How to Optimize Your Ecommerce Supply Chain

Understanding the Ecommerce Supply Chain

Fast paced. Responsive. Data driven. Your ecommerce supply chain must operate at peak performance to keep up with projected online sales growth.

Your approach to supply chain management will vary, depending on your ecommerce business model. Whether you’re selling direct to consumer or B2B, it pays to understand how your products move – from suppliers through to your end customers.

Online retailers and brands sell products via their website, mobile app or social platform. Digitally native brands take it a step further by tightly controlling end-to-end distribution – from sourcing to shipping direct to consumers. Marketplace sellers, on the other hand, may allow third parties to control their distribution so they can reach a larger customer base.

Then, there are those for whom ecommerce is a secondary sales channel. Few traditional retailers operate solely in the realm of brick-and-mortar stores today. And more and more manufacturers, B2B companies and even subscription companies are adding an online store as well. Naturally, selling through multiple channels increases supply chain complexity.

Supply Chain Models
share a common goal:
to satisfy ecommerce customers

Order Fulfillment to Meet Expectations of Online Shoppers

As a rule, however, all of these supply chain models share a common goal: to satisfy ecommerce customers.

Chances are, your customers have high expectations for their buying experience. They’re researching their purchases extensively online – seeking out detailed product information, reading reviews and consulting their social networks. Before placing an ecommerce order, they want to know if an item is in stock and how many are available. They want to move from laptop to phone to social platform with ease, and they expect a seamless experience, regardless of the channel.

To complicate matters further, ecommerce shoppers expect responsive service, even during peak shopping periods. They’ve grown accustomed to fast, free shipping and having a variety of delivery options. If they’re unhappy with their purchase, they want returns to be convenient – and free.

To satisfy these increasing customer expectations, you need a high-performing supply chain.

Designing Fulfillment Operations for Effective Ecommerce

Ecommerce demands put extraordinary pressure on fulfillment and distribution operations. Take time to design a supply chain solution that can deliver:

Visibility

With data in high demand, you need a real-time view of your entire ecommerce supply chain – distribution facilities, drop-ship vendors, in-transit shipments, available to promise, etc.

Speed

While most consumers are not yet demanding next-day deliveries, their desired delivery window is definitely shrinking. Make it a priority to reduce order processing and transit times.

Cost control

Rising parcel shipping costs are a challenge for ecommerce merchants of all sizes. Look for ways to balance delivery speed and cost, especially if you want to offer free shipping.

Seamless service

Your customers expect the same experience on a PC, mobile device, social channel and online marketplace. Ensure consistency at every point in the buyer’s journey.

High throughput

Ecommerce sales channels usually generate a high volume of orders that require piece picking. This labor-intensive process demands experienced staff with strong decision-making skills to select the proper items.

Scalability

Your business is likely to experience peaks and valleys. Be ready to accommodate fluctuations in online order volume and be prepared for business expansion due to sales growth or new sales channels.

Personalization

Ecommerce shoppers crave a personal touch. To earn their loyalty, consider offering customization services – engraving products, assembling gift sets, adding inserts, etc.

Efficient returns

Roughly 20 to 30 percent of all online purchases are returned. You need to process returns/exchanges efficiently and cost-effectively and get salable products back in inventory.

Watch How One Ecommerce Business Streamlined Its Supply Chain

allheart needed to ship ecommerce orders quickly, reduce costs, provide customized products and keep up with spikes in customer demand. A custom fulfillment solution proved to be just the right RX for America’s medical superstore.

Watch the video>

Focus on These 8 Areas of Fulfillment
Operations to Master Ecommerce

For an effective ecommerce supply chain, you must master eight key aspects of order fulfillment and distribution:

Establishing a multi-node network can help move your products closer to consumers. With strategically located distribution centers, you can reach 90 percent of the U.S. using two-day ground service.

Another option is to position your fulfillment operations to ensure ready access to parcel service. Central locations such as Memphis, Louisville, Columbus and Modesto are popular sites for ecommerce distribution centers.

