Ecommerce Distribution: Process, Strategy, & Solutions

Supply chain problems have led to widespread delivery delays. And these problems are not going away anytime soon. Despite this, over 40% of shoppers expect a two-day shipping option when shopping online. When companies can't meet that expectation, their customers turn to other brands that can. Online retailers must rely on efficient e-commerce sales processes.

What is Ecommerce distribution? 

Ecommerce distribution describes the methods and strategies which are used by companies to transport products from the eCommerce distribution center to the customers. To make it clear, this is the way e-commerce companies handle order fulfillment. This includes every step, from completing an order at the warehouse to the delivery of the package to the customer by the delivery agent. And when a customer decides to return their order, the management of returns will also fall under the scope of ecommerce distribution. 

Online retailers can handle distribution entirely in-house or work with a third party to coordinate transportation and delivery. Regardless of who performs the process, the steps are the same for all businesses.

Four Steps in the Ecommerce Sales Process

The e-commerce fulfillment and sales process consist of four key steps: order management, shipping, last-mile delivery, and returns management.

Order Management 

Order management includes everything from receiving to tracking orders and preparing them for shipment. Order management begins when a customer first makes a purchase and places the order online. The company then approves the purchase, authorizes and accepts the payment, and sends the order to the warehouse.

Some companies with good customer service will also email the customer a receipt confirming the details of their purchase and providing information on how to track their package. The order fulfillment team at the warehouse then finds the items to complete the order and packs them for the next step in the process.

Shipping

Shipping isn't as simple as loading onto a truck. When a package leaves the logistics center, it often doesn't go directly to the customer. That's due to the fact that high-volume e-commerce enterprise brands often have more than one eCommerce distribution center, usually located in different parts of the country. For optimization, these companies ship packages to shipping centers based on the delivery destination region. Shipping teams at these hubs then plan and schedule routes to deliver the packages to the customer.

Last-mile Delivery

Last-mile delivery is the final phase when the package arrives at the customer's doorstep. Unfortunately, this is also the most expensive part of the ecommerce distribution process and the most difficult to plan for.

There are countless ways drivers can travel from one destination to another. Evaluating all options quickly and finding the most efficient route without software to streamline the process is a major challenge, especially when a company has more than a few deliverables to deliver.

Returns Management

Over 20% of online purchases are ultimately returned by the customer, which means final delivery isn't always a customer's final interaction with your business. A smooth returns process is therefore crucial for customer loyalty. 

Facilitating returns requires a system for receiving and approving customer return requests and logistics planning to coordinate the collection and transportation of returned products. However,  by offering a competitive returns policy aimed at attracting customers, a truly effective returns management process will go further and also help improve brand image. For example, popular online retailer Zappos has a handy return policy that offers free shipping and gives customers a full-year return policy.

Types of Ecommerce Fulfillment and Sales Strategies 

E-commerce fulfillment and sales strategies are different for every business, and specific practices and sales strategies may vary depending on the size of the business, the scope of the delivery program, and the type of products that the business has sold. However, there are three common models that companies implement for fulfillment and distribution: in-house, drop shipping, and third-party logistics.

In-house fulfillment

Whether they complete the delivery or collect the goods to return them to the warehouse, the delivery team is the last point of contact for your company. With self-delivery, you can take advantage of this by having complete control over the entire process, which means you can hire and train your own drivers. Being in control of fulfillment operations also means that you can customize your delivery practices to fit your business needs.

In-house fulfillment also means you don't have to pay the additional, non-standard delivery fees charged by many shipping and logistics companies, which is ideal for businesses that may have unique delivery requirements. 

For example, an online flower shop needs expedited shipping to deliver fresh-cut flowers as quickly as possible so customers can enjoy them longer. In-house delivery allows the florist to achieve this while avoiding expensive express and overnight shipping fees. 

Keeping distribution in-house also helps you optimize operations based on your specific business demands, which means it is often the cheapest fulfillment strategy for enterprises. 

Dropshipping

Dropshipping is a model where an e-commerce company promotes and sells another company's products without even handling them. Instead of storing your own inventory, a drop shipper advertises products on your website. When a customer buys an item, the sender buys it from the manufacturer. The manufacturer then ships the product to the customer.

So is dropshipping worth it? Dropshipping is a great business opportunity for entrepreneurs looking to grow. It can also be a good opportunity for sellers as it comes with low cost and low risk. However, companies that develop their own products and already have an existing sales model in place need to look elsewhere for an effective way to deliver products to customers.

Third-Party Logistics 

Outsourcing logistics to a third party can be expensive, but sometimes it's still the best option for e-commerce businesses. Third-party logistics providers (3PLs) often have sprawling service areas and large delivery teams that small, seasonal e-commerce businesses may not have. For this type of company, the cost of outsourcing can still be lower than in-house delivery, especially when the delivery destinations cover a large geographic area. A 3PL can also be useful for growing businesses that may need assistance to facilitate deliveries as the brand scales operations.

How Last Mile Delivery Can Affect Ecommerce Distribution

The retail distribution strategies a company employs determine what last-mile delivery looks like, which will have a major impact on the success of the delivery and the customer experience.

Last Mile Delivery for Ecommerce Distributors 

Ecommerce distribution businesses like Amazon simplify the movement and delivery of products, often to multiple customers. But it's difficult to juggle a large volume of shipments. Merchants need to receive the product from the retailers, store the product in the warehouse, and then pack and ship the orders when they are ready. If businesses don't follow DC's best practices, they could encounter issues like late shipments or even mix processed orders.

To avoid these issues, merchants can take steps like:

• Streamline inventory management practices to picking and packing
• Standardize processes to streamline operations and increase productivity 
• Implement a route planning tool to maximize the efficiency of last-mile delivery routes. 

Last-mile delivery for e-commerce businesses

When it comes to sales, last-mile delivery is the last chance to impress a customer, so it's critical to customer retention. And according to recent research, 82% of customers tell their friends about a good delivery experience. Therefore, seamless deliveries can also help you win new business. 

Holding delivery in-house gives you complete control over that final interaction, from hiring drivers to training your team on proper package handling. This makes self-delivery the best option for businesses that want to ensure a great customer experience.

To enable delivery in-house, a business must purchase delivery vehicles and hire a delivery team, including drivers, schedulers, and dispatchers. Businesses will also need to assess the cost of door-to-door delivery and determine whether they will begin charging for delivery services. Then, implementing a routing and scheduling engine will help streamline the transition to self-delivery.

Related: Best practices for warehouse maintenance in 2022

Grow your business with e-commerce distribution solutions!

E-commerce distribution is an interesting topic for many companies since the core of many modern companies is a strategy and solutions for selling products and services online. E-commerce distribution solutions are vital to an evolving business environment that requires connected systems, automated processes, inventory management, and also on-demand customer service.

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