Must-Know Best Practices in Ecommerce Logistics Planning
A well-planned logistics strategy improves efficiency and customer satisfaction. If there is something undeniable throughout the growth of ecommerce in general, it’s the development and professionalization of the logistics process. That’s why if you have an online store, and given this highly competitive and professionalized scenario, you cannot neglect something as important as logistics planning. In this article, we will teach you the different logistics models that ecommerce utilizes and how important it is to have a strategic plan with the sole objective of being able to meet the demands of a user that is increasingly accustomed to making online transactions.
Core Logistics Models for Ecommerce
When discussing logistics models for ecommerce, we must focus on 3 fundamental types: internal logistics (in-house logistics), external logistics (3PL or third-party logistics), and dropshipping. Each of them represents different responsibilities for a company’s internal organization. Partnering with reliable logistics providers allows scaling operations and reducing costs, while efficient inventory management prevents stockouts and optimizes cash flow.
The following table summarizes the key characteristics of these models based on the provided data:
| Logistics Model | Definition | Main Advantages | Main Disadvantages |
|---|---|---|---|
| In-house Logistics | Internal logistics is developed entirely by the company without the participation of an external company for storage or shipment control. | Total control over the logistics process and stock storage, allowing for a personalized packaging experience and higher autonomy. | Additional costs including human resources, packaging materials, tracking software, and the complexity of stock management. |
| 3PL (Third-party Logistics) | Carried out by an external company in charge of managing stock and coordinating with the transport company. | Professionalization of logistics, saving time on infrastructure and costs, which allows the company to scale much faster. | Less direct control over the day-to-day handling of individual packages and reliance on the provider's efficiency. |
| Dropshipping | A model where the seller does not have access to stock; a supplier holds all stock and is responsible for shipping each package. | Low economic barrier to entry with no initial investment in merchandise and high scalability due to large supplier catalogs. | Lack of logistics control and total dependence on the third-party supplier for stock availability and shipping quality. |
Understanding Inbound and Outbound Logistics
Inbound Logistics
Inbound Logistics refers to anything that is coming inside a company. It is one of the primary processes of logistics concentrating on purchasing and arranging the inbound movement of materials, parts, or unfinished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores. A manager in charge of inbound logistics manages everything related to the incoming flow of resources that the company needs to produce its goods or services, including managing supplier relationships and negotiating materials pricing.
Outbound Logistics
Outbound Logistics refers to anything that is going outside of a company. These processes are vital for companies as they connect them directly with their customers in the value chain. It is defined as the process related to the movement and storage of products from the end of the production line to the end consumer. A manager working in outbound logistics will be focused on two issues: storage and transportation, using warehousing techniques to keep the finished goods safe and accessible.
Optimizing Warehouse Space with Industrial Racking Systems
Industrial racking systems are metal structures designed to support the goods in a warehouse or industrial facility. These systems are a key element in the smooth functioning of a warehouse and play a central role in the logistics and supply chain operations of companies. Optimizing space is key, and there are two main categories depending on the type of unit load to be stored: Pallet Load Racking and Picking Solutions for cartons or small items.
- Standard Adjustable Pallet Racking: Stores pallets mechanically using forklifts with direct and immediate access to all unit loads.
- Very Narrow Aisle (VNA) Pallet Racking: A compact version that creates higher density by narrowing the aisles, resulting in a space saving of over 40%.
- Double Deep Pallet Racking: Pallets are stored at two depths, thus achieving higher storage density, though the operator does not have direct access to all pallets.
To ensure quality, the design of storage systems must consider engineering factors such as structural calculation, load and resistance studies, and compliance with international and local regulations.
The Role of Wholesalers in the Supply Chain
Wholesaling entails buying products in bulk, thus acquiring them at lower cost, and distributing them to retailers, suppliers, or even end consumers. This process plays an important role in the supply chain as it bridges the gap between manufacturers and retailers. There are different types of wholesalers:
- Manufacturers: The producers who transform raw materials into finished goods at a large scale.
- Merchant wholesalers: They buy products in bulk from manufacturers, store them in warehouses, and resell them in smaller quantities to retailers, taking ownership and bearing the risks.
- Brokers and agents: They act as intermediaries for buyers and sellers but do not take ownership of the products; they facilitate deals and get a commission in return.
