Ecommerce Logistics Explained: A Guide to Shipping & Fulfilment

July 11, 2024

min read

Logistics is the implementation, organisation, and orchestration or a complex operation. In the context of online retail, eCommerce logistics is the commercial activity of transporting finished goods to online shoppers. Logistics carried out for online retailers can involve a plethora of specialisms throughout the supply chain, customer journey, and retail operations. In general, third-party logistics, and carrier management providers are diversifying their approaches.

What is eCommerce shipping?

Ecommerce shipping is where an online retailer either works directly with couriers, uses a courier reseller, or partners with a carrier management company, that grants them access to shipping software, and with some providers, a single daily collection regardless of carrier choice. Parcel delivery management firms are utilised by retailers shipping anywhere from 10, to 1000s of parcels per day, and work with retailers who prefer to keep their product storage, along with pick and pack operations in-house.

What is eCommerce order fulfilment?

Ecommerce fulfilment involves entrusting a specialist to manage all aspects of order processing. This ranges from goods-in (receiving finished goods from suppliers), to warehousing and storage, picking and packing, shipping and returns. Increasingly, due to intense competition amongst third-party logistics (3PL) providers, 3PLs are offering complementary services such as outsourced customer service, inventory analysis, bespoke packaging, customs clearance, and eco-friendly initiatives.

Finding the right ‘elogistics’ specialist

The first stage in determining which type of provider you need is to consider your current scale. If you’re a small business shipping only a couple of orders per day, then it would be most suitable to utilise a business parcel delivery solution for ad-hoc shipments. If you’re sending 10 or more parcels daily, then a multi-carrier delivery management provider can give you access to a single daily collection regardless of courier choice, from your premises.

For mid-market and established, high-volume merchants who require additional warehouse space, or are at the end of their rental term and want to invest their capital into other areas, then outsourcing fulfilment can be a viable option. Checking their third-party employee and customer reviews, along with client case studies on the 3PL’s website, and reaching out to their clients for honest feedback, will all de-risk your procurement process.

With eCommerce fulfilment, pricing is complex and factors in storage space, shipping and returns costs, picking and packing fees, along with implementation and integration costs, and for some providers, a monthly software fee. Some logistics warehouses go deeper into the supply chain and offer outsourced customer services, manufacturing, and overseas warehouses to minimise customs paperwork. What is often ignored is the human element of logistics outsourcing; 3PLs who provide a consultative, approach, operating within an ecosystem of strategic partners, can help 3PLs provide greater value to retailers.

Once you’ve benchmarked your e-logistics providers against each other, this is the point at which to establish KPIs (key performance indicators) and OKRs (objectives and key results) with your chosen 2PL, 3PL or 4PL, to ensure your expectations are aligned, and to monitor performance metrics, such as on-time delivery performance, order processing speed, WISMOs (‘Where is my order?’ queries), and picking accuracy.

The role of logistics in customer satisfaction

Logistical infrastructure can make or break both sides of the customer journey; pre- and post-checkout. Factors impacting the customer experience, and consumers’ brand perceptions, include things like products being out of stock, early order cut-off times, and poor customer feedback. After customers have checked out, the quality of email (and SMS) communications, along with on-time delivery performance, and in-flight delivery options, can all impact conversion rates, and customer lifetime value.

A study by Brightpearl and Trustpilot discovered operational failures, such as order fulfilment, drive consumer dissatisfaction, and that identifying and addressing gaps in service quality can enhance the customer experience dramatically. The study which quizzed online shoppers learned 77% of poor reviews are directly related to issues shoppers have after clicking the buy button.

Managing eCommerce returns

With an average eCommerce return rate of 17.6% in 2023, shoppers returning items they bought, expecting a replacement or refund, can demolish a retailer's profit margins. This emphasises the importance of ensuring your customers' expectations are aligned with the reality of your products, though detailed product descriptions. It also emphasises the importance of retailers identifying serial returners and ensuring they don't damage your business.

Ecommerce logistics case study

Complete Strength, a Workout Supplements retailer, initially conducted their eCommerce shipping in-house, then later worked with an eCommerce 3PL. More recently, they switched to a new provider, Zendbox, which offers an industry-leading 10pm order cut-off time. This has improved their conversion rate and thanks to the Zendportal inventory analysis platform, they are able to minimise both understocking and overstocking.

The Kent-based UK fulfilment centre introduced this late order cut-off time because their research indicated it can be a major competitive advantage, proven to increase customer lifetime value, and customer satisfaction. With 35% of online orders placed between 4pm and 9pm, the 10pm order cut-off time means Complete Strength can now reach new market segments, such as gym-goers who have just finished their evening workout and realise they are low on protein powder.

The future of eCommerce logistics

Consumers will increasingly demand fast, free, yet environmentally-friendly shipping, along with personalisation, and omnichannel, on-brand customer experiences. At the same time, eCommerce, and logistics operators that support this electronic economy, are set to double in market size by the end of the decade. This market growth will encourage diversification of, and competition amongst, eCommerce 3PL businesses, giving merchants greater choice with the operations they would like to outsource. E-fulfilment, carriers and shipping software vendors will have to utilise AI, IoT and partner with a broad range of vendors in their spaces, to remain relevant, and offer added value by utilising the latest technology to deliver marginal gains such as better inventory management, more efficient pick and pack, and granular data to support customer service operatives.

Gilson Pereira
Head of Customer Experience at Zendbox

Resilient and forward-thinking, Gilson is responsible for leading the strategy, planning and execution of our customer experience (CX) goals, liaising with department heads to ensure every team at Zendbox works cohesively to provide our clients a positive and seamless experience across all touchpoints.

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