E-Commerce Logistics - 5 Things You Need to Know

Logistics is the core of any e-commerce company. If your products can’t reach your customers efficiently, then it’s pointless being in business. Inventory on the shelves represents money that should be in your bank account, earning interest, or paying your bills. By optimizing your logistics, and handing it off to a third party, you benefit from better inventory management, as well as faster delivery to your customers.

Let’s unpack the key concepts you need to know about e-commerce logistics.

1. Understand Demand Planning

Most e-commerce retailers base their inventory holding on past sales performance. Startups don’t have any historical data to rely on when ordering inventory amounts. So, how do you know how much stock to have on hand?

By using a fulfillment center, you can set up tracking software to manage your inventory and logistics. The system automatically alerts you when stock levels are running low, and it automatically places a new order with your supplier.

You can also use teaser content in your social media marketing campaigns to pre-launch products and get an idea of their demand. We recommend that you always do a pre-launch campaign to verify the demand for your product before you decide to stock it at a fulfillment center.

2. Use Decentralized Warehousing

Move your products closer to your customers with the help of decentralized warehousing facilities. Fulfillment centers are now starting to branch out into local communities, as more people migrate online for their retail shopping experience.

Some fulfillment centers are opening in abandoned mall spaces and retail locations across the country. Using decentralized warehousing costs down on your shipping costs, and it dramatically improves delivery time to your customer as well.

3. Grow with 3PL

After you reach a point where your living room is overflowing with products and your struggling to keep up with orders, it’s time to get some help. Working with a 3PL warehouse of a fulfillment center can help you keep your business organized.

Fulfillment centers take care of your logistics, including receiving your order, picking, packing, and shipping your products to your customer.

4. The Real costs of Free Shipping

In recent surveys, more than 70% of online shoppers said that free shipping was the deciding factor in making their purchase. However, many logistics models can’t afford to offer free shipping to their clients. The costs involved with handling your logistics make it far too expensive to provide free shipping on orders.

However, working with a drop shipper or fulfillment center can reduce your shipping costs dramatically. In this economy, your customers expect you to deliver in 2 to 3-working days, and they don’t want to pay for the shipping. Working with a fulfillment center may allow you to compete in this arena.

5. Manage Returns Efficiently

Managing returns, exchanges, and refunds are one of the most significant challenges facing e-commerce entrepreneurs. How you handle these processes determines how your market views your credibility, and whether or not they remain loyal to your brand.

Working with a logistics company allows you to optimize your customer returns. Fulfillment centers handle all of your returns, and exchanges, and send you the defective products to exchange with your supplier.

The Final Thought – Focus on the Last Mile Experience

In surveys, customers consistently mention that they value the last mile as the most crucial step of the purchase, even more than security. By handing off your logistics processes to a fulfillment center or drop shipper, you have the advantage of not having to warehouse your inventory.

In most cases, working with a fulfillment center reduces your logistics costs, while improving your customer service in the last mile.