The thriving start-up ecosystem in India has unlocked massive opportunities for many new e-commerce businesses. This not only is giving boost to the nation’s economy but also creating employment for many. However, where there are opportunities, there are also challenges. Any e-commerce business, whether it is a start-up or trying to scale up, there are multiple factors involved. From product development to inventory management to marketing, each step comes with its own set of challenges. In this entire jigsaw of business operations, one component is of utmost importance – logistics. E-commerce logistics is critical to success as one can create a great product but if it is not able to reach the customers on schedule then the entire business can collapse. Because in today’s world dominated by e-commerce, consumers almost always have another option.
Logistics have become more critical to e-commerce in recent years with the rise of fast and free shipping standard set by major players in the market. This has made consumers used to free shipping which is also fast, besides accuracy in the delivery of their ordered products. To cater to this ever rising quality and expectation threshold, online sellers need a fast, reliable and robust e-commerce logistics provider.
Whether or not to go for a Third-Party Logistics (3PL) Provider
Either it is during the nascent stages of starting up or while scaling up, the most discussed aspect is whether to outsource the product delivery to e-commerce third-party logistics provider or to handle it in-house. Business owners have many apprehensions pertaining to costs and control. However, there are enormous advantages to outsourcing logistics. Professional third-party players have an abundance of capabilities which individual sellers do no, such as technology, manpower, geographic spread, capital to scale up and expertise. In addition, they have economies of scale that often allow them to give a better price per unit than insourcing options. Moreover, this allows retailers and sellers to focus on their core competencies – making and selling their products and offer scalability as a business grows.
Looking for the right E-commerce Logistics Capabilities
Whether a business decides to build its e-commerce logistics capacity internally or to outsource, it is critical to make sure that either the business or its 3PL have the following capabilities:
These days customers are spoilt for choice. With the spread of e-commerce business and subsequent scaling-up, customers are getting more and more used to quick and free delivery. The shorter shipping cycle has driven the sellers to spread their inventory into multiple smaller warehouses which are closer to their target demography. This lets them use regional and multiple logistics providers which is often a cost effective proposition.
Data is precious, and a game-changer in e-commerce business and logistics. Data, coupled with smart analytics can be a formidable force. The advantages of this combination are enormous. From identifying demand patterns and trends to understanding consumer buying behaviour and preferences, it plays a vital role in product placement and optimizing transit. The system collects and analyses data from variety of sources to predict optimal route from Point A to Point B.
Automation and Real-Time Updates
Automation is key to reducing the turnaround time, in turn making the delivery faster. Automated warehouses and hubs work faster and keep the synchronization. Besides, real-time delivery updates really boost customer experience as customers can check in real-time about the exact status of their packages. Though automation requires upfront investment, it increases efficiency, ensuring long term ROI for companies with large volumes.
Another most important aspect of any e-commerce business is reverse logistics. Sometimes when customers are unsure about the product they have ordered or they are not happy with the delivered product, they want to return or exchange them. This process of picking the product from customer home and ship it back to the seller is called Reverse Logistics. It must be taken into account that returns and exchanges can account for more than 25% of e-commerce sales. The costs and mechanisms for handling reverse logistics with as much care as the initial purchase needs to be figured into the budget and the e-commerce logistics plans.
Last Mile Delivery
Probably the most important and challenging part of e-commerce logistics is when the product reaches last mile. This is the last leg of the delivery process when the package goes to be delivered at the customer’s doorstep. This is supposed to be final interaction between the brand and the consumer in the e-commerce logistics chain, which defines whether the customer is happy with the overall shopping and delivery experience. If the customer is happy, it is almost certain that he/she will buy from the seller again.
E-commerce is not just about developing a good product or offering great deals. It is an ever evolving process and in order to thrive and retain the customers, online businesses must be proactive and keep enhancing customer experience. Whether it is free shipping, 24-hour shipping or offering discounts, sellers must ensure what works for them and keep their customers happy and loyal while keeping the costs in check.