Shipping Logistics: Definition, Best Practices, & Guide
October 6, 2021
If your business sells a physical product, what is the most important part of building a long-term online brand?
These days, it’s not email copy, website design, or Instagram ads.
It’s shipping logistics.
70% of shoppers view a clear and easy shipping experience as their top priority when shopping at digitally native brands.
But as ecommerce continues to dominate retail, the ability to deliver a memorable brand experience has become a lot more complicated, especially if you’re a direct-to-consumer (DTC) brand.
That’s why it’s important to invest in a shipping strategy that meets customer expectations while keeping costs low.
This article discusses what shipping logistics entails and how to optimize your shipping strategy for your business.
What does shipping logistics mean?
There are several factors that impact your shipping logistics strategy, including procurement logistics, freight shipping, and carrier partnerships.
Where you store your inventory compared to where a bulk of your customers live also plays a major role in shipping, especially when it comes to last-mile delivery.
What is the difference between shipping and logistics?
The key differentiator between shipping and logistics is scope.
Shipping is what it sounds like: the physical movement of your goods, for example, from a fulfillment center to your customers. From documentation, working with carriers, tracking, and handling, to delivery times, and transportation, shipping refers to the processes that happens as goods move throughout the supply chain.
Logistics refers to systems. They’re all of the synchronized operations that manage how your products are acquired, stored, and transported to their final destinations, of which shipping is just one.
Combined, the term “shipping logistics” refers to the stages of an ecommerce supply chain that requires strategy around how to get product from Point A to Point B, whether it’s shipping inventory to a fulfillment center, or shipping orders to customers.
Types of shipping logistics
Online retailers commonly underestimate how critical a reliable shipping logistics network is to the success of their operations.
For that, you need reliable networks to ensure your products are where they need to be at all stages of your supply chain. For instance, understanding production lead times and working with reliable manufactures and suppliers can ensure that inventory is delivered accurately and on time.
While partnering with the right third-parties like a 3PL or major and regional shipping carriers impacts the different types of shipping options you can offer customers and how affordable shipping is.
If there’s an issue with an order, a customer also needs to efficiently ship it back, so the returns or exchange process can begin quickly.
Shipping logistics can be broken down into three major categories:
- Inbound logistics
- Outbound logistics
- Reverse logistics
Here is a breakdown of all three and how they influence your overall logistics operations.
Inbound logistics are the processes that move products from a manufacturer or other party to be received at a fulfillment center or warehouse. Your inbound logistics network should include everything your business needs to transport, store, and deliver goods including:
- Sourcing products
- Production lead times
- Warehouse receiving
Outbound logistics, on the other hand, are all the operations necessary to move your products from a fulfillment center or warehouse to your customers, including:
- Order processing
- Picking and packing
- Carrier partnerships
Reverse logistics refers to processing customer returns and exchanges. This includes both inbound and outbound processes, like return labels, inspecting returned merchandise, processing refunds, and shipping out a new item if it’s an exchange.
Handling these processes in-house quickly becomes a hassle for most retailers. Unlike brick-and-mortar stores, ecommerce usually requires customers to buy a product without ever interacting with it.
Over 60% of consumers say they read an online brand’s return policy before clicking “Submit Order,” so it’s wise to invest in processes they can trust. As your business grows, a good reverse logistics process can reduce costs and resources.
The importance of shipping logistics (and its challenges)
When overseeing shipping logistics, common questions you’ll have to answer include:
- How does your inventory make it safely to a warehouse, and how is it checked in?
- What processes are triggered when a customer orders something?
- Who’s in charge of getting the delivery there on time?
- When a customer wants to return something, how can they?
There is a lot to consider when establishing a strong shipping logistics strategy. To make it challenging, the rise of on-demand logistics is influencing a lot of changes within a typical ecommerce supply chain.
The markets are dynamic, supply chains have become longer and more complex, and competitors are everywhere.
Yet customer expectations remain high. 87% say the shipping and delivery experience with an online brand impacts their decision to shop with the brand again. 1 in 3 customers will leave negative review via social media about a poor delivery experience with a retailer.
That’s why more and more DTC brands are relying on a 3PL that offers logistics operations and premium technology and automation to help support their supply chain.
