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Streamlining E-commerce Logistics: Enhancing Efficiency and Customer Satisfaction

The procedure an ecommerce firm utilizes to get an order out the door and into the hands of the client is known as ecommerce logistics, or elogistics. Online customers’ orders are packed, shipped, delivered, and occasionally returned after they’ve been made.

The ecommerce logistics of an online store have various parts, albeit this procedure varies for every business.

How Does eCommerce Logistics Work?

eCommerce logistics is an amalgamation of numerous operations like inventory management, warehousing, packaging, labelling, invoicing, shipping, payment collection, return, and exchange that operate in unison to create a supply chain. All of them together create a challenging task that needs to be completed using a foolproof plan.

In addition to these, eCommerce logistics calls for in-depth familiarity with geographic areas, roads, and their conditions, as well as with legislation governing transportation. The main goal of setting up a logistics unit is to deliver packages considerably more quickly, safely, and precisely.

The eCommerce Logistics Company Functions in Two Directions

Forward Direction – Receiving an online purchase, organizing the item, packaging it, creating an invoice, setting up the payment, dispatching, and delivering the item to the customer’s door are all parts of logistics in the forward direction for an eCommerce business. The amount of time it takes to fulfil an order relies on the material’s accessibility and the consignee’s location. There can be an extra delivery fee for certain places. It is the seller’s responsibility to always inform each consignee of a shipment’s precise location, from the point of shipping until delivery, via tracking SMS or email notifications. Similar to a retailer, the owner of an eCommerce firm needs to receive payments. For a better client experience, an online retailer should offer a variety of payment methods, such as debit/credit cards, bank transfers, and COD (cash on delivery). The COD option is crucial in a nation like India where customers are more accustomed to working with tangible currency.

Reverse Direction – Despite all precautions, it is impossible to completely eliminate the chance of incorrect or damaged shipments. In these circumstances, effective reverse logistics is crucial. Logistics must return these faulty or damaged items and replace them with appropriate orders that satisfy the customer within a reasonable amount of time. Building trust between the customer and an eCommerce organization is facilitated by a simple exchange or replacement process.

The 5 Links in the Chain of eCommerce Logistics

  • Vendors – Companies that produce the goods and deliver it to fulfilment centres are known as suppliers or manufacturers. The supplier distributes the product directly to the client if the brand uses drop shipping. In the alternative, the company places a bulk order, holds it in a warehouse, and then ships the items out to clients as orders are received.
  • Fulfillment facilities – A fulfilment center is a sizable warehouse where inventory is kept near to the final customer. Each product is packaged and shipped as soon as a consumer place an order. This facility may be fully run by a third-party logistics service provider, or it may be owned or leased by the eCommerce company (dedicated fulfilment center) (3PL). For instance, Amazon uses its own fulfilment facilities for companies to complete orders as part of a programme dubbed Fulfilled by Amazon (FBA).
  • Distribution facilities – If an online retailer is sufficiently large, they may divide their goods among various storage facilities or modes of transportation using distribution hubs. When it comes to packaging needs or shipment locations, businesses could decide to employ distinct warehouses for their B2B and DTC orders.
  • Sorting resources – These are facilities used to sort things for large-scale eCommerce businesses that move lots of merchandise.
  • Transporters – Companies that deliver goods to their destinations are called shipping carriers. These are USPS, UPS, FedEx, and DHL in the US. They pick up the shipment from the warehouse or fulfilment facility and fly or drive it to the customer. A brand may utilize its own private carriers in specific circumstances to speed up delivery.

Types of eCommerce logistics

  • Internal logistics – You control your supply chain if you manage your eCommerce logistics in-house. This entails keeping track of goods as they travel from the source to the warehouse and any other distribution hubs or sorting facilities you may have. It also entails leveraging the data provided by your eCommerce platform and devoting numerous hours to manually figuring out how much each shipment will cost to ship.

Think – Consider spending late nights organizing Google Sheets and studying Mandarin.

  • Drop shipping – In this scenario, the product is delivered directly to the customer by the supplier or manufacturer. Due to the absence of warehouse expenses, this alternative is significantly less expensive, but it sometimes results in significantly longer delivery times, particularly when delivering internationally.

