Starting up an ecommerce business isn’t easy. It might seem as simple as sourcing some inventory and then sitting back and waiting for profits, but that sadly isn’t the case. Those who are involved in the industry understand that it can be competitive and challenging. Finding a way to stand out from the crowd and even get the chance to sell items to customers is a major hurdle for many businesses.
But there are many issues beyond getting traffic to your business. In fact, finding customers is relatively simple. It’s the logistical challenges that come later that are tougher. There are a lot of steps that happen in between a customer buying something online and the item being delivered to them. And then there are all of the steps that need to happen before and after that process.
In this article, we’ll go over the top 10 ecommerce logistics challenges that online sellers face. If you don’t already run a shop, this list will help prepare you for what you may have to deal with if you decide to jump into the world of ecommerce. If you already own an online store, we’ll offer explanations of these issues that may help you conquer them.
Delivery… and everything that comes with it
The biggest logistical challenge that any seller has to face is delivery. While delivery can be a simple process when things are going well, even just one small change or error can turn it into the most painful part of ecommerce. Let’s go over some of the challenges that you might encounter during the delivery process.
One logistical aspect of delivery that can pose issues for sellers is the fact that, for the most part, delivery is outside of their control. Once the item is packaged up and sent out, there’s really not a whole lot that you can do aside from cross your fingers and hope that the item arrives safely.
This can cause a lot of stress. Knowing that you may catch some flack for a slow or incorrect delivery despite it not being your problem just doesn’t feel good. You may want to try to exert more control over your delivery process, but that’s just not possible most of the time.
Another delivery-related issue is actually sending things out on time. When sellers start off and aren’t making that many sales every month, shipping on time is generally pretty easy. But things get infinitely more complicated when business starts to increase.
This is especially challenging when you are in the awkward phase between being a small store and having enough revenue to hire people to take care of shipping for you. When there’s just one person managing the entire packaging and shipping process, things can – and often do – get messy.
Things don’t always get easier once you’re past this point, though. Once you hire people to take care of shipping for you, you need to correctly teach and manage them to ensure that there are no issues. And you need to make sure your warehouse is properly stocked ahead of shipping time, and that your inventory is organized, and that you are keeping track of everything that has been shipped or is ready to ship….
We don’t say all of this to make the delivery process seem like an insurmountable obstacle for an ecommerce business. It definitely isn’t. Once you get a system down, it can be very smooth. But you should be very aware of all of the moving parts that go into product delivery. Your goal should be to have satisfied, happy customers; quick and efficient delivery is one of the keys to gaining them.
Scaling the business
There are few times in life that are more exciting – and more nerve-wracking – than when you first start a company. It’s unclear whether you’ll find success or not, but you still have to put in all the effort you can. It’s a time where anything feels possible, and that’s both invigorating and, in some ways, terrifying.
But once your business is established, you can’t just sit back and watch it grow from a start up into Amazon. If you want to see actual growth, you need to actively position your business to become bigger and better.
Here’s an example of why scaling your business can’t just happen naturally. Say your inventory is made up of 100 items that you replenish each month. If you start off with 50 customers that each buy one item monthly, you’ll have no problem dealing with that level of demand with your current supply.
But as the months go on, word of mouth allows more and more customers to come. Suddenly those 50 customers have turned into 150, and each of them are still buying one item per month. Your 100-item inventory is now not nearly enough to deal with that.
So what can you do? Well, you need to buy more items, of course. But as this goes on, you’ll need more employees. You’ll need more delivery workers. And, at one point or another, you’ll need more funding to deal with the increased economic strain brought on by all these new factors.
In a sense, your business can grow on its own. But unless you make real decisions as a result of that growth, you’ll hit a ceiling that you just can’t get past. So it’s important to pay close attention for opportunities to scale your business. The biggest issue you’re bound to face in scaling, though, is getting funding.
There are lots of ways for ecommerce businesses to secure funding to help them grow, but you’ll need to do your research to find which is best for you. You’ll need to make sure your credit is in order, that you reach out to the right people, and that you have a real plan for the funds you might receive.
If you aren’t ready to grow your business, you aren’t ready to find success. Make sure to have a vision – and a plan for turning that vision into a reality – from the early stages.
Keeping track of inventory
More customers willing to buy things from you is great, but it means that you need more products to sell. That’s a relatively simple problem to solve, though. But more products presents a trickier problem: you need to find a good way to keep track of your inventory.
