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 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 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 consider 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. 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. 

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 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. 

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. 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 27000+ pin codes along with shipping rates starting from Rs. 23/500g. 

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 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. 

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 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. 

Customer Service

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.

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.  

Running a retail eCommerce business can be a difficult task. You have to be on your toes at all times, and you cannot miss out on a single aspect of your business, right from your website to the product being delivered. Throughout this process, your 3PL fulfillment provider plays a significant role.

They are essentially responsible for the entire fulfillment supply chain and ensuring that your product gets delivered to the customer in the right state. However, if results are declining and you are not getting the kind of service you expected, it is time to move ahead. How do you know if it is precisely the right time to switch your fulfillment provider. 

Switching your 3PL fulfillment provider can be a critical decision for your business. In a way, it will steer the future of your sales and delivery operations. But it is vital to take a look at your current 3PL providers and fulfillment strategy to ensure that your business is headed for success. 

A fulfillment provider not aligned with your business could also be a significant reason for stunted growth. Therefore, it is essential to have a look time and again if your association is successful or not. With time as your business grows, requirements change, and it is not necessary that the third-party fulfillment provider you started with also grows with you. Since there are many variables like inventory, an established professional comfort, and other aspects involved, it may seem like a nightmare to switch your 3PL provider. But honestly, it is not. Let’s look at the importance of a 3PL and decide when it is time to change your 3PL fulfillment provider. 

Impact of 3PL Fulfillment on Your Business

Your 3PL fulfillment provider has a direct impact on your eCommerce business. They are responsible for the timely delivery of your product and the processing of each incoming order. Hence, they have a direct role to play in customer satisfaction and positive delivery experiences.

According to a report by Comscore, 73% of shoppers expect affordable and fast delivery. Therefore, if your three pair provider does not provide you with essential services like fast shipping and error-free operations, it could lead to a negative impact on your business. 

Importance of 3PL Fulfillment

Error-Free Operations

Third-party fulfillment providers specialize in order fulfillment so they can provide you with tamper-proof packaging and error-free shipping. This becomes a bonus for your business as you do not have to carry out work like picking, packaging, and shipping yourself.

Trained Resources

All the staff at a fulfillment center is trained for specific operations. If you take care of these operations yourself, there is a chance that you might be multitasking. Having dedicated and skilled employees reduce the risk of errors and improve efficiency. 

Automated Operations

Fulfillment centers have The latest warehouse management and inventory management systems. These usually work synchronized with each other, and you do not need to worry about your order management and fulfillment operations.

How to Decide When It’s Time to Change Your 3PL Fulfillment Provider?

Incorrect Orders

Even one incorrect order packaging and delivery can be a red flag for your business. But even if you want to give them a second chance, several incorrect orders are the right signal. It means that your fulfillment provider is not as efficient as they claim to be, and it is time that you make a move to ensure that your business is not impacted by low customer satisfaction.

Increase in Order Volume

Most times, the fulfillment center you start with can only handle a particular order volume based on their storage and fulfillment capabilities. When you realize that you have a steady increase in order volume, it could be a sign to move your full payment provider to a different one. Lower space for functioning and limited growth might be hindering your eCommerce business by delayed delivery and unsatisfactory work. 

Rising Fulfillment Costs

Which time, your business will grow, and you might need to reconsider your fulfillment costs. One of the primary reasons to outsource to a 3PL fulfillment provider is to reduce your fulfillment costs. If your fulfillment provider is continuously increasing their demand, it is time you moved ahead. Growing warehouse, labor, and freight costs can be a threat to your profits. 

No Latest Innovations

If your full payment provider is not indulging in any latest innovations and is not adapting to recent technology, your business might be suffering. Since the eCommerce industry is progressing rapidly, it is necessary to adopt the latest technology and trends. 

Incompatibility With the Provider

The most important reason for signing up with a 3PL fulfillment provider is the ease of business. You want to make sure your fulfillment operations are simplified and taken care of, not worry about them as much, and take care of them yourself. But, if you feel your full payment provider is not doing justice to your business or you have to put in a lot of effort for dealing with them, it is best to move on. Having many incompatibility issues will eventually lead to unsatisfactory service, and you will have to suffer.

Shiprocket Fulfillment – The Ideal 3PL Fulfillment Solution for Your Business

Shiprocket Fulfillment is a reputed 3PL fulfillment provider that provides you with an end to end solution for warehousing, inventory management, and shipping. Once you sign up with Shiprocket fulfillment, all you have to do is ship your products to a fulfillment center. Like picking, packaging, inventory management, and order fulfillment, all the other operations will be taken care of by the fulfillment center. We have fulfillment centers located in Delhi, Gurugram, Mumbai, Bengaluru, and Kolkata. Shiprocket Fulfillment provides you with several benefits like 2X faster delivery as your store products are stored closer to your customers, affordable shipping rates, error-free operations, tamper-proof packaging, and reduced weight discrepancies.

Final Thoughts

Switching a 3PL fulfillment provider might look like a difficult task, but it is not that difficult if you dwell deeper. Be cautious about the time you spend thinking about it, not regret your decision later as the migration might be difficult if not thought through.

