How Ecommerce Logistics Can Help Reduce Returns and Improve Margins
Customer satisfaction and cost efficiency are two pillars of business growth. As such, two of the biggest challenges that e-commerce businesses face are maintaining profit margins and reducing order returns.
Returns are inevitable in online shopping. Customers can’t physically inspect items before purchase, so returns are unavoidable. We wouldn't consider declining e-commerce returns a "necessary evil" either, since offering a return policy is standard e-commerce practice. Every business should allow returns to remain competitive.
The good news? Working with a reliable e-commerce logistics partner can help you save on logistics costs, as well as reduce your order returns. This is possible through the magic of strategic inventory management and optimised delivery.
This guide goes through how an e-commerce logistics partner can improve your margins and reduce your returns.
Key Takeaways
E-commerce logistics reduces overheads and improves profit margins through optimised service costs, fulfilment, and shipping.
Accurate inventory management ensures customers get exactly what they ordered, lowering return rates.
Cancelled sales mean lost revenue and customer dissatisfaction. An e-commerce logistics provider prevents lost sales by optimising warehousing and delivery time.
Partnering with an experienced logistics provider allows your online store to offer hassle-free, fast, and reliable service.
Customers happy with your service tend to be loyal advocates of your brand, ready to make future purchases.
Why Your Online Business Needs an E-commerce Logistics Partner
Running logistics in-house can seem manageable when you’re just starting out. Perhaps you don't even have a website yet, and you mainly sell on social media. Or you, the owner, have the time to personally pack and ship out orders.
But as your online store grows, operations quickly become complex and expensive. You’ll need warehouse space, trained staff, a tracking system, and reverse logistics capabilities, all of which require significant investment.
An e-commerce logistics company (or 3PL provider) simplifies all that. By managing your supply chain, storage, and delivery under one end-to-end service, you:
Gain access to warehousing and order fulfilment without the associated upfront costs.
Reduce costs tied to warehouse leasing and staffing
Ensure customer satisfaction through fast, accurate deliveries
Maintain a seamless customer experience
Have access to a complete, robust logistics department.
In today's digital era, online businesses emerge like Seven-Elevens, competing with each other on costs and quality of service.
As such, partnering with an expert logistics provider helps e-commerce businesses remain competitive and exceed customer expectations.
Gain access to warehousing and order fulfilment without the associated upfront costs.
Reduce costs tied to warehouse leasing and staffing
Ensure customer satisfaction through fast, accurate deliveries
Maintain a seamless customer experience
Have access to a complete, robust logistics department.
How an E-commerce Logistics Partner Improves Margins
Logistics itself can be a major expense, eating into your margins. But a 3PL partner helps reduce operational costs, improving your margins.
Good 3PL partners may even improve your customer satisfaction.
#1 Reduces Upfront Investment on Infrastructure
By outsourcing to an e-commerce logistics partner,
You eliminate the need for long-term property commitments.
You gain access to existing distribution centers.
You offload warehousing and inventory management to a reliable partner with complete infrastructure.
This creates a cost-effective setup that scales with your order volume. Meaning, you only pay for what you need, as opposed to leasing an entire warehouse for idle stock.
On the other hand, building an in-house warehouse involves leasing costs, equipment, and technology, all of which require massive upfront payments. On top of that, there’s ongoing maintenance, insurance, and utilities: all adding up to high recurring costs that eat into your margins.
You eliminate the need for long-term property commitments.
You gain access to existing distribution centers.
You offload warehousing and inventory management to a reliable partner with complete infrastructure.
#2 Eliminates the Need for Labour Costs
Hiring a full operations team, from warehouse managers to pickers, packers, and customer service staff, can be an expensive recurring cost.
An e-commerce logistics company absorbs those labour costs.
They employ trained teams who manage order processing, packing, delivery, and even processing returns.
You'll only have to pay the logistics company for warehousing and order fulfilment fees. This is often more cost-efficient than paying a salary to an entire warehouse team.
You won't have to allocate time to handle the menial HR. The logistics company already has the skilled trades on hand.
Partnering with a 3PL removes the pressure of staffing. The result? Lower operational costs, fewer mistakes, and faster order cycles that help improve your profit margins.
They employ trained teams who manage order processing, packing, delivery, and even processing returns.
You'll only have to pay the logistics company for warehousing and order fulfilment fees. This is often more cost-efficient than paying a salary to an entire warehouse team.
You won't have to allocate time to handle the menial HR. The logistics company already has the skilled trades on hand.
