Is Logistics Management the Final Frontier for ECommerce?

Logistics Management Is a Headache for ECommerce Companies

If you asked successful eCommerce leaders for a list of the biggest challenges to eCommerce in 2017, a number of issues would fall under a single category: Logistics management. Part of the problem is the fact that much of the advantages of eCommerce come from removing real-world impact; eCommerce companies do not need to have a physical location or any of the challenges inherent in brick-and-mortar business. These businesses have streamlined their product pages, made websites mobile-friendly, and ensured efficient checkout processes. Even marketing efforts are aptly, and rightly, focused on digital platforms. However,  high-quality images, product summaries, and video reviews found online are only a stand-in for a physical product. Eventually, whatever is purchased in an online check-out must make it to the customer.

This is where the rubber meets the road for a number of eCommerce businesses. There are manufacturing delays, inventory issues, questionable shipment practices, and a reluctance to deal with delivery problems. All of these supply chain and logistics management problems occur in the offline world. In this area, eCommerce businesses are often less prepared to handle concerns.

Implementing logistics can be costly to an eCommerce company. However, the repercussions of implementing bad logistics practices are worse. In many regards, eCommerce companies are designed to reduce operating costs and overhead. It’s part of the benefit to being online only. However, when it comes to implementing logistics processes and procedures, there isn’t a clear business model for eCommerce companies, except that faster is always better when it comes to customer satisfaction.

Amazon’s Two-Hour Delivery Dream

Of course, the leader in eCommerce is driving the conversation and capacity for logistics management by online stores. Earlier this year, Amazon completed its first use of drone delivery service. It was a moment mostly intended as symbolic, but it sets the bar high for companies that are still mastering USPS shipment. While the use of drones for same day delivery is a major goal for Amazon, it is the company’s other logistics dreams that exemplify what customers really want from eCommerce – immediacy.

While experience is a highlight of traditional retail, the real reason brick-and-mortar stores are still around is their ability to provide a product immediately. If you pop into the shop down the street for a last minute gift, you can leave the store with said gift. When it comes to eCommerce, the standard service is three to five business days for delivery. Some companies can’t guarantee fulfillment and shipment faster than a week.  Then there is Amazon, a company that has achieved same-day delivery in several markets and is looking to process, ship, and deliver in two hours or under where possible.

The consumer desire for fast delivery is likely beyond the current capabilities of most eCommerce companies, even those with the forethought and business model to be on the cutting edge of logistics solutions. The question, then, becomes what problems must be solved before fulfillment, shipment, and delivery is properly streamlined, and is it possible to do this in a timeframe preferred by consumers?

The Last Mile Difficulty Exemplifies the Logistics Management Conundrum

It is said that in emerging markets around the world the last mile of shipment and delivery is not only the most complicated to complete but the most expensive. It could take days or weeks for an international eCommerce shipment to reach the purchaser, with the majority of problems occurring a figurative mile or less from the buyer’s home.

At first, eCommerce companies blamed the problem on a lack of clear street addresses and postcodes in emerging markets. After all, the United Arab Emirates, for example, doesn’t use postcodes at all, and, as another example, the standards of apartment addresses in New Delhi high-rises are still unreformed.  Over time, it became apparent that the logistics management problem of completing the “last mile” was far more complicated than solving delivery addresses.

It often starts with how products are ordered from U.S. and European online stores. The process of inputting name, address, and delivery information wasn’t applicable to a number of emerging markets. However, even after information is entered, the information must be properly replicated by fulfillment, sent via international carrier, translated into different languages, sometimes translated again into the original language of the eCommerce company. Once the package reaches the right city there are other issues.

Delivery and logistics companies aren’t operated the same universally. Tracking numbers change, delivery drivers have multiple phone numbers (some of which can change daily,) and customer service provided by these companies can have roadblocks just like domestic companies. It can be complicated for the customer or eCommerce company to determine where a certain shipment is located.

However, problems of “the last mile” are not isolated to emerging markets. Similar fulfillment, shipment, and delivery complications are constant in the United States. Whether it is a package that is left at the wrong apartment or the requirement of a signature to deliver, customers often meet frustrating issues in trying to receive their products. Whether the fault of the eCommerce company or not, these logistics management shortfalls are often attributed back to the business.

How Multi-Channel Selling Is Creating Greater Logistics Management Challenges

Another big theme for eCommerce in 2017 is the ability to sell across several platforms or channels. For instance, a number of businesses that were once only found online are establishing a presence in physical, retail locations. Similarly, traditional retailers are building a presence in eCommerce. However, multi-channel selling is more nuanced than simply deciding to move on or offline.

Brands are putting their products on larger eCommerce platforms, such as Amazon and Jet.com. Also, there is an increased need to offer one-click and off-site purchase options, whether through redirects from social media or other partner webstores. This movement into multi-channel selling only increases the logistics management questions and requirements for an eCommerce company.

Not only is it necessary to manage a single inventory system, but that inventory must report to multiple platforms. Then they all must update seamlessly. A single, synchronized system is necessary to make this work. Otherwise, the delays in fulfillment and shipment can build up quickly. Far worse, if these platforms aren’t in sync, delays in delivery won’t be communicated to consumers before purchasing. Such an occurrence creates problems that lead to greater customer dissatisfaction.

One of the biggest logistics management questions for online retailers interested in multi-channel opportunities is whether they can keep up with the fulfillment and shipment process. Frequently, third-party sellers must complete their own fulfillment process. The same is true for Google Marketplace.  Failure to ship and deliver in the promised timeframe still reflects badly even on giants like Amazon. Therefore, the company imposes specific shipping and logistics management commitments from their third-party sellers.

The eCommerce business needs close control over the fulfillment process to make multi-channel selling work.

Online Solutions for These Offline Problems

Hope is not lost, however.  Successful leaders in eCommerce are talented at addressing offline problems through online solutions, and logistics management is no different. For instance, several tech companies are focused on solving the “last mile” dilemma in India and the Middle East. These businesses are looking at the problems in each emerging market, whether language barrier, lack of reliable delivery options, or problems with addresses, and trying to develop automated order and shipment processes that make it easier to find a customer.

Other software has addressed the logistic nightmares that eCommerce companies face on the front-end of fulfillment and shipment. Whether by ensuring that orders are efficiently moved through the warehouse or by providing comprehensive tracking technology, solving many of these problems feels within reach.

When it comes to deciding which add-ons or development solutions are right for your business, look for those that don’t just handle a logistics management problem, but make your overall business model leaner. Moving towards holistic efficiency, not just a band-aid solution, will ensure you can build off the first technologies you adopt.

Interested in learning more about development and technology solutions for your biggest logistics management issues? Talk with the eCommerce developers at 1Digital Agency. We utilize the latest in web development and design to ensure all phases and processes of an eCommerce business are handled efficiently. To learn more, call us at 888.982.8269