In e-commerce ventures, logistics are the processes of shipping order to customers or transporting an inventory to a merchant. …Logisticsmanagement is the practice of locating and identifying potential distribution and shipping companies, and evaluating their effectiveness.
Logistics is a congregation of various processes such as inventory management, warehousing, packaging, labeling, billing, shipping, payment collection, return, and exchange. All these put together turn into an exigent task, that requires a full-proof strategy to be accomplished.
Logistics are a vital part of any e-commerce business’s operations. In this article, we will look at 1) logistics for e-commerce, 2) important considerations in e-commerce logistics, 3) best practices, and 4) examples.
Logistics for e-Commerce:
A customer had the responsibility of becoming the last link in the supply chain by travelling to a store location and making their purchase. To facilitate and encourage customers, businesses would need to make significant investments in creating the perfect store in the perfect location. The costs associated with this would then be reflected in the final price of the good available for sale. The seller would also need to keep a particular level of inventory on hand and this would need to be regularly replenished.
Several changes have occurred to the system because of the shift towards online selling. The major changes include:
Flexibility in locations
Connecting to supply chain
Though there is not enough information at the moment on the consequences of these changes in logistics, there are some trends that can be observed. These trends relate to how e-commerce is changing physical distribution systems.For one thing, traditional stores had put their focus on economies of scale through large stores in key locations. The new system challenges this by instead focusing on warehouses that are located in less urban and metropolitan areas and ship high numbers of smaller parcels to individual buyers. Economies of scale similar to traditional sellers can be achieved if a large volume of online sales is achieved and the shipments can be consolidated to a degree.Another important aspect of this change is the cost of moving purchases from the point of sale to the point of consumption. Traditionally, this was the responsibility of the customer. But with e-commerce, this system, though still often paid for by the customer, needs to be integrated into the distribution process. This means more focus on aspects such as packaging and a lot more freight actually shipped. A traditional logistics system would not be able to handle this additional requirement.
Evolution of Logistics:
As mentioned above, the importance of the changes to traditional logistics models is only now being understood and considered by retailers who chose to sell online. Over the last 40 years, the field of logistics has evolved in several ways and a broad timeline is:
1970s: Generally, retail stores were stocked by deliveries direct from suppliers and/or wholesalers
1980s: A trend towards centralization of store deliveries was seen and this was done through distribution centers under the retailers control
1990s: Global sourcing gained popularity and a trend towards import centers was seen. These import centers were created to receive and process shipments in containers.
2000s: The popularity of e-commerce meant the creation of e-fulfillment networks for distribution.
Major Requirements of E-commerce Logistics:
As online retail has grown, especially in non-food related industries such as fashion or electronics, where goods are shipped to customers through postal or freight networks, there has been a need for four major functions from logistics:
Mega E-Fulfillment Centers
Parcel Delivery Centers
Shipping Costs: One common e-commerce dilemma for store owners are the abandoned carts. This happens when the customer adds in all the items but then gets either distracted or put off by the shipping charges. The additional costs are almost never factored in when the purchase decision is made and most often the item suddenly appears to cost more than its worth. When setting up e-commerce logistics, a store owner needs to have a clear shipping strategy in mind, which is a balance between being attractive to the customer as well as making business sense for the seller.
Charge the Customer What You Are Charged
Ship to Home
Ship to Store
Reverse Logistics Considerations:
Key Components of a reverse logistics framework include:
A clearly stated Returns Policy
An established process for Returns Preparation
A process for Receivingreturned items
A process toShip an item exchanged, offer a refund or store credit
A systematic way to Inspect and Sortreturned items
An Asset Recovery Systemthat may include things such as restocking, repackaging for sale, return to a vendor and disposal or scrapping.
Whenever an online seller plans a logistics process, there are some key points to keep in mind. These apply to both larger sellers and smaller ones and can help either type of seller achieve logistics success.
Flexibility: It is important to keep the logistics process simple and flexible. This flexibility will allow expansion in workstations and temporary employees during times of increased work such as the holiday season.
Order Auditing: The key element of a logistics process is ensuring that the right customer receives the right order in the time specified. Customer satisfaction will take a serious hit if the customer opens their package to find the wrong items. An audit process can help ensure that order accuracy is maintained throughout the logistics chain. An automated system in this area can be a great way to ensure that this happens.
Proper Packaging: An important aspect of the logistics of e-commerce is the packaging. Not only does the packaging need to protect the items inside and make a great first impression, it also needs to be cost effective for the company to ship.
Accurate Inventory Management: There are periods of high sales and ones of low sale. In either case, there needs to be an accurate measure of inventory in stock and this needs to be maintained to ensure that all orders can be fulfilled at the right time.