Online shopping has forever changed the way businesses operate and how consumers shop. As brands continue to embrace digital transformation by moving away from brick-and-mortar locations to an ecommerce-first model, customers are able to get what they want in just a few clicks.
The global pandemic has also forced slow-adopting businesses to invest in their digital experiences, and shoppers have become even more dependent on getting everything online. And who can blame them? It’s indisputably convenient.
The major challenge for businesses, however, is figuring out how to fulfill the needs of customers in a reliable, scalable, and cost-efficient way. An integral part of every ecommerce business is its shipping and distribution operations, which often involve a logistics company or freight forwarding partner.
In this article, we’ll take a closer look at how the still-growing ecommerce industry impacts the world of logistics and freight shipping—and how both industries work together to adapt to overwhelming order volumes and keep customers happy.
What is freight shipping?
Whether you purchased your item online or at the actual store, it was almost definitely part of a larger freight shipping order. Businesses use freight shipping to transport their products in bulk across the country (and world) using specialized trucks, trains, ships, and planes. The process is usually managed by the ecommerce business and the shipper (or manufacturer) at different stages.
If an ecommerce business is not able or not interested in taking care of freight shipping or inventory management, there are other services they can lean on.
Freight forwarding is a third-party service that can handle the freight forwarding process partially or entirely. These companies act as liaisons between the ecommerce business and the manufacturer, working with carriers and managing paperwork to ensure items are smoothly shipped across borders.
Drop shipping is a great option for an ecommerce business that wants nothing to do with shipments or inventory management. The supplier or manufacturer manages inventory storage and sends products to the end customer.
Third-party logistics (or 3PL) is a mix-and-match option that allows ecommerce businesses to decide which parts of the supply chain and inventory management process they want to outsource. 3PLs can manage freight shipping, store and track warehouse inventory, as well as pack and ship orders to end customers.
The impact of ecommerce on the logistics industry
The drastic growth in the ecommerce sector spilled over to the logistics industry, forcing logistics companies to make changes to not only take advantage of new opportunities but also to survive. To keep up with growing online orders, logistic companies had to expand their operations and undergo a technological revolution. While these changes have helped them adapt to the demand and grow their revenue, early adopters have quickly become industry leaders by prioritizing the following improvements.
Faster delivery times
Delivery times are a dealbreaker for customers who expect everything immediately, thanks to the two-day, next-day, and even same-day delivery options available on Amazon. This new delivery time standard has made it imperative for freight service companies to incorporate technology that helps them become faster, more agile, and more efficient.
More customer support
Shipping and logistics companies have improved their customer support by using digital tools like real-time tracking and chatbots to help customers get shipment-related information. For even more touchpoints, 24/7 SMS and email support have also become effective strategies to keep people informed about their shipments.
Diverse shipping needs
Since ecommerce businesses provide shoppers with flexible shipping options, logistics companies need to do the same by offering standard, expedited, or same-day delivery, along with store or alternative location pick-up options.
Digital transformation
To better manage, track, and evaluate much higher quantities of information, shipping and logistics companies now rely on analytics tools to help them make data-driven decisions. This also helps identify better delivery routes, track vehicle performance, and closely monitor delivery times.
Automation
The rise in automation has helped logistics companies better manage and optimize routes by considering traffic patterns, weather disruptions, delivery windows, and vehicle capacities. With real-time updates, they can create alternative routes and respond to unexpected disruptions or changes in delivery priorities.
Reverse logistics
Reverse logistics is essentially the technical term for returns and exchanges, and it’s become a hot topic due to increased returns volume. Because online shoppers often cannot return their items personally—especially if the seller doesn’t have a storefront location—logistics companies needed to reevaluate the return process and offer reverse logistics functions to transport returned packages from purchasers back to their ecommerce clients or warehouses.
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One more major challenge for logistics companies
While logistics companies are doing a great job at adapting to the recent ecommerce trends, they’re still dealing with last-mile delivery challenges. Last-mile delivery is the final part of the process where a package gets transported from the distribution center to the customer. This has always been the biggest pain point for all involved parties, further amplified by a surge of ecommerce transactions.
On the positive side, logistics companies are testing new strategies and technologies to tackle the last-mile delivery problem. Some transportation companies rely on delivery networks of local, contracted couriers to deliver packages. Others have tested autonomous delivery vehicles and even drones to help deal with the final step of the delivery.
When it comes to warehouse storage, some logistics companies are testing strategically placed micro-fulfillment centers that are closer to key areas. These warehouses are also getting a makeover with more efficient designs and—you guessed it—automation.
Technology is playing a huge role in helping to resolve last-mile delivery challenges. As the tech continues to evolve, optimization algorithms and real-time data analysis will continue to help shipping and logistics companies avoid traffic, better manage high volumes, and identify faster and shorter routes to cut down on delivery times.
What this means for the future of freight shipping and logistics
Innovation in logistics is only beginning, and companies must continue to evolve and adapt to ongoing changes in the ecommerce sector. While the explosive growth has changed the logistics industry forever, adapting to these changes is not only about surviving or finding new opportunities—but also about reinventing yourself to stay competitive and foster growth.
By bridging the needs of ecommerce businesses and customers with flexible, tech-first solutions, freight and logistics companies can better navigate challenges while embracing the endless possibilities that today’s digital landscape offers.
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