All about e-commerce logistics

The success of an e-commerce is strongly linked to its logistics. Indeed, e-logistics plays a crucial role for the customer experience, and therefore for customer loyalty. While some companies choose to bring their logistics in-house to keep control of their entire chain, others opt for outsourcing. RAJA reveals everything you need to know about e-commerce logistics.

The link between logistics and e-commerce

EAlso known as e-logistics, e-commerce logistics relates to the different means implemented for the management of the flow of goodson an online sales site. It includes in particular storage, order preparation, transport, delivery of goods, but also the management of after-sales service.

The e-commerce sector has seen a real boom in recent years. Indeed, according to the LSA magazine, the sector is estimated to have gained more than one million customers in France between 2020 and 2021. Speed, product choice, free delivery…

Consumers have changed their consumption habits, pushing e-commerce players to organise their logistics to serve the customer. To do this, companies are investing. Indeed, between 20 and 40% of an e-commerce’s turnover would be allocated to its logistics.

The aim: to offer an optimal customer experience, particularly in terms of delivery. Indeed, according to a IFOP study:

• 98% of consumers would order from the same site after a positive delivery experience;
• More than 1 in 2 consumers would abandon their order if the delivery options were not suitable.

There is therefore a crucial relationship between logistics and e-commerce.

Internalising your logistics

Internalising your logistics, what is it?

A company opting to internalise its logistics chooses to manage its entire logistics itself. Thus, the company takes charge of managing its stocks, preparation, or even the dispatch of orders.

This “all in-house” strategy makes it possible to keep control of all aspects of its e-commerce. Nevertheless, you need to be able to control your entire supply chain, including having the necessary storage space.

What are the benefits?

Insourcing your e-logistics offers several advantages. Indeed, keeping its logistics in-house allows the company to :

• Better control of its logistics flows;
• Have optimal control over the quality of its services: in particular, it retains control over delivery times, after-sales service, or even the packaging of its goods (personalised packages, etc.). This allows it to offer an optimal customer experience;
• To control the costs of its logistics as well as possible;

Insourcing also proves to be financially beneficial when the company owns its warehouse(s). Thus, in-house logistics can be a real competitive advantage.

Externalise your logistics

Logistics outsourcing, what is it?

Outsourcing is the act of outsourcing all or part of its logistics. The company calls on one or more external service providers to take over some or all of its logistics operations. These service providers can therefore handle everything from stock management to the dispatch of goods.

What are the benefits?

Outsourcing your logistics includes a large number of benefits. In particular, it allows you to:

• Focus on its core business: the company can therefore concentrate on its development, without worrying about logistical problems;
• Benefit from the expertise of its logistics provider, and thus improve its services;
• Be supported in its growth, without having to make major changes within the company;
• Not being subject to variations in activity, linked, for example, to the season.

Opting to invest in external logistics can also be a financial advantage. This is because the company does not have to rent or buy a warehouse, machinery, or specific equipment for the operators. Finally, due to the quantity of goods to be processed, the service provider benefits from advantageous rates for transport. The company thus benefits from the external service provider’s contract.

The difference between logistics providers

A logistics provider can take over all or part of the company’s logistics needs. Thus, there is a classification of different logistics providersavailable on the market, depending on the types of services offered.

The 1PL or First Party Logistics

First Party Logistics is the 1firstdegree of logistics outsourcing. In the 1PL category, the provider only handles the delivery service. E-commerce products are transported from one point to another by a delivery company.

The 2PL or Second Party Logistics

.
Second Party Logistics is a 2degree subcontractor. This second category of logistics providers offers delivery services, but also goods storage and warehousing solutions.

3PLs or Third Party Logistics

A 3PL logistics provider offers additional services to the previous one. In addition to transport and warehousing services, the Third Party Logistics can take care of order picking, cross-docking, or even inventory management. The 3PLs thus have a crucial role in the company’s logistics strategy.

4PLs or Fourth Party Logistics

This fourth category of logistics provider takes on the management of the entire logistics process. The 4PLs coordinate and supervise the various players in the supply chain. In practical terms, they subcontract the logistics part to 3PL providers, and take care of the logistics project management. These companies can also play a consulting role.

5PLs or Fifth Party Logistics

Fifth Party Logistics are the latest class of logistics provider. Like 4PLs, they take care of the entire logistics flow. The difference is that they offer logistics engineering services. Their services help to increase supply chain performance.

An essential criterion for the success of an e-commerce business, e-logistics is a particularly complex area. Indeed, e-commerce logistics must ensure the management of stocks, deadlines, and delivery. Should you keep your logistics in-house or outsource them? You will find some answers in our article “Externalizing your logistics: advantages and disadvantages “.