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What is Retail Logistics? A Comprehensive Guide

Ethan Townzen
Written by
Ethan Townzen
Published on
June 7, 2024
The digital age of Retail Logistics

What is Retail Logistics? A Comprehensive Guide

Everything moves quickly in the digital age. Retail logistics is becoming even more important as a sales channel as costs have risen for e-commerce in recent years. Based on our experience shipping for the largest retail brands such as PepsiCo, Starbucks, and AB InBev, these are the most effective retail logistics strategies we have gathered.

What Is Retail Logistics?

Retail logistics is the backbone of smooth-flowing retail operations. It is the operational process of storing and shipping goods into retail stores. 

What Are the Components of Retail Logistics to Consider?

  • Inventory Management: Maintaining optimal stock levels to meet demands while minimizing holding costs. One of the biggest reasons to be removed from retail stores is stock-outs. Having an effective inventory replenishment strategy is critical. One of the ways we support our retail clients as Buske Logistics is inventory replenishment forecasts based on historical data. However, this doesn’t take into account promotional sales or other factors. It’s best to work with your retail buyer to accurately forecast inventory needs.
  • Order Fulfillment: The core of retail logistics, which includes receiving, processing, and delivering orders to customers can be complex. Each retailer places a purchase order (PO) differently. This requires custom EDI integrations and in some cases receives advanced shipping notices (ASN).
  • Shipping and Delivery: Transporting goods from your warehousing solutions to a retailer is also unique. Each retailer has approved carriers that can ship into their distribution centers.
  • Returns and Reverse Logistics: Efficient retail logistics does not end with delivery. Having a returns management plan is also important when a load is rejected by a distribution center. 

The importance of logistics in retail business, especially in the digital age, cannot be overstated. Studies have shown a link between efficient retail logistics and customer satisfaction

This means that, along with product quality, every component of retail logistics is highly important for an e-commerce business to thrive.

Retail Logistics: Retailer Expectations to Consider

Understanding what customers expect is key to a highly effective strategy. This can be summed up into three points:

  • Faster Delivery: The rise of e-commerce led to new standards of delivery speed. It is important for brands shipping into retail to optimize their retail supply chain to keep up with the trend of fast deliveries to ensure available on the store shelf.
  • Real-Time Tracking and Transparency: Retail buyers want to be kept in the loop — they want to know the status of their brand's orders at every stage. What this looks like is having a 3PL that uses a good WMS.

One study notably found that faster delivery may influence customer behavior and could translate to increased sales and profits

Challenges and Strategies

Streamlined retail logistics may not entirely eliminate the challenges in your business operations, but it enables you to handle them more efficiently. Identifying these potential challenges also helps develop the most competent and cost-effective strategy for your business.

Challenges

Omnichannel Operations

This refers to various sales channels — online and in-store — where customers can find and order your products. 

Omnichannel operations are good; they increase product visibility and allow your business to reach more customers. However, they also mean tracking inventory, shipping, and delivery across various platforms to ensure seamless omnichannel fulfillment

Speed Expectations of E-Commerce

With the advent of 2-day and sometimes same-day delivery from Amazon, retailers are in a battle for providing in-stock and cost-effective goods. The challenge has made retailers start implementing fines on their customers if the product is late, which has introduced a new challenge in managing this channel. 

Cybersecurity and Data Privacy Concerns

Cybersecurity and data privacy have become critical concerns in the digital age.

Retailers must safeguard their systems and customer data from cyber threats. Implementing strong security measures, complying with data protection regulations, and educating employees about cybersecurity are essential to mitigating risks.

Influx of Orders from Sales or Holidays

Retailers may expect their brands to be a partner and offer promotional discounts. Not all 3PL service providers are prepared for a spike in demand for quick deliveries during sales or holiday seasons. This can result in angry customers, delayed deliveries, and bad business reviews.

Strategies in the Digital Age

Retail logistics can be the most challenging function of an omni-channel logistics strategy. Partnering with third-party logistics (3PL) providers is a great way to enhance retail logistics capabilities. 

Building a strategic partnership with a reliable 3PL provider gives businesses access to expertise, infrastructure, and technology that can help scale operations and improve efficiency.

At Buske Logistics, we offer a wide range of retail solutions, including optimal inventory management, seamless online store integration, and omnichannel fulfillment to help maintain overall customer satisfaction.

We practice zone skipping to reduce transit times, which will help streamline deliveries. We are also committed to protecting the privacy of all our customer data. 

When there is an influx of orders from retailers due to sales, Buske Logistics is always ready to scale operations based on the demand. We can provide more storage and warehouse capacity or increase labor to meet these needs.

Frequently Asked Questions

Is Retail and E-Commerce Logistics the Same?

They are not the same, but they go hand in hand with a successful omni-channel strategy.

Retail logistics refers to selling goods through retailers. E-commerce is selling directly to customers without any entities in the middle.

Does Logistics Mean Delivery?

No. Logistics involves transportation of goods, warehousing, inventory management, order fulfillment, and returns management. Delivery is just one part of logistics.

What Is Reverse Logistics?

Reverse logistics is moving products from customers back to retailers or manufacturers. It may involve handling returns, repairs, refurbishment, recycling, or disposal.

Depending on the steps involved, reverse logistics is vital in supply chain management to manage costs, improve customer satisfaction, and promote sustainability.

Meeting Business Demands

Retail logistics management is essential in delivering excellent shopping experiences in the digital age. With a dependable third-party logistics partner, you can focus on growing your business, meeting customer demands, and increasing sales.

Contact Buske Logistics now to build successful strategies to improve your retail logistics in a highly competitive digital age.