Entrepreneurs who run a traditionally operating logistics business fear of transforming into an online entity. Taking a logistics business to an online forum needs intensive research and proper study of the market and the competitors, I agree. But it’s worth it.
If you are one of the few who wants to transform their traditionally operating logistics business into a super cool logistics business that depends on technology? You are in the right place!
This article educates you on various topics and has enough reasons to help to take a stand on turning your logistics business into an online-based business.
Is digitalization better than traditional logistics business?
Transforming the traditionally operated business logistics business into online logistics services could help your business expand, creating awareness amongst the users and other stakeholders.
If it is an app-based logistics business, then it gets even more beneficial. People love to book their services in an app and get doorstep delivery.
Challenges faced by traditional logistics business
These are some challenges faced by the traditionally functioning logistics business;
- High expectations from the customers to get their products or services as soon as possible.
- A lower employee retention rate is one of the main causes in the logistics business.
- Workers swapping from one place of work to another is a crisis for a business owner due to more labor-intensive work and less salary.
- Too many safety regulations laid by the government. Implementing everything could cost more for the business.
- Manual billing could cause errors in the process.
- Freight documentation in the paper could mean one more skilled labor cost, paper cost, etc.
How does an on-demand logistics business work?
When it comes to any business, there are two things to remember to make it successful and worthwhile. The first one is the business model and the revenue model.
Business Model for the on-demand logistics business
An aggregator business model is considered to be one of the potential business models in the market for an online logistics business. The core purpose of the business model is to create a platform to connect the service providers and the end-users by providing the best and user-friendly features for them.
Revenue Model for the on-demand logistics business
When there is a business model in action, obviously there has to be some form of revenue to be generated. The aggregator form of business adapts more efficiently with the “commission-based” revenue model.
Here, the admin of the platform can receive a certain amount of commission from the end-users and distribute the earnings that the admin owes to the service providers.
4 steps to digitize your logistics business
When you plan to digitize the logistics business, these are the four steps to consider for better implementation.
Find your niche in logistics
Anything can be transferred from one place to another. Being precise about your business niche is important to plan further. These are some logistics based niches in the market that perform extraordinarily well;
- Plastics and chemicals
- Industrial manufacturing equipment
- Appliances and electronics
- Food and Beverages
- Petrochemical and energy
Pick one out of the lot or find something that might suit your expertise and market necessity.
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Narrow down the operational difficulties faced
Operational excellence can be achieved only if the difficulties are acknowledged and discussed, finding a solution. According to supplychain247, “When companies digitize their logistics business, there is a 30% cost-cutting happening to enhance the profit margin”.
These are some of the procedure that can be followed to address the problem;
- Conduct a meeting with the stakeholders to find the problems at their end.
- Taking into account the investments when a traditional logistics business is digitized.
- Address the quantitative and qualitative transfer of goods and services - as the business has to manage all quantum after being digitized.
Features and functionalities you want for your on-demand logistics business
The features of the digitized format of the logistics business must be based on the niche of the business. Market research could induce ideas and initiate thoughts on choosing the right features and functionalities for your on-demand logistics business.
What features to consider for my on-demand logistics business?
There are actually 3 platforms involved when it comes to running an aggregator form of business model.
Features that an admin would want:
- Users management - The admin of the logistics business platform must be able to manage the users (both the service providers and the end-users) to have a handle over who comes into the platform.
- Admin Management - The admin can manage the service providers who register themselves into the platform, the notifications sent to the users, the promo codes and more.
- Booking Management - The admin will be able to check the booking details (Users name, the service they booked for, booking time & date etc). Also, if there are any cancellations and their reasons as well.
- Geo-fencing - This feature allows the admin to restrict the registrations of the end-users and the service providers into the platform based on location.
Features that an end-user would want:
- One-step registration - Users would love to register on a platform within three steps. Hence, registering via the phone number could be a feasible option. Also, to avoid fake registrations, using phone number verification methodologies can help.
- Live Tracking - Any end-user would want to track their booking anytime. This feature could help them find the transit passage of their booking.
- Schedule the service - The end-user would like to schedule the service on the platform and once they avail of the service they can pay for it.
- In-app chat - The end-user can communicate with the service provider within the platform itself via a chat box.
Features that a service provider would like to have:
- Cancellation reason - The service provider would like to state the reason to cancel the services booked by the end-users.
