E-logistics, a concept that emerged in the 2000s, is a fusion of traditional logistics and e-commerce. This term, also called electronic logistics, encompasses all logistics activities specific to e-commerce sites. The particularity of e-logistics lies in its adaptation to the unique needs of online sales, including the management of orders, deliveries, and returns.
Differences between traditional logistics and e-logistics
Transport: in the context of e-commerce, transportation costs are higher because goods must be delivered directly to end customers. Managing the “last mile” is crucial to optimize these costs. This includes organizing routes, using local delivery services, and optimizing vehicles to ensure fast and cost-effective delivery.
Storage: traditional warehouses, often organized around pallets, must be redesigned to accommodate the diversity and variability of e-commerce orders. This requires the use of modular storage systems, storage robots, and automation technologies to manage the flow of goods efficiently. Bins and dynamic shelves replace pallets to allow for more flexible item management.
Orders: in e-commerce, orders are typically larger in number, smaller in size, and varied in terms of products. This diversity requires increased flexibility and responsiveness. Order management systems (OMS) are essential to process and track each order, from purchase to picking and packing to delivery.
Demand: online demand is more unpredictable and fluctuates rapidly, influenced by seasonal trends, marketing campaigns, and fashion trends. To manage this volatile demand, e-retailers must use demand forecasting tools and data analytics to anticipate peaks and troughs in activity.
Customer base: online customers are diverse and more volatile. The ease of access to different offers on the web pushes customers to quickly switch providers if their expectations are not met. Loyalty programs, personalized offers and excellent customer service are essential to retain these customers.
Digitalization: electronic information management is essential to ensure order traceability and communication with customers. A robust information system is therefore necessary to efficiently manage logistics flows. This includes the integration of inventory management software (WMS), order management systems (OMS), and automation technologies to reduce errors and increase efficiency.
Main challenges of e-logistics
E-logistics aims to meet the specific requirements of e-commerce, particularly with regard to the preparation and shipping of orders. Indeed, the number of orders, as well as the diversity of items, require optimization of flows as well as better transparency of flows. Key elements include:
Delivery efficiency: customer satisfaction in e-commerce depends largely on the delivery promise. Fast and reliable delivery is crucial to customer loyalty. Around 35% of customers change e-commerce sites after a bad delivery experience (source: Fevad). To minimize this risk, e-retailers must work closely with carriers and use delivery tracking technologies to inform customers in real time.
Inventory Management: inventory Management is critical to avoiding stockouts and overstocks, which can damage brand reputation and increase costs. Optimal inventory management relies on accurate forecasting, regular product rotation, and optimization of storage space.
Goals to retain customers
On the Internet, customers are particularly volatile. A customer does not have to make much effort to change e-retailer if its prices, its delivery methods as well as the general shopping experience are better. To stand out from the competition, it is essential to:
Optimize inventory management: use a inventory management system (WMS) to ensure traceability and reduce errors. Techniques like dropshipping and cross-docking help minimize storage needs. Dropshipping, for example, allows e-tailers to sell products without having to physically store them, reducing storage costs and inventory risks.
Reduce delivery times: provide accurate and reliable delivery times. Analyze and optimize each step of the supply chain to meet customer promises. Using regional logistics hubs can also speed up deliveries and reduce costs.
Implement an effective returns policy: provide accurate and detailed product descriptions to reduce returns. Clearly display the returns policy on the e-commerce site and remind customers of the environmental impacts of returns to raise awareness. A clear and easy-to-understand returns policy can reassure customers and encourage them to buy with confidence.
Improving the shopping experience
The shopping experience encompasses many factors. Improving the experience can bring you many benefits. A confident customer engages more with your brand, their average basket size is higher and their loyalty rate is higher. According to the Harvard Business Review, increasing your customer loyalty by 5% can increase your profits by more than 25%. In addition, a loyal customer buys on average more than half as much as a new customer. The experience can be calculated by different indicators such as the Net Promoter Score (NPS). Among these factors, there are several crucial aspects for customer satisfaction:
Product availability: avoid stockouts and promptly inform customers of limited availability. Transparency about product availability can increase customer confidence and encourage them to complete their purchases.
On-time delivery: ensure orders arrive on time as promised. E-retailers should work closely with carriers to monitor performance and quickly resolve delivery issues.
E-commerce website optimization: ensure fast loading speed, compatibility with all devices, and a simplified payment method. Transparency on pricing and stock availability builds customer trust. Using personalization technologies can improve the shopping experience by offering relevant product recommendations.
Clear returns policy: offer free or low-cost returns, while informing customers about the steps to follow. A clear and fair returns policy can reduce barriers to purchase and increase customer satisfaction.
E-logistics is essential in e-commerce
E-logistics is now an essential component of e-commerce site management. It requires special attention to digitalization and automation of processes using tools such as WMS. Efficient electronic management reduces errors, increases logistics performance, and guarantees customer satisfaction. By optimizing inventory management, delivery times, and returns, e-retailers can significantly improve the shopping experience and build customer loyalty, which is crucial in a highly competitive market.
The benefits of well-managed e-logistics include improved customer satisfaction, increased loyalty, and increased profits. By focusing on these aspects, e-commerce sites can differentiate themselves from the competition and ensure their long-term success. Efficient e-logistics not only optimizes costs, but also creates a smooth and enjoyable shopping experience for customers, thus strengthening the brand’s reputation and credibility in the market.
E-logistics: optimizing logistics for e-commerce