Ecommerce: An ever-expanding domain having innumerous opportunity and scope for development. And, if you look at the developments in recent past, then you will observe that it's just a beginning for this domain and more is yet to come. A sudden increase in its popularity and use among the masses is opening the chances for new investments every day.
It looks very simple from outside but there is a range of activities that an ecommerce business ought to perform in order to survive and thrive. Today, we’ll be looking at one such activity that is not only essential but a backbone for any ecommerce business. Not to mention, but without it, most of the businesses would fail. Most of you might even be guessing right now, so let me just clear the confusion here. Today, we’ll see about the essential part for any business and that is none other than “The supply system”. Apart from this, we’ll also see what wonders an effective supply system could do for an ecommerce business.
Supply system is an integral part of any kind of business and, especially for ecommerce. Today, in this fast-paced world, businesses with an effective supply system are flourishing. They are only the one that can thrive and sustain nail-biting competition and fluctuations in demand. Nowadays, due to various reasons, no businesses are sure to experience the same level of demand around the year for their products. There are festivals, wedding seasons, etc. And all these things directly or indirectly affect the demand. During these seasons, the need for some products could be skyrocketing and for some it might not. Hence the system should be ready to fulfil the fluctuating demand. And, even after being prepared with everything to make the buying process of customer smoother. The merchant might not deliver the order just because of inefficacy in the supply system. Hence, it becomes even more necessary to list out the processes way before to manage the product right from its manufacturing to delivery to the end-user.
In previous paragraphs, we have much talked about the problems that an ineffective supply system could entail. But, before we proceed any further, let’s see what exactly this supply system is. In the ecommerce domain, a supply system is something that ensures the proper delivery of the product to the user right from its procurement. To maximize the efficiency of supply chain, there are some things on which you could specifically pay attention. Let’s see each one of them one by one.
Procurement of Materials or Products
Usually, this is the first step and could vary depending on the nature of business. For some businesses, it might even start right from the procurement of raw materials. Whereas in others like ecommerce, it generally starts from the procurement of product from the seller. And, in case, if you closely analyze the whole process, I.e., Right from procurement to delivery on the customer's doorstep, you would find that it plays a significant role. Let me explain this in detail.
Consider yourself a buyer of some goods, say perishable items like fruits, veggies etc. You regularly order these products from a website say (Y.com). On one fine day, upon delivery, you find that some of the veggies you received were spoilt and not fit to consume. Now, there is a much less chance that you would dare to order them again from the same website. It even applies to non-perishable goods in case if they were not delivered in their original shape.
Now, considering the above case, it becomes even more important to check the products before taking their delivery from the supplier. Otherwise, it could seriously hamper your brand image. The product procurement in itself is a vast topic and to avoid deviation from the main topic we'll not go much into detail. But there is a general checklist that you can follow before procuring the products.
- Find a trustworthy supplier
- Get feedback from other sellers about the supplier
- Check whether the product provided by them are good or not
- Negotiate for discount
- Estimate the rough demand, place the order and procure the product accordingly
After the procurement of products, next comes is their management at the warehouse/store.
In ecommerce, Inventory management corresponds to the process of ordering, storing and managing the sufficient quantity of products. Inventory management is an important part in supply chain and any inefficiency in it could lead to skyrocketing stock keeping cost, obsolete products, dead stock etc.
Nowadays, the customers are placing orders regularly and stock as per the demand would only help you to fulfill the order on time. A notification about cancellation of order afterwards due to out-of-stock product may lead to customer dissatisfaction. Hence, it becomes an important task for an ecommerce merchant to keep a check on the stock and their management to reduce losses due to spoilage, stalled stock etc.
Here, you may be wondering about this new term stalled stock. So, let me explain to you about it first. A stalled stock is something that is being kept at the warehouse due to no selling/decreased demand. It hinders in the effective management of inventory and even the whole supply chain. It haunts every merchant as this is the money of the merchant that is stuck in the products. Neither this money is giving any returns nor is used in the business again. It is almost a kind of loss that cannot be recovered until the stalled inventory starts moving (selling) again.
Effective Logistic System and Timely Delivery of Goods
This is usually the last part of the supply chain of an ecommerce business. Its importance could not be stressed out more as many startups have failed in the recent past cause of their ineffective logistic channel. Existence of an effective logistic channel not only ensures timely delivery of products/goods but also restores the faith of the customer in the brand each time the product is delivered.
Being an ecommerce business owner, you must be aware of the fact that apart from the delivery of goods, delivery partners also handle returns. These days, any ecommerce merchant handles roughly an average return of 18-20%. The role of reverse logistics cannot be ignored here, owing to this much significant high rate of return. Here you may wonder why I am suddenly using this term so much. So, here’s the deal. A proper logistic channel ensures timely delivery of goods whereas the reverse logistic ensure the returned item gets back safely to the warehouse again. Although, these days, many merchants even offer their customers to send the item back via their medium and pay the cost of logistic to the customer afterwards. But the method doesn’t prove to be much convenient for merchants as they are not aware of the whereabouts of the package each time.
The things described above not only carve out the importance of logistic but how they can help with the brand image too. Now there is one thing which you must take care before managing the part of logistic and delivery, I.e., delivery partner. An ineffective delivery partner may cost you lots of sales. But that is a topic of another time and hence we should try not to delve into much detail.
Also, while selecting a logistics partner for your business, you should consider these points beforehand:
- The usual delivery speed of the packages for various operating locations
- Customers feedback on their delivery agents
- Return handling process and how they’ll keep you in the loop with delivery and return of packages
- Average delivery charge for packages of the various weight range
- Location of the shipment center from your warehouse, etc.