The strong growth in E-Commerce business in Germany has led to a rapid increase in the volume of parcels shipped. In 2020, 4.05 billion shipments within the national parcel market were delivered. This corresponds to growth of 10.9%, reaching a new high after just 3.8% growth in 2019. The Bundesverband Paket und Expresslogistik e.V. has revised its annual growth forecast upward from the original 4% to 7% per year and forecasts a shipment volume of 5.69 billion shipments in 2025.
Logistics around online distribution channels (E-Commerce logistics) is becoming increasingly important for brand manufacturers. Due to the requirements of some online distribution channels, E-Commerce logistics has some special requirements that are not easy to implement, especially for manufacturers focused on the delivery of goods to stationary retail and within the B2B network.
A key requirement is the picking and shipping of goods to individual customers instead of delivering bulk orders to retailers. Orders must be traceable for the end customer and returns and customer service processes must be established. In addition to these requirements, the ability for drop shipment is a requirement that is increasingly demanded by numerous online retailers. In this case, an online retailer sells goods that are not in its inventory and must be shipped by the manufacturer. As parcel volumes have increased, so has the amount of packaging material. Initiatives such as Amazon SIOC (ship-in-own-container) have emerged to counteract the increase in packaging materials, but at the same time impose further requirements on manufacturers for the design of shipping packaging. As show below, there are plenty of requirements depending on the respective E-Commerce distribution channel:
Figure 1: E-Commerce logistics requirements for online distribution channels
E-Commerce logistics processes cover the entire value chain from the receipt of goods in the warehouse to delivery to the end customer, as well as the return and processing of returns. In addition to pure shipping activities, demand planning is of central importance. It helps to better forecast future order volumes.
Figure 2: Value chain in E-Commerce logistics
Numerous companies cannot manage E-Commerce logistics due to the complexity of the requirements and processes or these companies need much time horizon to set up the necessary processes and resources. The use of a fulfillment service provider is therefore recommended. The range of services they provide extends from pure warehousing, picking, and shipping items to taking over customer service and financial accounting.
With many years of experience in E-Commerce projects, FOSTEC & Company supports companies in setting up and optimizing E-commerce Logistics at all stages of the value chain. The following are examples of topics we can assist with:
- Demand Planning: Evaluation of the status quo of demand planning and selection of suitable systems and tools as well as applied methodology for better forecasting of future order volumes of E-Commerce distribution channels.
- KPI Reporting: Selection of KPIs and development of a KPI reporting framework for the evaluation of productivity, efficiency, and quality of E-Commerce logistics processes; integration of the KPI reporting framework into business intelligence systems
- Automation: Feasibility analyses for the automation of E-Commerce logistics processes depending on the product portfolio as well as automation recommendations
- Insourcing and Outsourcing: Analysis of the in- or outsourcing of E-Commerce logistics with execution of tendering procedures to find a suitable E-Commerce fulfillment service provider
- Amazon SIOC (ship-in-own-container): SIOC compliance testing of the E-Commerce product portfolio as well as implementation support in the SIOC certification process
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Markus Fost, MBA, is an expert in e-commerce, online business models and digital transformation, with broad experience in the fields of strategy, organisation, corporate finance and operational restructuring.Learn more