Distribution Logistics Guide

Between making a sale and delivering a customer order, distribution logistics play a critical role in the ecommerce supply chain.

But to get distribution right, it’s oftentimes a balancing act.

And, as we’ve learned from the pandemic, you can’t predict the future, which makes optimizing distribution logistics based on demand challenging. 

Let’s take a deeper dive into what distribution logistics involves, how to optimize it, and what to consider as the supply chain continues to struggle with delays and disruptions. 

So, what do you want to learn?

• Introduction to Distributions Logistics
• Direct vs. Indirect Distribution
• Distribution Logistics Tips From The Experts
• DTC Growth With ShipBob

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What is distribution logistics?

Distribution logistics refers to the activities and processes involved in physically distributing goods to a location.

This can include transporting raw materials or wholesale products from a manufacturer or supplier to a merchant’s warehouses, fulfillment centers, or distribution centers, or shipping finished goods and orders from a merchant’s facilities to customers or retail stores.

Why distribution logistics are important

While it may not be glamorous, distribution logistics are absolutely critical to running an efficient ecommerce business that consistently satisfies customers. Here are just some of the reasons why every ecommerce merchant should pay attention to their distribution logistics. 

Availability of products

Part of distribution logistics is making sure that the correct amounts of each SKU are transported to and arrive at the right fulfillment centers or distribution centers, so that they can be picked, packed, and sent to customers.  

When distribution logistics are working smoothly, businesses are less likely to run out of stock at a particular location, lose items in transit, or run into other issues that prevent orders from getting to customers.  

Reducing costs

If your business is looking to shave costs off its bottom line, distribution logistics are a great place to start. Optimizing how raw materials and products are transported across your supply chain can not only result in shorter lead times, but also save money by reducing waste and decreasing the cost of shipping. 

Increased customer satisfaction 

Customers care a lot about the delivery experience. In fact, one survey found that after a negative delivery experience, 59% of consumers will contact the seller to complain, and 36% will make a point of shopping somewhere else in the future. 

So to keep customers satisfied and maintain a good retention rate, you’ll need to make the order distribution process as smooth and reliable as possible. 

Well-oiled distribution logistics help ensure that customers get the right order, in perfect condition, and on-time, delighting customers and encouraging future purchases.  

What is a sales logistician?

A sales logistician is the person in charge of logistics sales. This role is responsible for the order-to-cash process and ensures that orders placed are accurately fulfilled and shipped on time.

The role also involves the process of forecasting demand so online retailers and their logistics directors can accurately plan logistics processes like product procurement, warehouse receiving time lines, and inventory replenishment to ensure there is enough stock to meet demand.

Lastly, a sale logistician works and maintains relationships with third-party logistics to ensure that distribution is being done in the most efficient, cost-effective way possible. 

Direct vs. indirect distribution

A distribution logistics method can include various channels, depending on the needs of the business.

For ecommerce, there are two distribution logistics approaches that ecommerce businesses can choose from: direct and indirect.  

Direct distribution

Direct distribution involves cutting out the middleman entirely by taking on distribution management in-house. 

Once inventory is purchased, it is delivered directly to the online retailer who either rents a warehouse or fulfills orders from an office or at home.

For direct distribution, an online retailer is also responsible for the fulfillment process. They will need to invest in their own inventory management software, so they can efficiently track inventory, from pipeline inventory to items being fulfilled.

The online retailer is also responsible in developing a shipping strategy by choosing shipping methods and carrier partners based on their profit margins and average shipping costs.

Brands that take care of their own distribution logistics are required to invest in their own storage needs, fulfill orders in-house, and  maintain carrier partnerships for their shipping needs.

Indirect distribution

With indirect distribution, DTC brands have the flexibility to outsource fulfillment to a third-party logistics (3PL) provider.

Indirect distribution involves sending inventory to a 3PL provider that takes care of warehousing, picking and packing, and shipping on behalf of the online retailer. 

