The role of the supply chain is the most important in e-commerce. Our clients who do well all have a very stable supply chain. No matter the product, you can squeeze out extra profit by optimizing the supply chain. We have never seen a business with a poor supply chain stay profitable for long, whether big or small.
A good supply chain always lowers costs, improves cash flow, and makes products more competitive. It must be said that supply chain management is challenging for startups. Today’s blog shares some tips for small businesses and real examples from our clients.
What is the E-commerce supply chain?
E-commerce supply chain refers to the entire process from purchasing raw materials to delivering the final product to consumers. This includes production, warehousing, logistics, order processing, and customer service. Using internet technology and big data analysis, the e-commerce supply chain optimizes efficiency and cost at each step to improve its flexibility and response speed.
What to do in the supply chain process?
Data Analysis: Use data analysis tools to look at sales and inventory data to help make decisions.
Team Collaboration: Work closely with purchasing, sales, warehousing, and logistics teams to optimize the supply chain.
Good Communication: Communicate effectively with suppliers, customers, and team members to ensure accurate information flow.
Market Insight: Quickly catch market changes, respond fast, and adjust supply chain strategies.
Strong Execution: Make solid supply chain plans and make sure they get done smoothly.
Continuous Improvement: Keep making the supply chain process better, increase efficiency, cut costs, and boost customer satisfaction.
Ongoing Learning: Stay curious about new technologies and models to drive innovation and change in the supply chain.
What are the challenges in E-commerce supply chain?
Product selection
First, many beginners don’t know what products will make money, and they’re not aware of the challenges behind supply chain management. You know, managing the supply chain for socks is very different from managing it for coffee machines. That’s why we always tell our new clients to start with something simple. Besides requiring less investment, the supply chain is also easier to handle.
Supplier management
Many small businesses collaborate with multiple suppliers, making unified management difficult, which increases costs and risks. Some also overly rely on one or a few suppliers, and if these suppliers make mistakes, the entire supply chain will be impacted.
Lack of Full Data Analysis
Small or family-run stores lack professional personnel and technical support, making it difficult to accurately obtain, process, and analyze supply chain data. Often, business decisions are based on approximations, guesses, and intuition, preventing effective monitoring of inventory levels and restocking times. This results in either inventory overstock or delays in restocking. Inventory overstock wastes significant funds, leading to insufficient cash flow for other operational activities, such as marketing.
Logistics & QC
Small businesses typically outsource quality control (QC) to third-party companies, but these companies often cannot flexibly identify product issues because they do not understand the products well and find it difficult to evaluate them from the consumer’s perspective. I have mentioned this issue before. Additionally, they cannot secure competitive prices for transportation costs, such as international shipping and fulfillment fees.
Order Management & After-Sales
From order placement to shipping, the process typically involves order synchronization, order review, and order printing. Currently, many e-commerce businesses still rely on inefficient manual order processing, leading to low efficiency, high error rates, and wastage of human and material resources.
E-commerce after-sales services involve many detailed tasks, such as complex return and exchange processes, consumer dissatisfaction with services, and rapidly changing demands, all of which increase the pressure on customer service. Additionally, these businesses often handle after-sales issues too mechanically, lacking communication and interaction with consumers, which easily leads to conflicts and prevents them from gaining a deeper understanding of consumer needs and expectations.
What Are the Best E-commerce Supply Chain Strategies?
Optimizing supply chain strategy varies from product to product, there is no best secret. You have to polish the strategy that suits you according to your capital investment, product characteristics, team size, sales channels, etc. But in general, an excellent supply chain will have to do the following:
Find cooperative suppliers to ensure good quality products
Whether working with factories or trading companies, the most important factor is their willingness to cooperate with you. New sellers often face challenges due to small MOQs. Suppliers focus on large orders and may not pay attention to your smaller orders, leading to issues such as delayed delivery, reluctance to understand your customization needs, high defect rates, and expensive freight forwarder fees.
Therefore, spend time comparing suppliers and have backups. Don’t rely solely on their online profiles, as what you see may not be accurate. Place a small trial order to test their service and professionalism. Many issues are discovered during collaboration, and merely observing is not enough to identify a good partner.
Always prioritize data analysis to make objective decisions
Many large sellers use big data analysis and advanced forecasting models to accurately predict market demand, optimizing inventory management to avoid overstocking and stockouts that affect sales. Small sellers can use small ERP or software tools to monitor sales and inventory, combining this with production and logistics lead times to accurately estimate restock times and quantities.
Automated Order Processing Reduces Errors and Boosts Efficiency
In the early stages of entrepreneurship, manual shipping operations may suffice due to low order volumes. However, as order volumes increase, it’s crucial to adopt an intelligent order management system for automatic receiving and processing. Automating these processes significantly reduces errors and tedious manual tasks, thereby enhancing work efficiency.
In packaging and label printing stages, leveraging automated equipment such as weighing devices and label printers reduces human errors and improves the accuracy and efficiency of packaging.
Reducing Return and Exchange Costs for Large Items
For sellers of large items, it is recommended to choose a specialized local warehouse for storage. Large products have higher inventory and logistics demands, and using a local warehouse makes handling returns and exchanges easier. For example, our client Mike sells tables and chairs. If there is no local warehouse, the cost of returns and exchanges for customers can exceed the product’s value, and the returned items may not be sold at the original price. This forces Mike to either compensate customers or abandon the products.
This handling method incurs high costs for large item e-commerce sellers. Therefore, it’s crucial to find a suitable local warehouse, such as a third-party logistics (3PL) provider or fulfillment center, to serve as a return processing point. This minimizes costs when customers return or exchange goods.
Who's Your Ideal Supply Chain Partner?
If you import goods from China to resell, you must know about Jingsourcing. Unlike finding suppliers on Alibaba yourself, they offer all-inclusive services, including supplier selection, sampling, mass production follow-up, quality control, and delivery to your door. They make your Chinese supply chain smooth, easy, and efficient. Over the past 10 years, they have served over 4,000 businesses, with 70% engaged in e-commerce.
If you have a wide range of products and many suppliers, you can let them act as your China purchasing department to manage and monitor these suppliers, and perform QC before the goods leave China.
If you don’t have your own suppliers or want to change existing ones, you can directly collaborate with them. Their partner factories are audited, ensuring you get good prices and avoid issues with small MOQs that you might encounter on Alibaba. You won’t need to worry about unreliable suppliers or product quality issues. Yes, our one-stop service is the best choice for starting and optimizing your supply chain.
