Many traditional logistics companies that have typically engaged in B2B logistics are now facing the demands of a changing world. With the tremendous growth of e-commerce last decade, logistics companies are gradually entering the doors opened by a B2C form of logistics. As the number of online shopping platforms grows, and consumer behaviour changes, the demand to enter this area is lucrative.
The most significant difference while doing e-commerce logistics is the change from B2B to B2C. Traditionally, the bulk product arrives in the warehouses, which is then moved on pallets and transported in bulk. Whereas, in e-commerce, the cargo arrives in bulk, but does not leave in the same way. It requires much attention after that, as an individual product leaves one at a time, as and when requested.
Checklist for E-commerce logistics
There are many different aspects involved in a simple cart to customer transaction. These aspects can be taken up by third-party logistics companies. First, they can operate as Fulfilment Centers, that are essentially large warehouses with a full inventory of products manufactured by the e-commerce retailer. Each of these warehouses is equipped with state-of-the-art management systems that keep a tally of the inventory and manage the bulk. The order is also picked, packed and shipped from these places. For smaller e-commerce businesses, fulfilment centres are operated by third-party logistics companies.
Next are distribution hubs that essentially function like fulfilment centres, in the way that they store inventory and can pick and pack, but the difference is that distribution centres are close to different populated areas, that allow them to reduce the cost of moving the product and decrease lead time. Further, there are also sorting facilities that are mostly needed by large e-commerce businesses that move the bulk cargo. Finally, there is the job of the carrier who is responsible for handling the transport of the product to the door of the customer.
With logistics giants consulting business with e-commerce giants, the space has now opened for e-commerce SMEs and logistics SMEs to collaborate and support each other's business. A right logistics company can offer robust and technologically advanced warehousing capabilities, with the ability to track inventory. It also provides the product's transport to the customers, reduced cost and time and further expertise to improve and take over the supply chain.
Investing in Warehouse Management System (WMS) or inventory management software readies a particular logistics company to take the leap into managing the different components of e-commerce logistics. Additionally, the coronavirus pandemic has significantly impacted the way consumers are preferring to satisfy their retail needs online, allowing online retailers to cement their businesses and collaborate with third-party logistics.
Opportunities from the East
In the world of E-commerce, hands down China takes the trophy for being the largest e-commerce market in the world. In 2019, over 25.1 billion packages were delivered via Chinese e-commerce companies, including large players like Alibaba. Apart from just Chinese consumers preferring online retail, many manufacturers have their units based in China, making it a hotbed for e-commerce business.
This has attracted many Western logistics companies wishing to leverage cross-border e-commerce that allows manufacturers in the East to move their products to the West. With growing routes to move products, logistics companies are upgrading their warehouses to adapt to the inventory requirements of the business. Over the last few months, due to the preparation of the holiday season, logistics companies have witnessed increased activities as consumers under lockdowns are preferring to shop online. In a study done by supported by the United Nation Conference on Trade and Development, shows a significant increase in online shopping in China, Turkey and Brasil, along with increases in European countries too.
These developments taking place parallelly to each other as a whole has turned the niche market of e-commerce into a mainstream model, attracting various logistics companies, allowing for IT companies to optimize processes, and finally focusing on the end goal for all, that the product reaches the consumer in 1-2 days!