Logistics management for online stores | Complete guide

The increasing volume of orders through online stores, the pursuit of shipping and delivering products as quickly as possible to gain customer satisfaction, along with reducing costs and enhancing competitive value, are some of the motives that have led commercial activities to focus on logistics management and work to improve it to enhance growth, sustainability, and increase return on investment.

In this article, we take an overview of logistics management, its benefits, its most prominent types, how to apply it professionally, and other aspects that help you form a comprehensive general vision of this vital field.

First, let's review the term logistics services and related types.

What are logistics services and their most prominent types?

The term logistics services refers to the operations and procedures that work to transport goods from one point to another through various means of land, sea, or air transport, to deliver them to the final consumer at the specified place and time.

Commercial activities aim to achieve several goals through the implementation of logistics services, including:

• Securing the transport of goods to the agreed upon delivery area.

• Controlling the process of transporting goods and addressing problems that may arise during the transport and delivery process.

• Accelerating delivery time.

• Reducing costs and increasing return on investment.

• Enhancing the competitive value of the brand by providing distinctive logistics services.

According to these multiple goals, logistics services have many types that serve different aspects, including:

• Production Logistics:

This is a type of logistics service related to supply chains in e-commerce and non-e-commerce.

• Transport Logistics:

This is a type related to various means of transport, controlling and managing them.

• Shipping Logistics:

This is a type related to dealing with orders, processing them, and preparing them for shipping.

• Emergency Logistics:

This is a type of logistics service that is relied upon to transport goods under critical conditions and natural disasters.

Now, after this quick presentation of the term logistics services and their related types, we move on to talk in detail about logistics management.

First, what is the concept of logistics management?

This term refers to the science of managing resources, goods, services, and information, and controlling their flow and storage from the point of production to the point of consumption. Logistics management simply represents the comprehensive management of various logistics services according to several scenarios and at several stages until the products are delivered to the final consumer with the best possible quality and in the fastest possible time.

The main purpose of logistics management is to find more efficient and effective ways to convert raw materials into products, and to work on transporting and distributing them until they reach the final consumer.

The driving force for commercial activities to carry out these procedures is to meet customer needs and provide the best possible service to gain their satisfaction and enhance their loyalty to the brand by meeting their requirements. Given customers' aspirations for the best, there is a challenge for accurate and fast shipping, in addition to providing a high level of quality, which is achieved through logistics management.

The matter does not stop at this point, but goes beyond that, as logistics management has an active role in creating an innovative vision within the supply chain of commercial activities by analyzing historical data and tracking the movement of goods in real-time, which contributes to improving the flow of goods and avoiding any potential disruptions.

We would like to point out that there are many challenges facing commercial activities in managing logistics services, which we review in the following paragraph.

The most important challenges of logistics management for online stores:

Some of the challenges faced by online store owners in applying professional logistics management are:

First: Supply chain and inventory management:

This is one of the most serious challenges facing various commercial activities. Errors that can occur in the process of managing the supply chain and inventory directly affect the workflow of the commercial activity, causing many stages to be disrupted, such as transport, distribution, order management and processing, and consequently delaying the delivery of shipments to customers, which leads to loss of confidence in the brand and losing a lot of money.

Second: Same-day delivery:

This is also one of the challenges facing online store owners, especially in light of the increasing aspirations of customers to receive their orders as quickly as possible, especially if this option is among the shipping options available in the store.

In reality, overcoming this challenge requires professional logistics management, which includes accurate and extremely fast order management and processing, inventory management and monitoring, and controlling operational processes within warehouses, including packaging and preparing products for shipping.

Third: Delay in order processing:

This challenge relates to the process of order management for the online store, as it is necessary to rely on advanced systems and tools to process orders as quickly as possible to avoid delay in subsequent operations such as packaging and then directing them to warehouses to prepare products for shipping, which contributes to delivering them to customers on time.

Fourth: Dealing with returns:

This is one of the most complex challenges in logistics management for online stores, as it directly affects the operational cost and customer experience. Although flexible return policies are an essential element in attracting customers and enhancing their trust in the store, applying them practically constitutes a heavy burden, starting from receiving returned products, inspecting their quality, re-entering them into inventory or disposing of them, leading to reverse shipping costs and associated administrative procedures. When return rates are high, this may lead to profit erosion, in addition to increasing pressure on logistics teams, which necessitates searching for solutions that reduce the impact of this problem without harming customer satisfaction.

Fifth: Order tracking and logistics information management:

The challenge in this aspect is the integration of different tracking systems with the online store's systems, as customers need immediate updates on the status of their shipments, and if this information is not available or accurate, it may lead to a decline in confidence in the store. This requires precise integration of order tracking systems, as well as managing logistics data issued by the different parties involved in the process to ensure a seamless customer experience.

