Logistics is stumbling block for many e-shops

Logistics in the e-commerce sector is still too often seen as a cost rather than a means to add value. E-tailers are afraid of high costs and often do not know how to handle their logistics. That concludes the Flemish Institute for Logistics (VIL) from their enquiries among Belgian webshops.

The right choice of logistics determines the success of an online shop and directly affects the choice of online consumers. The Flemish Institute for Logistics (VIL) will therefore, in cooperation with nine companies (Colruyt Group Krëfel, bpost, Fiege, Neckermann, Unigro, P & G, Libridis and Mondial Relay), determine what improvements are needed in the area of logistics in e- commerce.

Webshop as market expansion
The e-commerce sector in Belgium is still in its infancy. Of those surveyed, about half have been active with their webshops less than one year. Among the surveyed are many small shops and a large majority of multichannel-players (64%). More than half of the starters sees the opening of a webshop as a chance to expand their markets. They are increasingly aware of the fact that consumers can not only be reached offline.

Slightly less than 33% started a webshop to be able to offer a wider (or deeper) range than is possible in a physical store. What is important in this case though, is an adequate delivery time.
Twenty percent of the Belgian webshops that participated in the study of VIL said their online initiative was a response to competitors' online stores.

Logistics biggest stumbling block
Nevertheless, logistics is seen as a big hurdle by many online stores. 48% of respondents say they fear the complexity of deliveries. An order must go through quite a few steps before it arrives to the customer, something that is much more obvious for offline stores. Also the high costs involved with the logistics are a concern.

Delivery charges
Most Belgian and foreign e-tailers choose for one of the following three options when it concerns delivery:

- Fixed delivery charges
- Calculating handling costs in the product price
- Variable delivery charges based on weight, number of items or other relevant issues

Essential questions that an online retailer must ask are: What costs do we want to cover with the delivery charges? And what margins do we ultimately want to maintain?

Right of return
The right of customers to return packages makes it even more difficult for the retailer. It means an additional flow of goods. Just under half (45.8%) of the participating e-tailers saw less than 2% of its online orders being returned in 2010. 29% of the webshops saw 2% to 5% of the packages returned.

Logistics innovation needed
On average, customers make a purchase within seven minutes. After that it takes on average two to three days before the customer receives the product. Those two days however, do remain part of the purchase experience of the customer. It is therefore very important to properly handle the logistics.

Source: Retail Detail