Logistics technologies are changing how modern retailers operate. Huge warehouses are being built to house an infinitely higher number of products. Home Depot is revamping their distribution center strategy to include a host of regional centers, and logistics providers stand to reap significant profits from increased collaboration in the marketplace. However, the rise of e-commerce will naturally lead to greater focus on logistics technologies, and you need to understand how this increase the role of logistics technology in e-commerce in the global economy.
What’s Driving Investments in Logistics Technology in E-Commerce?
Two primary forces are contributing to the need for logistics technology in e-commerce. Both of these forces are actually just the cascading events from engaging in e-commerce, and you need to think about what they mean to today’s shippers.
E-commerce Rises to Power.
E-commerce is growing at astonishing rates. More customers are able to shop online from anywhere, and the number of mobile devices is climbing as well. As a result, companies are doubling down on their efforts to meet the surge in demand and across global omni-channel sales. By 2017, e-commerce will generate $370 billion in the U.S., and the compounded annual growth rate is expected to stay at or above 10 percent over the next half-decade, reports William B. Cassidy of JOC.com.
Globalization Promotes International Shipping and Logistics.
The globalization of logistics technology in e-commerce makes it an ideal venture for international shippers. While some companies may operate in-house logistics enterprises, such as Home Depot with its 80-percent distribution capacity for omni-channel sales, many companies will turn to logistics providers to achieve further cost savings. Meanwhile, some companies simply lack the resources to ship products overseas, and logistics providers will need to increase technology investment to push today’s fleets beyond their current capacity.
Benefits of Logistics Technology in E-Commerce.
Logistics technologies have huge untapped potential for improving the e-commerce landscape. By nature, logistics providers have focused the majority of their resources of developing the most cost-effective solutions for their clients over years. As a result, they are perfected poised to provide the services needed as the world’s economies come together to increase e-commerce sales and activity.
New Business Models Reduce Operating Costs.
Logistics providers focus on revamping existing business models to create a productive, cost-savings oriented environment, explains Ricard Coelho of TAS Portugal S. A. Furthermore, companies with a surplus of services, such as extra trucks, can benefit by turning their existing logistics capabilities into sources for other logistics providers. In other words, these collaborating entities can both achieve profits by simply combing resources through the use of a third-party logistics provider (3PL).
Better Control of Order Fulfillment.
The order fulfillment processes of e-commerce require a system capable of syncing across multiple systems. For example, Nutrisystem uses a 150 unique SKU system to reduce overhead and ensure orders are sent out as soon as possible, reports Inbound Logistics. Furthermore, connected systems enable automated order tracking and real-time analysis of all systems at any time, which reduces unnecessary delays and errors during fulfillment. In fact, control from these information-visibility systems directly leads to a more fluid inventory pipeline and better customer satisfaction.
More Focus on Value-Added Services to Increase Revenue.
Many businesses lack the capabilities to increase customer satisfaction, reduce errors in order processing or catch overbilling issues. Many of these problems are simply the result of small-business processes, but the shift toward logistics technology in e-commerce is making these minor problems major deterrents for customers. Consequently, logistics technologies have grown to include a host of value-added services, most notably auditing services, to ensure small business have the tools and resources available to continue growth in what is becoming an e-commerce-based market.
Greater Conversion Rates for Businesses.
Consumers are also looking to business for benefits in every purchase. How quickly does it take to get the product? Is there a shipping cost? What is the returns policy?
These questions for vital to consumers, and they help determine if a consumer becomes more than online window-shopper. The conversion from online window shopping to a customer is not taken lightly, and businesses need to pull out all the stops to promote this conversion. For example, a customer is less likely to make a purchase if the same item can be purchased on Amazon with free shipping. As a result, logistics technologies are needed to give small businesses the opportunity to assess a variety of modes of transit to reduce shipping times and virtually eliminate the cost of shipping for the customer.
Obviously, it would be ill-advised to believe logistics systems promote free shipping. But, the key to making this work is by creating an environment where the overall profits of sales outweigh the costs of shipping products on the part of the seller, which is actually the process seen when retailers offer “Free Shipping on Orders Over $X!” Ultimately, more orders equate to more profits, so “eating the shipping cost” does not seem like a major expense.
Synchronicity Among All Systems.
Customers want their orders as soon as possible. Amazon’s hopes of making two-hour deliveries possible attest to this notion. As a result, logistics technologies must be capable of handling reordering or rerouting of goods automatically to ensure the supply chain can get products to customers as quickly as possible. In other words, products to be more diverse and distributed to optimize the e-commerce supply chain. Additionally, the volume of orders and products shipped requires synchronicity across warehouse management systems, transportation management systems and existing analytics systems. However, synchronicity is even better when all of the needs are met from within the same dedicated system, such as the Cerasis Rater.
Logistics technology investments represent one of the most significant explosions of growth in the history of e-commerce, and through logistics technologies, retailers will be able to meet customers’ expectations and provide unparalleled assistance and guidance in the shopping experience. By understanding these facts, businesses will thrive in the future of an increasingly global marketplace.