Ecommerce companies depend completely on logistics. Logistics is the term for all the steps a product goes through after production but before it gets to the customer. This includes warehousing, packing, shipping, and final delivery. The logistics industry for freight shipping has grown a lot in the past decade and is expected to keep rapidly expanding. Experts predict the global market will increase by $319.65 million between 2022 and 2027. This growth will probably lead to new logistics solutions and shipping carriers.
In this article, experts from Genius Software will talk about the future of e-commerce logistics. They will cover the newest trends in the industry. This article will also answer common questions about logistics for e-commerce companies. It will have tips for growing businesses on improving their supply chain processes.
For those interested in the promising logistics market, we will explain the main features of e-commerce logistics solutions. We will also give advice if you want to build an app to manage your company’s own logistics. You’ll learn what functionality to include in such apps. Finally, we will share some guidance on creating a custom logistics app from nothing. Stay tuned to know more.
What is E-commerce Logistics?
E-commerce logistics refers to the process from when a product is manufactured to when it gets delivered into the customer’s hands. This process contains several sub-processes, which is what makes it more complex. We will now discuss these steps in more detail.
Breaking Down the Step-by-Step Logistics Journey
The logistics journey incorporates multiple phases. These include inventory management, order placement, packing, shipping, and final delivery of the order to the client. Third-party logistics (3PL) companies may be involved in carrying out any of these steps. Here is what happens during each phase:
1. Order Placement
This stage covers the different methods of placing an order. Customers can place orders online by phone or by submitting paper forms in stores. E-commerce refers specifically to electronic order placement and fulfillment. This could occur via a centralized marketplace or a particular supplier’s website where customers can browse catalogs, add products to carts, checkout, and select delivery options.
2. Inventory Management
Before orders are shipped out for delivery, they spend some time in warehouses. You can use your own in-house storage or turn to 3PL warehouse vendors. Depending on the chosen warehouse vendor, there may be different ways to organize inventory management.
Centralized warehouses provide one large storage hub to supply products directly to the shipping carriers. Meanwhile, decentralized warehouses supply products to multiple hubs which then deliver orders to customers who can choose their closest available hub.
3. Packing
When the order appears in the warehouse inventory, it gets packed up. This requires having enough cardboard boxes, plastic film, and paper available.
Certain products may also need special handling, like extra protection for glass items or customizing the packaging with gift cards or fancy bags.
4. Shipping
Shipping services involve transporting large volumes of products over long distances. Large country-wide or international shipping operators usually handle this process. It requires special transportation methods like planes, ships, or freight. That’s why you need to carefully choose a qualified shipping vendor before outsourcing this service.
5. Final Delivery
This last step is also referred to as “last-mile delivery” because it is when the order finally reaches the customer. There are a few options to organize this final stage. For example, customers could pick up their order from a chosen retail store location or delivery office. Or they could elect to have home delivery instead.
6. Reverse Logistics
Managing any order exchanges or returns is also part of the supply chain. Although not always utilized, it’s wise to have a return policy in place.
The Role Of Third-Party Logistics Companies (3PL)
If logistics is not your company’s core competency, diving into the specifics can be challenging. In that case, you need to learn how to build an in-house logistics team, outsource certain steps, and optimize processes.
The good news is you don’t have to handle logistics alone. Nowadays, there are numerous 3PL vendors and ecommerce logistics management apps available. Explore more ecommerce:
Decreasing Cost Per Unit
Logistics operational costs make up 5-15% of total expenses for ecommerce retailers. Cutting costs at every logistics stage allows companies to invest more money into business growth.
Large 3PLs can provide great rates since they already have the infrastructure fully built out. For example, they may offer drone delivery services to help save on budgets.
These vendors decrease cost per unit and remove bureaucratic headaches. Typically their services align with government and industry regulations. Therefore, they follow consistent protocols and are compatible. For instance, international freight companies can collaborate with national and local carriers since they have the necessary agreements in place.
Scaling Geographical Reach
Imagine you want to enter a new overseas market to export products. Sending orders manually through the mail would make customers wait longer. Plus international shipping costs would fall either to your company or the customer.
