Why Understanding Logistics Management is Key to International E-commerce Expansion?

Logistics Management by Definition

E-commerce logistics is a complex and multi-component process that requires good expertise, a fair amount of time, and very careful planning. In this context, logistics management involves the strategy, execution, and optimization of the following key logistics services: warehousing, inventory management, order fulfillment, cross-border deliveries, and returns management (reverse logistics).

Why is it important?

The effective management of the above-described processes ensures timely delivery, transportation and operational cost reduction, optimized control of stocks, and increased customer satisfaction. With the globalized e-trade and the rising customer expectations, warehouse automation, integration of innovative fulfillment solutions, and partnering with reliable cross-border delivery partners play a key role in the competitiveness of e-commerce businesses.

10 Essential Functions of Logistics

Below, we will explore the 10 key functions of logistics in e-commerce, which are essential for the effective management of the supply chain. These functions not only enhance operational efficiency but also contribute to customers’ positive experience and the sustainable growth of online merchants.

Demand Forecasting and Planning

Forecasting and logistics  planning have a vital role due to the seasonality of the sales, peak periods, and the additional logistics workload associated with them. Careful planning and synchronisation with last-mile delivery partners is necessary to ensure that deliveries to online customers are always on time.

In case you are working with a logistics partner who is experienced enough, he will even be the first to initiate such synchronization to avoid potential disruptions like late deliveries before upcoming periods of clearance sales, Black Friday, and other peak moments when increased e-sales and corresponding higher shipment volumes are expected.

Order Processing Logistics

Order processing, or the so-called fulfillment in e-commerce, is the process of preparing online orders and turning them into ready-for-delivery shipments. The process starts with receiving a new online order and generating an AWB – the transportation document that contains all the information about the sender, receiver, weight, and dimensions of the package and facilitates the correct transportation and tracking of a shipment across a single or multiple carriers’ network.

This is followed by the picking and packing of the ordered products for a secure delivery and dispatch to their domestic or cross-border destination. The fulfillment process has some key aspects that can significantly impact the successful sales and deliveries of the e-commerce business, such as the location of the fulfillment center or levels of automation of the processes. The strategic location of the center/s enable faster deliveries to key markets, and the implementation of specialized equipment speeds up the fulfillment process and avoids mistakes with the online orders. The results are customer loyalty and satisfaction, less returned items/orders and more repeat sales.

Expert advice: Choose a fulfillment partner with a network of fulfilment centers across different countries. This way, you can distribute your goods across multiple centers depending on your key markets and optimize delivery time and costs. We advise you to visit the fulfillment operator in person before sending your goods to them to ensure that you have chosen a reliable partner who meets all your needs and requirements.

Product and Material Handling Logistics

Product and material handling logistics in e-commercefulfillment covers the storage of products, the organization of inventory and the preparation of products for transport. Speed of delivery, customer satisfaction and return rates depend on effective management. In outsourced fulfillment, the process also includes the physical movement of the products from the manufacturing facility or warehouse of the online merchants to the warehouses of the logistics company/fulfillment partner, where the goods are stored and shipped to the online customers.

Inventory Control Management

Effective inventory control management is an important component of international e-commercelogistics. It ensures that online merchants maintain balanced inventory levels, avoiding both overstocking and stockouts, which can negatively impact sales and revenues. By using advanced inventory management software, real-time visibility of the inventory levels is granted, predicting demand for different seasonal products, and optimizing restock operations.

Also, integrating inventory control with warehouse management systems increases overall operational efficiency and ensures seamless order fulfillment.

Returns and Reverse Logistics

Returns management, otherwise known as reverse logistics, is the process of handling returned goods from the customer back to the fulfillment center. Reverse logistics is an essential component of e-commerce logistics that directly impacts customer trust and brand loyalty.

Effective returns management includes a streamlined returns process for end users, providing quick replacements and fast refunds on returned orders. A well-structured returns process, along with partnering with an experienced logistics provider, can significantly improve customer satisfaction and reduce operational costs.

