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(EN) Module 3 – Section 4

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Module 3 – Section 4

In this section you will find:

 

  • the role of logistics in the e-commerce chain
  • the main logistics models
  • the process chain
  • specific regulatory elements
We like e-commerce because every time a package arrives it looks like Christmas, but when we open it we immediately realize the amount of excessive packaging. The solution? Cube optimization and reusable containers. Roger Botti - Robilant Associati
We also provide information about the Deliver in Europe platform – a service co-funded by the European Commission that aims to help and support companies in identifying logistic service providers that best meet their needs. to know more

Logistics

E-commerce is fundamentally changing the postal and parcel markets. Global commerce streams revolutionize shopping, but the current parcel streams are ill-fitted to accommodate this. Almost one out of five EU citizens mentions that cheaper delivery prices are the main improvement that would encourage more online shopping from sellers located in other EU Member States. Similarly, more than one third of online merchants consider higher costs of cross-border delivery compared to domestic delivery as an obstacle in online cross-border trade. In surveys done by Ecommerce Europe, inefficient cross-border delivery is consistently in the top three biggest barriers for online merchants to sell in another EU Member State. Almost half of companies selling abroad (44%) view logistics and distribution as a difficult barrier to tackle when doing business abroad. The Ecommerce Europe survey “Barriers to Growth” also shows that 15% of companies not selling at the international level refrain from doing so because of excessive transportation costs.

For the whole text of the Manifesto go to: https://www.ecommerce-europe.eu/publication/manifesto-e-logistics-april-2016/

What is logistics?

Imagine a new customer comes to your online store and…

1. Finds a product he/she wants at a price he/she likes

2. Adds it to his/her cart.

 

What happens next?

He/she has to decide whether to buy or not: his/her choice may depend on delivery and shipping options (time, costs…)

  1. Option 1: If delivery and shipping options do not meet his/her needs, he/she abandons his/her cart and leaves your website
  2. Option 2: If delivery time and shipping options do meet his/her needs, it is highly likely that he/she makes the purchase.

 

What can you do, as a me-commercer, to influence his/her decision?

Improve

• Shipping speed

• Cost

• Alternative choices

These are the key factors with impact on making a purchase and returning to your e-commerce brand again.

 

Back-end supply chain management is a critical component of any business today, especially in the case of ecommerce.

 

What is LOGISTICS?

Management of the way resources are obtained, stored and shipped to their final destination.

 

How to create logistic strategy?

You need to make a layout of planning, execution and control of the movement and placement of your goods and/or services. This has to be designed in order to achieve specific objectives, which may vary according to your economical activity and scope.

 

Let’s start. You will need to make these few steps in order to organize logistic management of e-commerce:

• Locate and identify potential suppliers and distributors

• Specify their accessibility and effectiveness in terms of your business production

• Get in touch with them and find the most cost-effective solutions for your business

 

Larger companies often work with multiple parties to keep pace with demand, but usually there is no such necessity for microbusiness to partner with different organizations in order to manage ecommerce website logistics. If your operation is small enough, you can work with local businesses and organizations to ship and store your products.

 

What is the logistic process of microbusiness?

• Customer completes his or her order on your website. (Most ecommerce platforms have integrated inventory management software, so a completed payment automatically adjusts your inventory accordingly.)

• You get the notification that an order has been confirmed – paid.

• You ship the product.

How? It depends on the size of your operation/parcel:

• Home/office operation: If you’re running your website from your home or a separate office and store inventory there, all you have to do is pack the product and send it to the buyer. This is a great option for newer and small businesses because they save money on overhead costs, as they do not have to outsource warehouse management to a third party.

• Drop-shipping partner: If you do not have a storefront location and room to store the products, you make a contract with a brick-and-mortar partner. Good online system connections will let him just pack up the right product and handle it to the awaiting customer.

• Outsourced logistics: if your operation is large enough to outsource your online operation logistics, you’ll likely have to sync your platform with the third party you partner with. That way, once a customer makes a purchase, the distribution center will know and they can send the package out quickly. This hands-off approach is well organized and eases the stress of shipping so you can focus on other aspects of your e-commerce.

