E-commerce logistics – Does this sound familiar to you? When you buy something online, can you hardly wait until it arrives? And in the following days, do you look forward to the delivery by peeking out the window waiting for the courier? As a customer, all our attention is generally focused on the last step – our package’s arrival. But what happens from the moment we order the goods to the moment we receive them is actually the most important and eventful part of the entire e-commerce logistics process. It is actually during those frantic times that all the important operations take place, allowing us to transform our virtual request into a material good that is delivered to our home or wherever we want. Of course, as an online retailer, this is something that you are well aware of.
Even if most consumers are not fully aware of it, when they click on “confirm checkout” they set in motion a series of complex and ultra-efficient operations, which together make up the logistics process. This can be considered the core of e-commerce. It is the logistics process that has the delicate task of managing the entire distribution chain and coordinating from a strategic and practical point of view all that is involved in the flow of products. It makes sure that what is requested by the customer arrives at the address indicated by them. In today’s world, we can buy almost any product we want just by sitting comfortably on the sofa. And then after just a few days, the products arrive at our home. For a consumer, this seems simple, but in reality it is thanks to the whirlwind of activities that are carried out “behind the scenes.” But how exactly does this sector work? Let’s find out together…
- E-commerce logistics: reference data
- E-commerce logistics: challenges
- Comparison: e-commerce logistics vs. traditional logistics
- Analysing e-commerce logistics – 10 points
- The fulfilment companies: an alternative for e-commerce logistics management
- E-commerce logistics: a hint at dropshipping
- The perfect ally to tackle every aspect: Sendcloud
We have great news regarding e-commerce. This is confirmed by the very recent SAP e-commerce report 2019, which provides us with very interesting data. According to the report, the monetary amount moved by B2C e-commerce stands at 35.65 billion – in 2019. This represents a dizzying increase compared to previous years (+30% from 2018 and +140% from 2015). But that’s not all. The trend will continue to be positive for 2023, and a further increase is estimated in various sectors. Among these: electronics, food, body care, household appliances, and clothing.
Further data that predicts positive outcomes for the future comes from the latest National Statistic Office update on digitisation. According to data from 2018, only 1 out of 7 companies (with more than ten employees) sells online. The share of turnover from these online channels doesn’t exceed 12%. It may seem like a negative figure, but it is not. Most countries are still starting with digitisation, and the potential of e-commerce is not yet fully exploited. This means that the coming years could provide a lot of changes!
To keep up, as you can imagine, the logistics system has to grow and improve in the same way. Without services like:
- Efficient storage of goods
- Fast, flexible shipping
- Optimal return management
- The possibility to track packages (and a great way to market the brand during this process)
…then hardly any retailer will be able to be competitive online.
If we told you to rate the last e-commerce store you used, which aspects would you focus on to assign your score? Surely you would determine a significant proportion of the score from the timing and methods of the delivery.
Logistics management is a crucial aspect of every company that sells online. It is the needle in the scale that moves customer satisfaction up or down, and it is a key driver for business growth and success. Therefore, it cannot be overlooked, ever, at any time or in any step.
One of the biggest challenges that e-shops face is to have a distribution system that is as organised, fast, efficient, rational, and as optimised as possible. It also has to be modern. The online consumer expects increasingly new and sophisticated options for the delivery and collection of their products, along with reliable, modern tracking solutions. Yes, as I’m sure you know: it’s up to logistics to provide them with all of this!
As you know very well, e-commerce logistics is very different from traditional logistics. Moreover, the dynamics of physical stores differ from those of e-shops in many aspects, so it is unthinkable that shipments, storage, transport and customer care are managed in the same way in both channels.
In e-commerce, punctuality and delivery-reliability are everything: the customer who buys online expects service in a short time, without additional costs, impeccable, and precise. Customisation is also essential: deliveries must be built around the individual needs of each consumer in terms of time, place, and method. Complicating this (for logistics) is the fact that demand and flow of goods are not as regular and stable as in traditional distribution. On the contrary, they are unpredictable, irregular, and complex. In order to satisfy these needs, it is necessary to have a super-stocked and super-organized warehouse, a regularly updated inventory, a vast assortment of items, an efficient picking system, and tools to help manage orders.
Although different, the two models of logistics can coexist, especially within an omnichannel model.
E-commerce logistics has the task of managing all the activities that are needed to move products, get them to their final destination quickly and efficiently, and generate customer satisfaction.
Let’s see – in short – every point:
- E-commerce logistics: warehouse management
- E-commerce logistics: receipt of goods
- Checkout is just the beginning of the logistics process
- Product preparation
- The heart of e-commerce logistics: shipping
- E-commerce logistics: tracking shipments
- Returns and their management
- A key element for e-commerce logistics: customer care
- Customer satisfaction and e-commerce logistics
- User rating
It looks like an endless list, but it’ll be worth it, I promise!
