It used to be the case that if you didn’t want to wait a day or two for your online order, you’d either have to cancel it altogether or suck it up and sit tight. Now, with so many retailers and ecommerce businesses offering expedited shipping options, consumers barely have to wait at all.
Consumer demand is driving rapid progress in ecommerce logistics, with two- and even next-day shipping becoming standard.
The effect on ecommerce logistics continues to be profound. The communicated speed at which consumers will receive their orders can play a deciding role in whether they choose to buy from your online store — or your biggest competitor.
As a result, the entire supply chain has needed to evolve. Fulfillment logistics continues to shift, with retail giants such as Amazon and Walmart as well as third-party logistics (3PLs) providers opening more fulfillment centers in new cities around the country to ship orders to consumers in record time.
Online shopping isn’t slowing down, either. Amazon, for example, ships around 3 million packages every single day. Alibaba, its Chinese counterpart, ships a staggering 12 million packages a day. And global ecommerce sales are expected to be worth $4.5 trillion by 2021.
The pace can be stomach-turning for any ecommerce business owner, which is why it pays to find a 3PL who can handle logistics from end to end — and back again.
What is ecommerce logistics?
Ecommerce logistics refers to the processes involved in storing and shipping inventory for an online store or marketplace, including inventory management and the picking, packing, and shipping of online orders.
With so many millions of packages shipped across the country on any given day, it’s vital that systems are in place to keep them on track and make sure they’re delivered to the right place on time.
Ecommerce logistics starts with moving inventory from the manufacturer and lasts until it ends up at the end customer’s destination. One of the most critical pieces is fulfillment, which includes:
- Inventory management
- Warehousing and storage
- Order fulfillment, including picking, packing, and shipping orders
Each of these components is a world of complexity unto itself, and keeping them all running smoothly together is no small task.
Businesses offering same-day shipping, for example, must ensure that they have adequate stock levels in a distribution center close to that customer’s location. If they outsource order fulfillment, their 3PL must be reliable and capable of fulfilling orders at pace, even during peak and holiday periods.
Any lapse in communication within your supply chain ultimately has a negative impact on the customer experience.
The current state of ecommerce logistics: 3 trends
Rapidly evolving, logistics is the backbone of ecommerce businesses: it helps you differentiate your customer experience from that of your competitors — or leads to breakdowns that leave you in the dust. Here are three logistics trends to be mindful of as we enter 2019:
1. Consumers want same-day delivery
We can thank the persistence and high expectations of urban millennials for the rise in same-day delivery options. In fact, 64% of millennials are more likely to make an online purchase if same-day delivery is offered, and 61% of shoppers would willingly pay more for same-day delivery.
In addition, 88% of consumers are willing to pay for same-day delivery, with 71% being “highly likely” to recommend a retailer that successfully fulfills same-day delivery.
Keep in mind that while they are used interchangeably, same-day shipping and same-day delivery are not one and the same. Same-day shipping simply means your order leaves the facility it was stored on the same day it’s purchased. But this doesn’t necessarily correspond to its transit time.
Same-day delivery takes it a step further and guarantees that your order will be delivered on the same day it’s purchased.
What does this mean for retailers in 2019? In addition to having the right technological capabilities in place, same-day delivery requires that ecommerce businesses expand their geographic footprint. Major retailers and delivery companies will ramp up their investment in local partners with the goal of making same-day delivery cheaper and more accessible for more of the population.
2. Last-mile delivery is key
An increase in online order volume plus a rise in customer expectations places additional pressure on the final leg of the logistics process, often referred to as last-mile delivery.
Last-mile delivery refers to the transportation of a package from a distribution hub (often through a shipping carrier) to the package’s final destination with the goal of delivering the item as quickly and cost-effectively as possible.
And last mile is big business. Same-day and last-mile logistics are estimated to be valued at $1.35 billion this year.
Where logistics often fall short in consumers’ eyes is precisely here: within that last mile. There are many factors that can trip a delivery at the final hurdle; most often, the recipient isn’t home or there’s a problem with the local courier.
Major shipping carriers such as FedEx and UPS often hand their deliveries off to USPS for the last mile to help speed up local delivery and reduce the chance of failed delivery attempts.
3PLs like ShipBob are going even further to make last-mile logistics better for ecommerce business owners, and their customers. For example, ShipBob:
- Obtains quotes from all major shipping carriers before to get the best prices for business owners — that means both businesses and customers benefit from fast, affordable delivery.
- Analyzes customer data to optimize shipping. With distributed inventory, inventory is split across strategic fulfillment centers and then sent from the warehouse that is located closest to the customer. When your orders travel to lower shipping zones as opposed to higher, farther away zones, you save both money and time in transit.
- Provides real-time ecommerce order tracking. When it comes to last-mile delivery, communication is vital. You can access shipment tracking information in real-time, then easily send these details along to your customers.
People who pay for expedited and same-day delivery expect to receive their packages when and where they ask for them. A failure during the last mile can have unfortunate and negative effects on a business.
