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Top challenges of supply chain eCommerce firms face

ByChristiana Antiga

Jun 23, 2021

Online retailers, start-ups and manufacturing companies looking to capitalize on business via eCommerce can at times struggle to cope up with the ever rising demand of online delivery because of the COVID-19 pandemic. It is definitely a problem as almost all firms in the mentioned categories are facing such issues.

AS the intense magnitude of the demand-supply gap is impacting the supply chain management by a large magnitude, firms need to stay relevant these days and tackle challenges that arise in the logistics and supply chain areas of their businesses.

Often at times, professionals in the eCommerce industry are often asked what are the top challenges they are facing in their supply chain side. TIme to discuss them here.

Challenges faced by eCommerce firms in supply chain management

As determined by supply chain management professionals across various manufacturing, warehousing and retail firms in Canada in collaboration with leading experts from a mobile app development company in downtown Toronto, here are the top challenges eCommerce firms face in the supply chain aspect of the business:

The legacy process

Most professionals in eCommerce firms often wonder how to keep their business agile in the face of so many changes occurring in the business world. How can they embed efficiencies along with management of cost trimming in keeping themselves agile?

It is undoubtedly true that there is an abundance of Third-party logistics (3PL), logistics software, digitalization and automation of key processes being done. Unfortunately, none of these is an easy process. Also, an easy ‘one-size-fits-all’ plugin does not exist that can help these firms solve their complicated supply chain problems.

Suppliers, logistics firms and 3PLs all are using unique kinds of software, or they do not use any at all. The outcome is a complicated nature of data automation flow throughout the supply chain. Hence, eCommerce firms should avoid legacy processes that were curated some years ago and move forward on to refining the processes by means of automation.

Dealing with taxation and regulations at multiple regulations

Being a part of the eCommerce industry, A business needs to follow versatile tax policy guidelines aligning with the global supply chain management. THe international tax environment which is in existence today is quite a complicated one.

Indeed eCommerce is driving innovation and thus fuels expansion of the supply chain. This is leading most governments to formulate modern tax policies that would keep the pace of such expansion. 

However, the real thing to discuss and observe is the actual implementation of these tax guidelines for the global digital economy poses a challenge to the industry.

Complexities in the infrastructure

Warehouses of eCommerce firms must handle continuous orders of all sizes every now and then, and all this requires a larger frequency to pick and pack as well. Why do things become challenging? Because they may be doing various kinds of work and might be fulfilling sales from the same commonly shared physical facility.

Single-item orders are rising rapidly these days due to the COVID-19 pandemic. Hence, handling constantly rising volumes of orders is a monumental challenge especially if eCommerce businesses lack software solutions, such as the Warehouse Management Systems (WMS). Streamlining space activities in the warehouse is a challenging task too.

The issue of reverse logistics

A common challenge a lot of people might be facing is handling reverse logistics. Customers might return the products the business sent. The challenge here is a high level of reverse logistics expenses. No business might ever easily know why the customers returned the shipment as well as the rationale behind these returns (app ideas).

Furthermore, if it happens to be a cross-border transaction, then it becomes a complicated challenge. This can cause sales to ultimately go down by a large margin.

Planning for the inventory

Inventory management entered the world of eCommerce as a large challenge. New demands on it are leading to a rising level of stock-keeping units (SKUs).

Keeping a high amount of stock such as high-value electronic items is a cause of concern and a challenge in itself, when it comes to the supply chain of an eCommerce firm. Rather, firms should keep a low level of buffer stock. However, that can also pose a problem when the distributor or the supplier does not have the exact available stock.

Hence, as it can be observed, it is quite important to know and understand the exact inventory status of the online retail store as well as that of the supplier. This helps ensure no one loses orders to competitors.

Christiana Antiga
Author: Christiana Antiga

My name is Christiana Antiga, and I work as a Content Creator and marketing specialist

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