Why is Effective Supply Chain Management so important in E-COMMERCE.
It is important to have an effective supply chain for any business, ensuring the smooth flow of products from the manufacturers to the customers.
A key part to the success of your e-commerce business depends on the effectiveness of the Supply Chain.
This includes the identification and procurement of quality goods and moving them from the supplier through to the customer.
However, this impact goes both ways, with the rapid growth of the e-commerce industry also impacting supply chain management in diverse ways. Many e-commerce businesses are forced to modify or improve their supply chain to keep up with the competition.
What are E-Commerce and Supply Chain Management?
Supply chain management refers to the management activities involved in optimising the flow of a product, from procuring raw materials to delivering the product to the end user. Providing the best Quality, Service & Cost. E-commerce refers to all commercial transactions and transmission of funds and data conducted over the internet. However, the term E Commerce has now become an overarching term for global trade and online selling.
From sourcing raw materials to manufacturing, warehousing, inventory tracking, and finished goods, down to the point of sales and delivery. Supply Chain management covers the various stages of e-commerce business and is aimed at providing the customer with an exceptional experience while also bringing about business growth.
For e-commerce businesses the customer experience is impacted by supply chain management. Effective supply chain management will result in customers getting the right quality products at the right time, at the right cost. Resulting in positive customer experiences and business success. Effectiveness in e-commerce supply chain management means that the various stages of commerce are optimised to achieve customer satisfaction and business growth.
The eCommerce supply chain involves getting to know the challenges and preferences of the customer and designing the supply chain to meet those needs and provide solutions to the challenges. In addition, adding visibility, transparency, and good communication will also improve the effectiveness of the supply chain in achieving the required goals.
Increased demand for fast and timely delivery
One of the effects of the rapid growth of e-commerce on customer behaviour is an increase in the demand for fast delivery services. With giant e-commerce businesses setting the pace in offering same-day delivery or 2-day delivery, smaller businesses are under pressure to try to emulate the same.
As a result, businesses must modify or improve their supply chain management system to cope with the challenge of fast and efficient delivery services and remain relevant in a pool of other e-commerce businesses. Emphasising a robust supply chain management for ecommerce becomes crucial in meeting the demands of the rapidly evolving online marketplace.
Increased Price Competition
The birth of e-commerce has given customers a preferred and more convenient way of shopping. Rather than walking into a physical store, they can now buy whatever they want from the comfort of their homes. Owing to this preference, the growth of this industry has skyrocketed in recent years, giving rise to several e-commerce businesses worldwide.
As a result of this, customers are spoiled with options when it comes to shopping online. There is stiff price competition between e-commerce businesses in the same space. This increased competition has led to businesses re-strategizing their supply chain management system to accommodate this increased competition in price and enable them to compete.
New and innovative ways to reach customers.
E-commerce has created new and innovative ways for businesses to reach their customers. Businesses no longer need to go through the traditional retail channels to sell their products. Thanks to e-commerce, customers can now purchase various items with the click of a single button.
Sellers have an array of tools and multimedia channels to market and sell their goods and more ways to reach customers and make the products available to them. Also, supply methods such as drop shipping have eradicated the need for warehouse storage & inventory costs further streamlining the supply chain.
Improved customer experience
E-commerce has enabled the easy collection of various customer data online. By visiting your site and scrolling through your products, customer preferences and products of interest can be collected and used to improve customer experience. Customer experience can be improved by constantly displaying personalised content on their screens using data and analytics.
An improved customer experience can enhance the flow of products to the end users by increasing their chances of purchasing the products. Thus, leading to a more efficient and effective supply chain management system.
E-commerce has a dual function in Supply Chain Management
Customers are no longer limited to purchasing items from retailers alone. E-commerce has given them the privilege of shopping for raw materials and other items directly from manufacturers, dealers, and distributors through their websites or platforms such as Alibaba or AliExpress. Retailers can also buy products from manufacturers, wholesalers, and distributors through their e-commerce sites. With Supply Chain specialists identifying suppliers, sourcing the goods and shipping them. Effectively enabling the sellers to concentrate on their marketing and sales strategies.
In addition, businesses can fulfil customer orders directly from the supplier using drop shipping. When these orders are placed on their websites, they simply contact the manufacturers through their websites. The manufacturers then send the products directly to the customers. This fulfilment concept restricts the retailer to just collecting payment from the customer and paying for the manufacturer's services and cancels the need for supply chain management systems. Thus, giving eCommerce a duality of function in supply chain management.
Whether you run a large company anywhere in the world or a small retail store, the importance of effective Supply Chains & E commerce is extremely important.