The evolution of logistics has always been rooted in automation. The development of transportation, warehouse monitoring, and tracking technologies makes it easier to bring goods to customers’ doorsteps. Now that the number of e-commerce orders is spiking, business owners have to consider new ways to deliver increasing product volumes.
How do e-commerce businesses cope with the challenges of an industry using automation? We are going to answer this question by more closely examining the e-commerce projects our team has worked on.
Bvblogic tech specialists helped develop logistic software and implement a delivery automation strategy for MOYO — a leading electronics retailer in Ukraine, with a range of physical stores and an online store.
In this post, you will find out more about the insights we collected when developing automation solutions for MOYO and you will be able to apply them yourself when it comes to organizing logistics at your e-commerce store.
Main Challenges that e-commerce Businesses Face In Logistics
Today, other than fluctuating demand and stock distress, e-commerce business owners have to deal with particular logistics challenges that are unique to this sector. Some refer to a human factor, and others to inefficient logistics frameworks or the absence of a systematic approach when it comes to warehouse management and supply chain.
1. Slow delivery (including last-mile)
According to statistics collected by a study of e-commerce parcel markets in the European Union, 38% of e-commerce shoppers today are dissatisfied with online deliveries. Delivery costs and speed are among the chief reasons shoppers feel unhappy about shipping.
Statistically, the number of parcels distributed worldwide has grown by over three million units in the last three years, and last-mile delivery is still the most difficult part of order fulfillment since the local e-commerce industry can’t handle it in bulk as global companies do.
2. Asynchrony between online and offline activities
For many e-commerce store owners, it’s challenging to balance the pace of online and offline development. More often than not, business managers struggle to establish partnerships with local delivery services or create a system of local warehouses to match the speed of offline order fulfillment with a growing online presence.
3. Little-to-no-way to monitor logistics activities
Monitoring statistics is another pain point that lots of local e-commerce businesses share. At the same time, intelligent tracking systems are time-consuming to implement. That’s why e-commerce businesses stick with outdated yet operable systems rather than introduce large-scale changes.
4. No interfaces to interact with clients or delivery services
A fair share of e-commerce businesses invests in incremental changes rather than complex interfaces to reform the old-fashioned workflow on a global scale. That’s why the lack of communication frameworks is a challenge for most warehouse and supply chain management teams.
5. Struggles in courier delivery planning
Failing to connect with local delivery providers and plan courier deliveries results in shipping delays and higher last-mile delivery costs. Being able to oversee and plan delivery routes, as well as control courier staffing resources and schedules, will bring e-commerce store managers more confidence and help create uniform delivery standards that will benefit every location the company operates in.
The Aftermath Objectives
The more you dive into local e-commerce and its pain points, the more insights you can gather and the better you understand which objectives logistics automation should focus on mitigating.
- Increasing the speed of product delivery (in large cities in particular). Most e-commerce shoppers come from densely populated urban areas — thus, we have to account for intense traffic and high customer expectations. The goal here is to maximize the speed of last-mile deliveries in large communities to stay competitive among other retailers in the area.
- Reducing the cost of last-mile delivery. Low drop sizes and the inability to drop parcels in bulk decreases the efficiency of bringing the product to customers’ doorsteps. There should be ways to make last-mile delivery more affordable and protect parcels from weather-related and human-error-induced damage.
- Processing a high number of deliveries per day and optimizing delivery routes for managers. The order-processing system has to be scalable (can adapt to a growing number of entries over time), and be able to generate the most convenient delivery routes automatically and monitor how well delivery managers adhere to the routes designed by the system.
- Optimizing peak workload for delivery services during sales, holiday periods, Black Friday, etc. As practice shows, during seasonal events, the handling capacity of delivery services falls rapidly, as the number of orders gets higher than ever. As an e-commerce business, we need to be able to estimate the number of deliveries during the holiday season, keep track of stock inside the warehouse, and schedule refills promptly.
- Monitoring the performance of delivery managers, the number of completed deliveries, tracking KPIs, gathering feedback. Performance monitoring would protect the business against fraud, offer new ways to train employees, help track the performance of the business, and sort through efficient and poor management strategies. To capture and track metrics, measure the productivity of the delivery team and keep tabs on order fulfillment speed, we will need an all-in-one management system in place.
- Guaranteeing safe, timely, and high-quality online delivery. Other than improving the handling of day-to-day warehouse maintenance and supply chain activities, the business has to be transparent in customer relationship management, giving shoppers a way to track deliveries and ensure risk-free purchases.
- Gathering big data to analyze delivery routes, and optimize delivery and logistics. Being able to receive more customer data and process it precisely gives the company a way to forecast demand and improve customer experience. Collecting real-time location data can help supply managers come up with multiple route scenarios and adapt to environmental changes, accidents, or traffic jams.
- Offering 24/7 support. Constant availability offers local e-commerce businesses a competitive advantage over other retailers; however, recruiting and maintaining an around-the-clock in-house support team is too time-consuming and expensive — automation, in this case, is the only affordable and manageable way to ensure 24/7 customer support.
