What is e-commerce logistics?

In 2022, the global e-commerce logistics market was valued at a whopping $315.82 billion. This figure is only expected to grow as online retailers continue to offer goods by offering consumers convenience with deliveries to their doorstep. The Covid-19 pandemic facilitated this growth as essential products were dispatched through e-commerce delivery. And online retailers in Denmark did not miss out on the trend either. 

But what is e-commerce logistics? Essentially, this is the practice of managing an e-commerce retailer’s entire supply chain, which starts with getting the product from a manufacturing line, packing it, shipping it and fulfilling the order as part of a wider process that manages inventory, shipping, warehousing and distribution. 

Although this sounds like a seamless process, there are many details involved in it and efficiency and smooth operations are a major necessity to ensure a timely delivery of goods to consumers. In this article, we explore the various components of e-commerce logistics, the challenges involved, the solutions and the right partner to meet your needs. Let’s take a closer look.

Components of e-commerce logistics

There are several components involved in e-commerce logistics. They include the process from when an order is placed to the moment it reaches a customer’s doorstep. Some of the key elements involved in this process include:

• e-Commerce order fulfillment: order fulfillment is a complex process that starts at a warehouse and ends with the shipping stage. This includes aspects such as warehousing and storage, packing and handing the package over to a courier. It requires order accuracy, quality, quantity and timeliness to ensure customer satisfaction with the unboxing experience.
• Inventory management: inventory management accurately tracks what merchandise is located in a particular warehouse and where exactly it can be found. This means that stock levels constantly need to be monitored in line with consumer demand.
• e-Commerce warehousing management: warehousing involves both finding a suitable location where merchandise can be stored and also how much of it can be stored. It’s also about ensuring that an e-commerce retailer is able to manage its stock and inventory.
• Order packing and shipping: firstly, an order is placed, the item is located and then it goes through to packaging from the warehouse. Once packed, the process then moves on to a courier, who will ensure that the parcel arrives at the right destination.
• e-Commerce returns and reverse logistics: e-commerce retailers also need to be prepared for customer returns. Especially with fashion merchandise that comes in multiple sizes. They also need to be prepared for lost items, customer refunds and ensuring an optimal customer experience to keep such situations to an absolute minimum.

Challenges in e-commerce logistics

Of course, the intricacies involved in e-commerce logistics cannot be discounted and they require a careful evaluation of the challenges involved as well as ways for mitigating them. Some of the more prominent challenges include:

• The need for sustainable solutions: customers are increasingly looking for online retailers who put sustainability at the heart of what they do. As such, there is great demand for using recyclable materials and sustainable practices.
• Technology and digital development: with online retailers, there’s a great need to be tech savvy to give them an edge against competitors. Tracking online orders can become an overwhelming process while keeping customers updated regularly. As such, order tracking using advanced technology is essential.
• Shipping costs: these are the costs that a customer pays to have the goods delivered to their doorstep. However, shipping costs play a very influential role in a customer’s decision making process. In general, faster shipping comes at a higher cost while slower shipping can be more affordable. Different customers have different needs and budgets and e-commerce retailers should ensure that they find the right balance by choosing the right e-commerce logistics service provider.
• Managing returns: ensuring that one’s returns process is simple and that refunds can be issued timeously requires careful and strategic planning. An e-commerce retailer’s returns policy is a crucial element of a buyer’s decision-making process and that’s why these businesses need to have a plan in place to manage returns and refunds.
• Scaling for growth: as an e-commerce retailer grows through increased demand for its products, so do challenges arise with their need to scale the business. Using the services of a third-party e-commerce logistics provider is a good way to mitigate this challenge.
• International e-commerce sales and cross-border shipping: with global borders shrinking as a result of e-commerce, it’s now easier and faster than ever to deliver goods to consumers. However, areas that must be navigated include managing additional fees that come with clearing customs and import fees and taxes. Knowing how to manage these with the help of a third party is a good way to manage this risk.
• Free shipping: free shipping is another challenge for retailers that want to please their customers with lower shipping costs and high quality goods. However, it often happens that free shipping is built into the price of the goods or the price is reduced completely to ensure e-commerce retailers remain competitive.
• Warehousing: knowing the location and the methods for the most efficient storage in a warehouse also poses a challenge. However, it requires a careful balancing act. That’s because retailers need to strike the perfect balance between the required space and addressing any potential backlogs. Furthermore, the location of your warehouse will also play a role in determining the costs associated with the transportation of the goods.
• Shipping errors: examples of these include lost tracking numbers, miscalculated package weight or size or typing in the wrong address. To counter this challenge, the use of technology should be applied to minimise the scope for errors.

E-Commerce shipping solutions

E-Commerce shipping solutions come to the fore to counter these challenges through helping different online merchants with a variety of ways in which they can address their logistics needs. From standard delivery options to express services and e-commerce international shipping solutions for the Danish market and beyond, this can be achieved through three primary options, including:

• Third-party logistics providers (3PL)
• In-house logistics
• Dropshipping

Choosing among these e-Commerce shipping solutions to meet your online needs will help you better navigate the complexities and challenges involved in e-commerce logistics at any stage of growth your online business may find itself operating in.

Navigating e-commerce transport and logistics with MBE Denmark

As an established logistics partner in Copenhagen, Denmark, Mail Boxes Etc. (MBE) offers a range of professional shipping services for e-commerce businesses. Our comprehensive e-commerce logistics solutions include:

• Efficient order fulfillment
• Customised shipping solutions
• Last-mile delivery excellence
• Returns management
• And so much more

Understanding e-commerce logistics is integral to thriving in the competitive online marketplace, especially in Denmark, where customer expectations are high. By partnering with MBE Denmark—a provider for e-commerce transport and logistics in Copenhagen, Denmark—you gain access to a trusted ally in the world of e-commerce logistics. Choose among the leading e-commerce shipping companies and explore our professional shipping services to elevate your e-commerce business and provide your customers with a shipping experience that goes beyond their expectations.