Sample Research Paper on How Logistics Works in E -Commerce

Logistics is one of the less often thought about aspect of the digital retail revolution. As a
process, it oversees the means in which products reach businesses and customers.
Among the e-commerce businesses setting the new standard for e-commerce logistics is Amazon
by making deliveries take place in less than 48 hours. Walmart and Target are also following
suite by allowing customers to enjoy a two-day shipping process.
It's, now than ever, important for organizations to invest in distribution centers and warehouses
to meet consumers' expectations and cope with the rising demand from the modern e-commerce
channels. Such an investment will also help speed up the design, development and,
implementation of logistics and supply chain processes.
Recent technologies including advanced robotics, augmented reality and drones are helping
companies stay competitive, satisfy customers' needs and reduce operational costs.
Understanding logistics
Logistics generally deals with the management of products or resources that are in storage and/or
transit. When applied to e-commerce, the process enables businesses to ship orders to customers
and merchants to have their inventories transported.
If you're running an e-commerce site, you'll come across the term logistics management. With
logistics management, your role as a retailer is to locate and identify potential shipping and
distribution companies and evaluate their effectiveness.
Most business prefer outsourcing logistics to third-party companies that are equipped to handle
the storage and transport of goods.
How logistics applies to modern e-commerce
One prerequisite to running an e-commerce business is to master the basics of logistics. Modern
businesses, regardless of their sizes, increasingly rely on back-end supply chain management to
keep their operations afloat.
If your business doesn't have a brick-and-mortar facility for housing inventory, the best thing to
do is to outsource the help from third-party logistics providers. The outsourced help will ensure
that your business activities run smoothly without having to worry about storing and shipping
What's logistical process for a typical business?

Small-scale businesses follow a simple logistical process when they have goods that need
transportation or storage.
The process usually starts with a customer ordering a product on your online store and proceeds
with an inventory software triggering the transaction. It's increasingly important to have an
integrated inventory management software installed on your e-commerce site for the logistical
process to be smooth.
In online businesses, logistics basically entails the following processes:
1. Inventory management
Management of inventory involves using proper methods to keep track of stored goods. With this
procedure, it's easier for your digital store to monitor stocks. You also get to predict the items
that have a higher selling power than the others.
The reasoning behind inventory management is that businesses get to ensure that they don't
unexpectedly run out of products. Customers' buying trends can help you predict on how your
products will sell in the near future.
2. Storage/warehousing
Warehousing is a logistics procedure that covers the physical stores businesses use to store,
manage and, track products that are yet to be shipped to customers.
Over the years, there has been tremendous developments in the field of warehousing. Most of
these advances make it easier for e-commerce players to use warehousing management systems
in tracking inventory.
Traditional warehousing management techniques take time and are costly to execute.
3. Order fulfilment
As the most crucial aspect of both logistics and e-commerce, this procedure ensures that
customers recieve their respective orders promptly and in good condition.
Your business can outsource this service from a third-party provider or invest in an in-house
order fulfilment service. The customers' location, size of business and order quantity will
determine which route to take.
Is it possible to track stored or transported goods on the back end?
As logistics is becoming more complex and dependant on digital technology, businesses now
enjoy diverse options for monitoring inventory in the supply chain.
When installed in your e-commerce site, inventory management software can update you on the
number of items remaining on your online shelves. With this information, it's easier to stay
productive as an online retailer and attend to customers' orders conveniently.

If you've partnered with services like the USPS, FedEx or UPS, it's possible to track goods by
using the fulfillment numbers provided by the respective shipping company.
It's a good idea to monitor orders to ensure they reach the shoppers. Giving your customers the
same tracking information in their confirmation emails can help dispel uncertainties with regards
to order fulfillment.
Challenges facing e-commerce logistics
While logistics proves to be incredibly beneficial to e-commerce players, it suffers various
challenges. Your customers will still expect the product storing and shipping processes to be
smooth whether your business is facing e-commerce logistics problems.
It's a good idea to protect your trusted customers and stay relevant in your niche of business as
these challenges arise. The problems your online store may face with regards to e-commerce
logistics include:
1. Resources for same-day delivery
As e-commerce giants such as Amazon are facilitating same-day deliveries, other e-commerce
sites (both small and large-scale) want to follow suite. Same-day deliveries are convenient for
online retailers if they have the resources to facilitate faster logistics and fulfilment.
Your business may want to stay competitive by shipping goods to customers in the same day
they're ordered. It may get frustrating if you don't have the resources to make the service a
2. Identity theft
Consumers are increasingly relying on online shopping sites to provide them with a wide range
of services and products because of the convenience they enjoy. Identity theft, as one of the e-
commerce challenges, is making it difficult for consumers to enjoy the convenience that online
shopping brings.
It may be saddening to your business if your customers' credit card information is stolen when
they're trying to purchase an item from your site. The customer will be forced to leave the cart
unattended because they can no longer transact with your business.
Cases of identity theft on e-commerce sites also hurt the logistical process in the long run since
consumers experience difficulties purchasing an order and fail to enjoy order fulfilment.
3. Free shipping costs
Online retailers are increasingly offering consumers the free shipping service as a way to
encourage them to shop more items.

