Counting logistics costs in online stores is an integral part of effective e-commerce supply chain management. In an industry where delivery time and quality customer service are critical, controlling logistics costs is becoming a strategic element for success. In this paper, we will outline how online stores can effectively optimize their logistics expenses to achieve competitiveness and increase profits.
See the list of items that need to be taken into account when calculating the real cost of handling orders through the warehouse.
• Staff
- Salaries: Requires including wages for employees responsible for various areas such as warehousing, packaging, shipping and customer service. This includes both base salaries and any bonuses or allowances.
- Recruitment and deployment: Costs associated with the process of finding, recruiting and training new employees, as well as introducing them to the specifics of warehouse and customer service work.
- Vacations and layoffs: Costs associated with vacation pay and replacement for employee layoffs.
- Appropriate licensing, training and health and safety: Expenditures to provide adequate health and safety training and training to enable employees to obtain the necessary authorizations to perform their duties, which may also include certification costs.
• Storage
- Fees associated with the maintenance of the building: Costs associated with fees for electricity, heating, insurance, as well as possible costs for repairs or maintenance of the storage building.
- Rack purchase and audits: Expenditures for the purchase and installation of storage racks and regular audits to ensure the safe and efficient storage of goods.
- Forklifts and equipment: The cost of purchasing, servicing and maintaining forklifts, pallet trucks and other equipment needed to move goods in the warehouse.
• Information systems
- Purchase, implementation and maintenance of a WMS: Expenditures for the purchase, implementation and configuration of a Warehouse Management System (WMS), as well as costs associated with maintenance, upgrades and technical support.
- Scanners, computers, printers: The cost of purchasing, servicing and maintaining equipment needed to identify, track and manage goods in the warehouse, such as barcode scanners, computers and label printers.
• Packages
- Cartons, foil packs, tapes, fillers: Expenditures for the purchase of various types of packaging necessary for the safe and efficient packing of goods prior to shipment.
- Regular purchases and keeping an eye on stock: Costs for regular purchases of packaging and monitoring of stock to ensure sufficiency and avoid business interruptions due to lack of packaging.
• Transportation
- Courier delivery in PL and EU: Costs associated with the shipment of goods by courier both within and outside Poland, to countries of the European Union.
- Management of couriers, contracts, contact: Outlays for managing relationships with courier companies, negotiating contracts, monitoring service quality and resolving any problems or complaints.
- Freight forwarding – deliveries to the warehouse: Costs associated with organizing the transportation of goods from suppliers to the warehouse, including salaries for those responsible for managing transportation and fees for forwarding services.
- Imports of goods – customs duties and taxes: Expenditures for customs duties, taxes and other costs associated with the import of goods from outside the European Union.
- Organization of transports: Costs associated with planning, coordinating and monitoring the transportation of goods, including any costs associated with reverse logistics (e.g., returns).
• Product inventory management
- Cost of maintaining adequate inventory levels: Expenditures for purchasing goods to maintain adequate inventory levels to efficiently fulfill customer orders while minimizing the risk of shortages.
- Potential losses due to obsolete or spoiled products: Costs associated with keeping products in stock that may become obsolete, spoil or lose value, and potential losses associated with disposing of them or selling them at a lower price.
• Insurance
- Goods: Costs associated with insuring goods held in storage against the risk of theft, damage or loss.
- Employees: Outlays for employee insurance, which can include health, life or accident insurance.
- Equipment: The cost of insuring equipment, machinery and other warehouse equipment against possible breakdowns, damage or theft.
• Returns handling
- Handling and processing returns: Expenditures for personnel and infrastructure needed to handle product returns procedures, including receiving returned goods, checking their condition, possible repairs or restocking, and updating data in information systems.
- The need to repackage, store or transfer returns to other sales channels: Costs associated with repackaging products, storing them in stock, and possibly transferring them to other sales channels, such as outlets or outlet stores.
• Technology and automation
- Investment in warehouse automation technology: Expenditures for the purchase, installation and maintenance of modern technological solutions, such as conveyors, conveyor belts and sorting systems, which can increase the efficiency and precision of warehouse processes and reduce the need for employee involvement.
• Audit and optimization
- Costs of regular audits of logistics processes: Expenditures for hiring specialists or hiring outside firms to conduct logistics process audits to identify areas for optimization, improve efficiency and reduce operating costs.
• Reimbursable costs
- Costs associated with handling complaints and issuing refunds to customers: Expenditures for customer service for complaints and product returns, including customer service personnel, possible refunds or issuing discount coupons to customers.
• Customer service
- Error Clarification: Costs associated with customer service in the event of errors, ambiguities or problems with orders, including staff responsible for providing information to customers and resolving problems.
- Questions about order status, complaints, etc.: Customer service costs associated with providing order status information, tracking shipments, handling complaints, responding to inquiries about products or services, and supporting the customer during the purchase process.
• Monitoring and security
- Monitoring and security costs: Expenditures for monitoring systems, cameras, sensors and other security measures to protect the warehouse from theft, loss or damage, including personnel responsible for monitoring security systems and responding to alarm situations.
In today’s world of e-commerce, effective logistics cost management is a key determinant of online business success. By carefully analyzing costs, using modern tools and optimization strategies, online stores can not only increase their profitability, but also build lasting relationships with customers and gain a competitive edge in the e-commerce market.
A summary of these costs is worth comparing with the logistics services offered by e-Packman fulfillment. Feel free to contact us, we will help you generate savings of up to 20-30%.