- Earnings report -Offering earnings reports could help service providers to track their earnings within the platform.
- Dynamic routing - The online logistics platform should offer an inbuilt map or integration to Google Maps to assist the service providers to reach the end-users location and the destined location easily.
- Payment receiving method - The service providers should be able to receive their earnings from the admin of the platform. It is a feasible option to add bank account details in the app to keep receiving the earnings without any hassle.
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Identifying the appropriate software development resources
With all the features discussed above, there must be a software that can help you create an app like Uber for logistics that complies with all your logistics business requirements.
Outsourcing such services would give you an edge to concentrate on other factors of running your on-demand logistics business.
Importance of digitizing your logistics business
When you digitize the process of logistics business, human errors while performing manual tasks can be avoided. Computers can centralize the goods and services moving back and forth. It can help you (the admin) pinpoint what, when and how something went wrong in the process.
Digitizing the logistics business in the form of an app or a website-based operation can induce transparency within the organization. And it also encourages the end-users to book the services online, which increases efficiency in maintaining the process.
The digitization method can help the admin of the platform to integrate the warehouse management, the management systems, and the transportation facilities to keep an eye on everything in one place..
For instance: A visually appealing and simple-to-use dashboard can help the admin to manage the logistics business more efficiently and effectively.
When people use apps and website platforms, they entrust you with their information. It will help the admin (which is you) to get a hold of the futuristic plans of the business.
Data will help not only from the business expansion point of view, but also in the operations of the business. The regular users can be given offers or discounts as they prefer your online logistics platform over the others.
No more labor-intensive tasks
When the logistics business runs based on technologies, you’ll need a minimum number of skilled workers rather than extensive unskilled laborers. This could be very useful in running an organization with a lesser cost of maintenance and labor.
Ways of growing your online logistics business
When it comes to starting an on-demand logistics business, it is important to figure out how you can grow your business. Following some of these processes could help your business grow better and quicker.
Inbound & Outbound Marketing
Concentrate on creating a user-friendly website and app that helps your end-users easily navigate and book your services. This could be an excellent inbound marketing strategy that you could follow.
Finding the leads through emails, cold calling, and online events or other traditional marketing strategies could be an outbound marketing strategy to consider.
With time, the customers lose excitement in your product or service. The only way to keep them interested and excited is to create a value-based marketing technique. And keep constantly working on it to make it better and on-trend.
Check out the competitors of the logistics industries who tried and succeeded (or failed) in introducing internet-based businesses. Gather their insights, learn from their mistakes, analyze their performance reports, etc.
The performance reports are not only about the financial aspects but can include their employee attrition rate, operational efficiency, and all the kanban and kaizen-related reports.
Why would you need those? An online logistics business not only fails because of the financial issues but mainly because they lost the trust factor amongst their customers and extracted more work with lesser pay for employees.
Introducing technology not only for operating the business but also moving the goods or services from one place to another. Make your business techno-savvy and excitingly efficient to attract your end-users.
Drone deliveries, self-driving vehicles, 3D printing, high-tech crane machine moving goods, robots delivering goods and services to your end-users doorsteps are never cheap. (I understand!)
But the courage to introduce these logistics businesses steadily, slowly within the platform. And the end-users might create a lot of fan bases for your prompt service.
Social Media and its hype
Don’t think that social media marketing is hyped too much, and there is no way an on-demand logistics business has any need to market in social media. Use LinkedIn for visual content to attract new users into your platform with the above-mentioned tech wonder in your logistics business.
When it comes to managing a logistics business online, the communication has to be far accurate and intense. When communication is lacking, the whole business falls apart.
When you plan on taking your logistics business online, remember to make the communication system more user-friendly in the organization as well as between the service providers and the end-users.
FAQ | How important it is to digitize your logistics-based business?
What is the digitization of the logistics business?
Making an online presence using websites and developing an app that could encourage more users is the digitized process of running a logistics business.
How many parties are involved in the on-demand logistics business?
Basically, there are three people involved in an on-demand logistics business: the logistics service provider, the end-user, and the admin of the platform.
What is the purpose of digitization in logistics?
The core purpose of digitalization in the logistics business is to connect the end-users and the service providers easily and efficiently.
What technology can be used to build the logistics app?
Flutter is one of the leading software development kits used to develop any on-demand apps in the market.
How much does it cost to start a logistics company?
It varies according to the features and benefits that you want for your on-demand logistics marketplace.
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