How to prepare the supply chain for the next wave of eCommerce

     

describe the imageThe rapid growth of the eCommerce market has convinced many business leaders to launch initiatives based on online selling. Even companies like Walmart that have established a firm stance in brick-and-mortar retail have at least dipped their toes into eCommerce. However, it is important to understand the factors that drive success, some of which may not be immediately obvious.

Don't forget the supply chain
Industry analysts and third-party observers are often quick to point out the importance of developing an engaging Web presence. It is true that this is essential but perhaps even more critical to success are the behind-the-scenes processes that get products to customers. In fact, Multichannel Merchant contributor and DropShip Commerce CEO Jeremy Hanks recently argued that effective supply chain management strategies created today's industry leaders.

"For the brave new eCommerce-enabled and -disrupted world, supply-side innovation is the key to winning," Hanks wrote. "What makes Amazon and Walmart ecommerce and brick-and-mortar giants, respectively, is that they have supreme control over their supply chains. Although we tend to primarily view them as marketplaces, the reality is that they are massive supply pools first, with the unparalleled ability and coordination to oversee virtually billions of dollars of inventory."

As Hanks noted, eCommerce has made tasks related to global merchandising easier. However, it has also put greater pressure on organizations that must now deliver value to a broader audience. Especially since many eCommerce initiatives serve as a launch pad for global services, organizations that venture down this road must reevaluate their supply chain management strategies to be successful. After all, it does not matter how seamless Web, mobile and in-store customer experiences are if the supply chain is the bottleneck. Hanks identified several factors that can contribute to eCommerce success, including:

Endless Aisle
Businesses selling online may not have to worry as much about stocking their shelves in-store. However, they still have to consider warehouse inventories. As Hanks noted, this makes it critical to adopt supply chain management solutions that align supply and demand in real time. Because accuracy is paramount in these situations, organizations must also have complete visibility over suppliers and other business partners. 

"Even with distribution centers across the country and the planet, supply can still be restricted because of the costs that come with buying and holding inventory, not to mention building and maintaining these facilities," Hanks wrote.

Cost efficiency
Many companies initially turn to eCommerce to sell their own services. However, it can also be a way to explore other revenue opportunities and form new partnerships. For instance, Hanks reported that 39 percent of all items sold on Amazon come from third-party sellers. This reduces the amount of infrastructure, labor, transportation and other operational costs required to turn a profit.

Because eCommerce is frequently new territory to a business, it can be difficult to estimate the value of an investment, particularly considering the number of different options out there. Exploring this channel will create new concerns, as business leaders will need to decide which eCommerce platform will support their online store, which supply chain management software to use and how marketing strategies must evolve to engage the brand's target audience. This does not mean that organizations should approach eCommerce purely with guesswork, but it may necessitate a cautioned approach.

How to measure results
As Forbes contributor and marketing expert Dmitry Perlovich recently noted, it is critical to measure everything. For instance, he used the example of an email marketing campaign. Many companies know that it is important to track the success of different campaigns, but Perlovich argued that they need to go even further in detail by tracking the click-through rate of individual links. 

"Each and every piece of the marketing campaign should be very carefully and meticulously tracked," Perlovich wrote. "As a result of this effort, it will be possible to take the most successful pieces of the advertising campaigns and combine them together to produce a much more powerful lead generation campaign that yields more ROI. Every time you enact a marketing initiative, ask yourself: How can I measure and track it?"

Businesses should place a similar emphasis on detail in other investment areas. For instance, if the company needs new supply chain management software, it should first decide how the program's value and return will be tracked. Furthermore, it is critical that all stakeholders be involved in this process, since the success of this software could drastically affect customer satisfaction, meaning that this decision will likely impact everyone in the organization.

To this end, it may be helpful to test such projects on a small scale before fully implementing them. This way, companies can measure according to their predefined metrics and extrapolate a likely return. Perlovich argued that fine-tuning eCommerce strategies in this way will maximize the chances of success.

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