The Top 10 Ecommerce Logistics Challenges for Online Retailers

Sometimes getting customer orders out the door feels like an even bigger challenge than getting visitors to an ecommerce site. When you consider that ecommerce brands shipped over 3,200 packages per second in 2020, there’s no shortage of opportunities for your business. Getting your ecommerce logistics strategy right is more important than ever. Let’s explore the 10 logistics challenges that online companies struggle with the most.

Wed May 26 16:17:00 EDT 2021
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1. Tracking online orders

Once a customer clicks the “Confirm Purchase” button when they know where their order is can make or break their experience. An ecommerce band needs to ensure that customers can track their order with regular updates. They will want to know when the package leaves the shipping facility, is out for delivery and when it has been delivered to their door.

Even if an order is delayed, a customer is reassured knowing where their purchase is. This means companies need to find a tracking solution that can connect shoppers to retailers after the “Buy” button with simple, clear notifications that let them know where their order is and when it should arrive.

2.  Controlling shipping costs

To ship an order faster? Or to ship it at a lower cost? This question has challenged ecommerce brands for years, and it continues to be a challenge for everyone.

This comes down to trying to keep up with orders and pleasing your customers without adversely raising your costs and affecting your profit margins. The reality is most ecommerce shoppers are fine with waiting a bit for an order if it means paying less (or nothing) in shipping fees. Sometimes customers require express shipping, but in these situations, it’s usually best for you to offer it as an additional upgrade that they can pay for.

Another bad habit some ecommerce brands have picked up is sticking to a single shipping option. It’s not difficult to understand why: If something is already working, why change it? But that also means you may not be choosing the best shipping option for each package, potentially increasing shipping costs. Ecommerce brands can rein in those costs by diversifying their shipping carriers or outsourcing their order fulfillment process to a 3PL partner that can offer discounted service across multiple carriers.

Not only can a reliable 3PL provider cut down shipping costs, they can also reduce warehousing costs, too.

3.  Managing ecommerce returns

Returns have become a regular part of the online shopping experience. From shoes being the wrong size to items arriving damaged, online buyers have grown very comfortable with hitting the “Buy Now” button and simply returning something if it doesn’t live up to their expectations. 30% of shoppers to be exact. And yet, 3 out of 4 consumers still consider their online returns experiences a hassle.

In fact, 56% of online shoppers will make a purchase decision based on the return policy, so without a good plan in place you could have sales clicking away without you even knowing it. Ecommerce brands must ensure that their reverse logistics for returns are as efficient as their shipping logistics.

This means ecommerce brands will need to keep a close eye on their customers’ returns behavior while monitoring consumer trends. It also means using returns as a customer touchpoint opportunity to pivot towards a loyalty-driven offering, and develop a lasting relationship with them.

4.  Scaling your ecommerce logistics

The biggest challenge with growing online sales is keeping up with demand without biting off more than you can chew. Many companies experience rapid spikes in online sales and are left scrambling to ramp up their ecommerce logistics processes.

Ecommerce brands need to understand and implement dynamic scaling logistics, enabling them to increase or decrease their ecommerce supply chain without overleveraging their assets or tying up their monetary resources. 3PL providers are specifically designed to absorb this kind of scale.

The right provider will offer strategic input on growth opportunities to help clients get the most out of their ecommerce logistics investment.

5.  International ecommerce sales and cross-border shipping

Global reach is now easier; more and more businesses are selling internationally. When the world is your marketplace, you need to be prepared. From clearing customs to import fees and taxes, an ecommerce brand will need to be proactive to avoid getting caught off-guard with additional fees. There are few things that online shoppers hate more than having to pay extra at delivery after having already been charged at checkout. It’s important that you work with a provider who can help you present the true cost of delivery when selling globally.

6.  Offering free shipping  to keep up with consumer expectations

Free shipping has become the perceived standard for all ecommerce brands. In reality, offering free shipping depends on several factors, including:

  • The value of the products
  • The weight of the items being shipped
  • The average ecommerce order amount
  • The order’s shipping destination
  • The customer’s expected delivery window

To successfully offer free shipping and still turn a profit, ecommerce brands need to build the costs of free shipping into their prices and find an offer that works for both the buyer and the retailer. This can include a minimum order amount before free shipping kicks in, or only applying free shipping to specific products.

boxes sorted on conveyors in a warehouse

7.   Warehousing

Knowing where and how to store merchandise has become a major challenge for ecommerce brands. Overestimating the required space can drive up costs, while underestimating them can create a backlog and slow your ecommerce logistics to a halt.
Another factor to consider is warehouse location, which can determine the delivery window your company will require to get orders to their destination. Warehouse management issues need to be addressed head-on to keep the supply chain running correctly. Most businesses that struggle with warehousing should consider a 3PL provider for both professional advice, and to take on logistics challenges.

8.   Shipping errors

From typing in the wrong address to lost tracking numbers to miscalculating the weight or size of the package, shipping errors can cause ecommerce brands a lot of headaches and creates frustration for customers waiting for their orders.

Investing in postal software and technology can help curb human errors through automation, as can outsourcing the shipping process entirely to a trusted and reliable 3PL.

9.  Delivery security

Ensuring that packages get to their rightful owners has always been an issue for ecommerce brands and carriers. With the COVID-19 pandemic driving the popularity of online shopping and curbside pickup, consumers have grown to accept contactless delivery as a standard service that protects both people and packages.

From parcel lockers at designated delivery points to notifications that alert customers when their packages have been dropped off, ecommerce brands now have numerous options for ensuring safe and secure delivery.   

10. Finding a shipping logistics and order fulfillment service

Third-party logistics services can be the most effective solution to a number of ecommerce logistics challenges. But choosing the right service can be a challenge too.

The shipping process can dramatically affect a customer’s online experience. Although many ecommerce leaders outsource their fulfillment processes to 3PL providers, the key is finding a fulfillment service that respects the attention to detail your online brand has worked so hard to create.

The trade-off for efficiency shouldn’t mean becoming another nameless online seller. The right provider can help you scale, but remain flexible in their offerings to adapt to your needs. But most importantly, a 3PL solution can provide support and advice that brings peace of mind.

For more information on ecommerce fulfillment, learn more about our ecommerce and retail solutions.