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Shipping & Distribution Logistics Best Practices

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Shipping and Distribution Logistics

OK, so this is going to be an overview of the shipping and distribution capabilities for a marketplace and in particular, with a marketplace eCommerce platform. Depending on the scenario the fulfillment and shipping of the products might be split across different distribution centers or warehouses. In many cases, these orders may be drop shipped from many warehouses or distribution centers and the orders themselves may have split shipping. In other words, the destination and the origin could be split and going to separate locations.

So, logistically a marketplace has very powerful capabilities with process workflows between the buyer and sellers. Whenever you're running a marketplace whether you're directly warehousing and shipping part or all of the inventory, or none of it, we recommend considering some of the key factors with regards to the shipping and distribution within your marketplace platform, although some of the capabilities may not be immediate needs. We also would recommend that you consider where the marketplace might be in 3 to 5 years or beyond from a potential scalability perspective, as well as some of the more near-term in midterm levels of capability that are necessary to make the marketplace function as it continues to grow.

Core Considerations

Core Considerations

Some of the core areas that we would typically recommend that shipping include customs and duties for international and other potential restrictions. In addition to that, we would also recommend the capability for setting up discounts and rules. For example, a buy one get one or buy $75 or $1000 or whatever the number is to get free shipping on some or all of the items. Then also the ability to provide different rate quotes based on different carriers that might be available for each of the sellers within the marketplace store. It's even possible that the platform would allow different vendors or sellers to have different shipping providers.

As you can tell there a lot of a lot of different capabilities within the marketplace that are readily available. Such as order tracking and advanced notifications that's transactional in nature. In a lot of cases there's the requirement for in-store pickup or delivery depending on how the marketplace is being configured. So, if there's a physical store presence, how are you going to interact with that? Then the concept of LTL or freight shipping and possibly even multi warehouse management comes into question. Warehouse logistics can happen through EDI integration or other forms of integration to the warehouse management systems, so that if goods need to be transferred from one facility to another or an inventory usage notification needs to go out, that can all be automated.

So, there are a lot of different concepts as you scale your marketplace, certainly in most cases, not all are necessary right out of the gate. The general concept is that it can be fairly detailed, and we want to make sure from a recommendation perspective that you at least got these things in mind as well.

Accurate, Automated, & Efficient

Shipping and Tax Calculations

Just to dive into a few of these for shipping and tax calculations we do recommend considering what the different shipping providers are that the marketplace software you're considering provides. So, most typically any marketplace platform and eCommerce platform is going to have the capability to do work with the most common shipping providers like UPS, FedEx, USPS, DHL, and AT&T. Those are some pretty common carriers for LTL freight shipments. It’s also not uncommon for the marketplace have a API integration to enable not just rate quotes but also getting tracking information and possibly for LTL bill of lading and other relevant information.

Create Your Competitive Advantage

Logistics Key Values & Workflows

Ultimately, as one of its key value adds and competitive advantages over other marketplaces or eCommerce sites in that segment. So, keeping that in mind, this could be an absolute competitive advantage when implemented properly and a logistical nightmare when not. We highly recommend that you spend time and dig into this subject matter. In addition to the ability to leverage these resources, one of the common questions is whether or not per vendor or seller there can be different shipping providers. This can help enable the seller vendor fulfillment based on their already existing relationships and using their account information for the shipping.

We also recommend using default product information to get accurate quotes, as accurate as possible with simple weight calculations. To get even more accurate calculated shipping rates, enable the ability per vendor and per item to be able to provide full dimensional weight information.

In addition to the ability to provide quality shipping rates that are accurate, the ability to then coordinate where the items go will also provide a lot of value to the end users. Whether those items are set up to be delivered to a store or a particular split location for shipment it should be a capability for the marketplace. Seamlessly enable splitting the order or changing the location of the shipment and allowing the user to select from an address book or a store locator to easily coordinate and provide different locations for the shipment. Just basic things with regards to being able to split out the shipment and then also have it go to different locations like physical store locations.

The bottom line is that there's a lot of complexity to shipping and we would highly encourage you to dig into this because shipping can be one of the biggest variables and a major area where buyers lose trust and began to bounce from the checkout process. If you're able to leverage things like custom discounts and rules to encourage their behavior in their first checkout process or in a follow-up checkout process, there can be things like loyalty discounts, price based discounts, the ability to build a package or a pallet, etc. From a loyalty perspective, that makes it easy for the buyer to be highly encouraged and convert.

So, does the marketplace have these capabilities as you're looking at improving buyer conversions on your marketplace? Those capabilities can be the key factor in whether or not the marketplace is able to successfully scale or not. These are all things that should typically be built in and if they're not we would recommend considering the pros and cons of the platform if it doesn't have those.

Adapting to Each End-User's Needs

Purchase Order Options and Tracking

One of the other big pieces is the ability to enable folks to track their orders and then once the orders have been placed in the warehouse itself to be able to manage the inventory and provide notifications to the warehouse management system.

Of course, as someone completes an order, they want to be able to track their order and, in many cases, they may even want to be able to escrow their funds for the purchase. So, in other words the funds are authorized and even captured but not distributed to the seller until the tracking shows that the items were delivered and potentially that the buyer has accepted them and has approved the quality of the items or the integrity of the shipment. This helps ensure that the received product matches what was ordered and expected.

Depending on a particular scenario, that concept of being able to escrow or be able to require an approval step before funds are distributed to the seller can be a very key concept to enable governance within the application so that the community of vendors and sellers are incentivized and affectively driven toward very high-quality customer sat. Ultimately, the bottom line is that as a buyer, the moment the purchase is complete we all have been trained to check for status on the order and the market continues to commoditize around logistics and delivery.

So, at a minimum we recommend setting an expectation with an automated notification on-screen and an email that confirms that the order is received, it's being processed, and what the timeline is typically. Before they'll receive another notification advising them about status for the order and then as soon as a shipment is made being able to dynamically populate the tracking information to that end user so they can actively track the status of their order. Then you can leverage the delivery status to finalize the order as completed and delivered, essentially closed out. Of course, that would allow the buyer to potentially take the action of requesting a refund if there was a damage.

How Can Clarity Help

Clarity Marketplace Experts

In addition to that, the possibility exists, depending on how robust the marketplace warehouse management side of things is, to need to be able to send information back to the warehouse about shipping inventory. So basically, sometimes inventory will come from a location that doesn't have a lot of inventory that's best logistically for the end customer.

So, it is possible to leverage the shipping and distribution capabilities of your marketplace eCommerce platform to automatically notify internal warehouse management systems too. Essentially transferring inventory from another location that has excess inventory or possibly the manufacturing facility to that location that's become low on inventory. This can occur for store to store transfers, warehouse to warehouse transfers, etc.

Ultimately, shipping is a key component of the marketplace and giving it an edge within a typically very competitive landscape can be the difference between whether or not a buyer trusts and continues to work with a marketplace to make their purchases or goes with another marketplace. So, we highly encourage you to dig into this topic, in quite a bit of detail, especially if it's a key part of your value offering. Feel free to reach out to us at any time during your project as we are here as a resource.

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