Successful ecommerce requires more than a great website and attractive products. You need a reliable system to ensure you can always get your products delivered to your customers, on time and at the lowest possible cost. This is what ecommerce supply chain management is all about.
Did you know that 56% of young shoppers expect same-day delivery when they order something online? And these expectations will only continue to increase. Yet, it is impossible to meet these expectations without an advanced supply chain management system to ensure you’re always on top of inventory and logistics.
Last year we published a post on The Top 10 Ecommerce Future Trends for 2022. The number one trend in that post was that global supply chain issues are posing a significant challenge for ecommerce brands and will continue to do so well into 2022.
Before the pandemic, supply chain issues were not a major concern for many companies, but this has changed dramatically. The supply chain, defined as the system of moving goods from factories and farms to end consumers, has been affected at all stages by recent events. And in many cases, this has meant that ecommerce businesses simply have failed to deliver their products to their customers. Now, these issues are not all due to the pandemic. Another problem is that global supply chain companies are already making record profits, which means there is a limited financial incentive to resolve issues quickly.
So, what are the implications for brands and retailers? And how are supply chain issues impacting consumer behavior? Those are some of the questions we’ll look at in this article, as we suggest five areas to focus on in the coming months and year.
Related reading: Enhance Your Ecommerce Strategy With Click-And-Collect
ECOMMERCE SUPPLY CHAIN: 5 FOCUS AREAS FOR 2022
1. SUPPLY CHAIN STRATEGY
Yes, you need a specific supply chain strategy. Your supply chain strategy should cover things like:
- All data and information needs and flows
- Necessary resources including raw materials
- Budget including shipping cost, labor cost, and labor availability
- Specific delivery requirements like quick delivery,
- Special conditions required for your products (perishable goods, shelf life, or heavy items)
- Your target market and audience – geography, type of product, etc.
The goal is to connect all of the different entities and stages of the ecommerce supply chain in a way that ultimately supports your brand and business objectives and delivers a great customer experience.
Related reading: Seamless Customer Experience: Why It Matters And How To Deliver
2. WAREHOUSE STRATEGY AND MANAGEMENT
To have—or not to have—your own warehouse? That is the question.
One of the most important strategic decisions is whether to own your warehouses or outsource your warehousing through partners. If you opt for a solution where you manage your own warehouses, this will require some thoughtful attention. If you don’t outsource your warehouse operations to a third party, here are some aspects unique to ecommerce warehouses that you’ll need to consider to be successful:
- Large percentage of single-item orders – According to Peoplevox, around 80% of orders that ecommerce businesses receive contain just one single product. This means that ecommerce warehouses require a system that can manage to fulfill large volumes of single-item orders.
- Big fluctuations in demand – All commerce experiences rise and fall based on market demand. But in ecommerce, these fluctuations tend to be much more significant, which means your warehouse system needs to be able to handle these shifts in demand.
- Need for more accurate inventory management – Knowing the exact numbers of your inventory at all times is especially essential for ecommerce warehouses. For the best possible customer experience, these stock numbers should always be exactly reflected on your product detail pages and updated in real-time.
- A larger number of returns – Ecommerce businesses, due both to the nature of the business model and consumer behavior, have the highest number of returns of any type of business. Therefore, your ecommerce warehouse system must be designed to handle a large number of simultaneous return processes quickly and efficiently.
Regardless of which warehousing option you choose, your decision isn’t irreversible. As your company grows and as your business evolves, it’s normal to reevaluate and tweak your strategy.
Related reading: What Is a Dark Store? The New Post-Pandemic Retail Model
3. PLATFORMS AND TECHNOLOGY
Depending on whether you have your own warehouses or not, your technology needs will differ. If you choose to operate your own ecommerce warehouses, there are significant platform and technology choices that you will need to make. If you outsource warehousing through a partner, they will provide many of these platforms. However, you may still need to consider the integrations that will make workflows most streamlined.
If you have your own warehouses, the list of technologies and platforms to consider include:
- Order Management System (OMS). An OMS will route orders between where they’re placed and where they’re sourced. The OMS uses automated workflows to decide how to best fulfill each order based on rules that support the ecommerce strategy.
- Warehouse Management System (WMS). A WMS will manage the picking, packing, and shipping within your warehouse(s).
- Forecasting Software. This can be based on an enterprise resource planning (ERP) system, which usually provides inventory visibility.
Related reading: What Is An Order Management System?
4. CUSTOMER SUPPORT
Another extremely crucial aspect of the ecommerce supply chain is the customer support side of the process. Establishing a client-first customer support function is one of the most critical investments an ecommerce business can make. When you get this part right, it has the potential to set you apart from your competitors and help you build long-lasting and lucrative customer relationships. There are numerous ways that you can leverage technology to enhance customer experience and deliver higher levels of customer satisfaction.
For example, customers love convenience, they love choice, and they love to avoid paying shipping fees. With intelligent rule-based systems, you can use free shipping to incentivize larger orders, and you can offer the choice of different delivery options depending on your customers’ preferences.
5. LOGISTICS AND LOGISTICS PARTNERS
You know what they say, a chain is never stronger than its weakest link. This is why it’s so vital to choose the right logistics partners for our ecommerce operations.
To do this, you need to understand and break down the different components of the supply chain ecosystem. Then it is important to choose partners that not only work well with you, but also work well together. Managing logistics can be extremely challenging, and considering the ever-increasing consumer expectations when it comes to smooth and rapid delivery services, everything must be working flawlessly. Luckily, today, there are many third-party logistics (3PL) suppliers that can provide all the logistics services you need so that you don’t have to manage them yourself.
HOW VAIMO CAN HELP
A well-designed strategy for supply chain and warehousing should be an integral part of any ecommerce strategy. An optimized supply chain is not only at the core of successful ecommerce operations. A well-thought-out supply chain strategy can also dramatically reduce operating costs while at the same time increasing customer satisfaction through a seamlessly connected and personalized customer experience.
At Vaimo, we’re experts in all things ecommerce and we have more than 12 years of experience in helping our customers implement and finetune their digital strategies.
If you want to discuss or develop your ecommerce supply chain, to design a personalized customer journey, our team of experts is here to help. We’re happy to work closely with you and go through any or all of the areas we’ve outlined above to take your supply chain management to the next level. Reach out today to learn more about the work we do.