Logistics are the “nuts and bolts” of your e-commerce business, and the success or failure of your business could likely depend on executing the logistics of your e-commerce business correctly.
What Is Logistics?
Wikipedia defines logistics as “the management of the flow of resources between the point of origin and the point of consumption in order to meet some requirements”. Simply put, it is the “nuts and bolts” of your business – the process of delivering a product or service from its point of origin (either a studio, factory or workshop) and delivering it to your customer in a process that is both timely and at a reasonable cost.
If your e-commerce business involves delivering a service to your customers, the process may be reversed – instead of delivering a finished product from point “A” to “D”, the logistics of your business may revolve around delivering an employee or contractor to point “D” in a timely manner and at a reasonable cost.
Make It Or Break It
No matter how your business is organized, managing logistics really is the “make it or break it” component of many small businesses. Even if you offer a popular product or service and your customers are satisfied, your business can still fail due to costly errors, overspending and inefficiencies. Finally, it is important to master your logistical processes because your largest online competitors – especially Amazon.com – operate with incredible logistical efficiency. If you want to succeed online, where the power of the Internet levels the playing field for small and large businesses, you have to master your logistics.
As with other aspects of properly planning and executing a small e-commerce business plan, properly researching your logistical costs is of paramount importance. Logistical disasters, such as underestimating shipping and delivery costs or mismanaging inventory, are more often than not the result of poor planning and research. This is especially true when receiving inventory from, or delivering a product to, a foreign country; it is vitally important to research shipping costs, taxes, tariffs and fees.
Ongoing Logistical Research
It is also important to understand that properly managing logistics involves ongoing research – the variables of transportation costs can change year-to-year and even month-to-month. Proper research can also reveal opportunities to reduce costs that might not be readily apparent – for instance, depending on a customer’s location, some shipping options may be less expensive but deliver equitable delivery times. Over time these reduced costs and improved efficiency can result in a competitive advantage, especially in a crowded online marketplace.
Managing Cash Flow
In addition to transportation of physical goods, logistics also involves properly managing funds and cash flow. Since almost all small businesses rely on accounting software such as Quickbooks, it is imperative that the ongoing costs related to logistics are properly imported into the accounting software in a timely manner. This will allow for more prompt customer billing and improved cash flow. Most shipping companies offer online tools that make this transfer of data easier and more efficient
Ask For Help
Finally, it is important to realize when you need help with logistics. Many small business owners do not realize that everyone who has played some role in the development of a business – from attorneys to bankers to creative professionals such as website designers – can often offer valuable advice in managing logistics. For instance, a web designer plays a vital role in recommending and implementing the right e-commerce platform for your website, while your banker may offer valuable advice related to small business financing and cash flow management. It may also prove valuable to hire a consultant who specializes in small business logistics – a one-time investment in a consultant who fixes and improves your logistical processes may prove to be extremely valuable over time.