SCM In The Most Important Aspect For Success In E-Commerce

E-Commerce is defined as the purchasing and selling of products and services over an electronic network like the Internet; but E-Commerce doesn’t stop there, it also means operational efficiency in all areas of the business and the ability to compete with others not only inside the scope of E-Commerce but also with those operating in more traditional markets. Inventory and the way it is handled poses one of the biggest challenges to those starting an e-commerce business just as much as to those that are already successful operating one but are looking to take it to the next level. Being successful in the world of electronic commerce requires not only a lean and well-functioning supply chain but also a superb strategy on how to get there. As it is the case with many businesses, different products require different approaches to all aspects of their logistics components. Anything from the way the products are created and assembled, to the way they are purchased by customers and ultimately delivered to their hands.

Supply chain management deals with the coordination, the schedule and control of procurement, the production itself, and ultimately the delivery of products and services to customers. If you carefully read those words then you will understand why I am saying that it is so important to e-commerce, so much that I would venture to say that supply chain management is the backbone of electronic businesses and the most important aspect to ensure its success.

Successful companies like Amazon and Alibaba are more than simply two giants of e-commerce; they are also living proof that the competition between organizations today is actually a competition between supply chains. Look at Apple, Samsung, Nintendo, Sony, and Microsoft; when we compare products we realize that it is a matter of taste more often than not and the deciding factors sometimes have more to do with the way the products are created, designed, delivered and supported by the company.

The logistics model of e-commerce is rather demanding when it comes to finding supply chain management solutions to customers. While orders are usually smaller, they are complex in their fulfillment and shipping, so the requirements placed on logistics are much more crucial because customers expect a level of satisfaction that is much larger and as a result we have a situation in which the relationship between supply chain performance and customer loyalty is much closer than with any other business out there. It is said that in the future, supply chain management should mainly focus on their last mile distribution the way many of these successful companies like Amazon and Lowe’s have been doing for awhile in order to receive one of the highest rates of customer satisfaction in the market today. With that being said, it happens often that the best way to do this is not implementing in-house solutions like these giants have, but instead using third parties that have been doing this part of the supply chain for a long time and have all the necessary experience to provide you with the service that you need and that your customers expect.

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There are some crucial factors to contemplate when implementing successful e-commerce strategies and they should include consideration for characteristics of individual products, the volatility of the demand, the variety of products themselves and their respective lifecycles, the profit margins considering all costs including marketing and physical, the quality of the information available and ultimately but not less important, the type of forecasts used for leveraging supply and demand.

There are also other major elements that must be addressed by strategies of e-commerce and those cover many aspects of the experience. For one, you have to think about the platform in which sales are happening. A few years back it was easy enough because anything having to do with e-commerce was done through the Internet and computers; today we also have mobile devices like video game consoles, tablets and smartphones and that are adapting to strategies that promote electronic commerce. Omni-channel retailing is a very interesting approach that can combine the benefits of brick and mortar stores linked to client needs for immediateness to the advantages of e-commerce and social media distribution and marketing. The flexibility of the supply chain must also be seriously considered, as it is necessary to stay ahead and be able to answer the many demands of a market that is constantly changing and a customer that is asking for more and more each time. Using technology to your advantage is not only within your best interest but also an obvious choice when working this type of business. Systems that rely in automatic fulfillment and distribution are great solutions to implement in a market that relies so much on technological features so it makes perfect sense to have those solutions work in your favor.

For more great articles, check out our publications at David Kiger’s Blog.

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