Sixth: Achieving balance between cost and efficiency:

Online stores seek to achieve the difficult equation of achieving a balance between cost, efficiency, and high quality, but balancing between providing a fast shipping service at an acceptable cost is one of the most difficult challenges in logistics management. Sometimes, competition requires offering free or fast shipping, which may increase the financial burdens on the store. This requires searching for smart solutions such as negotiating with shipping companies to obtain discounted prices, or relying on shipping portals such as OTO, the leading shipping portal in the Arab world and Turkey, which enables you, as soon as you create a free account, to link and deal directly with more than 350 local and international shipping companies at discounted shipping prices that have been negotiated in advance on your behalf with discounts up to 90%, in addition to smart automation solutions and managing all operational processes with high efficiency from a single, easy, and smooth control panel.

This is one aspect of the most prominent challenges that must be overcome to manage logistics services professionally and thus achieve sustainability and growth and provide a unique and distinctive customer experience that contributes to enhancing competitive value.

In this context, we mention the urgent need for a comprehensive and integrated system that effectively manages the entire logistical process and helps you perform various shipping tasks easily, quickly, and accurately, which you will find in the OTO shipping portal, which provides integrated systems that can all be managed from one control panel for shipping, managing, tracking, retrieving, and analyzing orders, as well as facilitating the steps to link your e-commerce store and others.

If you want to try, you can now create a free account in OTO and try different shipping and logistics solutions without any costs or complex technical steps.

It is worth noting that logistics management has multiple types, some of which we review below.

Some types of logistics management

The types of logistics management vary according to the tasks and goals to be achieved, and based on the field in which logistics operations are applied. We can divide logistics management into two sections:

First: A section related to general logistics management:

This section of logistics management includes four main types as follows:

• Inbound Logistics Management:

During this type, various tasks related to receiving, storing, and transporting goods that were shipped from the supplier or manufacturer to the merchant's warehouses are handled, and work is done to organize and classify them within the warehouse to be ready for shipping and delivery to the final consumer.

• Outbound Logistics Management:

This includes planning and executing the transport of goods from the commercial activity's warehouses to customers, including order processing, packaging products for shipping until they are delivered to the customer at the specified time and place.

• Third-Party Logistics (3PL) Management:

This type of logistics management includes shipping agents, transport companies of various types, and providers of Third-Party Logistics (3PL) services, etc.The main goal of relying on this type of logistics management is to fully control the supply chains of commercial activities, ensure timely delivery of shipments to consumers, reduce operating costs, etc.

• Reverse Logistics Management:

This type is concerned with reverse logistics, which is the management of returns that occur from the consumer to the retailer or manufacturer for multiple reasons including manufacturing defects, non-conformity to specifications, and carrying out maintenance work, etc.

Second: A section related to logistics management for online stores:

This section includes different types, including:

1. Inventory management:

Through this type of logistics management for online stores, various goods inside the warehouses are handled, and work is done to accurately classify and organize them so that it is easy to monitor each product separately, know its quantity accurately, and give depletion notifications to make the appropriate decision at the ideal time.

We would like to point out that this process is carried out through advanced warehouse and inventory management systems and software such as the warehouse management system known as "OTO Pack" provided by OTO, the leading shipping portal in the Arab world. OTO's warehouse management system allows you to control all operational processes within the warehouses, and work to organize and classify goods according to a scientific method that guarantees you easy monitoring of inventory in real-time and ensuring the delivery of shipments as quickly as possible and thus gaining customer satisfaction.

2. Inspection and audit management:

This type of logistics management is of great importance to various commercial activities, as it is concerned with managing inspection and audit operations related to goods, detecting the accuracy and quality of products, and choosing the most appropriate method for storing them, thereby avoiding losses that online store owners may suffer due to damaged goods.

It is worth noting that the management of inspection and audit operations is not limited to checking products only, but also extends to following up on intangible exports and imports such as checking inventory records, receipt vouchers, etc.

3. Transport and shipping management:

Transport and shipping management involves a set of procedures that are taken to transport and ship goods from warehouses to the final consumer based on the details that have been processed.

To avoid losing money and losing customer trust in the store, it is necessary to rely on advanced systems for managing and accurately processing orders to avoid errors resulting from inaccurate entry of order details, which affects the shipping and transport process and consequently delays the delivery of shipments to customers.

We point out that professional and effective management is positively reflected in the commercial activity, as it achieves many benefits that support the commercial activity and meet customer expectations, which contributes to gaining their satisfaction and enhancing their loyalty.

Key indicators and metrics for measuring the performance of logistics services for online stores:

Key performance indicators play a pivotal role in evaluating the efficiency of logistics management in online stores and improving the customer experience. These indicators help analyze performance, identify problems, and make strategic decisions to develop supply chains and achieve sustainable growth. The most important indicators for measuring logistics management performance that must be constantly monitored are:

Order Accuracy Rate:

This is one of the crucial indicators for measuring the success of the online store in fulfilling orders without errors, and this rate is calculated by the ratio of correctly shipped orders compared to the total fulfilled orders. A high order accuracy rate indicates the efficiency of inventory management and order processing systems. While a low rate indicates problems in storage, packaging, or order management systems, leading to increased returns and customer dissatisfaction.

