E-commerce is experiencing a boom in growth as companies turn to online selling as a means of supplementing their brick and mortar success. On the consumer side, E-commerce sales are predicted to reach 31.1% of all sales by the year 2016. However, even as businesses are getting into the E-commerce game, it’s important to point out the impact of such initiatives on the supply chain. While an engaging web presence may move products, companies must appreciate that logistics is perhaps even more critical to success in online sales. Walmart and Amazon wouldn’t exist but for their ability to excel at supply chain optimization and expertly manage billions of dollars in inventory.
Once you understand the importance of a well-developed supply chain to E-commerce, you need to assess whether you’re equipped to handle the demand. If you’re having doubts, here are 4 ways you can prepare for this latest shift in consumer behavior:
1. Appreciate the Primary Goals of an E-Commerce Operation
The smooth functioning of a supply chain that’s E-commerce ready relies on its alignment with the three goals of selling through an online marketplace:
- Improving product selection;
- Increasing availability and preventing stock-outs; and,
- To a lesser extent, reducing inventory.
Understanding these complementary objectives is critical because so many of today’s consumers live in a world of instant gratification: They’re not willing to wait if you’re out of stock or don’t have the exact product they’re looking for, which means you’re losing orders. Approach E-commerce readiness with these goals in mind.
2. Implement Straightforward Policies to Achieve These Goals
Now it’s time to put procedures in effect that enable you to attain the goals of E-commerce. Start by reducing lead-time by ordering regularly, in small batches. You’ll always have stock on hand, but not too much. You will also increase cash on hand when it’s not tied up on inventory. Also, remember that your vendors are more than a link in your supply chain: They’re people, too, and they need communication to operate efficiently. Establish close partnerships with these entities by contacting them often to gain valuable feedback or alert them to upcoming changes.
3. Understand the Implications of the “Endless Aisle”
In the E-commerce environment, your supply chain must be able to deliver for the endless aisle. This means ensuring that warehouse inventories can handle both online sales and the in-store shelves of retailers. It’s wise to implement supply chain management technology that can account for inventory and demand in real-time rather than batches.
4. Learn From Mistakes and Fine Tune Efforts
Technology is also critical in measuring analytics as they relate to E-commerce activities. Marketing initiatives are closely tied to the inventory and logistics elements of your supply chain, so every time you add to a marketing campaign, determine how to track performance.
Your web strategies may provide a rich, compelling site visitor experience and your online presence may be robust. But both are of little importance if your supply chain stands in the way of delivering according to customer expectations. Setting your company up for E-commerce success means preparing for a much broader customer base while gaining control over your inventory, and making appropriate adjustments to ensure supply chain optimization. E-commerce can bring enormous opportunity, but only if your supply chain is ready for it.
About Michael Wilson
Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.