Term

What is Logistics?

2 MIN READ

Logistics

Logistics is the movement of goods to a certain place, at a certain time, in the right quantity, while maintaining quality.

Logistics is one of the three foundations on which the viability of an online store is based (along with product purchasing and marketing). For a novice entrepreneur, this is one of the most complex business processes. 

In online retail, logistics is divided into three main processes: 

  1. Movement of goods from the supplier
  2. Storage in the warehouse 
  3. Movement from the warehouse to the buyer.

In each block you need to make a choice: do everything by yourself or outsource.

How to manage logistics

  1. At the level of the relationship with the supplier, there are two options – wholesale purchase or direct delivery (dropshipping).
  2. At the level of warehouse storage, the owner of the online store has two alternatives – own a warehouse, rent a warehouse in a fulfillment center.
  3. At the level of product delivery, there are three options – outsourcing delivery, owning delivery and using delivery points.

This decision on how to manage logistics depends on the size of the business and what the store sells. A small online store with small sales volumes tries to handle logistics on its own. When orders start to count in the hundreds, there is a need for third-party logistics services. If an online store turns into a giant, it is more profitable for it to build its own logistics and even buy logistics operators.

 

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