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Logistics: Key to conquering online customers

18 February 2020
In the universe of online sales, achieving full customer satisfaction requires well-oiled logistics, which is sometimes overlooked in some organizations.

Most companies face fierce competition for consumer preference, so agility in delivery and process efficiency are significant competitive and differentiating factors.

More difficult than making the sale is sometimes delivering the right product, to the right place and within the prearranged time frame. Having a good product or a varied catalog is not enough to win over the customer, as delivery must also meet the client’s high and demanding expectations.

And, to achieve this, companies must invest in operation management.

In practice, optimizing the logistics operation of an online business is a major challenge. Unlike more traditional businesses, the past in online is not an indicator of the future. It is therefore necessary to invest in the flexibility and robustness of the operational processes in order to be able to respond with the speed and quality that the customer demands.

In this sense, we present the main aspects to consider when planning the logistics operation of an e-commerce business:

1. Stock
In the online market the demand has peaks with variations that can reach 200%. Articles that were considered bestsellers in the near past can be considered slow movers today and obsolete in the future.

Controlling stock levels is essential to ensure good customer service. Not only because the lack of an item in stock can lead to lost sales, but also because it is essential to control the quantities in stock to detect obsolete products.

In this sense, traditional stock management methods do not adequately support this highly volatile environment. To try to combat this difficulty, the biggest players in the market tend to bet on more advanced techniques, using customized algorithms and solutions that are based on different technologies, such as data mining, artificial intelligence and machine learning.

2. Packing
The packaging process is crucial in e-commerce operations. It is usually the bottleneck in operations to support the online channel due to the fact that, generally, this step requires a high degree of manipulation and customization, requiring very manual processes. A failure in this process will have a direct impact on the customers opinion of the product and service provided by the company. In this sense, it is important to ensure that all products in the order are securely packaged, and that all labels required for shipping are correctly placed.

The fact that e-commerce is a global business, with a high volume of exports, makes the packaging operation even more important as it must comply with the tax and legal requirements of different countries and regions.

3. Delivery Model
The delivery model must be defined taking into account the type of service provided. In most situations, it is interesting to work with more than one carrier to optimize routes and delivery times, taking into account the type of cargo and its destination.

In addition, there are situations in which the alternatives of pick-up at a store or delivery at pick-up points, for example, may be advantageous for customers. All options must be considered to which ones may best suit the business model in question.

4. Reverse logistics
Returns are part of day-to-day business online. Just as products must travel the company - customer path as efficiently as possible, they must also be able to travel the other way in the same way. For customers, being able to exchange or return a product easily and quickly is sometimes as important as the purchase, constituting a significant factor in their loyalty.

The normalization of processes, the planning of collections in order to optimize routes and reduce costs, and a good customer service are key elements to achieve high levels of satisfaction.

It is true that there is no predefined model to achieve full efficiency in the supply chain, since each business has its particularities. Our experience in consulting projects, however, allows us to assert that structured and consistent analysis should always be the starting point.

Only when adapted to the business model of each company will the redefinition of strategic or operational guidelines translate into the desired result: the improvement of the brand reputation and the loyalty of more customers. 

Opinion article by Lea Nogueira Lima, Industrial Engineering and Management consultant at INEGI. 

Picture @ Chris Watt
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