How To Determine the Best E-Commerce Logistics Solution

Running an ecommerce business is difficult, and many ventures fail because they didn’t have the proper logistics or management solutions in place to run the business smoothly.

Amazon boxes

photo credit: thisisbossi / Flickr

It’s not uncommon for ecommerce business owners to be afraid of the unknown: outsourcing your company’s supply chain can seem scary at first. You may be worried that you won’t have enough control, there could be too many unknowns, or that you don’t want to go through the struggle of finding the right logistics company (especially if you have no firsthand experience).

Before you begin your search, consider the benefits of an ecommerce logistics solution.

Ecommerce logistics solution: Benefits

1. It can help with inventory management

Without proper inventory management, you run the risk of having too much or too little inventory, both of which result in loss of sales. Supply chain management firms maintain inventory levels and keep track of shipments. They also help maintain vendor relationships, which can be difficult for ecommerce companies, as different vendors have very different lead times.

2. Helps keep customer satisfaction high

A customer’s first purchase is especially important, because repeat customers statistically spend more than new customers. One of the most surefire ways to keep your customers happy is to deliver a product accurately and on time.

3. Provides high-level data

For logistical companies, metrics are crucial. Data is constantly being collected, and e-commerce companies can use that data to improve their business and bottom line.

4. Risk mitigation

A supply and logistical management’s ability to ascertain risks before they happen can be a game changer. They’re able to identify legal risks and liabilities and come up with quick, efficient solutions.

Once you understand the benefits and are on board with outsourcing your logistics, you can start creating a list of potential companies to work with. Any product you’re considering — especially a big one — requires doing your homework.

Things to consider

Ecommerce warehouse management

During your research process, consider the following:

1. Choosing a warehouse

Choosing the best physical location is the first step, and this depends on the region you’re trying to serve. The closer you’ll be to your customers, the more prompt deliveries will be. This will also help alleviate transportation costs.

Also consider different types of rental contracts. If your ecommerce business is seasonal, look for a location that offers seasonal contracting.

2. Staff availability

It’s important to fully understand the warehouse’s workforce and compare it against the labor demands of your own company. Ask yourself: Is the warehouse a 24-hour facility? Will other businesses in the areas limit labor capacity? What’s the turnover rate for employees? Does the staff consist of company workers or temporary staff? And lastly, what certifications or education levels are employees required to have? Asking these questions gives you a solid overview of the company morale and how serious the company takes their business.

3. Technology

Every logistics solution uses technology they see best fit for their company. However, software in this space is constantly evolving, while some companies like to stay up-to-date and don’t mind re-training staff of better solutions, while others like to stick to the tried-and-true.

Think about what you value the most, but the bottom line is to have the best capabilities to take care of and manage your products. From the latest in cross docking technology to satellite tracking, the logistics provider you choose should be able to follow your shipment wherever it goes.

4. Communications

Your early communication with a potential logistics company speaks volumes for the potential partnership. A great company should be able to get the message across in a clear and timely manner. And this isn’t just about communication between your business and theirs; it’s a great indicator of proper communication to external suppliers.

Better communication across all stages of the process and lead to creative ideas for improvement.

5. Freight management

Freight management involves the calculation of shipping goods and products, the maintaining of accurate records, controlling costs, and sustaining warehouse inventory levels — among other responsibilities. Different logistics and supply chain managers take care of this process in a way that’s best fit for their company, but it’s important to understand how it’s also the best solution for you.

There are different logistical terms for the way companies handle this. A “milk run,” for example, is a route designed around customer demand that also picks up several other deliveries along the way and is always collecting or distributing product. However, running milk run routes requires a high level of discipline.

Ask your potential supply and logistics firm how they handle freight management, and how it benefits you.

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