Design your ecommerce warehouse to increase storage density and maximize picking capacity. Useful features include high ceilings (36 feet and higher), narrow or very narrow aisles, strategic racking systems and possibly a mezzanine level. Shelving solutions such as cardboard drawers, “bookshelves,” or hanging shelves can also be helpful.

Ecommerce fulfillment operations are labor intensive, primarily due to the need for piece picking. They typically require two to three times more labor than traditional warehousing operations. You’ll want to pay close attention to on-going recruiting, training and retention to support staffing needs.

To accommodate fluctuating order volume, be prepared for sales spikes, even when business slows. This requires scalable staffing as well as warehouse space to handle additional inventory and production lines.

Invest in advanced technology to ensure peak performance for your ecommerce supply chain. A warehouse management system (WMS) helps to manage daily warehouse operations and inventory management tasks such as receiving and put away, order picking, replenishment and EDI capabilities.

Ecommerce operations also require a robust order management system (OMS) to provide visibility and optimize inventory enterprise wide. Viewing multiple fulfillment sources helps to prevent stock outs and overstocks and reduce inventory carrying costs. Intelligent order routing helps to determine the best fulfillment source to pull from for the fastest and most cost-effective service.

Automated fulfillment solutions can help to speed order turnaround. Conveyance, scanners, label applicators and bar codes are commonly used. Innovative technologies such as robotics, drones, and artificial intelligence (AI) also have the potential to increase supply chain velocity.

Consider delaying product configuration or customization until the last possible moment. By moving value-added services like kitting, labeling and embroidery closer to the customer, you can be more responsive to customer demand. You’ll be better able to manage inventory, expand product offerings, personalize products and get to market faster.

Since ecommerce usually involves small packages weighing less than 150 pounds, you will need to master parcel shipping. It helps to establish relationships with multiple carriers and negotiate competitive rates. A good analytics tool can help you understand your parcel spend (including surcharges and shipping across time) and monitor proof of delivery and billing.

To provide hassle-free returns and quick refunds, make sure that your information systems, distribution network and transportation capabilities are working in tandem. An order management system helps to streamline returns process. Positioning distribution centers close to customers helps to minimize transportation costs and speed returns processing. Inbound quality inspection services can identify the need for refurbishing or repackaging and help to get resalable products back in stock quickly.

Many online merchants expand via physical locations like brick and mortar stores, pop-ups, boutiques, etc., as well as marketplaces and subscription boxes. If you use one of these channels – or plan to – make sure your ecommerce supply chain can support multiple sales channels and order profiles.

Outsourcing Fulfillment to Strengthen
Your Ecommerce Supply Chain

With so much to consider, ecommerce fulfillment and distribution can be overwhelming. We can help. In fact, Saddle Creek ranked #2 for Fulfillment Services in Internet Retailer’s Leading Vendors to the Top 1000 E-Retailers for 2020.

We have the resources and expertise to support your ecommerce supply chain:

  • Network of locations

    Leverage our facilities nationwide to configure a strategic distribution network that puts your products close to your end customers.

  • Scalable space/staffing

    With teams of experienced associates and shared-space facilities across the country, we can flex to fit your order volume and growth plans.

  • Custom engineered processes

    Our experts design custom solutions using best practices, proven processes and the right technologies to meet your specific needs.

  • Range of logistics services

    Utilize our order fulfillment, warehousing and transportation services ala carte or as part of an integrated supply chain solution.

  • Parcel management

    Put our parcel expertise, established carrier network, buying power and new parcel analytics tool to work for you.

  • Top-tier technology/expertise

    Take advantage of our robust OMS, WMS, TMS and automated fulfillment solutions without the overhead investment.

  • Quality management

    We utilize Lean Six Sigma to ensure quality and accuracy. Our inbound quality inspection and refurbishing/repackaging services help manage returns and exchanges.

  • Ecommerce expertise

    Enjoy the peace of mind that comes from knowing you have proven processes and best practices in place.

Ready to strengthen your ecommerce supply chain?

Contact Us Today