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Cracking the Code: A-Z Shipping, Fulfillment, and Logistics Terminology

Phuc Le
July 25, 2023

Logistics, as an integral part of supply chain management, encompasses a vast array of concepts, processes, and terms that keep the wheels of global commerce turning smoothly. From warehouses to transportation, from inventory management to distribution, understanding logistics terminology is crucial for businesses and professionals operating in this dynamic industry. 

This glossary of common terms used in logistics industry will help you get started.

This glossary of common terms used in logistics industry will help you get started.

# · A · B · C · D · E · F · G · H · I · K · L · M · N · O · P · R · S · T · U · V · W

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3PL: Third-Party Logistics. It is an external logistics provider that specializes in managing various shipping aspects, including warehousing, fulfillment, freight bills, and transportation.

4PL: Fourth-Party Logistics: A 4PL is an external logistics provider that takes charge of organizing and managing the entire supply chain for E-Commerce manufacturers and wholesalers. This involves handling logistics, packaging, warehousing, product delivery, project management, business planning, and transportation management strategy.

A

ABC Inventory: This is a widely used method of categorizing your products into what sells best and what doesn’t, based on how long their shelf life is, relative profitability and percentage of your total inventory.

Active Stock: Products which are stored in readily-accessible areas for easy order fulfillment.

Advanced Shipping Notice (ASN): A notification to the warehouse that there is a pending inbound shipment.

Application Programming Interface (API):  An API is a set of programming instructions and standards. It’s often used to help different software applications work together.

Arrival Notice: Also referred to as a delivery notice. This is a message, usually automated, where the carrier notifies the appropriate party that the shipment has arrived.

Automated Fulfillment: Automating fulfillment tasks, including receiving, storage, retrieval, picking, packing, inventory updates, and integration with marketplaces and warehouses. Achieved through mechanized equipment like conveyor belts, pick towers, sorters, robots, and API's and dashboards.

B

Backorder: Taking orders while waiting on stock to arrive in the warehouse.

Balloon Payment: This is a lump sum payment paid at the end of a contract, term, or defined period of time, that is significantly larger than all the payments made before it. This is generally the outstanding amount. 

Base Currency: Whenever a transaction takes place between two countries, the base currency is the one used for quoting purposes. For example, when importing goods from China to the US, the base currency is usually US Dollars, as opposed to Chinese Yuan.

Bill of Lading (BOL): A BOL is used to indicate where a shipment is going, the weight of the shipment, the commodity, etc. There are usually 3 copies for reference – one for the transportation company, one for the 3PL, and one for the customer.

Bundling: When two or more products are purchased in one order for one price. E.g. Buy-one, take-one. 

C

Cancellation Rate: The Cancellation Rate (CR) is all seller-canceled orders represented as a percentage of total orders during a given 7-day time period. 

Carrier: Businesses that deliver a shipment, often called a courier or shipping company. 

Carrier Liability: Often carriers limit the liability for an individual shipment, as well as for the total sum of shipments under one client account. Watch out for this to ensure that your products are fully insured while in transit.  

Case Picking: This is when a full case is shipped as a single unit instead of individual items.

Chargeable Weight: Used by airlines to determine the cost of shipment. It may be either volumetric weight or grass weight.

Commercial Invoice: A document created by the seller with their contact information, and information on the products being shipped such as their value for customs and insurance. 

Commodity Code: A code used for defining the type of goods and the applicable tariffs when importing or exporting.

Container: Packaging used in shipping, such as cartons, cases, boxes, bundles, and bags.

Containerization: Shipment method in which goods are placed in containers and then unloaded at the destination.

Courier Service: Fast door-to-door delivery service. Can be both local or international.

Customs: The authorities who collect duties on imports and exports. Also colloquially used to refer to duties paid on imports and exports.

Customs Value: The value of the imported goods on which duties will be assessed. Usually includes the price of the goods themselves and the prorated price of the freight or air shipping.

D

Distributed Fulfillment: This is the splitting of physical goods across different fulfillment centers that are strategically chosen to keep inventory closer to the end customer. This way, it is nearby when it’s ready to be shipped to achieve a lower transit time and cheaper shipping costs.

Distribution Center (DC): A warehouse facility which holds inventory before being sent to end users/customers.

Dock to Dock: This term is used to ascertain if there is a lift gate or a dock at the end location, so that the truck can pick up from one dock, deliver to another, no lift gate needed.

Dock to Stock: is a receiving method where specified quality and packaging requirements are met before the product is released, and materials are delivered directly to point of use (storage or manufacturing), skipping the normal receiving inspection.

Dropship: Dropshipping is a method of order fulfillment in which a company sells products by delivering them directly from the E-Commerce store/manufacturer or third party. Dropshipping merchants do not warehouse nor ever handle their inventory.

E

Expediting: Shipping faster than normal.

Export: Sending goods to another country.

F

First Mile: The first stage of transportation in the business-to-consumer (B2C) logistics supply chain. This is where the parcel first leaves the merchant’s doorsteps.

Flat Rate Shipping: Means the price of shipping is not connected to the weight, shape, or size of the shipped item.

