Imagine you’re selling products targeting various audiences, from baby boomers to Gen Z. With the help of your supercharged in-house marketing team, you keep receiving more orders.
As a result, you need to ship the orders to the customers’ addresses to meet the demand.
Now, the big question arises-how would you fulfill each order while maintaining the time and standards?
You can mitigate this challenge by opting for e-commerce logistics. It will help to grow your business and reach dizzying new heights by serving your customers efficiently.
In this blog, we will break down the different aspects of e-commerce logistics.
Let’s dive in.
What is e-commerce logistics?
Ecommerce logistics refers to the methodology involved in storing and shipping ecommerce business inventory. The entire process comprises pricing, inventory management, packing and shipping various online orders.
An ecommerce company needs to manage its inventories while planning and forecasting simultaneously. It will help them to have products during the peak selling period. Besides, they must have a system in place for shipping the products internationally and domestically.
Finally, they need to ensure that the distribution channel runs smoothly and is reliable. In others words, eCommerce logistics is a process that starts with getting inventory from the supplier and manufacturer and ends with delivering the product to the customer’s doorstep.
The importance of efficient ecommerce logistics for your business
After the devastating outbreak of COVID-19, the unprecedented crisis of particular products/services compelled people to embrace the alternatives. One such thing is switching to digital from traditional brick-and-mortar stores. The advent of the internet is playing a pivotal role here.
According to a study, retail ecommerce sales were estimated to exceed $ 5.7 trillion in 2022. Experts assume this may reach new heights. Given the convenience and safety of online shopping, your business needs to amp up the flow of manufacturing and delivery.
Here the importance of ecommerce logistics comes into the picture.
1. Global reach
With the advent of the internet, customers can find your business online. They can shop at any time, irrespective of device. By adopting convenient ecommerce logistics, you can provide a great shopping experience.
Convenience and flexibility are two significant factors driving sales for your business. Ecommerce logistics will facilitate the same by delivering the products on time while maintaining the quality.
Ecommerce will eliminate the need for a physical store involving additional staff, regular maintenance and heavy rents. Once You set the algorithm, everything will be automated, from picking up the goods from inventory to delivering the same at the customer’s doorstep. Here ecommerce logistics plays a pivotal role in doing it efficiently.
Proper ecommerce logistics enable tracking of operations and real-time viability across the entire supply chain. Hence it provides maximum transparency to all the participants related to the actions of the entire logistics operation.
4. Customer satisfaction
Real-time tracking, complete transparency and visibility provided by the logistics operations lead to customer satisfaction and retention. Providing the delivery of items at the right time and place would help to maintain better customer satisfaction and retention.
5. Reverse logistics
If the customer isn’t satisfied with your product, then they may raise a return request. Your logistic partner will arrange the pickup from the customer and return the same to the seller. This is known as reverse logistics. It ensures the value retention of your organization while keeping the customer satisfied.
How do eCommerce logistics work?
ECommerce logistics is the amalgamation of processes like warehousing, inventory management, billing, shipping, return and exchange that work in sync. All these work in tandem with the latest technology, which serves at its best during peak hours.
Mainly, the eCommerce logistics industry functions in two directions-
- Forward direction– Distribution and delivery of packages to the buyers. It includes receiving the order from an eCommerce store, providing a payment option, preparing the inventory, packing the item, preparing the invoice and dispatching the order.
- Reverse direction– Despite your best effort, there could be a chance of damaged shipments. On that note, reverse logistics is efficient. It can be responsible for returning those defective materials to inventory and replacing them with newer ones.
Four Vital Parts To Improve Logistics Management
Here are the four primary aspects that you should focus on to ensure smooth logistics management-
Goods need to be stored somewhere before they get sold. Warehousing paves the way for storing them. Some perishable items may require temperature-controlled environments. Warehouses are built according to the latest industry standards.
2. Management of inventory
Once the items are delivered and shipped from the warehouses, inventory management software will track the same to inform you about the present stock levels. You can plan the logistics per the demand so that the products reach your customer once.
3. Picking & packing
A robot may retrieve the ordered item from any shelf in the warehouse. Once the order is assembled, it needs to be properly packaged and labeled. It is one of the primary steps of the logistics process, as it directly impacts the customer experience.
Logistics and transportation are closely intertwined. They help to deliver the package to your customer. Local and regional delivery services take care of this final delivery.
