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With consumerism on the rise, unusual demand patterns can be common. It is thus important for e-commerce business to have distribution channels that are flexible, responsive and cost-effective.
What is distribution logistics?
Distribution logistics involves the entire process of delivering the finished products to the customer. It consists of order processing, warehousing, and transportation.
How to improve distribution ability
Traditionally, distribution channels dealt with product shortages through excess inventory or hiring surplus personnel. This can be extremely ineffective and costly. Instead, for e-commerce distribution channels to be effective it is important to have a robust, central logistics systems that can monitor the availability of products, process orders, and deliver products rapidly over distant locations.
To achieve this, it is important to leverage resources and share capabilities within the channel. Strategic and cooperative alliances made with other channel members can be formed for mutual gain. Participants of the distribution channel can capitalize on this arrangement by exploring new business opportunities to develop new and better product ranges, increasing sales by 10%.
Effective distribution channels also result in major cost savings and productivity improvements. According to a Harvard Business Review article, with effective distribution channels, unnecessary pools of inventory, duplicate service operations, frequent stock-outs and inability to respond to emergencies drop are significantly reduced, allowing costs to fall by 15% to 20%.
Successful distribution ability also heightens customer satisfaction. Customers that can receive products consistently and on time are likely to have a positive experience and return, increasing customer loyalty. In competitive e-commerce environments, having a reputation for being dependable and trustworthy is important in maintaining customer base for a steady revenue stream.
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