Ever since the world met with the pandemic, they began to understand the importance of logistics and the difference it creates from one business to another. That is why modern e-commerce businesses run on their logistics service.
From the customer orders to handing over the product to the customer, logistics service is instrumental. Hence, it marks the statement why some businesses are bigger than others. In addition, to curb issues in the delivery of products, companies are coming up with drones.
Therefore, in the next section, we will unearth some of the challenges in the logistics industry, even though the rate of innovation is higher. Being the hottest topic in the modern business world, you can shift your focus to the next one to learn more.
Challenges Faced By Logistics Industry In The E-Commerce Sector
Do you know? The size of the logistics industry is 8.4 trillion Euros, more than the GDP of 190 countries. Therefore, it shows the need of the industry in modern business, especially in e-commerce, where you need to deliver goods quickly. Logistics face some real challenges, from delivering food and groceries in minutes to delivering electronics and other goods in one day.
Here are a few challenges faced by them in the e-commerce sector –
Rising Transportation Costs
One of the biggest challenges that logistics companies face in e-commerce is the rise of transportation costs. After the Russia-Ukraine war, fuel and labor costs have skyrocketed. This is affecting the new drivers, as they are not getting the right value for their services.
Hence, today, independent logistics companies are unable to sustain themselves, as companies like Amazon are rapidly investing in logistics. In the last 20 years, Amazon has invested 1 billion USD in logistics.
Furthermore, it is giving the drivers electric bikes to deliver the product. However, the shortage of labor is affecting the proper investment and delivery of the package at the right time.
Major Skill Gap In The Market
Ever since the pandemic, there has been a greater shortage of labor in the global market. It is certainly affecting the prosperity of the e-commerce sector, as there are no good drivers that can deliver products with care and intelligence.
Furthermore, with the initiation of automation technology in the industry, fewer workers know. Hence, it creates a massive skill gap in the market and certain mishaps when delivery boys deliver packages to customers. That is why it is important to train the delivery people properly regarding the technology. This will certainly help the industry in a better way.
A similar scene with Divine Enterprise provides Logistic For High-Value Cargo and enables you to get the package on time. They train their agents with the latest technology and events to make them accountable and accurately deliver products.
Increased Customer Expectations
Another factor that is affecting the market is increased customer expectations regarding delivery time. No sooner than Amazon introduced one-day delivery, every customer expected from e-commerce sites to do the same. Hence, it puts pressure on the logistics company to deliver quickly.
It is mainly because sometimes there are external issues that affect the delivery time. Eventually, it fails to meet customer expectations and causes a loss of revenue and profit margin for the company. Therefore, companies need to communicate properly regarding product delivery. They need to set the time as per the miles, which will help the logistics team deliver the product on time. So, you should ensure you put the right information on the website regarding delivery timings.
Constraints Due To Peak Seasons
One of the major issues logistics partners face is constraints during the peak seasons when the rate of order is higher than in normal seasons. For example, people do so many things for their loved ones. Eventually, everyone wants them to get the things delivered on time. During that moment, the issue props up.
Hence, you need to plan for the peak seasons in advance and set out the strategy for the proper delivery of products. Furthermore, e-commerce companies should communicate with retailers and warehouses to avoid hassle during peak hours. Lastly, the company should make an inventory buffer to meet the increased pressure of the festive seasons. That way, they can deliver products all around.
High Competition Rate
Another factor that poses a challenge in the logistics sector is the high competition rate. Today, there are many companies in the logistics sector, especially with e-commerce websites having their in-house logistics. This creates a challenge for other logistics to compete with them. For example, Amazon’s logistics are bigger than FedEx and DHL – thus, it showcases how far Amazon has come in a few years.
Therefore, logistics needs to focus on value-added services to get a better client base and continue their services. Furthermore, they need to work on customer relationships. This will assist them in competing with bigger e-commerce logistics services and help the new online businesses deliver products. Also, they must constantly improve their services and add more technology to get better results and revenue.
Cross Border Delivery
The modern world runs on geo-political relationships. Therefore, logistics services must deliver products to a country where the trade relationship is good with the home country. This is because there will be lower tariff rates and export costs. Otherwise, with the rise of global trade wars between the East and The West, the logistics business is on edge.
Therefore, the logistics company needs to diversify its partners and delivery agents. This will help them to send products from one place to another. Also, they can ensure that delivery is smooth and follow all the roles of international trade.
The Bottom Line
In the end, we can conclude by saying logistics is an important factor in modern business. It defines the outcomes of greater revenue and profit-making processes of e-commerce companies. That is why e-commerce companies invest more in their logistics to gain more customers.
Furthermore, they can send real-time data on the location to improve transportation in the area.