5. Processing of return
Many logistics service providers also offer support for returns. It involves examining the returned item, handling returns and placing it back in the inventory if the package is in sellable condition.
Types of ecommerce logistics
There are different ways you can manage your ecommerce business logistics. Here you go-
This is the process where the manufacturer or supplier directly sends the product to the consumer. It is considered one of the cheaper options as it eliminates the warehousing cost. However, it can increase the delivery time in some cases, especially when it comes to international shipping.
2. In-house logistics
Managing your ecommerce supply chain by yourself is known as in-house logistics. It involves tracking shipments from the supplier to the warehouse, including various centers which you may have. You need to use your eCommerce analytics while spending long hours calculating the shipping cost.
Third-party logistic providers can handle all the logistic processes so that you can concentrate on the rest of your ecommerce business. 3PL offers supplier management, inventory tracking, warehousing and packaging. Even the 3PLs have nationwide networks, which enables them to offer 1- or 2-day shipping.
Benefits of ecommerce logistics outsourcing
Handling in-house logistics has become more challenging right now. Due to changing regulations and the constant development of technology, it is now turned costly and inefficient.
1. Wide expertise
Logistics partners have experience with different processes, markets and technology related to the supply chain. This will help you to serve accordingly, irrespective of the turbulence. If you need any help with your supply chain, your logistic partner can derive quick solutions based on the accumulated data and resources they have already.
2. Innovative technology
You should utilize the latest technology, that offers CRM and ERP integration, order management and other critical solutions. It may be expensive to do in-house, but outsourcing logistics will help you eliminate this issue.
Technology boosts the efficacy of significant logistics tasks. It includes order tracking, data analysis etc. Also, it reduces human flaws.
3. More concentration on your task
Outsourcing the logistics operations will help you focus on your core competencies. It will improve the entire supply chain operations, so you don’t need to intervene every now and then. In-house logistics incur high costs, including labor and physical and monetary resources. You can use these resources in other areas of your business.
4. Stronger business relationships
Besides moving packages, the logistics provider can advise if you have any critical supply chain issues. In this way, you can expand your business by considering their feedback. Moving forward, it will help to advance your capabilities.
5. Further scalability
Logistics outsourcing would help you to scale with fewer costs and risks. They can quickly respond to surges/drops in demand. On top of that, outsourcing will simplify the process of entering new markets while helping you gain exposure over time.
Things you need to check while opting for a logistics partner
You must check some essential things if you’re choosing a logistics provider for your eCommerce business. Here you go-
- CRM integration– Integration of CRM with logistics software will help to access the relevant information about the shipments, returns etc. Being a robust software, CRM integration can help you keep informed about the latest deliveries, shipments’ progress, customer inquiry etc.
- Shipping accuracy rate– It is essential to track how well the logistics solution can get the right product to the right customer.
- Ecommerce fulfillment– Logistics operations companies have specialization in shipping to particular markets. For instance, you may feel disappointed if you want to ship internationally and the logistic operation doesn’t have the same option. Therefore, before availing of the service, ask the logistics company about their geographical boundaries.
- Security measures– While choosing a logistics partner, don’t forget to ask about the security measures that need to be implemented at the inventories. As your packages are stored here, modern safety and security standards must be followed.
- Pricing plans– Ask the logistics partner about the latest pricing plans. Different logistic providers have different plans. It may be appropriate as per the volume of your business.
- Reverse logistics– Returning the package is known as reverse logistics. Ask the logistics partner about the returns process against the kinds of products you sell and if there are any fees related to returning the sellable stock to inventory.
- Support– Ask about the available resources to help you if you are stuck somewhere. From IVRS customer support to chatbot- it must be available during the most demanding time once you experience any issue.
Wrapping it up
It is assumed that eCommerce logistics will continue growing. It may face more challenges in the future, which require online retailers to speed up their logistics performance. Whatever the situation, you must stick to one goal- serving your customers on time while maintaining quality.
It would be best to hire a third-party logistics provider to perform the tasks efficiently. Before taking any initiatives, research the present market scenario and ask yourself- “Where does my business stand in all of this”?
Deepak Kumar holds a Master’s degree in Marketing and a bachelor’s in computer application. He works as a content & marketing manager at Bharat Software Solutions. He likes reading novels and traveling to hill stations.