One of the most important physical attributes within Internet commerce is warehousing services. Without it, there will be a severe breakdown in the essential nature of the web business model. To understand the nature of this business practice we will first take a look at the role of the internet in commerce and what makes it different from physical businesses.
Main Issues in Internet Commerce
The point of internet commerce is to be able to sell anything to anyone, anywhere. That is the lofty goal of every internet marketer. However, it never works out that way because Internet marketing is more focused than physical marketing except it is just across a wide geographical area. For instance, a person may specialize in marketing socks, but they may be able to do it across the globe in many markets, but they are focused on selling socks. There is diversity in geography, but focus in product. This is where the Internet lends itself to the idea of product focus.When this happens and the seller is selling across the world, one of the most important physical aspects of the business is warehousing services. Without this piece of the logistic puzzle no amount of web promotions and sales will ever be able to monetize the product or service.
Main Issues in Warehousing Services
Warehousing-services will be able to stock the product in various parts of the globe and reduce shipping costs. Take for instance a small item that is only being stocked in Atlanta, but is being shipped all over America and Canada. Each time the product is sold, it would have to ship out of Atlanta and that would be expensive. However a warehousing-service in Vancouver could stock the product and every time there is a Canadian order it could be shipped out of Vancouver instead. This would reduce the shipping cost tremendously and increase profits for the seller, or increase the cost competitiveness of the product, or both.
Without this piece of the puzzle it would not be viable in certain cases and in other cases a company that does have this benefit would be able to compete on price and cost. The ability to be able to offer lower overall costs to the customer would be a significant competitive advantage and should be something that all internet businesses look into doing.
Other than cost issues and competitive advantages, the reorganizing of logistics can have significant impact on overall profitability. It is possible to significantly reduce costs by transferring the facilitates to low cost locations and have a hub and spoke structure in delivery logistics.
There are numerous combinations and variations in piecing together a viable logistics solution. To get it done right, all the factors of the problem needs to be analyzed in holistic fashion and an intricate cost structure needs to be assembled to be able to stress test it from all angles. Once this is done the viable and proper solution will present itself.