Logistics of Online Retail Business Essay Example

LOGISTICAL REQUIREMENTS FOR IN-STORE AND ONLINE RETAIL STORES

This paper presents logistical requirements that need to be incorporated into an online retail business based in Australia and involved in sales of motor spare parts. By applying the logistical requirements in the design of these stores, the potential of the business to grow will be improved in terms of customer handling, communication, organizing of data and delivery of products and services to prospective customers. This paper also focuses on the influence of technology in managing logistical functions of an online retail business and making a distinction from an in-store retail business. The findings of this research are recommended for implementation by online business companies in managing operations of their business. For instance, this report will be useful for the consortium that intends to sell motor vehicle spare parts in Australia by applying online logistical management techniques suggested in this paper.

The main areas of focus of this paper includes a discussion of methods of managing customer order and provision of customer service by following online logistical requirements and distinguishes them from in-store logistical retail management. It provides a guide on technological rules that must be complied with in order to provide customers with quality online services while managing customer orders. It also proposes the design of the distribution center and methods of materials handling as well as principles that should be followed by online retail distribution center that needs to be situated in Sydney, Australia. This involves the elaboration of methods of receiving goods, packaging and material handling aspects within Sydney, dispatch of goods for storage and procedures for picking and holding goods. It also provides an explanation of methods of physically distributing goods in Australia with the focus on methods that will be used to deliver goods to end customers and retail store near Sydney. It also explains the design considerations of warehouses between the DC and the end users.

Increased use of information technology has transformed the manner in which businesses are performed in various sectors of economies. Nowadays more people are able to use facilities that enable communication between them such as computers and the Internet to do additional tasks such as purchasing products (Saunders 1997). Therefore, this has resulted in a shift in interest among investors who prefer investing in online retail businesses for the purpose of gaining an access to a large number of customers that use Internet. As a result, the investors have become interested in investing in online retail businesses. An example of such a business is the consortium that purchased Super Cheap Auto retail stores and Motorquipe online store. There is hope among investors in the purchase of these companies that they will benefit from large economies of scale experienced by these stores.

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Consequently, it has been necessary to ensure that with the emergence of online retail store logistical compliance measures that should be observed during the design of online retail stores are understood. It has also been necessary to ensure that a distinction is made in terms of logistics required for online stores during customer service and order management and those required for in-store retailing (Lysons&Gillingham 2003). This ensures online stores are not managed in a manner similar to in-store retailing. It has also been necessary to ensure the distribution center that will be located in Sydney by the online retail company applies the right material handling logistics and differentiate them from those of in-store companies.

Finally, it has been necessary to understand logistical requirements for the online company during distribution of products and services to customers. This paper explains these logistical requirements and differentiates them from those of in-store companies. The findings are then proposed for implementation by the DC in Sydney.

Order Management and Customer Service

During the design and use of the online store in Sydney, the company operators will need to comply with order management and customer management service logistics for online companies. This will ensure the operations of the company are not based on in-store method of management.

Order management refers to the processes involved in planning, transmitting, processing, picking and assembly of orders (Lee and Lye 2003). Customer service, on the other hand, refers to value adding and establishment of particular objectives such as return of a product. There are a number of logistics that need to be complied with to ensure customers’ orders are properly managed. This varies between online retail stores and in-store retailing. For instance, when the retail company receives an order, there is a need to notify the warehouse management to fill the order in the case of in-store retailing.

However, in the case of on-line stores, the records that customer fills are electronically designed and stored in copies that are saved in electronic equipment such as computers, registers and databases. The main management activities that need to be made include providing reports on order cycle times, consistent and timely delivery of orders, system picking ensuring customers’ orders are delivered at the right time and allowing flexibility such as the ability of customers to shift their preferences for various orders (Dobler & Burt 1996). Customer order management for the online retail company also involves ensuring customers are invoiced with the right payments they should pay for the orders given to them. However, in the case of in-store retailing, receipts or books can be used to record transactions with customers and copies of the documents kept safely in stores and shelves. During delivery of orders, safety conditions should be used to ensure orders are not damaged while in transit.

Customer service for an online retail company requires ensuring relationship with customers is upheld while contacting them online (Coyle, Bardi & Novack 2006). This is unlike in-store retail business where customer service is possible through direct contact with the customer.

