To thrive in the highly competitive ecommerce industry (or any business heavily relying on logistics), efficiently moving products is non-negotiable, but that’s easier said than done. The stakes are high, and the costs of fumbling a delivery can be even more so. In fact, a staggering 85% of online shoppers say they wouldn’t order from a retailer again after a poor delivery experience.

Key Takeaways

  • Efficient logistics is non-negotiable as 85% of online shoppers won’t return after a poor delivery experience.
  • Businesses lose over $1 trillion annually due to inventory planning issues.
  • The right supply chain execution solutions can optimize delivery routes and reduce transportation costs.
  • Retailers typically lose $30 on each return, with processing costs tripling during the ecommerce boom.
  • Real-time visibility across your entire logistics process is essential to prevent missed opportunities and customer dissatisfaction.

Logistics can be challenging, so we’ve compiled a list of common logistical challenges you might encounter, along with practical tips and solutions to help you avoid or overcome them.

#1: High transportation costs 

Fuel is a huge factor in logistical costs, often making up about 50% of your total supply chain expenses. But you must also contend with inefficient routes, unoptimized shipping, and outdated fulfillment solutions that can destroy your profits. That leaves you stuck with two tough choices: raise your prices or absorb the extra costs — and neither option is great for your business in the long run.

Customers love affordable shipping options, and free delivery is even better. However, rising costs can make accommodating that desire challenging and protecting your margins challenging. Although opting for the cheapest shipping solutions might save your budget in the short term, it could cost you through unhappy customers, damaged trust, and a dent in your reputation.

This is where a solid logistics strategy comes into play. By proactively managing rising transportation costs, you can find sustainable solutions that keep your business running smoothly while delivering the top-notch service your customers expect. Here’s how to do it:

#2: Inventory planning issues

Businesses lose over $1 trillion every year due to overstocking and understocking, according to IHL Group, but that’s just the tip of the iceberg. When your inventory management isn’t precise, it can lead to problems like cash flow issues, frustrated customers, and shrinking profits. A solid inventory planning strategy can transform your business by:

  • Cutting costs to open working capital
  • Preventing overspending on storage
  • Minimizing losses and improving cash flow
  • Improving the accuracy of your sales forecasts

To enjoy these benefits, businesses can:

  • Employ supply chain planning tools to tap into historical sales data and market trends for accurate predictions
  • Automate inventory tracking to avoid overstocking and understocking and identify slow-moving items
  • Build working relationships with suppliers to stabilize your supply chain and prevent shortages

#3: Delayed deliveries

Delivery delays happen regularly and can occur for many reasons. For example, some brands encountered logistical issues when they discovered TikTok didn’t integrate with their shipping platforms. As a result, orders had to be scanned manually, which caused delays, flagged their shops, and led to losses due to reship orders. 

Other causes for disruption include poor coordination, a lack of real-time tracking, and unexpected obstacles in the supply chain. Many businesses can’t afford to make these mistakes, especially since 39% of customers won’t return after a bad delivery experience. While some issues are unavoidable, you can prevent many of them by:

  • Using tracking systems to stay on top of shipments and address potential problems immediately
  • Updating everyone on delivery timelines
  • Finding a shipping partner with a proven track record and on-time delivery rates

#4: Handling returns

Ecommerce has a return rate of 17.6%, according to Shopify, with reasons including misleading product descriptions, failure to meet customer expectations, and defective items or damaged conditions upon arrival. And since returns are relatively easy through online stores, they typically occur more frequently in the digital sphere than in traditional brick-and-mortar locales.

Reverse logistics is a unique beast that can quickly become expensive. Research shows retailers typically lose $30 on each return, and interestingly, the cost to process them has tripled during the recent boom in ecommerce shopping. On top of that, 79% of consumers expect free return shipping.

Luckily, it’s possible to handle returns and keep your customers happy with a few tips like:

  • Streamline returns by automating the process
  • Make sure your return policy is clear and easy to understand
  • Sync your return procedure with your WMS system or order management system (OMS) to inspect and move returned items to the appropriate next stage quickly (i.e., reintroduce into inventory, refurbish, discard, or donate), thereby getting products into your available-to-promise (ATP) stock sooner

#5: Poor warehouse organization

It’s incredible how much warehouse space goes to waste due to improper organization; most manufacturers fail to optimize their warehouse capacity effectively. It can also be a headache for your team, as they’ll spend more time looking for products, which translates to slower processing times. This can lead to delays, unhappy customers, and a diminished reputation.

