E-commerce Supply Chain: Phases, Obstacles, and Management Insights

Running a thriving eCommerce business goes beyond great products and a user-friendly site. Success depends on managing a smooth, efficient supply chain.

Ensure each aspect of your eCommerce supply chain, from product sourcing to customer delivery, is optimized for smooth operations and superior customer satisfaction.

Yet, this journey comes with its obstacles. So, we must address these challenges directly to excel in the competitive online market.

In this piece, we'll describe the main stages of the eCommerce supply chain, examining their roles and the challenges they pose.

We'll also provide practical eCommerce supply chain strategies to help overcome these challenges and optimize your supply chain for success.

Retail eCommerce sales globally are predicted to surpass $8 billion by 2026. Whether you're a new eCommerce startup or a seasoned omnichannel seller, understanding the supply chain's opportunities is crucial. Tackling its hurdles will give you an edge in this rapidly expanding market.

Key takeaways

• A streamlined eCommerce supply chain is crucial for your eCommerce company. It enables timely product delivery and enhances customer satisfaction.
• The eCommerce supply chain comprises six stages: Determining supply and demand, warehousing, inventory tracking, order management, delivery, and reverse logistics.
• Regularly reviewing and optimizing your supply chain ensures alignment with business goals. That will help to ease adaptation to changing market conditions.
• Proactive and technology-driven supply chain management involves: auditing your current supply chain; implementing accurate tracking metrics; streamlining inbound operations; developing an efficient warehouse plan; maintaining effective labor management.

eCommerce supply chain phases

In online retail, the supply chain encompasses several critical stages.

Let's delve into each to grasp its significance, address the challenges, and provide tips for effective management.

1. Assessing Supply and Demand

In this phase, analyze market trends, customer actions, and past data. It will help to predict the anticipated supply and demand for your products. This guides cost-effective purchasing choices.

Precisely predicting demand helps prevent overstocking and stockouts, optimizes inventory, cuts costs, and ensures a smooth shopping experience.

Challenges may arise from shifting customer preferences and unpredictable market conditions.

To effectively manage this phase, use data analytics, perform market research, and establish robust communication channels with suppliers and customers.

2. Warehousing 

Warehousing plays a big role in eCommerce logistics. It encompasses the storage, organization, and efficient inventory management to facilitate seamless order fulfillment for your eCommerce store.

Good warehousing helps you keep the right amount of stock, make orders faster, and make customers happier.

Challenges in warehousing include not having enough space, having many warehouses, and making sure inventory is correct.

You can use tools like an inventory management system or a warehouse management system (WMS). Also, organizing your warehouse better, using faster picking and packing methods, or considering sharing warehouse space with others can help solve these problems.

3. Keeping track of inventory

Inventory tracking is important in the supply chain. It involves watching and managing how products move when they arrive when they get counted, labeled, and recorded.

It's crucial to track accurately to keep inventory right, avoid running out of stock, and spot problems like theft or shrinkage.

Problems with inventory tracking usually happen because of mistakes, differences between what's recorded and what's there, and not knowing what's happening in real-time.

You can track your inventory by using barcode or RFID technology, SKU numbers, and inventory software, and by doing regular checks and audits.

4. Managing Orders

Order management involves getting, dealing with, and completing customer orders. That includes entering orders, processing payments, confirming orders, and working with different teams to fulfill them.

Efficient order management is crucial for handling orders quickly and correctly. It minimizes mistakes and makes customers happier. Challenges might include complicated orders, changes in how many orders there are, and how fast orders need to be completed.

To make order management smoother, you can automate processing, connect your order systems for better data flow, and set up clear communication with shipping partners.

5. Delivering Orders

Delivering orders is key to keeping customers happy and loyal.

Effective delivery management means picking the best shipping method, working with carriers, and tracking the shipment until it gets to the customer.

Challenges can include organizing logistics, handling shipping expenses, and solving problems with the final delivery stretch.

To deal with these challenges well, team up with trusted shipping companies, use live tracking tech and plan delivery routes better. For instance, tools like eLogii route optimization software offer these features.

6. Handling Returns (Reverse Logistics)

Reverse logistics is about managing products that customers send back to you for returns, fixes, or swaps. This includes tasks like approving returns, checking products, fixing them up, or deciding what to do with them.

Good reverse logistics management is vital for keeping customers happy. It also helps in cutting losses and handling inventory well.

Challenges might include tricky and costly return processes, checking product condition, and dealing with what customers expect.

To manage reverse logistics well, set clear return rules and make your return processes simple for both you and your customers. This might involve how you check and fix returned products, for instance.