For an online retail company, it is necessary to ensure logistical arrangements are made to assist in accomplishing customers’ needs. Logistics customer service involves a balance between the firm’s needs and customers’ needs (Coyle, Bardi & Langley 2003). The process of meeting customers’ needs involves application of different logistics towards management of customers between online and in-store retail companies. In in-store customer service, the focus will be on providing customers with goods and services that meet customers’ needs, quality services and timely delivery of services according to customer expectations. In online customer service, it is necessary to ensure goods and services are displayed in online databases such as the Internet and websites where customers can access them. Customers should also be provided with the means of getting the goods or services when they need them.

The online retail company to be based in Sydney, Australia should ensure it applies a number of technological equipment to provide quality customer service. For instance, customers can be given a platform within on-line contact where they can be reached and their complaints understood by the stiffs of the company (Bowersosx, Closs & Cooper 2007). Customer service can also be improved by ensuring services that require the use of electronic equipment such as registers are provided by use of this equipment. However, it is necessary to ensure staffs are trained to use these equipment and they should be tested for functionality before being used to provide services to customers. Unlike on-line retail companies, in-store retail companies are less complex and customer service can be provided through the direct contact with the customer and does not involve the use of technological equipment to provide services (Arora & Shinde 2007). Customer services also require that the operators of the online company maintain a better relation with contractors, retailers and wholesalers and not only direct customers of the company.

Australian Distribution Center (DC) Packaging and Material Handling

Packaging and material handling at the distribution center in Sydney will require that goods are packaged in a number of ways based on protection offered by packaging and handling equipment. Since the online trading company to be located in Sydney will deal with the sales of auto spares, the main concern will be to ensure the products are packaged safely to prevent mechanical damage or properly placed in transport facilities such as trucks to prevent damage. Packaging in online retail store will be slightly different from in-store retail store in a number of ways (Arnold & Chapman 2004). For instance, in on-line retail store it will be necessary to ensure products are smaller to facilitate picking of smaller orders while in in-store stores, it will require a warehouse set up that handles large volumes of orders.

In on-line retail store, the use of push carts and totes would be applied while in in-store stores a number of materials handling equipment can be used. Furthermore, the other distinction in logistics between material handling in online stores and in-store stores is that in online stores, packaging should be done in small cartons, envelopes, bags that are suitable for handling small quantities of products (Saunders 1997). In in-store stores, it is important to ensure packaging involves the use of cartons that hold large volumes of orders.

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In on-line stores, there will be a need to provide standardized material handling and packaging compared with in-store stores. This is for the reason that in on-line stores, there will be the need to come up with a software that assists in packaging and handling materials as well as sizing them into standardized sizes to allow easy transportation and prevention of damage of the products (Lysons & Gillingham 2003). In in-store stores, there will be no necessity for material handling equipment and packaging because most of the work will be done manually and it will involve the use of human effort. Material handling in online stores will also be digital machines that enable conveyance of the products from one location to another. This is unlike in-store stores where material handling will be done by human effort.

In in-store retail store, material handling can be done by the use of pallets. Pallets are platforms for handling, storing and transporting products. There are a number of pallets standards that can be used based on associated costs and reasons why the pallets are used such as the size of products to be transported by these pallets (Lee & Lye 2003). During the design of material handling equipment, pallets should be designed so that they are able to carry products that the company deals with without difficulties such as oversize or undersize.

There are also a number of logistics that will need to be followed during packaging of products for the on-line retail store. This will be done to ensure products are properly designed during development stage and packaging is facilitated effectively (Dobler & Burt 1996). It has been observed that packaging should have a strong connection with logistics function and product development function within a product-developing organization with the focus of improving its logistics performance. For instance, the on-line retail store needs to take delivery of considerable amount of wrappings and packaging when a new spare part is delivered. On the other hand, in-store stores do not need more packaging since the products are usually transported in bulk. It is necessary to ensure that these spare parts are disposed of. In the company where there will be cases of wrapping materials as wastes, it will be necessary to ensure these materials are disposed of by developing the right disposal strategy (Coyle, Bardi & Novack 2006). The operators of both online and in-store retailing stores also need to determine whether some materials used for wrapping can be recycled as well as ensure that local government by-laws governing disposal of these wastes are observed. It may also be advisable to seek the idea of the supplier regarding the possibility of reclaiming packaging materials for reuse.

Physical Distribution within Australia

When goods leave the distribution center in Sydney, it will be necessary to ensure the goods are delivered to customers and retail stores. There are many transportation logistics that the company will need to comply with in order to ensure safe delivery of goods to these centers (Coyle, Bardi & Langley 2003). The purpose of explaining transportation logistics is to assist logistics managers, researchers and transportation planners create a definition and understanding of basic views of logistics in various areas of use and their relationship between transportation and logistics and the logistics that need to be used in online and in-store stores with respect to transportation.