Depending on the 3PL’s capabilities, a 3PL provides the resources, tools, expertise, and customer support needed to optimize logistics operations without the need to invest for merchants to invest in their own fulfillment infrastructure and warehouse management system (WMS). 

For instance, with ShipBob, you can connect multiple sales channels, including an online store, to ShipBob’s fulfillment software. From there, you’re able to choose one or more fulfillment center locations to store inventory in, which has the potential to reduce shipping zones, therefore reducing costs, when shipping orders across the US.

Once orders are placed, they are routed to the nearest fulfillment center location to be shipped via the most optimized shipping route.

“Compared to other warehouses we’ve worked with, ShipBob processes orders so quickly to get them out the door faster. It’s fun to see orders shipping out instantaneously. I love how fast and efficient ShipBob is.”

Harley Abrams, Operations Manager of SuperSpeed Golf, LLC

How COVID-19 has changed the game

When the COVID-19 pandemic hit, it caused massive disruptions to the supply chain, with closing borders and travel restrictions significantly affecting distribution and logistics.

As the pandemic continues, supply chain delays and disruptions continue to make headlines. To thrive during these times, online retailers are working towards building more agile supply chains and implementing new digital logistics systems throughout their network to continue to meet customer expectations.

On the manufacturing side, there has been sudden scarcity of raw materials, which has caused delays in work-in-process phase. This has impacted the ability for online retailers to restock on time to meet demand.

To ensure that inventory shortages don’t reach early-COVID levels, manufacturers are resolving to keep more inventory on hand so they can prevent production shutdowns. And to tackle the warehousing and capacity issues that could result from this change, they’ve even started to adopt automated storage and retrieval systems (ASRS), which can save up to 85% of the floor space taken up by standard shelving.

Many brands are also considering partnering with more local supplier and manufacturers, making product procurement less susceptible to supply chain disruptions. This not only gives them more control over the supply chain but also significantly reduces logistics costs in first-mile delivery.

Many online brands are also seeking to utilize 3PLs like ShipBob to take advantage of a robust 3PL distribution network. This has made it possible for brands to store inventory in multiple locations to help reduce costs and transit times despite ongoing delays (especially when dealing with cross-border shipping).

Overall, diversifying your distribution strategy is important, especially when it comes to location. Not only does inventory distribution save on shipping costs and speed up delivery times, but it also keep your supply chain running in case one location must shut down for any reason.

“I was about ready to launch SubSubmarine, and then COVID-19 hit. Shipping methods suddenly became more limited and expensive to the point where it would not be feasible to ship through the Australian Post to fans in America (costing about 20 USD or 28 Australian dollars per package and getting stuck in transit).

Learning from that experience, I needed to find a viable solution to both of these issues, which is where ShipBob came in.”

Lee Nania, Founder of SubSubmarine

3 tips for improving your distribution logistics

Despite ongoing distribution challenges, here are some tips on how you can optimize your own distribution logistics strategy to reduce risk, save costs, and continue to meet customer expectations.

1. Leverage software

Implementing the right supply chain technology stack has the potential to improve how you manage different aspects of your distribution logistics, from first-mile freight delivery to tracking inventory in real time, to monitoring fulfillment and shipping performance. 

When implementing the right software, make sure it seamlessly fits into your existing or desired tech stack. A well-connected tech stack can include everything from inventory planning to returns management, to freight shipping solutions.

For instance, ShipBob’s order fulfillment and digital logistics technology offers direct integrations with dozes of ecommerce solutions, creating an end-to-end ecommerce solution.

2. Partner with a 3PL

The best option to delegate distribution to the experts by partnering with a tech-enabled 3PL or distribution partner like ShipBob.

ShipBob not only takes care of fulfillment but also warehousing and distribution, ensuring that your inventory is managed efficiently and stored strategically across different fulfillment centers. 

This helps you reduce costs while ensuring faster, more accurate fulfillment to improve customer satisfaction.

From the ShipBob dashboard, you can monitor, manage, and optimize your supply chain with access to to shipping and fulfillment insights, as well as demand forecasting and other key supply chain analytics.

