Consumers interacting only with their computer or mobile screen might feel that e-commerce just about shopping online. However, it is so much more than that. E-commerce is a synonym for business efficiency at every operational level, even the supply chain.
According to data published by Statista, retail e-commerce sales worldwide amounted to US$2.3 trillion in 2017. This revenue is projected to grow to US$4.88 trillion by 2021. With new sales channels, increased globalization and higher competition, e-commerce has enlarged the market for companies across the world.
Implementing e-commerce increases a business’ overall performance. Effective implementation of e-commerce on the supply chain, across all phases of the business, can reduce costs, boost revenue and efficiencies, and expand market opportunities. Such improvements also result in lower inventory levels, streamlined procurement processes and reduced logistical costs, says an expert at Key Software Systems.
Improved Warehouse Efficiency
Ecommerce has led to an increase in the number of products, which allows the consumer to choose from a sea of options, while comparing and analyzing various products. However, the frequent changes in assortments can cause extra complexities in the supply chain for producers.
The increased number of products in the assortment, driven by e-commerce, means a larger number of products in stock. Other effects of e-commerce, such as changes in packaging and value-added services, create the necessity of improving warehouse efficiency, leading to the warehouse being regularly adjusted and updated, according to Eurogroup Consulting.
Smaller and Faster Delivery
With the rise of e-commerce, the modern consumer is able to control their order and delivery size. Although order sizes have decreased, there is a significant increase in the number of orders. Moreover, consumers now expect the shortest delivery times and last mile delivery. This requires companies to properly plan their supply chain management by sharing information with retailers in much better ways.
Integrated supply chains enable better information sharing between consumers, retailers and producers. Retailers are able to provide all kinds of interaction possibilities, including stock insight, product specifications, order and payment status, promised delivery times and warranty information to their customers in real time. This only improves customer satisfaction, which drives more sales.
It is clear that ecommerce impacts the supply chain for retailers. They are somehow compelled to craft their supply chain based on important aspects like separate picking strategies, differentiation in packaging, shorter product lifecycles, small order sizes and higher number of deliveries, and internationalization. Unless they are able to achieve efficiencies across the board in all these aspects, they will be left out of the race to the top.