Logistics is one of the most difficult and important elements of any eCommerce activity. It’s often the source of errors and problems. At the same time, it’s often the key factor that determines your company’s reputation in the eyes of the customers. Online store owners know this very well and often spend a lot of time on logistics. This may easily become frustrating because they feel that all this time could be dedicated to developing their business, products, or marketing and sales. Is efficient logistics management even possible if we devote only 2-3 hours per week to it?
Do you know how much your time costs?
Online store owners often wonder how they can save on logistics costs. We can find many guides on the web that show how to reduce the costs of running a warehouse, packaging, etc. We often see that at the initial stage of conversations, our potential customers ask about how much they can save up.
However, the key to success and the effective management of online store logistics lies deeper. Savings should be sought not only in the price per m2 of warehouse space rental or the cost of adhesive tape. Saving is every hour of the business owner’s work dedicated to developing their business – looking for new sales channels, working on the brand, or their products.
If you ever spent the evening packing late orders or dedicated hours to exchanging emails with courier companies, you probably understand what we mean.
“I remember the problems we experienced with order collectors in the warehouse. They would always break. I had no idea where the problem came from, or whether there is better equipment on the market in which it would be worth investing. I wanted to make smart financial decisions, so I was wasting my time trying to learn something about collectors,” recalls Wiktor Dymecki, the Board Member of Hubstyle. “Now all of that is the responsibility of people who know that – the logistics operator. We have an established SLA, and I only check if the logistics company complies with it. Nothing else interests me. ”
This quote comes from the >>Q&A panel with Wiktor Dymecki<< during the Omnipack Open Day, October 2019.
Looking at savings only in financial terms, we often fail to include working time and what we don’t pay now but will have to pay once our business grows – e.g., a larger warehouse. We wrote about it in this article about comparing logistics operator offers.
How to save time on eCommerce logistics?
#1 Employing workers
The first thought that comes to mind is the costs of employing workers. And rightly so. However, employing people is only the first and tiny step to increasing efficiency and saving time. Without a smart work organization, you will soon end up having to spend even more time putting out fires. The key is to break down the process of order processing into lots and assign specific responsibility to them. And this means that you’ll need more experienced people who can direct the work of such a team.
The problem many online stores face is the seasonality of the business. During the Christmas and New Year period, we need many more workers. But during the summer, for example, the requirement is much smaller. Continuously hiring and firing of employees affects team motivation negatively but also generates a lot of administrative work. Also, older employees end up wasting time on constantly training a rotating crew.
Having a permanent team is an ideal solution, but only large-scale enterprises can afford it.
Before we reach this level, we can:
- prepare an employment plan for the entire year,
- then delegate the recruitment to an employment agency,
- increase the team well in advance – so that the training of new employees takes place before the seasonal peak,
- look for seasonal talents who can stay with us permanently.
#2 Investment in software
Technology makes our lives easier in many areas. Logistics aren’t the exception to this rule. There are many options we can choose from that help to support specific operations, but also to monitor the ongoing operations, analyze data, and get in touch with the courier or target customer.
When you consider investing in such software, it’s worth thinking about how many orders we carry out and what is the complexity of our operations (e.g., building custom sets or different packaging methods depending on the recipient).
How to choose the perfect (meaning easy to implement and use, flexible, and cheap) program that will streamline the entire process of order processing? If you’ve been exploring this topic and looking for the perfect solution, you may know that it’s not a piece of cake. The best solutions available on the market are often very expensive, and we have no idea whether such an investment will pay off at all.
Considering the functionalities of WMS software, we can divide it into two groups:
|WMS with basic functions||WMS with more advanced features that require higher investment|
Checklist: How to Compare 3PL Operators’ Offers?
We wrote about the selection of a warehouse management system (WMS) and its costs in this series >>
In this aspect, the cooperation with the logistics operator brings benefits to many store owners. The operator has a warehouse and an order management system. It can integrate with your store and accounting system. It will monitor all of the processes for you and provide information in real-time to enable you to make better, more informed decisions. See what Wiktor Dymecki from Hubstyle said about it >>
#3 Professional accounting
Billing is one of the most important and time-consuming areas of online sales and order processing. Payments and cash flow are key, which is why accurate, tight, and preferably digitized invoicing is so important. Independent accounting is a nightmare for many entrepreneurs. It’s often associated with mistakes. As store owners, we have many other things on our minds, so it’s hard to be mindful enough about accounting. And mistakes lead to additional work related to explaining and solving problems – and so we get stuck in a vicious circle.
That’s why this is really worth considering:
- investment in accounting software available on the market (they often come with professional accountants as customer advisers) e.g., InFakt, Fakturownia, etc.
- employing an expert who will focus only on this area,
- considering an external accounting company.
Another option is to work with a 3PL partner who can take over the settlement and accounting of transactions from us. Such a partner may have experience not only in Poland but also in many foreign markets with different regulations.
#4 Organized returns
Returns are definitely one of the least favorite elements of running an online store. And yet, some brands (e.g., Zalando) made returns into their UVP that won the hearts of many consumers. It’s no wonder – it’s estimated that in Poland, 32% of online orders result in returns, and their handling is lined to about 40% of the price of the goods. In order for this cost not to get higher, we need an efficient return management process: both in terms of transportation, the financial part (refund and settlement of return shipping costs) and customer service.
And all of that is not easy. Serving this area is associated with a considerable amount of work, e.g., time spent on negotiating terms with courier companies or contacting the client and keeping them informed about the stage of the service. That’s why organizing a faultless, fast, and efficient return process is worth your time. That way, you’re not going to pay for any shortcomings in this area in the future. If you decide to cooperate with a logistics operator, the company will take over the topic of returns.
Conclusion: To what should you dedicate these 3 hours?
The time saved is best spent on strategic management and analytics:
#1 Data analysis
Observing seasonal changes, increasing or decreasing the popularity of products, delivery time, and overall order costs.
#2 Team management
Checking the effectiveness of the team’s work – how much time each stage of order picking and handling take, looking for ways to optimize this time and material consumption.
#3 Observing the market and consumer trends
Checking what methods of delivery and payment the competition offers, what the consumer preferences are this matter, what the maximum delivery time should be, deciding on launching new shipping methods, e.g., pickup points.