The exponential growth of eCommerce during the health emergency caused by the pandemic has changed the organizational and business models of companies. Aaron Rodriguez, an expert in business operations, explains how eCommerce logistics are evolving, and why businesses have to adapt.
In recent months, influenced by COVID-19, the number of companies that market their products in the online channel has increased a lot, either through their own website or specialized platforms. According to data on global digital commerce growth and spending patterns, in the first quarter of 2021, eCommerce globally grew by 58% over the same period in 2020. This was well above pre-COVID-19 levels. This data corroborates that the base of online buyers is consolidated.
Companies that want to enter the Internet have two options. They can develop their own website or use a specialized online platform. The latter is usually preferred by those who want to experiment with the eCommerce channel with a view to creating their own online store, which is sometimes still used in parallel with the chosen market.
“The option of selling abroad becomes complicated in the vast majority of cases of small companies due to ignorance of the procedures and ways to do so,” states Rodriguez. “That is why, in recent years, marketplaces have become a great ally of these companies that decide to start selling abroad without getting too complicated.”
Companies can choose to manage eCommerce logistics themselves (i.e., warehousing and order picking) or turn to external suppliers. In the first solution, it is necessary to create an area close to the stock to organize the shipment of the ordered items online, while in the second option it is possible to rely on the solutions offered by specialized platforms such as Amazon, which include all the steps, from storage to order preparation and transport.
The delivery of products purchased online is based on a different system than the transport of goods for large distribution, for which chartered carriers who operate with lots or complete lots, moving the items on pallets or large packages, usually intervene. On the other hand, online commerce involves, above all, the sending of packages of up to 30 kg in weight to be delivered to private customers by express courier.
Companies entering eCommerce for the first time often have little knowledge of the difficulties they may face. As a result, they often prefer to outsource all eCommerce logistics to external suppliers in order to meet the needs of their customers in the best possible way.
The products sold by manufacturers to retailers are delivered in large packages with cardboard boxes and pallets. On the other hand, in order to deliver the products to the homes of private customers, companies have to sell per unit, which is a great limitation, since an online order does not usually consist of more than three items and, basically, only one per package.
In the warehouse, the preparation of orders also requires the reorganization of storage areas and the regular preparation of goods to create a stock reserved for eCommerce. In the order preparation phase, it is also necessary to manage various types of packaging and use tools to check the weight of packages for deliveries to end customers.
In B2C transactions, averaging just over one product per package, the preparation time of online orders is essential. It’s also important to make online stores vibrant with the aim of attracting the consumer’s attention and continuously offering offers to compete with traditional retailers.
With high logistics costs, even with lower product prices, online retailers can hardly get significant margins, so those with strong brands and products with low recurrence rates are the ones who can gain the most from this strategy.
Staff training is a key aspect of the HR function, whose managers, during seasonal peaks, need to hire temporary employees and get them up and running quickly, especially with a view to optimizing the preparation of shipments to the unit in large spaces with large screens that help reduce errors.
Adds Rodriguez, “Businesses wishing to sell through an online channel should certainly consider using a software solution. Express courier companies that deliver to the end customer, for example, need to be connected to the company’s software to manage EDI messages and modify shipping labels.”
In terms of IT, managing an online sales channel is a big commitment and companies that already have WMS software should be sure that their solution has the potential to help them with eCommerce logistics, which is not always the case with warehouse management software used for traditional distribution channels.
Selling products online is not an easy task for a company, since this type of trade requires processes very different from the traditional model in terms of sales, logistics, labor and technological solutions. That is why it is essential to be able to count on an agile and flexible solution with the ability to adapt to the progressive growth of orders.