E-commerce: in which cases should you outsource your logistics?

E-commerce is becoming more and more successful, year after year. This is all the more true with the health crisis which is pushing consumers to make their purchases online day by day. But another reason is that they can now find the vast majority of the items they are looking for there. However, e-commerce businesses are faced with an important challenge in their activity: logistics, a key factor in customer satisfaction.

If you’re not careful, distribution costs can also hamper the profitability of your business. So, in what cases should you outsource it? What are the advantages and disadvantages of this solution?

E-logistics: what is it?

E-logistics corresponds to all the logistics of e-commerce stores. This is the entire process of physically processing a customer’s order. This goes from storage to delivery, including the maintenance of the goods, its packaging, inventory management and possible returns..

In e-commerce, the challenges are to control logistics costs, but also to provide customer satisfaction by delivering a product in perfect condition and respecting the indicated deadlines. It is about your reputation, the success and the smooth running of your business. Indeed, the efficiency of your logistics can be a brake or, on the contrary, a lever for purchasing and can push customers to choose your products instead of those of the competition.

However, it requires real organization, can sometimes cause significant stress and take up all your time and energy. Everything becomes even more complicated when the volume of orders increases. It is at this stage that it is essential to consideroutsource your e-commerce logistics in order to benefit from the various advantages of this solution.

Logistics outsourcing: what does it involve?

If you are just starting your business and your products are still limited, managing logistics is relatively easy. On the other hand, The more your business grows, the more complicated this aspect of your business will be., take time and generate significant costs.

Outsourcing is an interesting solution for this in order to entrust tasks related to storage, distribution and order management to a company specializing in this field.

When to outsource your orders?

From a certain volume of orders, logistics management can become particularly time-consuming, preventing you from focusing on the marketing aspect and the general management of your business. Thus, as an indication, it is recommended to opt for outsourcing from 100 orders per month.

Entrusting the package processing process from this threshold will make your job much easier on one side. And on the other, the efficiency gained will become more interesting than the costs incurred by this choice.

E-commerce: the advantages of outsourcing

Logistics outsourcing has several considerable advantages.

Lower the costs

Deciding to keep the order management process in-house can quickly require a lot of financial, material and human resources, from a certain monthly level. It is indeed necessary to find a safe and suitable storage location, but also to hire new employees and invest in the corresponding software and equipment.

Outsourcing saves you rental or maintenance costs for storage premises, which represent significant fixed costs. The capital mobilized in general will be much less substantial.

Providers specializing in logistics outsourcing distribute storage and personnel costs between several companies. This then allows them to offer customers much more attractive prices for them.

By ordering large volumes of packaging materials, among other things, they also have better negotiating skills to reduce their costs, which also trickles down to their customers. The same goes for their partner carriers who ensure deliveries and returns.

Fees tailored to your needs

Most companies specializing in outsourcing offer different options and prices from which you can choose according to your needs and your budget. This way, you only pay for the services you really need, according to the flow linked to your activity. This allows you to better control your costs.

Reduce delays

Outsourcing your logistics is also very interesting in the sense that your goods can be stored in the storage centers of your choice, allowing you to be closer to customers. Delivery times are then reduced, which is also a plus for your business in the eyes of customers and also reduces costs.

Benefit from the expertise of an external service provider

Another advantage is that you rely on the expertise of the external service provider, ensuring the efficiency of processing your orders. The processes they use have proven themselves, greatly limiting the risks of delay or even deterioration of your goods, which could be detrimental to your business.

In return for a monthly subscription, you can have peace of mind and concentrate entirely on developing your business.

Even during peak periods of your activity, deliveries and other aspects of logistics are still ensured. You also ensure that you comply with legal conditions regarding food safety and transport.

They also have the most advanced software to carry out careful monitoring and provide you with very precise inventory reports. These different statistics can allow you to better manage your activity and optimize your growth.

Bring added value to your offer

You retain the management aspects, however it is the service providers who take care of the transport and logistics operations. They can also offer additional services such as order packaging or returns management, in order to bring real added value to your offer.

A study carried out by Kibo in 2018 also shows that 74% of consumers consider delivery to be the most important part of the purchasing experience. Information that you absolutely must take into account if you want to attract customers and retain them.

You can even use logistics as a real selling point, by using a service provider whose the supply chain is eco-responsible. Packaging also plays an important role in attracting consumers and generating their trust, with organic or customizable packaging, for example.

Free up resources

You can use your human and financial resources for other higher value-added purposes.

The inconvenients

There are, however, aspects of outsourcing that some e-tailers may view as disadvantages.

The costs

Every service has a price. And the fees to pay are still considered by some as a disadvantage, because they cut into their margin. Gold, the efficiency and time savings that can be obtained through an outsourcing approach are generally worth it.

Loss of control

Some entrepreneurs have difficulty entrusting the management of their logistics to a specialized service provider, due to a feeling of loss of control over their activity. However, while it is possible to pack a few packages yourself when you are starting out, things become much more complicated when the volume of orders reaches a certain level.

E-commerce logistics outsourcing: how to choose your service provider?

Before choosing a service provider, you should ensure that the offers proposed correspond or can adapt to your real needs, but also that they can be flexible for your perspectives. It is therefore essential to check the prices and the services they include.

Also take an interest in the packaging materials used, to ensure that they best preserve your goods. If this is important to you, also ask if it is possible to personalize them or use your own materials.

Finally, you will need to know if the service provider offers transport services. And if not, find out if it has a partner carrier. Also be aware that some providers do not support product categories. Then make sure yours are not affected.

So should you outsource your logistics?

Outsourcing e-commerce logistics allows you to benefit from a turnkey solution, attractive in price and adaptable to the needs of each company. A lack of time, resources and expertise can indeed complicate management. With this alternative, logistics no longer becomes an obstacle to the growth of the company. However, you should choose your service provider carefully.

In addition, take stock of your various costs to know the real opportunity to use this solution. These are:

• labor costs, linked to the number of people to be mobilized, their training and their safety,
• insurance costs, to cover the risks of accidents and various disasters,
• storage costs (rental, maintenance, equipment),
• transport costs for transporting goods to the end customer.

If all of these are more expensive than using a specialist service provider, then there is no longer any doubt: this is the option for you.