E-Commerce Logistics: Challenges, Features and Logistics Solutions in Online Trading

1. What does e-commerce mean?
2. What does e-commerce logistics mean?
3. Logistics in e-commerce: What challenges do online shops face?
4. What are the peculiarities of e-commerce logistics?
5. What e-commerce logistics solutions are there?
6. E-Commerce Logistics Solution – Advantages & Disadvantages
7. What to consider when choosing the right service provider for e-commerce logistics?
8. What else should online store operators consider in addition to e-commerce logistics?
9. What tools can be used for e-commerce logistics?
10. Conclusion

Efficient e-commerce logistics is crucial for the success of your online store. Errors cost time, money, and customer satisfaction. Logistics costs make up a significant portion of revenue. Therefore, the question arises, what e-commerce logistics solutions are there and what are their advantages and disadvantages. In this article, we also look at the challenges and peculiarities of logistics in e-commerce, what to consider when choosing a service provider and what else to consider.

Learn about different logistics solutions for online trading and find the right model for you.

What does e-commerce mean?

E-commerce, also known as electronic commerce or electronic commerce, encompasses all activities related to trade over the Internet. This includes, among other things, the promotion of products through online marketing measures, the purchase and sale of goods and services over the Internet using online banking, but also customer service over channels such as e-mail, live chat, telephone or social media. There are different types of e-commerce, the most well-known are B2B (business-to-business), B2B (business-to-consumer) and C2B (consumer-to-business).

• B2B: Trade between companies, e.g. transactions between manufacturers and wholesalers or between wholesalers and retailers.
• B2C: Trade between companies and consumers, for example direct sales of products and services to individual customers through online shops.
• C2C: Consumer-to-consumer trade, in which private individuals sell products or services online to other private individuals, for example on online marketplaces like eBay. Because of the high competition in e-commerce, the customer experience is a crucial success factor. Find out more in the article about Composable-Commerce Trend.

What does e-commerce logistics mean?

E-commerce logistics, also known as e-logistics, encompasses the management of all logistical processes in online retail. This includes things like warehouse planning, flow of goods, information transfer, and returns. Efficient e-commerce logistics increases customer satisfaction, enables quick order processing, reduces warehousing costs, and improves a company's overall performance. Modern technologies and effective logistics processes enhance the competitiveness of e-commerce companies and lead to long-term success.

Let's look a little closer at the individual steps of logistics in e-commerce:

1. Goods receipt: This step includes the checking and recording of the incoming goods deliveries, including checking the quality and quantity of the products. The products are usually recorded using a goods management system that contains all data about the items and ensures an overview of the stock inventory.
2. Storage: The incoming goods are brought into the warehouse. There are different ways to set up a warehouse. This depends on factors such as the breadth and depth of the assortment as well as the type of assortment.
3. Goods removal: The stored goods are removed after the order has been received. Here, too, there are different possibilities for sorting the warehouse to accelerate the removal of goods.
4. Picking: After the goods have been removed, the items are put together for the orders in this step. Depending on whether it's a central warehouse or several warehouses, this step could take longer and be more complex.
5. Packaging: The picked items are now packed including accompanying leaflets and labelled with the shipping label. Depending on the size and weight, several packages or special shipping may be required.
6. Shipping: The packaged order is handed over to the parcel service provider. Customers also can see where their order is currently located using parcel tracking.
7. Return: Returned items also return to the warehouse via the goods receipt. This process triggers further processes in accounting.

Logistics in e-commerce: What challenges do online shops face?

Logistics in e-commerce is faced with a number of challenges. Here are some of the main challenges for online shops:

1. Resources for Same Day Delivery: Large e-commerce companies like Amazon are increasingly offering same-day delivery. However, same-day delivery requires significant resources and efficient logistics and order processing, which can be a challenge for smaller online shops.
2. Free shipping: Many customers expect free shipping and return of online orders. Companies either have to bear the shipping costs themselves or include them in the product prices, which can lead to losses.
3. Unreliable logistics service providers: Collaborating with reliable logistics service providers is crucial for smooth delivery. However, there are also unreliable providers that can lead to delays and problems with delivery.
4. Technical errors: The use of software for inventory management and parcel tracking is widespread in e-commerce logistics. However, technical errors or outages of the software can occur, leading to loss of information and delays in delivery.
5. Sustainability: Sustainability is playing an increasingly important role in e-commerce logistics.

What are the peculiarities of e-commerce logistics?

