Distribution Logistics: What is it? Definition, Basics & Guidelines

Transportation and logistics are the foundation of all trade, online and off. Distribution logistics combines all the moving parts that drive retail in particular. It’s a combination of processes that efficiently move goods through the fulfillment process, from warehouse to end customer. Let’s look at the role distribution logistics plays in logistics services and the transport and distribution of goods.

What is distribution logistics?

We’ll start by clarifying our terms. Distribution logistics, a component of the larger logistics industry, is a collective term for the processes and procedures behind successful order fulfillment services. This includes every step in the fulfillment process, from receiving orders from online retailers to fulfillment center organization, logistics center management and transport logistics to inventory management and distribution channels.  

The process of moving goods from a manufacturer or retailer and moving them to a distribution logistics agent is often called “first mile delivery”.  

What are the basic tasks of distribution logistics?

Transporting goods from manufacturers and wholesalers to fulfillment centers is the primary task of distribution logistics. E-commerce operations and fulfillment providers depend on an adequate inventory to meet customer expectations. Distribution logistics ensures that online orders, especially international trade, can be fulfilled in a timely manner. 

Distribution management aligns the various components involved in this process, including transport to the fulfillment center location, warehousing and integrating with third-party logistics services used by fulfillment partners, transport agents and others. 

Distribution vs Logistics – what is the difference?

It’s easiest to think of distribution as a subset of logistics. Distribution involves the physical transport of goods as part of e-commerce fulfillment while logistics is a larger series of steps that see those goods handled by fulfillment experts to achieve greater efficiency in distribution. 

Logistics providers are often involved in both distribution and logistics. 

What channels can be used for distribution?

Most distribution channels fall into one of two basic categories — direct and indirect. 

In digital logistics, direct channels include direct-to-consumer touchpoints in which the producer of a good sells directly to end users through their own outlets. Those outlets can be a traditional offline physical store or an online store. 

While direct distribution is possible for most types of goods, the fact remains that the services of intermediaries, such as wholesalers and retailers, are often essential in the distribution of goods to consumers.

Indirect distribution channels involve a middleman or broker between the manufacturer and the end consumer. This extra stage makes efficient distribution management and transport all the more necessary. These additional actors in indirect distribution include:

• Retailers, both online and offline 
• Wholesalers, as is the case with most consumer goods
• Agents or authorized resellers, who are given the rights to sell particular brand in a certain region

More than one of these can be active in the sale of a particular item or brand. Indirect distribution channels requiring more comprehensive distribution logistics are quite common. 

Distribution logistics outsourcing – is it worth investing?

Distribution logistics services support e-commerce by carrying out tasks and processes that are usually outside of your area of expertise. Working with logistics services providers for distribution and fulfillment means being able to focus on what you do best while handing over these important tasks to professionals.  

That means you can work on improving your online presence, product offering or some other customer-facing aspect of your business while logistics services pros work in the background, distributing your products quickly and efficiently. On top of all that, your overall shipping costs are likely to be reduced as well. 

Then there’s the issue of scaling up, a goal for every business. Doing so is much easier with a logistics services partner to help. Scaling beyond a certain point on your own is very difficult since you get involved in issues like warehouse expansion and taking on new staff to fill more orders. 

You’re almost always better off with a logistics services partner to take care of getting your goods into the supply chain and to the warehouses run by fulfillment centers and logistics partners. 

What are the challenges in distribution logistics?

Like any other industry, distribution logistics companies are forced to deal with various issues that complicate their logistics performance. Current challenges include: 

• Increasing demand. The relentless expansion of e-commerce and the move from physical to online stores means a greater need for distribution logistics. While this is obviously a good problem to have for companies in the field, it means managing with the challenges that growth brings, like recruitment & retention, expansion of physical infrastructure, streamlining operations at higher volumes & avoiding bottlenecks and more. 

• Variable demand. Certain periods on the retail calendar, like Black Friday, produce sharp spikes in demand that must be met while other periods during the year are difficult to forecast. 

• Rising costs. Like everywhere else in the economy, the costs of labor, materials and other inputs are rising. Staying competitive on price means the careful optimization of all processes in distribution logistics. 

• Inventory tracking. Digital solutions are obviously the industry standard here but the nature of handing physical goods at high volume will always result in occasional problems with locating and shipping the right inventory at the right time. 

Summary

Distribution logistics occupy a quiet but essential corner of larger supply chain processes. Without effective distribution logistics, fulfillment services would come to a standstill, waiting to be resupplied with the items that they are supposed to be shipping to customers. 

Success in e-commerce depends on many factors, but reliable and efficient distribution and logistics support is an absolute necessity. After all, it doesn’t matter how many customers you’re able to attract or how many orders they place if you can’t effectively fill those orders in a short time.