ECommerce Supply Chain Guide for 2022

Ecommerce has been on the rise for years as increasing numbers of consumers turn to online buying options for enhanced convenience. However, the pandemic has disrupted industries across the country and around the world. For eCommerce sellers, some of those disruptions have been positive. Others, however, have been much more frustrating to deal with. Take a deeper look at the challenges faced by eCommerce sellers and how to best address those challenges.

The State of eCommerce and the Supply Chain

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The eCommerce sector has seen high growth for several years, with increasing numbers of consumers turning to eCommerce solutions for the products they need most. As a result of the pandemic, however, the eCommerce sector saw unprecedented growth as many buyers needed to turn to eCommerce sellers to find the supplies they needed. Online retail sales amount to approximately $4.9 trillion worldwide, and those sales are estimated to grow 50% or more in the coming years. 

Digital solutions naturally make consumers' lives easier. Shopping online means the materials that consumers need most are at their fingertips. They can take care of most of their shopping from anywhere, rather than having to make time in their days to handle a shopping expedition. Many brick and mortar retailers are even taking advantage of the eCommerce space with options like:

  • Curbside pickup
  • Enhanced delivery options, including faster shipping or delivery times
  • Easier return options for consumers who aren't happy with their products

In addition, many retailers updated their websites, making them easier to navigate and manage.

Mobile Commerce

Mobile shopping has become increasingly popular. In 2021, mobile sales made up approximately $3.56 trillion. Mobile optimization has become increasingly important for many retailers, who need to provide maximum convenience for their buyers.

Brick and Mortar Sales vs. Online Sales

Many retailers note that their online sales are now approximately equal to their brick and mortar sales. As a result, many retailers are pushing their online shopping options to make shopping more convenient for their buyers. Brands are also choosing to invest in omnichannel tools that help keep the experience consistent between physical stores and the online environment, making it easier for shoppers to continue their buying experience however they choose.

Challenges Faced by eCommerce Sellers

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While eCommerce offers a number of advantages for businesses and buyers alike, it does come with some unique challenges that may influence the way retailers choose to handle their branding. 

Competition

An estimated 40% of eCommerce companies note that they find their competition "very tough," and another 44% describe it as "tough." Only an estimated 2% of eCommerce sellers feel that they have only "slight competition," and only 1% responded that they felt they had no competition at all. 

Competition in eCommerce can be fierce. Buyers have access to multiple sellers at their fingertips, and if they feel that a brand is not offering them what they want or need, they may swiftly turn to another brand. As a result, it's critical that brands continue marketing to both existing customers and new ones in order to continue expanding their sales.

Price Wars

Because of the stringent competition in eCommerce, many retailers end up locked in pricing wars. If someone else can offer the same product at a lower price--or provide more advantages for customers, including options like free shipping, samples, or loyalty points--consumers will quickly turn to that new brand for their shopping needs. 

In addition, many smaller eCommerce sellers find themselves fighting with bigger retailers, who can afford to generate smaller profits, overall, on the goods they sell. Maintaining a reasonable price point can prove extremely difficult for sellers who find themselves in constant competition with others in their space.

Shipping

The price of shipping has increased substantially across all carriers in 2021 and 2022. In 2021, the average rate increase was 4.9%. In 2022, it's estimated to be around 5.9% or higher.

Those higher shipping costs aren't just a problem for consumers. They're also a problem for eCommerce sellers. Around 66% of customers actually expect free shipping whenever they order online, and another 80% expect free shipping when they reach a certain dollar threshold in their purchase. 

For eCommerce sellers, that can mean a significant financial drain, especially as shipping prices continue to rise. Sellers must strike a critical balance between making a profit and ensuring that customers will continue to buy from them--because if they aren't offering free shipping, in many cases, buyers will simply turn elsewhere for their needs.

Supply Chains

Supply chain disruption became a serious problem in 2020, as many retailers struggled to keep the supplies they needed on the shelves. That disruption continues into 2022. There are still shortages in many of the supplies and products that consumers need: for example, the chip shortage continues to pose a potent problem for many industries. 

Other goods, while not in short supply, can take longer than anticipated to reach their destination. In 2021, for example, America suffered from a deficit of approximately 80,000 truck drivers. Since big trucks move around 72% of the goods that travel across America, that shortage can spell disaster for effective supply lines and ensuring that goods reach their destinations on time. 

While some supply chain challenges are slowly resolving in 2022, those disruptions aren't over yet. That leaves eCommerce sellers struggling to make sure they have the right goods on hand to meet consumer demands.

How eCommerce Sellers Can Stay Competitive

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Staying competitive as a modern eCommerce seller can be more challenging than ever. However, there are several things sellers can do to help increase their odds of growing their business and successfully providing for the needs of their customers.

