The Role of Logistics Centers in E-commerce

Logistics centers play a crucial role in complex supply chain networks. A logistics center is a facility dedicated to managing logistical functions. Furthermore, a logistics center can be a warehouse, freight forwarder, or even a repair depot. 

Logistics centers are associated with fulfillment and distribution centers. A logistics center helps you take on more complex logistics processes, including receipt, internal transportation, storage, preparation, and distribution of goods.

Logistics centers can act as logistics activity centers or distribution centers. 

  • Logistics activity centers are areas where you can carry out different business activities, particularly prepared to perform logistics tasks. Generally, logistics activity centers are located near one or more transportation centers to facilitate the movement of goods. 
  • Logistics centers are also commonly known as a form of a warehouse. Logistics or distribution centers can be defined as spaces for storing products, preparing orders, and dispatching orders to retail and wholesale businesses. You can fulfill tasks related to the supply chain, including goods receipt, internal transportation, storage, preparation, and distribution.

The different types of logistics centers

Not all logistics centers are the same since each offers different functionalities. Thus, it’s crucial to understand your business requirements before choosing a logistics center to store your goods or build a network of logistics centers.

Fulfillment centers

Third-party logistics (3PL) providers operate fulfillment centers. Moreover, fulfillment centers are physical locations for storing inventory and fulfilling orders on behalf of online retailers. Lastly, fulfillment centers are designed to run and manage fulfillment and logistics processes, reduce logistics costs, and speed up last-mile delivery.

Distribution centers

Due to the split inventory functionality, some 3PLs use their fulfillment network as distribution centers. You can split inventory across different locations within the same network for efficient distribution of products. Thus, you can fulfill orders from the fulfillment center closest to your customers’ destination. Furthermore, distribution centers act as transit hubs for redistributing goods along the supply chain.

On-demand warehousing

On-demand warehousing solutions allow e-commerce businesses to temporarily store and deliver orders by a third-party using warehouse facilities with extra storage space. On-demand warehouses operate as an intermediary during the fulfillment processes. Furthermore, on-demand warehousing comes with no long-term commitment. However, on-demand warehousing lacks stability and operational management, putting your supply chain at risk.

Micro-fulfillment centers

Micro-fulfillment centers are not open to customers. However, micro-fulfillment centers offer more space to store inventory and fulfill online orders for customers. Furthermore, micro-fulfillment centers provide home delivery and pick-up options, enabling customers to place orders online and pick them up in person. 

Role of logistics centers in e-commerce

The e-commerce industry’s primary benefit to businesses is that they don’t necessarily have to invest in physical retail spaces and storefronts. Likewise, e-commerce allows businesses to sell products online round-the-clock, regardless of geographical boundaries. Furthermore, if you don’t have a physical or brick-and-mortar store, you need a plan and space to store your inventory and fulfill orders efficiently as soon as a customer places an order.

That’s where the logistics center comes into play. Logistics centers are significant for e-commerce businesses since they determine where you will store inventory and how soon you can deliver and fulfill your customers’ orders through different shipping alternatives you can offer your customers. Eventually, the scalability of your e-commerce business depends highly on how well you distribute inventory to fulfill and ship customer orders quickly, affordably, and efficiently.

Storing inventory in multiple locations allows e-commerce businesses to reach more customers quickly, speed up transit times, and reduce shipping costs. Logistics centers operated by 3PL offering fulfillment services are more than just warehousing facilities. It helps e-commerce businesses in optimizing their supply chain. 

Furthermore, e-commerce logistics center solutions follow a more customer-centric approach and best practices to benefit e-commerce businesses by saving time and money and offering dedicated support and infrastructure.

Logistics Center

What do logistics centers do?

Distribution hubs for finished goods that you need to deliver from one location to multiple locations are known as logistics centers. Furthermore, some logistics centers provide space for additional distribution of products before they arrive at their final destination, while other logistics centers also provide on-demand storage space. More importantly, you can also avail fulfillment and shipping services if you have stored your inventory in a fulfillment center run by a 3PL company.