What most people don't know is that it actually costs a retailer to facilitate such a service. If your
business is working with a third-party logistics provider, you'll have to shoulder the costs
yourself as you offer free shipping.
Some businesses incur losses after implementing the free shipping incentive since they didn't
factor in the shipping costs in the product prices.
4. Unreliable logistics providers
While third-party logistics providers are expected to be diligent in their line of work, there are
some who make it difficult for online retailers to effectively ship products to customers or have
inventories stored.
Your customers will get impatient with you when a product takes longer than the estimated
shipping time. They wouldn't want to know that the logistics provider has caused the delay.
At the end, working with an unreliable logistics provider may translate to product delivery
delays, which will make your customers lose trust in your business.
5. Technical errors caused by inventory management or shipment
tracking software
Advances in e-commerce logistics are making it easier for online retailers to keep tabs on stored
inventory or goods that are shipped to customers. Not all solutions designed to make logistics
convenient are effective.
The software you're using to track goods may crush or experience technical errors. Before
getting it fixed, you'll have temporarily lost information regarding the status of products being
shipped to your customers. If it takes longer for this issue to be solved, your business will
definitely have some damage control to do.
How to address e-commerce logistics problems
Growing an e-commerce business to the point of having a large customer base and constant flow
of revenue is a big deal. Your goal is to now ensure that all operations are afloat and that the
online store doesn't incur loses.
E-commerce logistics may take a toll on your company's financial resources if not done properly.
If you're planning to take the logistical aspect of your e-commerce business to a higher level,
here are some of the things to consider:
1. Visibility
It's important to maintain the vision as the logistical demands of your online store grow. Most e-
commerce platforms that experience a sudden growth consider expanding their logistical
capacity to cope with the increase in new products or orders.

If your business grows, expand your operations to use several dropshippers and warehouses.
As you expand to cope up with the growth, ensure that items are still visible when shoppers
proceed to the checkout state. Have enough stock at hand to keep up with these demands.
It's advisable to partner with third-party logistics providers and ask them to help you develop the
operational discipline and systems required for inventory management.
2. Demand planning
Successful online retailers make inventory predictions based on historical data. With this data
and a few techniques, it's easy for them to determine the amount of inventory needed by their
Some of the ways to implement demand planning include social sharing and site traffic
monitoring. Monitor seasonal trends such as holiday and weather-driven purchases to determine
the types of products consumers are likely to buy.
It also a good idea to invest in free shipping and offer discounts codes and use them to measure
the demands for your products.
3. Last mile
A University of Delaware study suggests that last mile services form up to 28 percent of the
aggregate shipping costs. Last mile typically revolves around the final delivery step to a
Your online store may facilitate last mile via services such as FedEx or UPS. If you're running a
B2B store, you can use an LTL carrier to facilitate the service.
The delivery experience helps consumers rate your company. Ensure that your last-mile strategy
is sustainable enough to satisfy the expectations of your customers and balance the resource and
cost requirements.
4. Free shipping incentives
Online shoppers have a higher preference for unconditional free shipping when it comes to
making purchasing decisions. Inc Magazine reported that Amazon's 100 million plus Prime
subscribers are loyal to the company because of the free shipping incentive.
Integrating free shipping into your services may prove profitable in the long run. Negotiate with
your shipper on how you can facilitate free shipping to drive more revenue to your business.
You can even employ marketing tactics that allow shoppers to enjoy free shipping on selected
products or orders with minimum sizes.
5. Decentralized warehousing

With this strategy, you'll be moving products close to your customers to reduce shipping costs
and delivery times. Use it to minimize last mile and ensure that customers derive satisfaction
from your order fulfilment services.
You may turn retail stores into shipping centers to facilitate this service.
6. Managing returns
While it's quite challenging to manage the returns of your business, it's advisable to separate
them from the forward moving supply chain of products you're expecting. When handled
properly, returns may take the form of reverse purchases.
According to Transport Tropics, online retailers can achieve returns of 24 to 36 percent. You
need to set up various mechanisms to achieve these numbers.
You may delegate the management of returns to your staff or set up mini warehouse locations to
offer low-cost spaces for the job.
7. 3PL relationships
Third-party logistics relationships come handy to e-commerce shippers looking to outsource all
or part of their logistical functions to other businesses. Working with a 3PL helps you handle all
fulfilment aspects, store/track inventory and manage inbound shipments.
Using a 3PL helps your online business focus on other critical operations while ensuring that
your shipping and order fulfilment services are effectively handled.
E-commerce logistics: Summing up
The e-commerce logistics business continued to grow with the rise in the popularity of delivery
companies and e-shops. It also continues to face more challenges, which requires online retailers
to speed up their logistics performance.
Where does your business stand in all of this?
Understanding the challenges facing the e-commerce logistics sector and how to solve them is
crucial if you want to succeed in the e-commerce world. It would also help if you incorporate
some of the strategies discussed here into ensuring that the logistical processes of your online
business run smoothly.