T otal e-commerce sales for 2021 were estimated at $871 billion, a jump of 14.2% from 2020, the U.S. Census reports. “E-commerce exploded,” says Megan Smith, chief executive of cer with Symbia Logistics. “It has gone from being one of many retail outlets to the outlet of choice for many people.”
carriers, yet many also don’t want to restrict themselves to one or two carriers. “They’re reaching a middle ground and partnering with a manageable group of reliable, cost-effective carriers,” he says. AUTOMATION ADDS UP Along with material and transpor- tation constraints, many e-commerce companies are battling worker shortages, prompting greater interest in auto- mation. Before automating, however, several steps are key. A starting point is ensuring the com- pany’s warehouse, inventory, order, and transportation management systems are up to date. The company then can opti- mize the systems it already owns, and more easily integrate with advanced sys- tems, Chandra says. A second step is to verify the accuracy of the inventory records. Introducing automation to error-riddled records can often lead to more errors. For instance, if the system believes a product is out of stock when actually there is some on hand, a company will likely lose sales it otherwise could have captured. Similarly, when integrating with a logistics provider’s business systems, business rules and processes should be incorporated early and accurately, Smith says. She provides an example: A busi- ness has two products in ve colors, for 10 stock-keeping units (SKUs). After the integration, it becomes clear the two products are different sizes. Adding this information, while necessary, can upend “the ecosystem” already incorporated within the business rules, creating addi- tional work and potential delays. While allowing vendors to access their information systems can streamline pro- cesses, e-commerce companies also need to safeguard these systems and the infor- mation within them. Among other steps, this requires evaluating the cybersecurity protocols their vendors have imple- mented, Watts says. The evolving nature of e-commerce means the challenges also continue to evolve. Return logistics has become a
As online sales have jumped, e-commerce companies have tackled constraints and shortages across every leg of the supply chain, says Abhinav Chandra, managing director with the consumer retail group of Alvarez & Marsal, a professional services rm. “The effect is not additive, but mul- tiplicative,” he says. Those at the tail end of the process bear the brunt of the challenges. Apparel retailers, for instance, typically need to sell their wares within a few months. Shipping delays cut into that timeframe, boosting the risk the retailer will have to discount its merchandise. At the same time, consumers’ expecta- tions for speedy, reliable deliveries have only increased, says Steve Rosenstock, partner, consumer products indus- try leader with Clarkston Consulting. Even as they strive to meet expectations, many companies are navigating labor shortages, dated back-end systems, and cybersecurity risks. OVERCOMING DELAYS To mitigate shipment delays, e-com- merce companies have several options. One is to establish more distribution cen- ters or partner with logistics providers that offer locations near their consum- ers, cutting shipment times, says William Watts, managing principal, consumer markets services group with consulting rm Crowe LLP. Another option is to “pull forward” products from distributors or vendors. That is, the e-commerce rm includes the products within its information systems and uses tools like arti cial intelligence and robotics to help its
manufacturers or distributors identify items that are in demand and need to move quickly. The competition for the availability of products has been strong, Watts says, in part because many e-commerce compa- nies focus on the technology they use to interact with customers, and then con- tract with others to manufacture the products they sell. That leaves e-com- merce rms competing with others to access products. BUILDING RELATIONSHIPS One way to boost access is by build- ing relationships with multiple suppliers, Megan Smith notes. That provides a safe- guard if an option disappears. As companies source and warehouse products from more vendors, the com- plexity of their supply chain increases. Logistics providers can help companies manage this complexity. And just as they bene t by building relationships with suppliers, e-commerce rms can gain a competitive advantage by developing strong partnerships with their logistics providers, Smith says. In e-commerce transactions, actions taken in the warehouse or during trans- portation directly impact the customer experience. If a package is delayed while on a delivery truck, the e-commerce company needs to communicate this to the customer. Now that the red-hot growth in e-com- merce seen early in the pandemic has slowed, many shippers are rationaliz- ing their portfolio of carriers, says Dean Mills, vice president, sales and mar- keting, with TForce Logistics. They recognize they don’t need 20-plus
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