What is Physical Distribution in eCommerce?

Virginia Miller

May 30, 2024

In this article:

Frequently Asked Questions

eCommerce businesses often face complexity in the supply chain process. When the activities of the supply chain lack monitoring, handling, and tracking, it can lead to poor customer experience and lower sales rates and revenue. This is why physical distribution management is essential in the entire supply chain process. The management system includes warehousing, control of inventory, fulfillment process, and many more. All supply chain factors are managed until it reaches the end users. Therefore, a physical distribution system must handle the supply chain.

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Let's understand the physical distribution and how it benefits the eCommerce business. Moreover, in the below section, you will understand the essential functions of the system's setup.

What Is Physical Distribution?

Physical distribution refers to the process of moving finished products or goods from a company's fulfillment centers or warehouses to the end customer. It encompasses the storage, handling, and transportation of goods from manufacturers to consumers. Efficient physical distribution is critical for ecommerce businesses to deliver orders on time and provide a positive customer experience.

Importance of Physical Distribution

A robust physical distribution strategy provides numerous benefits for ecommerce businesses:

Faster Order Fulfillment

Proper warehouse management and inventory control enables faster order processing and shipping. Customers receive their orders sooner.

Improved Customer Satisfaction

On-time deliveries and transparent order tracking improves the post-purchase experience. Happy customers are more likely to reorder and recommend your store.

Cost Savings

Optimizing transportation routes and consolidating shipments reduces operational costs associated with storage, handling, and delivery of orders.

Increased Sales

Seamless physical distribution results in higher conversion rates and more repeat purchases. It directly impacts your bottom line.

How to Improve Physical Distribution

Here are some tips to enhance your ecommerce physical distribution strategy:

Centralize Inventory

Maintain your inventory in fewer centralized warehouses close to your target markets. This cuts transportation time and cost.

Leverage Automation

Automate processes like inventory updates, order routing, and shipment booking to minimize errors and delays.

Optimize Delivery Routes

Use route optimization algorithms to ensure each delivery run is efficient. This reduces miles traveled and fuel costs.

Track Key Metrics

Closely monitor KPIs like order processing time, shipping accuracy, transit damage to continuously improve operations.

Partnering With 3PLs

Consider partnering with a 3PL logistics provider to manage your ecommerce order fulfillment. Their expertise and infrastructure can enhance your physical distribution at reduced costs.

With an optimized physical distribution strategy, you can focus on sales growth while delighting your customers with fast, seamless deliveries.

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Recommended: Types, Examples, and Methods of Demand Forecasting

Frequently Asked Questions

What is physical distribution in ecommerce?

Physical distribution refers to the storage, handling, and transportation of finished products from warehouses and fulfillment centers to end consumers. It's a key component of the ecommerce supply chain.

Why is physical distribution important for ecommerce?

Efficient physical distribution enables on-time order delivery and positive post-purchase experience, driving higher conversion rates and repeat purchases.

What are the benefits of improving physical distribution?

Optimized physical distribution reduces operational costs, accelerates order processing and delivery, improves customer satisfaction, and boosts sales and revenue.

How can I enhance my ecommerce physical distribution?

Strategies like centralizing inventory, leveraging automation, optimizing delivery routes, and closely tracking fulfillment KPIs can significantly improve your distribution.

Should I outsource my order fulfillment to a 3PL?

Partnering with a third-party logistics provider that has warehousing infrastructure and expertise in ecommerce distribution can streamline your operations.

What common problems does poor distribution cause?

Inefficient physical distribution leads to higher costs, delayed shipments, poor customer experience, and loss of repeat business and referrals.

How do I choose the best 3PL partner for distribution?

Select a 3PL with ecommerce expertise, optimal warehouse locations, integrated technology, scalability to grow with your business, and transparent pricing.

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