Forecasting: Referred to as inventory estimation, is a strategic process aimed at predicting future inventory needs

Freight: Goods being transported from one place to another.

Fulfillment Services Provider: A company that provides fulfillment services. Fulfillment includes order management, picking, packaging, and shipping. This is what we specialize in at Locad.

G

General-Merchandise Warehouse: A warehouse used to store goods that do not have special requirements.

GTIN (Global Trade Item Number): A numeric system that provides globally unique codes to goods and services. Related concepts include UPC, ISBN, and NDC.

H

Handling Costs: The cost involved in moving, transferring, preparing, and otherwise handling inventory.

Hub: A common connection point in transportation. 

Hyperlocal Fulfillment: relies on small, numerous fulfillment centers, located in urban areas to stock and ship out goods for eCommerce orders. By bringing the product closer to the customer, the orders can be fulfilled faster, with a smaller footprint, and rely on innovative final mile delivery solutions.

I

Import: Goods brought into one country from another.

Inbound logistics: The management of materials from suppliers and vendors into production processes or storage facilities.

Inventory: The quantity of products you own and store for later sale.

Invoice: A detailed statement showing goods sold or shipped and amounts for each.

Item: Any unique manufactured or purchased part, material, intermediate, sub-assembly, or product.

J

Just-in-Time Inventory: This is manufacturing to demand. You make your product only when the order comes in, and not before. This involves careful planning and serves to cut down costs from the production process, while creating customized and high-quality products.

K

Kitting: Assembling different products and components as a single SKU into custom packaging. When you sell packs and product bundles, this usually involves kitting either on factory or warehouse level. 

L

Landed Cost: Cost of product plus relevant logistics costs (transportation, warehousing, handling, etc.

Last Mile: The final leg of delivery, where the shipment is delivered to the customer.

Localized Fulfillment: Investing in the country’s local infrastructure, such as warehouses, staff and a delivery fleet and do the fulfillment nationally. Another option is outsourcing to a third-party service provider to do the localization for you

M

Marketplace Seller Rating: Displayed on a scale, this is the percentage of positive ratings provided by verified customers. This is impacted by your level of customer service, speed and ease of shipping, and quality of product. 

Manifest: A document which describes individual orders contained within a shipment.

Master Carton: A master carton holds multiple units of the same SKU. Shipping products in a master carton help the customer save money by consolidating the shipment.

Multi-Channel Fulfillment: Where a fulfillment partner handles the storage, packaging, and shipping of a consolidated inventory of products that are sold on various online channels.

N

Net Weight: The weight of the merchandise, unpacked.

Node: A place in a logistics system where goods rest – plants, warehouses, etc.

O

Omni-Channel: The way a customer interacts with a retailer across multiple channels (such as stores, web, ecommerce platforms)

Order: An order is a request to ship products, following a purchase by a customer through the E-Commerce store’s website, or via an online platform.

Order Fulfillment: Order fulfillment is the start-to-finish process of an order being received, prepared, packed and shipped to the customer.

Order Tracking: Order tracking allows a merchant and a customer to track the status of a shipped package, via a tracking number that represents the specific order.

Outbound Logistics: The movement and storage of products from the production line to the customer.

P

Packing: Preparing a container to ship. This term is also used for packing “products” for an order.

Packing List: All shipped orders include a list which itemizes the SKU, description and quantities of every item contained in the order.

Periodic Inventory: A method of tracking inventory with regularly scheduled stock counts (either weekly, biweekly or monthly)

Perpetual Inventory: The system where you update your inventory every time an order is placed, or stock is moved around. This maintains a real-time inventory count. 

Pick and Pack: The process of pulling the products of an order from storage and packing it in preparation for shipping.

Picking: Pulling products from storage for an order.

Purchase Order (PO): A purchaser’s authorization to formalize purchase with a supplier.

R

Reorder Point: The reorder point is an inventory level set by the merchant which indicates that inventory levels are approaching a low count and it is time to reorder them to keep stock at the desired level. 

Return Merchandise Authorization (RMA): An RMA is used as an authorization for return. RMAs help the E-Commerce merchant keep an organized record of their returns and allows the customer to return the item with a reference number to the fulfillment house.

Reverse Logistics: Logistics for management of products after delivery to customer, such as returns and repairs.

S

Serial Number: Often used with items such as electronics, serial numbers are used to represent a specific unique item; as opposed to an SKU, which represents a group of the same items. 

SKU: Stock Keeping Unit, a code which identifies a product so that it may be tracked in inventory.

Stockout (out of stock): When you have inadequate inventory levels to meet current demand.

Supply Chain: Everything from the acquisition of raw materials to the delivery of finished products to the end user.

T

Tariff Code: A tariff code is a number field used for customs clearance which classifies a product, allowing customs to clearly define what the product is.

U

Uniform Product Code (UPC): A common type of barcode.

V

Vendor: The manufacturer or distributor of an item or product line.

W

Web Portal: The web portal is your account dashboard. It provides all of your account information, inventory counts and tracking as well as order tracking.

 

References: 

The A to Z’s of Shipping, Fulfillment, and Logistics Terms | Locad. Golocad.

The ultimate eCommerce fulfillment glossary of terms. Fulfillmentbridge.

