Logistics for online stores

How can you make the most of the various logistics options as an online store?

E-commerce logistics is one of the most important aspects for the development of an online store. This is especially true for traders who are looking to grow their business. Over time and with the growth of your online store, profits but also costs will increase: you will need enough space to store the inverter, hire employees, every year the regulations increase and more.

Due to the great competition and the development of online commerce in general, customers have more and more choice and are therefore more demanding. Their expectations are not only for good product quality, but also for fast delivery . Doing all this can be a huge challenge for the trader. That is why e-commerce logistics is crucial.

In this article, we will look at the different logistics strategies for your online store and how you can take advantage of these many opportunities. 

Importance of logistics for e-commerce

Your logistics must be organized in such a way that you meet all the needs of your customers and at the same time be profitable. To do this, it is important to optimize your logistics costs.

On average, an online retailer spends between 20 and 40% of its turnover on logistics. These costs include warehousing, order picking, packaging, delivery and return.

If you run your online store yourself, you can reduce some of your costs, but if your business grows, this can become a daunting task due to the large number of orders that need to be processed weekly.

In addition, logistics will take you valuable time for what you really need to focus on: generating more online sales

What are the logistics options for e-commerce for online stores?

You can organize the logistics process in different ways:

  • Dropshipping
  • Fulfillment (electronic performance)
  • Using your own logistics system
  • Concluding a contract with a carrier
  • Use of an automated logistics platform

We will explain the advantages and disadvantages of all these possibilities in the following lines.

What is dropshipping?

Drop shipping is a business model that literally means "resale". If you use dropshipping , you will be able to offer products that you do not store in your warehouse or pay for rent.

The moment you place an order, you order the product from the manufacturer or supplier, who then sends it directly to the customer. 

Advantages of dropshipping

With the Drop shipping model, you can offer your customers products that you have not yet purchased. This reduces the risk of investing in too many goods that you will not be able to sell.

Since you do not have the inverter, you do not need an available warehouse to store the products. The supplier assumes responsibility for the processes related to inventory management, product processing and delivery. All this means that you will have more time to consider your business strategy and your costs are minimal. 

In reality, you are a remote consignor who does not have the goods in stock, and therefore, you can bet on a greater variety of products and expand the scale of your business accordingly.

Disadvantages of dropshipping services

Why doesn't every retailer rely on the dropshipping model? The answer is because this option also has some disadvantages, such as: 

  • Great competition
  • Small profit margins
  • Lack of influence on delivery and customer experience 

What is electronic performance or fulfillment?

Another option for your online trade is fulfilment (or electronic order fulfillment).

Fulfillment warehouses provide all processes for the execution of online orders: from the storage and management of inventory, processing of orders and their completion to sending the product to the customer, including the return of goods. The companies that offer fulfillment services have everything necessary to optimize the logistics process from the receipt of the order to its arrival at the end customer.

Although outsourcing the logistics process to fulfillment companies is a significant investment, it will save you a lot of costs and time in the long run, so you can focus entirely on your business strategy.

Advantages of full film

With this model, you own the inverter, which means you have to invest in a commodity. This, on the one hand, gives you the assurance that you will have control over your inverter and the sales process.

When working with a fulfillment partner , you can count on higher profit margins.

Disadvantages of fulfilment 

This model is preferred more than larger online stores, as you need to invest more to work with a fulfillment service provider.

In addition, you are responsible for purchasing the products with all the resulting financial risks.

When you work with a fulfillment service provider, similar to the dropshipping model, you do not have full control over the logistics processes. To avoid dissatisfied customers and mistakes, bet on a proven partner in the field to ensure the quality of your service.

We, from Bigarena Fulfillment , have a large and functional modern warehouse and take full responsibility and all care for the acceptance, labeling, counting and storage of your goods. In addition, we work with specialized warehousing software, thanks to which errors in packaging and handling of shipments are unacceptable. If you are looking for a reliable partner for the implementation of the processes of your online business, you can rely on our extensive professional experience.

Use of own logistics system for e-commerce

If you want to keep in touch with your customers and bet on a higher profit margin, you can manage the logistics yourself. 

However, this means that you have to take care of all the steps in the execution of orders: from the processing of orders, the printing of delivery labels and delivery of the shipment, to the processing of returns, etc. - and all this is at your expense. You can save some of these steps by purchasing order processing software, which is also an additional cost.

Concluding a contract with a carrier

The choice of carrier (s) depends on several key factors:

  • delivery speed
  • ability to track the order
  • possibility of delivery in the evening and at the weekend
  • possibility to receive the shipment at the service points
  • network in the country and abroad
  • the tariff charged by the carrier

Using an automated platform

Sales through automated platforms provide a flexible business opportunity with relatively low start-up costs. It is possible to sell goods even without having your own online store.

Advantages of marketplaces for your business:

  • You can use an already established channel to sell online goods.
  • You will have lower marketing costs compared to other sales channels.
  • You can also sell abroad as soon as you become part of the platform.
  • The platforms take care of high traffic, and at the same time you have the opportunity to follow your competitors and trends in online commerce.
  • Because the platforms are well-established online markets, they enjoy a higher percentage of trust from customers.
  • You receive feedback on your products and services to encourage other customers to buy from you. 
  • You can take advantage of preferential delivery prices.
  • Provide greater transparency - stocks, prices and stock levels are available in an open environment
  • Your products will be available 24 hours a day on the international market. 

Disadvantages of automated platforms for your online business

Sales on online platforms also have potential drawbacks that should be taken into account.

  • Marketplaces are online platforms , the use of which charges a commission for each sale. Before choosing a platform for your business, make sure you understand all the terms of the contract. 
  • There may be restrictive conditions regarding the way you can communicate with customers.
  • There may be restrictions on branding the products you sell.

We hope this article will help you choose the right logistics strategy to develop your online business. If you are still not sure what to choose, contact the BigArena Fulfillment team , which will be happy to help you make the best decision for your business.