Order Fulfillment Time:

This indicator measures the time it takes for the store to process the order from the moment it is received until it is shipped to the customer, including order processing, packaging, and sending it to the shipping company. The ideal time varies depending on the type of product and the shipping speed provided by the store, but in general, the faster the fulfillment, the more customer satisfaction increases.

Inventory Accuracy Rate:

This indicator determines the extent to which actual inventory data matches the data recorded in the inventory management system, and it is measured by comparing the actual number of units with the number recorded in the system. If the percentage is high, it means that the inventory is managed efficiently, which reduces shipping errors and unexpected product depletion. If the percentage is low, this may lead to financial losses due to unavailable orders, or excess storage which leads to high operating costs.

On-Time Delivery Rate (OTD):

This indicator expresses the efficiency of shipping and delivery operations, and it is calculated by comparing the percentage of orders delivered on time to the total shipped orders. The higher the percentage, the greater the efficiency of supply chain management, and the reduction of shipping delays, while a low percentage indicates a decline in customer confidence, especially if the store promised them fast delivery.

Return Rate:

This indicator is used to measure the percentage of returned orders compared to the total delivered orders, and the high return rate is due to many reasons, including:

• Poor product quality.

• Errors in order processing.

• Damaged products upon arrival.

Analyzing the causes of returns by relying on this indicator helps improve the customer experience and reduce operating costs.

Stockout Rate:

This indicator expresses the number of orders that the store was unable to fulfill due to inventory depletion, where a high rate indicates poor inventory management, and may lead to losing customers to competitors.

Damaged Product Rate:

This indicator measures the percentage of products that arrive to customers in a damaged condition, and it is an important indicator for judging the quality of packaging and the professionalism of shipping companies. A high rate of this indicator indicates the need to improve packaging materials, or change unreliable shipping companies.

Benefits of professional logistics management for commercial activities

Logistics management has an active and direct role in the development and success of many online stores due to its multiple benefits, including:

• Increased profits:

Organized logistics management helps various commercial activities reduce expenses associated with transporting goods and various operational processes, which contributes to improving productivity and thus increasing return on investment.

• Enhanced customer satisfaction:

Logistics management, as an important part of the supply chain, plays a vital role in controlling the times of shipment delivery to customers and thus delivering them as quickly as possible. It also has an active role in maintaining product quality and packaging them skillfully according to scientific methods to ensure they reach the final consumer with the best possible quality.

• Reduced errors:

Professional management of various logistics services contributes to reducing errors related to order processing, as well as those related to inventory, and this in turn plays a crucial role in improving the store's operational efficiency and thus completing tasks accurately, quickly, and without errors.

• Reduced storage needs:

Effective logistics management contributes to reducing the storage needs for various goods inside warehouses, by carrying out effective inventory management and monitoring, forecasting market and consumer needs, and then making the appropriate decision regarding supporting inventory at the optimal time.

• On-time shipment delivery:

Professional logistics management helps various commercial activities deliver shipments on time, which gives customers a good impression of the brand and thus enhances their loyalty to the commercial activity and enhances sales movement.

In order to achieve maximum benefit from logistics management for your commercial activity, we have collected some important tips for you in the following paragraph.

How can you optimally manage your logistics services?

The process of logistics management is complex, but it can be applied professionally, provided that the correct foundations are followed to execute it accurately. Here are some tips that may help you with that:

• Focus on managing and monitoring your store's inventory by relying on the best advanced programs and systems that will give you the ability to know what products you have in stock and monitor them in real-time to renew them and overcome all problems that may arise in the future.

• Rely on innovative systems for managing and processing your store's orders to manage and process customer-related orders as quickly as possible and work to direct them to warehouses to prepare them for shipping.

• Rely on trusted and experienced logistics partners in the field of shipping and delivery. You should compare the different types of shipping companies based on their reputation, geographical coverage, services, and cost to choose the partners most suitable for your store's needs.

• Rely on innovative solutions such as shipping portals like OTO that enable you to provide multiple shipping options to your customers and give you the ability to control your various operational processes effectively and thus ship and deliver products as quickly as possible and with the best quality.

• Build strong relationships with your partners in the supply chain, such as suppliers and logistics service providers, to improve workflow and achieve the best results.

• Use shipment tracking systems to provide customers with a clear view of the status and location of their orders in real-time.

• Regularly evaluate your logistics management performance for your commercial activity and look for ways to improve it. You should rely on data analysis to identify weaknesses and deal with them and treat them.

Conclusion

Through the diverse axes presented regarding logistics management, we conclude that it is not just a technical aspect of the e-commerce process, but a real backbone that supports the success of commercial activities of different sizes and fields of work. By implementing innovative and professional logistics strategies, online stores can achieve excellence, enhance competitiveness, and provide an exceptional customer experience that contributes to gaining their satisfaction and enhancing their loyalty to the brand.

Therefore, it is necessary to rely on technological solutions to automate various operational processes to enhance the effectiveness of logistics management and improve visibility and control over the supply chain.