Cross-Border Guide: An A-Z Glossary of the Key Terms Used in Cross-Border Shipping. Blog.

More Insights

August 18, 2023

Profit-Friendly Shipping: 5 Strategies for Customer Satisfaction

In today's competitive e-commerce landscape, successful businesses understand that impeccable shipping strategies are paramount for maintaining customer satisfaction while safeguarding profits. This article delves into the key aspects of effective shipping, exploring customer expectations, factors influencing shipping costs, and five proven methods to trim shipping expenses without compromising customer happiness. Modern customers demand transparency, accuracy, and convenience in shipping. Understanding the variables impacting shipping costs, such as package attributes and carrier choices, is crucial. By the end, you'll not only grasp shipping intricacies but also possess actionable tools to balance customer delight and shipping cost effectiveness effectively.

UNDERSTANDING AND EXCEEDING CUSTOMER EXPECTATIONS IN SHIPPING

UNDERSTANDING AND EXCEEDING CUSTOMER EXPECTATIONS IN SHIPPING In the contemporary world of e-commerce, shipping has evolved from a mere logistical process to a crucial element in shaping customer satisfaction. Today's customers expect a seamless and satisfactory shipping experience that goes beyond the basic delivery of their orders. This article delves into the intricacies of customer expectations in shipping, shedding light on the factors that influence their perceptions and offering insights into how businesses can surpass these expectations to foster loyalty and positive brand associations.
Customer-Centric Shipping: Beyond Timely Deliveries
Customer expectations in shipping encompass a spectrum of considerations that extend well beyond the delivery timeframe. While prompt delivery remains important, it's just the tip of the iceberg. Modern consumers demand transparency, reliability, and personalized communication throughout the shipping journey.
  • Accurate Tracking and Communication: Customers anticipate real-time tracking updates that provide insights into the status and location of their orders. According to a survey by Narvar, 67% of customers consider real-time tracking updates as crucial to their shopping experience. Transparency in this aspect not only minimizes anxiety but also empowers customers to plan and manage their expectations effectively.  
  • Flexible Delivery Options: Offering a variety of delivery choices, such as express, standard, or even specific time slots, accommodates diverse customer needs. Businesses that provide flexibility recognize that each customer's situation is unique, enhancing overall satisfaction. A report by Walker Sands reveals that 79% of consumers view multiple delivery options as an essential factor when making an online purchase
  • Effective Handling of Issues: In case of any hiccups along the way, customers expect prompt and empathetic resolution. Research by Zendesk indicates that 62% of customers expect a response within four hours when they reach out with an issue. A proactive approach to address concerns, such as delayed deliveries or damaged packages, can turn a negative situation into a positive customer service interaction.
  • Seamless Returns Process: According to a study by the National Retail Federation, 91% of consumers stated that an easy returns process influences their decision to shop with a retailer again. A hassle-free returns process is an integral part of the overall shipping experience. 
Shaping Customer Loyalty through Shipping Excellence
Meeting and surpassing customer expectations in shipping can have a profound impact on brand loyalty and repeat business. When customers feel valued and their needs are met, they are more likely to become advocates for the brand, sharing positive experiences with friends and family. As the e-commerce landscape continues to evolve, businesses must prioritize an empathetic and customer-centric approach to shipping. By understanding and catering to the nuanced expectations of customers, companies can differentiate themselves in a competitive market, nurturing lasting relationships and paving the way for sustained success.

FACTORS INFLUENCING SHIPPING COSTS: NAVIGATING THE COMPLEX LANDSCAPE

FACTORS INFLUENCING SHIPPING COSTS: NAVIGATING THE COMPLEX LANDSCAPE In the intricate world of e-commerce logistics, shipping costs stand as a pivotal determinant that can significantly influence a business's financial health. Navigating the multifaceted landscape of shipping expenses requires a deep understanding of the diverse factors that contribute to the ultimate cost. This section of the article delves into the intricacies of these factors, shedding light on how they impact shipping costs and underscoring the necessity for businesses to strategically navigate this complex terrain.
  • Package Dimensions and Weight: Package dimensions and weight play a crucial role in determining shipping costs. Carriers often utilize a concept called dimensional weight, wherein the size of the package is considered alongside its weight to calculate shipping charges. Carriers often employ dimensional weight pricing, where package size and weight are both considered to calculate shipping charges. For instance, UPS states that packages measuring over 1 cubic foot are charged based on dimensional weight if it exceeds the actual weight. This approach ensures fair compensation for bulky items that occupy more space.
  • Shipping Distance: The distance between the point of origin and the destination significantly affects shipping costs. Longer transit distances typically entail higher expenses due to increased fuel consumption, extended travel times, and the utilization of additional resources. According to the National Cooperative Freight Research Program (NCFRP) Report 16, shipping costs can increase by approximately 5-7% for every 100 miles. This cost factor underscores the importance of optimizing shipping routes for efficiency. 
  • Delivery Speed: The speed at which a package needs to be delivered can impact its cost. Expedited delivery options, which promise quicker arrival times, often come with higher price tags. Offering a spectrum of delivery speeds allows customers to balance their urgency against cost considerations. For example, same-day or next-day delivery options can increase shipping costs by up to 50%, driven by the need for expedited handling and delivery processes.
  • Shipping Zones: Shipping zones are geographical areas defined by carriers to categorize destinations based on their proximity to the point of origin. Shipments to distant zones involve longer transit times and higher costs due to the increased complexity of cross-country logistics.
  • Carrier and Service Selection: Different carriers offer distinct pricing structures and service options. Businesses can leverage comparison tools to identify the most cost-effective carriers for specific destinations and services. Opting for less expensive carriers or utilizing bulk shipping rates can significantly impact overall costs. For instance, USPS may offer more economical options for lightweight packages, while FedEx or UPS might be preferred for expedited deliveries.
  • Additional Services:  According to data from Statista, 41% of online shoppers consider package tracking to be an essential feature. While services like tracking and insurance enhance customer satisfaction, they also contribute to higher shipping costs.
Understanding and effectively managing these factors necessitate careful analysis and data-driven decision-making. Businesses must utilize historical shipping data, employ predictive analytics, and employ optimization techniques to strike the right balance between service quality and cost efficiency. By comprehending package attributes, shipping distances, delivery speeds, carrier choices, and supplementary services, businesses can expertly navigate the intricate landscape of shipping costs, ultimately contributing to improved profitability and operational excellence.

