The role of a logistics provider for e-commerce
Posted: Tue Jan 07, 2025 9:42 am
PL (Second Party Logistics)
When the logistics service includes the transport of goods as well as storage, in this case, the subcontractor is part of category 2 PL. The service provider is then responsible for managing the flow of incoming and outgoing goods. Client companies thus entrust all or part of their stock to the service provider.
3 PL (Third Party Logistics)
In the type of logistics service classified as 3 PL, the subcontractor takes care of the delivery of goods, storage in the warehouse, but also the preparation of orders. This is a complete service that results in long-term contracts and allows client companies to completely relieve themselves of all the logistical constraints related to their commercial activity.
4 PL (Fourth Party Logistics)
Category 4 PL logistics service new zealand phone data providers offer an additional service: the coordination and supervision of goods flows. Indeed, in addition to storage, transport, and order preparation, this service allows client companies to completely offload the management of their logistics service.
5 PL (Fifth Party Logistics)
In this last category 5 PL, logistics providers are responsible for automating the flow of goods. Indeed, outsourcing concerns transport, storage, order preparation, as well as the coordination and supervision of flows, but also the management of the supply and distribution of products.
The continued growth of online business activities is a real boon for logistics service providers. Indeed, independent entrepreneurs who want to sell physical products online must deal with the constraint of storing and delivering goods. Outsourcing the entire logistics management allows them to focus on implementing their web marketing strategy or optimizing their customer service, for example.
In absolute terms, the role of the logistics provider is to ensure delivery in compliance with the e-commerce site's commitments to its customers. Indeed, on an online store, when buyers complete their purchase, the delivery time and method significantly influence their choice. The carrier must then provide impeccable service. For example, if the e-commerce site offers an express service in a few hours, the logistics provider specializing in this type of delivery has a contractual obligation to accomplish its mission, in its geographical area of intervention. If this same subcontractor operates in several cities, in this case, it can have a local storage warehouse, with full management of the flow of goods, or even their automation, as well as an order preparation and packaging service.
Thus, logistics providers must be able to offer profitable pricing to their customers. This parameter is all the more important since the vast majority of online stores opt for the storage service for their goods, due to lack of premises. But also, demands are extremely fluctuating given the highly competitive nature of the e-commerce sector. For example, the concept of "last mile" in the field of logistics is represented by the cost generated by delivery rounds in their last restricted perimeter. This alone corresponds to at least 20% of the cost of delivery. The logistics provider can then highlight the use of electric vehicles in order to be able to offer delivery services, at the right price, to e-commerce sites.
In addition, logistics providers specializing in the e-commerce field offer a suitable service : merchandise returns management. Indeed, Article L121-20-12 of the Consumer Code grants a 14-day withdrawal period for any online purchase. The service provider can thus expand its merchandise flow automation offering by receiving product returns and inspecting them, which allows for refunds to be issued to Internet users. In addition, since product returns represent nearly 25% of purchases made on an e-commerce site, e-commerce logistics providers must also repackage the items and put them back in stock.
Another role assigned to logistics providers is inventory management . Indeed, if the service provider works on behalf of several e-commerces at the same time, it is essential to organize the warehouse well. But also, it is essential to set up a system for automating the management of the flow of goods for each client company. In this case, the service provider's role is:
to ensure permanent availability of products in stock based on forecast orders from their e-commerce customers;
to have the material, time and human capacity to properly manage order peaks. Indeed, in the vast majority of cases, these peaks follow seasonal trends among Internet users such as the summer holidays, the Christmas period, Mother's and Father's Day, Black Friday, sales, etc.
In this context of e-commerce in perpetual motion, how can logistics providers maintain the stability of their business? One solution is to adapt inventory management to the variations in activity of online stores. For example, by multiplying e-commerce customers to allow the logistics subcontractor to have continuous activity throughout the year. Indeed, some online stores offer products that are not subject to the rules of seasonal peaks that we saw previously. These are furniture or home accessories stores. The same is true for childcare products, beauty products or even hairdressing equipment.
Finally, the subcontractor can offer its customers to apply the "forecast on demand" method in order to minimize the costs of storing goods. This process consists of keeping the stock level permanently at the lowest possible level, which allows savings on this service and, at the same time, ensures product availability for customers throughout the year.
