E-commerce – Future Of Supply Chain
• Impact of e-commerce on supply chain management
- The Internet is becoming famous among customers to find and purchase the items they need. Shopping online is convenient, often cost-effective, and less time-consuming as purchases can be made with a click of a button. The trend has even turned Cyber Monday into a more active shopping holiday than the in-person/in-store Black Friday. E-commerce and supply chain management can work hand in hand to help your business benefit from this increasingly popular customer shopping experience.
- Transportation companies through e-commerce can exchange documents electronically. It also enables shippers, freight forwarders, and trucking firms to streamline their document handling without huge monetary and time investments. E-commerce helps companies reduce overall costs, improve data accuracy, streamline supply chain services, accelerate business cycles, and enhance customer service.
- Businesses are taking this opportunity of technology, globalization, and e-commerce being intertwined, to increase their connectivity and boost their speed of conducting sales transactions. Thanks to the advancements in technology, businesses can instantly communicate with customers by providing for their needs and understanding their shopping patterns.
• How is connected supply chain the future of E-commerce?
- Growth of cross-border, global marketplace – In a year of uncertainty, the global marketplace has become one of the very profitable platforms to weather the storm. Fuelled by the transformation of shopping, Alibaba, Amazon, Etsy, and Taobao all reported record figures this year as consumers turned to these new ‘virtual shopping malls.’ By the end of 2020, an estimated 2 billion people will have made an online purchase, and the rise in users is beginning to signal a shift in online sales. As important as the U.S. market is to this growth through marketplaces such as Amazon, eBay, and Etsy – sellers can often forget that 85 per cent of the industry purchasing power lies abroad. In fact, in China, e-commerce sales have recently overtaken the U.S., and the country’s ‘Singles Day’ shopping event eclipsed Black Friday in the U.S. At the end of December, the global e-commerce market was expected to reach $1trn, and early forecasts anticipate the trend to continue. With new cross-border payment solutions that can manage overseas logistics, pay suppliers in a local currency, and make VAT payments in real-time, becoming an international seller is easier than ever before.
- Diversifying supply chains – In 2020 lockdown restrictions affected supply chains which affected businesses greatly. At the peak of the crisis, disruption to factories highlighted the fragility of relying on one single source for inventory. With little to no option left for sellers, the shift to diversifying supply chains to mitigate financial repercussions has forced industries to re-think business strategies. However, disruption isn’t new, and one of the biggest mistakes sellers often make is overlooking future risk planning and the prioritization of corrective actions. Instead of assuming there won’t be interruptions to one supply chain, consider other sources. With an abundance of cross-border services such as parcel consolidation, global fulfillment, and payment providers, sellers must explore international markets.
- Faster Delivery – With the continuous change in the world, consumer preferences, schedules, and expectations are also rapidly affecting the speed and manner of how products are delivered. In an age of everything to be wanted immediately, the industry standard of the typical 7 to 10 delivery day window has become outdated. Almost 90 percent of the consumers are now willing to pay for same-day or faster delivery. Thanks to online marketplaces such as Amazon Prime, Walmart, and Best Buy, the ‘new normal’ of instant delivery in as little as two hours has challenged sellers to rethink their customer service approach. Now, the speed, price, and the previously optional ‘add ons’ are differentiating sellers through competitive advantage in an e-commerce race that most cannot afford to lose. The key at present is to be flexible. With diversified supply chains, robust inventories, and reliable fulfillment management, sellers can use their ability to deliver to the right customers at the right time.
- Rise of social commerce – The business advantages for retailers to sell directly through social media in a year that has seen e-commerce become the focus has drastically strengthened. The opportunities to buy, sell, or promote on one integrated platform through leveraging channels that millions of people are using now appears to be a no-brainer for most sellers. Staggeringly, over 87 percent of the e-commerce shoppers believe social media helps them make a shopping decision, and yet, only 40 per cent of sellers are using it to generate sales. In 2021, experts project this number will rise significantly. Through live-streaming, two-thirds of Chinese consumers said they purchased products via the platform in the past 12 months. Live-streaming is bound to become part of the U.S. shopping experience, and with more features evolving and launching alongside industry growth and demand – sellers should keep up with new trends.
- The transformation retail shopping events – As online commerce exists, annual in-store holiday promising discount deals have begun to lose their relevance. During the 2020 holiday season, deals popped up early, 24-hour sales lasted a month, and by late November, most of the ‘festive shopping’ had been done online. Retail shopping events have changed, accelerated, and turned in favour of digital commerce, with sales increasing 30 per cent year-on-year during the 2020 holiday season. More importance is being placed on the broader e-commerce market, and the increase in competition in an already saturated market will require sellers to work smarter. Instead of waiting for domestic season events, think globally. By partnering with the right cross-border payment provider, sellers can enter new markets, effortlessly move money to all corners of the world, and grow a larger audience that will effectively move sales forward post-pandemic.
• What is connected supply chain? What are the advantages of connected supply chain in e-commerce?
Connected supply chain is the seamless flow of materials, information, and financial resources along the supply chain, enabled by two factors: information systems connectivity and physical connectivity.
