7 October 2022

How to manage the supply of your shop. Ankorstart helps you understanding how to do it peacefully.

16 Minutes

       MY RETAILER TOOLBOX

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Logistics is at the very heart of any retail store. Being able to provide your customers with the products they want, when they want them and at a reasonable price will ensure that your business stands out from the crowd. To achieve this, you will need to make sure your logistical chain is streamlined, efficient and reliable. Having a good understanding of what goes into achieving optimum retail logistics is absolutely fundamental for any business entrepreneur. 

To assist new entrepreneurs in coming to grips with the complexities of retail logistics, we have put together a brief overview of what goes into retail and logistics management. If you are unsure of what you need to be focusing on when it comes to retail logistics management, keep reading to find out exactly what the most important areas of logistics really are. 

Summary

What does logistics really mean in retail?

Originally, the word logistics was derived from the French word “loger”, which related to the movement and supply of armies. Just as an army requires a continuous supply of food, ammunition and equipment, a retail store requires a continuous and reliable supply of goods to sell to its customers. 

As a business owner, the concept of retail logistics revolves around your ability to source merchandise at a reasonable cost and then supply it to your customers, who purchase it at a price that allows you to generate profits. 

The more complicated or convoluted the logistical supply chain is for a business, the higher its costs will be and the more expensive its products will be for customers. Having a less than optimal logistical supply network can mean that your business cannot compete in the marketplace. This is especially crucial in today’s fast-paced world of online ordering and delivery services. Customers are now used to being able to place an order online and have that order fulfilled quickly and easily. By developing an efficient and reliable logistical chain, you can provide your customers with the services they expect at a price that allows you to stay competitive and make a profit. 

What are the primary functions of retail logistics?

Whether you operate an online e-commerce business or have a bricks-and-mortar shop on the high street, you need effective logistical systems. The primary functions of retail logistics are:

  • Procuring inventory
  • Receiving and processing inventory
  • Distributing inventory
  • Fulfilling customer orders
  • Tracking inventory
  • Shipping orders

Each step in this system needs to be efficient, reliable and cost-effective. Delays, inefficiencies or cost overruns in any of these logistical areas can result in the late fulfilment of orders, orders not being fulfilled or increased prices across the board. Needless to say, any of these things will result in unhappy customers and a loss of profits for your business.

The basics of procuring, receiving and processing inventory 

The first step in the logistical chain is the procurement of inventory. Generally, this means making wholesale deals with wholesale suppliers to make sure you are able to sell goods at a profit to the public. 

As a retailer, you must ensure that you’re not only getting a good wholesale price on inventory, but also that the wholesalers you are doing business with can guarantee they supply goods reliably and quickly. 

Once your goods have been procured and shipped to your warehouse or place of business, they will need to be unloaded and accounted for. Receiving and processing systems are of vital importance. If the correct procedures are not followed, you won’t be able to fulfil orders in a timely fashion and may be unaware that orders from wholesale suppliers have fallen short or are late. 

Developing an efficient and accurate system of receiving and processing inventory will ensure that you always get what you have ordered and that your customers won’t have to wait for their orders to be fulfilled. 

Distribution and fulfilling orders

The next step in the retail logistical chain is to distribute your inventory and fulfil customer orders. Distributing inventory is where a retailer disperses their goods across a range of warehouses or fulfilment centres. This can help to reduce delivery times to customers and cut down on shipping costs. Not all retailers will choose to distribute their inventory, but for enterprises that deal with bulk orders across a wide area, this system can be beneficial. 

These days, customers expect their orders to be fulfilled on time, quickly, and at an affordable cost. Order delays can mean that your business receives bad online reviews, which can damage your brand and prevent customers from returning to your store. Orders that have been delayed or get cancelled will negatively impact customer satisfaction levels and customer retention rates.

E-commerce businesses must pay special attention to their order fulfilment processes. Once a customer hits a button to order an item, the process of it then being paid for, shipped, and received should be as efficient, fast, and streamlined as possible.  

Tracking your inventory

Knowing how much stock you have on hand is essential, no matter which type of retail business owner you are. Busy periods such as the Christmas season, Mother’s Day, Father’s Day, or Valentine’s Day can cause a rush of orders. If you are not on top of your inventory tracking, you could run out of goods and fail to keep up with customer demand. 

This makes the ability to track inventory in real-time incredibly important for the majority of small to medium retail businesses. There are a variety of automated digital tracking tools that you can use to provide you with up-to-the-second information on how much inventory you have, what is running low, what orders have been fulfilled and what orders are waiting to be fulfilled.  