5 WAYS TO DECREASE SHIPPING COSTS AND ELEVATE CUSTOMER SATISFACTION:

5 WAYS TO DECREASE SHIPPING COSTS AND ELEVATE CUSTOMER SATISFACTION: Finding ways to lower shipping costs while still delighting customers is a delicate balancing act. This section of the article explores five strategic approaches that businesses can adopt to achieve the dual goals of cost-effectiveness and customer satisfaction.
1. Embrace Live Rates for Transparent Pricing
Adopting live rates, also known as real-time shipping calculations, is a strategic move supported by concrete benefits. This approach enables businesses to present accurate shipping costs based on carriers' actual charges for varying package dimensions, weights, and distances. Research from ShipStation reveals that 63% of online shoppers consider shipping costs before making a purchase, emphasizing the importance of transparent pricing. Live rates ensure that you can set product prices without being burdened by shipping uncertainty. These rates update dynamically, which is particularly crucial in the face of carrier rate adjustments. For instance, if a carrier increases rates by 5%, your website's shipping costs will immediately reflect this change. This real-time synchronization not only avoids discrepancies but also strengthens customer trust in your pricing accuracy. Customers greatly value this level of transparency. A survey by BigCommerce found that 38% of respondents abandoned their carts due to unexpected shipping costs. Offering precise shipping charges calculated for their specific order enhances their trust and reduces the likelihood of cart abandonment. Furthermore, live rates offer customers a spectrum of shipping choices tailored to their preferences. The FedEx Shipping Method extension exemplifies this by offering over ten domestic options, such as priority overnight, two-day delivery, and freight. This abundance of options aligns with customer demands for flexibility in shipping preferences. Implementing live rates can also alleviate the necessity of offering free shipping as a sales incentive. According to a study by the National Retail Federation, 75% of consumers expect free shipping, and 93% of shoppers consider free shipping a factor in their purchasing decisions. By providing customers with transparent shipping costs and versatile options, live rates inherently diminish the pressure to resort to free shipping promotions.
2. Provide Customizable Shipping with Table Rates
Enhancing your shipping strategy with table rates introduces a level of customization that addresses the diverse needs of your customers. This method relies on a series of rules to determine shipping costs, taking into account a range of variables such as weights, dimensions, shipping classes, order totals, delivery destinations, and the quantity of items ordered. This dynamic approach is particularly valuable when dealing with a product range that exhibits variations in shape, size, or type. Table rates offer a robust solution for businesses with complex shipping requirements. For instance, if you offer products with varying weights and sizes, or if you cater to diverse customer bases with distinct order patterns, table rates allow you to create precise rules that align with these intricacies. According to a survey by eMarketer, 47% of online shoppers abandon their carts due to unexpected shipping costs. Offering table rates mitigates this issue by providing clear and predictable shipping costs based on multiple factors. This level of transparency enhances customer trust and contributes to a smoother shopping experience. Moreover, table rates are particularly advantageous for businesses that sell products with varying shipping considerations. If you offer a combination of lightweight items that can be economically shipped together and heavier items that require individual handling, table rates enable you to craft rules that balance these requirements. By integrating table rates into your shipping strategy, you not only address the unique needs of your product range but also optimize the customer experience by providing clarity and predictability in shipping costs.
3. Opt for Predictable Flat Rates
