Fulfillment Operations 7 min read
eCommerce Supply Chain Challenges Faced By Startups and How to Overcome Them
December 10, 2020 by Srishti Arora - 7 min read
- What Does the eCommerce Supply Chain Comprise?
- eCommerce Supply Chain Challenges for New Startups
- Shiprocket Fulfillment – The Answer to eCommerce Supply Chain Challenges
eCommerce in India is growing rapidly. According to a report by KPMG, the eCommerce retail logistics market is valued at USD 1.35 billion in 2018 and is projected to witness a growth of ~36% in the coming five years. The retail supply chain has been completely disrupted after the advent of eCommerce. What earlier used to be procuring, storage and selling are now replaced by elaborate processes like procuring, storing, packaging, shipping, and returns. Any new process implementation will have its own set of challenges. Similarly, eCommerce has had its share of roadblocks for people who start their journey, but there have also been many sophisticated solutions.
Before starting, it is important to see what these challenges are so you can tackle them easily. Here are some eCommerce supply chain challenges that startups face, along with a few useful solutions.
What Does the eCommerce Supply Chain Comprise?
Before diving into challenges, let’s identify what the eCommerce supply chain comprises. The supply chain is basically the chain of operations involved in the production and distribution of a commodity. The eCommerce supply chain comprises operations like manufacturing, storage, order fulfillment, and distribution.
Read more about supply chain management.
These functions are vital for the successful functioning of eCommerce and a delightful delivery experience. Even if you face disruption in one step in the entire chain, it will impact your entire business. Therefore, it is important to consider the challenges faced by startups so you can stay prepared early on in the process.
eCommerce Supply Chain Challenges for New Startups
This step essentially constitutes a manufacturing aspect of the supply chain. It can get difficult to source products for eCommerce stores from several retailers. Also, many sellers make the mistake of only approaching one seller for their sourcing. It is important to reach out to multiple sellers for your product so that you can stay on top of your inventory at all times.
Coordinating with your suppliers is the main challenge. You can resort to maintaining a centralized inventory system to ensure that your suppliers send your products on time you update them with your business requirements.
After sourcing your products or manufacturing them, the next challenge that crops up is inventory management. Inventory management refers to the process of managing all the products that you will sell in the future. It can be a major challenge to maintain your inventory and synchronize it with the incoming orders. Also, inventory management needs to be top-notch so that you do not spend a lot on sourcing. Inventory is your biggest asset, but it will not take long to become the biggest liability if not managed correctly.
Many sellers cannot forecast that inventory demand and purchase more than what is required or much less. This ends up with the situation of dead stock or inventory stock out. To avoid these challenges, make use of real-time inventory management software that helps you predict inventory demand and synchronizes with the order management system to analyze the inventory requirement in real-time.
Inventory storage is another challenge many eCommerce businesses face. Since the business is run online, most businesses think they can store inventory at their place and sell peacefully. However, long-term planning is essential in eCommerce, and as your business grows, you will have to invest in a separate space for storing your inventory. The warehouse comes in handy in such situations. However, warehouse management is challenging as the warehouse pays costs a lot. There are other things that you need to take care of in the warehouse, like the overhead costs, rent, electricity, planning, etc.
Tie with a 3PL partner to store and ship your goods, so you do not have to take on the challenge of managing and storing inventory yourself.
Shipping and Logistics Management
The next and most critical challenge faced in eCommerce supply chain management is shipping and logistics. Everything else is under your control, but shipping and logistics require you to depend on a third-party courier company. This highly impacts your customer experience as the shipping and delivery experience is what counts for the customer.
A major challenge faced by most car companies is being dependent on a single courier partner and a limited pin code reach. This limits them from shipping their products across the nation. A practical solution to this problem is tying up with multiple courier partners via a shipping solution. This way, you will address several other challenges with technology and a data-backed shipping solution – like Shiprocket.
With Shiprocket, you get access to 17+ courier partners and 29000+ pin codes along with shipping rates starting from Rs. 20/500g.
Order fulfillment comprises all operations starting from order management, picking, packaging, and shipping. It poses a major challenge for eCommerce sellers as you require skilled resources to carry out these operations. The operations need to be error-free, and the packaging needs to be tamper-proof. Since many sellers cannot source good quality packaging material at the best rates, they compromise on the quality, which eventually leads to a poor customer experience. Therefore, we recommend you shop for your packaging material in bulk and store it for further use. Another smart thing to do is allocate a specific packaging material to each SKU. This way, you will be able to eliminate any confusion and carry out error-free operations.
The next big challenge is eCommerce security. How secure is your platform for shopping online? Does it have any fraudulent activity? Is your customer’s data safe? Do customers have safe payment gateway for payments? These are some of the few questions you might come across as an eCommerce business. One case of data or security breach and your business can take years to build the same reputation.
A few steps you can take include certificates, web app firewalls, bot blockers, address verification systems, etc.
Ensure 100% security before making your store live and review it periodically to ensure safety.
Return Order Management
Handling return orders can be a menace if you have to pay extra for every returned order. Sellers must draft a return policy and show it on the website so that customers can be clear about how they can ask for returns. In today’s eCommerce, almost every seller is offering a return for all their orders. If you do not offer this facility, it can be a loss for your business. However, returns are expensive and cost almost double as forwarding orders. Most of the time, non-delivery can also lead to returns which becomes a major problem for sellers.
Handling customer complaints and queries after processing orders is a major challenge as many queries flow at once. Also, since the customer is not in front of you, it can get difficult to explain the entire process by a call or email. Sellers face a major challenge in setting up a process for effective query resolution and often cannot train their resources to handle difficult queries. We suggest that you set up a customer service management software that can help you provide information via help talks and train your support staff regularly about updates to tackle this challenge easily.
Shiprocket Fulfillment – The Answer to eCommerce Supply Chain Challenges
eCommerce supply chain challenges can be difficult if not tackled properly. The best solution to all these fulfillment challenges is a 3PL fulfillment solution that you can hire for your business. A reliable solution is Shiprocket Fulfillment.
Shiprocket fulfillment is an end-to-end 3PL fulfillment solution that helps you with inventory management, warehousing, and distribution. You can store your product in Bengaluru, Delhi, Gurugram, Mumbai, and Kolkata to process orders seamlessly. Our team will help you with error-free operations and ensure the fastest delivery to customers. Since you store products closer to your customers, you will be able to deliver 3X faster and save on shipping costs.
Knowing your eCommerce fulfillment supply chain challenges is essential before starting your eCommerce start-up. It will enable you to face these challenges head-on with practical solutions so that you move forward actively with your business plan. We hope these challenges give you some insight into the eCommerce supply chain process, and you will be able to handle your business much better with the solutions provided.