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How logistics represent the biggest challenge in e-commerce

E-commerce logistics is the process of producing, labelling, warehousing, and ultimately shipping the product to a customer's door after it is purchased. It is the seamless — and often automated — process that helps e-commerce companies deliver products to customers who bought online (and back to the company if returned). When it comes to logistics of shipping, improving the final-mile delivery process — that is, the step where a package is delivered to the customer's door — is the single most crucial precondition for customer loyalty with an e-commerce store. Focusing on the logistics implications of e-commerce, rapid increases in the delivery speeds present huge challenges to organizing online order fulfillment.

Many challenges associated with last-mile delivery are beyond a firm's control; and in recent years, the challenges and costs associated with last-mile delivery have only grown worse, as the alternatives for delivery have continued to increase for customers. In addition, managing those expectations for faster delivery, volume, and sufficient inventory in times of spikes in demand could be a nightmare. During busy seasons, such as festivities or global promotions such as 11.11, shipping and logistics are the biggest challenges that e-commerce companies have to deal with.

To do logistics well, it is essential that you get external assistance for logistics in the areas of shipping, fulfilment, and logistics. More than half (53%) of retailers report that logistics for deliveries and fulfilment presents a major challenge. The rapid rise in e-commerce is starting to place a greater burden on third-party logistics (3PL) companies, which are struggling to meet challenging customer demands, rising costs, and increased competition.

According to a SOTI Inc. report, over 61% of logistics companies agree that last-mile delivery is the most inefficient process across the entire supply chain. The report from SOTI found that almost half of the world’s transport and logistics companies are using obsolete technologies to handle last-mile deliveries.

Data is key in order to predict the challenges ahead. Forecasts can be hugely influential on the running of retail businesses, and, focusing on the logistics side, how deliveries are made to customers. Data driven forecasting could potentially overcome hurdles for both retailers and third-party logistics providers. But when data is scarce or inaccurate, troubles may arise, as last-mile delivery costs could become very expensive. Last-mile logistics can account for 53% of the overall transportation costs for products, but finding a logistics company that will maintain the ability to deliver large quantities of goods within short periods is essential, which allows for retention of customers.

Returns are costly for e-commerce players, because reverse logistics presents unique challenges. As part of their reverse logistics processes, companies must try to figure out what are the major reasons behind returns, and also which returns methods customers favour. Integrating returns processes with the rest of logistics operations could be a good approach to mitigate over-consumption costs and better position products for resale. One of the best ways to enhance logistics is by offering multiple shipping options. For instance offering priority tiers could help customers to better decide how fast they want to receive their products. As a result, companies could effectively sort deliveries according to their urgency. If the clients is not in a hurry, no need to rush the delivery.

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