E-commerce is in the middle of a boom. The economy is strong, and trucking capacity is tight. Yet, as few as 33 percent of shippers have taken advantage of a transportation management system (TMS), reports Michael of Levans of Logistics Management. As e-commerce continues to expand, shippers must adapt to the changing needs of consumers and accommodate returns rates of up to 400-percent than that of traditional, brick-and-mortar purchases. In order to manage e-commerce logistics and maintain cost efficiency, shippers need to know the challenges in managing e-commerce logistics, how a TMS can help, and a few tips to streamline the process.
What Are the Challenges in Managing E-Commerce Logistics?
The challenges of managing e-commerce logistics mirror the challenges of traditional logistics management, but with an added emphasis placed on speed of order fulfillment and delivery, as well as thorough, timely management of reverse logistics. This is due to the higher rate of returns associated with e-commerce purchases.
According to Roberto Michel of Logistics Management, the biggest challenge in e-commerce logistics revolves around the demand for additional last-mile delivery options and next-day shipping, if not same-day shipping. Traditional warehouse management systems (WMS) were designed to handle orders in batches, which are costly in e-commerce fulfillment. Instead of having periods of peaks and lulls, orders continue to flood the warehouse on an ongoing basis, and being able to incorporate incoming pick tickets into existing picking strategies can mean the difference between success and failure.
Going back to reverse logistics, consumers expect a hassle-free, cost-free returns process. Shippers must now address the added costs of free returns from more returned orders. As a result, freight spend as a whole has increased, but passing this cost along to consumers will only serve to undermine the productivity and brand value gains through e-commerce.
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Why a TMS Is Key in Managing E-Commerce Logistics
It’s no secret that less than truckload (LTL) shipping can be a cost-effective way companies to reduce shipping costs, but taking advantage of LTL rates and offering immediate e-commerce free quotes can be almost impossible. Shippers are faced with a decision between estimating LTL freight rates, as well as the delivery schedules, and risking undercutting costs of shipping. To consumers, a company may offer free shipping, but every instance of free shipping amounts to added expenses for a company. This is why some companies have already taken steps to set purchase minimums for free shipping or discounted shipping options. However, the basic need to provide an immediate shipping quote to consumers, even if such quotes are not factored into the final purchase price, continues to exist. This means consumers can see how much shipping would have cost if they were not given the free shipping option, and this has additional value for shippers by allowing them to know their exact shipping costs.
Fortunately, advancements in TMS technology, such as the Cerasis Rater and integrated LTL e-commerce solutions can offer less than truckload rates, schedule shipment pick up or drop off once an order is submitted and track and analyze all online shipping activity. This marriage of traditional TMS function and e-commerce capability can revolutionize freight management by removing the risk of unknown variables in freight management for the e-commerce world.
Top Tips to Manage E-Commerce Logistics
E-commerce logistics make up some of the most complex logistics operations on the planet. Shippers need to conduct research to understand how and when products are ordered, what type of shipping options are necessary and how to keep costs in check. As a result, shippers need to follow a few tips to successfully manage e-commerce logistics, which include the following:
- Take advantage of all available shipping options. Although working with traditional small package and LTL shipments can help, a combined approach, utilizing multiple modes of transport, is essential to successful management of e-commerce logistics. When dealing with larger items, it is even better to have a dedicated provider that can handle the intricacies of bulky items and unusual shipments, such as freight better suited for a white glove service.
- Offer multiple shipping options to consumers. Consumers want to see more than the standard shipping options. Even if your company is able to offer free shipping and next-day delivery, consumers may want to have the luxury of picking up an item in-store or having it delivered to a third-party location. This is the same case with Amazon. Amazon’s customers have the option of picking up a product at an Amazon locker site or having it shipped somewhere else. Walmart has implemented curbside pickup options, as well as pick up in-store options and ship to home delivery. Variety is the spice of life for the e-commerce consumer, so shipping must have variety.
- Getting into and visibility into shipment status and location. Real-time data and tracking of e-commerce shipments are critical to success. Consumers will want to know where product is, when it is expected to arise, why it has not already arrived, and what they can do to speed the process. Obviously, shippers are not all-powerful, and adverse events, like bad weather, do occur. Having the capability to reroute shipments and ensure the timely delivery of orders made through e-commerce platforms will build competitive advantage for shippers and improve customer service levels.
- Leverage an E-commerce-based TMS. While using any TMS is a great way to help manage freight spend and logistics, the realm of e-commerce takes an extra level of finesse and care. Shippers need to reevaluate existing TMS use and consider implementing a solution that is designed to work with e-commerce platforms. For instance, Cerasis now offers a full lineup of e-commerce based TMS solutions, empowering decisions and helping keep costs under control. Meanwhile, seamless integration with existing shopping carts allows for the white-label shipping support companies need in today’s age.
- Connect the entire supply chain. It is unreasonable to continue operating with organizational silos in the world of e-commerce. Demands for products can change on a minute by minute basis, and shippers need to know how to move product closer to end users and fulfill orders faster. Although a large part of this has to do with shipping strategy, connecting the entire supply chain, including the procurement of raw materials and products from vendors, will allow shippers to better manage inventory, move more product and satisfy more customers.
The Big Picture
Much like freight management meant for inbound shipments coordinated with vendors, e-commerce logistics is filled with risks, including threats and opportunities. Instead of succumbing to the near-unrealistic expectations for e-commerce fulfillment, shippers can position their organizations to succeed by implementing an effective e-commerce logistics strategy. Such strategies are based on the tips to succeed in e-commerce, so shippers can use such tips to select a system that will improve and streamline managing e-commerce logistics.