What is Logistics and How Does it Apply to eCommerce?
Table of Contents
What is logistics?
The term Logistics refers to a complicated planning process. Being able to efficiently manage storage spaces, delivery options routes and delivery times, warehousing, and packaging process is all part of logistics.
The main goal of logistics is to ensure a smooth and efficient process starting from the manufacturing process to the delivery to the end user. Along the way, there are different steps and departments involved with the logistics process, being able to organize and lead these departments and steps should be the main focus for all of the company’s operation members.
Logistics management involves optimizing processes and resources to minimize costs, reduce lead times, and improve overall efficiency. In today’s global world with continents being connected and the population of the world expanding, being able to compete with the other competitors plays a big role in the logistics world both for optimizing the processes and smoothing the logistics steps.
What is an eCommerce supply chain?
An eCommerce supply chain consists of different steps that include network activities, processes, and the steps involved in the production, distribution, and delivery of goods. In this context, it involves all the stages starting from the manufacturing to goods arriving to the end user.
Optimizing the supply chain process is crucial for better customer relationships, ensuring timely delivery, and maintaining cost-effectiveness. Successful companies use current technologies, analytics, and automation will help businesses grow and optimize their supply chain process.
The 5 Parts of the eCommerce Logistics Chain
1. Suppliers
Suppliers or manufacturers are the starting point of the logistics process. They manufacture, produce, or gather the necessary supplies and pack them to be delivered to the end users through the B2B wholesalers. They are the first step of the logistics process and plays a crucial role in the B2B wholesale world.
2. Fulfillment centers
A fulfillment center is a large warehouse that wholesalers use to store their products before they deliver them to their customers. These warehouses are generally used by eCommerce sellers to pack and ship individual products as soon as the customers place their orders. Fulfillment centers have the capacity to both pack and ship the products.
3. Distribution centers
The term refers to big logistics infrastructures. This infrastructure can contain different types of warehouses among them. Distribution Centers mainly help and support the logistics operation for a faster and bigger distribution network. Wholesalers send their customer’s orders to these locations first to be able to fulfill the Delivery Window agreed with the customer.
4. Sorting facilities
Sorting facilities mostly distribute the pallets of supplies to the company warehouses throughout the different areas and zones.
5. Carriers
Carriers are the parcel services that B2B wholesaler companies use. They deliver the smaller amount of orders and products to the customers directly to their door via trucks or planes. Some companies start their own carrier services to reduce the shipping and logistics costs.
How to address eCommerce logistics problems?
Optimize inventory management
- Implement inventory management software and track your stock in real-time.
- Use demand forecasting software to prevent overstock or stockout.
- Implement just-in-time inventory practices.
Improve order processing
- Minimize delays and streamline your order processing systems.
- Implement order management software and optimize your order fulfillment.
- Implement barcoding and scanning systems to optimize your order-picking process.
Enhance warehousing efficiency
- Re-arrange your warehouses for easier navigation and faster warehouse management.
- Implement Warehouse Management software and streamline your warehouse operations.
- Implement third-party logistics providers to outsource your fulfillment.
Implement robust shipping solutions
- Offer your customers different shipping options.
- Implement real-time order tracking services to optimize your customer satisfaction.
Enhance communication
- Create stable communication channels with your suppliers, carriers, and customers.
- Listen to your customer’s feedback and optimize your logistics process according to that feedback.
Continuous improvement
- Regularly assess and analyze logistics performance metrics.
- Stay updated on the industry trends and topics.
Challenges facing eCommerce logistics
Supply chain visibility
Maintaining a clear real-time tracking system will play an important role Lack of real-time tracking can lead to uncertainties and delays.
Inventory management
Stockout can lead to missing orders and customer dissatisfaction while overstock can result in unnecessary stocks invading valuable warehouse space. To stop these things from happening, you should keep an eye out for your inventory.
Returns management
Managing returns in an efficient and cost-effective manner is a significant challenge. If you cannot maintain your product returns process you might face customer dissatisfaction.
