E-Commerce Logistics

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E-Commerce Logistics in Developed Markets

In developed economies the growth of online retail has been stronger in sectors such as fashion, electrical and ICT goods, as opposed to food.

In the former, where purchased items are typically distributed via a postal, parcel or freight network, e-commerce logistics models have led to a wave of new demand for four distinct types of logistics functions:

  1. Mega e-fulfillment centers where the merchandise is stocked and picked at item level. These facilities, which are either operated by the retailer or a logistics service provider, are typically 500,000 sq ft to one million sq ft in size, or even larger. They often operate 24/7.
  2. Parcel hubs/sortation centers which sort orders by zip or post code so that they can be delivered to the relevant parcel delivery center for final delivery to the customer’s home or designated collection point.
  3. Parcel delivery centers which handle the ‘last mile’ delivery to the customer
  4. Seamlessly integrated technology where shopping carts connect via API, web xml or some other connection to a transportation management system so shoppers are getting the exact price quote of shipping of larger items more suited for less than truckload modes, as these technology products for logistics, such as a TMS, must accomplish along with the shopping cart for better management:
    1. Ability to organize and track shipment no matter what mode
    2. Online order status and documentation
    3. Online dispatch documentation and invoice, such as a bill of lading and freight invoice
    4. Auto reminder for payments
    5. Seamless interface with existing SCM or ERP system
    6. Online alerts for critical information via text or mobile
    7. Information systems reports on past data analysis, delivery history, etc.

These types of e-commerce logistics systems, based on the above considerations, ensure the following benefits to shippers, customers, and 3PL service providers:

  • Improved communication
  • Transparency into the supply chain
  • Improved customer satisfaction
  • Cost reduction
  • Improvement in efficiency
  • On-time delivery

We will go further into the benefits of setting up an effective e-logistics structure and operation in this ongoing series. However, these are the top things to consider when looking to set up a program.

How has Freight Shipping Changed in an E-Commerce Logistics World?

Then: In the early days of e-commerce, it was about the convenience of ordering a product from home. No driving to the mall and no waiting in line, just living life and waiting for the package to be delivered to your doorstep. Shippers still used snail mail and phone calls to communicate with customers and order delivery times were in the weeks, not days. Free shipping quickly became a tool that brought in competitors’ customers, since there weren’t many carrier options, no additional costs (such as sales tax) existed, and order delivery times were slow anyway.

Now: E-commerce merchants collect sales tax, fuel charges are much higher, and the ever-popular free shipping is the farthest thing from free to retailers. Other than giants like Amazon, not many retailers have the resources to operate multiple distribution centers in strategic locations and instead are turning to third party logistics service providers to reach their customers.

The evolution of multiple shipping options allowing customers more control over the delivery process than ever before, expanding from only small package from USPS, UPS, and Fed Ex to now get larger items via less than truckload modes.

It’s no longer about being the fastest rat in the e-commerce delivery race. Instead, it is about being able to deliver an order at a time frame and price point that customers want.

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