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eCommerce Supply Chain Challenges Faced By Startups and How to Overcome Them

December 10, 2020 by Srishti Arora - 8 min read

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 the process of procuring, storage, and selling is now replaced by elaborate processes like procuring, storing, packaging, shipping, and returns. It is obvious that 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 for the same. 

Before starting out, it is important to see what these challenges are so you are not left surprised when you face them. 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 does the eCommerce supply chain comprise. The supply chain is basically the chain of operations that are 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 one step in the entire chain is disrupted, it will impact your entire business. Therefore, it is important to take into consideration the challenges faced by startups so you can stay prepared early on in the process. 

Supply Chain Challenges for New Startups

Product Sourcing

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 and you can resort to maintaining a centralized inventory system to ensure that your suppliers send your products on time and are updated with your business requirements too. 

Inventory Management

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 maintaining your inventory and synchronizing it with the incoming orders. Also, inventory management needs to be top-notch so that you do not end up spending 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 end up purchasing 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 also synchronizes with the order management system so that you can analyze the inventory requirement in real-time. 

Warehouse Management

Storing your inventory is another challenge faced by many eCommerce sellers. 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. Warehouse comes in handy in such situations. However, warehouse management is challenging as the warehouse pays costs a lot. Along with that, 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 be dependent 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 be able to address several other challenges with technology and a data-backed shipping solution – like Shiprocket

With Shiprocket, you get access to 17+ courier partners and 27000+ pin codes along with shipping rates starting from Rs. 23/500g. 

SR Fullfilment

Order Fulfillment

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 are not able to 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. 

eCommerce Security

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 a safe payment gateway for payments? These are some of the few questions you 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 of the 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. It is essential that sellers 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. 

Customer Service

Handling customer complaints and queries after processing orders is a major challenge as there can be many queries flowing 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 also train your support staff regularly about updates so you can 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 warehouses located 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 also save on shipping costs.

Conclusion

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 do not get stuck 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.  

Shiprocket Fulfillment features
December 10, 2020 by Srishti Arora

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