Think – Purchasing iPhone cases from a brand in China and having to wait two months for the consumer to receive them.

  • 3PLs – Third-party logistics companies (3PLs) take care of all aspects of the logistics process, so you don’t have to. They provide packaging, warehousing, supplier management, and inventory tracking. Some 3PLs even have a network of warehouses across the country, enabling them to provide 1- or 2-day shipment.

Market size for e-commerce logistics worldwide from 2020 to 2026

Global e-commerce logistics sales exceeded 441 billion euros in 2021. The size of the e-ecommerce logistics sector will increase to over 770.8 billion euros by 2026, driven by the expansion in online sales.

Exhibit 1

How COVID-19 Reshaped E-Commerce Logistics

Like how SARS was a significant boom for Chinese e-commerce, COVID-19 is a fast-forward for e-commerce logistics. However, the current scenario is different, and the boom is probably going to be much stronger. E-commerce is now substantially more developed than it was in 2002, and secondly, its effects are more widespread than those of SARS, which were primarily limited to China.

Exhibit 2

Challenges faced by E-commerce Logistics

  1. Materials for same-day shipping – Other e-commerce sites (small and large-scale) aim to imitate same-day deliveries being made possible by e-commerce behemoths like Amazon. Online businesses can benefit from same-day deliveries if they have the means to expedite logistics and fulfilment. By providing products to clients the same day they place an order, your company may desire to maintain its competitiveness. If you lack the funds to make the service a reality, it could get frustrating.
  2. Identity fraud – Due to the convenience of online purchasing, consumers are increasingly depending on these platforms to supply them with a variety of services and goods. Consumers are finding it challenging to take advantage of the convenience that online purchasing offers due to identity theft, one of the issues facing e-commerce. If a customer tries to make a purchase from your website but their credit card information is stolen, it could be heartbreaking for your company. Because they can no longer do business with your company, the consumer will be forced to leave the cart unattended. On the long run, cases of identity theft on e-commerce platforms affect logistical operations because customers have trouble placing orders and don’t receive their goods as promised.
  3. Technical blunders brought on by shipment tracking or inventory management software – Online retailers are finding it simpler to maintain track of goods that are dispatched to customers or that are stored inventory because to developments in e-commerce logistics. All logistics convenience measures are not equally successful. Your inventory tracking software may crash or have technical issues. You will have momentarily lost knowledge about the progress of the shipments of goods to your clients till it is corrected. If it takes longer to resolve this problem, your company will undoubtedly need to conduct some damage control.

The top 3 ecommerce logistics trends of 2022

1. Customers desire quicker delivery –The surge in same-day delivery choices can be attributed to urban millennials’ tenacity and high standards. In fact, 61% of consumers would be willing to pay more for same-day delivery, and 64% of millennials are more inclined to make an online purchase if it is available.Fast delivery necessitates that ecommerce companies broaden their geographic reach in addition to having the appropriate technological capabilities in place. Otherwise, it costs a lot of money to physically ship something from one side of the country to the other.

2. Last-mile delivery is crucial – The last leg of the logistics process, often known as last-mile delivery, is under added pressure due to a growth in online order volume and a rise in customer expectations.Last-mile delivery is the movement of a package from a distribution center to its final location, frequently via a shipping carrier, with the aim of delivering the cargo as swiftly and economically as feasible. Last-mile logistics are also huge business, with this year’s forecast placing their combined value at $1.35 billion.

3. Brands must spread risk and use creativity – 2020 turned out to be a year like no other as the world battled with the COVID-19 pandemic’s effects and supply chain disruptions. Overnight, things changed. More customers made purchases from online retailers than physical establishments since many consumers were quarantined or refused to leave their homes. Some e-commerce companies received more orders than ever. Others, though, witnessed a fall in sales. The people who had unconventional thinking were the ones who survived.

Conclusion

Consumers are expecting more from all of the internet retailers they use. Strong e-commerce logistics partners can boost productivity, cut delivery costs, and deliver a wonderful customer experience.

The appropriate 3PL partnership can give your company the freedom and flexibility it needs to expand without requiring you to hire a logistics director or manage ecommerce logistics internally.

Author: Sonu Kumar Sah

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