#3 Provides Optimised Shipping and Delivery Costs
Shipping can account for a large portion of processing costs, especially if you’re fulfilling orders across regions or borders.
There are multiple ways to get your package from the warehouse to the customer. However, a logistics provider has the necessary connections and expertise to select the best, most cost-efficient method.
A logistics provider leverages bulk discounted shipping rates and optimised delivery routes to reduce your shipping costs per parcel.
They can also determine the most cost-effective shipping method based on item weight, item category, delivery location, and urgency.
Some logistics companies provide a fulfilment fee for each parcel. This already covers picking & packing, labelling, and shipping & delivery for each order. This is often more cost-efficient than the rate of JUST shipping & delivery from a third-party courier.
By optimising shipping methods, logistics companies can reduce shipping costs for both local and cross-border deliveries. This, in turn, preserves your profit margins.
Expert logistics companies also ensure faster deliveries, resulting in happier customers who are more likely to make future purchases.
How Can an E-commerce Logistics Company Reduce Returns
While improving margins is essential, reducing returns has an equally powerful impact.
Fewer returns mean fewer lost sales, less reprocessing, and more loyal customers who trust your brand.
Here’s how logistics expertise directly reduces your return rate, thereby improving satisfaction among online shoppers.
#1 Proper Inventory Management Ensures Order Accuracy
It doesn't matter if you have high-quality images or accurate product descriptions on your website. If your customer receives the wrong order, it's of no use.
Maintaining accurate orders starts with proper inventory management. If you have multiple sizes for jackets, for example, a logistics provider will have unique SKUs (e.g., barcode, QR code) for each size. From XS all the way to XXL.
A reliable e-commerce logistics provider uses advanced inventory management systems to track SKUs, ensuring your shoppers receive exactly what they purchased: the right size, colour, and variant.
Well-organised warehousing ensures that products are stored in environments optimised for their specific needs. For example, if you stock heat-sensitive products, such as whey protein, proper warehousing ensures they're stored in climate-controlled areas. This prevents product degradation, especially for perishables, cosmetics, or electronics.
Proper warehousing results in fewer mis-picks, fewer defective products, and a lower return rate.
A reliable e-commerce logistics provider uses advanced inventory management systems to track SKUs, ensuring your shoppers receive exactly what they purchased: the right size, colour, and variant.
Well-organised warehousing ensures that products are stored in environments optimised for their specific needs. For example, if you stock heat-sensitive products, such as whey protein, proper warehousing ensures they're stored in climate-controlled areas. This prevents product degradation, especially for perishables, cosmetics, or electronics.
#2 Integrated Shipping and Delivery Ensures Proper Order Arrival
With third-party courier services, you have limited control over the courier handling your shipping. If anything gets damaged during shipping, third-party couriers may offer limited insurance that doesn't cover the full cost of damage.
It's crucial that items arrive in pristine condition to the customer. If the merchandise gets damaged during shipping, customers may return the parcel.
As such, an end-to-end e-commerce logistics partner may be the better shipping & delivery solution.
Your logistics partner ensures every item arrives safely and on time.
They coordinate each step, from warehouse dispatch to customer handover.
Their integrated control and oversight over shipping & delivery also ensures safer transit of the ordered item to its respective customer.
The result is fewer returns caused by damage during shipping. Additionally, there will be fewer order cancellations due to delays and "lost in transit" statuses.
Your logistics partner ensures every item arrives safely and on time.
They coordinate each step, from warehouse dispatch to customer handover.
Their integrated control and oversight over shipping & delivery also ensures safer transit of the ordered item to its respective customer.
#3 Optimised Merchandise Stocking Prevents Order Cancellation
Having products in stock when customers want them is essential to maintaining customer satisfaction.
Poor stock management can lead to order cancellations due to customers waiting too long for their items. Or worse, customers not ordering at all due to an item taking too long to restock.
A logistics company can help out in this regard:
A logistics company uses predictive analytics to monitor demand trends, optimise inventory levels, and restock popular SKUs proactively.
A logistics company's flexible warehousing solution enables you to manufacture goods according to customer demand, rather than being limited by the available storage space.
As a result, partnering with an e-commerce logistics provider leads to fewer cancellations and stronger customer loyalty. These, in turn, lead to increased orders.
A logistics company uses predictive analytics to monitor demand trends, optimise inventory levels, and restock popular SKUs proactively.
A logistics company's flexible warehousing solution enables you to manufacture goods according to customer demand, rather than being limited by the available storage space.
