What is On-Demand Logistics & How it Impacts Scalability

What is on-demand logistics?

On-demand logistics isn’t a catch phrase for nothing. It’s a contemporary logistics approach that allows internet retailers to grow their consumer base across borders and fulfill purchases as soon on-time as possible.

On-demand logistics may assist multichannel retailing by reducing and automating the fulfillment process for purchases that come in through multiple sales channels.

On-demand logistics, therefore, necessitate a strong distribution network, adaptable fulfillment options, and cutting-edge technology and automation technologies that allow for rapidity and accuracy.

How on-demand logistics is changing the delivery experience

Customers want quick, consistent, and dependable shipping. It’s no surprise that on-demand logistics is crucial for increasing sales and retaining customers.

The arrival time for most items is now 2 days or less, thanks to internet retailers such as Amazon and Walmart.

Excessive delivery may be costly. Expedited shipping is always an option, and some clients are prepared to pay more for faster shipping, but there are methods to get fast transportation without spending extra money.

On-demand logistics often use inventory distribution, which is a conventional on-demand logistics approach. Ecommerce enterprises that are just getting started will frequently pack and ship items themselves (or may also rent a single warehouse to assist with storage issues). However, as the company expands, fulfilling orders from a single location is no longer sufficient to provide on-demand logistics.

That’s why, to reduce costs and increase efficiency, internet businesses collaborate with logistics firms that have numerous fulfillment sites for storing product, receiving orders, and delivering shipments.

On-demand logistics firms, which now work with thousands of businesses, can provide discounted shipping rates from major and regional parcel carriers and let brands take advantage of a tiny amount of space in their fulfillment center(s).

This is only one example showing how companies may use on-demand logistics without having to invest in their own infrastructure or technology.

Here’s a summary of how on-demand logistics might benefit your ecommerce company.

Faster shipping times

Although Amazon Prime may have popularized it first, most online shoppers now expect to receive a 2-day delivery option on all ecommerce sites.

In fact, if a customer isn’t pleased with the estimated arrival date, 36% of internet consumers will abandon their shopping cart.

It may be difficult to offer rapid shipping choices, such as 2-day delivery, because you must make sure that the shipping processes you provide don’t reduce your profit margins.

You can provide more or all of your consumers faster 2-day shipping via ground by distributing inventory according to where there is demand (and once your volume justifies it, where the excessive storage and initial transportation costs can be offset by the average savings in delivery).

This is because you may transport from the customer’s nearest facility to save time and money.

Lower fulfillment costs

Fulfillment costs include all of the expenses and charges that are associated with warehouse receiving, storage and management of inventory, order processing, and picking, packing, and shipping orders.

On-demand logistics may appear nearly unattainable in an extremely competitive retail environment, when most of your time and logistics budget is dedicated to:

  • Storage and warehouse costs
  • Hiring and training personnel are two of the most important tasks a small business owner may face
  • Using fulfillment software to its fullest potential
  • Inventory management
  • Purchase and stock up on packing supplies
  • The process of tacking down the components of a vehicle and connecting them in place
  • Orders for transportation 

Reduce fulfillment costs by considering both the financial investment and the time involved in logistics.

Working with a third-party logistics (3PL) firm is an excellent option. A 3PL partner may assist your company save money and time while freeing up resources to concentrate on product development, marketing, and business growth. You may meet client expectations while reducing fulfillment costs by outsourcing to a 3PL.

If you outsource fulfillment to a 3PL, the company will send your products from one centralized warehouse to multiple distribution centers throughout their network. Synchronizing sales channels with a 3PL’s technology allows all purchases placed through them to be routed to the closest fulfillment center. You can use them to improve your shipping approach, minimize costs, and speed up last-mile delivery.

Meet consumer demand

On-demand logistics systems use latest technology to help merchants expand their operations and obtain real-time aggregated logistics data.

Analytics allow retailers to gain insights into how they can make better purchasing and replenishment decisions based on demand (and when it’s time to replenish stock at particular locations).

For example, Launch Fulfillment is a 3PL that runs warehouses in several locations across the world. The same unique software powers each location, giving insight into inventory and orders, as well as fulfillment and shipping performance.

You can use data and analytics to make better decisions about how to satisfy consumer demands and expectations if you have access to sophisticated data and analysis.

You can also immediately offer consumers with order tracking, as well as quickly view orders across the company’s whole fulfillment network in real time to respond to any issues or queries.

Another critical component of on-demand logistics is inventory forecasting. You can’t ship orders without having a stock. You may use historical data to predict demand, ensuring that you always have enough inventory on hand and stored, set automatic reorder points, and even calculate how much safety stock to keep on hand.

On-demand warehousing

With more internet businesses expanding across the world, there is an increasing demand for more storage and warehousing capacity.

Amazon’s Fulfillment by Amazon is the most well-known, but it isn’t the only option. On-demand warehouses are gaining traction because of their capacity to store goods and just pay for the space you need.

Some on-demand warehousing solutions rent our other 3PLs’ open space, while others simply utilize garages and other non-fulfillment-ready buildings.

It’s a decent hack to tackle problems like the lack of affordable warehouse spaces near to where your consumers are, or if you need more room during the holiday season.

However, the objective is to fulfill customer expectations, which means you can’t just rely on geographic proximity.

However, on-demand warehousing is mostly a short-term solution that can’t guarantee a consistent experience, resulting in more fulfillment mistakes. It’s hard to address problems fast when the warehouse isn’t operated by your own on-the-ground employees, which leads to poor customer service.