What is the most important aspect of developing a long-term online brand if your company sells a physical product?
It is no longer email copy, website design, or Instagram ads that are in demand. It’s all about shipping logistics.
When shopping at digitally native brands, 70% of shoppers prioritize a clear and simple shipping experience.
However, as e-commerce continues to dominate retail, providing a memorable brand experience has become much more difficult, mainly if you’re a direct-to-consumer (DTC) brand.
That is why it is critical to invest in a shipping strategy that meets customer expectations while remaining cost-effective.
This article explains what shipping logistics entails and how to optimize your business’s shipping strategy.
Shipping Logistics Definition
Shipping logistics is described as all the inbound and outbound logistics involved in transporting finished goods as they move through your supply chain, from first-mile delivery to end customer shipments.
Procurement logistics, freight shipping, and carrier partnerships are all factors that influence your shipping logistics strategy.
The location of your inventory in relation to where the majority of your customers live is also important in shipping operations, particularly for last-mile delivery.
Shipping vs Logistics
The scope is the primary distinction between shipping and logistics.
Shipping is exactly what it sounds like: the physical transport of your goods, such as from a fulfillment center to your customers. Shipping refers to the processes that occur as goods move throughout the supply chain, including documentation, working with carriers, tracking, and handling, as well as delivery times and transportation.
Logistics refers to a system. These are all synchronized operations that control how products are acquired, stored, and shipped to their final destination. Only one transport to the final destination.
The term “shipping logistics” refers to the stages of an e-commerce supply chain that require a strategy for getting products from point A to point B, whether it’s shipping inventory to a fulfillment center or shipping orders to customers.
Shipping Logistics Types
Online retailers frequently underestimate the importance of a dependable shipping logistics network to the success of their operations.
This necessitates the use of dependable networks to ensure that your products arrive at their destination at all stages of the supply chain. Understanding production lead times, for example, and collaborating with dependable manufacturers and suppliers can help to ensure that inventory is delivered accurately and on time.
While partnering with the right third parties, such as a 3PL or major and regional shipping carriers, has an impact on the different types of shipping options you can offer customers as well as how affordable shipping is.
If there is a problem with an order, the customer must also ship it back quickly so that the returns or exchange process can begin.
Shipping logistics can be divided into three major types which are: Inbound, Outbound, and Reverse.
- Inbound Logistics
Inbound logistics refers to the processes that transport products from a manufacturer or another party to a fulfillment center or warehouse. Everything your company needs to transport, store, and deliver goods should be included in your inbound logistics network, including sourcing of products, lead times of production, and warehouse receiving.
- Outbound Logistics
Outbound logistics, on the other hand, encompasses all of the operations required to transport your products from a fulfillment center or warehouse to your customers, such as ordering processing, picking and packing, transportation, and carrier connection.
- Reverse Logistics
The processing of customer returns and exchanges is referred to as reverse logistics. This includes both inbound and outbound processes such as creating return labels, inspecting the returned merchandise, processing refunds, and shipping out a replacement item if an exchange is made.
Most retailers find it difficult to manage these processes in-house. In contrast to traditional retail, e-commerce typically requires customers to purchase a product without ever interacting with it.
More than 60% of consumers say they read an online brand’s return policy before clicking “Submit Order,” so it’s prudent to invest in processes they can rely on. A good reverse logistics process can help you save money and resources as your company grows.
Shipping Logistics Importance
When developing a strong shipping logistics strategy, there is a lot to think about. To make matters more difficult, the rise of on-demand logistics is influencing many changes within a typical e-commerce supply chain.
Markets are changing, supply chains are becoming longer and more complex, and competitors can be found anywhere.
Nonetheless, customer expectations remain high. 87% say their online brand’s shipping and delivery experience influences their decision to shop with the brand again. One in every three customers will leave a negative review on social media about a retailer’s poor delivery service.
As a result, an increasing number of DTC brands are turning to a 3PL that provides logistics operations as well as premium technology and automation to assist with their supply chain.
How to Improve Shipping Logistics
In a global economy characterized by rising freight costs, disrupted supply chains, and increased competition, online retailers are devoting more time and resources to improving operational efficiency.
One of the most promising areas for expansion is shipping logistics optimization. There are numerous ways to optimize shipping logistics, particularly if you use a third-party logistics partner.
- Distribute your stock.
The way you distribute your inventory has a direct impact on your shipping logistics. A distributed inventory model allows you to reduce shipping costs and delivery times by storing your products in multiple fulfillment centers closer to your customers.
Consider this: 2-day shipping was previously only possible by using expedited air shipping — a significant expense! Fortunately, major shipping companies and other third-party logistics (3PL) firms now have the infrastructure and resources to provide affordable 2-day ground shipping.
Due to the decentralized inventory, ground transportation is the fastest and most cost-effective way to bring cargo to its destination.
Free shipping is the most important motivator for 90% of customers to shop online. Ensuring that your products are as close to the people who buy them as possible also helps you unlock the ability to offer them that highly sought-after perk.
- Order management can be automated and real-time data can be viewed.
As your online store grows, a strong order management system can assist you in removing bottlenecks. This process starts when a customer places an order on your website and ends when the customer receives their delivery.
When growing your business, it’s critical to automate the order management and inventory management processes. Inventory management software allows you to keep track of stock levels, orders, sales, and shipments in real-time. It can also assist in automating real-time inventory tracking, saving time, and preventing common problems such as out-of-stock incidents, splitting shipments, backorders, and mispicks.
- Set up a warehouse management system (WMS).
For any brand, large or small, managing a warehouse can be a second full-time job.
The best 3PLs use a digital warehouse management system (WMS) that connects to their supplier dashboard, allowing you to monitor and monitor daily operations in their warehouses while also providing real-time insights into those operations.
If you manage your own warehouse, implementing a solid WMS can help you grow by improving order efficiency and reducing inefficiencies that can be a drain on your company.
- Select the best carrier.
Shipping carriers are in charge of delivering goods from a warehouse to your customer. USPS, UPS, FedEx, and DHL are among the major domestic and international shipping companies.
Because different businesses require different shipping capabilities to ensure that deliveries are completed smoothly, many businesses find it difficult to select a carrier. A variety of factors can influence which one is best suited for the job:
- Location
Do you deliver locally, nationally, or internationally? Different carriers provide different services, benefits, and rates based on your response. - Reputation
As improbable as it may seem, the United States Postal Service is the most trusted organization in the country (though not number one for all shipping service levels). Customers have a preference for who delivers the package and it is important to consider the perceived reliability of the carrier. - Inventory Storage
When shipping goods nationwide, consider shipping as quickly as possible using a carrier that can receive the goods locally from a distributed fulfillment center. - Options for a 2-day Shipping
Transit times are an important factor to consider when selecting a carrier. If you need orders out the door and into the hands of customers as soon as possible, you should work with a carrier that provides appropriate options.
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