Key eCommerce supply chain obstacles

Here are some common problems you might face with your eCommerce supply chain:

1. Uncertain demand forecasting. Predicting what customers will want is hard because market trends, seasons, and preferences change. If you get it wrong, you might have too much or too little stock, which can cost you money and upset customers.
2. Complicated inventory management. Balancing stock, using storage space well, and keeping track of what you have is tricky. Messing this up can leave you with too much stock, higher costs, and problems getting orders to customers on time.
3. Slow order processing. Quickly dealing with orders, packing them, and sending them out is crucial. If you're slow, customers might leave bad reviews, lose trust in you, and buy from someone else.
4. Last-mile delivery problems. Issues like traffic and wrong addresses can slow down deliveries and make customers angry. They can also make delivery more expensive and slow down your whole supply chain.
5. Handling product returns. Dealing with returns and reverse logistics can be hard and expensive. Doing it wrong can cost you money and upset customers.
6. Lack of supply chain visibility. You need to know where products are and how much you have so you can make good decisions. If you can't see what's happening, it's hard to fix problems quickly.
7. Mixing different systems and tech. If your systems don't work well together, you might waste time and money fixing things. It can also make it hard to get things done and make good decisions.
8. Working together in the supply chain. Sometimes, the different people in your supply chain don't get along. This can cause problems with deliveries, service, and customer satisfaction.

Handling Supply Chain Obstacles

You can tackle supply chain problems, like the ones I mentioned. You can keep up with trends, listen to customers, and regularly improve each part of your supply chain.

Using tech tools like inventory systems, data analysis, and automation can also make things easier and help you make better decisions.

Being proactive and using tech to manage your supply chain will help you succeed in today's competitive eCommerce world.

5 Tips for Managing Your eCommerce Supply Chain

Below are five strategies to enhance your eCommerce supply chain. Implementing these approaches can streamline processes, boost effectiveness, and provide outstanding customer service.

1. Review and Improve Your Existing eCommerce Supply Chain

Carefully examine your current supply chain procedures to find areas that need enhancement. Seek out inefficiencies or chances to save money in restocking, order delivery speed, and sourcing raw materials. You might also think about outsourcing your fulfillment process.

By evaluating both the strong and weak points of your supply chain, you can refine processes. It will help to enhance efficiency, performance, and profitability.

Consistently assessing and optimizing your supply chain ensures it stays in line with your business objectives, enabling you to adjust to market changes effectively.

2. Introduce Precise Tracking Measures

Accurate and current inventory tracking is crucial for successful eCommerce supply chain management.

By putting in place robust tracking metrics, you can access real-time information about your inventory levels, enhance order accuracy, and prevent both stock shortages and excess stock.

Precise tracking metrics enable data-driven decisions, streamline operations, and improve customer satisfaction by ensuring orders are fulfilled promptly.

3. Simplify Inbound Supply Chain Operations

Effective inbound supply chain logistics play a crucial role in maintaining a seamless and efficient supply chain.

By simplifying procurement, transportation, and supplier management processes, you can shorten lead times, optimize inventory levels, and increase responsiveness.

Building strong supplier relationships, optimizing transportation routes, and using accurate demand forecasting help cut delays, cut costs, and improve supply chain performance.

4. Develop the Optimal Warehouse Layout

An effective warehouse layout and design greatly influence your supply chain operations.

To maximize warehouse efficiency, assess product flow, storage capacity, and order fulfillment procedures. A properly organized warehouse enhances inventory management as it enables quicker and more precise order picking. That results in fewer errors during handling.

Implementing efficient warehouse practices can speed up order fulfillment, lower expenses, and enhance customer satisfaction.

5. Efficiently Handle Workforce Management

Effective labor management is crucial for maximizing your eCommerce supply chain efficiency.

Ensure you have enough staff to handle changes in demand and meet customer needs. Labor management tactics like workforce planning, training initiatives, and performance monitoring can streamline your workforce.

By matching your labor resources with demand, you can enhance productivity, lower labor expenses, and uphold high service standards.

Your Optimized eCommerce Supply Chain

A properly handled eCommerce supply chain is the foundation of your online business. It enables you to fulfill customer needs, timely product delivery, cost-efficiency, and competitive advantage.

Whether it's predicting demand accurately, managing warehouses efficiently, tracking inventory effectively, handling orders smoothly, ensuring reliable deliveries, or optimizing labor, each aspect of the eCommerce supply chain requires thorough focus and ongoing enhancement.

By being proactive in tackling obstacles and adhering to proven methods, you can establish a sturdy base for sustainable expansion in the constantly evolving eCommerce landscape.

Enhance your delivery process with eLogii

The last-mile delivery stage is essential in any eCommerce supply chain, as it's when your customer receives their order. This is where eLogii comes into play.

eLogii enables you to efficiently manage both small and large delivery driver teams. It empowers dispatchers to make instant corrections or mark stop locations with just a tap.

Recognizing the significance of visual clarity in handling many routes, eLogii provides an option to switch between detailed and simplified stop markers on the map view. This feature minimizes clutter, offering a clear view of individual stops and route progress.