Employing flat rate shipping presents a straightforward solution that benefits both businesses and customers. This approach involves charging a consistent shipping fee, irrespective of the order's weight or size. Flat rate shipping is particularly advantageous if your products possess similar dimensions and weights, or if the majority of customers tend to order comparable quantities. However, caution is advised, as discrepancies can lead to dissatisfied customers or financial losses. Customers value flat rate shipping for its simplicity, mirroring the preference of business owners. The elimination of complex rate calculations resonates with customers, streamlining their shopping experience. This simplicity contributes to reducing cart abandonment rates, as highlighted by a study conducted by Baymard Institute, which showed that 25% of shoppers abandon their carts due to unexpected costs. Flat rate shipping also serves as a valuable marketing tool. Employing messaging such as "Shipping is always just $5.00" capitalizes on its inherent simplicity and transparency. This type of communication can encourage customers to add more items to their carts, driven by the reassurance that shipping costs won't escalate unexpectedly. By implementing flat rate shipping wisely, businesses can provide customers with a hassle-free experience, build trust through straightforward pricing, and potentially increase sales by leveraging transparent marketing messages.
4. Harness the Power of Free Shipping
The allure of free shipping holds undeniable sway over customers' purchasing decisions. Research underpins this, revealing that a staggering 93% of shoppers are more inclined to buy when free shipping is on offer. Additionally, 58% of consumers exhibit the behavior of adding extra items to their carts just to meet the criteria for free shipping. However, it's important to acknowledge that not every store can seamlessly adopt this approach. Businesses grappling with wide-ranging shipping cost variations or operating on thin profit margins may find themselves at risk of incurring losses, even in the face of heightened sales. Strategically executing free shipping requires a deft balance that safeguards profits. An effective tactic is to avoid channeling all profits into shipping costs. Instead, consider a method such as modestly raising prices to encompass shipping expenses. Imagine an instance where an item typically priced at $8.00 incurs $3.00 in shipping costs. Offering the product at $11.00 with free shipping ensures customers are cognizant of their total expenditure, eliminating surprises during checkout. Critical factors to ponder include evaluating your products' shipping costs and discerning whether customers would accept marginally higher prices. An alternative approach involves a hybrid model, wherein a portion of the shipping costs is subtly incorporated into the product price, with the remainder borne by the business. The aspiration is that augmented sales will counterbalance the slightly narrowed margins. The potency of free shipping is undeniable, but its success hinges on adeptly navigating the fine line between customer attraction and financial prudence.
5. Synergize Shipping Options with Fulfillment Center Integration
Navigating the array of shipping strategies can be perplexing, prompting a pragmatic approach of blending strategies to sculpt a tailored fit for your business. A commonly employed tactic involves amalgamating options, such as offering a dual-tiered shipping model. For instance, you could propose free shipping for orders surpassing a designated minimum, while applying flat rate shipping to orders below $50. This method strategically guides customers towards higher cart values, fostering increased spending, all the while averting the risk of hemorrhaging funds on shipping expenses. Alternatively, for businesses confronting a medley of order sizes, product weights, and price points, a diversified strategy could materialize. Implement free shipping exclusively for USPS Ground deliveries, while simultaneously leveraging real-time rate calculations for expedited delivery alternatives. This hybrid approach strikes a balance between cost-effective shipping for standard options and real-time transparency for premium choices. Harnessing free shipping as a strategic tool within larger marketing campaigns offers a supplementary avenue for businesses to bolster sales. By temporarily waiving shipping fees during specific holidays or seasonal periods, you can galvanize purchases and capitalize on the psychological allure of "free." Integration with a fulfillment center can optimize these multifaceted strategies. With a fulfillment partner, you can seamlessly orchestrate shipping variations, ensuring efficient execution while concurrently optimizing costs. This integration augments the precision of your shipping approach, bolstering customer satisfaction and business profitability. In essence, weaving together shipping options with the synergy of a fulfillment center not only maximizes operational efficiency but also empowers businesses to wield shipping strategies as potent tools for revenue growth and customer engagement.  
August 18, 2023
Phuc Le
Content Writer at Amilo
August 9, 2023