According to a report by marketdataforecast.com, the size of the global dropshipping market was estimated at 111.28 billion dollars in two thousand and eighteen. This number is said to record a CAGR of around 29% from 2020 to 2025. 

Dropshipping is turning out to be a very successful business model for e-commerce. It has already been shown to be quite an advantage for sellers who are just starting and want to experiment in the domain without investing a lot in storing inventory.

But what exactly is dropshipping, and what is the supply chain associated with the fulfillment process? Let’s have a look.

What is Dropshipping?

Dropshipping is a popular retail business model where the seller does not host any inventory. The seller only accepts customers’ orders and processes them directly from the supplier once they receive an order. It is the responsibility of the manufacturer or supplier to deliver products to the customer.

For example, you have a website that sells sunglasses. If you do not store an inventory of these sunglasses and instead ask your supplier to ship them directly to the customer, then you are a dropshipper. 

Who is Involved in the Process?

As understood by the definition, there are two critical stakeholders involved in the process of dropshipping. Let’s have a look at who these stakeholders can be.

Third-Party Suppliers

Manufacturers

Manufacturers are entities that do not sell the product directly to the customer. They are the ones who create the product in bulk and sell it further to wholesalers or retailers. In most cases, manufacturers do not directly sell to customers. They have tie-ups with several companies that source their products. Since the production is in bulk, they prefer selling larger quantities. Manufacturers are the stakeholders that ship the final product to the customer. In other words, they can be the third-party suppliers for retail drop shippers.

Wholesalers

Wholesalers are sellers who purchase products in bulk and further sell them to retailers and small shop owners. Wholesalers usually operate in a niche and hold products from one category specifically. So, retailers typically have to tie-up with multiple wholesalers for different product categories in a dropshipping business. Usually, wholesalers sell only to retailers and not directly to the general public. They, too, stock products in massive amounts and have fixed deals with retailers for outsourcing their products.

Retailers

The next stakeholder in a dropshipping business is the retailer. This is the entity that is the face of the company. In simple words, a retailer showcases the products but does not take the responsibility of storing and shipping them. Retailers usually have their store or e-commerce website where they display and market the products, take incoming orders, and dropship them with a third-party supplier.

The Dropshipping Fulfillment Process

By understanding the definition and the role of stakeholders in the dropshipping free payment supply chain, it is safe to say that dropshipping is a service that your third-party supplier provides to you. Therefore, it is essential that you tie-up with the best and the most reliable suppliers to get the best prices and the best service. The service your dropshipping partner provides Will directly reflect on your brand. Therefore, it is essential to maintain a stable supply chain process and efficient communication between the two parties to ensure that customer satisfaction and operations are not affected in any way.

Let’s have a look at how the dropshipping fulfillment process works- 

Step 1 – Customer Places the Order With Retailer

The retailer has an outlet in the form of a website or a store where the customer can place an order. The customer places an order for the required items along with the quantity. This order is generated by the retailer, who then takes care of the rest of the process. 

Step 2 – Retailer Places Order With Supplier

The retailer then takes the total amount of orders for a day or a week and shares it with the third-party supplier that is a manufacturer or a wholesaler.

Step 3 – Supplier Packs & Ships Order 

This third-party supplier takes in the bulk orders, packs them, and then ships them with suitable courier partners or shipping companies. 

Step 4 – Supplier Shares Tracking Details with Retailer 

The supplier then shares tracking details with the retailer. These contain the estimated delivery date, order details, etc.

Step 5 – Retailer Shares Order & Tracking Details with Customer

Finally, the customer shares the order details along with the tracking information with the customer. 

Try Shiprocket Fulfillment for Dropshipping Fulfillment

Suppose you are a wholesaler or a manufacturer who does not have a storage space to house inventory. In that case, you can make use of the multiple fulfillment centers provided by Shiprocket Fulfillment. Shiprocket Fulfillment has fulfillment centers across India in cities like Delhi, Kolkata, Mumbai, Gurugram, and Bengaluru. Once you store your products with Shiprocket Fulfilment, we can take care of all your incoming orders and ensure they deliver to the customers as quickly as possible. You also get the advantage of storing your products closer to end customers, and this can give your wholesale business a competitive edge when dropshipping.

Along with this, you can reduce shipping costs, ship with multiple courier partners, get the best packaging and processing services, reduce weight discrepancies, and deliver orders to 2X faster. Overall, you can provide customers with a mind-blowing delivery experience and improve your retailer’s brand’s quality. This can also give you a chance to tie-up with several retailers and opt for dropshipping with them.

Conclusion

The dropshipping fulfillment supply chain can be tricky if each stakeholder’s role is not taken into account. Since this fulfillment strategy requires a lot of two and fro between various stakeholders, it is essential to use automation and technology to ensure that the correct information is communicated at all points. If all these things are kept in mind, dropshipping can turn out to be a lucrative business for third-party suppliers like manufacturers and wholesalers and also for retailers. It can be extremely lucrative for young individuals who are just starting their business and are not looking to house and invest in expensive inventory.