When you have an eCommerce, some terms you must know by heart since you will deal with them practically every day. However, if you're just starting out, you may find that one gets in your way. Because… what is a logistics center?
If you're unsure of the definition or whether it's right for you, we'll help you clarify everything this word entails.
What is a logistics center
The first thing you need to fully understand is what we mean by a logistics center. It's a place where the storage, organization, and, in many cases, distribution of the products you sell takes place.
Let's take an example. Imagine Amazon. It's a huge store with a ton of products. Many of them are from third-party sellers, but others are managed directly by the company, and they need a place to store their stock. But also a place to organize and distribute it. In other words, if you order a product, they need to know where it is and prepare it for shipment.
This doesn't mean that if you have an eCommerce business you absolutely must have a logistics center, since most of these are set up when the company is too large and can't store all its products or distribute them in an organized way. But it is true that, in the beginning, every logistics center for an eCommerce business is your home . Or a warehouse where you keep the products.
As you grow this gets smaller and you need more and more space. And that new space is what is considered that storage, organization and distribution center.
What functions does a logistics center have?
With what we have told you before, it is normal to think that the functions are going to be the ones we have referred to: store, organize and distribute. But in reality there are more functions to take into account such as:
- Centralize activities. Think about the following: you get an order for two products. You have one in warehouse A and the other in warehouse B, which is 15 kilometers from the previous one. That means you have to spend time collecting both. Now, you already have them, but it turns out that you prepare the orders at home, which is 30 kilometers away. You would have to go home, prepare it and then ask for a messenger to come or take it yourself, and it is wasted time.
- By centralizing everything you would have your warehouse, your order preparation section and your courier ready to collect all orders for that day. Wouldn't it be easier that way?
- Monitor stock. Because many times if you don't carry a good inventory you can be selling products that you don't really have, and then you will have a hard time, in addition to having to make returns that, sometimes, can cost you money.
- Manage time better. In this way you will be meeting deadlines, or even ahead of them, which gives a good image to customers.
Types of logistics centers
A logistics center isn't very complicated. They're spaces designed to organize an online store or a physical store (because they can distribute products that are out of stock more easily). However, did you know there are five types?
Yes, and each of them has unique characteristics that can be more interesting for your business. We explain them to you.
Integrated Merchandise Center
Also known by the acronym CIM , this is a center almost always located on the outskirts of cities. Due to their proximity, they are responsible for distributing the products they have to customers . But not only to them, but also to suppliers and other "physical" channels that can sell their products.
For example, a hairdressing products company. You could sell to clients but at the same time you can have an agreement with several hair salons to serve them your products.
logistics hub
Although it is widely known by this name, it is also called a transport hub , or transport node.
In this case, it's a fairly large center that handles logistics and transportation . You could say it's where the company's trucks are loaded and unloaded to distribute the products they sell.
logistics platform
This type of logistics center is the most well-known, and almost the one that defines the term. It is a space where products are neither manufactured nor altered, but rather used for product storage and management.
Industrial Estate
We could tell you it's a larger logistics platform. But there's another difference. It's where the manufacturing and/or alteration of products takes place , before they're moved to another part of the industrial park for processing and shipping.
Logistics activity area
Known as ZAL, this center is located in port areas and its objective is to control the logistics carried out by sea, land or air.
Am I interested in having a logistics center?
Now yes, the big question. Should I have a logistics center for my business? Suits me?
The answer is not as easy as it seems. And it is that, if you are starting but you sell many products and you have a significant stock, you may need to rent a warehouse where you can store them while the orders arrive. If these are few, you will have no problem managing them, but what if there are many? Apart from hiring people, the safest thing is that you need to replace the products that are sold and that you can expand more.
So there will come a time when you will need that logistics center to be as efficient as possible for your customers . But there's no predetermined timeframe for doing so; some entrepreneurs start out with this already covered, while others take many years to even consider it in order to improve their business.
The important thing is that you know what a logistics center is, the functions you can do with one and the types that exist. Whether you need it or not will tell your business and the results you are getting with it.