Small E Commerce ventures often have multiple challenges that cause hurdle in running the business smoothly. One of the prime challenges is logistics. The logistics involves procuring raw materials and then shipping the finished good to the product. The company that running the E Commerce business is the sole customer check point and is responsible for smooth delivery of the product. However, due to multiple challenges, the delivery of the product is delayed.
Let us look at few of the challenges faced by a small-scale E Commerce venture.
Last mile connectivity
In a number of countries, last mile delivery is probably one of the most challenging aspects of E Commerce. During the last mile delivery, i.e. to the home address of the customers, there could be multiple roadblocks to delivery.
For example, a customer may not be available at the time of delivery. The address may not be complete or correct. The customer location may be farther than expected. The weather may play truant. It may not be possible to leave the package at the door due to possible theft of the package.
In case of international shipping, customer may be asked to pay extra to the customs. In the worst case, they might not have permission to import a particular product into their country.
Customers may not be understanding enough about the issues leading to overall bad feedback about the services in general.
Inventory management
Small businesses are often low on resources. That means one can only have limited stocks of the relevant items. It might take some time between stock depletion and then further replenishment. It depends on a number of factors, primary one being the availability of raw material and in time shipping to the E Commerce vendor.
When there is no stock, the product shows out of stock status in E Commerce website. If that goes on for a long time, the customer may be tempted to look for other websites to buy the product. It leads to loss of hard-won customer loyalty and can lead to customer turnover. The inventory of top products needs to be stocked all the time.
However, too much of stock also has its own set of problems. If the stock is perishable like food or flowers, it needs to move before expiry date. If for any reason the stock lies unsold, then the cost of the spoilage has to be borne by the business.
Multiple vendors/ systems
A small business usually sources its products from a single vendor. However, the complexity of logistic increases if there are multiple vendors. There could be issues with software systems that are too primitive to handle complexity. Often small businesses depend upon spreadsheets to keep a track of inbound delivery, production and outbound goods movement. This is very error prone. And with more vendors it gets more difficult to keep all the things working.
Ever Increasing Transportation and material costs
The inflation around the world is up in recent times. It has caused an uptick in both manpower and material costs. The constant wars around the world does not help with the oil prices.
Due to this, the cost to deliver the goods increased rapidly for small business E Commerce companies. If the transportation charges are too high, the customer does not want to buy or make repeated purchases that frequently.
Excessive returns
The fundamental problem with E Commerce business is that it is impossible for a customer to try and then buy. Often the order is based on the appearance of the product’s picture on the E Commerce portal, and any misunderstanding may result in dissatisfaction with the delivered product.
In retail for example, issues could range from colour, size, fabric, fit etc. In that case the logistics need to work to pick up the return requested by the customer.
In a few cases, customers frequently return the products leading to high return costs for the E Commerce business.
Photo by Marcin Jozwiak
Leave a Reply