Peak season is upon us, and that means a flood of orders just waiting to be processed quickly and effectively. Online merchants know these questions all too well: should I handle my logistics internally or externally? Do I need a SaaS solution for my logistics? How can I supply my customers on time?
In this article, Vinzenz Ager of Sendcloud talks about how your customers' expectations affect your decision of whether to opt to handle your logistics in-house or via an external provider. In addition to exclusive insights taken from the latest Sendcloud E-Commerce Delivery Compass 2021, this article also shares some basic considerations when it comes to choosing a logistics solution. It covers the pros and cons of each option and explains when a SaaS solution makes sense.
Customer expectations in 2021 are higher than ever!
Customer expectations in 2021 with regard to the shipping services of online shops are higher than ever before – especially as big players like Amazon.de or Zalando dominate this realm by offering premium shipping. Nowadays, it’s not only about getting your parcel to the customer: today's consumer also expects you to be as flexible as possible when it comes to shipping and make delivery within a few days – even if they only choose standard shipping in the check-out process. From the customer’s point of view, this is what the dispatch speed should look like:
2 to 3 days is the shipping speed that __well over half __(58%) of online shoppers expect from you. Considering how long it takes to process an order from when it is received to when the parcel service finally delivers it to your customer, that’s quite the challenge for online merchants. That’s why you need a logistics process that can seamlessly integrate into your business, helping you save time and money.
Achieving the required flexibility with regard to setting up a smooth logistics process also comes with its challenges. The Sendcloud E-Commerce Delivery Compass 2021 depicts this as follows:
Over 76% expect to choose the time period for the delivery of their order, and a whopping 71% would like to be able to choose the exact delivery date. To be able to offer your customers a service this flexible, you need logistics management that you can trust to smoothly transfer shipping-related information.
You should always keep the customers’ perspective in mind in the process as they’re ultimately the ones who determine how successful your online shop will be. Never forget that!
For more insightful information about consumer behaviour in ecommerce, check out the Sendcloud E-Commerce Delivery Compass 2021 provided by Sendcloud.
Internal vs external logistics
The success of your online shop depends heavily on your logistics management. This requires careful consideration and organisation on your part so you can fulfil your customers' needs, gain market shares and differentiate yourself from your competitors. But as is often the case in ecommerce, there’s no ‘one size fits all’ solution here. Your industry, product range and target audience all play a role in determining which solution is right for you. It’s a case-by-case decision.
The most important question you need to ask yourself is: Do you want to take on your entire logistics management by yourself or outsource (parts of) it to an external logistics partner?
To answer this question, consider the following:
How much logistics management experience do you have?
- What’s your budget?
- Do you have enough storage space, staff and time?
- Do you primarily ship your products domestically or internationally?
- Do your products require a specific type of storage and/or packaging?
- To what extent would you be willing to give up direct access to your logistics processes?
- How much do you care about personalisation in ecommerce?
- How high is your shipping volume now, and how high do you expect it to get?
- How much does direct customer communication matter to you?
- Are you already using a SaaS solution for your logistics?
There are many factors and considerations that go into answering these fundamental questions. Implementing a solution can be very time-consuming and cost-intensive. That’s why you should allow plenty of time to take a good look at your existing processes and answer these questions for yourself. This will help you make an informed decision about whether to opt for external or internal logistics.
Let’s have a closer look at the advantages and disadvantages of both options.
Outsourcing your logistics: More efficiency, but less control
Outsourcing your logistics is the right move for you if you’re not yet familiar with terms like merchandise management system. An external partner takes care of all – or at least part – of your logistics-relevant processes. And of course, this solution saves you a lot of resources: using external warehouse capacity is often cheaper than setting up your own storage space. This way, you also externalise other associated costs, allowing you to use your resources more efficiently, e.g. expand your range, improve your website, ramp up your marketing activities, etc.
You also benefit from the existing logistics structures and processes of a logistics partner who already has the required expertise. In the best case scenario, transferring goods from the warehouse into the hands of the respective shipping company is smooth and well-coordinated.
Important for you to know: communicate with your external partner beforehand about exactly how use of their logistics management works. Will you be able to increase your booking capacities quickly and easily? Which shipping companies does your external partner work closely with? Which returns solutions do they already offer?
It’s crucial that you clarify these matters in advance.
You should also be aware of the fact that by setting up external logistics, you’re forcing yourself to accept the following conditions:
- You’ll have little to no control over the shipping process.
- You’ll be giving up personalisation options in the shipping process in favour of standardised processing.
- You’ll also be giving up control of the customer experience.
- The interaction with your customers as well as your shipping companies will become more indirect.
- There’s no guarantee that your partner's solutions are exactly suited to your industry.
- The future development of the pricing model with your partner will become less transparent.
- Returns usually become more cumbersome for you as well as your customers.
Taking logistics into your own hands: keeping your customers close at all times!
Handling your logistics internally may sound very time-consuming to you at first. But one thing’s for sure: this option offers an array of possibilities for online shops of all sizes – no matter if you send 100, 1,000 or even 10,000 parcels a month!
Many online merchants initially shy away from handling their logistics in-house: they don’t think they have the required expertise, or they’re not prepared to make the necessary short-term investments up front and don’t want to spend time setting up their internal logistics.
But that’s a mistake! Here are the benefits you get with internal logistics:
Only if you run your logistics internally do you retain full control over your processes.
- You’ll ensure smooth communication with your customers and couriers without being disrupted by intermediary external partners.
- You determine every single shipping-related aspect, thus increasing customer satisfaction.
- You can set up your logistics processing so that it makes sense for your specific industry.
- You can precisely coordinate your check-out and logistics processes.
- You can scale your warehouse management as your business grows.
- You decide how to handle returns and offer your customers an ideal solution.
The benefits speak for themselves: Only internal logistics processing can optimally fulfil your customers’ expectations. But what can you do to implement your in-house logistics as easily and quickly as possible? SaaS solutions can help!
Internal logistics made simple – with the right SaaS solution
Are you uneasy about setting up internal logistics, even though it would allow you to provide your customers with the best possible service? Then a SaaS logistics solution such as Sendcloud might be the answer!
SaaS logistics solutions support you from start to finish. As soon as you receive an order, a warehouse employee can process it at once via Pack & Go before the courier ships it to the customer.
Thanks to automation, you’ll also increase the speed and efficiency of storage and dispatch, enabling you to bring in and reproduce processes at any time. As your business grows, you’ll also have a wide range of opportunities to make processes more scalable.
The right kind of interfaces to shipping providers also give you full control over the shipping process. This also includes dealing with returns, which you manage in your own returns portal. This method reduces your workload, while at the same time giving your customers the flexibility they expect from you.
Read more about peak season:
- The peak season in ecommerce lies ahead: how to best prepare yourself
- 7 tips for Cyber Week: More success in the busiest time of the year
- Black Friday in ecommerce: Tips for more sales
- Supercharging onsite search in time for Peak Season
- Why you should listen to your customers when choosing your logistics solution