In many cases, the shipping partner does not take returns. However, it’s important that this happens in sync and that online retailers rely on a local return address for all markets they sell to. The speed of the returns process is also very important so that returned products can be ready for re-sale as quickly as possible in order to maintain the stability of online retailers’ financial float.

Expert advice: Local return address and courier pickups directly from the customer’s address are examples of exceptional customer service that builds strong relationships with customers and boost the business growth. Pick a logistics partner who handles all returns/exchanges on behalf of the online store and offers a local return address for security and convenience of the online customers in every country across the EU.

Storage and Warehouse Logistics

Expert advice: Outsourcing logistics operations to an experienced logistics provider will optimize time and resources of the e-commerce business while enhancing the overall efficiency of the processes. Online merchants only pay for the storage space and services they have used, thus being able to invest the funds from this cost optimization in their marketing and sales.

Transportation and Delivery Management Logistics

Besides the storage and fulfillment of products, another key role service in the logistics management is the transportation and delivery process. For many e-commerce businesses, international expansion becomes tricky when it comes to cross-border deliveries. Each and every market inside the EU has its own specifics and most common mode of transport, i.e., last-mile delivery methods. To respond the best way to customer demands, the delivery effectiveness is subject to compliance with preferred delivery methods by the end customers.

Expert advice: Instead of negotiating terms and monitoring performance of different preferred local couriers, partner with integrators of courier services who directly provide you with the services portfolio of multiple last-mile delivery partners in each and every country. For example euShipments.com integrates the solution of 60+ premium and preferred couriers thus providing over 800 delivery methods to 27+ countries in Europe, including the extremely popular in CEE Cash-on-delivery option.

Product Packaging

In the e-commerce industry, product packaging during the fulfillment process is of utmost importance for a flawless condition and positive customer experience upon delivery. Especially when it comes to fragile products like electronics, cosmetics, home & deco, etc. Also, flexible packaging methods allowing for customized packaging further help in building brand recognition and loyalty.

More and more e-commerce businesses are also relying on sustainable and eco-friendly packaging, so it is important that the fulfillment partner can cover similar requirements.

Supply Chain Data and Monitoring with Software

Risk Management and Compliance

There are various ways to manage risk in e-commerce logistics processes that require flexibility, use of proven technologies, and proper logistics data analysis. The key strategies in this regard are related to the diversification of couriers and delivery methods in each market. Tracking order statuses in real-time can prevent the likelihood of undelivered shipments, which in turn increases the percentage of successful sales for the business.

Expert advice: As mentioned above, courier services integrators provide at least two last-mile couriers for each market in their network. This not only achieves good risk management, especially during peak periods, but also localizes the checkout page of the online store. When completing an order, shoppers have a choice of their local preferred couriers and delivery methods (such as Cash-on-delivery), which reduces the abandoned cart rates.

Supply chain vs. logistics

Making Logistics Management Functions Work Within Supply Chain Management

Supply chain management is more complex than the logistics management itself, as it covers more processes. Actually, logistics is the part of the supply chain that mainly focuses on the storage, management, and transportation of goods. While the logistics management functions are associated with the above focus areas, the supply chain operations are dedicated towards the entire process from manufacturing of a product to its successful delivery to an end customer.

The effective integration of logistics best practices within the broader supply chain functions could improve many aspects of the business, like operational and shipping costs, transit times, and overall customer experience.

What challenges are faced in supply chain logistics?

The business model of retail and dropshipping is fairly common in the global e-commerce industry, where the “full” supply chain is replaced only by its logistics part.

Thus, pure logistics processes are subject to significantly extended optimization, while the likelihood of supply chain disruptions is much greater. Despite these challenges, the supply chain can adapt to logistics process improvements, taking advantage of AI and tech innovation.

Final thoughts

A good understanding of logistics processes is key to the success of a cross-border e-commerce business. Logistics itself, being a whole separate industry, includes complex processes that require experience and expertise that the majority of online merchants do not possess.

Instead of applying a trial-and-error approach to logistics, outsourcing it to experts with a fulfillment and logistics network with EU-wide coverage to support international expansion of its eCommerce clients is the optimal option.

Frequently Asked Question