Dealing with all that you have to sell isn’t much of an issue when you’re a very small shop. If you’re just selling a few things from your home, you can easily just take a look and record what you still have and what you’ve already sold. But once your inventory is large enough that you are no longer keeping it in your home, you need a really good system to keep track of your products.
Gone are the days of pen-and-paper inventory tracking. It just isn’t a reliable way to run an ecommerce business for even small shops. To deal with the logistical issues that come from tracking inventory, we highly recommend getting some variety of inventory management software.
There are lots of options online, and you’ll need to try out a few different pieces of software to determine which works best for you and your business. But once you find a good one, you’ll be shocked to see just how much it helps you out. Software will keep you incredibly organized when it comes to your inventory, and that should certainly be your goal.
Of course, you should be aware that one inventory management system probably won’t work forever for you. As your business grows and shifts, your inventory will change as well. That means that you should be willing to change your inventory management system when it would be prudent to do so.
In other words: don’t get too attached to one piece of software. And, in a way, that’s a lesson that you should keep in mind for many aspects of your business. Innovation is key, so don’t stay committed to one way of doing things. That’s an easy way to allow your competitors to pass you by.
Offering free shipping
Amazon really changed the ecommerce game. Not only did they introduce and popularize the idea of online shopping to a worldwide audience, but they also came up with several ideas that are now the industry standard. One of those ideas that is most challenging for small and medium-sized ecommerce businesses is free shipping. Pretty much every shopper expects a free shipping option when they buy things online these days.
The issue here is obvious: shipping isn’t free. So how can this be handled by businesses that aren’t quite the size of Amazon?
Well, it’s tricky. Your profit margins are likely still thin if you’re a relatively new seller. You might even not be turning a profit yet. So it might seem like a terrible idea to incur even more financial losses by effectively paying for the shipping of your products.
But thinking about it that way isn’t the right mindset. Free shipping is a major selling point for many shoppers, and offering it can be a really effective way to increase revenue. Customer experience additions like free shipping can also turn a one-time customer into a lifetime customer, and that will pay off in dividends later on.
But the question remains: how can you offer free shipping? Figuring that out is a massive logistical challenge for any shop owner that doesn’t have experience doing so in the past.
There are ways to offer free shipping without it taking a toll on your funds. One common method is to offer free shipping behind a purchase amount. Giving customers the option to upgrade to free shipping after they spend $100 will encourage them to spend more when they perhaps wouldn’t have done so originally. The increase in business there will more than pay for the cost of free shipping.
Offering free shipping for those who spend a certain amount also does something else for you. Customers will see that their delivery costs might be waived at your shop versus other shops, so they will naturally gravitate towards you. It doesn’t even matter if they get the free shipping or not; they just care that the option exists. The appealing offer is enough to get them to start shopping.
You can also speak with your vendors about ways to cut down on delivery costs to help facilitate free shipping. You can sometimes work out deals where a change in delivery route will save you a lot of money, and that will help you offer free shipping without it being as harmful to your funds.
Offering great (and personal) customer service
One of the great things about ecommerce is that it can all more or less be done completely digitally. Customers love the fact that they can just shop from the comfort of their homes, and business owners love that they don’t need to invest in brick-and-mortar stores filled with employees. It’s a win-win situation.
As good as that sounds, though, it also results in some complications on the customer service end of things. Despite shopping from home and not actually seeing any representative of your business face-to-face, most customers still want to feel like they are being cared for and personally assisted through the shopping experience. They want all the benefits of shopping online… while also having all the benefits of shopping in a store. Put another way, they want to have their cake and eat it too.
That might seem like an unrealistic demand to business owners, but that doesn’t matter. Whether you like it or not, the customer is always right. If the majority of customers want something, it’s wise if you cater to those desires.
That’s easier said than done, though. How do you give someone a shopping experience that feels personal when there’s a computer screen – and potentially thousands of miles – between you? Ecommerce customer service can be hard to figure out.
One great way to approach this is to invest in real-time customer support chat. This undoubtedly requires a bit of a time and money investment: you need to find a good chat client, figure out how to install it onto your shop’s site, and employ someone to respond to messages.
