Table of Contents
E Logistics -Introduction
We will look into the concept of E Logistics, its process, and its relationship in e-commerce businesses.
By now, you should be well aware of what is Logistics and how important Logistics is to your business. With the more attention towards online business platforms, the requirement of E Logistics has increased.
E Logistics is the process of using information technology for traditional Logistics concepts towards efficient procuring, warehousing, inventory management, supply-demand forecasting, distributions, and other activities involved in delivering a product from the origin to its destination in online businesses.
Or simply we can say “all the activities involved in the flow of goods from origin to destination in an online marketplace” is called E Logistics. E Logistics is also known as E-Commerce Logistics, electronic logistics, e-logistics, internet-enabled logistics, or e-business logistics.
E Logistics was a growing trend due to the increasing online businesses. With the COVID-19, consumers tend to procure more through online platforms and businesses demanding E commerce Logistics services. As per the findings of FEVAD, the demand for online procuring has increased 32% in 2020 compared to 2019.
In today’s context, competitiveness doesn’t depend only on price but also on customer service and delivery time. To meet that business needs to adjust their practices as to the trends. Followed by the trends, E-Logistics became a much popular concept during the last couple of years more than ever.
Thus, e logistics depends on the technological infrastructure and the development in information technology.
There are online shops to buy clothes, shoes, food, electric and electronic items, home necessities, or any product and service you want. Amazon.com remains the world’s largest e-commerce website followed by eBay and Walmart.
You can order a product with a few clicks while sitting comfortably at home and the product will be at your doorstep soon thanks to quick E Logistics arrangements.
Activities in E Logistics
If you are buying a product from a shop by physically visiting, you will pick the product from a shell and bring it to the cashier. The cashier will invoice it and you can simply pay by cash or a bank card and take the product with you.
Thus, when you buy online, neither you bring the product to the cashier nor a cashier is available. The whole process goes online on the e-commerce website and payment could arrange using the online payment gateway available on the website.
Hence, your order will be picked up and delivered to you by E Logistics.
When you place an order for a scarf, your order will be listed under the order fulfillment list on the website backend. Then the order fulfillment team does the purchase, arranges the packing/printing of the scarf as per the purchase order you have placed (Quantity, color, material, etc.)
Then they will arrange the shipping using a courier service. For the Same, they need to contact the courier service, place the pickup order, provide the correct address of your for delivery. And they will update the order status on the backend of the e-commerce shop including the package tracking number.
Then the same product status details will be e-mailed to you for your provided email. They will further track to make sure you have received the ordered scarf.
What will happen if you are not satisfied with the product or the product gets lost while delivery even it could be a very rare case? Of course, the online shop will arrange a re-delivery or refund the payment as per your interest.
E Logistics Process
1. Customer browse the goods in online stores. Select the product and add the products to the shopping cart of the website and make the payment. Or directly make the payment without adding to the cart as per the options available on the website.
Some stores offer the facility for “payment on delivery”, thus most of them are not.
2. Order fulfillment team or the distribution center receives the customer’s order through the website.
3. Order fulfillment team makes the purchase of goods from the merchandiser. And make packing/labeling and arrange the shipping. Further, they updated the tracking number and email the customer on the order status. And update the backend of the store on order status.
4. Seller arranges the payments to the order fulfillment team if the order fulfillment team is outsourced.
5. Customer receives the ordered product.
6. If the customer encounters issues with the product seller will attend the same and keep the order fulfillment team informed as appropriate.
7. Now the job is done!
Difference between traditional Logistics and E Logistics
|Item||Traditional Logistics||E Logistics|
|Customer service||Reactive, Rigid||Responsive, Flexible|
|Distribution model||Supply-driven push||Demand-driven pull|
|Inventory / Order flow||Un-directional||Bidirectional|
|Demand||Stable consistent||Highly seasonal, fragmented|
Tips for your E Logistics/ E Commerce Business
If you are into an online business free delivery is very important to attract customers. Most customers tend to buy from free delivery shops, and research studies show that the unavailability of free delivery for the highest % of abundant carts.
Sometimes, the customer is willing to pay a high price for the product with free shipping, rather than the less priced product with paid delivery.
If you are looking to grow your e-commerce business, don’t forget to arrange free delivery.
Provide options for delivery method/courier service
Having options for the delivery methods is another aspect you should look into. As per the first point, providing free shipping is necessary. It is obvious that you won’t be able to provide fast free shipping if your profit margin is less.
That’s why you have to provide options to the customers. Either they can use the free shipping option, or fast delivery by paying for it.
Sometimes, there are customers who are willing to pay more for greener delivery methods.
Unlike buying from a physical shop, the customer has to wait until the product reaches the destination. Since they are paying prior to receiving the product they become more confident in buying from your e-commerce shop if the cargo tracking is provided. This helps customers to check the product status and closely monitor the location of the product.
The majority of carriers provide this service nowadays and this helps both your business and customer to be comfortable on the sale and purchase. And to develop customer loyalty towards your online shop.
A study conducted by Rebound says 46% of buyers on online platforms, stopped buying from e-commerce websites due to bad experiences with return policies. Having a good return policy over the competitors is advantageous to your business to win customers.
Having a return policy further ensures the quality of the service provided by the e-commerce shop in terms of proper packing to minimize damages, provide an exact description of the product to customers, and minimize errors in sending products different from what has been ordered.
Fast Customer Service
If a customer is having unclear areas of the product, they do not have sales representatives to speak like in a physical shop.
Hence it is important to have the means of communication. Emails would be a good method thus it is not very fast. Hence having chat windows on site is important to provide quick responses to customers’ queries.
Presence in Social Media
Social media is a part of E Logistics in marketing the e commerce stores. Instagram, Pinterest, Tiktok, and Facebook are popular media to promote your e commerce store.
You have the freedom to share images and videos of your products on social media to attract customers.
Dropshipping is a popular concept in e commerce business. Here the shop doesn’t keep stocks of products thus arranging the order fulfillment with a partnership of a third party company.
The third party could be a manufacturer or a retailer who has the products in stock. Or a party who is specialized in order fulfillment procuring from the merchandiser. And they do the backend work in E Logistics from the time of customer place order to sending them to the customer.
Here the seller has to spend less time on the backend work as the whole work is taken care of by the third party company/order fulfillment team.
Further, since the supplier does not have to keep stocks in hand, capital costs on inventory management and warehouse management will be saved.
This is the biggest advantage of dropshipping shops as the seller doesn’t have to have a capital investment for inventory. Further, this helps to avoid product expirations, obsolete products as the products are not purchased beforehand and purchase is done only after the demand arises.
Another advantage of dropshipping is you don’t have to have a physical location for the shop. And can handle the business being anywhere in the world. This is an extra benefit for e commerce stores.
E Logistics in dropshipping is much easier than the traditional Logistics as the activities involved are mostly IT involved and the order fulfillment part is outsourced.
There are much more advantages as well as disadvantages in dropshipping like errors by the order fulfillment team affecting your brand.
The E Logistics involved in the big e commerce shops like Amazon and Walmart are much more complex than the E Logistics we have spoken above. And those companies have their in-house service providers, warehouses, inventories, and Logistics system on providing high quality services to their customers.