What is Consolidation?
In e-commerce, consolidation refers to the practice of grouping all the orders and goods consignments scheduled to be delivered to the same destination followed by their shipment. Consolidating shipments often poses a complex challenge for coordinating logistical operations as it requires collaboration among various distribution companies, retailers, and business partners.
Significance of Consolidation
Consolidated shipping comes with more than one benefit. If implemented properly, consolidation helps businesses reap huge profits and prosper in the long run.
- Clubbing multiple products into one package minimizes shipping costs as comparatively fewer packaging materials are required.
- Carbon footprints are reduced drastically as emissions from different vehicles during transportation are avoided. Hence, it ensures sustainable logistics.
- One of the key benefits of consolidated shipping is speedy delivery. Since goods are shipped together, faster delivery is possible owing to lesser traffic congestion.
- Tracking orders becomes easier as all goods are combined in one package.
- With faster shipping services, greater customer satisfaction and expansion of the client base are possible.
- The chances of goods suffering from damages are significantly reduced as a single package involves less handling.
How Does Consolidation Work?
- Since consolidation involves collaboration between different parties, the most important step is to determine and agree upon the entire consolidation process beforehand. This avoids unnecessary hassles and conflicts.
- The next step is to review the consolidation structure and technical areas to ensure smooth delivery.
- It is important to choose the best trading partners, create test transactions, and communicate tracking details and mapping details to prepare for better implementation of consolidated shipping.
- Test transactions must be carried out to review the entire process, incorporate the required changes, and resolve issues. The test transaction is audited to check and confirm its accuracy.
- Finally, consolidated shipping is implemented if the test transactions show positive results.
Use Case with Consolidation
For instance, customer A orders a mobile phone online. He also wants to include accessories like a screen guard, earphones, a back cover, and a power bank in his order so that everything gets delivered together. To cater to this consolidation, joined forces of different shippers, last-mile delivery services, and a consolidation center is required.