How Do Logistics Work in Ecommerce?

Of all the advantages of e-commerce logistics management services, the most important one is probably not the first one that comes to mind. And just in case it doesn’t come to mind, here it is.

Increased sales.

The main reason that most companies consider using logistics services, including supply chain management, warehouse management and order fulfillment, is to lower their operating costs.

Of course, third-party logistics solutions must reduce your costs because, well, if they didn’t, why would you use them?

But e-commerce businesses range in size from the most valuable companies in the world to sole proprietorships. And they all compete against each other on the same playing field. 

That makes the ability to devote more of your company’s resources to improving sales, versus worrying about things like inventory management, at least as valuable a benefit third-party logistics (3PLs)as cutting costs.  

How Ecommerce Logistics Management Services

The fact is, 3PLs can open the door to virtually unlimited sales increases. Here are just a few ways that you can make it happen. 

1. Traditional Logistics Services – To underline the point we made earlier, let’s ask a question. Does your e-commerce business specialize in supply chain management, warehousing, inventory tracking or transportation?
   
   No? But one, more or all of them are crucial to your business.

So your choice is to devote the time and resources to hiring and/or developing the expertise in all of those areas, maintaining them, and keeping on top of technological changes, new processes and other options.

Or find a partner who does all that for you. So you can keep the sales machine stoked, whether that be with more staff, marketing, web sites, or just you and your phone.

1. The Two Key Ecommerce Customer Demands – Let’s face it, unless you happened upon a completely unique offering for your customers, chances are that they can find the same thing, or something very similar, elsewhere.
   
   So how do you compare to the competition? Or, perhaps most importantly, how do your customers see you in comparison to the competition?
   
   Free Shipping
   Depending on which study you look at, up to 90% of consumers say free shipping is their top incentive to do more online shopping. Many online shoppers will choose free shipping over discounted prices. And they expect at least two-day free shipping, if not faster.
   
   The challenge here is not just to minimize shipping costs so you can offer free shipping options, but to find reliable, cost-effective last-mile delivery, which is the Achilles heel of next-day and same-day shipping.
   
   Free Returns
   90% of online customers expect free shipping, and 88% expect free returns.  While many who set out in e-commerce enterprises fail to consider the impact and logistics of returns, e-commerce return rates are 250% higher than brick and mortar return rates.
   
   How can a 3PL help you compete with a fast, free returns policy? Reverse logistics, which includes everything from picking up the return, to repairs, repackaging, restocking and/or recycling.
2. Customer Experience – As an extension of the idea that your customers expect free shipping and free returns, competing in e-commerce is really all about your customer’s experience.
   
   They may have bought something on Amazon a few minutes ago, and now they are on your site. Or maybe you got your product listed on Amazon. In any case, your customer doesn’t care that Amazon has buckets of cash, thousands of employees and fulfillment centers around the world.
   
   They expect the same experience, from the moment they spot your product and make the buying decision, to when they open the package and begin to consume it, and beyond, as they get from Amazon.
   
   Without all the logistics in place, those that keep your supply chain running, maintain inventory levels, pick and pack, deliver and return your products, it will be difficult to meet the customer’s expectations, and be as successful.

To learn more about the importance of shipping in e-commerce, check out our article “Amazon Shows that Shipping is Key to Ecommerce Success”.