3PLs can provide regional warehouse branches wherever needed. With their support, you simply ensure enough supply is stocked at the warehouses serving those areas. The logistics companies handle the rest.
In summary, 3PLs empower businesses to grow and scale geographically by providing access to their infrastructure and facilities across different operational territories.
E-Commerce and Logistics: Main Trends
Now, let’s explore some of the most promising logistics and e-commerce trends that you may want to adopt to meet business needs, attract more customers, and stay competitive.
Free Shipping as a New Standard
In today’s world of online shopping, good service is no longer a differentiating factor. To beat competitors, you must offer fast, seamless, free delivery.
According to a recent Gartner survey about 2022 holiday shopping, inflation has made customers re-evaluate priorities for gift purchases. The top 3 considerations are now item price (65%), value (53%), and free shipping (51%). Therefore, adding free shipping to your offerings is advised.
Dampening of Seasonal Spikes
Due to the recession climate, consumers often save money by shopping for gifts and essentials early. As a result, seasonal spikes for events like holidays are less pronounced than ongoing inflation-related trends. Specifically, research indicates people now tend to shop for winter holiday gifts in October or November (48%) and year-round (16%).
Personalized Customer Experiences
Treat every customer like your closest friend. What does this have to do with logistics? Consider surprising loyal buyers by sending small gift items or cards to celebrate years of patronage or order volume milestones.
To enable this, first choose a 3PL vendor able to handle customized packing, gift inserts, and personalized messaging. Second, build out a loyalty system for regular customers tied to your logistics solution. This will allow automating relevant instructions to logistics partners.
Sustainable Packaging
Being eco-friendly matters to most industries now – logistics included.
A McKinsey study on sustainable packaging found about 20% of companies won’t likely attain committed 2025 sustainability goals. However, the green trend remains strong as customers financially support the concept. 60-70% of shoppers express willingness to pay more for sustainably packaged goods.
It’s never too late to join other environmentally conscious brands. And revamping product packaging is a good initial step.
Same-Day Delivery
For any product lineup, promoting fast delivery is an excellent tactic for driving sales. Over half (51%) of US retailers already offer delivery within hours. And 65% plan to launch same-day shipping by 2024.
The US same-day delivery market is forecast to triple from $5.87 billion to $15.6 billion between 2019 and 2024. So adding expedited delivery capabilities will soon become mandatory.
Decentralized Warehouses
Decentralized storage helps reduce delivery times for high-volume sellers by positioning inventory near end-customers for faster fulfillment. Carriers can pick orders from the closest available location.
Drone Market Growth
Logistics automation marches forward, as drone delivery lowers operational costs by 70% versus standard shipping.
Amazon and Walmart lead US commercial drone delivery, planning further expansion by 2023. In 2022 alone Walmart completed over 6000 drone drop-offs across 36 hubs in 7 states.
Widespread drone adoption remains challenging for smaller players lacking resources. But continued sector maturation should increase access over time. We expect independent drone delivery services to emerge widely in the coming years.
Logistics Software for eCommerce Companies
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Now that we’ve covered logistics basics for e-commerce, let’s examine some common software solution characteristics for this industry.
System Architecture
Logistics solutions belong to the broader Enterprise Resource Planning (ERP) software category. They comprise complex systems with interconnected components. Each module or microservice provides specific features for end users. This is why microservices architectures have become standard for logistics applications.
User Roles
Most logistics apps need to support multiple user roles due to the need to manage information access. Roles are based on each user’s job duties and responsibilities – for example administrator, sales, customer support etc.
Besides, flexibility is also required when defining allowed user actions. Logistics apps often have more than one user interface, so developers must construct tailored experiences which takes considerable time.
Real-Time Data
For logistics, data is critical for decision-making. These systems tend to be data-intensive since information flows from multiple sources continuously. Delivery workflows require displaying real-time changes as well as monitoring statistics over set periods.