You can improve operational efficiency and cut costs with a little organization though. Specifically, you need to:

  • Ensure high-demand items are easy to access
  • Use systems that track stock in real time to reduce errors and boost accuracy
  • Invest in shelving or racking systems to maximize the vertical space in your warehouse

#6: Global shipping complexities and regulations

When shipping internationally, businesses must navigate country-specific customs regulations. International and domestic shipping regulations can change without warning, and failure to comply can result in seized goods or hefty fines for your business. In turn, that translates to even longer delays, which hurts your relationship with your most loyal customers and drives up costs. If you’re not following the latest rules, shipments may be held up at borders.

To tackle this problem, be sure to:

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#7: Inaccurate demand forecasting

Underestimating demand can leave buyers empty-handed and frustrated, while overestimating it ties up resources in unsold inventory, wasting space and money. Either way, inaccurate forecasting can hurt your business down the road.

When you run out of stock, you risk losing sales and damaging customer trust. But when you have excess, you lose money from holding fees and slow down your cash flow. So, to forecast demand effectively, you can:

  • Look at your past sales patterns to spot trends and adjust your stock levels accordingly
  • Collaborate with your sales and marketing teams to discover insights into upcoming campaigns or market shifts
  • Monitor local news and events to stay informed about anything that might impact demand in your area

#8: Lack of real-time visibility

Without a live overview of your logistical process, you’re practically flying blind. That inevitably ends in missed opportunities and dissatisfied customers left in the dark. Further compounding your duties, almost half of customers expect businesses to respond to their inquiries in under four hours. So, real-time visibility is essential for both the front and back end.

To ensure clear sight, here’s what you can do:

  • Invest in tracking systems that provide live updates on where your shipments are
  • Implement warehouse management software that covers the entire logistical process, from inventory management to shipping
  • Set up automatic notifications to catch any hiccups along the way

#9: Goods damaged during transit

No customer wants to wait eagerly for a package, only for it to arrive damaged. The blame for that doesn’t fall solely on the carrier — it also lands squarely on your brand. That can lead to financial losses due to reshipping items or reimbursing frustrated customers.

You can dodge this expensive situation by taking these actions:

  • Ensure your items are well protected during transit to reduce the risk of damage occurring
  • Work with shipping partners who understand the best cartonization and packaging practices for your products
  • Quickly address returns or damaged goods to keep your buyers happy and prevent additional costs

#10: Labor shortages

Recently, the logistics and transportation industry has felt the impact of a labor shortage. According to a report from Global Trade, 37% of organizations face staffing challenges, while 61% must contend with disruptions to their transportation. Even more concerning, 58% say these problems have directly affected their customer service.

This can hurt your own service and, in turn, leave customers frustrated and liable to abandon your brand. Quality suffers when your team is stretched too thin, as does your reputation.

You can save yourself the trouble by:

  • Outsourcing to a reliable shipping and fulfillment service
  • Providing flexible working hours, part-time roles, or even remote work opportunities for positions that don’t require an onsite presence
  • Using automation tools to reduce your reliance on manual labor, streamlining processes, and doing more with fewer resources

Navigate all of these with one turnkey partnership

Overcome logistical challenges ahead of time for smooth procedural workflows

Problems in shipping and fulfillment can impact your efficiency, customer satisfaction, and bottom line. You can tackle them with the right strategies, tools, and support. Take proactive measures like the ones outlined above, and you’ll be able to mitigate or sidestep completely many of the obstacles that can hinder your logistical process.

At MyFBAPrep

We aim to help ecommerce business owners streamline their logistics, reduce errors, and improve their operations. Thanks to our years of experience working with global brands, we have the knowledge and resources to guide you toward success.

We’ve partnered with Deposco to deliver a turnkey solution with full visibility into your supply chain operations. If you need help growing your business and overcoming fulfillment hurdles, simply reach out to our team. We’ll be able to oil your operations so they run smoothly and efficiently! Learn about the Deposco + MyFBAPrep partnership.

You can also grab a demo of Deposco’s platform here.

About the Author

Tom Wicky, Founder and CEO of MyFBAPrep

Tom is an entrepreneur, startup advisor, and management consultant with over 20 years of senior management experience. He is the Co-Founder and CEO of MyFBAPrep, the largest worldwide 3PL ecommerce warehouse network. He managed the digital assets of local media companies across Europe as part of a $2 billion private equity investment led by Macquarie Bank. At the beginning of the Amazon FBA Marketplace, Tom built a data automation platform used to programmatically generate, manage and optimize over 1 million product listings on Amazon. He is a Boston sports fanatic and a recovering hot sauce junkie. Tom speaks Spanish and German and lives in Florida with his wife and three children.