The Future of Global eCommerce: Insights Into Gen Z And Millennials' Expectations

As the world becomes more interconnected, global commerce continues to experience significant growth. According to eMarketer, global retail ecommerce sales reached $4.28 trillion in 2020, and this number is projected to reach $6.39 trillion by 2024, reflecting the increasing demand for online shopping options. This surge in digital commerce has opened up remarkable opportunities for online businesses to tap into a vast consumer base and drive sales. Two key generations that play a crucial role in this ecommerce landscape are Generation Z and Millennials. These demographics hold substantial purchasing power and represent a significant portion of online consumers. According to a report by McKinsey, Millennials alone are projected to make up 35% of total luxury goods sales by 2025. Understanding the preferences and expectations of Generation Z and Millennials is essential for businesses to effectively engage with these audiences and boost sales. Research conducted by Accenture found that 63% of Gen Z consumers prefer personalized product recommendations, while 51% of Millennials are likely to switch brands if a company doesn't offer a seamless mobile shopping experience.

THE SIGNIFICANCE OF GEN Z AND MILLENNIALS IN GLOBAL ECOMMERCE

THE SIGNIFICANCE OF GEN Z AND MILLENNIALS IN GLOBAL ECOMMERCE Generation Z, born from the mid-1990s to mid-2010s, and Millennials, born from the early 1980s to mid-1990s, wield significant influence over the realm of online shopping. A staggering 32% of Generation Z and 25% of Millennials engage in daily online shopping, underlining their digital prowess and reliance on e-commerce. Moreover, Generation Z's impressive purchasing power surpasses $143 billion USD, leaving a profound mark on the retail industry. As for Millennials, their projected income of $8.3 trillion by 2025 will considerably escalate their annual spending from $2.5 trillion, further shaping the e-commerce landscape. In light of these remarkable figures, it becomes imperative for businesses to prioritize meeting the expectations of both Generation Z and Millennials in the online shopping domain. The rise of social commerce has emerged as a powerful revenue stream, revolutionizing the way people shop online. Furthermore, cross-border shopping, evolving payment methods, expedited shipping options, and the proliferation of online buying opportunities have transformed income-generation strategies for businesses. As such, understanding and adapting to these evolving trends are paramount. We will delve into these dynamic shifts, providing a comprehensive understanding of how Generation Z and Millennials are reshaping online shopping and impacting businesses in the process. By grasping these emerging trends, global ecommerce seller can position themselves strategically to tap into the immense potential offered by these influential generations and succeed in the ever-evolving world of ecommerce.

THE POWER OF EXPECTATIONS: HOW MILLENNIALS AND GEN Z RESPOND TO ONLINE SHOPPING

To thrive in the competitive world of e-commerce, businesses must prioritize meeting the logistics expectations of Millennials and Generation Z. By focusing on fast and reliable shipping, real-time tracking, sustainable practices, hassle-free returns, personalized delivery options, and omnichannel fulfillment, companies can deliver exceptional logistics solutions that resonate with these influential demographics. Aligning logistics practices with the preferences of Millennials and Gen Z not only fosters customer loyalty but also positions businesses as leaders in the industry, driving success in the ever-evolving landscape of online retail. Let's delve deeper into each of the seven key factors driving online shopping satisfaction for Millennials and Generation Z.
1. Seamless Mobile Experience:
Millennials and Gen Z are highly dependent on their mobile devices for various activities, including shopping. According to Statista, as of 2021, 98% of Gen Z and 96% of Millennials own smartphones. To cater to these mobile-first shoppers, businesses must optimize their websites and apps for mobile devices. A responsive design ensures that the user interface adapts to different screen sizes, providing a smooth and consistent experience across devices. Fast loading times, intuitive navigation, and easy-to-use menus are essential for enhancing mobile user satisfaction.
2. Personalization and Product Recommendations:
Personalization is a key driver of customer satisfaction among Millennials and Gen Z. These generations expect businesses to understand their preferences and deliver tailored product recommendations. Utilizing data-driven insights and advanced recommendation algorithms, companies can suggest relevant products based on customers' browsing behavior and past purchases. Personalized content, such as personalized emails and product suggestions on the homepage, fosters a sense of individual attention, which can lead to higher engagement and repeat purchases.
3. Social Media Integration:
Social media has become an integral part of the daily lives of Millennials and Gen Z. They use platforms like Instagram, TikTok, and YouTube not only for social interactions but also for discovering products and brands. Businesses that actively engage with their audience on social media, share engaging content, and leverage influencer partnerships can effectively reach these digitally-connected shoppers. Encouraging user-generated content and facilitating seamless shopping directly from social media posts can further enhance the overall shopping experience.
4. Fast and Reliable Shipping:
Speed and reliability in shipping are critical factors for satisfying Millennials and Gen Z's instant gratification expectations. Amazon's success has set high standards for fast shipping, with many customers now expecting same-day or next-day delivery options. E-commerce businesses should partner with efficient logistics providers to ensure timely deliveries and provide customers with real-time tracking information for their orders. Transparent communication about shipping times and any delays can help manage expectations and maintain customer trust.
5. Cross-border shopping
Millennials are often drawn to unique, niche, and exclusive products that may not be readily available in their local markets. Approximately 71% of Millennials engage in cross-border shopping several times a year. This is closely followed by 60% of Generation Z consumers. Online cross-border shopping provides them with access to a broader selection of items, allowing them to discover and purchase products that align with their individuality and interests. Millennials are primarily driven by price sensitivity and the pursuit of the best online deals when engaging in cross-border shopping. According to Retailx, in Europe, Portugal leads with 66% of consumers shopping internationally multiple times a year, followed by the UK with 62% and Spain with 59%. Consequently, it is vital for your online business to effectively expand across borders. Collaborating with a trusted 3PL company like Byrd can be advantageous for cross-border sales. byrd handles documentation requirements and ensures reliable shipping through trusted parcel companies. Our expertise enables seamless navigation of the complexities associated with cross-border operations.
7. Transparent and Flexible Returns:
A straightforward and customer-centric returns policy is vital for building trust and loyalty among Millennials and Gen Z. These generations value transparency and expect a hassle-free returns process. Offering pre-paid return labels and easy-to-follow instructions for returning items can simplify the process for customers. Quick processing of refunds or exchSustainable and Ethical Practices: Millennials and Gen Z are conscious of the impact of their purchasing decisions on the environment and society. Brands that adopt sustainable and ethical practices, such as using eco-friendly packaging, supporting fair labor standards, and engaging in social initiatives, can resonate with these socially responsible consumers. Transparent communication about such practices on the website and social media platforms helps build a positive brand image and can influence purchase decisions.
8. Streamlined Checkout Process:
A smooth and streamlined checkout process is critical for reducing cart abandonment rates. Complicated or lengthy checkout procedures can frustrate customers and lead to lost sales. Businesses should focus on simplifying the checkout process, offering guest checkouts, and ensuring a secure and trustworthy payment gateway. Incorporating one-click checkout options or saved payment information can further expedite the purchase process and enhance overall satisfaction. To adapt to the expectations of customers, e-commerce sellers should think of outsourcing to a logistics outsourcing company. Here are some types of logistics outsourcing companies you should consider.

