So, you’ve finally started your dream e-commerce business, and it turned into a company with customers, inventory, and real revenue. That’s great news! Starting a business venture is never an easy process, and if you’ve completed this step, it is already a remarkable achievement.
However, starting a company is only half the battle won. To win the battle, it’s essential to invest in the coordination of logistics, which is even more important than investing in the inventory itself when it comes to the company’s success.
There is a saying that you need to learn how to manage your inventory before it can manage you, and it couldn’t be more true. Even if you have a one-of-a-kind product and your expertise is beyond doubt, the only scenario in which you can succeed is when your company’s logistics are properly coordinated and run smoothly.
Further in the article, we’ll go over six of the most important things to keep in mind when building a startup in e-commerce to take your online brand to the next level. Read on to learn more!
What Is E-commerce Logistics?
E-commerce logistics is what it says on the tin. It’s the process of delivering products from the warehouse of a seller to the door of a customer. Depending on the industry, this process may involve the following steps:
- Acceptance of orders;
- Managing inventory;
- Handling returns.
Having a well-organized supply chain management system in place allows companies to move the product through each stage with less hustle and ensure that it gets to a buyer in time.
Of course, it can be tricky to raise the threshold set by Amazon, which offers the fastest 48-hour delivery, especially for an e-commerce startup, but knowing what things to focus on in the beginning should help get you on the right track.
Why Is E-commerce Logistics Important for an Online Brand?
Let’s put it simply. If the seller can’t deliver the product to the buyers when they need it, chances are high that they will buy from another brand. And if the e-commerce business doesn’t have customers, there’s little use in having one in the first place.
That’s where e-commerce logistics come into play. A fundamental part of any business, it gives companies a competitive edge over the competition and allows them to increase customer loyalty.
In addition, it enables companies to grow. By building a network of multiple shipping channels, including global logistic providers and nearshore software development services, even small retail companies, which startups are, can work with a higher-volume stock of goods and target an audience nationwide..
In addition, it enables companies to grow. By building a network of multiple shipping channels, including global logistic providers, even small retail companies, which startups are, can work with a higher-volume stock of goods and target an audience nationwide.
Now that we’ve covered the importance of e-commerce logistics, let’s have a look at the important things to keep in mind when optimizing your supply chain.
The advantage that retailers have and startups don’t is sales history. By using data from the past, companies can forecast the demand and figure out how much inventory they need. But what do startups do in this case? Here are a few tricks.
First things first, it’s vital to keep a close eye on the site traffic. This, along with social sharing, can give you a clue if customers are interested in the product and whether it’s time to get ready to support that demand.
You should also monitor seasonal trends. Some goodies are best sold in winter, while others, like outdoor items, increase in demand as spring arrives. Knowing this, you can stock up on the right stuff at the right time.
When making forecasts, it’s also important to set a spending limit on discounts, as well as a threshold for free shipping. By doing so, it will be easier for you to scale up, and there will be fewer unexpected expenses along the way, not to mention that you will also be able to attract new customers with your offers.
As a startup, you probably won’t have a huge inventory from the get-go, but it will certainly grow as you proceed:
- Firstly, you’ll be adding new products to make your offer more appealing;
- Secondly, you’ll likely decide to expand and use not one but a few warehouses and drop shippers.
The flip side of the coin is that the more warehouses you have, the more difficult it is to see the full picture of your sales performance. Quite often, e-commerce startups face the problem of not being able to tell their customers if the product they want to buy is in stock or not.
Worse than that, very few can actually control it, and the only way shoppers find out if the product is available is only when they add it to the cart, which can be quite frustrating, to say the least.
To avoid this, it’s essential to make discipline your priority and make sure that providers you work with can give you access to internal systems where you can see your entire inventory, including how it moves from point A to point B. Only if you have this kind of visibility over the logistics, can you expect your e-commerce business to be successful.
According to research by Fedx, 73% of shoppers are more inclined to make a purchase from a store that offers unconditional free shipping, making it important to introduce a free shipping policy at the outset. Even if you aren’t ready to offer it yet, make sure to factor in your strategy to have an ace up your sleeve as you begin to grow.
There’s nothing wrong with taking a cue from the big players like Amazon, Walmart, and others. Like everyone else, they started small, but now, after many years of being in the market, they have over 100 million prime subscribers and can deliver many things for free.
Could you offer your customers some kind of subscription plan? Or, maybe, encourage them to buy two products instead of one? Whatever the case, the key to success is discipline and strategy.
The last mile, or “last touch” as it’s often referred to in logistics, is the last step of the delivery process to the customer. For e-commerce businesses, this is actually the most important step as it often determines if your customers will continue to engage with your brand or switch to your peers.
Last-mile service involves a number of things:
- The choice of a courier, which may be UPS, the U.S. Postal Service, FedEx, or others;
- How quickly the product will be moved to the user.
Obviously, the goal is to provide your customers with a greater number of shipping options and make sure that the product can be delivered in the most accurate and fastest way. Many app-based logistics providers offer tight delivery windows, allowing e-commerce startups to compete even with more serious retailers, including Amazon.
So, be sure to do a bit of research before choosing logistics providers to make the last buying step for your customers as smooth and enjoyable as possible.
Perhaps, the trickiest part of e-commerce logistics for startups is handling returns. Unfortunately, though, returns are inevitable. According to the study of Transport Topics, the average return rate for e-commerce is 24-36%, which means it’s essential to manage them as effectively as the delivery of products, if not more.
The better you manage returns, the more confidence your shoppers will have that they won’t be stuck with products that don’t meet their needs. With that in mind, consider what perks you can offer your customers. In addition, think of all the complications that may get in the way:
- Will you pay for return shipping?
- Will you resell products?
- Or will you liquidate them?
By answering these questions, you’ll get an idea of what actions need to be taken to improve the delivery experience for your customers.
Ideally, return management should be run separately from deliveries and handled by a different person or a small department to ensure a flawless supply chain.
A lot of companies, including startups, choose to outsource operational logistics to third parties (3PL). The benefits of doing so are quite obvious. Rather than monitoring inventory and handling order fulfillment, companies can have a much easier time and focus on running their business.
The catch is, finding a 3PL able to deliver to your brand standards can be quite a challenge. That is, of course, if you don’t know what you’re looking for.
To minimize risks, look for a 3PL that can provide you with access to the inventory management system. Even if you don’t plan on processing orders yourself, it is important to be able to track your progress.
Furthermore, you want to stick with providers that have a proven record of carriers they’ve been working with for some time. Sometimes, it’s enough to check user reviews to see if the information you find on the Internet is true or not.
It goes without saying that it’s best to find providers experienced in your niche.
To wrap up, while it might seem that it’s quite difficult for e-commerce startups to jump on the bandwagon, it’s more than doable. The secret to success lies in logistics. In conclusion, e-commerce logistics is an essential part of any online business, and by following the rules for internet safety, startups can optimize their supply chain organically and successfully compete with established retailers in the market. Follow our tips to build a successful supply chain for your e-commerce and reap the rewards of increased sales and revenue and a growing loyal customer base.