The "impossible task" of eCommerce logistics: how to get it right
From your customers’ point of view, it’s like magic: click “buy,” and a few days later, items will appear on their doorsteps.
But like any eCommerce merchant, you know the truth. Behind the curtain, a new order triggers a complex series of operations, involving multiple locations, parties, and tools that need to work just right for deliveries to make it out on time.
This sequence describes the world of eCommerce logistics. Sometimes, getting logistics right can feel as challenging as one of Houdini’s escapes. But with a strategic approach, lots of testing, and the right partners and systems in place, you can bring the magic to life for your online customers.
Need a way to keep all of your ducks in a row? Manage everything from your website to your operations in one place with Wix eCommerce.
What is eCommerce logistics?
Ecommerce logistics spans everything that happens from the moment your customers click “buy” to the moment they receive their orders—plus when buyers decide to return their items.
Below are five major components of the eCommerce logistics web, each of which has its own unique tasks and challenges.
Ecommerce warehousing involves receiving shipments from your manufacturers and storing them in a safe space until they’re sold online. To maintain proper warehouse management, you’ll need to install the right hardware and software, train staff, establish the right workflows, maintain good relationships with carriers, and keep your warehouse floor organized (among many other things).
Order fulfillment kicks into motion when a customer purchases your product. Whether you’re sending orders straight to your customer’s doorsteps or enabling in-store pickup, you’ll need a synchronized way to route orders and track their statuses. Beyond this, there are various factors to keep in mind regarding eCommerce product packaging, labeling items for last-mile delivery, and keeping customers informed.
Inventory management refers to managing and tracking stock levels, with the goal of having the right products in the right place at the right time. It requires proper demand forecasting—which gets trickier with every new sales channel, audience, and product you add—so that you don’t oversell or undersell. Sellers today also have the added pressure of displaying in-stock statuses directly on their site for customers to see, so you’ll need a system for accurately tracking inventory across all of your channels (including physical locations).
Nearly one in five eCommerce orders are returned. And while there are steps you can take to reduce returns, returns are a natural component of eCommerce. Reverse logistics entails setting up a process for receiving, reselling, and/or disposing of returned merchandise in order to recoup revenue while maintaining a high level of customer service.
Selling internationally can be a big business opportunity—but also entails accommodating customs regulations and adjusting shipping fees to reflect tariffs and carrier costs. If you manage an international eCommerce strategy, consider working with a 3PL that specializes in cross-border logistics and guide you through it.
Ecommerce logistics vs. brick-and-mortar logistics
The challenge with eCommerce logistics is that it’s far more complex than brick-and-mortar logistics. There are several key reasons for this:
Destination - Instead of delivering a truckload or pallet of items to a few retail locations, you’re responsible for coordinating the delivery of multiple (smaller) parcels to billions of potential addresses worldwide
Multi-item orders - Many online orders include multiple items, which all need to be sourced and delivered on time, whereas in traditional retail, buyers pick from what’s already on the shelf
Unpredictability - Unlike in traditional retail, where shipments and demand is easier to predict based on the location and hours of the store (among other factors), eCommerce never sleeps—and demand is often fluctuating
Speed - More than 90% of online shoppers expect delivery in three days or less, and 30% expect same-day delivery.
Free shipping - Despite having higher expectations for speed and service, 66% of shoppers expect free shipping for all online orders.
Free returns - Free returns is an important consideration when shopping online, second only to free delivery and outranking shipping speed, according to a PowerReviews survey.
Demand for options - During pandemic lockdowns, services like curbside pickup became more mainstream—and now, consumers want those options to stay in place. Close to a quarter of U.S. shoppers report using curbside or in-store pickup for their most recent online order. And when it comes to returns, six in 10 shoppers are more likely to shop online if items can be returned in stores, saving them the hassle of repackaging and mailing products back.
5 eCommerce logistics options
Your customers essentially expect free, fast, and flawless shipping. The stakes are high, too: more than two-thirds of consumers won’t shop with a brand again after a poor delivery experience.
The good news is that you have options. How you decide to handle logistics comes down to a matter of costs (and efficiency) versus control.
While some eCommerce logistics solutions require a heavier investment, you retain greater ownership over the process. By contrast, other options demand less involvement, but require you to entrust the customer experience with a third party.
The spectrum of options includes:
01. In-house logistics (aka self-fulfillment)
Managing your own inventory, fulfillment, and customer service gives you ultimate control over logistics—from deciding which carriers to work with, to controlling how to pack items to create a good, branded unboxing experience. But small- to mid-sized businesses may have a hard time negotiating favorable contracts with major package carriers and landlords, plus face capacity issues during peak selling seasons.
That said, physical stores can serve as a supplement to your fulfillment centers. Or, as we’ve seen several large brands like Apple do, you could partner with an existing retailer to store, ship, or accept returned merchandise.
02. Third party logistics (3PL)
Third-party logistics (3PL) providers take on the bulk of warehousing and order fulfillment duties. A 3PL is a good option if you have difficulty managing costs and shipping expectations on your own, or experience other signs that it’s time to outsource fulfillment.
While you’ll still have to procure the inventory to send to your 3PL’s distribution hub or fulfillment centers, you avoid the headaches of managing carrier relationships and managing the pick-pack-ship process.
When looking for a 3PL partner, consider factors like:
Is your 3PL comfortable handling products like yours?
What service levels do they support?
Does the 3PL require a minimum monthly order volume?
How much control do you have over the packaging and branding?
How much flexibility do you have in terms of shelf space in the event that your business grows or shrinks?