The order and organisation of environments are fundamental in every field, don’t you agree? Think about how long it takes you to find that document when your desk is full of objects and papers or to locate that sweater when the closet is upside down. The same goes for logistics. The warehouse should be perfectly organised so distribution can meet the criteria of functionality, efficiency, and speed, and the storage capacity of the building can be fully exploited.
Shelving with gangways and/or roller conveyors, self-supporting structures, mezzanines, gangway systems, pallet racks, and roller conveyors are just some of the tools that can be used to optimise space and speed up storage and retrieval operations. Some actions are fundamental:
- make a precise mapping of the warehouse .
- identify the stocks of goods to be disposed of through the product turnover index.
- carry out an analysis of the article allocation model.
- make checks on the quantity and quality of both incoming and outgoing goods.
In some cases, you can think about the possibility of using a warehouses built-in outdoor spaces (case-by-case dependent).
In order for the warehouse to be tidy and functional and for the logistics operations of e-commerce to be carried out regularly, even the phase of receiving goods arriving from suppliers must be organised with specific criteria. First of all, its receipt must be planned and coordinated with the rest of the supply chain processes in order to avoid any hiccups. Secondly, reception and consolidation area staff must be specially trained to carry out essential tasks such as:
- control procedures and, in particular, the comparison between package lists and company purchase orders (the two lists must coincide).
- checks on the conditions of the packaging.
- thorough inspections if needed.
- the registration of goods and providing their labeling.
After all, you know, training is always essential!
When an e-commerce retailer receives a purchase notification, what happens?
The fun begins!
It is precisely at this moment that all the activities that allow the order to be processed in the shortest possible time, with the lowest possible costs and with maximum customer satisfaction, begin. Product flows, such as handling and shipping, are integrated with customer care and after-sales services.
First, you must process the request and understand where the purchased goods are stored. Then, we move on to picking. The picking (the extraction of the item from the shelves) can be carried out manually or with special tools by an employee or by means of automatic systems (as happens in robotic warehouses). It is a much more complex process than you might think. In fact, in warehouses, there are thousands of objects, and often the purchases are of single pieces. This is why it is necessary to optimise picking routes through an upstream analysis of orders and a good organisation of picking stations or dynamic management of their distribution. Otherwise, time and energy will be wasted to recover the goods.
To limit and speed up the movement of employees and increase the efficiency of e-commerce logistics, you can also use a specific software system, capable of processing precise picking lists based on the location of products and a whole other set of logistics parameters.
The goods are then cataloged, processed if necessary, packed with the required documentation (the invoice and delivery note must always be added to the package) and finally, labeled. Of course, the ergonomics of the packaging stations should be designed in such a way that the operator can carry out his tasks with a few quick movements.
For all these picking and packing activities, you need the perfect partner to entrust the logistics of your e-commerce!
Only when the order is ready can you schedule the shipment.
In most cases, the logistics departments use several couriers. They choose based on various factors. For example, the size of the parcels to be shipped, final destination, required delivery time, etc…
In detail, logistics is in charge of:
- ordering the delivery list and optimising it by considering different elements. For example, the route to be taken, type of vehicle, customer, shipping priority.
- understanding which goods to deliver during the same trip to reduce costs and time.
- assigning transporters and managing the time slots where they will have to pick up the items.
- checking the documents relating to the products and those to be delivered to the transporters.
- checking the weight and volume of packages.
- grouping multiple goods from different picking or warehouse areas.
- loading the parcels onto trucks.
The shipment tracking service is very important. In practice, the customer will receive a tracking number and link by email. This will allow them to follow the package – in real-time – on its way from the warehouse to its final destination.
It is important to have software that can interface with the seller’s website to automate the information update in the customer area and provide accurate and timely information on the package’s route.
Track and trace emails are a valuable tool not only for customers, but also for companies to increasingly use them to carry out marketing operations. In what way? By writing promotional messages and/or customising their content. Why miss an opportunity to communicate with your customers, right? For example, tracking emails can include a shortlist of items recommended for the next order, coupons or discount vouchers, one or more links to exclusive offers, banners on current promotions, a request for reviews or feedback, a short description of services or special activities. The possibilities are endless.
In all cases, an e-commerce retailer can obtain greater visibility and, perhaps, entice the customer to make new purchases.
In the process of choosing the tool to entrust the logistics of your e-commerce, always consider this option as a priority! For example: setting up a custom Track & Trace page with Sendcloud is extremely simple:
Okay, let’s see the next step!
After a while, varying from case to case (hopefully as short as possible), the order will reach its destination. However, it is not yet time to breathe a sigh of relief and “archive the file.” In fact, the customer may decide to exercise their right to return their purchases.
E-commerce retailers generally handle at least twice as many returns as traditional retailers. According to the European Ecommerce Association, in physical stores, the number of returned items is about 8-9%, while in online stores, it ranges from 15% to 30%, exceeding even 40% in the clothing sector.
For those who buy online, the possibility of sending back goods that they do not like is a fundamental added value. In fact, when choosing the sites where to shop, return policies are also essential in choosing to purchase.
That is why in recent years, most e-commerce shops have made this operation very flexible by removing all (or almost all) the obstacles that could annoy users.