• Fast delivery times: In e-commerce, customers expect their orders to be delivered quickly, often within a few days or even the next day.
• Free or low-cost delivery: As mentioned earlier, e-commerce customers expect free or at least low-cost delivery options.
• Different shipping options: Customers often want to be able to choose between different shipping options, such as express delivery, pick-up at a specific place or delivery at a certain time.
• Parcel tracking: Transparent parcel tracking is important for e-commerce customers as they want to know the current status of their order.
• Returns management: Returns are inevitable in e-commerce. The logistics must be able to process returns efficiently and offer customers a smooth return process. These peculiarities make e-commerce logistics a special challenge, where speed, flexibility, and efficiency are key factors in meeting customer expectations and being successful in competition.

What e-commerce logistics solutions are there?

There are various e-commerce logistics solutions that online store operators can use to manage the shipping and delivery of their products. Some of these solutions are listed below:

• Dropshipping: With dropshipping, online store operators work with suppliers who store, pack, and directly send the products to customers.
• E-fulfillment with a logistics service provider: With E-fulfillment, the logistics process is outsourced to a specialized logistics service provider, while online store operators retain control over the inventory and the sales process.
• Own e-commerce logistics: Start-ups and online shops with a small range of goods can take care of the warehousing, purchasing of goods, and shipping processing themselves.
• Contract with a shipping partner: Online store operators can sign a contract with a shipping service provider to have their products shipped.
• Use of an automated logistics platform: An automated logistics platform allows collaboration with various shipping partners and optimizes the shipping process.

E-Commerce Logistics Solution – Advantages & Disadvantages

dropshipping

• advantages: less financial risk
• disadvantages: no own stock, low profit margin, no influence on delivery and customer experience

e-fulfillment

• advantages: the logistical processes are outsourced to specialized service providers, resulting in higher costs
• disadvantages: no influence on delivery and customer experience

own e-commerce logistics

• advantages: full cost control, higher profit margins
• Disadvantages: high storage and personnel costs, higher time expenditure

Contract conclusion with a shipping partner

• advantages: negotiable prices, expertise and scalability
• disadvantages: lower profit margin, dependence on a partner

Use of an automated logistics platform

• advantages: optimization of the shipping process, flexibility in choosing the shipping partners
• disadvantages: costs for using the platform, no direct control over shipping partners and methods

What to consider when choosing the right service provider for e-commerce logistics? 

1. Adaptability: Every e-commerce business has specific requirements and flexible service providers can offer tailored solutions to meet these requirements.
2. e-commerce experience: A logistics service provider with e-commerce experience can better meet the special requirements.
3. IT interfaces: Make sure that the logistics service provider has seamless integration into your IT systems.
4. Packaging and shipping options: Make sure that the logistics partner selects the right packaging size for your products and offers different shipping options.
5. Additional services: A good logistics service provider offers additional logistical services. These include return management or customer-specific packaging solutions.
6. Same Day Delivery and decentralized warehousing: If you want to offer Same Day Delivery, you should choose a logistics service provider with decentralized warehouses. This allows for faster delivery, but can also lead to higher costs as the storage costs rise.
7. Competent counseling: A good logistics service provider should assist you in developing and implementing your logistics strategy.
8. Communication: If you plan to increase your stock levels, or if you expect higher shipping volumes, it is important to be able to coordinate with your logistics service provider in time.

What else should online store operators consider in addition to e-commerce logistics?

In addition to e-commerce logistics, online store operators must also consider other aspects in order to be successful. Here are some important points:

• Accurate knowledge of potential markets: Before focusing on shipping, it's important to know the potential markets. An
• expansion into other countries often requires a realignment of logistics processes.
• Coordination of marketing and sales activities: An effective marketing campaign can lead to increased demand, which means logistics must be scaled accordingly.
• Automation of processes: Automating logistical processes can save time and costs.
• Customer retention: Maintaining existing customer relationships is less expensive than acquiring new customers.
• Review of the product portfolio: A regular review of the product portfolio can save costs. Products with little demand cause storage costs and should be removed from the assortment.

What tools can be used for e-commerce logistics?

Alaiko

byrd

active ilos

ehouse eCommerce logistics

V-LOG

everstox

Warehousing1

Supplier Sentinel

ItsMyCargo

You can find more tools in the category Supply Chain & Logistics.

Conclusion

Efficient e-commerce logistics is crucial for success in online trading. Logistics in e-commerce brings a number of challenges that require careful planning and professional implementation. The competition in online retail is high. Good products alone will not bring success if delivery times are long and communication with customers is not right.