Supply Chain Management

What is eCommerce Distribution? Process, Strategy, and Solutions

eCommerce Distribution

Delivery delays have been caused by supply chain problems. These issues are not likely to go away. However, 40% of online shoppers expect two-day shipping when placing an order. Customers will look for other brands that meet this expectation if businesses fail to deliver. eCommerce distribution must be efficient for online retailers.

What is eCommerce Distribution?

eCommerce distribution refers to the strategies and methods companies use to move products from their distribution center to their customers. It’s the way eCommerce companies manage order fulfillment. It covers every step from when a customer places an order at the warehouse until the time the delivery person delivers the package to the customer. If a customer decides to return an order, then the handling of that return falls under the umbrella of electronic commerce distribution. E-commerce retailers have two options: they can either handle distribution in-house or partner with third parties to arrange transportation and delivery. The steps for every business are the same regardless of who handles them.

Also read: What Is Delivery Management and How to Manage It Successfully?

Four Steps in the eCommerce Distribution Process

The eCommerce fulfillment process includes four steps: order management, shipping, and last mile delivery. Returns management is also an important step.

Order Management

Order Management includes everything from receiving and tracking orders through to preparing them for shipment. When a customer places an order online, it is called managing orders.

The business will then approve the purchase, authorize payment and send the order back to the warehouse. Good customer service means that customers will receive an email receipt from the business confirming their purchase details and giving information about how to track their shipment. The warehouse’s order fulfillment team will then find the items needed to fulfill the order and pack them for the next stage.

Shipping

Shipping can’t be as easy as putting an item onto a truck. It is not common for a package to be delivered directly to the customer after it leaves the fulfillment center. Enterprise eCommerce companies that have high order volumes may have multiple fulfillment centers, which are often located in different areas of the country. These companies use the location of the delivery destination to send packages to shipping centers in order to maximize efficiency. These centers have shipping teams that plan routes and schedule packages for delivery to customers.

Last mile delivery

Last-mile delivery is when the package reaches the customer. It’s the most time-consuming and expensive stage of the distribution process. There are many ways delivery drivers can get from one place to another. It can be difficult to quickly evaluate all options and determine the most efficient route, especially if there are multiple deliveries.

Returns Management

More than 20% of online orders are returned by customers, so final delivery may not always be the last interaction a customer has. A seamless return process is essential for customer retention. A system to receive and approve customer returns and coordinate pickup and delivery of returned products is essential for facilitating returns. A truly efficient returns management process will not only help to improve your brand image but also offer a competitive returns policy to win customers over. The popular online retailer Zappos offers an easy return policy that provides free shipping and gives customers the opportunity to return their items for up to a year.

Also read: 10 Ways Production Tracking Software Can Prevent Supply Chain Delays

Types of eCommerce Fulfillment and Distribution Strategies

eCommerce distribution and fulfillment are different for each business. The specific practices and distribution strategy can differ depending on the company’s size, delivery range, and product type the company sells. There are three main models businesses use for fulfillment and distribution. These are in-house dropshipping, third-party logistics, and in-house.

In-house fulfillment

The delivery team will be your final point of contact, regardless of whether they are completing delivery or picking merchandise up to return to the warehouse. Self-delivery gives you the ability to take full control of the process. You can also hire and train your drivers. You can also customize your delivery methods to suit your business needs by having complete control over fulfillment operations.

In-house fulfillment means you won’t be charged extra for non-standard deliveries. Many shipping and logistics companies charge additional charges which are ideal for businesses that have specific delivery requirements. An online florist may need expedited shipping in order to get fresh-cut flowers quickly to ensure customers enjoy their flowers for longer periods of time. In-house delivery allows the florist to do this without having to pay expensive overnight shipping fees.

Distribution in-house allows you to optimize your operations based on your business needs. This is often the most cost-effective fulfillment strategy for enterprises.

Dropshipping

Dropshipping allows an eCommerce company to advertise and sell products from another company without actually handling them. Dropshippers will not stock their own inventory but will instead advertise the products on their site. Dropshippers will purchase an item from the manufacturer when a customer orders it. The manufacturer then ships the product to customers.

Dropshipping is worth the effort? It depends on what you are selling. Dropshipping can be a great opportunity for entrepreneurs who have a growth mindset. Dropshipping can be an excellent business opportunity for sellers because there are very few costs and the risks are minimal. Businesses that produce their own products or have an established sales model need to look for other options to ship products to customers.

Third-party logistics

Although outsourcing logistics to third parties can be costly, it can still be a good option for eCommerce businesses. Third-party logistics companies (3PL) have access to large delivery teams and extensive service areas, which is something that seasonal and small eCommerce businesses might not have. Outsourcing may be cheaper than in-house delivery for these types of companies, particularly if the delivery destinations are spread across a larger geographic area. For growing businesses, a 3PL may be a good option. They can facilitate deliveries and help with scaling up operations.

Also read: Inbound and Outbound Logistics: What is The Difference?

eCommerce distribution: How last mile delivery can make or break it

Retail distribution strategies will determine what last-mile delivery looks like for a company. This will have a significant impact on the delivery success rate.

Last mile delivery for eCommerce distribution businesses

Amazon and other eCommerce distributors facilitate the delivery and transport of products to multiple customers. It can be difficult to manage a large volume of deliveries. Distributors must receive products from retailers and store them in the warehouse. Then, they need to pack and ship the orders as soon as possible. Companies that don’t follow best distribution center practices could face problems such as delayed deliveries and incorrectly filled orders.

  • Distributors can avoid these problems by taking steps like:
  • Optimize inventory management to simplify picking and packing
  • Standardizing processes can streamline operations and increase productivity.
  • To maximize efficiency on last-mile delivery routes, use a route planning tool

Last-mile delivery for eCommerce companies

Distribution is the most important aspect of distribution Last-mile delivery is your last chance to impress customers, which is why it’s so important for customer retention. Smooth deliveries are a great way to gain new customers, as 82% of customers will recommend you to their friends if they have a positive experience with delivery. You can control every aspect of delivery, from the hiring of delivery drivers to the training of your team in proper package handling, by keeping it all in-house. Self-delivery is the best choice for companies who want to provide a great customer experience.

A business must purchase delivery vehicles and hire delivery staff, which includes drivers, planners, dispatchers, and dispatchers, to bring delivery in-house. It will be necessary for the business to determine whether it will charge delivery fees and assess the cost of delivery in-house. The transition to self-delivery will be made easier by implementing a routing tool and scheduling software.

Written by
Aiden Nathan

Aiden Nathan is vice growth manager of The Tech Trend. He is passionate about the applying cutting edge technology to operate the built environment more sustainably.

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