What mistakes to avoid in e-commerce logistics

6 November 2021

Precision, speed, customization: these are some of the fundamental requirements for those who want to succeed in e-commerce. With the intense competition in the sector and new consumer habits, it is no longer possible to not fulfill orders, delay deliveries, or pay little attention to the needs/preferences of consumers. The main players already know this and have sought to offer an impeccable shopping experience to their customers. In a market that grows every day, logistics and inventory management distinguish industry leaders from others. It is no longer enough to sell; you must captivate.

Although most people know that e-commerce requires even greater care in the relationship with the consumer, many focus only on the sales platform, believing that the heart of the relationship is there. However, it is useless to have an attractive website if the customer receives the product late, with errors, or with damaged packaging, for example. All of this undermines their trust in your company. Hence the importance of continuously seeking improvement in logistics.

Optimizing warehouse and order fulfillment processes is not as simple as it seems. First of all, it is necessary to avoid some of the common e-commerce logistics errors that directly interfere with the business. These are what we will address in this text.

Common Errors in E-commerce Logistics

Online shopping has become a real necessity nowadays. Many entrepreneurs have taken advantage of the moment to start new businesses, but there is a part that ends up making mistakes right when they start, and this can have a negative impact on sales and prevent the business from becoming profitable and sustainable. Most of them occur within the warehouse itself, in relation to internal logistics processes.

Now discover some of the most common errors in e-commerce logistics and learn how to avoid them in your business:

1 – Not Using the Ideal Picking Mode for the Type of Business

We place this error at the top of the list because, in addition to being quite common and causing problems in customer service, it generates higher costs for the company. This is because the expense for picking can represent up to 60% of a warehouse’s total expenses, and if resources are not well utilized, the loss ends up being inevitable.

When using a picking mode that is no longer suitable for the type of business, you might spend more time separating orders, open up spaces for errors, and have inefficiency in the entire operation. Imagine an employee going back and forth multiple times to the same address to pick up the same product requested in different orders. This is a rather common image of an unproductive operation. And the worst part: many still do not realize where the error is.

In general, e-commerce warehouses operate with small orders and fractional items. To be sorted efficiently, specific picking strategies must be used, which must be defined based on the type of order, number of orders fulfilled per day, number and diversity of SKUs in the warehouse, estimated time for order picking, types of stored products (their shape, degree of fragility), the size and layout of the warehouse, stock volume, and sales seasonality.

Batch picking, for example, is a widely used method in e-commerce. In this type of picking, orders are grouped to reduce access to stock, allowing more units to be picked on each route, thus fulfilling more than one order. Subsequently, the items collected in a grouped manner are separated based on each order and destination, usually in the control process (hive/wall). Many companies also choose to use RF collectors in the separation (pick and confirm) to ensure greater assertiveness in order processing.

The first step in defining the most suitable mode for your warehouse is to know the specifics of the business and all available picking options. Automating this process, through specific picking solutions or a WMS, will bring even more efficiency.

2 – Disorganized Inventory

This is also a major error in e-commerce logistics. The lack of inventory organization generates a series of problems, starting with picking. If products are not easily found, delays and rework will be frequent. And it’s not enough to have an address that facilitates localization. It is necessary to have a strategy in choosing the location of each item to make separation faster and more effective.

Imagine that a product you sell a lot is positioned far from the shipping area, while another that is seasonal occupies an easily accessible address. Certainly, there is a lack of strategy and warehouse organization to facilitate picking. Therefore, the golden rule is: noble products must occupy noble areas.

Moreover, if your inventory is disorganized, the chances of stockouts are high, causing great customer dissatisfaction at the time of purchase. There can also be excess inventory that causes losses to your company. Not to mention that poor stock management means poor use of space and its resources, i.e., various losses.

To avoid all these situations, it is important to have a warehouse management system, the WMS, which will manage the product from the moment it arrives at the DC, indicating its best position based on its characteristics and turnover, always aiming to benefit the collection. Additionally, the WMS has inventory defragmentation and Kaban routines, which indicate the right time for line replacement.

