Shipping and logistics: Types and definitions explained
Vaishali Ravi
·January 27, 2025
The terms “shipping” and “logistics” are sometimes used interchangeably, but they’re not the same thing. For ecommerce brands, it’s important to understand the elements of both terms so that you can put smart strategies in place for managing your shipping and logistics. With the right processes in place, you’ll be better equipped to consolidate costs around shipping and returns, and ensure a premium experience for your customers.
What is shipping?
Shipping is a small, but crucial, part of the entire logistics process.
Shipping refers to the act of sending a package from one destination to another. It can include one or multiple types of transport, including road, air, sea, or rail.
As an ecommerce business, many of your operational processes might involve shipping, such as:
- Purchasing raw materials
- If you manufacture your own products, you’ll likely need to source the raw materials from elsewhere. You can set up raw material purchasing and shipping schedules to match your production schedule.
- Purchasing wholesale products
- Many ecommerce businesses operate by purchasing wholesale products in bulk, then marketing and repackaging the items for individual buyers.
- Sending products to customers
- This type of shipping is the bread and butter of ecommerce, of course: sending customers the items they’ve ordered. Depending on the scale of your shop, you may personally package and ship their items, you may use a warehouse team, or you might rely on the services of a 3PL. In some cases, you might even dropship your items directly from your manufacturer without ever physically taking ownership of them.
- Processing customer returns
- Returns are a common part of the customer journey, with as many as 30% of products in some industries ending up as returns. When processing returns, you might have them shipped back to your warehouse or 3PL, to a donation center, or to a recycling facility, depending on your plans for the returned item.
As you can see, shipping is an integral part of the product lifecycle, factoring into every phase from pre-production to the returns process.
Next, let’s look at how it relates to logistics.
What are logistics?
Logistics refers to more than just the flow of physical items from one destination to another—it consists of all the systems that work together to manage that flow. While shipping focuses on physical movement of goods, logistics includes all of the activities required to manage the journey of products through the entire supply chain, while ensuring they are optimized for cost and delivery speed.
Examples of logistics activities can include:
- Inventory management
- Inventory management involves tracking the movement of inventory from one location to another—including raw materials, works-in-progress, finished goods, and MRO inventory needed for maintenance and repairs. Successful inventory management relies on using tracking technologies such as RFID or bar code scanners to track inventory locations in real-time, optimizing the purchase of products to ensure a sufficient level of inventory to meet demand without overstocking.
- Warehousing and storage
- You’ll also need a defined system for storing items that you’re planning to sell. Whether you operate your own warehouse space or rely on a 3PL, you should integrate warehouse data with your inventory management system to ensure you can easily locate items in stock.
- Order fulfillment
- Order fulfillment occurs when a shopper places an order with your brand, initiating the shipping process from your warehouse, 3PL, or dropshipper. The customer should receive an order confirmation, access to order tracking when available, and an estimated delivery date.
- Transportation management
- Transportation management revolves around shipping logistics, but includes choosing a carrier, planning a route and shipping class, and tracking the shipment. Your carrier will generally offer a variety of shipping options, so you can optimize for cost or speed depending on your brand’s or customer’s priorities and price point.
- Reverse logistics
- Reverse logistics come into play when a customer needs to make a return, whether for a warranty repair or because they no longer want the product. You should build a reverse logistics strategy that makes the most of your budget—for instance, choosing to offer a “returnless refund” on products that aren’t likely to be resold, rather than bearing the cost of shipping them back into inventory. Using a returns management solution like Loop can help you build streamlined workflows that maximize the efficiency of your returns.
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The difference between shipping and logistics
As these examples illustrate, shipping is one small component of logistics—and to ensure that things go smoothly, you’ll need a solid process in place for getting your products from one place to another. Invest in a robust ecommerce platform like Shopify to help you track and manage orders, and sync data directly to your warehouse operations or 3PL so that you have visibility throughout the supply chain. With the right data, you’ll be able to build workflows that help you pack and ship items efficiently and ensure on-time delivery to your recipients.
And don’t forget about the other side of the coin, reverse logistics in ecommerce. Product returns can occur for many reasons, and they shouldn’t all be treated the same way. By using a reverse logistics operations platform like Loop, you’ll be able to set up custom workflows for different use cases, such as new-in-box products, gently used items, and warranty repairs.
With Loop’s dynamic routing system, you’ll be able to ensure that each type of return takes the most efficient path to its destination, and can veto return shipping for products that won’t be resold. That helps you optimize your reverse logistics costs so that you can shore up your profit margins and retain more revenue from the returns process.
Ready to learn more about how Loop can help you improve logistics? Book a demo.
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