The importance of shipping 

Your goods have been procured, ordered and sent from the wholesaler. They have then been received and processed. The customer has placed an order, the item has been taken out of your inventory and must now be prepared to be sent to the customer. 

The shipping process is the last step in the logistics chain. Care must be taken to ensure that your shipping is affordable, dependable and prompt. In fact, the right shipping process can be used to add value to your products and help you stand out from your competitors. For example, if retailer A can ship a product within two days and retailer B cannot, then customers will naturally gravitate towards retailer A. 

Some retailers will offer customers free shipping on bulk orders or provide faster shipping options as a loyalty reward. The type of deal you can negotiate with your shipping company will impact the amount and type of value-adds you can offer your customers. Many retail business owners choose to work with a combination of shipping providers. What methods you choose will depend on the frequency of customer orders that you must fulfil, the areas that the orders must be shipped to, and the expectations of your customers. 

How to source wholesale suppliers

Finding a wholesale supplier who can provide your business with quality products at a competitive price, reliably and consistently, is absolutely vital to the efficiency of your logistical supply chain system. There are various methods you can adopt to source quality wholesale suppliers.

If you deal in generic goods (such as clothing, children’s toys or sporting goods), then you can simply search for a wholesaler online. Many wholesalers who deal in common goods have websites where retailers can sign up to place orders. Alternatively, you can get recommendations from other people within your industry or get tips on good wholesalers from online forums. 

If you’re a retailer that deals with specialty items, you may have to spend more time sourcing wholesalers. You may need to reach out to artisans or manufacturers individually and negotiate wholesale deals directly. This is the case with businesses such as jewellers or exclusive wine stores. 

Many wholesalers will require some proof of trading before they will allow you to place an order. Proof of trading can be an official letter with a business letterhead, a business card, or proof of a business bank account. Other wholesalers may require you to sign up for a trade card or submit purchase orders.

How can you improve the logistics of your retail store?

Improving the efficiency of your retail and logistics management systems helps you enhance the profitability of your business, and create a strong brand that your customers will trust and return to.  

Spend time planning your logistical systems. Do your research on what shipping companies and wholesalers will provide you with the best deals. Look into inventory tracking software and consider the use of technology such as RFID chips to track stock. Finally, consider getting assistance from logistical experts such as business consultants or even other retailers in the same sector.

You can also find support and guidance from the team at Ankorstore. Ankorstore is dedicated to helping new retail entrepreneurs launch successful businesses. We work with retailers in more than 33 different countries across Europe. Our Ankorstart program provides guidance, support and advice for new retail business owners. 

Ankorstart is a free and non-binding program that anyone can join. Over 10,000 retail business owners are now part of the Ankorstart program. Why don’t you try it out for yourself? We invite you to see just how Ankorstart can help you to create a sustainable, thriving retail business!

Tips for improving your retail logistics management

  • Choose the best supply chain strategy for your business
  • Focus on efficient inventory receiving and processing systems
  • Bulk buy products from reputable wholesalers
  • Diversify your shipping methods
  • Negotiate favourable deals with wholesalers and shipping companies
  • Use inventory tracking software

FAQ

  • What are retail logistics?

Retail logistics is a term used to describe the flow of goods from manufacturers to wholesalers, then to retailers and their customers. Retail logistics encompasses procuring products for sale, receiving and processing inventory, tracking inventory, fulfilling customer orders, and shipping goods to customers. Understanding the fundamentals of retail logistics is a vital part of operating a business successfully. 

  • Is it important for my business to focus on retail logistics?

The logistical systems of your business are fundamental to your ability to satisfy consumer demand and make profits. By ensuring that your business has the most cost-effective, reliable and efficient logistical supply system possible, you will increase your chances of creating a sustainable retail business that is viable and profitable in the long term.

If there are breakdowns in the logistical supply networks you have in place, then you may not be able to fulfil customer orders on time or you may run out of inventory during busy periods. A strong, reliable and efficient logistical system is crucial to building a trustworthy brand. 

  • What should I concentrate on with retail and logistics management?

Make sure you surround yourself with reliable and trustworthy wholesale and shipping partners. Train your staff on the most efficient methods of receiving, processing, and tracking inventory. If you require assistance, you can get practical advice from other retailers, arrange a consultation with a logistical expert, or join the Ankorstart program from Ankorstore. Ankorstart is free, non-binding and can provide new retailers with invaluable advice on how to successfully launch a new retail business.

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