Logistics services are the backbone of modern eCommerce. In fact, without logistics services, millions of daily deliveries of online purchases never happen. But what do we mean by “logistics” and why is it so essential to eCommerce? We’ve put together some answers and explanations for these basic questions here.
What is the meaning of logistics services?
Logistics services are essentially everything involved from the time you hit “Buy now” on an online website to the moment that item is delivered to you. Logistics, also known as order fulfillment or just fulfillment, covers everything from warehouse and inventory management to selecting & packaging items for shipment to handing the item over to delivery agents for transportation to the final destination.
While some online merchants store their own inventory and fill and ship orders themselves as they come in, it is increasingly common to outsource these activities to logistics services specialists for reasons that we will describe below.
What types of Logistics services are there?
While logistics refers to the entire process of eCommerce order fulfillment, that process can be broken down into different parts that reflect the different stages of the fulfillment process:
- Warehousing - Goods sold online need to be stored somewhere before they’re sold. Warehousing involves the safe and secure storage of these items in facilities that keep everything in the condition they need to stay in. Some items, for example, may require temperature or humidity-controlled environments. Warehouses themselves should be built according to high industry standards and be well-situated close to transportation arteries to facilitate fast delivery times.
- Inventory management - As items are delivered to and shipped from warehouses, their number needs to be tracked in real time in order to inform the retailer about current stock levels. Good inventory management services and tools are needed to avoid shortages and to plan for anticipated spikes in demand, for example around Black Friday.
- Picking & packing. When an order comes in, someone — or, in some facilities, a robot — has to retrieve the ordered item from its position in the warehouse. Then, when the complete order is assembled, everything has to be properly packaged and labeled for the journey to the end customer. This is a crucial step in the logistics services process since it often directly impacts the customer experience.
- Delivery. Transportation and logistics are always associated with one another. The next step in this supply chain process is getting the package to the customer. Providers of this logistics service are well known to most of us since they are the ones that put the packages in our hands. International companies like UPS, DHL and FedEx along with many regional and local delivery services take care of this step.
- Returns processing. Many logistics services providers will offer support for returns, which are a major part of eCommerce. Returns processing involves handling returns, examining the returned item and placing it back in inventory if it is in a sellable condition.
Logistics services – latest trends and challenges
Like any other part of the business world, logistics services are subject to change of all kinds. Economic factors, technological growth, changes in customer preferences and more — they can all have an impact on how logistics services work.
A good recent example of this is Brexit and its impact on UK-based online retailers. With new layers of bureaucracy and a more complex legal framework to deal with, the entire industry has had to adapt in a way that allows merchants to keep delivery times short and costs down. Three years after Brexit came into effect, both logistics services and British eCommerce operations have largely successfully adapted to the new landscape but it simply shows how an industry like logistics must deal with changing circumstances.
For a detailed look at how one UK business successfully handled the challenge of Brexit, read more here.
What to look for in a logistics provider
When it’s time to choose a partner to provide logistics for your ecommerce, these are the particular areas that you should consider and ask about. You have lots of options when it comes to working with a logistics specialist, so be sure rate them based on their how they perform in these areas:
- Shipping accuracy rate. This is an important metric that tracks how well logistics services for ecommerce do their most basic job – get the right product to the right customer.
- Integration with CRMs and tech ecosystems. Digital integration means being able to access all relevant information about your shipments, returns and more. Integration is a valuable asset that keeps you informed about deliveries, shipments in progress and other issues that you customers may inquire about.
- Where the logistics service ships to. Some logistics operations can specialise in shipping to certain markets, so if you plan to ship internationally, be sure to ask about the markets that are important to you for ecommerce fulfillment.
- Returns. Be sure to ask if the kinds of products you sell can be processed when they are returned, the fees for doing so and about any services offered to return sellable stock back to inventory. This whole process of processing returns is known as “reverse logistics” in the industry.
- Secure facilities. Always ask about security measures implemented at sites where your goods are stored. Modern ecommerce logistics warehousing should meet the highest standards.
- Customer support. Customer support is important for any service, and logistics is no exception. Always ask about available resources to help you when you have a problem, question or anything else that requires contact with the company.
- Flexible pricing plans. Per-piece charging is the industry standard - the more you ship, the more you pay. However, different ecommerce logistics providers may offer different plans that may be more appropriate for the volume of your business.
- Cost and source of materials needed. Like everything else, the price of paper goods used in the shipping process is going up. Most fulfillment operations will offer everything required for the packing and shipping process but it’s always best to be clear if anything is expected from your side.
- Custom packaging options. Sometimes, a one-size-fits-all approach doesn’t work when it comes to packaging. Always ask about the packaging options available, particularly if you offer items in non-standard sizes.
Logistics services – how can your online store benefit from them?
Logistics services support eCommerce by taking care of tasks and processes that are outside of your area of expertise. Just as you would, for example, hire an outside company to paint your offices because they’re better at it than you are and can do it faster than if you did it yourself, working with logistics services providers means being able to focus on what you do best.
That means you can work on improving your website, product offering or some other customer-facing aspect of your business while logistics services pros work in the background, delivering your products in a fast, efficient way.
Scaling up is a goal for every business and it’s easier with a logistics services partner. 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 sold goods from you to your customers.
Logistics services with Omnipack
Outgrowing your current logistics setup? Looking to access new markets? Need help navigating cross-border logistics procedures? Omnipack is here to help - contact us.
What are logistics services?
Logistics services include everything required to get purchased products from the warehouse to the customer. Fast, efficient logistics services are essential for success in eCommerce, since logistics issues like delivery are such an important part of the overall customer experience. Think of logistics as all of the mostly unseen processes that go to work after a customer completes a purchase on a website.
How do you choose the best logistics service for your business?
Talk to the sales team at Omnipack today to talk about your current operations along with an explanation how we can take care of your fulfillment.
How much does logistics services cost?
Prices will vary due to many factors but the important takeaway is that overall costs are almost certain to be lower if you work with an order fulfillment specialist. This is true for two reasons. First, these specialists have streamlined their operations thanks to their expertise in the field and as a result can enjoy lower costs created by these efficiencies. Second, thanks to their size and volume of parcels they handle, they get much better prices for delivery than you would acting on your own. Total shipping costs go down and the level of service goes up when you work with a logistics partner.