During the life of your online retail business, you will ask yourself a lot of questions around timing: Is it time to hire my first employee? Is it time for a bigger space? Is it time for me to raise prices? We have worked with established brands and new businesses since 2009, and we have seen the growing pains up close. Unfortunately, there isn’t a crystal ball to see when the time is right for your business to make a positive change, but there are some tell-tale signs. This month, we are diving into the role of a Chief Logistics Officer and why it might be right for your business.
What is a Chief Logistics Officer?
As the title implies, this position oversees the entire strategic approach of an organization. They work closely with other C-Level individuals including the CEO, CFO and more. A CLO (Chief Logistics Officer) often has extensive experience in supply chain or logistics management and knows first hand how to look at the moving pieces around a brand’s logistics strategy and how it fits into the brand’s overall business plan. There are many questions that arise from this area of the business, and if you are currently the one managing your supply chain, you know this first hand. Everything from driver shortages to new tariffs can make or break your bottom line if you don’t have someone dedicated to this area of the business.
Sign #1 You Need a Chief Logistics Officer: Your Sales Projections Missed the Mark
We see this all the time. Even established brands can be 10% off their projected sales goals. A Chief Logistics Officer can work with a business owner and/or CFO to develop realistic sales planning. Even if you are an established brand, the future costs to make, package and ship a product will change based on factors you can’t control, such as: tariffs, supply, world events, and more. Preparing for these changes and building it into your overall business plan can keep you ahead of the curve.
Sign #2 You Need a Chief Logistics Officer: You Are Unsure What Your Marketing Budget Should Be
New business owners often grossly underestimate the cost to market to a new client. Some experts calculate that it costs five to seven times more to acquire a new client than retaining a new customer. And retail businesses need a steady influx of new clients to stay alive. To find those right clients, we recommend budgeting twice as much as it costs to get the message out in order to get the value out of that message.
What does that mean? If you spend $1,000 creating a Facebook Ad either working with a marketing agency or using up your valuable time, then, you will need to spend $2,000 on promoting that ad to first, get your money back on what it cost to make the ad and second, to gain a profit through new clients.
Sign #3 You Need a Chief Logistics Officer: You are Ready to Scale – Responsibly
Growth for the sake of growth isn’t a strategy. As a business owner, you likely have a gut reaction when it’s time to scale, but you need a strategy to ensure it is sustainable. Especially when your business is growing quickly, it’s important to ensure that everyone on your team is on the same page regarding your products, ideal customers and internal processes. Being unclear on these core items is a primary reason some startups fail in the scaling process.
When you bring together your core team to plan for scaling, you may include your CFO (Chief Financial Officer), CMO (Chief Marketing Officer) and COO (Chief Operating Officer). Here, a Chief Logistics Officer can offer the critical missing piece that many retail businesses overlook. When you begin to scale, and bring on more customers, it’s imperative to know how this will affect how that product reaches your customer successfully. More customers means more product development, which means more warehouse space will be needed, which means stronger internal processes for product management, etc. All pieces of your business affect the other, and this domino effect will increase the cost of doing business more quickly than you think.
Final Thoughts
While there are many logistics partners available for online retailers, it’s important to know that not all of them operate with a C-level strategy in mind. From risk management, to cost savings and strategic, sustainable growth, know what you want your business to look like with this added support. And be sure to look for a partner who can help you hit these business goals – not just move your product from point A to point B.
From warehousing to product delivery, our team at Sweetwater can not only support your logistics needs, but we have the experience and strategic mindset to help take your business to the next level. Learn more about our services here.
