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How to accomplish the “impossible task” of eCommerce logisticsIt’s magic from your customers’ perspective: Click “buy” and items will be delivered to their homes within a few days. You know the truth, just like any eCommerce merchant. Behind the scenes, a new order triggers complex operations that involve multiple parties and locations. This is how eCommerce logistics works. Sometimes logistics can seem as difficult as Houdini’s escapes. You can make magic happen for your customers online with a strategic approach and lots of testing. Do you need a way to manage all your ducks? Wix eCommerce allows you to manage everything, from your website to all aspects of your business operations, in one place.
What is eCommerce logistics?Ecommerce logistics encompasses everything from the moment customers click “buy”, to the moment they receive the order, plus any return requests. These are the five main components of eCommerce logistics web. Each has its own challenges and tasks.
Ecommerce warehouseEcommerce warehousing is the process of receiving shipments from manufacturers and safely storing them until they are sold online. You will need to train your staff, install the correct software and hardware, keep your warehouse organized, and maintain good relationships with carriers.
Order fulfillmentWhen a customer buys your product, order fulfillment begins. You will need a way to track orders and route them synchronized, regardless of whether you are sending orders directly to customers’ doorsteps or enabling in store pickup. There are many other things to consider, such as eCommerce product packaging and labeling items for last mile delivery.
Inventory managementInventory Management is the process of managing and tracking stock levels with the aim to have the right products at the right time. This requires accurate demand forecasting, which gets more difficult with each new channel, audience, product, and product that you add. You must ensure you don’t undersell or oversell. Today’s sellers are under increasing pressure to display in-stock statuses on their website for customers to see. Therefore, you will need a system that accurately tracks inventory across all channels (including physical locations).
Reverse logisticsOne in five eCommerce orders is returned . While there are ways to reduce returns, they are an inevitable part of eCommerce. Reverse logistics is a way to receive, resell, or dispose of returned merchandise. This allows you to recover revenue and maintain a high level customer service.
Cross-border logisticsInternational sales can be a huge business opportunity. However, it also requires you to comply with customs regulations and adjust shipping fees to reflect carrier and tariff costs. A 3PL who specializes in cross border logistics can help you navigate your international eCommerce strategy.
Ecommerce logistics vs. brick-and-mortar logisticsThe problem with eCommerce logistics is its complexity. This is due to several reasons:
- Destination –Rather than delivering a truckload of goods to a few retail outlets, you will coordinate the delivery of smaller parcels to millions of addresses around the world.
- Multi-item Order Many online orders contain multiple items that need to be sourced, delivered on time and packaged properly. Traditional retail allows buyers to choose from what is already on the shelves.
- Unpredictability Unlike traditional retail where shipments and demand are easier to predict based upon the hours and location of the store, eCommerce is unpredictable and often fluctuating.
- Speed More than 90% of online shoppers anticipate delivery within three days or less and 30% expect same day delivery.
- No shipping charges – 66% expect free shipping on all online orders.
- Free returns is an important consideration when shopping online. It’s second only to free shipping and faster delivery, according to a PowerReviews survey.
- Consumer demand for options During pandemic lockdowns services such as curbside pick-up became more common–and consumers now want those options to remain in place. Nearly a quarter U.S. shoppers reported using curbside pickup or in-store pickup to pick up their latest online order. Six in ten shoppers are more likely to order online if they can return items in-store. This saves them the effort of packaging and shipping back their products.
5 eCommerce logistics optionsCustomers expect fast, free and flawless shipping. It is also important to remember that more than two thirds of consumers will not shop with a brand if they have a bad experience with shipping. There are many options. The decision about how you handle logistics is a matter of control versus cost. Some eCommerce logistics solutions are more expensive, but you still have greater control over the process. Other options, however, require less involvement but still require you to give the customer experience to a third party. There are many options available:
01. Self-fulfillment or in-house logisticsYou have complete control over logistics. From choosing which carriers to use, to packing items in a way that creates a memorable unboxing experience, you can manage your inventory and fulfillment. However, small to medium-sized businesses might have trouble negotiating favorable deals with major package carriers or landlords. Physical stores could be used as an addition to fulfillment centers. You could also partner with an established retailer to sell, ship, and accept returns merchandise, as Apple, among others, has done.
02. Third-party logistics (3PL).Third-party logistics (3PL), which handles the bulk of order fulfillment and warehousing, is a good option. If you are having difficulty managing shipping costs or other indicators that it is time to outsource fulfillment, a 3PL provider can be a good choice. Although you will still need to purchase inventory for your 3PL’s fulfillment centers or distribution hubs, this allows you to avoid the hassles of managing carrier relationships as well as the pick-pack-ship process. Consider these factors when looking for a 3PL partner:
- Are you able to handle products similar to yours with your 3PL?
- Which service levels are they available?
- Is there a minimum order volume that the 3PL requires?
- What control do you have over packaging and branding?
- What flexibility do you have regarding shelf space in case your business expands or contracts?
- Are 3PL owners of their assets? Is there any restriction on how assets are managed
- What is the process for sorting and processing returns?
03. Marketplace programsAmazon and Walmart both offer fulfillment services similar to a 3PL. Amazon FBA is one example. It is powered by Amazon’s fleets of trucks, planes and partners, along with its 185 fulfillment centers around the world. FBA is only available to Amazon sellers. Amazon Multi-Channel Fulfillment, however, is also available. This allows sellers to use FBA services on other channels than Amazon. Some marketplaces, such as Walmart Marketplace, prohibit the use of Amazon logistics. Instead they promote their own services. It is not surprising that if you sell on any market, you will reap the greatest benefits (e.g. higher rankings and better buy box standings) by using their own services. Did You Know:Wix merchants have the ability to connect their accounts with Amazon MCF. Automated synchronization of orders, inventory and service levels for seamless fulfillment.
04. DropshippingDropshippers are not like 3PLs. They don’t require merchants for inventory before they can offer items for sale. Dropshippers will fulfill orders when customers purchase products from your website. You don’t have to store or handle any physical inventory. This is Dropshipping. Dropshipping offers additional convenience in fulfillment and allows you to add and modify product lines quickly. Dropshipping can be cheaper than using a 3PL as you only pay for orders once they are placed. What you gain in convenience you lose in control. Dropshippers are trusted to deliver your items in pristine condition and on time. You need to ensure that you vet potential dropshipping partners carefully. Wix merchants have the ability to source millions of products and sell them via Modalyst. This official dropshipping solution has been thoroughly tested and is well managed. How to get dropshipping started with Wix.
05. Hybrid approachThere is no single solution that works for everyone, as it is often said. Mixing and matching these options can satisfy your specific business needs and decrease your dependence on one channel. You might decide to manage most orders in-house but only outsource certain product categories for dropshipping. (View the top dropshipping products). You can also use a 3PL provider to ship certain areas and cross-border, but you handle local pickups. To avoid any wire crossings, make sure you have a reliable system for managing your store across all these providers.
Six best practices to help you succeed in eCommerce logistics
- Pay attention to the services that your audience is interested in
- Choose from a variety of options to ensure availability
- Use stores for “forward stocking”
- All about the sustainability of slow lane
- Reverse logistics in your business plan
- Use the right technology