How to optimize your shipping logistics
In a global economy of increasing freight costs, disrupted supply chains, and expanding competition, online brands are investing more of their time and energy into increasing operational efficiency.
One of the greatest opportunities for growth is in shipping logistics optimization. There are numerous ways to your optimize shipping logistics, especially if you lean on a third-party logistics partner like ShipBob to help.
Distribute your inventory
Distributing your inventory directly impacts your shipping logistics. A distributed inventory model allows you reduce shipping costs and delivery times by storing your products closer to your consumers in more than one fulfillment center.
Think about it: 2-day shipping was once only possible by using expedited shipping via air — a big expense! Fortunately, major shipping carriers and other third-party logistics (3PL) companies now have the infrastructure and resources to enable affordable 2-day shipping via ground.
With distributed inventory, ground shipping becomes the quickest and most cost-effective mode of transporting shipments to their end destinations.
90% of customers say free shipping is their biggest incentive to shop. Ensuring your products are as close as possible to the people who buy them also helps unlock your ability to offer them that highly sought after perk.
“We sell flammable goods that need to be shipped via ground, so ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US. This is helpful especially when weather challenges happen; being able to have different locations to ship from allows for a more seamless supply chain.”
Andrea Lisbona, Founder & CEO of Touchland
Automate your order management and view real-time data
A robust order management system helps remove bottlenecks for you as your online store grows. This process begins when an order is placed on your site, and ends when the customer receives their delivery.
When scaling your business, it’s important to streamline the order management process, along with inventory. Inventory management software allows you to accurately track levels, orders, sales, and shipments. It can also help automate real-time inventory tracking, saving time and preventing common issues like:
- Overstocking and understcoking
- Splitting shipments
ShipBob’s order management solutions provides all of the easy-to-use features your business needs, from efficient order management and accurate inventory tracking and reporting, to highly reviewed customer support.
“With ShipBob, I can keep customers updated in real time. I just hop into my account, have a look at their order, and see where it is. I’m also able to fully manage my business and logistics on the go.”
Implement a warehouse management system (WMS)
Managing a warehouse can be a second full-time business for any brand, large or small.
The best 3PLs use a digital warehouse management system (WMS) that connects with their merchant dashboard, allowing you to monitor and control daily operations in their warehouses and provide real-time insights into those operations.
If you manage your own warehouse, implementing a robust WMS helps you grow by giving you better order efficiency, reducing inefficiencies that can be a drain on your business.
Unlike on-demand warehousing platforms and many other 3pLs, ShipBob uses proprietary warehouse management software to give you full transparency into your shipping logistics (and some peace of mind).
“We are very impressed by ShipBob’s transparency, simplicity, and intuitive dashboard. ShipBob’s front-end software was the primary decision-making factor for me in choosing them over other fulfillment solutions.
Their software is so simple and intuitive, especially as so many 3PLs have either bad or no front-facing software, making it impossible to enter orders, keep track of what’s leaving or entering the warehouse. It’s fun to see orders shipping out instantaneously.
I love how fast and efficient ShipBob is. Their shipping costs are very reasonable, and their platform makes fulfillment feel so easy.”
Harley Abrams, Operations Manager of SuperSpeed Golf, LLC
Choose the right carrier
Shipping carriers are responsible for transporting goods from a warehouse to your customer. Major US and international shipping carriers include USPS, UPS, FedEx, and DHL. (Note: ShipBob tracks carrier performance of all four, including their average transit times each week.)
Different businesses require different shipping capabilities to make sure deliveries are executed smoothly, so it’s difficult for many businesses to choose a carrier. All sorts of things can affect which one is right for the job:
- Location: Are you shipping locally, across the country, or internationally? Depending on your answer, different carriers offer various services, benefits, and rates.
- Reputation: Believe it or not, the USPS ranks as the #1 trusted agency in the US (though not number one for all shipping service levels). Customers have preferences on who delivers their packages, and it’s important to consider a carrier’s level of perceived trustworthiness.
- Where your inventory is stored: If you’re shipping products around the country, you may want to consider a carrier that can pick up products locally from distributed fulfillment centers for fastest possible delivery.
