The Challenges Facing E-commerce Supply Chains

In an earlier post, we discussed the effect the e-commerce boom is having on couriers. This time around, we want to look in more detail at the heart of the e-commerce supply chain – the logistics industry – and the challenges it is facing thanks to our love of online shopping; those ongoing, the more recent challenges, and potential future challenges.

Let’s start at the beginning and look at ever-present trials created by the impact of a burgeoning e-commerce industry.

3 basic challenges facing the logistics industry

The first of these challenges is the cost of delivery. The more that’s sold online, the higher the delivery costs will be. Although an obvious correlation, serious thought has to be given about how these additional costs will be met.

The obvious answer is to pass them on to consumers, but many e-commerce businesses want to keep their prices low in such a competitive landscape. That means they’re going to be looking to negotiate lower prices with their logistics provider. Of course, there is also the option of ‘click and collect’ to consider.

Once the goods have been delivered, a second challenge comes into play – returned orders. In the e-commerce world, there’s a phenomenon called ‘intentional returns.’ This is where the consumer orders more than they need (e.g., a dress in several sizes) and then return the unwanted items. Again, this incurs additional costs that have to be accounted for somewhere.

Finally, we need to talk about emissions. If the e-commerce sector continues to expand apace, the number of vehicles on our roads is set to increase exponentially. As governments continue to push for lower emissions, courier companies may be forced to invest in zero-emissions vehicles or face penalties.

More recent challenges facing the logistics sector

It’s hardly surprising that now’s the time we mention Covid. The global pandemic impacted (and still does) every aspect of our lives. Its impact on supply chains has been catastrophic, especially when you factor in the havoc wreaked by Brexit. This double whammy caused chaos and has highlighted the need for ‘just in case’ measures to be put in place to help prevent other potential future disruptions to the supply chain.

Delivery times are another challenge. Consumers are becoming more demanding, wanting their goods in the shorted possible time. But more than that, they also want their orders arriving within their promised delivery slot. Therefore, the logistics industry needs to find a way to guarantee speed and precision.

This could be achieved by introducing the third challenge we’re going to look at in this section – last-mile fulfilment centres. These are hubs located closer to the consumer, enabling faster delivery and, potentially, same-day deliveries. They sound like a great idea on paper, but the cost of setting them up could be prohibitive in some cases.

Future challenges for the e-commerce supply chain

What challenges could the future hold?

    • Greater demand by consumers for same-day delivery
    • Higher volume of returns if consumers can order and return at little to no cost
    • Lack of visibility in supply chains if there isn’t greater synchronicity between e-commerce businesses and couriers
    • Larger truck capacity to cope with the number of orders and more significant traffic congestion

These challenges are not going to go away. E-commerce businesses need to work with their supply chains to make sure the consumers growing demands are met. The future could be bright for both sides of the supply chain if they work together to overcome the many challenges they face.

Smart Directions provide e-commerce businesses with bespoke logistics services. Call the team on 01442 507 240 for the right package for your business.

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