After several years of digital transformation, unprecedented eCommerce growth, and supply chain challenges, 2022 witnessed a significant shift in industry trends, including a slowdown of upward momentum due to escalating costs and fears of an impending recession. Now that we're well into 2023, we’re looking at the changes that will occur within the eCommerce space and identifying the new challenges and opportunities that lie ahead.
From a revamped strategy handling eCommerce growth, expanding distribution networks, improving visibility, and retaining customers, we’ll talk about it all.
It may seem counterintuitive, but the eCommerce boom seen over the last several years has been a challenge to adapt to, as with increased sales come increased shipping costs (not to mention the standard yearly GRI that carriers put in place, regardless of your growth). The primary pain point for shippers is managing transportation and shipping spend, especially as their business grows.
Carriers generally charge higher fees for faster delivery options, an expectation on more and more consumers’ minds, which can reduce the profit margins for eCommerce businesses. Additionally, as global supply chains continue to be disrupted due to the COVID-19 pandemic, global conflicts, and carrier strikes, shipping costs could increase further. eCommerce shippers should consider technology solutions that are built to manage large growth cycles and that easily integrate into the other parts of their business to mitigate these costs.
Businesses may be intrigued by the simplicity of operating a single warehouse but some issues arise when businesses rely on this strategy. We’ve laid out four of those common issues below:
1. A single warehouse may not be strategically located to reach all customers efficiently, leading to longer delivery times and higher shipping costs.
2. A single warehouse is vulnerable to natural disasters and other unforeseen events. If there’s no secondary location, businesses could come to a standstill with disrupted operations that damage customer satisfaction.
3. A single warehouse may not have enough storage capacity to meet demand during peak season or unexpected spikes in sales.
4. Lastly, having a single warehouse can limit the scalability of eCommerce businesses. Therefore, eCommerce businesses may need to consider working with multiple warehouses in different locations to improve their operational efficiency, reduce risks, and scale their operations effectively.
Lack of visibility
Visibility, or lack thereof, is often a challenge for eCommerce businesses. Whether the loss of visibility is within a single warehouse, across warehouses, in the last mile, or something else, it can damage a business’ ability to operate. Without proper visibility, eCommerce businesses may be unable to track their inventory accurately, leading to stockouts and/or overstocking. Additionally, businesses may not be able to identify potential bottlenecks or issues in the order fulfillment process, leading to delays or errors.
This can ultimately impact the customer experience, resulting in negative reviews, reduced customer loyalty, and lost sales. Solutions to this problem include investing in inventory management software, like a WMS or TWMS, which help in the order fulfillment process and enable identifying potential issues proactively.
In the ever-competitive eCommerce landscape, customer retention is a massive challenge. Ecommerce businesses can overcome their competition to acquire and to retain customers by investing in personalized marketing campaigns that target specific customer segments based on their preferences. Tailoring promotions and offers to the needs of individual customers can improve customer loyalty and retention. Additionally, implementing a loyalty program that rewards customers for repeat purchases can help build long-term relationships with customers and increase their lifetime value.
On the horizon: make sure you understand climate impacts
As governments and consumers become more conscious of the environmental impact of shipping, eCommerce businesses may face stricter regulations and higher costs associated with sustainable shipping strategies and packaging materials. The pressure to reduce the carbon footprint of their operations may encourage eCommerce businesses to adopt sustainable practices, such as using electric vehicles, renewable energy sources, and eco-friendly packaging materials.
However, these changes may increase the costs of shipping and ultimately impact eCommerce businesses. To overcome these challenges, businesses may have to consider implementing more efficient logistics processes, consolidating orders to reduce the number of shipments, and collaborating with other businesses to optimize the use of transportation resources. They may also need to educate customers about the environmental impact of shipping and encourage them to choose more sustainable options, such as slower shipping times or in-store pickup. Ultimately, eCommerce businesses may have to prioritize sustainability and adapt to the changing climate landscape to remain competitive in the market.
Challenges in 2023 are abundant, but solutions are available and attainable for businesses at every stage of growth. Successful businesses will have to grapple with challenges that sprouted from the eCommerce boom, expand distribution networks, improve visibility, and retain customers. Additionally, businesses will need to incorporate climate change initiatives to keep up with consumer expectations and the needs of our planet in the coming years.
If you would like to discuss your business's strategy and learn how a technology-based solution like the ShipCaddie TWMS platform can help, contact us today! https://shipcaddie.com/contact/