With that said, though, it’s definitely worth it. Customers will feel like you actually care about their business, and that goes a long way in keeping them satisfied. Customer chat support can also help answer questions that might otherwise prevent someone from buying products from you. Issues like sizing, shipping, and anything else can be quickly and efficiently settled with these chats.
Email support can also go a long way to improving the customer experience for your business. Make sure to respond in a timely manner to all messages you receive through email. It can also be worth hiring someone who is an experienced writer to respond to all emails for you. Professional-sounding writing can elevate an email and make the customer much better about the communication.
The threat of hackers
The Internet is no longer an innocent place. Well, we’re not sure if it ever really was, but people have definitely wisened up to the dangers of the web lately. The average netizen understands that their information isn’t necessarily safe on the Internet, and they want to be assured that you will go to great lengths to protect their sensitive details from being accessed.
That’s not that easy to do, though. Hackers have gotten better, faster, and stronger in recent years, and it’s more challenging than ever to make sure that your ecommerce shop is actually secure. Having hackers access your own information is one thing, but you really don’t want them to get to the info of your customers.
If that happens, the truth that you have with your customer base is completely destroyed. And not only that, but you’ll have to help out with the clean up efforts. You’ll need to alert your customers that there has been a data breach and that they need to do all that they can to monitor their bank accounts, passwords, and whatever else might have been accessed.
That’s a messy situation. To prevent it ever happening, you really need to look into your store’s cybersecurity. Luckily for most shop owners, large platforms like Amazon and Shopify can help you with this. While partnering with these corporations won’t guarantee that your data will be completely safe, it is definitely helpful to have them assisting you.
If you are independent, though, you are going to need to put in a little bit more work to ensure safety from data-hungry hackers. Hire someone to look over the back end of your website to make sure that it is as secure as possible. It will cost you some money, but that investment will pale in comparison to the costs of an actual data breach.
In short: you should be aware of the fact that hackers can derail your entire business. Take the necessary precautions in light of that, but don’t spend too much time worrying about it. While you need to be prepared, you don’t need to live in fear. The odds of you being hacked are relatively low… but it’s not impossible.
Supply chain issues
The pandemic has taught us a lot of things. One of the most important lessons for ecommerce businesses, though, is the fact that the supply chain is more fragile than we used to think. Shipping delays were common throughout the early days of COVID-19, and it seems like we are still recovering from that. Even worse, outbreaks and waves can be unexpected and hard to account for, creating upset customers and breaking the flow of business.
Supply chain issues are a major logistical challenge for anyone in ecommerce. Unfortunately, there’s not a whole lot that you can do to prevent these issues happening. It is generally beyond your power when your inventory is stuck somewhere.
What you can do, however, is prepare a Plan B for when these issues occur. For instance, having secondary vendors that you can call up if your primary vendors are having issues is a great idea. They may not give you the best price or the fastest delivery times, but if they can help you out in a pinch, they’ll do just fine.
Another important thing to do is train your employees to be ready to enact your backup plans. While their general focus should be on going about business as usual, they should also be 100% ready to jump into action if there are issues. What exactly you’ll need them to do will depend on your backup plan. Just make sure they understand it.
If you’d prefer to decrease the odds of an issue like this cropping up, you can always just look at diversifying your vendors and suppliers from the beginning. That means that you can just shift business over to Suppliers 2 and 3 when Supplier 1 is having problems. This is an approach that is smart for any medium-sized business to be doing even when there isn’t a pandemic going on. The current situation in the world just makes it even more pressing.
There will also just be some situations that you can’t really fix or make better. That’s part of ecommerce. If that ever happens, the most you can really do is have a protocol for how to keep your customers happy. How you go about that is up to you, but you could always offer coupons or free merchandise. The last thing that you want is bad reviews, after all.
Staying ahead of competitors
In the regular commerce world, you really only need to compete with the other shops that are nearby. Most people aren’t going to drive an hour to go to a competitor’s store, so you don’t need to worry about anyone that far away. It’s not a stretch to say that your biggest worries are your neighbors.
That is definitely not the case for ecommerce. Your competitors can be literally anywhere in the world. If they occupy the same niche as you, they might take away some of your business. This isn’t always the worst thing in the world, but the fact that competition is so readily available makes for some unique logistical challenges for all ecommerce businesses.
First of all, it means that you need to pay close attention to global trends. While you might have the advantage of faster and cheaper shipping compared to international competitors, they still might take away some customers using techniques that you aren’t familiar with. That means that you should keep a close eye on what international businesses are doing. Being far away doesn’t mean that they aren’t a threat.