The advantages of connected supply chain are:
- Inventory visibility and stock availability – An effective e-Commerce help streamline tasks of supply chain related to stock monitoring or ensure availability of resources before the “out of stock” point. It can also “connect” customers to the inventory, allowing for transparency and the ability to know if or when the requested product will be available. This brings the courage in customers and builds trust, attribute critical for any business, especially B2B eCommerce.
- Customer Experience – Speaking of customer empowerment and trust, a good supply chain system can do wonders for customers’ experience through the e-Commerce platform and help a company’s reputation by leaps and bounds. Happy customers (those who had an excellent browsing journey through the platform and got what they wanted when they requested it) tend to leave great reviews. They can build a company’s reputation, helping towards customer loyalty and securing new customers. In an era where most potential customers are checking reviews before purchasing a product or a service, investing in a refined e-Commerce supply chain system that can help customer satisfaction is a no-brainer.
- Profitability improvement – Some business sectors, such as manufacturing and distribution, don’t allow for big profitability margins due to the market’s saturation. A good supply chain management system can help identify problematic areas within the business’s operations that can cause additional costs, delays, or mistakes, all of the aforementioned affecting profitability. Solving these problems through supply chain system that offers better interactions of supply chain system, cost-efficient operations, and optimized inventory availability can increase profitability and help a business jump ahead of the competition.
• Latest trends of connected supply chain in e-Commerce industry
- Big data, AI and Machine learning
- Big data – The usage of big data can help understand behavior of the which in turn will help them to plan and strategize their operations and processes.
- Machine learning – The logistic companies understand and analyze the pattern and trend of orders at different seasons with the help of machine learning so that the software can automatically allocate the resources accordingly, and also alert the authorities.
- AI – The usage of artificial intelligence can help logistic companies to gather insights from images of delivery packages, their weights, sizes etc. and detect anomalies, QA assurance, or set-up schedule.
- Drones and Electrical vehicle usage – At one end Uber is experimenting with drone-based taxis and at the other end e-Commerce giant Amazon is testing to make deliveries through self-driven drones. It has been quite sometime since they started the testing and there was some success. With the testing period, Amazon has tried with different type of drones like air drones, land rovers, etc. Whatever the vehicle is, human based delivery will be history when future is concerned. However, in the near future, electric vehicles will be a thing as it will reduce fuel cost with time. Even though it is at testing phase too, the usage of electric vehicles to make deliveries seems promising.
- Advance package training – block chain – e-Commerce is an industry of human-made products. And just like any other industry, there are counterfeit products, fraudulent sellers, etc. Through the usage of the blockchain technology, supply chain management companies can keep a track of these type of products and sellers,and track the validity of the products
- Streamline shipping an warehouse location – Technology holds the ability to remove the middle-parties. Integrating third party APIs will remove multiple stake holders in the chain to manage logistics and will make the supply chain better. With increase in demand and tighter delivery times, this is crucial as more the number of stake-holders, more the administrative work and that means more chances of delay and bigger timelines of deliveries. Customer preferences are reduced to choose the platform for purchase. With increase in buyers demand, the strategy also calls for increasing warehouse locations especially as close to customer locations as possible.
- Controlling costs – As sales increase, the number of products/raw materials to procure increases. Additionally the quantity of products to be delivered within the stipulated period increases. With time, the cost of freight is always going to rise upwards as there are numerous matters that are involved in the same. The rates to transit products continue to remain high in the foreseeable future. Maintaining these costs is always going to be a challenge for any supply chain manager. As costs increases, the profit margin in products decreases. To control these costs and maintain a steady but fast paced delivery schedule are on-going tasks for every supply chain and/or logistics managers and companies.
- Buyer personalization – Making every consumer feel special should be one of the top priorities. Consumer wishes fore-commerce platforms to showcase products of their interest, which are under their budget, and can be delivered on time. They also wish for support to be provides whenever they need. The companies who have tried to fulfil some of these expectations have witnessed increase in sales and customer loyalty. So, companies have started to integrate AI chat-bots, automated tracking systems, etc.
• Conclusion – How does integration of e-commerce and connected supply chain give rise to a business model?
- The development of Internet technology has given rise new business models into the B2B sphere. More and more buyers and suppliers are interested in the electronic market (EM) because the limiting factors of time and space seem to have been overcome by the new media. The evolution of information and communication technology has made the cyberspace a new marketplace.
- E-business solutions are seeking to enhance supply chain effectiveness and efficiency through the automatic business processes. The adoption of e-business can result in benefits such as higher transparency, reduced transaction, manufacturing and other costs, reduced unmonitored corporate spending (also known as maverick or rogue purchasing) and more centralized purchasing spend and more coordinated and efficient collaborations for such projects as joint product design.
- E-business may also facilitate collaboration and supply chain information sharing, such as order forecasts and inventory planning. Automatic requisition and purchase order creation and integrate payment processes are also facilitated by e-business. Additionally e-business also looks after development of organization plans for more effective management of sourcing and logistics.