How Your Business Can Implement Cost-Effective Logistics Operations

E-commerce is fast becoming the lifeblood of the retail economy. In 2021, the e-commerce industry generated $5.2 trillion worldwide, with a 56 percent increase expected by 2026. With statistics like these, it's no surprise that e-commerce has become a driving force for businesses of all sizes.

However, serious blind spots threaten that profitability. Entering the next generation of online selling requires a new approach when implementing effective e-commerce logistics operations for the overall success of your company's e-commerce strategy. As a leader, it's essential to transition away from the "bolt-on" view of e-commerce and move toward creating an entirely new experience and supply chain.

How the Customer Experience Affects E-Commerce Logistics

Customer experience is the new battlefield within e-commerce, especially when 83 percent of customers claim they would be willing to switch brands after a poor experience. Unfortunately, many companies are inadvertently decreasing their e-commerce profit margins by attempting to replicate their offline experiences online. If your business isn't putting customers' needs at the center of everything, this is a massive blind spot.

Your customers expect a seamless process from when they land on your website to when they receive their package. When it comes to comparison, stocking, shipping, supply chains, and marketing, all aspects of the buying journey must improve the customer experience. Remember, 66 percent of customers expect companies to understand their needs.

Customers also expect the conveniences offered by big brands such as Amazon.com, including free returns, free shipping, and even one-day delivery. One study found that 66 percent of customers expect free shipping even for non-Amazon purchases.

Is e-commerce profitable without these perks? Yes. However, failing to meet customers where they are or provide them with their necessities is a blind spot that impacts your marketability. In other words, your company's e-commerce strategy must consider customer expectations when implementing cost-effective logistics operations.

Balancing Logistics With Profitability

The logistics involved in running a successful e-commerce operation require honest forecasting and reporting of fixed and variable costs. Countless businesses have hit roadblocks because they lack the data and oversight required to price effectively, offer a premium service, and make cuts to improve their average e-commerce profit margins.

Compromise is necessary to accommodate the challenges of e-commerce logistics. It underlines the importance of departing from the offline experience to create an entirely new one.

For example, Louis Vuitton is a luxury brand that decided to outsource its warehousing operations to improve its e-commerce profit margins. Unfortunately, in doing so, it had to compromise on aspects that made it a luxury brand, such as placing bonus fragrances inside packages.

Global e-commerce expansion reveals new challenges that require you to make hard choices. Does it mean you need to compromise on your brand's values? No. You just need to get creative with how you express them.

Cross-Border Efficiency

Recently, countries have recognized the future of e-commerce and have worked to implement rules and regulations to protect consumers. If staying within regulatory expectations becomes a blind spot for your business, you risk penalties and reputation damage. This ultimately leaves the door open for competitors to take your place.

For example, the European Union implemented a law that enshrines the consumer's right to return most products within 14 days of purchase. The cooling-off period allows returns for any reason on most products.

Do you have a system set up to accommodate efficient returns? Most businesses spend considerable time working on their e-commerce logistics but pay less attention to the concept of reverse logistics to process returns. Cross-border efficiency requires scaling to perfect communication, timing, quality of delivery and packaging.

Take Action to Remove Your Blind Spots

Every e-commerce blind spot can potentially reduce your company's profitability in various ways. Poor customer experiences can lose business. High return rates eat away at your e-commerce profit margins. Increased supply chain costs also reduce your expected margins.

Taking action requires a brand-new data-driven approach to e-commerce. Entering the next generation of e-commerce requires innovative solutions to help your business remain competitive.

However, the nature of doing business online remains the same. You must become indispensable to customers by anticipating their needs and getting the perfect product into their hands as soon as possible.

Larger companies are already moving into the next generation of e-commerce and have done it profitably and sustainably. Now is the time to make the leap and become a business of the future today.

Simone De Ruosi is the CEO and co-founder of Go Global Ecommerce, a cross-border e-commerce solution.