E-commerce Logistics and Shipping Terms

In E-commerce market of India, which is growing at an astonishing (around) 30% annually, logistics, shipping, and delivery together make up the soul of the supply chain management process. They are individually complex steps in themselves because there are many sub-steps involved to complete each single phase.

Starting with the Logistics, it is the key enabler for the growth of E-commerce retail industry. While many E-commerce retailers have partnered with logistic service providers (LSPs), some have invested in developing in-house logistics capabilities.

Evolution of Logistics

From a distribution property perspective, this evolution has passed through various general phases and very broadly in the timeline as follows:

  • In the 1970s, most retail stores were replenished by direct deliveries from suppliers or wholesalers.
  • In the 1980s, retailers started to centralize their store deliveries through new distribution centers which they controlled.
  • In the 1990s, global sourcing (for non-food products) took off, with many retailers developing import centers to receive and process mostly containerized imports.
  • From around 2000, e-commerce began to rapidly expand with pure-play (internet only) retailers leading the way in establishing e-fulfillment distribution networks.
  • Airway Bill Number (AWB Number) – AWB is an 11-digit code used for tracking the shipment. You can use this code to check the delivery status of the shipment and its current position. If you find that your order is ridiculously late, use AWB to report the complaint to the shipping and logistics company that your merchant has chosen.
  • Shipping Invoice – It is a document containing standard information, including the name and location of the sender and the receiver. Additionally, it contains an itemized list of the purchase order, i.e., the invoice reflects the total number of items ordered, their cost, any discounts, or taxes applicable, and the final billing cost.
  • Shipping Label – A shipping label is pasted on the top of the package and describes the contents of the package. It also contains the originating and destination addresses to help the courier carrier to deliver the package promptly.
  • Shipping Manifest – A shipping manifest is a document that acts as a proof of handing over the shipment to the courier company. It contains the information of the pick-up courier person, i.e., name, contact details (mobile number), and his/her signature. The shipping and logistic company gives one copy to the merchant and keeps the other copy for its records.
  • Freight Bills – The shipping and logistics company issue freight bills to the consignee (usually the merchant of the order placed). This bill includes the description of the freight, shipper’s name, the point of origin, actual weight, and volumetric weight of the shipment, and the bill amount.
  • Ready For Dispatch – This message is an indicator that the shipment is about to leave its place of origin. It flashes only after the processing of the AWB Number and assigning the shipment order to a shipping carrier (Courier Company).
  • COD Label – Cash on Delivery (COD) label can be printed on the top of the product package, or the courier person has the receipt. This label includes information related to the supplier, receiver, and itemized list of products and mentions the amount to be collected. It also includes other details like AWB number, weight, and product dimensions.
  • Generate Pickup – This process appears once the product to be shipped has been finalized for a specific day. This entails selecting the courier company responsible for completing the order delivery. The cutoff time for generating pickups is before 1:00 PM from Monday to Saturday and no pickup is generated on Sunday.
  • Missing Orders – These are the orders that couldn’t be processed at the initial stage of the shipping and Logistics Company. Some of the factors responsible for such an error involve the product order not checked out properly and failed payment process.
  • Return to Origin (RTO) – It contains the address of the sender. The product can be returned to the point of origin, i.e., the merchant’s address, if there is a discrepancy related to the product or order placement.
  • ETA: Expected Time of Arrival (ETA) denotes the time of the shipping carriers reaching the destination of the receiver, which includes both merchants and clients. Merchants can pick their returned goods, while customers can receive their ordered items.
  • ETD: Expected Time of Departure (ETD) denotes the time of the aircraft takeoff or the ship’s sailing post stocking their freights.
  • Bill of Lading: The official contract on shipping is entered between the vendor and the carrier by the means of Bill of Lading. It indicates details on the terms and conditions for shipping the merchandise as agreed between the merchant and the shipping company. It also acts as a receipt for goods.
  • Freight Rates/ Base Rate: Courier companies charge a minimum rate for shipping, which is called Base Rate. This base rate is based on per kg or per 0.5 kg of the parcel. The price is independent of the current fuel charges, taxes, and the distance covered.
  • SKU: Stock Keeping Unit (SKU) denotes the identification code of an item for shipping via Airlines. The purpose of providing the unique identification number is to differentiate the product and its attributes from the rest of the stock. It may include other specifications too ,like size, brand, model, and color of the product.
  • Reverse Order Pickup: Reverse Order Pickup (ROP) indicates that the courier company needs to pick up the previously placed order. ROP occurs due to a returned order by a dissatisfied customer. Upon requesting the order to be returned by the customer, the merchant immediately relays the same information to the Courier Company.
  • Volumetric Weight: The volumetric weight is calculated according to the volume of the cargo. Volumetric weight ensures suitable charges are applied based on the volume weight in case the actual weight is low. For example, cotton merchants pay traffic based on the volumetric weight, as it is light in weight and does not occupy space.
  • Chargeable Weight: The chargeable weight is assessed by first calculating the volumetric weight and the actual weight. Chargeable weight is either of this weight, which is greater than the other. Thus, if the volumetric weight is more, it is counted as chargeable weight, and if actual weight is more it is said to be chargeable weight.
  • Missing Orders: If the product is untraceable due to reasons like wrong delivery address, and seized by the customs, then the package/order falls in the category of the missing orders. However, instantly items are not declared as missing orders, initial research goes into what went wrong by tracking the Airway Bill Number (AWB) Number.
  • Fuel Surcharge: Fuel surcharge is the extra amount of charges levied on the order due to the increase in the rate of fuel price.
  • Out of Delivery Charges: Out of Delivery (OD) charges are applied to an order if the merchandise is demanded in a specific period of time by the customer.
Schedule Control
E-commerce Logistics Models

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