E-commerce and the Supply Chain: E-Commerce Fulfillment Strategies

E-commerce and the Supply Chain: E-Commerce Fulfillment Strategies

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The e-commerce boom has radically transformed the way we shop for products. Today, the sales prospects are endless, which means competition is at an all-time high.  Now, more and more customers can browse through millions of available products online, and with just a few clicks, they can place their orders and have them delivered to their doorstep.  While for everyday consumers this convenience is seemingly effortless, in order for businesses to make this happen, a successful e-commerce fulfillment process must be in place.


Within the ease of online shopping hides the complex network of logistics taking place behind the scenes, with e-commerce fulfillment, the process of dispatching and shipping the orders received by customers, being just one of them. E-commerce fulfillment can present its own unique set of challenges for businesses of any size. This week, we delve into some of the most common challenges and provide key strategies to help your business overcome them.

 

Challenge 1: Inventory Management in a Dynamic Environment

Unlike brick-and-mortar stores that have set patterns of customer traffic, e-commerce shops can experience sudden spikes in demand. Seasonality, the good timing of an e-commerce marketing campaign, and general spikes in a particular item's popularity may occur, leading to depleted stock or excess inventory taking up space.


This evolving environment requires a data-oriented strategy in e-commerce inventory management. This is where innovative technologies such as advanced analytics, digital tools, and automated forecasting techniques come into play. Think of a tightrope walker – perfect balance is the key factor. Low stock can result in customer dissatisfaction caused by the dreaded "out of stock" messages while having too much stock means capital is being invested in something that would not provide as much flexibility. Therefore, a flexible e-commerce warehouse strategy that can cope with peak and trough seasons becomes critical. 


Moreover, some companies also use drop shipping for some products, where the storage and shipment are taken care of by a third party so that they can reduce the initial investment and minimize the risk of overstocking.

 

Challenge 2: Order Accuracy and Picking Efficiency

Another hurdle in the e-commerce race is order accuracy and picking efficiency. E-commerce orders are typically smaller and more frequent compared to bulk wholesale orders. They are made by individual customers instead of wholesale buyers. This means that there should be more precision and speed in the process of picking and packing individual items.  


While the warehouse staff should be able to work efficiently and precisely to collect the order, a selection error can be a source of a domino effect leading to customers being upset, and requesting returns, potentially resulting in lost revenue. Companies can fight the above errors by allocating funds towards warehouse management systems (WMS). These reliable systems are capable of simplifying the task of picking, reducing mistakes, and efficiently organizing the warehouse.