By definition, logistics means the management of products when in storage or during delivery. However when we talk about logistics, it is a little more complicated than engaging with any delivery service to get the products shipped to customers. There is more to think about and in this piece, we will discuss the key points of logistics for ecommerce exports. Before we get to that, let’s go through some definitions:
Cost Per Unit: It is the cost to produce one unit of a product. For example, if it takes $10 to produce 20 guitar picks, then the cost per unit is $0.50.
Warehousing: Warehousing is the act of storing products as inventory to be sold or distributed. The term warehousing refers to any kind of storage whether big or small. For smaller business owners, storage is normally done at their own premises be it a house, or an office building. For the bigger players, warehousing may require a rented building or warehouse and for types of businesses, there is cost incurred.
Pick & Pack: The action or process of which goods to be sold are picked from the master inventory, and packed to be sold individually. This is usually done by a fulfillment center. Some delivery companies double as fulfillment centers and make it a lot more convenient for retailers.
Now, let’s discuss shipping:
- Bulk – Shipping of orders in large quantities. Usually done for business-to-business. Bulk shipping is what you see on ships where products are transported in contenas to their destination hub. This is usually step one of the shipping process. From the main hub, retailers can either choose to proceed with forward inventory deployment or engage in a delivery service, depending on the location of the main hub and volume of inventory; whether or not it requires dropshipping.
- Forward Deployed Inventory – Forward deployed inventory is the deployment of inventory from the main warehouse or hub to smaller hubs before the products are shipped to customers. From the smaller hubs, either a local express delivery company or a local express mail service is engaged.
- Local Express Delivery – Local express delivery is shipping fulfilled by a local delivery company with a shorter delivery time. For local shipping, local express shipping is expected to deliver within a day but for cross-border shipping, it may take a little longer. They handle delivery from country of origin all the way through to the customer. An example of a local express company is DHL. Items handled by local express shipping companies are normally protected and come with some sort of guarantee.
- Local Express Mail Service (EMS) – EMS is your local postage or mail service that take over the product once it is in the delivery country or region. This means that the product will first be brought in by another shipping service before it is handed over to an EMS. EMS are a less preferable service because they have longer delivery lead time and don’t usually provide compensation for lost or damaged items.
Here is a table to understand the shipping processes better for export ecommerce:
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