Review and comparison of 3 common methods for shipping goods for an online store

In this article, we explore the methods of shipping goods and the challenges faced by online stores. We examine the role of logistics in the supply chain. Finally, we review the advantages and disadvantages of each method. You can also share your valuable opinions with us in the comments section. Stay with us.

Types of Online Sales

Before we get to the main topic, let's look at four categories of sellers who sell their goods and products online:

• Manufacturers
• Traditional retailers and wholesalers
• Internet companies without physical inventory (software)
• Internet companies with physical assets (online stores)

Each of these companies has different methods for shipping their purchased goods based on the type of service and product they sell, and they have their own specific terms and conditions. For example, car manufacturers have strict rules for shipping purchased cars to prevent damage to the product.

Shipping Standards

Here are some general questions about what online sellers should consider when shipping goods:

• Coverage areas based on the scope and capacity of the business
• Shipping conditions
• Standard time interval between order and shipping
• Number and equipment of distribution hubs (distribution channels)

These are questions that can be used to improve logistics management and better shipping for customers. Now let's look at the different shipping strategies in online stores:

• Direct shipping from the store
• Shipping from supply centers (hubs)
• Shipping orders from the main warehouse
• Using the Drop Shipping method

The fourth option is not new; let's get more familiar with it.

Drop Shipping Method

Drop Shipping (Drop Shipping) has a general definition:

 A supply chain management method where the seller does not keep goods in stock but instead, after receiving an order from the customer, contacts the manufacturer and wholesaler who deliver the goods to the customer.

So what are the advantages of this method? Why should we ask the manufacturer to deliver the product to the customer and act as an intermediary? Let's first examine its advantages and disadvantages. The most interesting advantage is that you don't need anything at all!

Advantages:

• No need for investment to start this business model
• No need for warehouses and equipment
• No need for a fleet and logistics management, as there is no fleet
• Higher speed and quality in providing services to customers
• Focus solely on marketing and sales

These are good advantages, but every good thing has its downsides, which we will mention here:

Disadvantages:

• Low profit margins
• Increased shipping errors if there is no proper infrastructure
• Intermediary role and increased risk in the business

These were the disadvantages we mentioned. Let's not stray too far from the main topic. We mentioned shipping methods to get to what? It's a good question! We explained the shipping methods to delve into the main topic and examine the role of logistics in the supply chain of online stores.

Shipping Methods

Logistics in online stores has a fairly defined role. Online stores that operate with a specific strategy and goal know well the consequences of neglecting and mismanaging logistics in their supply chain.

As we mentioned at the beginning, based on the research conducted by the Logiico team in the market, we can categorize shipping methods into three models:

• Shipping using the store's own fleet
• Shipping using companies that provide shipping services (Snap, AloPeyk, etc.)
• Shipping in collaboration with companies that provide logistics services (commonly known as 3PL logistics)

Now let's examine each of these methods.

Our Own Fleet, Yes or No?

If you have read Logiico's previous article (Fleet Management, from Chicken to Human Blood), we mentioned the advantages and disadvantages of using our own fleet and stated that to use our own fleet, we need to have proper management and manage our fleet. The main reason for this is that your customer is unaware of the shipping process and doesn't care about the challenges you face.

They only see your courier delivering the purchased product, and if it doesn't arrive on time, they will be very upset. We also mentioned issues like support and other matters, which might be worth reading.

Outsourced Shipping

This method is mostly used by stores that do not have their own fleet and ship the customer's goods using services that provide shipping within and outside the city, such as Snap Box, AloPeyk, etc. The advantage of this method is that you don't need to set up your own fleet, and you can save on costs. However, the main drawback is that you are not aware of the customer's receipt of the goods.

Collaboration with 3PL Companies

The third option involves companies that provide third-party logistics services, or 3PL, which is also known as collaborative logistics. First, let's define third-party logistics:

What is Third-Party Logistics?

Third-party logistics companies are those to which others outsource some or all of their logistics tasks, including warehousing, order management, inventory management, shipping, and fleet management. As we mentioned, the main expertise of these companies is in warehousing and shipping, which they manage and execute using their experienced staff.

Is this Good or Bad? What are the Advantages?

In recent years, most companies have prioritized the quality of work when choosing a logistics partner. Today, with economic pressures and the unstable conditions we face, the issue of price has become the most important factor considered.

In general, the factors that have led companies to use logistics partners can be summarized as follows:

• Intense pressure to reduce prices
• Efforts to improve supply chain performance
• Utilization of new communication technologies
• Faster market introduction
• Improved performance in transportation and shipping
• Entry into new markets

Using business partners to outsource logistics has many advantages, but the most important point to consider is the quality they provide. You define a specific strategy for your online store based on creating value for the customer, and if the company you are working with as a partner does not adhere to this goal, it can be costly for your reputation.

Summary

We reviewed the methods of shipping goods in online stores and saw which methods we can use to send customer orders. Using collaborative logistics might be one of the best methods, but before choosing your shipping method, you need to consider the size of your business to proceed more strategically.

We would be happy to hear your thoughts on this matter. You can share your valuable opinions with us at the bottom of this page. Follow Logico on social media; we have good news for you.