The global ecommerce industry is booming with revenue from online sales expected to hit US$6.3 trillion in 2023, marking a compound annual growth rate (CAGR) of 10.4%.
To capitalize on the opportunities for growth in today’s worldwide ecommerce industry, many businesses have expanded the scope of their operations into different product lines, countries, and sales channels.
One such company is Aromatan, a fragrance manufacturer that was co-founded in 2015 in India by Taha Nabee, who comes from long line of perfumers stretching back five generations.
“When we established Aromatan, we had aspirations of becoming a global perfumery house, with multiple brands, that would really help people discover the beauty and power of scent, its applications in aromatherapy, and its ability to improve their everyday lives,” Nabee, who is now CEO of Aromatan, said.
To achieve this vision, Aromatan – which started selling only offline, primarily at tradeshows around the world – decided to pivot to an online selling strategy.
Buoyed by the boost in sales from this pivot to ecommerce, Aromatan decided to expand its business by:
- Developing new products: Aromatan’s product portfolio – which totaled 100 products in 2018 – has grown to over 250 products including incense, essential oil diffusers and roll-ons, mists, and smudge sprays.
- Entering new markets: Aromatan – which started selling online only in the US – soon expanded to the UK, Canada, Australia, and other countries.
- Selling across multiple online channels: Besides Amazon and its own websites, Aromatan began selling across other channels including other ecommerce marketplaces and social media stores.
But managing a multi-channel ecommerce business with a growing product portfolio across numerous countries is challenging, especially when it comes to order fulfillment and inventory management – and so Aromatan made the decision to engage third-party logistics (3PL) providers to streamline its logistics operations.
“As Aromatan grew and expanded across different product lines, countries, and ecommerce channels, it became increasingly difficult to manage our inventory effectively. Inventory is cash, and we wanted to be able to turn it around fast and also deliver our products to customers as quickly as possible. To do this, we needed to be able to maintain inventory depth and in-time storage – and so we decided to work with 3PLs to help us with our inventory management as well as our fulfillment operations,” Nabee remarked.
In 2018, as Aromatan’s online business on Amazon and other channels began to really take off, the fragrance manufacturer started to outsource its logistics operations to several 3PL providers, including Fulfillment by Amazon (FBA), which handles fulfillment for orders placed on Amazon.
Around that time, Aromatan learned that Amazon offered another 3PL service, Amazon Multi-Channel Fulfillment (MCF), which provides fast, reliable fulfillment for orders placed on off-Amazon channels including brand websites, other ecommerce marketplaces, and social media stores.
“When we discovered MCF it was a real ‘aha moment’ as – up until that point – we didn’t realize that we could use Amazon’s fulfillment network to pick, pack, ship, and deliver our off-Amazon orders. Choosing to use MCF was an easy decision, as working with them enables us to realize so many efficiencies in terms of inventory and allows us to use Amazon’s best-in-class fulfillment services across all our sales channels and enjoy simple, predictable pricing for fulfillment and storage,” Nabee commented.
Aromatan decided to go with MCF as one of its 3PL providers for three main reasons:
- Inventory utilization: Aromatan could tap into the same pool of inventory that it used for its Amazon orders (with FBA) for its off-Amazon orders (with MCF) as well.
- Delivery speed: With MCF, Aromatan could deliver orders from its Shopify-based websites and other channels in as fast as one day.
- Network robustness: Aromatan had confidence that MCF – which uses Amazon’s global fulfillment network – could be relied on to fulfill its off-Amazon orders on time to customers’ doorsteps all year round, including peak periods.
“Working with MCF gives your business the opportunity to optimize your inventory by using it for your Amazon and off-Amazon orders and also benefit from the speed and robustness of Amazon’s network,” Nabee added.
Near the end of 2018, Aromatan began using MCF (which is available in 10 different countries) to handle its orders from off-Amazon channels in the US and UK – the company’s two main markets.
Although Aromatan started off manually entering MCF orders on Seller Central, Nabee soon realized that – as the company’s order volume increased – his team needed an order management system to help them streamline the order fulfillment process. Aromatan implemented ShipStation (which can be seamlessly integrated with MCF) and this system enabled the team to effectively manage inventory and orders across all their ecommerce channels and automate the order fulfillment process.
Aromatan has been using MCF since 2018 to handle fulfillment for its off-Amazon orders. During that time, the fragrance manufacturer has witnessed some profound transformations in its business:
- Revenue from online sales – which was non-existent back before 2018 – now accounts for 85% of Aromatan’s total revenue (and this percentage continues to rise). And total revenue has skyrocketed, registering 84% year-on-year growth over the past five years.
- Sales are now flowing in from multiple channels: Around 35% from Amazon, 35% from Aromatan’s websites, and 30% from other ecommerce marketplaces, social media stores, and offline and wholesale orders.
- Aromatan has further established its business across numerous markets including the US and UK, which account for around 40% and 35% of its sales respectively.
“MCF has been instrumental in helping Aromatan transform into a digital-first, global, multi-channel fragrance brand. I would recommend MCF to any ecommerce business as it provides a great path to reach consumers around the world, through any channel,” Nabee stated.
With MCF, Aromatan has been able to achieve numerous business benefits including:
- Inventory optimization: By utilizing the same pool of inventory for its MCF and FBA orders, Aromatan has been able to dramatically improve its inventory turnover and Inventory Performance Index (IPI) score (a metric that Amazon uses to measure how efficiently you use your inventory) to 864 (as of May 2023) and maintain an in-stock rate of 99%.
- Improved delivery performance: With MCF, Aromatan can offer its customers around the world the Amazon fulfillment experience for their off-Amazon orders, with shipping speeds as fast as one day and on-time delivery rates greater than 97% in the US and 99% in the UK.
“MCF has allowed us to get more products to more customers in the off-Amazon world in a faster way. With MCF, we can easily expand our business across different countries and ecommerce channels. I have no doubt that MCF will continue to play a pivotal role in Aromatan’s growth, now and in the future,” Nabee concluded.