What is Outbound Logistics and How your eCommerce can Best Perform at It
When you are planning to open an eCommerce business, you need be aware of some basic concepts, actions and process you will have to follow for your business to succeed. For example: what your product is, where you can find a manufacturer, where you will store your stock or how you will deliver it to your clients. It might seem a bit overwhelming at the beginning, we know: don’t forget about this, let’s check this other thing out, call the suppliers and a long etc, but it is important to acknowledge the situation first and then act, so nothing gets lost on the way.
That’s why today we want to talk about Outbound Logistics. We know this part of the logistics process of building and managing an eCommerce company pretty well, and we consider it essential to achieve your goals. However, people normally don’t pay attention to it until the end and that is a mistake.
Concerning logistics, in general the outbound process applies to the majority of business, but we will focus our examples on online stores since that is what we work with the most.
What is Outbound Logistics?
Ok, let’s start from the beginning. What is Outbound Logistics? It is the process of storing, transporting and delivering your products to customers. Normally, this process starts with a client’s order in your website, then it follows up by the packing and transportation of the item, and it finished with its delivery. It is actually an easy concept.
In order to make outbound logistics work as smoothly as possible, online stores mainly need to be smart when choosing the right selling channels for their target audience, be in control of their inventory and of course, optimize their delivery options. In fact, this last point is crucial. Why is delivery fundamental?
Because, nowadays, the majority of online shops – and most business, actually – have the customer as their main focus of attention. Having a negative experience regarding one of the most expected parts of the shopping process, which is receiving the products, will make customers very dissatisfied. And that can have a big impact on your sales. In fact, according to loqate, 57% of consumers avoid buying from an online store with whom they have already had a negative delivery experience.
Outbound Logistics and its phases.
Because every online store goes through those outbound logistics processes mentioned before, storing, transporting and delivering, let’s get each of them separately for a better understand. That way, you will know how your eCommerce should approach each of them when the time comes.
Basically, it is the place you keep your products before you sell them. There are different alternatives regarding storing, however for the majority of online shops, the two most use options are: having your own warehouse/store space or renting one. Depending on the kind of eCommerce you have, as well as on your budget, you will consider one or the other. Either way, and since the product might need to be delivered to a customer at any time, to have in place a proper organization system is imperative, so you know how much stock you have.
Because of that, another main point arises: quantity. You must know the amount of products you have on a daily basis and keep a balance so you don’t run out of stock, or get too much. On one hand, if a shop overstocks its inventory, the products may become antiquated or obsolete. Plus, having products stored indefinitely without selling them it’s useless and even more, if you have to rent a warehouse to store them, it will cost you a big amount of money. On the other hand, if a store doesn’t have enough stock in its inventory, it takes the risk of losing customers.
Best way to perform here: First of all, be aware of what is the best way you can store your product. You don’t want to pay for a big warehouse which will be half empty, but you won’t like to have your house fill up with boxes either. Once you have got your ideal store place, keep your inventory updated weekly or even daily so you don’t get any surprises on the way. One way to do so is by using an Inventory Management Software. Check out which one can adapt better to your business needs and get the maximum benefit out of it.
Transportation here means the way you make your product reach the customer who bought it. Pretty simple, right? Well, the concept is indeed very simple. Still its importance is vital, as without transportation, there is no logistics as such. In fact, this is one of the most complex parts of the outbound logistics. Therefore, it is necessary to move the product from one location to another in the most convenient and efficient way possible.
For that reason, at this point it is mandatory to talk about carriers, of course. So, unless you have your own fleet of cars or trucks available for you to delivery the products, most eCommerce owners need to contract these services. And it’s very usual for majority of stores to do so. Unless your products are so small you can send them in an envelope by mail, you’ll probably need a carrier. You can get in contact with different operators depending on your needs and your budget to get a variety of shipping rates and from then on, you choose. Take into consideration different factors which can influence those rates, like:
- shipping volume: the more you ship, the cheaper will get
- weight: if they are heavy, either in weight or in volumetric weight, you will pay more
- means of transport: there are different options like truck, plane or boat for example
- way of delivery: carriers will give you variety of choices, like pickup point or home delivery, among others
- destination: carriers work in different levels such as regional, national or international
- additional costs: make a good research, so you don’t get extras you didn’t know about like fuel or extra insurance for example.
Probably at the beginning it can be a bit difficult for you to get good deals from carriers since the number of shipments you will have is very low, but it is a matter of knowing where to look and who to ask. We can give you a hand with that, by the way.
Best way to perform here: Be really aware of what the needs of your online store are to choose your operator wisely. If you sell small things like jewellery and it can be sent by post, don’t over complicate yourself. If your product is bigger than earrings and you need to use a box, measure and weight well before sending it (including the box) so you don’t get any surprise. If you sell regionally, find a regional carrier, they will do the same job as a national agency but cheaper. On the contrary, if you ship nationally, don’t waste your time and money with a smaller operator which won’t cover your need properly.
Small hint here: Don’t forget that besides the carriers, it is very important to know very well who your customers are and what expectations they have about delivery. For example, if your clients live in a big cosmopolitan city, they might accept that you don’t offer same day delivery, but they won’t wait for a week to get their products. You must consider the best choice you can offer to your audience in order to keep them satisfied. Even if at first it looks like an extra effort for your eCommerce, in the long run, it can be very beneficial for your company.
In other words, it is handing your products over to the final client. It is closely related to transportation since technically the carrier that you choose is the one who will deliver the product on your behalf. That’s why it is also important that when choosing a carrier, you select one or more than one you can trust. You don’t want your products to be delivered in bad conditions, damaged or broken.
According to Metapack Consumer Research Report, 75% of customers expect all delivery options to be displayed on the product pages. Actually, the same report states that “54% of consumers expect to be able to choose which carrier delivers their online purchases”. So, a good way to approach this is to give your customers the option to choose the carrier themselves. They will trust the shipper they choose hence they will also trust your store too. Reliance is key for customers, nowadays even more.
Apart from that, there are other elements you can have more control over during the delivery and after, and they can be decisive. During the process for example, the barcode system will help you to track and trace the order. In this phase it is really important to keep your customers updated on where their parcels are. And after the delivery, if any client has any problem or doubt for any reason, an incredible customer support could help you stay on the good side with your customers if they need to contact you regarding the product. A good support team is always welcome.
Best way to perform here: As we said, choose a carrier that you trust as if it was you doing the delivery. And to be honest, try also to be customer oriented. We know it can be difficult and if you are still a small online shop to afford a whole team for customer service, or don’t know how to do the track&trace emails, don’t panic. In fact, there are online software and shipping platforms that can help you with those parts of the shipping process, to effectively help you manage your eCommerce. And normally, they can offer you more advantages than just customer service.
Even though outbound logistics belongs to the final segment of the chain in creating and managing an online store, it is very important. The way you approach how to store your product, will help you to control it. A clever choice for transportation will allow you to get to your customers in the most effective and efficient way possible for your eCommerce. And finally, optimizing your deliveries will help you to reach your customers’ expectations which is highly beneficial to your online store.