In many ways, online retailers are replacing traditional stores as ecommerce is becoming the preferred shopping method among consumers. In 2019, an estimated 1.9 billion people worldwide purchased goods online. Ecommerce fulfillment has evolved significantly just in the past few years, bringing increased competition, challenges and consistent change. As this method of shopping increases in popularity, it brings with it a new batch of ecommerce logistics challenges such as rising expectations for fast delivery time, real time tracking, free and easy returns, and mobile optimized websites. Successfully navigating these challenges in ecommerce and coming up with strategies to overcome them is very important in order to remain competitive in the market.
In 2019, an estimated 1.9 billion people worldwide purchased goods online.
Massive Industry Growth & Challenges in Ecommerce
The way that people shop has undergone a massive evolution from traditional brick and mortar shopping to online retail and continues to change as new technologies are introduced and companies improve their technology. This growth has had a huge impact on all companies from start-ups to global enterprises. While different industries have been impacted in different ways, the challenges in ecommerce are felt far and wide among business owners. Companies that have been around for a long time need to adapt in order to stay relevant, while smaller companies need to overcome ecommerce logistics challenges by ensuring their supply chains can provide efficient fulfillment services and fast shipping. Online shoppers have more choices than ever, and everyone is competing with companies like Amazon that offer the whole package. Get it, the whole package? Speaking of bad puns, check this out.
Ecommerce Supply Chain Challenges
Ecommerce has affected supply chain management in a big way. With the industry changing so much, customers have much more power in the buying process. Many companies sell similar products, allowing consumers to jump between businesses to find the best price and delivery time. In order to stay relevant, your supply chain needs to meet your customers’ needs and expectations and pivot quickly as the market changes (see Toys R Us and Sears). Common ecommerce supply chain challenges include inventory management and shipping costs. If one of your products is out of stock, a consumer is much more likely to buy a similar product from a competitor rather than wait for your item to be back in stock. Shipping speed is also a huge influencing factor for your customers. People are unwilling to wait for longer shipping when they know a similar item can be purchased from Amazon, where they can reap the fast and “free” shipping benefits of Amazon Prime. However, studies show that a majority of customers are willing to shift to other retailers that offer the same delivery speed and shipping price as Amazon.
Effective inventory management and faster and cheaper shipping need to be key parts of your ecommerce logistics strategy. Having a comprehensive warehouse management system that can expedite the inventory management process and help with product retrieval is key. This will streamline the picking and packing process and help you organize your warehouse in the most efficient way. You need to make sure you are providing real-time tracking, expedited shipping options, and managing customers’ expectations for shipping costs. You may be able to implement these best practices in-house if you have your own distribution center, but for some companies it can be advantageous to work with a third-party logistics provider (3PL). These providers have systems and expertise to expedite the fulfillment process and the relationships to help you get better shipping rates—both of which help you stay competitive.
Technological Challenges in Ecommerce
Technology continues to bring a plethora of new capabilities to the ecommerce logistics industry. Companies that have been around for years and have made the transition from a strictly brick and mortar experience to a full omnichannel operation have had to make technological adjustments to stay relevant, which comes with its own challenges. For any business, choosing the right technology platform for your company is a vital decision. This is because the wrong shopping cart solution, inventory management software, or analytics system can limit growth and efficiency. On top of that, the integration with existing protocols when transitioning to new software systems can be convoluted and difficult without the proper guidance from experienced partners.
However, one of the more concerning ecommerce logistics challenges is security. The explosive growth of the ecommerce industry has made it more attractive for criminals. Hacking incidents tend to go viral, which can cause a decrease in consumer confidence for online shopping. Because of this, reliable and up to date security systems are very important, not only for protecting your customers’ personal information, but also for avoiding a PR disaster if a security breach does occur. There is quite a bit of work that goes into securing your technology in order to protect your customers and yourself.
Partner with ITS Logistics as a 3PL for Ecommerce
The ecommerce world can be challenging and keeping up with the constant changes and trends can be a full-time job. At ITS Logistics, we know that your time is better spent running your business instead of researching and implementing best practices for your fulfillment process. When you partner with ITS, we consistently monitor and troubleshoot issues before they become a problem. Our WMS platform has the capabilities to meet our clients’ wide variety of needs. We also have a large in-house development staff that builds our custom service platforms like our FLEXPICK application which improved our productivity in the peak of 2020 by more than 35 percent. Additionally, we have an onsite business intelligence team, which many of our clients have found as a vital resource when it comes to improving their overall business metrics. If you are looking for a 3PL partner to help you successfully navigate common ecommerce challenges, give us a call today!
Interested in learning more? See these additional resources for ecommerce fulfillment
Fulfillment & Distribution Case Studies
Learn how we’ve tapped our vast partner network to solve logistics problems for clients.