eCommerce Logistics: Challenges and Solutions

Managing your own eCommerce logistics presents many challenges: Products need to be packed and shipped quickly. And returns must be handled quickly and smoothly. There are several ways to meet these needs. We present four options.

From in-house e-logistics to fulfillment, this article will help you find the logistics solution that’s right for your business.

eCommerce logistics, or e-logistics, refers to all the logistics processes involved in online retail. As eCommerce is a fast-paced field, visibility, flexibility and scalability are essential for professional order fulfillment.

Logistics in eCommerce covers all steps from the delivery of goods to the warehouse to the delivery to the end customer. The following sub-areas are included:

• First mile and receiving: Products are transported to the warehouse. The goods are received and undergo quality control. The items are then entered into the inventory management system.
• Storage: In the warehouse, products are stored according to policy. Depending on the industry, different requirements must be met.
• Picking and packing: Once an online order is received, the appropriate items are assembled, packaged, and postage paid.
• Shipping: The packaged goods are handed over to the selected carrier. The parcel service takes care of the transport to the end customer. Track and trace allows the goods to be located at any time.
• Returns: Returns are received, processed and repackaged. The scope of services may also include the exchange of goods and repairs.

Online retailing has fundamentally changed the way consumers shop: Products are always available, can be ordered at any time and are delivered directly to the customer’s home. This in turn is changing supply chains and the movement of goods. The volume of deliveries in eCommerce is constantly increasing. At the same time, it involves a large number of individual orders, requiring more frequent trips.

Fast shipping and smooth returns management are especially important. If customers are not offered a reliable service, they are likely to turn to the Internet’s many competitors for their next online purchase.

To meet these demands, logistics processes must be optimally coordinated. Online stores face several challenges in this regard, such as:

• Keeping track of inventory and orders
• Shipping many small orders with few items
• Satisfying customers’ need for quick delivery
• Efficiently handling returns
• Managing seasonal fluctuations and peaks
• Responding to customer inquiries or problems promptly

To ensure that your eCommerce business doesn’t turn into a logistical nightmare, a variety of solutions come into play. Below, we take a closer look at some of the options.

Smooth e-logistics contribute significantly to the success of your online store. Fast and efficient order fulfillment is necessary to meet customer expectations. There are several ways to successfully manage eCommerce logistics.

Companies that handle their own logistics take care of the entire supply chain and do not hand over their products at any point: they store, pack, ship, and manage returns themselves.

This logistics solution is particularly suitable for small online stores whose shipping volumes are still manageable. However, as orders increase and the store grows, handling logistics in-house becomes more time-consuming and expensive in terms of staffing and warehousing.

A first step towards outsourcing can be working with a shipping partner. A selected parcel service handles the transport and delivery of the goods. The online store continues to pick and pack the items itself. By outsourcing the shipping of goods, time-consuming trips are saved. However, the time and costs involved remain high – even as the order volume grows.

Your warehouse is bursting at the seams and your internal resources are stretched to the limit? Especially for established shops with high order volumes, outsourcing all logistics is a good idea. One of the most popular outsourcing solutions is e-fulfillment.

In this case, all aspects of logistics – not just shipping, but also warehousing, picking, and returns – are outsourced to a service provider you trust. This is also known as 3PL fulfillment, or third-party logistics fulfillment.

This means that in addition to your carrier, you have an additional company in your supply chain that can efficiently manage all of your logistics. This saves you valuable resources and allows you to focus on your core business and growing your company.

For online retailers looking to not only outsource but also optimize their supply chain, 4PL fulfillment is an option. Unlike 3PLs, 4PLs go one step further: they take control of the entire supply chain, coordinate other market participants (such as 3PLs, warehouses, parcel services), and are involved in planning and developing the logistics strategy.

However, they are only an advisory party – they act as an interface and can only influence processes administratively. Since they have no material logistics resources, their hands are tied in some areas.

Alaiko provides an innovative solution between 3PL and 4PL. This means that Alaiko not only manages the logistics network, but also takes care of the entire order processing and offers additional services such as real-time inventory tracking, proactive communication with buyers or customized packaging. This way you always have an overview and full control over all logistics processes.

Dropshipping is another way to outsource logistics. Here, too, you outsource your entire logistics process to an external partner company. The big difference with fulfillment is that you do not own the goods. The items are stored and shipped directly by your dropshipping provider. You are not charged for the goods until the customer purchases them.

Fulfillment and dropshipping differ in another way: While a dropshipping partner handles the logistics according to its own rules, with fulfillment you get a customized service package tailored to your needs.

The booming online retail industry presents eCommerce brands with new challenges every day. Efficient eCommerce logistics are necessary to meet the demands of end customers. Depending on the size of the business, there are different solutions, such as working with a shipping partner, dropshipping, or fulfillment. The latter offers the advantage that the service package can be customized to your needs.

DCover image by insta_photos on stock.adobe.com, other images by fotomek and tirachard (also stock.adobe.com).