Logistics models – which ones are worth choosing in e-commerce?

Own online store is an activity that requires: meticulousness, full commitment and continuous development. Strong market competition means that a business that does not develop is forced out of the market. Nowadays, customers require the highest level of customer service, fast order fulfillment, and reasonable prices for the services provided. For this reason, it is important to choose the right logistics model for your business.

Logistics in e-commerce – what is worth knowing about logistics models?

Logistics processes for e-commerce companies can be divided into several sectors: storage, picking, packaging, and shipping to the recipient. Along with the growing requirements of potential customers, the pressure on the development of a commercial enterprise is also growing. The main requirements for e-commerce companies are:

• short order fulfillment time,
• fast and safe delivery by courier,
• low order completion costs.

Meeting high standards and consumer expectations often generates high costs. Can they be limited in any way? Fortunately yes! It is enough to use ready-made logistics solutions that include the implementation of modern order and transport management systems.

Logistics models available for e-commerce companies

The organization of logistics in the e-commerce industry is the foundation that turns into real profits for the company. Want to find out which logistics model will be best for your business? Here are some proven solutions.

Dropshipping

In recent months, it has become an increasingly popular way of doing business online. Dropshipping does not generate high sales costs, as it does not require the company to store the goods (except for returns, although not always). This logistics model focuses on sales brokerage. This can be described in a few steps.

1. You collect orders from customers.
2. You collect payments.
3. You order goods in a warehouse with a shipment order directly to the customer.

Unfortunately, dropshipping has some downsides. In this case, as an entrepreneur, you will have limited control over the processes of shipping the goods.

Own logistic warehouse

This is probably the oldest logistics model known in the retail industry. Launching an online store with its own storage space requires considerable financial outlays. Such an undertaking requires investment in modern warehouse equipment, hall equipment, warehouse management software, as well as in qualified employees.

Such a solution can be profitable for a small business, where the number of orders does not exceed a dozen per day. The advantage of your own warehouse is direct access to the goods and the ability to constantly control the flow of orders through the warehouse. The downsides are quite high warehouse maintenance costs and low efficiency with the growing number of orders.

Cross-docking

What is the cross-docking logistics model? It is a system that allows you to store goods obtained from various suppliers in one point. Thanks to this, you can skip the costly process of storing goods in warehouses just before picking an order for the customer.

Cross-docking will work well for companies that want to reduce expenses for storing goods. In this way, the risk of stopping deliveries to the final recipient can also be avoided. Unfortunately, a big downside is the lack of greater control over inventory. Without an appropriate ICT system, a situation may arise where the customer orders goods that are no longer in stock.

Fulfillment

This model requires the entrepreneur to be the least involved in logistics processes. In this case, the external service provider takes over the responsibility for storage, logistics, fulfillment of orders and returns of goods. Thanks to this, you can reduce the costs of running a business in e-commerce, as well as speed up the execution of orders.

Of course, fulfillment also has disadvantages. In this case, the logistics operator is responsible for stock and shipment of goods. This sometimes generates problems with maintaining high delivery standards. However, the risk can be reduced by choosing a reliable logistics operator.

How to choose the perfect logistics model for your company?

An alternative to the above proposals may be a hybrid method of doing business in e-commerce. The combination of several different logistics models is an opportunity to optimize costs and maintain the smoothness of order fulfillment. Before you decide on a specific logistics model, consider:

• preferences of your customers,
• company budget,
• number of monthly orders to be fulfilled,
• goods storage costs,
• shipping methods available.

Outsourcing logistics services is a good choice, especially if you want to run an e-commerce business with a minimum of costs and stress related to order fulfillment. In order to improve logistics processes in the company, we also encourage you to use e-commerce logistics services, marketplace, as well as optimization of processes related to production, shipping and packaging of goods. You can take advantage of such support by contacting OEX FULFILIO.