With technology evolving in the modern world, e-commerce is no different, changing aggressively in order to deliver fast and convenient services to customers at competitive prices. Global online sales reached $2 trillion in 2016, which was slightly less than $1 trillion, earlier in 2011. In addition to growing and developing technologies, what are the key players of transformation in e-commerce, which have made it the preferred shopping method?
Here are 5 keys to give your company’s e-commerce logistics leverage:
1. Realize the different costs coming from both shipping and fulfillment
Even though e-commerce has been evolving aggressively, some of the big players within the market are still exploring retail options, which leads to blurred lines between retail and e-commerce. Businesses have realized “that customers prefer to have the choice of buying online or in-store,” writes Mickael Froger for MCM, which will bring different logistic challenges. Fulfillment is processing the order and making it ready for delivery. On the other hand, shipping takes place independently from the fulfillment process, usually through a third party (e.g. USPS, FEDEX, UPS.) One of the biggest challenges for e-commerce logistics is warehousing, and delivery costs and time. Now, with increasing competition, strong online retailers are forced to operate through technologically-equipped warehouses which are located closer to their customers in order to carry out their orders in a timely manner.
2. Take advantage of increased number of subscriptions
For example, “Fabfitfun”, “Ipsy” or “Me Undies” may have started the subscription boxes trend, but shoppers like them because of the benefits they bring. They like receiving an exciting box filled with their favorite items each month. They like the convenience of shopping, without wasting time or exploring different products each and every month. On the other hand, subscription boxes are great for decreasing supply chain friction. The more predictable shoppers’ habits get, the easier it is to avoid chaos and confusion.
Knowing the number and timing of the order helps logistic companies coordinate shipments and stocking months in advanced, which leaves almost no room for late deliveries or backorders, leading to lower shipping costs.
3. Invest in the future of delivery
Competition in the e-commerce market forces companies to excel in the last stretch of delivery, which brings competitive leverage for the time-sensitive consumer profile. Amazon started this game with drone delivery that was launched in England. As Amazon leads the market, many companies are now focusing on autonomous delivery in order to fulfill last-minute orders. For example, Amazon Prime has expanded to Mexico, too. Unfortunately, many e-commerce companies cannot afford multiple distribution centers in big cities, which makes a two-day shipping option very costly. For this same reason, smaller companies rely on third-party logistics in order to reach their customers.
4. Control your own shipping
Options such as free shipping, two-day shipping, or overnight delivery increased delivery costs for e-commerce companies, forcing them to search for different solutions. Now, bigger players in the market are looking to build their own last-mile delivery and logistics services. Amazon already took the initiative and launched “same day shipping,” which is delivered by its own freight services taking third-party companies out of the picture. Walmart has also created its own logistics branch in order to eliminate 3PL companies.
5. Follow the change in shoppers’ preferences
Previously, customers preferred online shopping for the ease and convenience of shopping without having to go to the mall, getting exhausted, or waiting in lines. They didn’t care much about the timing of the delivery. Recently, the newly-introduced shipping options increased the cost of shipping. With added taxes, the end cost for the customer became higher, forcing customers to become price-sensitive. In other words, shoppers are not satisfied with the online shopping experience anymore. Delivering the order in very short time, with a good price, is the key.