When the logistics service includes the transport of goods as well as storage, in this case, the subcontractor is part of category 2 PL. The service provider is then responsible for managing the flow of incoming and outgoing goods. Client companies thus entrust all or part of their stock to the service provider.
3 PL (Third Party Logistics)
In the type of logistics service classified as 3 PL, the subcontractor takes care of the delivery of goods, storage in the warehouse, but also the preparation of orders. This is a complete service that results in long-term contracts and allows client companies to completely relieve themselves of all the logistical constraints related to their commercial activity.
4 PL (Fourth Party Logistics)
Category 4 PL logistics service new zealand phone data providers offer an additional service: the coordination and supervision of goods flows. Indeed, in addition to storage, transport, and order preparation, this service allows client companies to completely offload the management of their logistics service.
5 PL (Fifth Party Logistics)
In this last category 5 PL, logistics providers are responsible for automating the flow of goods. Indeed, outsourcing concerns transport, storage, order preparation, as well as the coordination and supervision of flows, but also the management of the supply and distribution of products.
The continued growth of online business activities is a real boon for logistics service providers. Indeed, independent entrepreneurs who want to sell physical products online must deal with the constraint of storing and delivering goods. Outsourcing the entire logistics management allows them to focus on implementing their web marketing strategy or optimizing their customer service, for example.
In absolute terms, the role of the logistics provider is to ensure delivery in compliance with the e-commerce site's commitments to its customers. Indeed, on an online store, when buyers complete their purchase, the delivery time and method significantly influence their choice. The carrier must then provide impeccable service. For example, if the e-commerce site offers an express service in a few hours, the logistics provider specializing in this type of delivery has a contractual obligation to accomplish its mission, in its geographical area of intervention. If this same subcontractor operates in several cities, in this case, it can have a local storage warehouse, with full management of the flow of goods, or even their automation, as well as an order preparation and packaging service.
Thus, logistics providers must be able to offer profitable pricing to their customers. This parameter is all the more important since the vast majority of online stores opt for the storage service for their goods, due to lack of premises. But also, demands are extremely fluctuating given the highly competitive nature of the e-commerce sector. For example, the concept of "last mile" in the field of logistics is represented by the cost generated by delivery rounds in their last restricted perimeter. This alone corresponds to at least 20% of the cost of delivery. The logistics provider can then highlight the use of electric vehicles in order to be able to offer delivery services, at the right price, to e-commerce sites.
In addition, logistics providers specializing in the e-commerce field offer a suitable service : merchandise returns management. Indeed, Article L121-20-12 of the Consumer Code grants a 14-day withdrawal period for any online purchase. The service provider can thus expand its merchandise flow automation offering by receiving product returns and inspecting them, which allows for refunds to be issued to Internet users. In addition, since product returns represent nearly 25% of purchases made on an e-commerce site, e-commerce logistics providers must also repackage the items and put them back in stock.
Another role assigned to logistics providers is inventory management . Indeed, if the service provider works on behalf of several e-commerces at the same time, it is essential to organize the warehouse well. But also, it is essential to set up a system for automating the management of the flow of goods for each client company. In this case, the service provider's role is:
to ensure permanent availability of products in stock based on forecast orders from their e-commerce customers;
to have the material, time and human capacity to properly manage order peaks. Indeed, in the vast majority of cases, these peaks follow seasonal trends among Internet users such as the summer holidays, the Christmas period, Mother's and Father's Day, Black Friday, sales, etc.
In this context of e-commerce in perpetual motion, how can logistics providers maintain the stability of their business? One solution is to adapt inventory management to the variations in activity of online stores. For example, by multiplying e-commerce customers to allow the logistics subcontractor to have continuous activity throughout the year. Indeed, some online stores offer products that are not subject to the rules of seasonal peaks that we saw previously. These are furniture or home accessories stores. The same is true for childcare products, beauty products or even hairdressing equipment.
Finally, the subcontractor can offer its customers to apply the "forecast on demand" method in order to minimize the costs of storing goods. This process consists of keeping the stock level permanently at the lowest possible level, which allows savings on this service and, at the same time, ensures product availability for customers throughout the year.