The 5 biggest supply chain hurdles in ecommerce

Ecommerce has revolutionized the retail industry, making it easier than ever for consumers to shop online. Amazon, Nordstrom, Etsy, eBay, Apple–all major ecommerce retailers that you’ve likely purchased from at some point or another.

In 2023, it is estimated that 218.8 million US consumers will shop online, which is roughly 65% of the entire U.S. population.

Would you rather shop in stores or online? Hear the bell as you open a door or the click of your mouse as you press “checkout”?
While I try my best to explore local stores and wander through shops, I’m equally as guilty as anyone else of purchasing online and getting excited for the moment when the delivery man leaves it on my front porch and rings the doorbell.

I get excited for something that will likely arrive days into the future rather than the instant gratification if I were to stroll over to the store in person. Yet, consumers today spend so much time shopping online for that same feeling of instant gratification only it’s at the tip of their fingers when they click “checkout”, rather than the instant gratification of paying and taking it home then and there.

In other words, the “retail apocalypse” is among us.

What is that exactly?

The “retail apocalypse” is a recent term that describes the movement of consumers from brick and mortar retailers to the online, ecommerce space.

In 2022, ecommerce sales:

• Were estimated at $1,034.1 billion
  • An increase of 7.7 percent from 2021
• Accounted for 14.6 percent of total sales

Digitization has increased the ability of all retailers to grow their sales, and when the integration between online and offline is done correctly it is inevitable that this will trigger a real, virtuous circle.

However, running an ecommerce business comes with its own set of challenges, especially when it comes to the supply chain.

5 biggest hurdles

1. Inventory Management
   • One of the biggest hurdles in the supply chain for ecommerce retailers is managing inventory. Without a physical store, retailers rely on accurate inventory data to ensure that they have the right products in stock to meet customer demand.

• The #1 reason people shop online is that they’re able to shop at all hours of the day. This means that your inventory management system needs to be spot on as there likely isn’t anyone there managing the backend at 2am…

• Tip–get a good understanding of your inventory control. If you can understand when to reorder, how much to reorder, how many more to order, and how long stock can stay in and out of the warehouse, you’ll be able to keep your ecommerce inventory solid.

• Managing inventory is a huge undertaking, and it can be especially challenging for retailers that sell a wide variety of products.

2. Fulfillment
   • Another hurdle in the supply chain for ecommerce retailers is fulfilling orders. And important to distinguish, warehouses and ecommerce fulfillment are not the same thing. With more and more ecommerce buyers, retailers are facing increased pressure to get products to customers faster and cheaper. This requires a well-coordinated fulfillment process that includes everything from warehouse management to shipping and tracking.

• Many times, it can be more cost-effective to work with a partner on ecommerce fulfillment, but of course, do your research first.

3. Returns and Refunds
   • Returns and refunds are a part of any retail business, but they can be particularly challenging for ecommerce retailers as there may not be a physical location for one to return an item back to the store. Understandably, returns and refunds can cause disruptions in the supply chain, and managing them can be time-consuming and costly.

• The reverse logistics of your ecommerce is important to keep happy customers. The 5 R’s of reverse logistics include: returns, recalls, repairs, repackaging and recycling.

• Focus on having a solution for the 5 R’s–a fully fledged returns strategy–and your customers will come back time and time again.

4. Global Shipping
   • Ecommerce retailers often sell to customers all over the world, which can lead to complex and costly logistics. Shipping internationally can be difficult, especially when dealing with customs, tariffs and taxes.

• But, the reward is high. Statista has the average order value of an international sale at $147, which is 17% higher compared to an average domestic sale.

• Tip–work with a last mile carrier that can help you find the most efficient–price, delivery time and metrics.

• Extra tip–USPS is typically the most cost-effective carrier internationally.

5. Cybersecurity
   • As unfortunate as this is, ecommerce retailers are also facing an increasing threat of cyber attacks. Protecting sensitive customer data and financial information is critical to maintaining the trust of customers and can be a significant hurdle in the supply chain.

• Today’s supply chains are highly interconnected so if one is breached, the rest of the chain may be vulnerable as well.

• A report from NCC Group found that supply chain cyber attacks increased by 51 percent between July and December 2021.

  • Visibility is a high priority–companies need to know what’s going on across the supply chain, and where their inventory is at, at all times to reduce the risk of cyber attacks.

Uncover your barriers

Ecommerce retailers face a number of hurdles in the supply chain, from managing inventory and fulfilling orders to dealing with returns and international shipping.

While these hurdles will not disappear, there are efficient and effective ways to make them more manageable.

When you understand where your specific hurdles are, you can implement strategies to overcome them to improve your operations and increase your bottom line.

A big component of LimeLoop’s Smart Reusable Packaging is in the word “smart”–our technology. Your ecommerce supply chain is only as good as your ability to track and manage where your products are at all times.