Introduction - Setting your house in order before the launch
|Operational efficiency in e-commerce business|
My previous blogs were around the available options to launch the digital store and critical features to look for in the selection of E-Commerce software. As an extension to these articles, my dear colleague Sai Hari and I would like to delve into the importance of the operational side of the business before diving into the e-commerce bandwagon. Because, a lopsided effort between the backend operation and online platform could possibly compromise the business objectives. In the past, a staggering number of online businesses were closed due to inefficient operations. Hence, we are today focusing on the discussion points that could potentially derail the growth of the online business. For instance, based on our experience, efficient Systems integration, Order Fulfillment (logistics) and Payments (including refunds) form a balanced platform.
Need for integration – Detect this requirement early to drive growth
Functional ERPs play an integral role in business continuity and synergistically using these software’s with online sales platforms will help greatly in the operations. That said, identifying the need for integration is the first step in moving towards the objective i.e. smooth operations. All the market leaders in this space have experienced this in their respective growth phases and have eventually achieved operational efficiency which improved their profit margins. Well, if you as top management, are constantly encountered with any of the few following questions i.e.
Is your manual entry of data resulting in errors or taking time? Is there an oversell of inventory on the online platform? Are you increasing resources to handle the rise in sales? It is the right time for initiating steps towards integration. Besides the obvious benefits to operations, integration allows the bi-directional flow of data that would greatly enhance the customer experience and in turn improve the likely chances of increasing AOV (Average order value).
In continuation, upon agreeing on the importance of integration, Businesses run into the challenges of selecting the service provider for this entire activity. Firstly, one should note that although there is a common perception of the cost associated with infrastructure and resources, the integration would be cost-effective compared to the cumulative risks associated with the non-performance of the platform. Hence, spending on this activity would provide productive results. Secondly, with regards to software, most of the e-commerce suits currently in the market allow the user to scale the integration. Other vendors like EPiServer, Sitecore, Commerce Tools, Salesforce, Shopify help e-commerce to easily integrate functional ERPs, other software with online sales portal.
Payment Setup - Managing your finance effectively
Most of the E-Commerce solution companies offer a wide variety of payment processing gateway plugins. A successful sale requires an efficient gateway to handle payments and transactions. However, issues like transactional delays, payment declines, and security topple the operations resulting in consumers withdrawing the sale. Besides these, high transactional costs, hostile refunds (chargebacks) policies and fund settlement delays seriously cut the profit pie of the business.
As a result, choosing the right gateway that offers the best transactional cost, quick fund settlements and decent customer support is important. Although, it is tougher to find such a player in the marketplace, gauge the trade-offs properly with your business requirements. For instance, the high success rate of the transaction is relatively more important than a delay of 2-5 days in fund settlement. Further, refunds are painful to all the stakeholders, hence prior agreement on the chargeback options is recommended for a better arrangement between the parties. Lastly, the business should also consider transactional analytics options and mobile responsiveness in choosing the payment channel partner.
Order delivery fulfillment – Last-mile delivery critical to customer satisfaction
Online sales portal always finds it challenging to find a reliable logistics partner and more importantly this last link is very crucial for customer satisfaction. Following factors should be considered in onboarding a third-party logistics partner*
Delivery coverage – The whole idea of the online portal is having a reach without investing in the physical store. However, lack of delivery options across the length and breadth of the country could hamper the sales. Hence, it is no brainer to go with a delivery partner with maximum reach, diversity (in handling product categories) and lastly good TAT (speed of delivery)
Insurance policy – Given the transit losses in the fulfillment process, it is imperative for the business to mandate insurance coverage for the goods. In doing so, the brand owner shall understand the intricacies of the insurance claim, coverage, and calculation
Traceability options – Tracking the delivery and updating the consumer with the movement of the product is becoming vital in the last mile delivery of the product. Chose the partner that can integrate this mechanism into the online portal
Cost of shipping – Shipping costs are often the deciding factor in choosing the delivery partner and it is often proportionate to the features offered by them. Hence, finalizing the features aligning to the business needs helps in determining the cost of this service
*although these operations can be handled internally, due to the amount of standardization in this area, it would be wiser to choose a partner in completing this activity. Also note, the size of the business would also be a factor in making this decision.
In conclusion, considering the importance of streamlining the backend operations, e-commerce business should take wiser steps as delineated above for scalable and sustainable growth. We are happy to receive any questions regarding this topic, feel free to use the comments section or drop a line in the contact us form. In the next chapters, I would like to touch upon the aspects of enterprise resource bus and other technical aspects of the integration activity.
Phani Kumar is a solution architect for E-Commerce entities. He is currently providing technology consulting to homegrown e-commerce brands of Australia. He resides in Melbourne and has great appetite for new technologies and start-up companies. He is open to discussing business ideas, technology updates, and networking. He can be reached at email@example.com
Sai Hari is a consulting professional who primarily practices in the area of strategic planning, sales growth, process improvement, and risk management. Besides associating with the verticles like E-Governance, Food, beverages, retail, and E-Commerce, he also helps startup entities to get off the ground. He can be reached at firstname.lastname@example.org for any productive discussions
(All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site)
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