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Logistics and Swiss marketplaces

Get an overview of the logistical implications of Swiss marketplaces.

Logistics with marketplaces

According to Swiss Trend, online marketplaces are one of the growth drivers of e-commerce in Switzerland. This is shown by the ranking of the top-selling online shops in Switzerland: six of the top 10 places are occupied by operators of marketplaces where numerous retailers and manufacturers sell their products to customers.

Marketplaces as a driver for e-commerce logistics

Amazon offers its marketplace partners comprehensive logistics services in many countries. As part of "Fulfilled by Amazon", the company stores its partners' products in its own logistics centres and picks and ships the goods. A comparison of Swiss marketplace operators, however, shows that they generally do not offer such services. Digitec Galaxus, for example, does offer suppliers the option of storing products in its logistics warehouse, but this option is not available to marketplace retailers.

Logistics as a central success factor in e-commerce

Logistics is a key success factor in digital commerce, to which the large providers have responded with high investments in logistics. Prominent online retailers such as the Competec Group or Zalando report the construction of new logistics centres or their expansion. The Competec Group alone is investing CHF 70 million. Digitec Galaxus, the marketplace with the highest turnover in Switzerland, was able to increase capacity by 60% during the pandemic by commissioning new logistics centres. Sellers already offer very fast delivery times, but continue to raise speed standards as customer expectations rise.

Build up your own logistics

In many cases, retailers take care of their logistics themselves. Since it plays an important role in the success of e-commerce, many suppliers do not want to let the issue be taken out of their hands. No profit margin is lost to third parties and retailers are more independent. However, setting up one's own e-commerce logistics involves some effort. From the creation of shipping labels to packaging and handling to shipping, returns, warehousing and much more, everything is the responsibility of the retailer. An extensive range of goods can only be managed by linking a logistics solution to the branch or ERP system. This is associated with corresponding costs. And setting up its own logistics solution requires human and spatial resources. When setting up its own logistics, the retail company must also ensure that the solution is scalable for future growth.

Outsourcing to logistics partners

Another option is to work with a logistics partner such as Swiss Post. The biggest advantage of this solution is that the retailer can concentrate on its core business while leaving the entire logistics to a company that specialises in it. However, outsourcing does come with costs. In addition to the warehouse space used, processing costs are incurred for each step of the process (storing items, picking orders, shipping, accepting returns). This financial burden can be difficult to manage for products with rather low profit margins and small shopping baskets. However, a major advantage of outsourcing is flexibility: additional warehouse space can be acquired or released at short notice if needed or possible; an existing warehouse can be enlarged or downsized at any time if needed or desired by working with a partner who already has the necessary facilities.

Dropshipping

Dropshipping is a distribution method in which a retailer does not stock the goods itself, but forwards the orders directly to a distributor or manufacturer. These then deliver the products directly to the customer. One advantage of this model is that the retailer does not have to build up a warehouse and the entrepreneurial risk lies with the supplier. The effort for handling, shipping, product and warehouse management thus lies with the supplier. Understandably, this model usually reduces the supplier's margin. Another disadvantage is that there is a great dependence on the supplier. If the supplier is unable to deliver an ordered item, the retailer's hands are tied.

When deciding which logistics path a retail company should take, it also depends on how far the company has come with the digitalisation of its business model. In the initial phase, when order volumes are manageable and the company has not yet grown beyond a certain size, it makes perfect sense to take over the logistics processes yourself. For retailers that have grown beyond a certain size, on the other hand, outsourcing logistics processes can be a thoroughly worthwhile path.

Operational flexibility is in demand

Shippers must be able to cope with fluctuations in demand. Marketplaces demand high delivery quality; this is especially true for delivery reliability. This is understandable because customers do not distinguish how a delay occurred, and so the negative experience falls back on the marketplace. For this reason, marketplaces penalise shippers who cannot deliver orders within the required deadlines. Successful shippers on marketplaces are those who have efficient and flexible logistics.

Conclusion

Logistics in e-commerce requires efficiency, quality and flexibility. Logistics processes are a decisive success factor, because customer expectations of speed and quality are high. On the other hand, they represent a relevant cost block. If the processes do not run optimally, money is wasted with every order. Therefore, it is worth taking a close look to see if there is potential for optimisation in e-commerce logistics.