Always make sure you are managing the right item. Even double check, no matter how little time you have – it is worth it.

Source: Transport logistics of materials 

Track items on the back end

There are options for you to check your inventory and where it is in the supply chain. Inventory management solutions within your ecommerce platform provide you with information about how much of a given product you have left. Inventory management tools give you real-time insight into your products so you’re never behind on customer orders.

Some of your logistic partners (UPS, FedEx, USPS, national posts and etc.), also can offer items tracking based on the parcel numbers they provide. Once the product leaves your hands, it may be a good idea to check on certain orders to make sure they reach the customer.

 

Choosing your shipping option you also might consider these 3 Important issues:

• Product size and weight: What’s the difference in size and weight of your smallest, lightest SKUs (stock keeping unit) and your largest, heaviest SKUs?

• Shipping destinations: Where are you shipping to – domestic or international? International shippnings requires to consider last mile delivery stage- the movement of goods from a transportation hub to the final delivery destination. The final delivery destination is typically a personal residence.

• Shipping options: What are the best shipping channels for you and your client unique needs?

 

The best practice of e-commerce provides the same tracking numbers to customers in their confirmation email so they can keep track of where their package is.

Process

Now there is the time to come back to the beginning of the topic. How does your layout of planning, execution and control of the movement and placement of your goods and/or services look like? What specific objectives, which may vary due to economical activity and scope of business, you have?

Market analysis you already made, will help you to define the client and his/her possible requirements, both of these will help you solve the crucial point of the e-commerce – price of the logistic services.

 

Top 4 ecommerce shipping option:

1. Free shipping

  • Of course, shipping may be free to your customers –– but it is not definitely free for you. These are the strategies how to cover the cost of free shipping. First, increase product prices to cover shipping costs. In this case, the customer pays. Second, the business pays the full price of shipping. Third, the company slightly increases prices of products to cover some shipping costs, so that both the seller and the customer pay. Businesses can also offer free shipping when a customer hits a minimum order value. This strategy can help to increase an average order size; therefore, it may increase profits to help offset shipping costs. You still need to pay the carrier and you have to make sure you are making sufficient profit on each order to cover the associated shipping costs.

2. Flat rate and table rate shipping.

  • Flat rate shipping is not related to value of the order e.g. the same amount of EUR 5 will be charged whether the order reached EUr 10 or 100. Table rate shipment model depends on the several criteria: destination between warehouse and client, sum, weight and size of the parcel.

3. Live rates from a carrier.

  • This option is very similar to the table rate shipping mentioned above, except that your online store has to be connected to some logistic company (3rd party) which will provide the current delivery price, after the client submits his/her order, this will depend on several criteria: destination between the warehouse and the client, value of the order, weight and size of the parcel.

4. Mixed and alternative strategy.

  • This allows you to balance your need for profit with promotional opportunities. For example, you offer free standard shipping (with no delivery commitment or a range commitment like 5-10 business days for delivery) alongside other options like expedited shipping (for example, 3-5 day delivery at a table rate based on order value) and live rate options for second Day and overnight delivery.

 

Here are a few options:

  • Standard shipping + Expedited shipping
  • Free shipping + Standard shipping + Expedited shipping
  • Standard shipping + In-store pick up + Same day delivery
  • LTL freight (less that truckload) + Standard shipping

Logistic legislation issues

 

  • What are the most important logistic legislation issues, related to your me-commercer logistic management layout?
  • Seller has max 30 days to deliver the goods after the contract is concluded;
  • Consumer HAS THE RIGHT to prolong the delivery time in case the goods are not delivered on time. After such a period consumer has the right to withdraw from the contact and get the money back without any delay.
  • The risk of loss of or damage to the goods passes to the consumer only when the consumer confirms receipt of the  goods.
  • The risk passes to the consumer upon delivery to the carrier if the carrier was commissioned by the consumer to carry the goods and that choice was not offered by the trader, without prejudice to the rights of the consumer against the carrier.

 

More information https://europa.eu/youreurope/business/sell-abroad/on-line/index_en.htm

This project has been funded with support from the European Commission. Information reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
For more information contact: projektai@paneveziodrmc.lt