Cheat Sheet: 14 E-commerce Logistics Terms You Need to Know

Cheat Sheet: 14 E-commerce Logistics Terms You Need to Know

By Chris Crutchley on December 19, 2021
Are you a budding e-commerce business or making the transition to the new norm of online-first selling? Don't get lost in a sea of new terminology.

Like any sector, e-commerce has its own unique language—one that can leave those out of the know scratching their heads. But today, it’s essential to make sure you and your business are up to speed on the current state of selling.

In 2021, e-commerce sales have increased by nearly 15%, while projections show the US market alone is on track to reach a yearly value of $1 trillion in 2022. 

E-commerce sales have exploded in the last two years, due both to the COVID-19 pandemic’s wide-spanning effects on how shopping is done and the growth of global platforms. It’s now easier—and faster—than ever to get goods online.

At CBIP Logistics, we’ve seen first-hand how businesses that adapt and capitalize on the changing landscape of commerce come out on top. Here’s a hand-picked list of e-commerce and modern-day shipping terms to keep you on your game.

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E-commerce logistics terms you need to know today

  1. Dropshipping: This is a term that seems to be all the rage but is, in fact, not such a new phenomenon. It’s a system where stores don’t keep any items in stock themselves; instead, they purchase from a third-party supplier before outsourcing shipping to get their goods directly to customers.

  1. FBA: An acronym for ‘fulfilled by Amazon,’ this means that, as an Amazon-listed seller, you opt to carry out your fulfillment in-house with Amazon. This system is favored by some for its ease of use, but also requires sellers to play by Amazon’s rules for warehousing and certification standards.

  1. FBM: An acronym that stands for ‘fulfilled by merchant.’ Unlike FBA, FBM means sellers on Amazon opt to take care of their own warehousing and fulfillment. Many merchants fulfill themselves because it offers more flexibility.

  1. Last-mile: The last step in the shipping process that deals with transporting goods from a fulfillment center to the customer’s door. This is also traditionally the most inefficient facet of modern logistics due to lags in technological uptake, poor communication among companies and delivery personnel, and an overall lack of planning. 

  1. Volumetric weight: This metric dictates the prices of a shipment. Volumetric weight can be calculated by multiplying the length, width, and height of a parcel (in cm) and dividing that figure by 5000. It’s a crucial measure because it not only calculates the space a shipped item will take up, it also calculates density. 

  1. Value-added tax: Unlike a flat sales tax, value-added taxes are placed on goods as they move from country to country and are then charged to their customers at the end point of sale. Businesses need to keep track of these costs so they don’t end up with surprise fees.

  1. Waybill: A comprehensive document that contains information about a shipment’s contents. As DHL notes, it serves as a ‘passport’ for a given shipment to move between countries. In the age of e-commerce, it may also possess a real-time tracking number.

  1. De minimis: This term comes into play for the small stuff you ship. ‘De minimis’ is the price value at which something can enter a country without being taxed. Often there is a ‘de minimis’ threshold; for example, in the UK this value is £135.

  1. Pick and pack: This is a fulfillment style common among e-commerce merchants that don’t send out orders in mass quantities to customers. The system relies on warehouse workers grabbing items from shelves and shipping them off to individuals’ addresses, rather than using pallets-sized shipments.

  1. JIT inventory: An acronym that stands for just-in-time inventory. This is an inventory management system where retailers work with suppliers to have only enough raw materials to meet demand. The goal is to reduce waste and free up space—but it can be risky and involves a supply chain working in lockstep.

  1. 4PL: Fourth-party logistics (4PL) is a supply chain management system featuring a logistics company that doesn’t own assets itself. Rather, it connects customers with providers and infrastructure to facilitate global shipping. They offer more flexibility than other services like express couriers and don’t ‘lock customers in’ when their business needs change.

  1. Cart abandonment rate: This simply measures what percentage of shoppers began the process without completing ‘check out.' Nowadays, virtual shopping carts are more important than ever—and making sure customers see their orders through to the end is a growing challenge. That’s why cart abandonment rate has become a key metric used by major shopping platforms. 

  1. Demurrage: Demurrage refers to a fee placed on merchants or importers who don’t remove their containers on time. It’s a fee instituted for good reason—if containers aren’t removed, newly-shipped containers can’t make it ashore, and a cycle of backlogs ensues.

  1. ERP: Enterprise Resource Planning (ERP) systems are a central information hub for businesses and their logistics operations. These platforms help to visualize supply chains and better use resources; they’re also a way to help understand and predict breakdowns.


RELATED: Selling on Amazon & Want to do Your Own Fulfillment? Find Out How

Want to ramp up your e-commerce business? We can help

At CBIP, we specialize in crafting custom logistics plans for ambitious businesses. Whether it’s adapting to market shifts or developing seamless customer service, we’ve got you covered. Our shipping programs are complete with real-time visualization so you can enter the new age of international shipping with confidence.

Studies show that over half of online shoppers won’t go through with a purchase if delivery timelines aren’t clear and easy communication isn’t available.  At a time when getting shipping right is a key component of retaining customers, you need a partner who understands the ever-changing global logistics landscape.

That’s where we come in. As a 4PL provider, we give you options in warehousing, shipping, and have experts on the ground ready to work through any challenges that affect your business. You also get to see your supply chain every step of the way so nothing gets lost in translation.

Are you ready to take your e-commerce business into the future and ensure you stay on the cutting edge of your supply chain? Talk to one of our experts today.

About Author

Chris Crutchley

Chris Crutchley is CBIP’s director of operations and finance. He has over a decade of corporate finance and operational expertise throughout the Asia Pacific.

In logistics, Chris strives to continuously innovate and challenge the industry’s norms in order to offer clients world-class service that emphasizes clear communication.

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