During the selection of transportation mode to use in transporting products from the DC, transportation management needs to understand volatile elements such as costs of fuel, capacity levels and the level of customer requests for tighter, and occasionally frequent, timely delivery of goods and services. For instance, in online retail stores it will be necessary to be prepared to provide frequent delivery of products when a customer requests for the goods (Bowersosx, Closs & Cooper 2007). On the other hand, in in-store stores, delivery will be made on a scheduled basis and heavy equipment such as trucks.

There are three modes of transport that the company can use to distribute goods from the distribution centers to the end users. These include roads, railways and air transport. The choice of transport mode will be based on the spatial distribution of the end users from the distribution center, the affordability of transport methods and the nature of stores operated by the company. For instance, the DC could benefit from Australia’s process of switching a proportion of journeys by interstate long haul road freight to intermodal road-rail system for in-store stores (Arora & Shinde 2007). For online stores, the most effective mode of transportation would be vans or motorbikes that are able to deliver products to end users at their doorsteps and also able to access remote areas that are not served well by major transport networks.

For online stores, it will be possible to link two modes of transport during transportation of same loading unit, with limited handling of freight itself during the process of changing modes. This is not the case for in-store stores where specific modes of transport such as railways or roads will be exclusively required. The company can use transportation to impact the bottom line of its operations by ensuring goods are delivered at the right time, representatives are provided to work at the retail outlets and become accountable for the goods delivered to those outlets.
In addition, regional aspects that enable quick distribution of goods and their exchange with customers will be considered during the distribution process. These include geographical regions, population density as well as infrastructure and logistics capability. For instance, the management of the distribution center in Sydney will have to ensure regional stores are located in areas with high accessibility and potential customers for the products of the company (Arnold & Chapman 2004). This will ensure the company does not incur losses in the sales of spare parts during its operation in Australia. In addition, both online and in-store distribution stores will need to be located in areas that have high population density such as major towns and urban centers that provide ready market for the spare parts. Thus, the likelihood of purchasing spare parts will be enhanced in both in-store and online stores.

Furthermore, it will be necessary to ensure there is an adequate transportation infrastructure from the distribution center to the stores or locations where customers are based. This will ensure facilities used during transportation such as trucks for online stores or vans for online stores are not damaged due to poor transport conditions such as bad roads (Saunders 1997). There should also be effective means of data storage for products being transported between the distribution center and the local stores by investing in equipment that facilitates keeping of records regarding transported products and accountability for the delivered products. For in-store stores, books signed by the transporters and the staffs at the distribution centers can serve this purpose. For online stores, the use of equipment such as computers and Internet can be applied in providing accountability for the transported goods (Lysons & Gillingham 2003).

In addition, staffs should be trained to use the communication and transport equipment and adhere to the rules regarding transport of illegal products in the transport network. They will also need to ensure they adhere to transport laws and traffic laws regarding transportation of bulky products. For instance, it will be important to ensure the maximum allowable amount of goods to be transported by vehicles involved in the transportation process is not exceeded.

This paper shows that logistics plays an important role in determining the success of both on-line and in-store retail stores of any type. In management and customer service it is observed that when logistics for managing orders and customer service are followed effectively, cases of damage to orders or loss of customers’ goods are avoided. It also ensures customers are retained and popularity of the stores is improved. However, there are various approaches that have to be followed on managing orders between in-store and online stores.

In material handling at the distribution center, this paper recommends that various logistics should be followed by in-store and online stores. For example, it suggests that online stores need to use lighter material handling methods such as vans and packaging products using wrapping materials in small volumes. In in-store retailing, this paper proposes that material handling equipment that need to be used include heavy equipment such as vans while it is not necessary to wrap materials during transportation due to their heavy nature.

In physical distribution within Australia, this paper recommends that the main logistics that need to be followed by both online and in-store stores is to ensure the transportation equipment such as trucks follow traffic rules set by Australian Government as well as do not exceed maximum allowable cargo sizes during transportation. In addition, it suggests that transportation should be done to areas with adequate infrastructure such as roads and railways for in-store stores. However, for online stores methods such as use of vans and motorbikes can be applied to access remote areas.

The recommendations of this report for logistics to be followed by online and in-store retailing stores can be useful for the Asian consortium that intends to design an online store in Sydney. By applying these recommendations, it will be possible to attain high success in its initial stages of operation and remain competitive in the sales of motor vehicle spare parts.