3 – Not Controlling Stock Movements

In addition to having an organized inventory, it is necessary to monitor all product movements that occur in the warehouse. If you don’t have this control, how will you ensure that the picking lines are replenished? Or how will you know the right time to call suppliers to replenish stocks? For this, having a system that records the product from its entry into the warehouse, through internal movements, to its departure, makes a difference. You will always know where each product is and the level of your stocks, keeping it always replenished to meet customer demands.

4 – Lack of Integration Between Systems

Imagine that your customer requested a product that was indicated as available on the sales platform, and when that order arrived at the warehouse, it was found that the item was missing. You will have to contact that customer and inform them that you cannot ship the product within the expected time frame or that you will cancel the purchase. Have you ever thought about how disappointed they will be?

To avoid such situations, it is important to prioritize good integration between your intralogistics management system and the sales system, as well as the ERP. This ensures that information is always interconnected and updated. Whenever a change occurs, the systems must be tasked with transmitting this information to the others, avoiding errors that can severely damage the relationship with the customer and its operation.

5 – Poor Management of Exchanges and Returns

Exchanges and returns are part of the routine of any e-commerce warehouse, but they often do not receive the right attention. Companies that do not have strategies to manage them end up creating obstacles for customers and are subject to merchandise loss, damage, stockouts, rework, and disorganization at the DC. Therefore, we also consider it one of the main errors in e-commerce logistics that should be avoided.

It is important that returned products follow the same process as goods received in the warehouse, verifying if it is indeed the item that was sold, its quantity, and conditions. If the product is in good condition, it must be sent to the picking area; if not, it must go to the segregated area.

The WMS greatly aids in this process, as the system manages all stages of the return, allowing not only for an agile exchange (benefiting the customer) but also for the returned product to be correctly sorted, classified, and when in perfect condition, quickly returned to stock. (Learn more about reverse logistics).

6 – Not Tracking Order Processing in Real-Time

Your operation is not exempt from occurrences that can cause delays in order fulfillment. What will distinguish you from others is how you and your employees handle these bottlenecks. When you can monitor the progress of processes in real-time, it is much easier to identify delays and resolve them in time without affecting the deadline agreed with the customer.

In this sense, it is important to have a management system that offers panels and dashboards (Sight Management), through which employees self-manage and managers make quick and assertive decisions.

With Sight Management, the WMS allows, for example, close monitoring of the status of each order, as shown in the image below. Expired orders are in red, those on alert are in yellow, and those processed on time are in green. With these signals, it is easier to make the necessary changes so that deadlines are met.

Real-Time Order Management – WMS Deagor

It is worth adding that by following stock operations, orders, and other warehouse sectors in real-time, it is possible to identify opportunities for process improvement, more effectively meeting your customers’ needs.

Prepare to Grow

In previous articles, we presented some of the most common errors in e-commerce logistics, among which can also be added the choice of wrong packaging, disorganized shipping processes, lack of delivery traceability, among others. But beyond all these issues, it is important to draw attention to a failure related to the company as a whole: not being prepared to grow.

Many e-commerce companies do not consider the impact that business growth will have on their logistics and service operations. Effective logistics and inventory management include the ability to scale up to promotions, sales peaks, new distribution channels, and sustained revenue growth. For this reason, it is essential to invest in technologies that accompany this growth. With the help of the right tools, it is possible to increase sales and enter the omnichannel without necessarily increasing storage space or hiring more labor, for example.

Technology is an important support for growth and also an ally for your company to gain a commercial advantage, offering differentials to your customers. Therefore, for your business to grow while maintaining a high standard of service, investment in innovation is essential.

How Do You Avoid Making Mistakes in Your E-commerce Logistics?

Unfortunately, the examples cited in the six topics are common, especially for e-commerce companies just starting out. And the important thing is that failures that are initially easy to resolve due to the small scale of the company soon get out of control and become costly and time-consuming to correct. Is it possible to never make mistakes? The truth is no, especially when you are building a business from scratch. However, there are shortcuts to avoid mistakes, and this includes leveraging the knowledge of those who came before you and having the right tools for your business!