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15 Jun 2022

A Brief Guide to Consolidation in Ecommerce Logistics

It makes good economic and environmental sense, doesn’t it? Instead of sending ten separate shipments to one destination, gather them all into one load and ship them together. At the same time, it makes NO economic or environmental sense to have ten different companies delivering packages to one address. That’s why smart ecommerce operators choose consolidation as an optimal approach to shipping, both for the inbound side of the supply chain, and the outbound. In case you’re not yet familiar with the consolidation concept in ecommerce logistics, we’re about to explain pretty much everything you need to know about it, and highlight some of the most important advantages it offers today’s ecommerce retailers.

What Does Consolidated Mean?

In the context of ecommerce operations, to consolidate means grouping several items, orders, or goods consignments going to the same destination and shipping them together.

For example, if a customer makes an online purchase of a mountain bike but also wants a full-face helmet, shin pads, elbow pads, goggles, and padded gloves added as part of the order, she or he would expect everything to be delivered together.

Achieving this consolidation at the lowest possible price is a complex logistics challenge that may involve the combined efforts of several shippers, a consolidation center, and a last-mile delivery service.

The Benefits of Consolidating Shipments

For etailers, consolidated shipping can reduce shipping costs, lower carbon footprints, increase customer satisfaction, and simplify parcel tracking. Let’s look at these benefits more closely: ### 1. Reduced shipping costs By combining several items into a single package, you use fewer packing materials and boxes. You also reduce the actual weight and dimensional weight of your shipment—the two factors that determine shipping costs. By shipping fewer items, you also reduce per-package handling fees. ### 2. Smaller carbon footprint Consolidated shipping services contribute to sustainable logistics, because they reduce the number of trucks on the road spewing out CO2 emissions. Fewer trucks also mean less traffic congestion and faster deliveries. ### 3. Improved customer satisfaction To return to our example of the bicycle purchase, imagine the customer’s frustration if the full-face helmet is delivered, say, on Monday, the gloves on Tuesday, the protective pads on Wednesday, and finally, the bike arrives on Thursday. Consolidated shipping would ensure that all the items arrive together. ### 4. Easier shipment tracking With all items packaged together, customers can more easily track the delivery. Instead of following the movement of multiple orders, they can follow the progress of a single shipment.

Two Routes for Successful Order Consolidation

There are two routes to follow if you decide to implement order consolidation: do it yourself or partner with a 3PL company.

If yours is a small ecommerce business that typically ships at low volume, you may be able to manage the consolidation process yourself, but you need skilled pickers and packers in your fulfillment center.

If you ship products at high volume, you may find it difficult to handle the complexities of package consolidation in-house. Instead of sending your packing team into a daily frenzy, why not partner with a 3PL logistics provider that has experience in consolidating multiple orders into low-cost shipments?

When Large-Scale Consolidation Shipping Makes Good Sense

Not all items sold by online businesses can be delivered by courier service, as they are simply too big to fit into a delivery van. In this situation, it is better to opt for less than truckload (LTL) shipping for local deliveries and less than container load (LCL) shipping for international freight.

Even if these two shipping modes may attract surcharges and cost more than courier services, they may still be the most affordable ways to ship large items that are not bulky enough to warrant full truckload (FTL) and full container load (FCL) shipping.

Businesses that regularly move large quantities of inventory between fulfillment centers stand to gain the most from this form of shipping.

When to Choose International Consolidation

If yours is a business that would benefit from holding inventory in multiple countries, consolidation could be the most economical way to handle international shipping. Suppose, for example, you are a UK-based ecommerce retailer that has penetrated markets in the GCC. Instead of selling and shipping from the UK directly to the customers in the GCC, you could export your products to the GCC, keep them in a warehouse there, and use that inventory to fulfill orders placed by GCC customers. In this case, you could ship regular, but small, shipments of a few pallets, using an LCL consolidation partner. The following steps would be involved: 1. Your goods are dispatched from your UK warehouse and transported to a consolidation center. 2. They are consolidated with other shippers’ goods into a full container load (FCL). 3. The full container is shipped to the GCC. 4. The container is transported from the dockside to a consolidation center for deconsolidation. 5. Your goods are separated from the other shippers’ goods and trucked to your GCC warehouse. There they will remain as inventory to be consumed in fulfillment of your GCC customers’ orders.

Need Some Help With Consolidated Shipping?

So now you’re more enlightened about the use of consolidation in international shipping, ecommerce fulfillment, and last-mile delivery. However, the application of consolidation in the supply chain can be quite a complex undertaking.

That’s why, if you are looking to reduce costs and environmental impact through consolidated shipments, it will be worth partnering with an ecommerce integration provider.

*At Shipa Ecommerce, we have a wealth of international shipping experience, and whatever your shipping challenge, we work with you to provide the most efficient and cost-effective solution, using consolidated shipping and fulfillment when appropriate, and always tailored precisely to your business needs.

Keen to find out more? Why not get in touch with us today.*