Logistics and E-Commerce

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Logistic and E-Commerce​

Being a part of 21st century almost everyone is fan of discounts and sales on online shopping portals. Aren’t you? In an e-commerce business where on-time delivery is the primary driving force, one should understand how logistics work.

Indian logistics, a highly unorganized industry, broadly divided into e-commerce delivery, trucking, and overseas freight transport.

What is Logistics e-commerce logistic

Logistic and E-Commerce Logistic and E-Commerce What is Logistics 

What is logistics and How does it work?

Have you ever been occupied with lots of ideas to do something that it created a chaos in your head?
What do you do to sort it out?
You make a plan. Divide the task in steps. Your initial steps lead you to your final destination. Right?
That what exactly logistics is about.

“Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption to meet the requirements of customers or corporations.” – Wikipedia

Logistics has always been a great challenge, especially in a country like India. This product doesn’t match to the one I saw online need to ‘exchange the product’, I am super excited about my new shoes but it is taking so long to deliver,. Relatable?

Logistics and E-Commerce logistic What is Logistics

Logistic and E-Commerce Logistic and E-Commerce What is Logistics

The Rise Of E-Commerce- A New Way Of Doing Business And Meeting Customer Expectations

The rise of e-commerce led to a digital phenomenon known as “The Amazon Effect,” which entirely changed the composition of consumer buying behaviour and expectations from businesses and companies. Because of e-commerce, consumers expect hassle-free and fast shipping at competitive prices. This troublesome delivery schedule challenges traditional logistics and supply chain models, and companies are now obliged to adjust their strategies to provide the low-cost and on-demand delivery service that consumers now demand and aspire.

E-commerce represents a fast-growing share of the retail market. According to various reports, e-commerce accounts for 14.3% of all retail sales in 2018 and up to 15% year-over-year. It is also calculated that e-commerce sales will rise by 17.5 % of retail sales globally by 2021. This exponential increase in demand will unquestionably impact the logistics and transportation industry as they need to get ready to increase volume and delivery expectations for the customers. 

This can be done by engaging with reliable financial partners who have intensive knowledge of how the online business works and has great awareness of the industry and security. Logistics companies can determine how to remain ambitious and successful amidst industry changes and emerge as a success.

The E-commerce impact on Logistics Industry

The e-commerce sector is touching heights and is hugely impacting the logistics business these days. E-commerce has immensely impacted logistics because with growth of e-commerce there is a growth in consumer’s demands and expectations. Consumers are turning out to be peculiar about the timing of delivery as per their choice.

Reports indicate that e-commerce impact on logistics business is as such that the global logistics market in the e-commerce realm is expected to reach $726 billion by 2020.

This increase has made companies like FedEx to be innovative and advanced in its services to reach the global network. Steps are being taken to upgrade logistics in terms of transportation especially.

What is Logistics Logistics and E-Commerce

E-Commerce Impact

With a shoot in the e-commerce, today’s aware consumer wants to be updated about the product. The consumer wants to know the time of delivery and desires to keep track of shipping process at the top of it free shipping are becoming new bonus for an online shopper!!

The transportation industry provides the critical linkages for the omnichannel needs of retailers, from the first mile to the last mile and back again on e-commerce portals.The regional fragmentation of supply chains and distribution networks has forced retailers and their supply chain partners to rely more on motor carriers; truck transportation is best equipped to provide the flexible and reliable services needed by JIT inventory management systems,    decentralized distribution networks, and tighter delivery windows

There are two characteristics of omnichannel business models that have had the greatest impact on trucking operations:

1) the re-emergence of decentralized hub-and-spoke distribution networks.

2) a greater emphasis on reliable deliveries throughout these networks as delivery windows continue to shrink

Managing Consumer Expectations

Customers are informed and expect fast and free shipping options from retailers. This makes it very important for logistics companies to adapt to the ever-growing expectations of consumers and emerging preferences and accustom themselves to the ever-increasing delivery-pressure. 

