What is e-logistics and what are its main benefits and challenges?

What is e-logistics and what are its main benefits and challenges?

Find out what e-logistics is, what its specific challenges are and how to implement effective strategies to make the most of it.

Definition and specificities

E-logistics is defined as the management of all the physical flows of an organisation that sells goods on an online platform (website, marketplace, etc.). E-logistics is opposed to the traditional logistics set up by retailers, although the two can be complementary. Because of its many particularities, e-logistics represents a crucial issue for e-merchants and requires the deployment of specific actions and processes in order for an e-merchant to benefit from an optimal flow management.

Several factors explain this: 

  • Buying online has become an increasingly important part of buyers' consumption habits in recent years. In 2020, online purchases have raised of +32% according to FEVAD. Having a dedicated logistics specific to this sales channel is therefore no longer an option for e-merchants.

  • Internet users are becoming increasingly demanding when buying on the internet. E-commerce offers future buyers the opportunity to compare offers on the market in just a few clicks, which means that e-merchants need to stand out from the crowd, and this largely involves the buying experience, and therefore the delivery process. 

  • The withdrawal period is also much longer in e-commerce than in traditional commerce. It is way more likely that the product received will not ultimately meet the customer's expectations, hence the importance of implementing a returns management policy for online merchants. 

In view of these observations, it is understandable that logistics management is of particular importance and represents a front-line issue in the success of an e-commerce business.

What are the stakes for your online shop?

Delivery at the heart of customer satisfaction

According to Fevad, 35% of customers who have had a negative delivery experience will no longer order on the same e-commerce site. Being able to guarantee a flawless delivery to its final recipients is therefore central for e-merchants, and several actions can be implemented to ensure customer satisfaction.

  • Offer several delivery methods

It is nowadays essential to offer a several choices of delivery to its end customers: while home delivery remains the most popular method, pick-up point delivery (Relay Point) is also very popular in France. As speed of delivery is an increasingly important criterion for online shoppers, being able to offer express delivery on D+1 appears almost unavoidable for an e-merchant in 2021.   In addition to these classic transport offers, more and more e-merchants are opting for more ecological deliveries: according to a study by Generix, more than 87% of French people would be interested in a greener delivery method. Adapting your supply chain by adopting a last-mile delivery solution using bicycles or electric vehicles can therefore be an excellent way to stand out from your competitors and guarantee customer satisfaction.  

  • Free delivery

Shipping costs are at the centre of online shoppers' concerns: according to a study (PayPal and ComScore), 43% of French online buyers already abandoned their shopping basket because of excessively high shipping costs. The best strategy is to offer free shipping, which is increasingly appreciated by customers. However, it is not always possible in terms of cost structure and profitability: one can then imagine a minimum purchase amount for example (which will increase the average basket), free delivery for the next purchase in order to build customer loyalty or even during a certain period only in order to boost customer acquisition

  • Delivery tracking

In the world of e-commerce, it has become almost obligatory for customers to benefit from tracked delivery. The vast majority of carriers now offer this service. As an e-merchant, this allows you to reassure your customers and build loyalty, while saving time on your customer service management.

Set up an effective returns management policy

As mentioned above, the issue of returns is central to e-commerce, in particular because of the related withdrawal period. Where the return rate in traditional commerce is around 8%, the same rate reaches 25% for e-commerce, according to Fevad. It is easy to understand why the question of returns is a central issue in logistics, especially since buyers attach great importance to it: according to a Rebound study, 46% of buyers have already been dissuaded from buying again on an e-commerce site following a bad product return experience.

Often a source of friction between buyers and sellers, e-merchants have every interest in being well prepared in order to optimise their return rate and turn their return policy into an advantage over their competitors. There are a number of tips for this: check that the packaging chosen is suitable and will guarantee safe delivery without damaging the product, offer a free return to reassure the customer from the purchase phase, respect delivery promises to avoid disappointment on the part of the customer that could lead to an order cancellation, etc. Discover our complete guide to optimising e-commerce returns for more details.

Focus on a Customer Service that listens to your needs

As we have seen, the satisfaction of an online buyer can be challenged at every stage of the supply chain. To preserve it as much as possible in spite of the uncertainties of delivery, the best solution is to focus on a good customer service policy. Online buyers need to have a contact person they can rely on to answer their questions about products (pre-purchase) and reassure them in the event of an incident during delivery (post-purchase). Having a competent and available after-sales service is a great way to stand out from other online shops and increase your chances of a customer ordering from your site again in the future. Think about tools such as instant messaging on your site to make it easier to get in touch.

Which e-logistics solution should you opt for?

Once all these issues have been identified, the question arises as to how to turn each of them into a potential asset for your e-commerce. The choice of your e-commerce logistics organisation is closely correlated to this point. There are several options to consider: 

  • In-house management: the main advantage of this type of organisation is that it offers a certain flexibility in the day-to-day management of logistics. Having control over your stock, managing order preparation and packaging, as well as the choice of transport service provider allows you to have end-to-end control, and to be able to iterate easily. When sales volumes increase, however, this solution can be time-consuming or even reveal insufficient

  • Dropshipping: in order to completely relieve themselves of stock management, some e-merchants opt for dropshipping. In practical terms, this means that the supplier or agent manages almost everything from A to Z: sourcing or even manufacturing the products, procuring them in sufficient quantities, storing them and managing shipping for each order placed on the e-merchant's site. This strategy is not very binding and is usually economical, but it does not provide complete visibility on product quality or sufficiently short delivery times. 

  • Outsourcing to a logistics specialist: outsourcing all logistics operations to an e-fulfilment specialist is a good solution to offload the main tasks related to logistics transport. Entrusting all or part of your stock to a specialised warehouse allows you to benefit from a certain expertise in the field of e-commerce logistics and to be able to grow your sales serenely, by concentrating only on high added value activities.

In brief

E-logistics is a source of numerous opportunities for retailers but also brings with it its share of constraints and challenges. Anticipating these points and implementing appropriate strategies are the keys to the success of your e-commerce and the guarantee of customer satisfaction. Establishing the right partnerships in good time will allow you to grow and develop your e-shop in total confidence.

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