3. Rise of the drones
Robot delivery services are still in their infancy — but they’re progressing fast. Amazon continues to experiment with drone technologies, while a host of other startups are experimenting with sidewalk-based delivery robots.
Delivery robots like the Marble delivery robot provide potential additional efficiency and logistics possibilities for people in urban areas.
It’s difficult to say what impact delivery drones and robots will make on the logistics industry long-term, but it’s definitely a trend to keep an eye on in 2019 and beyond.
How 3PLs maximize efficiency in ecommerce logistics
Partnering with the right 3PL can be key to your business’s success. The goal is to find a logistics partner that can help maximize your profits as an ecommerce brand by optimizing your supply chain.
The right third-party logistics provider can…
1. Give your business room to scale
As a business owner, you want to spend as little time as possible on anything related to picking, packing, and shipping orders.
By investing in a partnership with a 3PL, you eliminate the need to buy or rent the warehouse space, license warehouse management software, equipment, labor, supplies, and technology required for in-house order fulfillment.
You also save time by outsourcing ecommerce fulfillment tasks to a 3PL. Instead of using your time to pack boxes, stand in line at the post office, or build out and manage a fulfillment infrastructure, working with a 3PL gives you time back to focus on more strategic initiatives.
In addition, you can access bulk shipping discounts that offer the best prices and best carrier options for both your business and your customers.
“Before ShipBob, we used a fulfillment center that frankly couldn’t scale with us. Since moving to ShipBob we’ve grown 30% year over year, which is a testament to their scalability, service, and technology.”
Carl Protsch, Co-Founder of FLEO
2. Enable faster fulfillment
Offering same-day or next-day delivery can be risky (and expensive) if you’re fulfilling orders yourself and relying directly on the major providers.
Partnering with a 3PL means you can fulfill more orders faster. As mentioned above, third-party logistics providers often allow you to distribute your inventory across fulfillment centers in different regions, which can provide huge cost savings for 2-, next-, and same-day shipping.
“ShipBob has fulfillment centers in major cities all over the US, so we can spread out our inventory across the country to reduce the shipping costs and zones associated with shipping orders to destinations that are far away.
In fact, we’ve distributed our inventory to Dallas, Chicago, Los Angeles, San Francisco, and New York to be near our customers and joined ShipBob’s 2-Day Express Shipping Program, which leverages ground shipping and is an inexpensive alternative to expedited air shipping.”
Founder of My Calm Blanket
3. Provide valuable insights
Getting orders to customers on time is critical, but having aggregate data to make more informed and strategic business decisions is invaluable. A good 3PL provider will offer technology and analytics to give insights into customers, orders, inventory tracking, returns, and more that can help you optimize supply chain management.
“One of the greatest features of ShipBob’s software is the inventory management functionality, which lets us track inventory change and velocity over time. Being able to monitor which styles are selling quickly helps us always keep our best sellers in stock.”
Ryan Casas, COO of iloveplum
Choosing the best ecommerce logistics solution
Every business is different, but for many ecommerce merchants, partnering with a 3PL for order fulfillment is a must to scale successfully and help optimize the supply chain. To choose the right 3PL for your ecommerce business, ask yourself…
What type of shipping do I want to offer?
This will help determine if you can offer the fastest delivery and most affordable shipping options to your customers through initiatives like 2-day shipping and same-day delivery.
Some 3PL providers offer same-, next-, and two-day shipping, allowing you the freedom and flexibility to cater to your customers’ rising expectations. Working with a 3PL can make offering free 2-day shipping more feasible and affordable for merchants of all sizes.
Will the 3PL integrate with my current store?
One of the most important elements of choosing a fulfillment solution is finding technology that works not just for you, but with you. To automate order fulfillment, look for a 3PL with technology that integrates with your ecommerce platform.
In addition to traditional fulfillment services, such as warehousing, picking, packing, and shipping, ShipBob’s technology helps with everything from order and inventory management to tracking orders and managing returns.
“ShipBob’s technology is far superior to what other 3PLs have. As soon as an order is placed on our Shopify Plus store, it’s pushed to ShipBob’s fulfillment software.”
Sarah Ribner, Co-Founder, PiperWai
Which regions do I need to ship to?
Where are your customers located? If you sell mainly to the east coast, but your 3PL provider only has warehouses in Seattle, they’re probably not the best choice. For example, ShipBob has fulfillment centers in five key urban locations — Chicago, Dallas, San Francisco, Los Angeles, and New York City — to efficiently reach many major metro areas.
Do I want custom design and branding on my packaging?
Sometimes a plain brown box is fine, but for some brands, packaging is a big part of the customer experience. If your brand is one of them, make sure to choose a 3PL provider that supports custom packaging, such as ShipBob.
Consumers are demanding more from major retailers and small ecommerce businesses alike. Next- or even same-delivery is becoming standard. As an ecommerce business owner, you need a logistics partner like a strong 3PL to maximize the efficiency of your deliveries
Partnering with the right 3PL can give your business the freedom and flexibility to grow without having to manage ecommerce logistics in-house.
Learn more about choosing the right 3PL in our free e-guide, “How to Choose a 3PL for Your Ecommerce Business.”