How To Strategize Your eCommerce Supply Chain For Growth
Everything has moved online these days. Demand for the online store version of every brick-and-mortar store has been driven upwards in the digital age, particularly in response to the COVID-19 pandemic, meaning that running an eCommerce business could be incredibly lucrative nowadays. Indeed, in 2021, eCommerce sales were approximately 4.9 trillion US dollars. But running an eCommerce business isn't easy and getting a sustainable eCommerce supply chain down is one of the biggest challenges eCommerce companies face.
Customers expect their products almost instantly in the digital age, meaning that quick shipping times and cost-effective solutions are a must for customer satisfaction. eCommerce stores face many supply chain challenges and so getting your supply chain strategies right from the beginning is in your best interest to build brand loyalty and customer trust.
There are lots of different ways you can optimize your supply chain using both in-house fulfilment and 3PL companies for distribution. In this article, we're going to be looking at what an eCommerce supply chain is, what the benefits of an optimized supply chain are, how to strategize your supply chain, and whether or not outsourcing your supply chain management is best for you. To find out more, keep reading now.
What is eCommerce supply chain management?
A supply chain for an eCommerce business involves a range of logistical processes, beginning with the raw materials for a product and ending with the product delivery. A supply chain begins with the planning and sourcing of raw materials, moving through manufacturing, warehousing, inventory planning, order fulfilment, and ending in the delivery of goods and the handling of any returns.
Good supply chain management is key to customer satisfaction and a successful eCommerce business. Keeping costs down while still delivering products in a timely fashion is essential to keeping customers happy and everything from good warehouse management systems to an effective inventory management system plays a role in a sustainable supply chain.
Supply chain management can be outsourced to third-party logistics companies (or 3PLs) and may also be done in-house.
Benefits of a good eCommerce supply chain strategy
Effective supply chain activities make for successful eCommerce businesses and the many benefits will make you want to optimize your supply chain management as best you can today. Benefits include:
- Reduced shipping times and costs - With the need for immediacy in our world today, customers want to receive their goods in a timely fashion. This means that shipping times need to be as quick as possible, and where possible, as cheap as they can be. High shipping costs can put off many customers and so reducing the time and cost of shipping is essential for customer loyalty to an eCommerce company. A good supply chain can help to reduce both time and cost of shipping goods to customers.
- Inventory management - The supply chain logistics industry is adept at good inventory management and good inventory management can help you to keep your warehousing costs down as well as monitor trends in the market. Knowing when you need to re-order products and when you have leftover stock can help you to optimize storage spaces and understand where your best-selling products are.
- Customer satisfaction - A good supply chain means everything runs smoothly and when everything runs smoothly, customers receive their products in a timely fashion and are happy! Customer satisfaction is what will keep customers coming back to your brand for more.
- Forecasting and response to fluctuations - With good inventory management and data analytics, you can keep ahead of which products will be needed and when. If you know what your customers are buying and when you'll always be prepared and ready to act quickly when supplies run low. In addition, extra data can help you to respond quickly to fluctuations in the industry, saving you money.
- Reduced overall costs - Everything in a good supply chain works to keep your costs down. From reduced shipping and transportation fees to optimized storage and inventory management works to ensure you are running your eCommerce company as cost-effectively as possible.
- Expansion of market - The better your supply chain management, the further you can expand your customer base. With more fulfilment centres and better shipping processes, you can improve your ability to ship anywhere in the world quickly.
How to strategize your eCommerce supply chain
After learning of the incredible benefits of a good supply chain, you're probably looking for ways to strategize your supply chain to make it more effective for your business. Below are a few really easy ways you can increase cost savings and promote a good customer experience by optimizing your supply chain logistics operations. Check them out now.
- Multiple fulfilment centres - By utilizing warehouse space in a range of locations, you can streamline production and decrease shipping and transportation times, including international shipping times. Multiple locations mean being able to serve as many customers as possible and giving each of them equal delivery time frames to enhance customer experience.
- Software for inventory control and management - Employing software to collect data on your inventory and keep up with inventory tracking is one of the best ways to keep up with the merchandise stored in your fulfilment facility. E-commerce businesses may find that paperwork accuracy fluctuates as businesses struggle to keep up so utilizing artificial intelligence to keep your stock levels up to date can ensure you know what stock you have, what stock you need, and what sells the most. It allows for optimal freight shipping and accurate forecasts of product needs.
- Optimizing your existing warehouse space - Factory direct methods of supply chain strategy cut costs of the middle man, meaning your e-commerce business can run more efficiently, but it also means lots of work happens within fulfilment centres. Optimizing this space by running regular audits and grouping products together logically can help employees to work quickly and efficiently.
- Using a 3PL - Many eCommerce companies now outsource their fulfilment to third-party companies for ease and better practice. eCommerce businesses may lack the expert knowledge for sustainable and streamlined supply chains and so, by outsourcing, they can utilize others' experiences to keep their costs down and their supply chain in good working order.
Could a third-party logistics company be right for my company's goals?
A third-party logistics company could be right for you if you're looking for someone with the knowledge and expertise needed to organize, strategize, and streamline your supply chain. Supply chains are complex to understand and many eCommerce companies do not have the in-house expertise needed, which is why more and more eCommerce and other businesses are outsourcing their eCommerce supply chain management.
With a 3PL, your eCommerce supply chain management will be overseen by those with the practical skills to ensure everything from supply chain visibility to reverse logistics is up to standard. When looking for a supply chain management team, ensure you look out for qualities you want in your management rather than just a competitive price as the cheapest option isn't always the best.
Benefits of using a 3PL for sustainable supply chain management
There is a tonne of benefits that come with employing a 3PL to oversee your supply chain management. These include:
- Warehouse capacity - Anyone looking for warehouse space currently will know there are shortages as the world plays catch-up with the boom in eCommerce sales seen during the COVID-19 pandemic. Indeed, it was estimated in 2021 that a further 490,000 sqm of warehouse space will be needed year on year for the next few years. This means that finding your own space can be difficult and costly. A 3PL will already have warehouse space that can be used for your product manufacturing and distribution processes, helping to cut costs.
- Scaling labour etc. - A 3PL will scale everything from labour to transport to ensure the strongest margins while still getting quality products to your customer's doors in good time. Scaling, when needed, helps reduce costs too.
- Expertise and knowledge - We have discussed this frequently throughout this article, but it is one of the major benefits of a 3PL. Supply chain logistics are complex and so working with someone who already knows what is going on is going to make your life easier in the long run.
- Delivery and transportation rates - With the knowledge of the industry that a 3PL has, negotiating better rates, inventory managing to keep ordering to a minimum, and reducing packing materials to in turn reduce weight and therefore shipping costs are all standard practices to keep reducing cost when it comes to delivery. Lowered delivery costs also mean keeping customers happy.
Whether you own an eCommerce business or a physical store, you know how difficult supply chain management can be. With the boom in eCommerce, many new businesses are trying to get to grips with the way supply chains work.
Strategizing your supply chain is one of the best ways to run your business more smoothly and make way for growth. There are a few ways you can do this, including implementing up-to-date software for the management of inventory and utilizing multiple warehouse facilities.
While you can optimize your own supply chain, a quick and simple way to do this is to work with a 3PL. A 3PL will be able to create the best possible supply chain for your business to keep costs down and delivery speeds quick, ensuring customer satisfaction at every turn.