Technology integration
Implementing new and updated technologies such as Simplisales will help you navigate through your road to the B2B market. Companies without the proper technological infrastructure will face the hassle and complexity of the B2B world.
Environmental impact
eCommerce logistics contribute to carbon emissions through transportation and packaging. Processing each order online through the Simplisales app and website leads to fewer sales representative visits, resulting in a notable decrease in carbon footprint.
Data protection
Having all the sensitive customer data brings the responsibility to protect those data to the B2B wholesalers. To protect these data you should implement data protection solutions.
Order packing and shipping
Order packing and shipping are crucial steps in the eCommerce supply chain, directly impacting customer satisfaction and the overall efficiency of the business. Let’s delve into each of these processes:
Picking and sorting
After you get your order, the first step is the pick up the ordered goods from their pre-arranged locations, with better warehouse management you should be able to find them real quickly. In larger warehouses, this process could contain multiple automations.
Packing
After picking up the goods you need to pack them in order to deliver the goods to their customers. Some goods could need different packaging such as bubble wrap, boxes, or other protective packaging. These help protect the goods from the outside forces.
Quality check
After packing up the goods you need to check if they are intact and ready to be sent to the customers. Without quality checks, your company could face potential customer satisfaction problems along the way.
Labeling and documentation
After the quality checks, you should mark the goods with proper labeling containing customer information, shipping address, and the invoice list. Without proper labeling, you may face delivery problems and unwanted returns.
Weighing and measuring
To accurately calculate the shipping costs and be in line with the regulations, every order should be weighed before it leaves the warehouse.
After packing the goods, the next step is getting the goods ready for the shipping process.
Carrier selection
If you don’t have a dedicated carrier service or logistics infrastructure, you should choose a third-party carrier. Choosing a proper carrier that suits your and your customers’ needs plays a crucial role in logistics.
Real-time order tracking
Customers feel more relaxed when they can track their orders along the way, most of the customer satisfaction feedback and customer loyalty comes from the customers of a company that implements real-time order tracking solutions.
Delivery confirmation
Sending delivery confirmation notifications to the customers will help you track your orders and reviews, and also will help you reduce the risk of unwanted returns and customer complaints.
Returns management
In case a customer wants to return their goods, you should be prepared to fulfill the customer’s needs. Providing them with ease for the return process will play a long way in customer satisfaction.
Efficient order packing and shipping are critical for meeting customer expectations, reducing shipping costs, and maintaining a positive reputation. eCommerce businesses continually strive to optimize these processes through the use of technology, automation, and strategic partnerships with reliable shipping carriers.
Types of eCommerce logistics
eCommerce logistics involve the management and coordination of the movement of goods in the online retail environment. There are various types of eCommerce logistics that cater to different aspects of the supply chain. Here are some common types:
In-house logistics
The term refers to the companies that handle their logistics operations in their own ecosystem. They might use warehouses, fulfillment centers, distribution centers, and private carriers to operate their logistics services. All of the processes happen within the company’s ecosystem. It could lower the logistics costs and improve profitability but requires serious investment.
Third-party logistics (3PL)
Many eCommerce companies don’t want the hassle with the logistics infrastructure and make a deal with Third-Party Logistics companies sometimes to build and sometimes to operate their logistics processes such as warehousing, order fulfillment, and shipping. It requires less investment, but for long-term profitability, it might become too expensive depending on the deal or the specified requirements of the company.
Reverse logistics
Handling the return process, including product returns, exchanges, and refurbishing or recycling of returned items. Implementing successful reverse logistics systems and processes always ends up with a satisfied customer. Even if the customers return their products, they might be happy with the ease of the return process.
In summary, eCommerce logistics is a complex process crucial for business success. Efficient management of suppliers, fulfillment centers, and the supply chain is vital for customer satisfaction. Overcoming challenges such as inventory management, returns, and technology integration requires strategic solutions. Meticulous order packing and shipping, coupled with real-time tracking, are essential for meeting customer expectations. As the industry evolves, businesses must choose the right logistics model—whether in-house, third-party, or reverse logistics—to ensure seamless operations and long-term profitability.
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