eCommerce Logistics For Startup Business Owners: Tips For Developing Your Online Stores
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According to research, an online retailer spends between 20% and 40% of their revenue on logistics. This figure includes costs associated with storage, order fulfilment, packing, shipping, and returns. How do you position your brand to offer expedited shipping without investing the time, resources, and capital required to open multiple warehouses? If your logistics are not optimised, the likelihood is that your conversions will suffer. Your only option will be to make concessions and compromises, which will result in astronomical logistical costs.
If you want to know how eCommerce logistics works and how you can benefit from logistics companies, read on.
What Is Ecommerce Logistics?
Ecommerce logistics is a broad term that encompasses the processes involved in storing and shipping inventory for an online store or marketplace, including inventory management and order picking, packing, and shipping. With millions of packages being shipped across the country daily, systems must be in place to keep them on track and ensure they arrive at their intended destination on time.
Ecommerce logistics begins with the movement of inventory from the manufacturer and continues until it reaches the final destination of the end customer. Digital fulfilment is a critical component of eCommerce logistics, which includes the following:
- Inventory control
- Storage and warehousing
- Order fulfilment, also known as order picking, packing, and shipping
Each of these components is a world unto itself in terms of complexity, and keeping them all working in harmony is no easy task. Businesses must maintain adequate inventory levels in a distribution centre located near the customer’s location. If they outsource fulfilment, their third-party logistics provider must be dependable and capable of processing orders quickly, even during peak and holiday seasons. Any communication or execution breakdown in your retail supply chain can have a detrimental effect on the customer experience.
Shipbob has a proven track-record of excellent communication that will retain more clients. Check how they do it with Shipbob features here.
What E-commerce logistics options are available to online merchants?
You can organise your logistics process in a variety of ways:
Logistics system utilisation
Contracting with a carrier
Using an automated logistics platform
What Are The Prerequisites For Ecommerce Logistics Success?
To be successful in eCommerce logistics, you must place a premium on supply chain efficiency.
This approach combines technology, resources, and best practices to assist you in scaling your business as it grows.
While centralising your inventory may save you money in the short term, it may cost you more in the long run and as your business grows due to the way shipping zones work.
ShipBob has fulfilment centres in major cities throughout the United States, which allows us to spread inventory across the country and reduce shipping costs and zones associated with shipping orders to remote locations.
For instance, if your inventory is located in Florida and an order is placed in California, the cost of shipping the order to a high zone on the opposite side of the country will be extremely high.
It would be significantly less expensive to ship the order to a customer in California from a California warehouse. Multiple strategically located fulfilment centres are critical to accomplishing this.
Inventory control software
Managing your inventory — particularly when it is conducted outside of your four walls — necessitates accurate reporting and real-time visibility into quantities across SKUs and locations.
Rather than relying on manual static options such as inventory sheet templates or spreadsheets, utilise eCommerce logistics software.
The following are some beneficial features that your 3PL’s technology should include:
Counting inventory in real-time
Establishing reorder points informs you when it’s time to send additional inventory. Managing SKUs and product variants with ease. Integrations with your existing technology stack insights into the number of days of inventory on hand.
Systems for warehouse management
If you manage all aspects of eCommerce logistics on your own, you’ll also require a warehouse management system (WMS). These systems are used to monitor warehouse performance and provide insightful data for optimising warehouse processes. A good 3PL will have their warehouse management system (WMS) that will feed insights and data directly to you.
Reporting and data analysis
Are you able to deliver your orders on time? How much does each order cost you? What would be the shipping costs if you increased the number of fulfilment centres from one to two (or two to three, and so forth)? With the right reporting technology, you can automatically gain valuable insights into your eCommerce logistics, allowing you to identify areas for further supply chain optimization and cost savings.
How Can eCommerce Businesses Offer Two-day Shipping?
2-day shipping has quickly become the preferred method of shipping for consumers. With studies indicating that 25% of customers abandon their carts due to slow shipping options, eCommerce businesses must consider offering two-day shipping to continue growing. Establishing a logistics infrastructure capable of rapid fulfilment takes time and significant investment. You’ll need to lease additional warehouse space, hire additional labour, negotiate shipping discounts with carriers, implement software, and order inventory, to name a few things.
This is neither feasible nor profitable for the majority of eCommerce businesses. That is why they partner with third-party logistics providers. Numerous growing eCommerce businesses partner with ShipBob to offer two-day shipping and gain access to benefits such as infrastructure, expertise, and technology. With proven conversion rates, 2-day shipping helps eCommerce businesses grow from both new and returning customers.
Consumers are increasing their expectations of all online retailers. Having a strong eCommerce logistics partner enables you to maximise efficiency, minimise shipping costs, and provide an excellent customer experience. By partnering with the right third-party logistics provider, your business can grow without having to manage eCommerce logistics in-house.