If you’re starting an e-commerce business or considering starting one, how do you get it off the ground? While there is no single way to structure an e-commerce supply chain, there are numerous things to consider and many questions you must ask yourself about how you want your business to operate.
Let’s begin with the most basic issue: inventory. Unlike a traditional brick-and-mortar store, you don’t need a physical location for stocking and selling products — in fact; you don’t even need products! While you could manufacture and sell your own products, many e-tailers sell products made by others. Which do you prefer?
Many other decisions must be made to set up the supply chain strategy that works best for you. How and where will you warehouse your inventory? Will you even need an inventory? What do you need to consider when selecting a packaging vendor? Have you thought about logistics or how to fulfill and deliver products? Would it make sense to outsource any or all of your operational tasks to a third-party logistics (3PL) provider?
The accompanying infographic, Getting Your Goods From Here to There: Setting Up Your E-Commerce Supply Chain Strategy, provides a lengthy list of questions, the answers to which will help you determine the optimal strategy for your business. Remember, there are no right answers, only answers that are right for your business!
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Setting Up Your E-Commerce Supply Chain
Do you want to manufacture products or resell others’ products? Do you have several product sources in mind? Do you have the ability to store inventory?
Can you accurately forecast sales volume based on past sales activity, seasonality, etc., so you have the right product numbers and mix on hand?
Have you considered transferring orders to a company that does all fulfillment and shipping, so you don’t have to invest in or stock inventory?
Inventory Packaging Customer Service Logistics Strength
Are your products fragile or perishable and require stronger packaging? Can your packaging withstand shipping “challenges, so goods arrive without damage?
Is your packaging attractive? Does it make a good first impression? Is it made of sustainable materials? Are your products perishable or fragile and require stronger packaging?
Can you buy materials in bulk? Does your supplier offer the correct size packaging, one that protects the product while optimizing shipping costs?
How much capacity (square footage) do you need to store your inventory? Do you require high ceilings or additional space for automated fulfillment?
Where are most of your customers located? Where are your shippers located? Do you need or want multiple locations to decrease shipping times?
Rent vs. Own
Do you need a unique layout or design? Are you financially able to build and operate your own facility? Can you afford maintenance and repair costs?
Warehousing Third-Party Provider
Is your company able to perform fulfillment and distribution tasks? If not, have you considered outsourcing some or all supply chain operations to a 3PL?
Can you afford to offer free shipping? Have you thought about charging customers exactly what you pay to ship? Would a flat shipping rate work for you?
Are you ready to handle “reverse logistics”? Have you weighed customer satisfaction vs. restocking and return costs? Do you have a clear return policy in place?
Have you made it easy for customers to pay? Do you accept multiple payment options? Is your payment processing secure and PCI compliant?
Have you trained your staff to address product and return policy inquiries? Do you offer multichannel support? Can you handle inquiries in a timely way?
Are your provided delivery dates/times accurate? Are you able to provide real-time product tracking? Can customers track delivery via smartphone?
Setting Up Your E-Commerce Supply Chain Strategy
GETTING YOUR GOODS FROM HERE TO THERE: