Everything You Should Know About E-Commerce Logistics
March 2024 would mark roughly four years since COVID-19 was declared to be a global pandemic. Four years since communities worldwide were spurred into lockdowns. Four years since individuals flocked online to buy their essentials, pushing e-commerce sales to new heights.
Despite the international borders opening up and physical retail gradually coming back to life, many people would still rather shop online than visit brick-and-mortar stores. With millions of parcels being shipped across the globe on any given day, it is imperative that proper e-commerce logistics infrastructure is in place to keep them on track. But to begin, what exactly is e-commerce logistics? And how can retailers better elevate their e-commerce experience in this post-pandemic world? Let’s find out!
Components of the Modern Logistics Chain
E-commerce logistics is a complex multi-step process that involves several components, including inventory management and packing of orders.
Inventory Management refers to the process of monitoring and tracking the amount of stock in a company. It helps companies to ensure that there is never too much or too little stock on hand, thus reducing the risk of stockouts and inaccurate records. With proper inventory management, businesses can enjoy an array of benefits, most of which are mentioned below:
Save Money on Storage: Inventory storage is a variable cost determined by how much space your initial inventory takes up at any given time. Therefore, if you take care of inventory levels, you can relocate the funds to other areas as and when needed.
Improve Cash Flow: A good inventory management would mean that you are only spending money on inventory that sells, thereby facilitating a constant cash flow through the business.
Show Trends in Customer Behaviors: You can also derive important insights about consumer purchasing behavior from tracking the inventory. Knowing what your audience likes and dislikes would play a crucial role when coming up with effective marketing campaigns in the future.
Satisfy the Customers: Having sufficient stock would allow customers to receive their items without having to wait, which in turn helps with increas
ing customer satisfaction levels.
As a requirement for almost all businesses, e-commerce warehousing involves storing goods before they are sold online. With a warehouse, the business can rest assured that products are being handled in a safe and secure environment. Besides, it also gives users access to information such as where items are located, when they arrived, how long they have been in stock, and the quantity on hand at any given time.
Various advantages of this component includes:
Better Inventory Management: As a centralized location to store goods, a warehouse facilitates the businesses’ process of tracking and managing inventory. Simply put, they can store, deliver and distribute goods more efficiently, which leads to faster shipment and better customer experiences.
Superior Customer Service: What can you do to stand out from an oversaturated market when there are so many logistics providers? The answer lies in the existence and quality of your warehouse management. In fact, 88% of shoppers are willing to pay more for faster delivery, and excellent warehouse management can undoubtedly enable timely delivery and optimized distribution, resulting in increased labor productivity and higher customer satisfaction.
Protect Against Price fluctuation: Customers’ income, government policies, employment rates, climatic conditions, and other factors all influence demand for goods and services from month to month. A warehouse allows you to store your products for a later date when the demand is high. This contributes to price stability and reduces revenue losses.
In the most general sense, e-commerce order fulfillment is the steps a business takes, starting from the time they receive an order to the time it reaches the buyer. Any order fulfillment will comprise 5 key stages, namely receiving inventory, picking items for the respective parcels, packing of packages, shipping and returns processing. While it may seem like a complicated process altogether, there is one fulfillment type that works best for each business.
In-house order fulfillment: Also known as “merchant fulfillment” or “self-fulfillment”, its name implies that the business will take charge of all aforementioned steps, without relying on any third-party. Merchant fulfillment gives you more control over your retail supply chain, but it can be expensive and difficult to scale as your business grows.
Outsourced order fulfillment: Instead of managing everything on your own, eCommerce businesses can outsource some costly and complex processes to third-party logistics partners, freeing up your time to focus on business growth.
Dropshipping: This is considered the most appropriate option for new e-commerce businesses thanks to its low barriers to entry and minimal overhead characteristics.
When a customer places an order, the order details are forwarded to the manufacturer, who will directly deliver the product to the end-consumer.
Taking E-Commerce Logistics to the Next Level
#1 Post-Purchase Experience Is Everything
Did you know that 40% of customers remember brands that provide them with a satisfactory post-purchase experience?
Post-purchase, which includes everything that happens after the purchase of a product or service, is an essential yet often overlooked component of every customer journey. A quality post-purchase experience has the potential to drive incremental revenue for retailers and manufacturers alike. When you provide care and support even after they have purchased from you, you give them a reason to stick with your company. Not only does this retain existing customers, it also helps with customer acquisition through word-of-mouth marketing when these individuals spread the word about their positive experience.
Consider how the delivery of your customers’ orders are handled, fulfilled, and communicated to them. These are all excellent customer touchpoints to prioritize when coming up with an effective post-purchase strategy. Nespresso, for instance, excels in this area by leveraging software solutions and data tracked from their parcel deliveries. Tracking assistance is amongst the top reasons for customers to call our customer relationship center and in some markets, we have seen a 45% decrease of these calls. In addition, with our session cam analytics we have observed that customers revisit the track & trace webpage 4-6 times during the delivery time window, proving it is indeed an essential feature to boost customer experience,” said Davide Costella, Global Delivery Services Manager at Nespresso.
#2 Omnichannel Retail Is the Future of E-commerce
Omnichannel retail, which provides customers with a seamless experience by utilizing multiple channels, is becoming one of the most recent trends in the e-commerce sector. According to research by Statista, almost one in two online shoppers in Europe and North America found omnichannel strategies to be very important.
An omnichannel strategy allows merchants to reach out to customers through a variety of channels, ranging from social media to well-known marketplaces, thereby increasing their chances of growing sales and revenue. Those that are able to pivot to an omnichannel method can thus differentiate themselves from competitors, particularly those that are hesitant to abandon the traditional brick-and-mortar store experience. In an industry as competitive as retail e-commerce, businesses should grasp any opportunity that gives them an edge over the rest. After all, many retailers using a single branded e-commerce site, such as BigCommerce, have seen a 58% increase in revenue after adding a marketplace.
#3 Free Shipping To Boost E-Commerce Sales
Free shipping is an increasingly popular e-commerce offering for those in the retail space. Based on Rakuten Insight’s findings, free shipping is one of the top three factors influencing a consumer’s decision to make an online purchase; the highest ranking belonged to the products’ price (80%), followed by the availability of free shipping (59%) and then reviews and testimonials provided by fellow shoppers (49%). In the same survey, more than half the group also claimed that they would return for repeat purchases in the presence of free shipping. So, is there any reason for not providing free shipping, which can help brands a lot in boosting sales?
#4 Returns Are the New Growth Strategy
Believe it or not, the way you handle the returns has a direct impact on sales and customer loyalty due to the following:
92% of customers commit to repeating purchases if the return process is straightforward.
Nearly 80% of customers demand free return shipping.
60% of customers read a return policy before making a purchase decision.
A personalized end-to-end customer experience that includes a forward and returns tracking experience is the best way to meet the growing expectations of customers. In a world where customer satisfaction is of utmost importance to any business, having returns as the new growth strategy would definitely be a great differentiating factor. According to a former Head of Customer Experience at Amazon, “customers who had a great seamless return experience would drive more sales than a customer who never had to return a product.”
#5 DTC Is the Way to Go For E-Commerce Brands
DTC, which stands for Direct-to-Customer, describes a business model in which products are sold directly to customers without the use of an intermediary. A traditional business model involves the manufacturer selling products to retailers, and then the retailers selling them to consumers. The DTC approach, in contrast, allows e-commerce firms to maintain complete control over the sales process while also establishing direct, trust-based relationships with their target audience. Successful DTC brands also provide customers with real-time notification updates of their orders, which in turn boosts the whole post-purchase experience — a vital element that we previously discussed.
A pioneer in DTC strategy, Apple has physical retail stores located in high-traffic areas throughout big cities. This has enabled them to offer new products to end-users with far less friction than would have been required previously. Another instance is The Sill – a brand that changed the decor industry by bringing a complete selection of potted plants to the e-commerce world. People can now easily and directly purchase from e-commerce platforms without the hassle of going down to the local store and hoping they have something you like in stock.
As e-commerce logistics evolves and diverges from the past, doing the basics is no longer adequate. The aforementioned strategies are sure to boost branding for businesses that are looking to increase sales, acquire customers and expand their operations.
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