- Ensuring full stock at the warehouse. Keeping tabs on how many items are available, updating the website regularly, and refilling stock as soon as a customer places an order should be first-priority for a local e-commerce business.
- Organizing warehouse storage. Labeling all products correctly, protecting inventory from workplace theft, and creating a comfortable way for employees to find a needed item inside the warehouse is crucial for maintaining high customer satisfaction and increasing the speed of order fulfillment.
These are the objectives we focused on when designing an automation platform for MOYO, and these are the chief tasks that an automation platform should help your local e-commerce business accomplish.
How Logistics Automation Software Can Help
Let’s take a look at the practical accomplishments that were achieved by automating logistics at MOYO. You can consider implementing these practices for your e-commerce business, as well.
1. Helping online shoppers pick up goods at physical stores
Thanks to logistics automation, the software can connect customers to the closest brick-and-mortar stores. To reduce the workload of delivery managers and encourage shoppers to pick up their orders on their own, an advanced system can send the location of the nearest brand store.
Now, once a customer orders electronics at MOYO, the system sends them the location of the nearest physical store.
2. On-demand delivery
Rather than hiring a fixed delivery team and having to maintain it regardless of demand fluctuations, an automation system makes it easier for businesses to collaborate with dozens of part-time delivery managers and reach out to them as the workload becomes more intense.
An improved logistics system added agility to the way MOYO now approaches deliveries, allowing customers to choose the most convenient location for examining the product or picking up the order.
3. Integrating e-commerce businesses with local delivery services
Being able to compare various delivery services and choose a company with the most reliable last-mile delivery practices, affordable rates, and skilled courier teams should be one of the top priorities for e-commerce businesses.
Integrating with local drop-shipping couriers and third-party shipping companies helped MOYO speed up the delivery process across all the large cities in Ukraine.
Other than that, innovative and out-of-the-box thinking helped uncover new ways of solving common problems. Thanks to an optimized last-mile delivery strategy and the use of electric bikes it takes no more than 45 min for MOYO to bring products to shoppers’ doorsteps in Kyiv right now. Take a look at the YouTube video ad here.
4. Planning routes for delivery managers and monitoring their performance
With a dedicated platform, a logistics manager can assign tasks to delivery managers and monitor their progress. By increasing the amount of data in the business owner’s reach, the supply chain team can balance workloads more efficiently, increasing employee satisfaction and retention.
The logistics automation system we developed for MOYO helps delivery managers effectively plan daily routes. Intelligent algorithms define the most efficient way to move between dropshipping points, reducing fuel costs and increasing the speed of order processing.
5. Gathering big data and planning deliveries in real-time
Knowing how to gather and apply big data helps to optimize supply chain and warehouse management. There are multiple variables that logistic automation can offer at managers’ disposal: traffic density, weather conditions, types of cargo that are transported, size of the fleet, etc.
MOYO can now make data-driven decisions when choosing warehouse locations or assessing the performance of running sites. As for the supply chain, big data helps MOYO predict and avoid likely accidents and shorten the delivery time.
Step-by-Step Logistics Automation
Now we want to shed some light on the actual process of logistic automation. Despite being a complex strategy with a handful of components, these are the primary steps you will want to consider:
- Setting up a cloud server. An off-the-premises system can give you a convenient way to access route maps, task dashboards, and other relevant data anytime. Other than that, cloud servers are secure and easy to recover. This is why we decided to go with a cloud-based solution for MOYO’s logistics automation system.
- Developing dedicated software. You will need a feature-rich tool that offers a full range of warehouse, supply chain, and performance tracking features. Our software engineers used advanced frameworks and APIs to create a scalable, easy-to-manage logistics system for MOYO. We also made sure that logistics managers with no tech training can easily navigate the newly introduced system.
- Integrating GPS trackers and connected devices. Most frontrunning logistics teams rely on the power of wearables and other IoT tools. That’s why integrating GPS tracking and wearable support into the logistic automation system of your e-commerce business is the right way to go. This is exactly what we did for MOYO to help them harness the full power of connectivity and workplace data.
- Building mobile-friendly software. To give your shoppers the ultimate online experience you need to focus on creating a user-friendly interface and optimizing it for desktop and mobile users alike. For MOYO, we developed an app that is optimized for Android and iOS systems and is accessible not only online but offline, as well.
- Training the team. Once your logistic automation system is ready to deploy, you need to facilitate smooth employee training. As to the actual product, our consulting team created robust documentation and video tutorials for MOYO in order to give them a step-by-step walkthrough of the system. We provided their employees with face-to-face consults to make sure there was no confusion on how to use the system.
Logistics Automation Challenges
When one chooses to redesign their e-commerce business approach to logistics, hurdles may arise. Even if the expertise of your contractor or your in-house development team is top-notch, and even if you’ve created a best-in-class logistics system with the world’s greatest UI/UX, chances are you will face unexpected challenges.
