Impact of Ecommerce on Logistics

Dream. Dare. Do – that is Suyati’s work principle in a nutshell.

Dec
28
2015
  • Author:
  • Sahana Rajan

e-commerce-logistics

The last decades have been freckled with substantial changes in the field of logistics. Primarily, this has implied the rising ability to fulfill the customer’s needs accompanied by significant profits for the company.  The objective of this piece is to put forward the changes which have occurred in the domain of logistics and show ways in which your business can partake of its efficiency and success.

The 1970s saw direct delivery of the goods from the suppliers/wholesalers to the retailers. The next decade of 1980s was marked with the coming up of distribution centers where the retailers began to concentrate the store deliveries which supplied to the shops thereon. 1990s constituted the globalization of logistics such that non-food items began to be imported from across the world such that retailers started setting up import centers. These centers had the capacity to acquire and process the imports received in different types of containers and packaging.

After 2000, internet became the juncture between customers and retailers where the central unit was the e-fulfillment center.  In 2015, Gartner predicted that by end of year 2016, over $2 billion will be spent on online purchases. Currently, the online e-commerce is under the tips of few giants like Amazon. However, many other retailers like EBay, Flipkart and SnapDeal are making their way to reach more audience through social media networking and extensive e-publicity.

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Revamped Value Chain

Traditionally, the retailers owned storehouses through which the products were delivered to the customers. Today, a majority of the retailers in e-commerce do not possess a life-size storehouse due to the high costs of maintenance. They generally have an online face (the store front). The products are under the control of third parties which manage the process more cost efficiently. This new process constitutes four compartments: the website (face of the shop), packaging point (item is packaged here), item-sorting point (product is filtering according to ZIP/postal code) and lastly, the postal delivery hub (this center is responsible for final delivery to the client). This process is explained in more detail in the next section.

As more and more organizations are included within this ecommerce structure, the misplacement of orders become a major challenge. Such a misplacement could occur when a range of warehouses, partners and spectrum of sales’ channels are involved in the system to dole out highest value to the customer and company.  In case orders get misplaced continually, then the company faces risk of losing customers in huge numbers. The solution to avoid such a loss is by setting up strong communication with the logistics department. Such a communication will allow a close-knit community of the company, logistics and customer.

The logistics team would be responsible for creating an atmosphere where the products (of wide diversity) can be supplied smoothly to clients across the world, accompanied with impeccable documentation of each process.

Tilling the Ground for New-World Ecommerce: Effect of Ecommerce Logistics on Supply Chain

Supply chains of the past followed traditional method of receiving products (bulk) in the storehouse, of packaging them and shipping them off in bulk. While e-commerce brings transparency into the mechanism, it is required of the retailer to be capable of carrying out the following: recording bulk orders, corresponding with the Stock Keeping Unit (SKU) and picking up the required goods.

The retailer needs a matrix where she can have a vantage view of all the processes. Every movement of the product has to be monitored to avoid any form of misplacement. Such requirements can be fulfilled by a robust logistics system which integrates the front-end and back-end regions of the ecommerce retailer. Automatically operating software and live fulfillment information form the back-end mechanism. The latest evolution in the logistics field is designation of robots to receive the inventory and to move the products within the warehouse.

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The Modern-Day Matrix of Ecommerce Logistics

Fashion, ICT and electrical products have encountered major boost in the developed economies with rise of ecommerce. Generally, the purchased items were distributed through freight matrix, post or parcel. With the coming of ecommerce logistics, four requirements have risen in the domain of logistics:

  • Establishment of life-size e-fulfillment centers: These centers would be the point of storage and picking up of the items. Under the care of retailer or logistics’ service provider, they have to be functional 24*7 and must have a size of 500,000 sq feet or more.
  • Item-Sorting Points: These would be points where the orders would be filtered according to the ZIP or postal code. This will allow smooth delivery of the product to the required postal delivery hub and consequently, to the consumer.
  • Postal delivery hub: These would be in charge of the last-mile supply of the product to the consumer.
  • Integrative technology system: A structured technology that will connect shopping carts (through web XLM, API or other connection) to the transportation governance system. The prime function of such a system will be to give the customer freedom to check prices of shipping differently sized items.

The smaller but heavier points of care in such a logistics’ structure would be:

  • Capacity to keep track of shipment, regardless of mode of transport
  • Production of accurate online order condition and certifications (receipts and other documents)
  • Clear display of delivery details including invoice, bill of loading and others
  • Automatic reminder system for outstanding and completed payments
  • Communication of important messages through messaging (SMS) or recorded calls
  • Orderly integration with the pre-existent ERP/SCM structure; and
  • Record-production and tracking system with reports on past purchases, delivery histories and others.

Such a matrix of integrated functions in logistics will allow for better mediation with the clients, reduced costs, punctual delivery of items, higher consumer satisfaction and improvised functionality.

 

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