UX Design
When designing logistics solutions, focusing on end-user experience is crucial. Interfaces for warehouse users versus finance teams would differ, yet still need to remain easy to understand. Strong UX gives apps an edge amongst competitors.
Logistics apps demand many dashboards, advanced filters, search capabilities, typeahead/autocomplete etc. Multi-step forms are also very common.
Software Types
There’s no need to limit options for form factors. Logistics apps range from web-based, mobile, hybrid tablet apps, terminal embedded systems and more. The optimal choice depends on what hardware employees typically utilize.
Web apps suit most device types and are fairly easy to build without large investments. This makes them an ideal starting point when needs are general.
Features To Look Out For In Shipping Software
Let’s explore popular features in existing apps to understand how to select options aligned with business goals.
Integrations With Third-Party Services
Logistics apps don’t need complex custom backend logic. Required functionality can be plugged in via APIs.
Here are some examples:
CRM Integrations
Any CRM platform can integrate with logistics apps, eliminating painful manual data transfers. This enables accessing historical customer data from previous systems.
The only remaining step is designing how integrated information displays within the logistics interface. Useful customized fields could cover preferred shipping methods, order counts, notes etc. This facilitates analyzing performance over time and detecting customer behavior patterns.
Financial Service Integrations
Although payment system integrations are optional, they streamline financial operations when included. Companies can then handle vendor payments directly through banking APIs.
Potential scopes range from internal teams only to customer-facing payment processing.
Inventory Management Integrations
Inventory is an essential supply chain component. Connecting warehouse systems via API lets businesses monitor real-time product availability and remaining shelf life. This data can also display directly on ecommerce site product listings.
Shipping Carrier Integrations
For companies leveraging multiple 3PL vendors, integrating carrier apps is a must. It provides a unified view across all partners and allows automating the last-mile delivery process.
Relevant carriers (DHL, FedEx etc) can connect based on company locales and requirements. This also enables order tracking and rapid issue resolution.
Reporting
Robust reporting provides valuable logistics performance insights, highlighting problems for improvement when trends are compared over time.
Consider adding machine learning modules to mine data history and suggest enhancements or even automate steps.
Standard reports would cover delivery success rates, average times, return rates, cost per item shipped etc.
Factors to Consider When Developing a Logistics App from Scratch
When creating requirements for a custom logistics app, these key aspects need consideration:
Warehouse Models
Decide between centralized versus decentralized warehouse systems, impacting both UI flows and designs.
Geography
International and domestic shipping needs differ, so customize accordingly. Going global demands more compliance research to cover extra regulations.
Integrations
Provide any known desired API integrations upfront, shaping initial scope and development effort. If unsure, detail required capabilities and our experts will define integration options.
Technology Selection
Identify if web, mobile, or desktop (or combinations) are your platforms. Logistics requirements will help the Genius team determine best architecture and technologies for your use cases. We consider technical factors plus relevant and efficient choices for industry needs.
The Bottom Line
Think through warehouse models, target market locations, necessary data connections, general system access needs etc when planning a logistics app build. Moreover, our experts can guide you on any requirements definition, translate needs to technical implementations, and leverage the right technologies tailored for this domain.
Launch Your Supply Chain Management Solution with Genius Software
In this article, our experts have provided an overview of the latest digital trends to help guide you into the future of logistics. You now understand what e-commerce logistics entails, the steps for fulfilling online orders, and key considerations when building a custom logistics app from scratch.
We know the frustration of trying to shoehorn out-of-the-box software into existing workflows, only to find critical gaps in features. That’s why Genius offers tailored supply chain management solution development services. We handle the entire product – designing interfaces, integrating with other systems, and configuring functionality around your exact operational business rules and metrics.
If you have any questions around e-commerce logistics or need help addressing complex industry challenges, don’t hesitate to contact us. Our team is happy to leverage expertise gained from past client engagements in order to provide advice about overcoming any logistics issue.
The bottom line is that Genius Software can deliver a custom-fit supply chain management app aligned with your ecommerce operations requirements and poised to scale into the future. Let us know how we can help launch your unique logistics solution!