How do distributed logistics centers work?

Logistics centers are most effective when you want the goods to be stored close to your customers to deliver an optimal shopping experience. A 3PL service provider can help you streamline the fulfillment process and automate delivery, as they have a growing network of fulfillment facilities that enable you to store your inventory. Lastly, 3PLs work with multiple large and regional carriers to pick up daily packages.

Characteristics of logistics centers

Logistics centers have grown in importance in recent years. Logistics centers have the following characteristics in common:

  • Logistics centers have connections with different forms of transportation that operate on local and international levels.
  • Logistics processes add value to multiple areas, including pricing, merchandise packaging, etc.

Advantages of logistics centers

Increased efficiency

Logistics centers can significantly reduce the time between when a customer places an order and when the order is delivered.

Reduced costs

By centralizing product reception and shipment processes in the last mile, a company’s costs can be reduced by eliminating excessive storage and transportation costs. Furthermore, the product is left in storage for less time and covers fewer unnecessary distances in transit, resulting in cost savings.

Flexible

As supply chain intermediaries, logistics centers provide e-commerce businesses with the flexibility and responsiveness to fulfill customer demands with tight orders and product marketing deadlines.

Logistics Center

Logistics center functions

The logistical functions go beyond just inventory storage, warehousing, and distribution:

  • Receiving products from production centers and other suppliers.
  • Once the goods are checked, they are stored in the corresponding storage system based on their characteristics and functions.
  • Devising optimal routes for automated and manual handling is carried out at full capacity. Furthermore, it also ensures good flow, items are moved as quickly as possible.
  • Optimizing picking routes can increase productivity and reduce costs for e-commerce businesses.
  • Real-time understanding of the status of all SKUs (stock-keeping units) can prove fundamental in preventing errors that might hamper the logistics processes.
  • Distributing orders to retail and wholesale customers alike.

Conclusion

The primary difference between logistics centers and warehouses manifests as the activity and operations that form part of the two processes. However, there’s no substantial difference between the two since both fulfill the same purpose. 

Logistics centers and warehouses enable e-commerce businesses to store an enormous inventory. However, logistics centers not only allow you to keep products but also play a role in other functions linked to the supply chain. 

Thus, logistics centers are designed to manage and optimize all essential components of logistics processes, including inventory control, preparing and packaging orders, transportation of internal goods, and distribution. 

More importantly, logistics centers have offices for correctly managing all logistical functions. Lastly, logistics centers have more operations, increased efficiency, and entail more functions in the supply chain.

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FAQs

A logistics center is a central specific area where all the activities relating to logistics, transport, and goods distribution are carried out on a commercial basis. Furthermore, logistics centers incorporate both national and international transit carried out by various operators.

Apart from the ones mentioned above, the following are the four types of logistics facilities:

  • Transfer centers
  • Distribution centers
  • Processing distribution centers
  • Fulfillment centers

There are five elements to logistics:

  • Storage, warehousing, and materials handling
  • Inventory
  • Packaging
  • Transport
  • Information and control

Logistics hubs are large-scale structures with multiple logistics service providers collaborating to offer value-added services by sharing assets. Such logistics hubs affect the efficiency of transportation systems since they directly impact the flow of goods.

  • Delivering the right product
  • In the right quantity
  • In the right condition
  • At the right place
  • At the right time
  • To the right customer

At the right price

  • The following are the most common types of logistics services:

    • Inbound logistics
    • Outbound logistics
    • Distribution logistics
    • Reverse logistics
    • Third-party logistics

    Fourth-party logistics

Freight facilities are fixed points for supporting freight transportation and distribution systems with a broad range of sizes. Furthermore, freight facilities fulfill the combination of three standard functions, each with a particular degree of importance. Freight facilities can be divided into five categories:

  • Manufacturin
  • Terminal 
  • Storage
  • Distribution
  • Parcel 
  •  

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