E-commerce leaders will have to keep with these changes to survive and stay ahead. Because of this, the dynamics of supply-chain are shifting and changing as companies are shifting towards augmenting conventional long-haul delivery with just-in-time (JIT) delivery. The suppliers are also transitioning from multiple storage facilities to single warehouse locations to meet the local needs of the people. All this had led to a change in the composition of fleets and large investments in small trucks and vans that are convenient in covering shorter distances and can help in last-mile deliveries.

According to survey reports of various fleet managers from NAFA Institute & Expo, 17% of them indicate that they will plan to adjust their fleet composition to favour last-mile deliveries. While 33% of them are planning to increase their fleet sizes and are preparing to invest in different asset qualities to address these prime concerns and get an advantage over others. 

E-commerce is rising and companies are likely to adjust their business models to provide the fast, convenient and hassle-free services that the consumers are demanding. Companies would focus on last-mile delivery as their key area to fight against giants like Amazon in this realm of e-commerce.

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

Then: Earlier e-commerce was merely about the convenience of ordering a product sitting at home. No driving to the mall and no waiting in queues, just waiting for the package to be delivered at your doorstep. Shippers still used snail mail and phone calls to communicate with customers and delivery took he weeks, not days.

However, free shipping quickly became a tool that brought in competitors. As there weren’t many carrier options, no additional costs (such as sales tax) existed but order delivery times were slow anyway.

Now: E-commerce merchants collect sales tax and fuel charges and the ever-popular free shipping is the farthest thing from free to retailers.  Other than leading companies 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.

Logistics and E-Commerce​

So, the e-commerce has impacted the transportation company in such a way that there is an 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 transport larger items via less than truckload modes.

It’s no longer a marathon 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.

It’s no longer a marathon 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.

E-Commerce Supply Chain Challenges

Ecommerce has hugely affected supply chain management. With the industry changing so much, customers have a lot of power in the buying process. Many companies sell similar products which allow the consumers to switch between businesses and online portals to find the best quality at reasonable price and delivery time.

To stay relevant, your supply chain needs to meet your customers’ needs and expectations and pivot quickly when the market changes. Common e-commerce supply chain hurdles include inventory management and shipping costs.

  • You need to maintain perfect stock as if you won’t have that product, your potential customer would buy a similar product from your competitors rather than waiting for it to be back in stock.
  • You also need to analyse your shipping speed which influences your customers to chose you among your competitors as people are reluctant to wait when they know they can buy the same products from Amazon, Flipkart or other big e-commerce giants. Studies have also shown that a majority of customers are enthusiastic to shift to other retailers that offer the same delivery speed and shipping price as Amazon.

Efficient inventory management and rapid and cheap shipping need to be a key part of your e-commerce logistics strategy. Having a complete warehouse management system that can assist the inventory management process and help with product retrieval is essential. This helps to streamline the picking and packing process and help you organise your warehouse effectively.

Make sure you do real-time tracking, expedited shipping options and manage customer expectations for shipping costs. You also need to implement the best in-house practices if you have your own in-house distribution system. Some companies think that it would be advantageous to work with a third-party logistics provider. These providers have systems and expertise to assist the achievement process and the relationships to help you get better transportation and shipping rates—both of which help you stay aggressive and ambitious.

Technological Challenges In Logistic and E-Commerce

Technology brings fresh opportunities to the e-commerce logistics industry. Over the years, companies have transomed and evolved their way of doing business. From traditional marketing and brick and mortar stores to online marketing and choosing omnichannel operation which has led to making technical improvements to stay relevant and appropriate. But all of this has its own challenges. 

For any business, choosing the right technological advanced platform for your company is a necessary decision. Wrong shopping cart solution, inventory management software, or analytics system can limit growth and competence of a company. The integration with surviving protocols when transitioning to new software systems can cause difficulties without the proper guidance from qualified professionals.

The major eCommerce issue that needs to be kept in mind is security. This is the most concerning challenge and hurdle for e-commerce logistics and supply chains. The explosive growth of this dynamic industry has made it extremely attractive to criminals which is a huge threat to this industry. Hacking incidents tend to go viral especially on social media, which can bring down the customers morale to do online shopping. This calls for having reliable and latest security systems which would help protect customers personal information and avoid any PR disaster if any breach occurs.

Hence, relevant security systems need to be incorporated in this business to protect not only the customers but yourself. 

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