Second of all, it means that new competitors can appear out of thin air. If you are running a brick-and-mortar shop, you’ll know as soon as a new competitor appears on your street. You’ll have plenty of advance notice as they purchase a space and move in. Ecommerce stores can start overnight, though, and you’ll have no warning. And it’s not wise to write off shops just because they’re new and small. They can grow quickly.
Finally, the nature of ecommerce competition necessitates innovation. The world of online business moves really quickly: every shop owner can check in on the moves their competitors are making in just a few seconds, and that lets them respond with just as much speed. If you don’t want to be left in the dust, you absolutely need to be ready to innovate on a dime. Don’t stay emotionally attached to any way of doing business; if your niche appears to be moving in a certain direction, don’t be afraid to act accordingly.
The logistics of dealing with competition in the world of ecommerce can be challenging. But they can also be rewarding. If you’re someone who loves new ideas and a healthy dose of competition, you’ll be happy to be in the ecommerce realm.
Choosing good value-add services
Standing out from the other shops within your online niche is obviously important. But how exactly do you do that? Well, one strategy is to utilize value-add services – or, in other words, small additions to your company that add some kind of value to your customers. These services can take many forms, and they elevate your business beyond a barebones transactional company to something more personal and meaningful to your customers.
But you can’t just pick all the bells and whistles that you want and call it a day. You need to choose value-add services that actually work with your company. Beyond that, you also need to make sure that the money you are spending on value-adds make sense compared to how much profit they bring in.
It’s a fine line to walk, and it’s not easy to figure out how much revenue is being brought in simply due to these value-add services. One way you can attempt to determine the best value-adds for your business is to run a series of tests where you compare revenue brought in (or customer satisfaction) over a few different months. You can try out different services every month and then compare the data to see what difference was actually made.
But this approach brings more logistical challenges. How do you control for other variables and ensure that it was REALLY the value-adds that were making the difference? What about seasonal trends? What about the natural ebb and flow of business? You see what we mean. It’s tricky to determine which value-adds are actually working and which you merely think are working.
In general, it can be a good idea to set up some kind of limit on how much you are willing to spend on a value-add service. If something is past that threshold, you can immediately write it off. The last thing you want is to waste a bunch of money on fancy wrapping paper that no one really cares about.
At the end of the day, though, there is no golden rule when it comes to additional services. You don’t want to be as basic as possible, but you also don’t want to blow your funds on useless marketing ploys. It may take some experimentation to find the perfect value-adds for your business, but it’s worth the time and effort to perfect.
Dealing with returns
Returns aren’t much fun for the consumer or the business. In fact, they’re generally a pretty big hassle for both parties. So does that mean that you can just enact a no-return policy and call it a day? Uh… no. Sadly. Returns are a major selling point for almost all customers; you’d be alienating a large base if you were to do that.
That means that you’re going to have to develop an efficient way of handling returns if you want your business to succeed in the long term. This, however, presents many major logistical hurdles.
The first thing you will need to make a major decision on is what your return policy will be, exactly. There are lots of boiler plate ones out there that you can adopt, but what do you think matches your business model the best? Will you be lenient in the hopes that it will get you more customers, or will you be stringent due to the financial toll that returns can have on a business?
One way to deal with this part of your return process is to monitor how your customers are dealing with returns. Do you find that dissatisfaction and the desire to return items is high? If so, you may want to be more stringent. If no one ever asks to return things, you can be as friendly with returns as possible.
In all likelihood, it will be somewhere in between those two options. But basing your decision on actual customer patterns will let you make an educated bet on the best choice for your business. You also retain the right to change your policy later, if need be, so don’t be too afraid of getting it wrong the first time.
Beyond that, you face the logistical challenge of making sure that your return process isn’t terrible for the customer. Most people who shop online still report that the average steps needed to return an item online are painful to go through. You can stand out from the crowd by making your returns as smooth as possible.
That means that you’ll need to hire people and then train them with returns in mind. You’ll also need to have some sort of automated process that guides customers through their returns. Those are major issues to deal with, but they are ultimately worth it.
The very last thing that you want is a bunch of bad reviews from customers who were dissatisfied both by the item they bought and the return process. That’s bad news for you. To prevent this, do all that you can to make returns a priority.