This insight can help you allocate inventory in distribution centers that are closest to where your customers lives to reduce shipping costs and transit times.

“ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US.” 

Andrea Lisbona, Founder & CEO of Touchland

3. Forecast demand

Accurately forecasting demand is essential to make informed decisions on distribution. Having the right tools and metrics in place to  strategically plan for demand and replenish inventory on time is essential.

Intelligent inventory forecasting uses past order data and details of upcoming events, which can help you optimize inventory, minimize inventory shrinkage, lower storage costs, and keep your customers happy.

With the right data at your fingertips, you can decide the best time to run a flash sale, discontinue a slow-selling item, or know how much inventory to order based on seasonality.

“Between shipping new collections for wholesale earlier in the year and Q4 madness for direct-to-consumer sales, we’ve been able to get through our heaviest seasons while staying ahead of production using ShipBob’s inventory forecasting tools — even as our order volume more than quadrupled in less than a year.”

Ryan Casas, COO of iloveplum 

ShipBob helps DTC brands grow

ShipBob partners with fast-growing DTC brands to help streamline their distribution and fulfillment strategy.

From operating a global logistics network to reducing fulfillment costs, ShipBob can help you meet customer expectations without the headaches and constant growing pains. 

Here is an overview of how ShipBob helps DTC brands grow through strategic distribution.

Multiple fulfillment centers for faster shipping

ShipBob continues to add more locations to its US network, as well as global fulfillment locations, which enables you to strategically store inventory across multiple locations to speed up transit times. 

To help you identify your ideal distribution method, ShipBob’s dashboard aggregates historical order data, which allows merchants to determine their ideal distribution strategy to optimize average delivery timelines.

Reduced shipping costs

Having a proper shipping strategy ensures that you can provide competitive, cost-effective shipping options for your customers.

Along with the ability to speed up shipping, ShipBob can also help you optimize and reduce shipping costs while also offering shipping incentives, such as affordable 2-day shipping or free shipping (with a minimum cart value threshold that’s higher than your average order value).

ShipBob partners with leading domestic and international carriers, as well as regional parcel carriers, and negotiates bulk shipping discounts to pass on to you and your customers.

“When I was shipping orders myself, what I paid per order is the same price now to pick, pack, and ship orders through ShipBob. It’s even much cheaper to ship to certain countries, which used to take ages and often got lost with localised post here.

Now, I have very transparent pricing, and I can easily run and plan my business. I also like that I’m billed right away. My old carrier billed monthly, which would drain a huge sum of Euros from my account at once. My cash flow has improved.”

Leonie Lynch, Founder & CEO of Juspy

Robust and streamlined analytics

ShipBob offers a powerful data and analytics reporting tool that makes it easy for merchants to analyze distribution metrics, monitor fulfillment and shipping performance, and manage their supply chain operations without being involved in the day-to-day operations.

Through ShipBob’s dashboard, you can: 

• View, track, and manage inventory across sales channels and your distribution network
• Manage SKUs and product bundles.
• Monitor SKU velocity, inventory days on hand, and more.
• Forecast demand by viewing historical trends.
• Filter all orders by status.
• And much more!

“I felt like I couldn’t grow until I moved to ShipBob. Our old 3PL was slowing us down. Now I am encouraged to sell more with them. My CPA even said to me, ‘thank god you switched to ShipBob. ShipBob provides me clarity and insight to help me make business decisions when I need it, along with responsive customer support.”

Courtney Lee, founder of Prymal

For a behind the scenes look at how ShipBob operates, check out the 3D experience below: 

By partnering with ShipBob, you can easily streamline fulfillment across multiple sales channels, track inventory in real time from a single dashboard, and save time and money by leaving logistics up to the experts.

Get the process started by requesting custom pricing, or read this review to learn more about ShipBob’s logistics capabilities.

Distribution logistics FAQs

Here are answers to the most common questions about distribution logistics.