sell, and product bundling.
- Conduct an efficiency audit on your operations. Operational costs present one of the biggest opportunities for boosting net margins. Identify areas or processes that can be improved with technology, then run a cost-benefit analysis of implementing that technology. Consult with your business advisor for tips on solutions that will work best for you.
- Get tactical with your sales strategy. Inventory and marketing costs can be insidious parasites, gnawing at your margins. Conduct an ABC analysis to identify the best products to focus your marketing efforts on. If dead stock is consuming vital inventory space in your warehouse try bundling your slowest-moving items with best-sellers. Add discount promos to clear it out.
- Fractionally increase your product prices. When sales increase, so do your costs (in most cases). Despite economies of scale, margins can wear thin as new staff, storage, and equipment are required to manage a growing business. Run tests to find the point where price begins to hurt sales and increase your pricing accordingly.
- Optimise your customer retention strategy. You’ve probably heard that it’s cheaper to keep existing customers than acquire new ones. But did you know that even a 5% increase in customer retention can lead to profit gains of 25–95%? Use customer loyalty programs, cross-selling and upselling strategies, and special offers to encourage repeat purchases.
Sustainable seaweed – Meet Hayley Fraser-Mackenzie
We recently chatted with Hayley Fraser-Mackenzie, Managing Director at Pacific Harvest Seaweeds, to discuss how she’s manifested success with an edible seaweed brand in 2024. Here’s what she had to say.
So, what’s new in the world of Pacific Harvest Seaweeds?
“We have recently become B Corp certified after an 18-month audit process. We've always been focused on human and planet health, and this certification is a milestone for our business. We are the second company working with edible seaweeds globally to be certified as a B Corporation."
Running a niche food brand isn’t an easy task – what have been your biggest hurdles so far?
“Cash flow is always a challenge when you are growing quickly. We're lucky to have strong financial controls in place and challenge ourselves on every decision around ROI. Seaweed is an emerging industry in New Zealand, so finding local seaweeds at food grade quality is an ongoing challenge.”
What are your top 3 tips for operating a successful business?
“Have a plan and measure progress against it. Work with good people (and be one too!). Watch the cash flow.”
What does your app stack look like these days?
- Unleashed [inventory]
- Xero [accounting]
- Stripe [payments]
- Klaviyo [email marketing]
- Canva [design]
- Asana [project management]
- Meta [social media marketing]
- Google [paid advertising]
- Shopify [ecommerce]
- GoSweetSpot [shipping]
Any parting advice for finding success in the food industry?
“I'm always surprised how much help there is around if you're happy to ask for it. It doesn't always come easily, but most people are happy to share their learnings. No sense in reinventing wheels and struggling through it all alone!"
On the lighter side...
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