Effective Logistics Management In An E-Commerce Business


What is an e-commerce store?

In simple terms, buying and selling products and services over the World Wide Web is called e-commerce. Any store that makes business by selling via the World Wide Web is called an e-commerce store.

How is the business to consumer process lined up in simple terms for an e-retail store?

1. Customers check the company’s website and places the order

2. The payment is either done instantly or at cases, cash on delivery is opted

3. Once an order is placed, it is intimated to the warehouse, where the products are stocked up

4. The right product is packed, shipped and safely sent out for delivery

5. The inventory is decreased by that number taken out and changes are made in the website page accordingly

6. The customer receives the product in the next few working days

The following are the logistics challenges faced in an e-commerce industry:

• Shipping costs

Due to a lot of options for customers to choose from over the internet, cost of shipping play a major role in placing orders. Lots of businesses offer free shipping to entice customers to buy from them

• Shipping time

The major disadvantage of shopping online is the time gap between payment and delivery. Most Indian e-stores take anywhere between 2-5 days for delivery and there are few big players who promise guaranteed one day delivery. No customer likes to wait for days for their order to be delivered

• Loyalty of customers

Because of immense competition and an open market, customers keep searching for better deals and offers and it is a challenge to ensure repeat customers

• Managing large orders of very small values

Most e-stores sell products priced from two digit numbers to several thousands. The profit margin for every product also differs considerably. It is hence a challenge to treat every product the same way and invest the same amount and labor for shipping and delivery for every order

• Safety of shipped goods

In case of damages during shipping and delivery, especially in case of fragile goods, the business deals with customer dissatisfaction, loss of goods and replacement costs.

• Reverse logistics challenges

Most e-commerce websites have an option of return of goods (RTO – Return To Origin) if the customer is unsatisfied. In India the return rates are quite high and the store has to deal with the additional costs of returning the goods to the warehouse.

The main success of an e-commerce store is to make their business model identical to that of physical stores. The more complicated buying online is, the lesser will be people’s inclination to buy.

E-commerce is young to Indian markets. The reason it is picking up fast is the Cash on Delivery (COD) option. According to a report by Ernst&Young, COD accounts to about 50-80% of all online transactions in India. In spite of the disadvantages it offers, COD has certainly built the reputation of online business.

With the young crowd preferring to shop online, the future of e-retail stores looks promising. Logistics play a major role in determining how trusted and how easy buying from a store is going to be. Businesses, especially start ups need to invest considerable time, energy and resources in planning their delivery mechanisms. Most e-stores retail the same goods and services. The difference lies in how fast, how cheap and how safe the orders reach the customer.

With an open market and fierce competitors, there is no doubt a well maintained logistics system will determine how successful the business can be.

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