- 2-day shipping options: One of the most important things to consider when choosing a carrier is transit times. If you need orders out the door and into the customer’s hands fast, then you should partner with a carrier that offers appropriate options.
ShipBob removes the stress of dealing with carriers along with the guesswork of knowing who to use when, by choosing the shipping carriers that can best serve your customers, wherever they are. We automate shipping by taking care of the process for you, while also managing carrier relationships on your behalf (and work with everyone from regional carriers, to large international players).
“Our focus is to grow our business, and that will not be achieved by packing up orders, sending out boxes, and dealing with enormous carriers like FedEx and UPS ourselves. That’s what ShipBob has mastered.
We want to focus on engaging with our customers, building our community, and continually developing new products that keep pace with science and customer needs. ShipBob lets us do just that.”
Pablo Gabatto, Business Operations Manager at Ample Foods
How to optimize shipping logistics with ShipBob
For most growing online retailers, managing shipping logistics is a time-consuming and costly process.
A 3PL partner can help take the complexity out of shipping logistics, from managing inventory to shipping orders to customers. Once you connect your online store to our fulfillment software, you can then choose which fulfillment center location(s) to store inventory in.
From there, you can submit a warehouse receiving order (WRO) and send inventory directly to us.
We’ll take care of warehousing, from receiving inventory in to stowing it, all of which you can view in real time from the ShipBob dashboard. Once orders are placed, they will automatically be sent to the nearest fulfillment center location to the order’s destination, where the fulfillment process will begin. Then ship orders through the most cost-effective route.
ShipBob partners with regional and major carriers (domestic and international) and negotiates discounted shipping rates to pass on to you and your customers.
“I was most impressed with ShipBob’s commitment to driving improvement and technology, which drives reductions in delivery time. I knew a shorter transit time was going to become more and more important.”
Michael Peters, VP of E-Commerce Operations at TB12
To optimize your shipping logistics, ShipBob can help. To learn more about how ShipBob works, click the button below for more information and fulfillment pricing.
Find ecommerce operations jobs
ShipBob launched the Ecommerce Operations Job Board to help people find the best jobs and hire top talent for ecommerce operations, supply chain, logistics, fulfillment, and shipping roles. Post a job here, or browse jobs here.
Shipping logistics FAQs
Here are answers to the top questions people have about shipping logistics.
What are the three types of logistics?
Inbound logistics are the operations that move products from a manufacturer to a fulfillment center or warehouse, including materials management, sourcing, and warehouse receiving. Outbound logistics are the operations necessary to move your products from a fulfillment center to your customers, such as order processing, picking and packing, and shipping. Reverse logistics are the processes necessary to successfully facilitate customer returns and exchanges.
How can I enhance my shipping logistics?
Shipping logistics are the backbone of your supply chain. Distributing inventory to multiple fulfillment centers that utilize modern warehouse management systems (WMS) and automated order management is the most effective way to improve shipping logistics and enhance customer experience.
Does ShipBob manage shipping logistics?
ShipBob offers shipping logistics including fully outsourced fulfillment with automation, ecommerce warehousing, inventory forecasting and management, and affordable 2-day shipping shipping options. As the leading 3PL for ecommerce businesses, ShipBob handles shipping logistics for you, so you can focus on running your business.
Is shipping and logistics the same thing?
No. Shipping is the physical movement of your goods from one destination to another (e.g., from a warehouse to your customers) and one of many logistics processes. Logistics refers to the synchronized processes that manage how your products are acquired, stored, and transported to their final destinations. Shipping is often one of many facets of logistics.
What is shipping logistics management?
Shipping logistics management is the overall process of managing the movement of goods through a supply chain. Most online brands trust a 3PL company like ShipBob to handle their shipping logistics management and fulfillment. For instance, online retailers can send inventory directly to ShipBob’s fulfillment center locations. Once orders are placed, items are picked, packed, and shipped directly from the ShipBob fulfillment center to the customer.
What is the relationship between shipping logistics and supply chain?
Products in a supply chain are manufactured, reviewed, stored temporarily, and shipped several times before they ever reach your end consumer. Efficient shipping logistics are necessary to accurately plan, process, and manage the movement of finished goods from one place to the next, until items reach the end user. Shipping logistics is one step that happens within the larger supply chain.