Complete Guide to Ecommerce Logistics: Strategy, Implementation & Best Practices (2024)

Which category do you find yourself in?

Category 1: A new eCommerce business owner looking to meet the demands for fast shipping and efficient order processing and fulfillment.

OR

Category 2: An established eCommerce store owner looking to optimize your delivery logistics in today’s ever-evolving online retail industry

If you say Category 1, you must be facing difficulty:

• Tracking inventory levels
• Ensuring timely deliveries
• Handling return efficiently

If you say Category 2, you must be finding it hard to optimize your delivery logistics to stay competent.

In either case, one thing is common: efficient eCommerce logistics is indispensable to lead your business to success.

So, whether you want to enhance your operational efficiency, boost customer satisfaction, or establish a reliable logistics system for your business, this blog is here to guide you. It explores what eCommerce logistics is, its types and components, how it benefits, and the best practices to enhance it.

What is the eCommerce logistics process? 

Ecommerce logistics refers to storing and shipping inventory from the manufacturer to the end customer. The logistical process is an integral part of all eCommerce businesses.

By 2026, the global eCommerce logistics market will be worth 770.8 billion euros, a staggering increase from its value of 441 billion euros in 2021.

The eCommerce logistics process of an online store starts with moving bulk quantities of stock from the manufacturer and lasts until it arrives at the end customer’s destination. It includes inventory management, picking, packing, and shipping online orders.

Logistics is becoming a competitive advantage for eCommerce businesses that want to stay ahead of the competition. Some eCommerce businesses even report considerable risks if their e-commerce logistics process fails to meet customer expectations.

3 Types of eCommerce logistics 

Online retailers need to have an inventory management system for careful management of logistics. Now let’s take a look at different types of eCommerce logistics:

1. In-house Logistics

You’re responsible for your eCommerce supply chain when you manage your eCommerce logistics in-house.

That means tracking shipments from the supplier to the warehouse and to the various distribution centers or sorting facilities that you may have. Additionally, it requires using the analytics provided by your eCommerce platform to calculate the shipping cost for each shipment manually.

2. Third-party logistics providers (eCommerce logistics partners)

A third-party logistics providers or fulfillment partner helps manage all aspects of your eCommerce supply chain to enable seamless deliveries.

They handle everything from customizing packaging and labeling to picking orders and shipping products out. So you don’t have to worry about hiring extra staff for cross-border deliveries or investing in expensive equipment.

3. Dropshipping

Dropshipping is perfect for eCommerce platforms looking to snowball. It allows ecommerce suppliers or manufacturers to send products–direct to consumer–without stocking them in a warehouse or local fulfillment center. This eliminates warehousing costs but drastically adds to the delivery times since products are not stored in E-commerce fulfillment centers near customers.

Main components of the eCommerce logistics chain 

The shipping process is a complex multi-step process, with each step reliant on the others. Here are some of the essential components:

1. Suppliers: The role of the supplier is to create the product and ship it to fulfillment centers. Suppliers are those who ship inventories to a business destination. They send the product directly to customers if the brand is dropshipping. Otherwise, bulk quantities of products are made and stored in a warehouse.
2. Fulfillment centers: eCommerce fulfillment centers are warehouses that hold inventory at strategic locations—close to your end consumer. When a customer makes an order, the fulfillment center packs and ships each product as soon as possible. Your eCommerce business can own or lease this fulfillment center facility, or your 3rd party logistics service provider can operate the fulfillment process. To ensure that you do not unnecessarily store excess inventory in the warehouse or fulfillment center, you can use a warehouse management system and manage inventory properly.
3. Distribution center:  Distribution hubs are used by companies that want to maintain a large inventory with hundreds of items. These hubs split inventory between warehouses and transport modes. For example, you can use separate warehouses for DTC and B2B orders as they require different packaging. 
4. Sorting centers: The purpose of a sorting center is to receive large quantities of orders and then sort them into smaller shipments based on customer orders.
5. Shipping carrier: You can use major shipping carriers like USPS, UPS, FedEx, or DHL to get your product from the warehouse to your customer. You can also rely on a private delivery carrier if you need something faster than standard shipping speeds.

11 eCommerce logistics best practices

Use these 11 best practices for your logistics operations and see how much value it adds to consumer buying behavior.