WHICH MODEL IS BEST FOR YOUR BUSINESS?

The best logistics model for a business depends on various factors, including the nature of the business, its supply chain requirements, budget, strategic goals, and the level of control desired. Here's a breakdown of when each model may be most suitable: WHICH MODEL IS BEST FOR YOUR BUSINESS?
  • Third Party Logistics (3PL) Model:
Best for: Small to medium-sized businesses with limited logistics expertise and resources, or businesses looking to outsource specific logistics functions (e.g., transportation, warehousing). Advantages: Cost savings, expertise, scalability, and the ability to focus on core competencies. Considerations: Assess the level of control required and the need for specialized logistics services. Communication and alignment with the 3PL provider are crucial for successful collaboration.
  • Fourth Party Logistics (4PL) Model:
Best for: Medium to large-scale businesses seeking to optimize and streamline their entire supply chain while dealing with multiple 3PL partners. Advantages: Centralized coordination, end-to-end supply chain management, and strategic focus on core business activities. Considerations: Consider the complexity and investment required to implement a 4PL model. Ensure that the 4PL provider aligns with the brand's objectives and can efficiently manage multiple 3PL partners.
  • Fifth Party Logistics (5PL) Model:
Best for: Large businesses with complex and unique supply chain requirements, seeking highly tailored and data-driven solutions. Advantages: Advanced technology integration, strategic partnership, and customized end-to-end supply chain management. Considerations: Assess the cost and resource implications of implementing a 5PL model. Ensure that the 5PL provider has the expertise and capabilities to meet the brand's specific needs and leverage advanced technologies effectively.  
August 9, 2023
Phuc Le
Content Writer at Amilo
August 9, 2023

Understanding The Distinctions: 3PL, 4PL, and 5PL Logistics Explained

In today's world, the progress of logistics has led to the rise of 3PL, 4PL, and 5PL solutions. These developments are driven by factors like global markets, technology advancements, and changing consumer preferences. As businesses expand globally, they need specialized logistics services to manage the movement and distribution of goods efficiently across borders and various channels. Third-Party Logistics (3PL) offers outsourced services for transportation, warehousing, and inventory management, allowing companies to focus on their core strengths while benefiting from expert logistics support. Fourth-Party Logistics (4PL) goes further, acting as the coordinator of the entire supply chain, optimizing operations among multiple 3PL partners. Fifth-Party Logistics (5PL) takes 4PL a step ahead, using advanced technology and data analysis for strategic decision-making, forecasting demand, and improving inventory management to adapt to market changes. Logistics' progress has given rise to 3PL, 4PL, and 5PL as specialized solutions to manage complex supply chains, meet customer demands, and gain a competitive edge in the ever-changing business world. Understanding The Distinctions: 3PL, 4PL, and 5PL Logistics
What Are Third Party Logistics (3PL) Companies?
Third-Party Logistics (3PL) companies are external service providers that offer a wide range of logistics solutions to businesses. These solutions encompass transportation, warehousing, inventory management, order fulfillment, and other critical logistics functions. The primary advantage of working with a 3PL provider is that they assume responsibility for managing and executing these logistics services on behalf of the brand. As a result, brands can shift their focus from logistics operations to core business activities, such as product development, marketing, and customer service. 3PLs often specialize in specific aspects of logistics and supply chain management, allowing them to bring expertise and efficiency to their particular domain. For example, a 3PL might excel in last-mile delivery, while another might be known for its expertise in international shipping and customs clearance. Brands can leverage the specialized services of multiple 3PLs to meet all their logistics needs effectively.
Understanding Fourth Party Logistics (4PL) Companies:
Fourth Party Logistics (4PL) companies operate at a higher level of supply chain management. They serve as strategic partners, coordinating the entire supply chain on behalf of the brand. Instead of directly handling logistics operations like a 3PL, a 4PL takes on a more comprehensive role, acting as a single point of contact and coordination between the brand and multiple 3PL service providers. These 3PLs handle different stages of the supply chain process. In essence, the 4PL provider serves as an orchestra conductor, overseeing the logistics network from procurement to delivery. They optimize processes, ensure smooth communication between various stakeholders, and manage potential disruptions proactively. By entrusting the entire logistics network to a 4PL, brands can achieve higher levels of supply chain efficiency and focus even more on business growth and strategic initiatives.
Exploring Fifth Party Logistics (5PL) Companies:
Fifth Party Logistics (5PL) companies take supply chain collaboration to the next level. As strategic partners, they work closely with the brand to design and manage the entire supply chain, encompassing both logistics and non-logistics activities. Unlike 4PLs, 5PLs offer end-to-end supply chain solutions that are entirely tailored to the specific needs and requirements of the brand. 5PLs have a deep understanding of the brand's business objectives and align the entire supply chain to achieve these goals. They leverage advanced technologies, such as artificial intelligence, machine learning, and big data analytics, to optimize the supply chain for efficiency and agility. These technologies enable better demand forecasting, inventory optimization, and real-time decision-making, empowering the brand with a competitive edge in the market.
Is There a 6PL?
While the terms 3PL, 4PL, and 5PL are well-defined in the industry, the concept of a 6PL remains less established. Some sources have used the term "6PL" to refer to a service provider that acts as an integrator of multiple 5PL providers. Essentially, a 6PL would be a higher-level entity that brings together and manages the services of multiple 5PLs, providing seamless coordination and collaboration across the entire supply chain network. However, it's essential to note that the term 6PL is not yet widely recognized or standardized in the logistics industry.

