Logistics Terms That You Should Know Before Starting E-Commerce Business

E-Commerce

Managing an online store is a great challenge, and if you have experience in traditional commerce you will discover that -although the experience will be useful-, many concepts will be completely new to you. In this sense, knowing what each technical expression refers to is essential to be able to deal with all the links in the shipping process without communication errors. That is why, below, we present the main terms to handle during the fulfillment process.

Reception

It is the process that companies have when receiving products, storing them, and registering them in the system to control their inventory. Of course, in stock management, you must calculate how often it is necessary to renew your inventory and the cost that this will have.

Pick and Pack

It refers to the process of selecting several products in different areas of the warehouse (picking) to be organized according to their destination and, later, packed according to their physical characteristics (packing) so that they reach the consumer in perfect condition. The key to good picking is to carry out this task in the fewest possible steps, which is achieved by having good inventory control.

Inventory control software

Having an inventory management tool in charge of managing the flow and storage of products allows better control of inventory, avoiding surpluses, or out-of-stock merchandise. In addition, it helps to determine slow-moving products and their seasonality to better plan your purchases.

API

Basically, this term refers to a set of protocols – or rules – that allows two systems to interact with each other. In this way, an API allows you to connect your online store with the inventory control software of your warehouse so that, every time a sale is made, it is automatically reflected in your number in stock. In this sense,  a clear example is the ShipBob platform,  which -thanks to its API- allows the integration of your e-Commerce with its platform, in order to have full control over shipments, stock, and everything related to the performance of your virtual store.

SKU

Stock keeping unit – or warehouse maintenance unit – is the reference number that is assigned to each product to identify and track it.

Storage fees

It is the price you must pay for a fulfillment company to store your product. The price to pay is calculated by the cubic area that your items occupy and, although they always try to optimize the space as much as possible, they should separate products depending on their characteristics. Finally, you should consider that the rate will depend on the size of your products and that you will need a different storage place for each SKU.

B2B and B2C

These acronyms refer to business models. B2B refers to relationships between companies (business to business), while B2C refers to transactions carried out from business to customers (business to customer).

Logistics

It is the combination of methods, infrastructure, and means used to streamline the processes in the supply chain. It covers the transport, storage, and shipment of products.

Reverse logistics

It is in charge of recovering containers and packaging for a second use, as well as recovering hazardous or polluting waste. It also refers to customer returns, outdated products, or seasonal merchandise.

Traceability

It is the tracking of a shipment, being able to see its status at all times and in real-time, from the exit of the warehouse to its final destination.

Within e-commerce, the requirements and concerns of customers are different from those of traditional commerce. Offering an efficient shipping service is a fundamental factor that will determine the success of your online store, so it is very important to have the ability to speak the same language in terms of terminology with your fulfillment team, in order to satisfy the expectations of your customers.