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What is logistics and how does it apply to ecommerce?

As an ecommerce business owner, you'll have to familiarize yourself with logistics. Back-end supply chain management is a critical component of any business today, but that's especially the case in ecommerce. Since you don't have a brick-and-mortar storefront to house inventory, you have to rely on third parties to help store and ship your products and services. This is crucial for basic time management — and for your bottom line.

What is logistics?

Logistics is simply the management of the way resources are obtained, stored and shipped to their end destinations. The planning, execution and control of the movement and placement of these goods and services must all occur within a given system that's designed to achieve specific objectives, which may vary by industry.

Taking a more macro view, logistics management entails a few steps:

  • Locating and identifying potential suppliers and distributors

  • Determining their accessibility and effectiveness in terms of business production

  • Forming relationships and finding the most cost-effective solutions for your business

Larger companies often work with multiple parties to keep pace with demand. However, your small business doesn't necessarily need to partner with different organizations to manage your ecommerce website logistics. If your operation is small enough, you can work with local businesses and organizations to ship and store your products.

What is the logistical process like for my business?

Logistics on a small-business scale aren't overly complex. Once a customer completes his or her order on your website, the transaction will trigger any inventory software you have. As a retailer, most ecommerce platforms will have integrated inventory management software, so a completed payment will automatically adjust your inventory accordingly.

Once you get the notification an order has been confirmed, it's time to ship the product. Depending on the size of your operation, the next steps could vary:

  • Home/office operation: If you're running your website from your home or a separate office and store inventory there, all you have to do it package the product and send it to the buyer. This is a great option for newer and small businesses because they save money on overhead by not having to outsource their warehouse management to a third party.

  • Brick-and-mortar retailer: If you own a storefront location and have the room to store the products you sell online there, the same principle applies as above. Just pack up the product and send it to the awaiting customer.

  • Outsourced logistics: If your operation is large enough to outsource your online operation logistics, you'll likely have to sync your platform with the third party you partner with. That way, once a customer makes a purchase, the distribution center will know and they can send the package out quickly. This hands-off approach is well organized and eases the stress of shipping so you can focus on other aspects of your website.

Can you track items on the back end?

Yes. Since logistics has become so complex and reliant on digital technology, there are options for you to keep tabs on your inventory and where it is in the supply chain. Inventory management solutions within your ecommerce platform give you visibility into how much of a given product you have left. Inventory management tools give you real-time insight into your products so you're never behind on customer orders.

If your business partners with a service like UPS, FedEx or the USPS, you can also track items based on the fulfillment numbers they provide. Once the product leaves your hands, it may be a good idea to keep tabs on certain orders to make sure they reach the customer. It's also an industry best practice to provide the same tracking numbers to customers in their confirmation email so they can keep track of where their package is.

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