Logistic Considerations When Starting an E-commerce Business

Even though your e-commerce business does exist in the digital world first, the truth is that you need a real-life infrastructure in order to make it all work. Sure, you can always entrust an important logistical issue to a third party. We’ll discuss a couple of such methods but, should you decide to take the high road and establish a proper infrastructure, there’ll be so much for you to do. With that in mind and without further ado, here are several logistical considerations when starting an e-commerce business.

Marketplace or your own platform

The first major choice that you’ll face here is whether to use online marketplaces like Amazon or eBay or make your own platform. The first option is simpler because start-up costs are significantly lower and, if you opt for a drop shipping model (something we’ll discuss in a bit), you might be able to start working today. On the other hand, there are a lot of false products on these platforms, which is why having your own platform is a reputation boost. Other than this, you also get to avoid paying fees for each sale, which is why you end up paying less in the long run.

Dropshipping

One of the first issues that you have to consider on this topic is one of dropshipping. This is a concept where you merely sell an item and then issue the order to move it from the original owner to the buyer. This is a lot simpler, seeing as how you don’t have to deal with storage or delivery system. The problem, however, lies in the fact that you have a lot less control over the delivery system. This can be quite problematic provided that there’s a problem with the delivery system that you use or that the manufacturer/original supplier has no more items in the inventory and they’ve failed to inform you about it.

Delivery system

Having your own fleet is definitely a first step towards taking control of the infrastructure of your e-commerce business. Other than being able to oversee your delivery, you also get a customer support boost. Why? Well, because a surprisingly big portion of customer service calls is related to the product that was sent in time but hasn’t yet arrived. By tracking your fleet via a fleet management software, your customer service representatives will be able to inform your employees of the exact whereabouts of the order. Naturally, this step isn’t without its challenges, one of which is finding suitable trucks for sale and hiring capable and reliable drivers.

Storage

Keep in mind that your business infrastructure doesn’t start with the delivery system, even though it’s an integral part of your operations. In fact, it starts as early as the storage of given items. For starters, you need a suitable facility, a proper warehouse management system and a well-trained and trusted personnel. All of these aren’t easy to put together but for those who do manage to handle it, the foundations for a great e-commerce business become a lot simpler to make.

Pricing strategy

In order to make it in commerce and e-commerce alike, what you need is a proper pricing strategy. Here, going the lowest isn’t always the most important. Starting with a higher price and then lowering it over the course of time will give you a chance to milk as many pay-grade demographics as possible. On the other hand, a low initial cost of your items may give you an increased efficiency when it comes to penetrating the market. Either way, you need to find a suitable solution for your industry.

Transparency

In the end, you need to build a relationship based on trust with your customers and the simplest way to do so is to be transparent about your prices and your business model. When it comes to the issue of delivery, you need to understand that people care far more about the price than about the time of delivery. Sure, same-day and next-day delivery are great but people are more than willing to wait 7-10 days for the item they bought, as long as they don’t have to pay more. Also, make sure to include the cost of tax into the price. This way you get a higher customer experience by avoiding unexpected costs.

As you can see, the logistics of an average e-commerce business are really not that complex. Those who decide to go for the most modest of options (something like the FBA model), might even start with as little as $2,000 to $5,000. For those more ambitious, however, the above-listed steps are inevitable.

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