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Outbound logistics management

The importance of outbound logistics relates to the expectations of offering direct sales 

through a website. In a nutshell, logistics is crucial to delivering the service promise estab‑

lished on the website.

A different angle on the importance of logistics and how it relates to the bottom line is 

illustrated by the fortunes of Amazon. Phillips (2000) reported that the fulfilment mecha‑

nism was adding to Amazon’s costs because of split shipments, where multiple deliveries of 

items are necessary from a single order. This is a particular problem in the USA, which is the 

source of 86% of Amazon’s revenue. Here the distance between population centres requires a 

network of seven distribution centres for shipments. Phillips (2000) explains that the need to 

fulfil a single order by shipping items from multiple locations increases costs for postage and 

the labour to assemble and dispatch goods. The alternative situation of stocking all distribu‑

tion centres with every product is financially prohibitive. Some analysts suggest that Amazon 

should change its logistics strategy by separating out its distribution operation as a separate 

revenue source and outsourcing fulfilment to reduce costs.

An indication of the scale of the challenge for distribution companies to deliver on time 

and provide services to enable customers to track shipment of products ordered online is 

shown by Mini case study 6.4.

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Part 2  Strategy and applications

Mini Case Study 6.4

Founded in 1932 in France, 3 Suisses originally ran a mail‑order service for woollen knitting yarn manufac‑

tured at a spinning plant owned by the Toulemonde‑Destombes family. 3 Suisses has since become one 

of France’s leading multi‑channel ‘distance retailers’, offering customers a wide range of goods, including 

clothing and household items, all of which can be bought via the Internet, by mail‑order or over the phone.

Annually, 3 Suisses delivers more than 5 million consignments to its customers, representing a total of 

more than 15 million individual items. Having had a web presence since 1996, 3 Suisses’ online business 

has experienced exponential growth, with, 80% of its turnover now generated online. The proprietary supply 

chain system the company previously relied on was not scalable enough, could not provide real‑time inven‑

tory visibility and did not offer 3 Suisses the necessary flexibility to run a catalogue and digital commerce 

order fulfilment operation. This factor is underlined by 3 Suisses’ strategy to become a pure‑player and stop 

printed catalogues at the end of 2014.

In this context, the 3SI Group (the mother company of 3 Suisses) decided to reorganise its activities by 

mutualising the logistic expertise of its digital commerce brands, subsidiarising this activity and investing 

more than €250 million in new IT, new logistics processes, equipment and personnel training.

Dispeo, the new 3SI Group’s subsidiary dedicated to supply chain and e‑fulfilment, now works for in‑

house brands but also for external digital commerce competitors as a pure sub‑contractor. It has been 

specifically designed to meet the essential needs of digital commerce ‑ speed, reliability, cost and volume.

At the heart of Dispeo’s logistics system is France’s largest order‑processing centre for digital com‑

merce companies, opened in 2013. The centre is able to deliver 8 items a second, and prepare orders in just 

two hours, with 400,000 items dispatched each day.