WHICH LOGISTICS MODEL IS BEST FOR YOUR BUSINESS?

WHICH LOGISTICS MODEL IS BEST FOR YOUR BUSINESS? The best logistics model for a business depends on various factors, including the nature of the business, its supply chain requirements, budget, strategic goals, and the level of control desired. Here's a breakdown of when each model may be most suitable:
  • Third Party Logistics (3PL) Model:
Best for: Small to medium-sized businesses with limited logistics expertise and resources, or businesses looking to outsource specific logistics functions (e.g., transportation, warehousing). Advantages: Cost savings, expertise, scalability, and the ability to focus on core competencies. Considerations: Assess the level of control required and the need for specialized logistics services. Communication and alignment with the 3PL provider are crucial for successful collaboration.
  • Fourth Party Logistics (4PL) Model:
Best for: Medium to large-scale businesses seeking to optimize and streamline their entire supply chain while dealing with multiple 3PL partners. Advantages: Centralized coordination, end-to-end supply chain management, and strategic focus on core business activities. Considerations: Consider the complexity and investment required to implement a 4PL model. Ensure that the 4PL provider aligns with the brand's objectives and can efficiently manage multiple 3PL partners.
  • Fifth Party Logistics (5PL) Model:
Best for: Large businesses with complex and unique supply chain requirements, seeking highly tailored and data-driven solutions. Advantages: Advanced technology integration, strategic partnership, and customized end-to-end supply chain management. Considerations: Assess the cost and resource implications of implementing a 5PL model. Ensure that the 5PL provider has the expertise and capabilities to meet the brand's specific needs and leverage advanced technologies effectively.

ADVANTAGES & DISADVANTAGES OF USING EACH MODEL

THIRD PARTY LOGISTICS (3PL) MODEL:
  • Advantages:
Cost Savings: Outsourcing logistics services to a 3PL provider can lead to cost savings by leveraging their established networks and expertise to negotiate better rates with carriers and warehouse providers. Expertise and Specialization: 3PL companies are logistics specialists, well-versed in industry best practices and technologies, providing businesses with access to expert logistics knowledge. Scalability and Flexibility: 3PLs offer scalable solutions that can adapt to fluctuations in demand, making it easier for businesses to adjust their logistics operations accordingly. Focus on Core Competencies: By delegating logistics tasks to a 3PL, businesses can focus on their core competencies and strategic priorities, enhancing overall productivity.
  • Disadvantages:
Loss of Control: Handing over logistics operations to a third party may lead to reduced control over critical aspects of the supply chain, potentially affecting the brand's image and customer experience. Communication Challenges: In some cases, communication issues may arise between the brand and the 3PL provider, leading to mismanagement of logistics operations. ADVANTAGES & DISADVANTAGES OF USING EACH MODEL
FOURTH PARTY LOGISTICS (4PL) MODEL:
  • Advantages:
Holistic Supply Chain Management: A 4PL provider offers end-to-end supply chain management, providing a comprehensive and cohesive approach to logistics operations. Centralized Coordination: Brands deal with a single point of contact, simplifying communication and streamlining logistics operations among multiple 3PL providers. Focus on Core Business: Brands can delegate the entire supply chain management to a 4PL, enabling them to concentrate solely on core business functions.
  • Disadvantages:
Cost and Complexity: Employing a 4PL may come with higher costs compared to a 3PL due to the additional strategic planning and coordination involved. Dependency on 4PL Performance: The brand's supply chain success heavily relies on the effectiveness and efficiency of the 4PL provider, increasing risk if the 4PL fails to deliver as expected.
FIFTH PARTY LOGISTICS (5PL) MODEL:
  • Advantages:
Tailored Solutions: 5PLs offer highly customized and optimized solutions designed specifically to meet the unique needs of the brand's supply chain. Advanced Technology Integration: Leveraging advanced technologies, such as AI and machine learning, enables 5PLs to achieve superior supply chain optimization and agility. Strategic Partnership: 5PLs act as strategic partners, aligning the entire supply chain with the brand's business objectives for maximum efficiency.
  • Disadvantages:
High Complexity and Investment: Implementing a 5PL model requires significant investment in technology, data analytics, and infrastructure, making it a complex and resource-intensive process. Risk of Over-Reliance: Depending heavily on a 5PL provider may lead to potential risks if the partnership encounters challenges or disruptions.  
August 9, 2023
Phuc Le
Content Writer at Amilo

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