Set Your Strategy

As an eCommerce seller, it's important to have a clear strategy in place that defines how you will find your place in the market and make the most of it. You need a comprehensive marketing plan in place that includes:

Knowing Your Niche

As an eCommerce seller, having a niche can help you establish exactly who you need to reach with your content and what benefits your goods offer. Your business can certainly grow over time to provide additional products and services, but you should start with a clear idea of exactly what you have to offer.

Defining Your Target Audience Clearly

Once you know your niche, you can also develop a better overall understanding of your specific target audience. Who are they? What do they do? The more you know about your target audience, the better you can craft marketing materials that are specifically designed for that exact audience. You can also use information about your target audience to get a better idea of the other products or options they may need in order to maximize their experience with your brand. 

Understanding Your Competition

As an eCommerce seller, it is essential that you know your competition. You need to know what your competition is offering, how their products differ from yours, and why your target audience is unique. Once you know your target audience, you can better shape the way you communicate with your target audience so that you can provide them with exactly what they need. 

Tailoring Your Marketing

You need a marketing strategy that allows you to quickly and effectively reach out to your target audience. Modern marketing means utilizing digital methods, including social media, email, and paid ads, to help you find your target audience where they are and provide them with the content and products they need to make buying decisions.

Plan Ahead for Challenges

A modern eCommerce strategy must take into consideration the challenges your business may face, including supply chain shortages and delays. If you take the time to plan for those delays ahead of time, you can better address them as they arise.

Secure Your Funding

Like many industries, eCommerce can struggle with funding concerns. In fact, you may have unique funding challenges that traditional banks or credit card companies simply don't know how to handle. Make sure you know where your funding is coming from--not just the regular flow of funds as you interact with customers, but where you can turn to get the funds you need in the event of a crisis or emergency situation.

Also, keep in mind that it's important not to just have a single source of funding. Funding is not a one-size-fits-all solution. Instead, you need diverse funding that will help you keep up with the continuing needs of your business. You may use options like:

  • A business credit card
  • Asset-based loans
  • Invoice factoring
  • Business lines of credit
  • Term loans

Make sure you have eCommerce funding options for working capital and cash flow. There are times when you may need immediate cash on hand to increase marketing or inventory but simply do not have it available. As a result, you may need an eCommerce funding option. 

Using eCommerce financing can help you get cash to fund shorter-term investments like inventory without worrying about interest and minimum payments since repayment happens automatically. As you sell products, the funding company debits a small percentage of your actual sales to take care of your loan--and you can focus on continuing to grow your business.

Diversify Your Supply Chain

With so many disruptions across the global supply chain, supply chain diversity has become increasingly important for many eCommerce businesses. You may want to:

  • Look for local sources for some of your goods
  • Find multiple sources for key supplies or goods, especially those that have to travel a significant distance
  • Make sure that you have clear strategies in place for getting goods or materials in the event of a shortage

While supply chain diversity may not eliminate the supply chain challenges your business may face, it can help provide you with alternative sources of many of the materials you use most frequently. That, in turn, can help you better address any shortages or challenges. A diverse supply chain helps you "future proof" your business and sets you up for success.

Check Platform Analytics

The better you understand your business, the better you can shape your marketing efforts and ensure that you have the right goods on hand for your customers. Both Shopify and Amazon, for example, offer comprehensive reporting and analytics that can help sellers understand every possible angle of their businesses. Don't just check your analytics once. Instead, make sure you continue to look back at those critical analytics over time to track trends, manage inventory, and adapt to the changing needs of your customers. 

Evaluate Your Marketing Regularly

A comprehensive marketing strategy is critical to maintaining your business growth and ensuring that you have a steady stream of both current and new customers coming through your virtual doors. Often, eCommerce businesses struggle to grow because they do not allocate adequate funds for marketing. If you find yourself struggling to grow, it may be worth a loan or a shift in your budget to help grow your marketing, which will, in turn, help you grow your business and, in many cases, your available income.

You Need the Right Funding to Grow Your Business

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Key Takeaways

  • Supply chain shortages continue into 2022, leaving a significant challenge for many business owners. 
  • Despite the challenges eCommerce has faced in the previous two years, the industry continues to grow rapidly. 
  • Having the right plan in place, from clearly understanding your marketing plan to ensuring that you have the right analytics and visibility for your brand, can go a long way toward improving your ability to grow your eCommerce brand.
  • ECommerce brands need to tailor their financial tools to each use case. Credit cards are good for longer-term, larger purchases, while eCommerce financing is best for shorter-term investments and working capital.

As your eCommerce business grows, your needs will change along with it. If you need funding for inventory, marketing, or short-term financial needs, working with a lender who works directly with eCommerce businesses can help you better achieve your goals. A lender who focuses on eCommerce needs will better understand your need for fast approval, low fees, and a lack of penalties to get the funding you need and keep your business thriving.

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