If the return process has become immediate (or almost) for the customer, it is certainly not for sellers. It consumes resources and complicates flows along the supply chain. Therefore, it is essential to use digital tools to help simplify:
- recording returns and the reason(s) for return.
- automating the process.
- providing a detailed analysis of returns.
- optimising the processing of returns to stock, for example, by grouping items by supplier and/or sign.
It is also useful to allocate a specific area of the warehouse for receiving and checking rejected items. This way, the recovery can be done quickly and in the correct manner, without damaging the image of the product and/or the company without impacting the activities and efficiency of the system. Reverse logistics should be considered as a main operational phase of the warehouse, in the same way as the others.
A solution that makes returns an asset and not a headache is essential! With Sendcloud, you can create a return portal in a minute… Your customers won’t complain anymore!
Any obstacle and/or error that the customer experiences during the purchase, delivery, or return of products may upset the consumer.
This is a risk that no seller wants to take. In fact, a dissatisfied customer can easily write a bad review or give negative feedback, causing bad publicity and influencing the behaviour of other consumers. In the fast-paced world of the internet and social media, it takes very little to compromise even highly successful marketing operations and damage the reputation of a product and/or a brand. What’s more, there is more and more criticism from disgruntled and disappointed customers.
That’s why you need to rely on the ideal partner for logistics management of your e-commerce. Nothing can be left to chance, and the ideal solution must be able to guarantee a smooth process! On the other hand, the best marketing strategy for an e-commerce store is a satisfied customer… both for the product and the logistics service!
As we have just said: customer satisfaction must be guaranteed at all stages of the sale and after-sales. It is linked to a whole series of factors distributed throughout the entire shipping chain:
- the timing and method of delivery.
- the choice of transport methods.
- the opportunity to customise the submission. For example, with gift wrapping, personalised messages, change of delivery address from billing address.
- the ability to monitor the status of orders and, above all, to return items quickly and easily.
- the type of packaging.
According to the UPS Pulse of the Online Shopper study conducted by ComSCORE, 27% of the user’s confidence is affected by shipping delays. Therefore, it is essential not only to guarantee a highly professional and efficient customer service, but also to analyse the quality of the service provided regularly, monitor delivery times, and use quality indicators. Thanks to the data collected through these operations, it is possible to analyse the causes of any complaints and identify strengths and areas for improvement.
One last thing. It is essential to have detailed statistics available, in addition to an analytics dashboard that provides information on orders and returns!
The last stage of the e-commerce logistics process is the evaluation by the end-user, during which the opinions and data of buyers are collected following their experiences.
The aim is to get to know customers better and to acquire more information about them. For example, how they perceive the company’s image, purchasing behaviour, and the value generated. This way, it also promotes the creation of a loyal relationship. Newsletters, questionnaires, and short surveys are some of the tools that can be used at this point in the process to monitor the level of satisfaction of the target. The data, of course, must be properly recorded in specific databases. Then it can be analysed, also through artificial intelligence systems. This phase also serves to evaluate and improve business processes and sub-processes.
As we have seen, logistics management can represent a real challenge for e-commerce retailers. A solution to save time, resources, and energy can be to rely on fulfilment companies. What are they? Companies that integrate product flows, like handling and shipping, with customer care and after-sales services. They relieve e-shops from activities such as reception and management of orders, preparation of shipping documents, packaging, payment administration, returns management, and customer care.
Today it is possible to sell products online without managing goods, stocks, and shipments.
Sounds incredible, doesn’t it? But everything is possible!
It’s all thanks to dropshipping, a business model in which the seller doesn’t physically own the products they sell to the end-user and doesn’t have an inventory. They only act as an intermediary, though it doesn’t seem so on the outside.
That is, in short, what this sales system consists of:
- the supplier/manufacturer provides his catalogue to the dropshipper.
- the seller publishes the items on his e-commerce site or marketplaces and takes care of selling them.
- when the customer places his order, the dropshipper (the seller) provides the order to the supplier with the shipping address. It is up to the supplier to take care of the delivery of the products.
In this way, the dropshipper uses the supplier’s warehouse. They don’t have to take care of the shipment; they only work on the sold and contain the costs to a minimum.
However, earnings are also low: in order to be competitive and defeat the competition, you must provide highly competitive prices. The other big problem is that of supply: it is not always easy to have the goods chosen by the user available quickly. Finally, we must not forget that managing many suppliers is not very easy either.
What do you require to meet the customers and your own needs? Simple! Rely on a tool that manages the logistics of your e-commerce from A to Z.
You just found the perfect partner: Sendcloud!
Through Sendcloud you can manage orders, print labels, have detailed statistics, integrate many couriers and e-commerce platforms, manage returns, target your customers with personalised tracking emails and much more … In short, with our platform you can manage your entire shipping process with a single tool, complete and easy to use. To learn more, book a demo or subscribe for free: try Sendcloud!
For example, generating and printing labels for an order will be faster than drinking coffee…