Intelligent logistics solutions for small e-Shops & Startups

By Konrad Wolfenstein from Xpert.Digital

When it comes to maintaining efficient workflow processes in the warehouse during growth phases, e-commerce startups quickly reach their logistical limits. The reasons for this are usually the lack of experience in handling the increased quantities and an inadequately prepared internal warehouse management infrastructure for the growing requirements. This, however, doesn’t have to be the case.

A rapidly increasing number of customers, a growing range of products and, as a result, a steadily increasing volume of shipments – what for many retailers looks like an ideal business situation – can quickly overwhelm companies. In order to remain well positioned amongst tough competition, costly investments are required, which attract financial strength and attention. In addition, the increased logistical challenges remain slightly unnoticed.

Anyone who does not invest in efficient structures here will quickly lose touch, because functioning logistics are the guarantee for the commercial success of online retailers. To make matters worse, the logistics industry is also constantly coming up with technical innovations. The use of drones in the warehouse for inventory and article management is no longer just a dream of the future. The use of interactive extended reality techniques such as augmented and virtual reality for efficient control of warehouse processes is on the advance. There is a risk of getting bogged down, especially for newbies. It is therefore advisable to carefully weigh up the pros and cons of investing in the technology in question beforehand and, if necessary, seek support from external consultants.

Challenges for online retailers

Online shop operators and especially e-commerce startups face three logistical challenges to which they have to find answers as quickly as possible in order to continue to be successful in business:

– Scalability of the systems

While modern web shops and innovative start-ups are characterised by their flexibility, logistics systems are often the exact opposite: they are difficult to adapt to current developments. But especially in the growth phase, the processes in logistics must be able to grow flexibly. It is necessary that they are scalable both upwards and downwards and can be flexibly adapted to changes.

– Fluctuating demand

Demand, which is difficult to forecast, is a challenge, especially for fast-growing startups. “When will my products be bought preferentially?” or “Will the high demand for my products continue?” are crucial questions. If an incorrect answer is given to this, this leads to high costs and dissatisfaction with the customer. Reliable tools for forecasting future sales volumes are therefore required.

– Returns management

If customers are given the opportunity to return their purchases, this will cause great logistical effort and growing costs, which will also increase if the returns can be made free of charge. Particularly in the case of startups or rapidly growing companies from industries with a high return rate (e.g. textiles, shoes etc.), this can quickly lead to excessive demands on financial possibilities.

Modern warehouse processes as a logistical answer

To ensure efficient processes even with rapid growth, investments should be made in flexible and scalable logistics. Basically, companies have two options here:

– Investing in storage technology

Inefficient shipping processes are a major threat to online retailers. Just because a small retailer stored the goods on their shelves in their own basement when they started their business and sent them one by one from home after the order was received, he has to do the same with 200 orders a day. With an increase in the range, such storage quickly becomes confusing.

This quickly leads to items being put together incorrectly after the order, inadequately packaged and sent far too slowly. What is annoying for customers in this case costs the online retailer real money. Because customer satisfaction is a great asset and thanks to big players like Amazon or Zalando, buyers are used to a high level of shipping. Negative experiences therefore quickly lead to higher return rates and customers dropping out.

– Outsourcing

Outsourcing the fulfilment to an external logistics service provider is an interesting alternative, especially for start-ups that are not yet able to precisely assess their logistics processes and handling volumes. This solution is a bit more expensive than operating the area itself, but the retailer gets rid of the imponderables of their own intralogistics management.

In addition, through professional handling of the fulfilment process, not only the delivery quality but also the profitability of the company can be increased. There are now a large number of fulfilment service providers who offer their customers a wide range of extras in addition to storage and shipping, such as shop management or professional photography of the items to be displayed.

For a successful start in e-commerce, efficient logistics processes are the be-all and end-all. They can be achieved by consistently relying on high-performance technology from the start and not losing sight of innovations in this area.