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eCommerce Logistics Model – Its Role in Online Success

Puneet Bhalla

Associate Director - Marketing @ Shiprocket

August 14, 2017

4 min read

India’s eCommerce market is growing at an astonishing 30% CAGR. Out of this, logistics, shipping, and delivery together make up the soul of the supply chain management process. They are individually complex steps in themselves because there are many sub-steps involved to complete every single phase.

Starting with the Logistics, it is the key enabler for the growth of eCommerce retail industry. While many eCommerce retailers have partnered with logistics service providers (LSPs), some have invested in developing in-house logistics capabilities.

Steps Involved in the eCommerce Logistics Process

  • First mile logistics
  • Fulfillment
  • Processing / Sorting
  • Line-haul
  • Last-mile logistics
  • Returns

Different eCommerce Logistics Models

For a new eCommerce portal, it’s necessary to pre-decide the required business model for retail logistics.

A few of these models include : –

  • Inventory-led model
  • Fulfillment by eCommerce retailer model
  • Dropship model
  • Marketplace model

LSPs offer a variety of delivery options for the delivery time window. New players in the eCommerce business need to be definite and decisive upon the choice of business model and the delivery time window for the placed orders’ deliveries. Switching to another model midway might be troublesome and require a business overhaul.

Shipping is another phase that is integrated into logistics. Ordering and timely delivery are possible only when there is butter-smooth coordination between the eCommerce retailer and the shipping company. Shipping is a process of transport of goods by some means of transportation. New eCommerce players require the understanding of a few shipping terms.

Commonly Used eCommerce Logistics/Shipping Terms

  • Airway Bill Number (AWB No.) – It is used for tracking those shipments that are done via airways. This number is used to check the delivery status and current position of shipment.
  • Shipping Invoice – A document containing standard information like the item(s) ordered, the cost, discount offered, taxes (if applicable) and final billing cost along with sender’s & receiver’s address.
  • Shipping Label – It describes the content of the package and helps the courier to deliver the package promptly.
  • Shipping Manifest – A document that acts as a proof of handing over the shipment to Courier Company. It contains the information of pickup courier person and his/her signature.
  • CoD Label – Cash on Delivery (CoD) label is printed on top of the package alongside or on the Shipping Label. It may also contain product dimensions and weight.

Thus, for new players in the eCommerce realm, it is necessary to understand the shipping process is necessary for smoother deliveries and better customer feedback.

Lastly, Delivery or the last mile connectivity step to the end-consumer is the final phase of handing over the ordered commodity to the customer. If there is no return sought for the ordered item, delivery is the last step to the Supply Chain. Partnership with logistics operators and collaboration across the supply chain helps to safeguard the delivery. The delivery phase is where you provide life to eCommerce’s concept of “Anything, Anytime, Anywhere.” Delivery phase gets engaged with both the retailers as well as the logistics operators in a synchronized manner. As a new player in the eCommerce business, one needs to be known about new and emerging trends in fulfillment, last mile-delivery and cross border eCommerce related concepts. Delivery is applicable to all requirements of an eCommerce business, be it B2B, B2C or C2C.

Delivery is all about precision, timing, and safe/cautious handling because a safe delivery ensures trust-building and irrespective of the eCommerce retailer having that specific delivery channel in-house or hired, ultimately the retailer suffers a loss of reputation and trust of the end-consumer. Thus, for new players in the eCommerce retailer business, it is very much essential to choose an appropriate, experienced, reputed and reliable delivery channel so that the reputation of the startup isn’t damaged before even being made.

Hence, Logistics, Shipping, and Delivery form essential functional aspects of eCommerce business and must be handled, observed and supervised precisely.

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