From inventory management to returns, e-commerce brands face extensive supply chain challenges. Today’s customers demand faster shipping, greener products and are also more likely to make returns. TikTok and other social platforms generate unexpected surges in demand. Weather, geopolitics, material shortages and other variables create supply chain disruptions.
Achieving supply chain visibility enables companies to navigate these hurdles successfully while decreasing costs, and improving accuracy which also reduces returns. Let’s explore the problems and their solutions.
Fast Shipping Expectations
More than 90% of consumers expect at minimum two or three-day delivery on their purchases, and 85% of customers said a poor delivery experience would prevent them from shopping with that company again. Most buyers also actively track their delivery.
To meet customers’ high expectations, brands need real-time end-to-end visibility of their supply chain, especially the last mile. Many sellers lose sight of the package once it passes to logistics partners, but customers don’t know that. They attribute any delivery mishaps to the brand, even if the brand was not directly responsible for that step.
To provide consumers with the delivery quality and real-time tracking capabilities they expect, companies must employ collaborative visibility — a system in which suppliers, brands, and logistics partners share real-time data. The resulting product journey insight gives brands more control over the supply chain, especially the delivery stage. This knowledge allows sellers to communicate immediate issues to buyers and identify and rectify recurring trouble spots within the delivery model. Customers can also follow their order’s path, giving them a positive experience.
While costly, returns are a fact of life in e-commerce. The average return rate hovers around 17%, resulting in $816 billion in lost sales. Retailers pay an average of $26.50 to process $100 worth of products customers send back. Since they can’t eliminate returns, companies must find ways to reduce them and increase handling process efficiency.
Products, website content, customer service and packaging are key components for preventing returns. Providing accurate product descriptions, images and measurements ensures the item matches customer expectations. High-quality products and excellent customer service result in more satisfied customers and top-notch packaging can prevent broken items.
As an essential part of the supply chain, reverse logistics systems help recover materials and reduce product life cycle costs. Companies must build processes that efficiently collect, inspect, remanufacture, resell and dispose of returned products. Supply chain leaders can leverage artificial intelligence (AI) to optimize return logistics systems and reduce costs.
With AI advancements, brands can begin to practice predictive returns. Analyzing customer data, such as reviews, reason codes and purchase histories, allows sellers to project which items might be sent back. The insight can also uncover the root cause for the return — for example, an inaccurate online description or a subpar product — empowering companies to remediate the problem.
Demand fluctuates wildly from month-to-month, even day-to-day. TikTok and other social media platforms add a new variable with their propensity to make products go viral, causing a sudden and unanticipated surge in sales. Retailers spend an estimated $1 trillion annually on stockouts, and the costs of overstocks quickly add up. Almost half of surveyed companies reported missing revenue opportunities stemming from inaccurate demand forecasts, highlighting the importance of predicting market changes more accurately.
Satisfying demand requires inventory visibility and real-time insights. Collaborative visibility and an integrated supply chain permit brands to monitor current inventory levels, locations and movement throughout the supply chain to make strategic decisions about procurement, production and shipping.
Integrated systems also enable companies to predict demand shifts. By combining data from sales channels and order management systems, brands can see changes and trends in buying patterns. Leveraging AI improves forecast accuracy by recognizing inventory data patterns humans may miss, like demand prompted by social media trends.
Consumers want sustainable products, and 68% of Americans are willing to pay more for them. A sustainable supply chain also reduces environmental impacts while enhancing brand reputation, increasing operational efficiency and driving long-term profitability. Corporate responsibility practices can actually increase sales revenue by 20%.
To achieve sustainability and optimize their entire supply chain, supply chain leaders must comprehensively understand their business operations. Integrated data reveals a company’s current carbon footprint and identifies areas for improvement. Transportation may afford one opportunity to reduce these emissions. Companies can adjust delivery routes, use alternative fuels and leverage technology to track and manage shipments more efficiently.
Retailers should consider environmental practices when selecting new vendors — and engage current partners in process improvements. Setting vendor expectations and standards, collecting data and assisting partners in implementing sustainable practices help reduce a brand’s environmental impact.
Establishing circular supply chains minimizes waste and maximizes resource reuse. Circular supply chains use renewable resources, design products for disassembly and implement closed-loop systems where waste is repurposed into new products. These practices reduce reliance on new materials, lower carbon footprints and create new revenue streams through waste reduction. Again, circular supply chains require end-to-end visibility to understand product sourcing, manufacturing and distribution.
The Critical Role of Supply Chain Visibility
The common theme woven throughout these solutions? Supply chain visibility. Collaborative technology gives brands control of their operation with real-time data to make better decisions and optimize their business amid the many challenges.
However, merely collecting the data will not yield actionable insights. Supply chain leaders need analysis to understand the implications, which is difficult to achieve with manual processes. AI and machine learning are creating new opportunities to leverage data. By integrating data from suppliers, manufacturers and logistics providers into a single location, AI unlocks powerful insights, like predicting returns and optimizing last-mile delivery.
Supply chains and markets will only grow more complex. Brands must establish visibility now to navigate current and future obstacles.