Logistics and shipping in an online shop
Logistics and shipping in an online shop can cost you dearly if you do not keep track of your goods. You need to know what comes in, what is in the warehouse, what is sent out and what comes back. I am not a logistics expert, but I have seen how serious it gets when logistics fail.
The video is from April 2009 and introduces the chapter on logistics and shipping. The examples, company figures and references to Post Danmark belong to that historical context.
Logistics and shipping in an online shop deserve respect
If you sell physical goods, there is more to move around than bits and bytes. Things need to be packed and sent to customers.
I have included this topic even though I do not have an enormous amount of professional knowledge to offer, because it is bloody, incredibly important.
At one point, I was involved in an online shop selling physical goods. One of the things that really caused it problems was logistics failing. That is why I have a deep respect for that part of the business.
There are several ways to handle it
You can send the goods from home. You can use a fulfilment warehouse. Or you can use dropshipping, where the supplier sends the goods directly to the customer.
I cannot stand here and say that one solution is best for everyone. It depends on your temperament, the size of the shop and how you want to run it.
It is fine to start at home and pack orders yourself. But once you reach 30–40 parcels a day, I think it becomes difficult to carry on that way.
If you live on a large farm, perhaps you can set aside a wing and have employees help. But then we are talking about a different arrangement from just sitting at home packing a few things.
Check what comes in
One thing you need to pay extremely close attention to is receiving goods. When a delivery arrives, you or a highly trusted employee need to check what is actually in it.
It is not enough for someone at the fulfilment warehouse to sign for the delivery and the driver to leave. If boxes or items are missing, that needs to be discovered.
I use examples of four video cameras or ten pairs of shoes that are not there when the boxes are opened. There may be mistakes, goods may have disappeared along the way, or there may be theft. You need to be able to see where the problem lies.
If you lose one, two or three per cent of the goods each time, it costs you a lot of money. Things do not have to disappear entirely, either. A damaged item can also be a loss.
So you need to check both the quantities and the actual goods. Otherwise you risk having one inventory on paper and another in reality.
Returns are part of the order process too
Returns can cost thousands of kroner if they are not handled properly. I have seen what happens when clothing comes back with something spilled on it, or when an item is not packed properly for its return journey.
That is another reason to get the entire order process under control. You need to know not only what you have sent out, but also what you receive back and what condition it is in.
I freely admit I do not know all the details very well. But I can promise you that you need to focus on this if you sell physical goods. It can be one of the things that kills your business if you overlook it.
Get help with the solution
Seek knowledge and get help from people who work with logistics. There are consultants who can help organise it.
In the video, I also mention hearing about positive experiences of talking to Post Danmark about logistics solutions. It is an example from 2009 of exploring the options with the people handling transport.
What matters is taking the task seriously before mistakes have eaten through your money.
Dropshipping is not just for beginners
If you have the opportunity, I think dropshipping can be a good way to start as an online retailer. The supplier sends the item and you handle the sale.
I have heard people say it is only for beginners and that you cannot build a real business on it. I disagree.
I highlight BilligVVS as an example. In the video, I talk about the man behind the business, who trained as a plumber and began selling plumbing supplies through dropshipping.
The figures I mention at that time are around 100 million kroner in annual sales and earnings of 10–12 million kroner for him. I use the story to show that the model can also be part of a large business.
Of course there are advantages and disadvantages. It is up to you to find the solution that best suits your shop. But respect shipping and logistics, whatever model you choose. You can find more of my e-commerce experiences in E-pusher.