Does the 3PL own their assets (e.g., have their own trucks, warehouses, etc.)? Are there any limitations based on how assets are managed?
How do they process and sort through returns?
03. Marketplace programs
Online marketplaces like Amazon and Walmart offer their own fulfillment services, similar to that of a 3PL’s. Amazon FBA is one of the best known examples. It’s powered by Amazon’s fleet of planes, trucks, and partners, alongside its 185 fulfillment centers across the globe. While FBA exists specifically for Amazon sellers, Amazon also offers Amazon Multi-Channel Fulfillment (MCF).
This expands its FBA services to sellers who are active on channels outside of Amazon. However, some marketplaces (like Walmart Marketplace) expressly forbid the use of Amazon logistics and tout their own services instead. Unsurprisingly, if you sell on any marketplace, you stand to reap the most benefits (e.g., higher rankings and buy box standings) from using their owned services.
Did you know: Wix merchants can easily connect their accounts to Amazon MCF. Automatically sync orders, inventory, and service levels to create a seamless fulfillment flow.
Unlike 3PLs, dropshippers don’t require merchants to obtain inventory prior to offering items for sale. Instead, when a customer purchases a product from your site, the order is passed to your dropshipper who then fulfills the order. You never have to handle or store any physical inventory.
This is dropshipping in a nutshell. Aside from the extra convenience during fulfillment, dropshipping allows you to quickly add and text product lines. It can additionally be more economical than working with a 3PL because you only pay when an order is placed.
But what you gain in convenience, you lose in control. You place a ton of trust in your dropshipper to deliver items quickly in mint condition—so you need to vet prospective dropshipping partners with care. To that end, Wix merchants can source and start selling millions of items via Modalyst, Wix’s official dropshipping solution that has been tested and is tightly managed. Learn how to start dropshipping with Wix.
05. Hybrid approach
As is commonly said, there’s no one-size-fits-all solution. You can mix and match a few of these options to satisfy requirements that are specific to your business and reduce your reliance on any single channel.
For example, you may decide to handle most orders in-house, but outsource particular product categories for dropshipping (view the best dropshipping products). Or, you may use a 3PL provider for certain regions and cross-border shipping, while handling store pickup orders and local deliveries yourself.
Just make sure that you have a reliable system for managing your store across all of these providers to avoid getting your wires crossed.
How to succeed at eCommerce logistics: 6 best practices
01. Focus on the services your audience cares about
While younger shoppers, urban dwellers, or buyers of groceries or bouquets may have a need for speed, the demand for same-day services may not be as strong if your customers live in rural outposts or if you sell home furnishings.
So, instead of spreading yourself thin and pursuing ultra-fast service levels “just because”—tailor your eCommerce logistics to excel at the services that matter to your audience. Prioritize a consistent, positive customer experience over shipping expectations that may or may not be met.
Offer value in other ways, such as through price, goodies, and a purposeful brand.
02. Diversify options to ensure availability
Whichever strategy you devise, ensure you have access to regional carriers in addition to the “big three” (USPS, FedEx, UPS) to give yourself pricing and capacity flexibility.
If you’re managing eCommerce logistics in-house, that may mean distributing goods among multiple warehouses in locations most accessible to smaller carriers, rather than centralizing operations in a single eCommerce fulfillment location.
03. Use stores as “forward stocking” locations
Since the pandemic, “dark stores” are all the rage. These are retail locations that aren’t open to the public and serve solely as mini fulfillment centers. While the real estate for a new store can be prohibitively expensive compared to a traditional warehouse location, you can use an existing store (even just in part) to your logistics advantage.
The benefit of this is that you can place inventory closer to your customers and reduce transit time dramatically. You don’t have to rely on express services and instead, open up FSLs in target markets to get products to your customers quicker. Not to mention, this could allow you to offer in-store and curbside pickup.
04. Tout the sustainability of the slow lane
To curb the cost of shipping, try directing shoppers towards longer delivery times. According to one recent survey, 86% of consumers are willing to accept slower shipping for sustainability purposes—if provided an incentive.
Amazon’s “No-Rush Shipping'' program does just that. Prime members who opt out of expedited delivery are rewarded with discounts.
You can develop a slower and inexpensive “green delivery” option to encourage your customers to do the same; not only will your logistics costs decrease, but you’ll be sparing the planet.
05. Build reverse logistics into your business plan
Have you ever returned an item online, only to be told to keep the item because it’s too costly to ship back? Chances are, you have.
Avoid this scenario by enabling a streamlined returns process that includes local store outlets. Or, if you don’t own physical locations, consider a service like Happy Returns that leverages major chains as return hubs.
You can also develop resale and recycling programs that put gently-used merchandise back into circulation.
06. Leverage the right tech
Automation is a necessity for staying ahead of logistics, managing costs, and making other informed decisions. Between implementing software (like a WMS or an all-in-one eCommerce platform) and using warehouse robotics, it pays to have the right tech stack.
Even if you outsource to a 3PL, you’ll want to understand what automations are available to speed up shipping times. Various eCommerce tech trends are likely to revolutionize the logistics industry.
But on a smaller scale, make sure to automate and optimize the essentials. For example, use a barcode scanner and system to improve order accuracy, and automate menial tasks like data entry to reduce human errors.
Loyalty is the reward for logistics mastery
Developing an eCommerce logistics strategy can feel like a daunting task given the many moving parts involved. However, there are various tools and resources available that can make the job easier.
By providing the flexible fulfillment options and easy returns, small business owners can boost their brand’s reputation and earn repeat business. So, take the time to get logistics right.
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Editor, Wix eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.