1. Devise a strategy

Your eCommerce business’ success depends on the quality of your eCommerce logistics strategy to a large extent.

Ecommerce companies should consider every aspect of their eCommerce supply chain to achieve optimal results. Your eCommerce logistics strategy should align with the goals of your business and understand the outcomes of events in the shipping process.

2. Adopt the local eCommerce delivery model 

There’s a growing demand for super-fast deliveries where customers want their orders to be delivered on the same day or the next day. 

This is why most eCommerce business owners are considering establishing a local eCommerce delivery model to fulfill customers’ demands in a specific geographic area by using local inventory and delivery resources.

Here are some steps to establish a local eCommerce delivery system.

1. Start by defining your local delivery area: Create local delivery zones based on factors like population density, traffic patterns, and regional competition and regulations.

Do you know Upper allows you to define and assign delivery zones to specific drivers based on factors, such as their start and end destinations, shift times, and driving preferences to better manage your deliveries?

Book a demo to see how!

2. Choose the right delivery model: Decide whether you want to handle your local deliveries in-house or outsource them to a third-party logistics company. In case you have just started out and can’t afford to pay heavy prices for 3PL companies, you can opt for in-house logistics.

3. Integrate efficient routing software: Optimizing local delivery routes can help you maximize your daily orders while reducing your delivery costs. 

Therefore, you can consider implementing local delivery route management software into your store.

This software can help you enhance your local delivery operations in multiple ways.

• Fetches the orders placed on your store and maps delivery addresses directly as location pins on the map, eliminating the need to enter them manually.
• Enables customizing colors of pins based on whether a job is delivery, pickup, or return.
• Creates optimal routes that consider real-time traffic patterns, drivers’ availability, customers’ preferred time slots, and priorities to maximize stops covered while reducing operational costs.

Do you know Upper has helped clients boost their daily deliveries by 300%?

Don’t believe us? Book a demo to see for yourself.

Besides, it also enables you to: 

• Track real-time route progress and make in-transit route edits to handle emergency situations. 
• Communicate with drivers in transit to improve coordination
• Send real-time delivery notifications to boost customer satisfaction.
• Collect digital proof of delivery for future record-keeping

3. Collaborate with a good shipping partner

You will need to collaborate with a good shipping partner for discount shipping rates and express shipping. Third-party logistics (3PL) order fulfillment services offer you access to economies of scale and infrastructure that you could not (profitably) deploy alone.

A 3PL can also help you avoid the hassle of hiring and maintaining staff, which will free up your time for more important things. The right third-party logistics service provider (3PL) can save you both time in transit and stress, so it’s worth the effort to find one.

4. Invest in packaging

Packaging is crucial to the success of your business, especially when it comes to making sure your products arrive in one piece.

You need to ensure products are packaged securely and in an appropriately-sized box so they don’t break during cross-border shipping. If you’re shipping something fragile, wrap it up extra carefully before dropping it in a box, and then seal it with tape.

5. Ensure quality

Online shoppers are accustomed to high quality, accuracy, and timeliness. They expect you to deliver their orders on time and as expected.

If you don’t meet expectations in terms of what your customers want, they will be more likely to switch brands. The quality of products and accuracy of shipping majorly contribute to the rapid growth of your eCommerce brand.

6. Offer free and fast delivery

eCommerce businesses ship their packages to billions of consumer addresses around the globe. There’s a reason free eCommerce shipping is the top reason people shop online: it works. 

Providing faster shipping options can be an excellent marketing strategy. But many sellers are missing out on the opportunity to attract online shoppers. To cover delivery costs, you can offer same-day delivery, free shipping, or shipping discounts only on select items or set a minimum order value. 

If you’re selling a product on your eCommerce website that customers can find elsewhere, offering a competitive shipping rate is vital. The long-term goal is to get your product in front of as many eyes as possible, and using free shipping can help you do just that. 

Also, 12 days of shipping doesn’t excite any customer. Timely delivery is non-negotiable. Nearly 65% of customers expect their products within 2-3 days after order.

7. Diversify the supply chain

It’s not always possible to avoid issues in your eCommerce supply chain. But, it is possible to reduce their impact across the entire supply chain network. 

Try to diversify your supply chain wherever possible. Employee strikes at a logistics provider or issues with their supply chain can disturb your order fulfillment process.