- The complexity of existing logistics processes and unoptimized supply chains. Logistics consists of two major areas — warehouse management and supply chain. Both of these subsystems are dynamic, with dozens of moving parts. Examining the way inventory management and shipping operations are running and finding the most fitting automation strategy requires investing a lot of time and skilled talent.
- There’s no one person in the company who knows all logistics processes well. Traditional e-commerce management teams don’t have a dedicated department or a person assigned to handle automation or logistics issues. At the same time, automation engineers are hard to find — more so those with logistics domain knowledge. Lots of companies struggle to find qualified decision-makers, analysts, and tech teams that will make the right digital transformation choices and oversee the implementation process.
- Outdated systems that are hard to integrate with new automation software. Tools that your logistics team currently uses may be incompatible with new and more advanced solutions. Thus, business owners have to either integrate a new system into their existing platforms or build an automation platform from scratch and move all the data from existing management tools to new solutions. Both options are time-consuming.
- A large pool of delivery contractors that support the logistics processes of the company. As companies employ a lot of contractors, collaboration is complex and time-consuming to automate. There are a lot of processes to break down and re-optimize.
- No digitized documentation, all records are paper-based. Replacing paper-based documentation with a digital platform requires laying some major groundwork. You will need to ensure there are no errors when moving customer records and other files to a new medium, and no data is lost.
Nuances of automating external and internal logistics
Let’s analyze a few more nuances that you should account for when automating logistics in your e-commerce business.
Normally, in logistics, there are two subsystems — external and internal.
External logistics covers moving goods between distribution centers, as well as the supply chain. This mostly concerns consumer-facing operations.
Internal logistics covers inventory and warehouse management, traceability of goods inside the warehouse, talent management, and other business-facing operations.
To correctly automate logistics, you need to be aware of what details come along with external and internal logistics. Here are a few things to keep in mind:
Internal logistics would benefit from RFID scanners, connected devices for inventory navigation, ERP, and accounting systems. Warehouse managers will need to monitor stock refills, connect warehouses to each other, prevent goods from spoilage, and optimize the way products are placed inside the storage space.
External logistics, on the other hand, requires different types of integrations — GPS trackers, fuel consumption monitors, and security systems to avoid product theft during shipping. Other than that, supply chain automation systems facilitate collaboration with local delivery companies to optimize and reduce the costs of last-mile delivery.
Both external and internal logistics activities require around-the-clock monitoring. Warehouse tracking helps ensure timely inventory refills and makes it easier for a worker to locate a needed product. A logistics manager will also be able to keep tabs on which tasks are the most time-consuming and find ways to automate them so that the team can process more orders in a day.
Traffic tracking will help to create more efficient delivery routes, and real-time supply-chain tracking will pinpoint inefficiencies and look for ways to reduce operating costs.
Retailers use internal logistics automation systems to connect warehouses, ensure interdependence within the team, and optimize the store’s daily workflow (inventory is an ever-changing organism that needs to be supported 24/7.)
External logistics automation tools help automate the number of steps needed to bring products to the customers’ doorsteps, plan efficient delivery routes, create comprehensive reports, and get real-time feedback from shoppers.
It’s important that logistics managers do not treat internal and external logistics automation as two separate entities. Warehouse and supply chain management platforms should be integrated with each other, helping connect business-centered and consumer-facing facets of the process.
What Will Influence The Final Cost
As you plan to automate your e-commerce store logistics, you might be wondering how much it will cost to complete the project. Depending on the complexity of supply chain and warehouse management activities, automation expenses may vary; however, to give you a better understanding of the final cost of the project, we compiled a list of expenses that business owners should account for during automation:
- AWS, Azure, and other hosting fees. A platform needs a server to run on — you will most likely use a third-party platform to host a system on, which will result in a monthly subscription fee to keep the system running.
- Automation software development cost. The process of building software includes market research and analysis, prototyping, UI design, coding, and testing.
- Purchasing additional licenses. To connect wearables or GPS tracking to the system, you might have to invest in additional software or licenses.
- Mobile app development. To ensure your customers can place their orders on the go, a fleet driver can access his assignments, or warehouse team can track their stock, you will need a functioning mobile app which will require additional investments depending on the functionality you want it to have.
As we learned for ourselves when helping MOYO automate its warehouse management and supply chain, bringing digital tools onboard is a way to speed up delivery, connect with customers, build local partnerships, prevent stock-outs, and ensure workplace safety.
We wanted to give you a full breakdown and liven up a generic case study with more than numbers, dry statistics, and tech specs. Our team strived to create a practical guide that would be engaging to read and easy to implement.
If you are looking forward to building a platform for logistics automation, contact Bvblogic. We will analyze which technologies can help your e-commerce business achieve its peak efficiency and help you implement affordable automation strategies. Leave us a message — we are looking forward to discussing your project!