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How AI is transforming eCommerce logistics

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Artificial Intelligence is transforming several critical functions of eCommerce logistics to bring significant improvements in efficiency, accuracy, and cost-effectiveness

New Delhi: “The more we can use robots to complete repetitive or distant tasks in highly predictable, structured environments, the more we free up our employees to leverage their unique human capabilities,” as per Tim Tetzlaff, global head of accelerated digitalization at DHL Supply Chain.

Tetzlaff is referring to the use of Artificial Intelligence (AI) in various business operations for bringing in efficiencies and increasing people’s productivity. AI has made great inroads into various business functions recently in particular it has deeply impacted supply chain and logistics.

From inventory management to last-mile delivery, AI is driving significant improvements in eCommerce logistics’ efficiency, accuracy, and cost-effectiveness.

Here are some ways in which AI is transforming eCommerce logistics operations and helping eCommerce businesses to save costs, deliver better and grow.

Praful Podder, Chief Product Officer at Shiprocket said, “In the eCommerce industry, witnessing the profound impact of AI on all operations has been truly remarkable. AI-driven solutions have unlocked new levels of efficiency and precision, enabling us to optimize inventory management, streamline last-mile deliveries, and enhance the overall customer experience. With AI, we are not only saving costs but also empowering our merchants to focus on more strategic tasks, further propelling their business growth. The transformative potential of AI in eCommerce is unparalleled, and we are excited to continue embracing this technological revolution for our continued success.”

1. Warehouse Management
According to Gartner, AI technologies are playing a crucial role in eCommerce logistics optimization. “AI-driven demand forecasting and inventory management solutions enable retailers to accurately predict customer demand, optimize stock levels, and reduce costs associated with overstocking or stock-outs,” it says in a report.

A McKinsey & Company study found that “AI-powered robotics and automation technologies can significantly enhance warehouse operations by optimizing picking and sorting processes, leading to increased operational speed and reduced costs.”

AI-powered sorting robots are increasing sorting capacity by some 40% or more as per DHL data. At DHL using robots has increased productivity between 30% and 180%.

2. Supply chain optimisation
According to a PwC report on AI, “AI-powered analytics tools provide deep insights into the supply chain, enabling businesses to optimize procurement, logistics, and supplier management, resulting in improved efficiency and responsiveness.”

AI is especially helpful in optimizing complex supply chains where multiple suppliers, transportation modes, and distribution centers are involved. AI algorithms can analyze real-time data from various sources, such as weather conditions, traffic patterns, and carrier performance, to optimize routing, transportation scheduling, and load balancing.

These factors result in reduced transportation costs, improved delivery times, and enhanced supply chain visibility.

McKinsey found that successfully implementing AI-enabled supply-chain management has enabled early adopters to improve logistics costs by 15%, inventory levels by 35%, and service levels by 65%, compared with slower-moving competitors.

How AI is transforming eCommerce logistics

3. Shipment tracking
AI is enhancing the shipment tracking experience for buyers with the help of an automated notification system. It is making logistics for eCommerce deliveries seamless by creating real-time communication via email, SMS and WhatsApp which gives the buyer a sense of assurance while meeting their delivery expectations.

These include updates at every state of the delivery including order received, order packed, order shipped, order out for delivery and order delivered. It also informs buyers if the shipment is arriving earlier or if it’s getting delayed.

According to Shiprocket, the advantages of sending real-time shipment updates are to build customer trust, increase delivery success rate, and reduce customer support calls.

4. Last-mile delivery optimization
Last-mile delivery, the final leg of the supply chain from the distribution center to the customer’s doorstep, is a critical aspect of eCommerce logistics.

Deloitte recognizes AI as a key driver in revolutionizing last-mile delivery. AI-based route optimization algorithms can factor in various parameters such as traffic conditions, delivery time windows, and delivery vehicle capacity to determine the most efficient delivery routes.

Furthermore, AI can also facilitate the use of alternative delivery methods, such as drones or autonomous vehicles, to overcome challenges related to urban congestion and improve delivery speed and efficiency.

5. Courier partner recommendations
An important aspect of the last mile is the logistics partner. Major key metrics such as delivery time, freight time, and customer satisfaction depend on the courier a business chooses. Most eCommerce companies, however, find choosing the right courier partner a challenge.

AI helps in this area by giving recommendations. An example of this would be an intelligent tool created by e-commerce enabler Shiprocket, which recommends the best courier partner for each shipment. The recommendation engine takes into account over 50 data points, including COD remittance, RTO (return to origin), pickup performance and delivery performance while giving recommendations.

The AI tool picks partners based on their ratings, fare, speed and by providing customers with a custom option, i.e., choosing the partner of their choice manually.

6. Automated shipping solution
AI automates shipping operations by offering multiple features that result in reduced manual shipping efforts. Many companies are opting for AI to save time, reduce costs, and decrease errors. Logistics companies are now helping eCommerce companies with this technology by importing all orders without manually syncing websites; map order and payment status and manage undelivered orders.

7. Customisation
According to a Forrester study, “AI-driven chat-bots and virtual assistants enable businesses to offer tailored product recommendations, resolve customer queries promptly, and enhance overall customer satisfaction.

For more such insights and resources on growing an eCommerce business, attend Shiprocket SHIVIR – Aapke Unnati ka Saathi at the Pullman, Aerocity, New Delhi on 4th August 2023.

Shiprocket Shivir 2023


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