8. Provide a precise ETA

The best way to ensure a positive experience for your customers is by providing them with an estimated delivery date and time of arrival. When you offer this information up-front, it helps to alleviate any concerns about the length of time it will take for their item to be delivered.

9. Keep your customers updated 

Always send an order confirmation when customers place an order. It helps them know that they can trust you and that their product will be shipped at the earliest.

Next, send a shipment confirmation once the product has been shipped to the delivery service. This way, customers can see that their order is on track and moving forward.

10. Prompt reverse logistics process

Reverse logistics or eCommerce returns can be a logistical nightmare for eCommerce retailers. It was estimated that $102 billion worth of products were returned in 2020, a 70% increase from 2019.

Often, customers buy variations of a product with the intent of returning them, whether because they don’t like the color or something else is wrong with the item.

Efficiently planning the reverse logistics process—how returned products reach you from your customers—can help you promptly deal with the cost-saving process and improve your customer experience.

11. 24/7 customer service

How well eCommerce brands service customers, move beyond consumer expectations, and achieve customer satisfaction strongly determines how successful their business will be.

When your customer receives their package, everything must be in order. If it’s late, damaged, or doesn’t arrive, you’re most likely to lose them as a repeat customer.

If something goes wrong with the delivery of your package, don’t panic. 

Once you’re made aware of a problem, call the regional shipping carrier and immediately try to resolve the situation. For delays, you can give a discount on the next order or replace the item if it is lost or damaged.

Advantages of using eCommerce logistics solution

Here’s how using an eCommerce logistics solution can transform your logistics process.

1. Scalability

The number of end-customer deliveries your business can make in a day is determined by two things: 

• How many orders do you get within a geographical network?
• How efficiently do you plan your routes for your delivery drivers?

With the help of software solutions like Upper, you can make sure that your drivers are as productive as possible so that you can serve more customers every day.

It is imperative to plan and optimize your routes efficiently to scale your business and make more daily deliveries.

2. Valuable insights

With modern reporting and metrics, you can get real-time insights into your last-mile logistics. Upper can help you make smarter decisions because it helps track driver performance.

With end-of-day reports, you can get an overall idea of the total number of tasks performed and how well your drivers performed the assigned tasks. You can then tweak, improve, or maintain your strategy depending on the business performance metrics.

3. Faster product returns 

Inventory returns are the bane of every eCommerce merchant or online store. It’s a costly, time-consuming process that can harm your business and bottom line.

Thanks to modern eCommerce logistics solutions, getting products back from customers is easier than ever. Route planners like Upper can streamline your delivery process with quickly optimized routes and even quicker dispatch of all delivery tasks, you can quickly get those returns back into store inventory.

Ship Your eCommerce Orders Using Upper 

If you’re an eCommerce business looking to ace in-house logistics, you can get Upper for managing multi-stop deliveries. It’s crucial to get the most out of every minute you spend on the job. That’s why Upper Route Planner could be the route planning solution you need.

It provides an easy-to-use user interface for scheduling and route planning needs. With  Upper planner:

• Automated route planning minimizes your time and effort in generating a route plan.
• Automated scheduling enables you to generate schedules in advance.

1. Route planning

With Upper’s commercial routing software, you’ll consistently deliver your eCommerce shipments on time and eliminate all delayed deliveries. The route planning and optimization software helps your drivers with the shortest paths per their specific last-mile delivery constraints, such as driving preferences, time windows, and more. 

2. ETA notifications

Upper sends automatic notifications regarding the ETA of last-mile delivery to your customers to save your drivers from failed deliveries or delivery attempts. It helps them get more deliveries done and ensures the items safely reach their final destination.

To know more about Upper and its route optimization process, sign-up for a 7 days free trial today.

Conclusion 

The increasing switch of brick and mortar store owners to online retailing has propelled the rapid growth of the Commerce industry. It has also raised modern consumers’ expectations and escalated the cost of shipping and tightened the delivery windows. Therefore, choosing an eCommerce logistics partner is crucial in the eCommerce industry for increased delivery speed and efficiency.

Eventually, there should be a robust eCommerce logistics system to surpass the eCommerce delivery chaos. Referring to the best logistics practices will help to grow your eCommerce business. Moreover, you can take help from route planning and optimization software like Upper to perform on-time and efficient deliveries. 

You can book a demo with us to learn about additional features of Upper Route Planner.