It is no secret that East Africa has one of the highest logistic costs around the globe.
Various World Bank estimates suggest that transportation costs increase consumer prices by up to 40 per cent. Improvements in infrastructure, efficiencies and utilisation of vehicles have led to steady advancements in the past years. Rising fuel prices have also had an impact on the prices.
The rise of ecommerce has added another challenge to the equation. In recent years, more Kenyans have opted for the convenience of online buying. It is not rare to see social media merchants offering accessories for as little as Sh100.
But what sounds like a great deal might end up being a lot more expensive. Delivery of items might cost many times more than the product itself. Regardless of whether the seller or customer foots the bill, the overall cost of the product might multiply.
It then goes without saying that uptake of ecommerce and logistics services by the manufacturers and end consumers is on the rise and may potentially increase the cost of products.
Whether you operate a small ecommerce shop or would like to sell your agricultural products, spend some extra time on planning your logistics.
And regardless of the size of the shop, everyone has to consider aspects such as packaging, billing, labelling, warehousing, transportation, payment, mobile payments or cash on delivery, returns and exchange.
To reduce the cost of a product for the consumers while maximising on returns, there are a few things to factor in. The most obvious is delivery.
While many sellers still deliver goods to their customers on their own, this becomes inconvenient as soon as demand grows. Delivering it by yourself might seem to be cheaper but it will take away precious time. Furthermore, acquiring delivery vehicles is expensive.
Other delivery services require you to drop the package at their offices, which will also affect your productive time. That is why most ecommerce shops opt for door-to-door deliveries to reduce delivery time and enhance safety and customer satisfaction.
To many sellers, packaging is more of a necessity than an important choice. But the right packaging will save you money as it reduces damage and increases product safety.
Traditionally, one would pay the same amount per package regardless of whether you deliver one or five to your client. Not anymore, especially with modern door-to-door delivery companies.
All companies that deliver directly to clients are struggling with a high rate of returns. Don’t take this for granted. You have various options to reduce this cost. Ensure that you communicate properly and that your goods live up to the expectations of the client.
Also, consider the protection of goods to be delivered. Every damaged or stolen product is a financial loss. Rather than working twice as hard to recover the loss, insure goods in transit and track them in real time.
Lastly, optimisation of logistics is equally important. A sale is not a sale until it is paid for. And how well businesses manage their logistics will determine if their clients will pay or return the goods.
Mr Kirschner is the Head of Growth at Sendy Limited, Kenyan based delivery platform. [email protected]