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Logistics - Growing pains of being successful online

by  David Dwyer on  10/04/2019    207 Reads

Logistics in e-commerce

The business challenges faced by e-commerce organisations could be considered greater than those of your average company since they do not have the luxury of a direct, face-to-face interaction with their customers at any point in the purchase process. For an e-commerce business there is a far greater need for reputation management. If the only way of earning trust comes from the impression you give through words and images you post online it is far more difficult to earn the trust required to win a sale. It will also be far easier to lose it if that reputation is tarnished, which may happen in a multitude of ways, including through the way you treat your customers in the post-sale process.

This is the reason why the tangible aspects of your online business need to be done well, and seen to be done well, by your audience, your customer base. Delivery is arguably the most important one of these tangible aspects to get right as it’s the point where your business offering and the expectations of your customers meet.

For e-commerce companies, this means not only delivery on time, every time but also transparency and communication in the lead up to your delivery. 

Making sure the package arrives on time could mean the difference between a lost and disgruntled customer and a long-term brand ambassador for your business.

Invisibility of good vs virality of bad

The sad reality of business is that when people have a good experience they tend to keep it to themselves, but when they have a bad one they tell everyone they know. Add social media into the mix and that message can spread far and wide. 

Delayed deliveries cause a whole range of emotions and are one of the most commonly cited reasons for dissatisfaction with e-retailers. 

According to some studies, people who have had a bad experience with an online retailer are 50% more likely to share their thoughts on social media than those who had a good experience.

While social platforms have provided online businesses with a fantastic opportunity to connect with their customers, to engage with them and to build brand awareness, it has also provided customers with a medium for venting their frustrations. For more on this topic see our Insights article on social proof, Narcissism or Necessity.

These forums/platforms have become reliable sources of information for other potential customers and, as peer approval is considered tantamount to reputational currency, you’ll want to avoid those bad reviews and revel in the good ones.

Logistical nightmare and a customer winner

One of the biggest bugbears of the e-commerce sector is returns; many e-retailers suffer from high levels of returns and this could be costly, particularly when margins can be wafer thin. However, we've seen strategies emerge from this issue to combat this. Those e-commerce businesses that make things simple for their customers with good shipping, communication and return policies earn greater user confidence. In essence if the user is treated fairly then confidence grows. An example that we've seen where the product is a commodity is for businesses to have a re-stocking charge, that is effectively the difference between the discounted purchase price and the full retail price. So long as this has been communicated clearly at the outset the customer feels as if they've been treated fairly. At Inspire we’ve based our customer service levels around, Fair Process, covering: engagement, explanation and expectation management, this is premised on the Blue Ocean Strategy philosophy that came out of the French business school, Insead. The same approach is valid though throughout the online digital world.

It goes without saying, or it should do, that this must be supported by good logistics to maintain that confidence. It’s all about finding the best logistical solution to ensure that delays are minimised – from the moment your customer completes their order to the moment the package arrives at their door.

An order does not constitute a sale

In practical terms, an online order does not constitute a sale, but simply shows the interest that customer has in making a purchase. Therefore, at most, it represents an ‘opportunity’ for a sale. 

This underlines the importance of good logistics in the e-commerce sector. Timing, speed, condition on arrival, tracking with alerts for delivery progress via SMS or email in real time directly to the consumer... these are some of the features and promises that go into turning your order from an opportunity into  a sale and the cultivation of a lifetime of value from that customer. Even if you’re selling a one-off item, customers can be converted into evangelists for your product or service.

And, should your product be returned and the sale not concluded, logistics once again can be key in developing that e-commerce relationship. Because, although that customer might not have bought this time, if they have experienced a good and efficient service they will come back again. Making the return of your items as simple and fast as possible increases your chances of earning customer loyalty.

At Inspire we deal with many different delivery fulfilment businesses so if you're looking to get a recommendation, just ask via the form below?

Blue Ocean Strategy, CLV, CRM, Customer Acquisition Cost, Customer Experience, Customer Lifetime Value, Customer Lifetime Value, Customer Relationship Management, Customer Service, CX, e-commerce, E-commerce logistics, e-tailers, Evangelical Customers, Fair Process, Logistics in e-commerce, m-commerce, Magento e-commerce, Mobile Commerce, Reputational Currency, Restocking charge, Robotic Process Automation, RPA, Selling, The Evolving Web, Web Consultancy
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