1. Everything an eCommerce Startup Needs to Know About Logistics
So, you’ve taken your first steps into the world of e-commerce. You have a product line, a cool website, and a dedicated team. Full of zest, vigour, and enthusiasm, you’re ready to dive in. But wait! Have you figured out the logistics of it yet?
Logistics. A word that brings dread to the hearts of many. Managing logistical challenges seems to be a nightmare for many Indian e-commerce players. But it doesn’t have to be that way - provided you take your time and learn about it, and how it can help your business scale new heights. In the right hands, logistics can evolve into a powerful tool for e-commerce. So, are you ready? Let’s jump right in!
2. What is Logistics?
First things first, what is logistics? In layman’s terms, it is the management and organization of a variety of activities, such as the storage, transport, and distribution of goods on a large scale. The entire process, beginning from the point of origin to the customer’s doorstep falls under the logistical umbrella.
Logistics is the beating heart of the e-commerce space. Poorly managed logistics leads to dissatisfied customers, which in turn reduces sales, and if not handled right, causes the business to crash and burn.
3. How can Logistics Help e-Commerce?
As stated above, bad logistics can easily spell doom for e-commerce companies. Therefore, it is increasingly necessary to ensure a well-planned, sustainable shipping and distribution plan as well as quick solutions when challenges inevitably arise.
The key points to keep in mind while designing an effective logistics strategy are-
3.1 ) In-House Logistics or Third-Party Logistics
In-house logistics, as the name suggests, refers to logistics solutions that are managed and operated by the businesses themselves, without the help of any external bodies. The entire process takes place under the supervision of the business, allowing them to retain control over the entire operation and make changes as they see fit. This method is usually employed by large companies that have years of experience in their industry.
Small and medium-sized businesses usually opt for third-party logistics, which involves outsourcing their logistical operations to a specialized organization. This takes away some degree of control, but is generally more economical.
3.2) Inventory Management
Once you have a clear idea of what kind of logistics strategy you want to pursue, you need to make sure your inventory records are efficient and up to date, all the time. It is of the utmost importance to make sure that your goods are properly tracked and managed, allowing for fast order pickup, as well as efficient returns. There are many inventory and warehouse management software that can help in maintaining inventory records and notify you if anything is amiss. There are also several kinds of warehouses that you can use as per your specific requirements.
3.3) Selecting a Logistics Partner
Next up, you need to find the best logistics platform to partner with, one who can meet all your needs and requirements and who are efficient at what they do. There are several options in the market- you can pair with individual courier partners, or you can find a courier aggregator to act as an intermediary. Both these choices come with their own perks and pitfalls. You can read more about them here. For example, courier aggregators offer higher degree of convenience up to a certain point, but they can also restrict access to certain niche or specialised carriers you might need
Another essential factor is the finances of it all- how much it costs to package and distribute goods all the way to your customers’ doors, and if needed, to send the orders back to the warehouses. When dealing with large volumes of orders, businesses can negotiate with logistics partners for reasonable rates, especially when you’re negotiating directly with the courier partner and not through an aggregator.
As customers keep demanding cheaper and faster deliveries, it’s important to be able to keep the shipping prices to a minimum, and to get the most bang for your buck. Without a well-thought out shipping strategy, the costs might very easily go overboard, cutting into your profits.
3.5) Non-Delivery Reports (NDR)
One thing every e-commerce business needs to know is that no matter how perfect your delivery strategy or overall plan might be, there’s always a chance things will go wrong.
The customer might not be reachable, the address might be incorrect, there are a million reasons why orders fail to be delivered at the last stage. In such situations, it’s essential to pin down the exact reason and get about solving the issue quickly. This is where the concept of NDR comes to play.
NDRs should be filed by the courier partner as soon as the delivery is failed, with a clear line of communication between the partner and the company. Poorly managed NDRs may leave a bad taste in the customer’s mouth. Therefore, it’s important to contact the customer as soon as possible and get their feedback as to the reason for the failed delivery, and attempt other deliveries if required.
3.6) Return To Origin (RTO)
If an NDR is successfully resolved and the order is finally delivered to the customer, all’s well and good. But if the customer explicitly refuses the order, or they can’t be contacted no matter what, then there’s almost no other choice than to file for an RTO. In essence, an RTO lays down the route or the plan for the product to find its way back to its point of origin, that is, the warehouse it came from.. RTOs are the bane of every e-commerce business. Companies often suffer losses as a result of RTO products getting lost or damaged in transit. Thus, it’s very important to find a courier partner that handles both NDRs and RTOs efficiently and quickly
3.7) Product Returns
Returns and RTOs differ in the sense that while an RTO is never delivered in the first place and sent back by the courier partner, A Product Return involves an already delivered product that a customer is dissatisfied with, and wishes to send back. Returns are a very delicate issue, and providing customers with a hassle-free return and refund system goes a long way in earning their trust. On the other hand, if the return experience is particularly inconvenient or long drawn out, it might push the customers away who will then think twice before ordering a product from your e-commerce marketplace.
3.8) Automation and Technology
E-commerce businesses should learn to get used to the development and deployment of cutting-edge technologies to aid them in logistical operations. AI and Automation have always been front and centre in this industry, and a wide range of functions are done not manually, but rather with the help of drones and machines. The IoT (Internet of Things) in particular has greatly helped the logistics sector with tracking and management software, movement of things and goods to and from warehouses with almost instantaneous updates, and so on. Furthermore, the role of technology is only set to increase in the coming decades, and being comfortable with them and adjusting to how they work will be greatly beneficial in the future.
To sum up, we can understand that logistics refers to the overall workflow of managing, transporting, and distributing goods. It facilitates the movement of goods from the supplier to the buyer and is the backbone of the supply chain. Issues like NDRs, warehousing, cost management, etc. are all things to keep in mind when delving into logistics.
Cleverly managed logistics strategies can boost a company’s growth, while poorly thought out ones can lead to huge losses. Thus, it’s more than necessary for e-commerce marketplaces to learn about how the logistics industry works in the context of the overall supply chain, how they can maximize profits and minimize RTOs, and spend time perfecting their strategy, changing it as new times bring forth new requirements and challenges.