Logistics Challenges of Online Shopping

Logistics challenges of online shopping
International Logistics and Supply Chain Management
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Black Friday online shopping problems（E-commerce logistics problems）Logistics challenges of online shopping in the perspectives of information flows, material (or product) flows and money flow.
Table of Contents   1.0  Introduction. 3 2.0 The Logistics challenges of online shopping………………………………………………….3 2.1 Information flows. 3 2.2 Material (or product) flows. 5 2.3Money flow.. 7 3.0 Recommendations to manage logistics challenges. 9 3.1 Information flow.. 9 3.2Money flow.. 11 3.3 Material flow.. 12 4.0  Conclusion. 13 5.0 Reference list. 14 1.1 Introduction The growth of e-commerce allows companies to move products through to different locations regardless of where the customers are located. However, problems still persist in e-commerce because of shortages and logistical problems, even as customers want accurate, faster and efficient logistics. Even with the development of e-commerce, logistics problems restrict technology advancement. Logistics is one of the most important aspects of e-commerce since there is emphasis on reducing distribution costs and improving efficiency of material flow. As online shopping has expanded e-commerce companies and outlets with e-commerce platforms face difficulties managing customer needs when there is increased demand like on Black Friday and Cyber Monday (Delcea, Ioanas and Paun, 2017, p. 230). Online shoppers visit e-commerce platforms and websites, then place orders, then receive the order and make arrangements to dispatch the purchased products. In the case of e-commerce giants like Amazon, there are warehouses where products are sorted and dispatched even across states.  When focusing on e-commerce logistics and supply chain management there is an emphasis on information flows, material flaws and capital flows.
2.0 The Logistics challenges of online shopping 2.1 Information flows The three flows in e-commerce supply chain management are the information flow, money flow and material flow. Ideally, there should be an information exchange on inventory, sales, forecasts, transportation, sales confirmation, invoicing and delivery (Yao, 2016, p. 360).  There are different logistics services that can be outsourced to third-party providers including warehousing and distribution. The warehouses are important in modern logistics as this affects the efficiency of the supply chain. The supply chain is effective when the supply and demands are met, but there are inefficiencies in online shopping when the warehouses are overwhelmed, and this result in delayed deliveries and sometimes laxity in assessing that products meet the required quality standards, and the storage time of the product to be delivered may also be longer than usual. Online shopping is convenient, but online information is not always the same with what is promised. Since there is higher demand during the shopping season, even there retailers are inclined to higher products at lower prices to attract more online shoppers. However, this sometimes affects the quality of products as the online retailers provide products that do not meet the customers’ expectations based on information and details provided.  Customers have no way of verifying the products before they are delivered unlike in conventional shopping where buyers can talk to sales people.  There is a need to ensure that the products displayed are of the same quality as those delivered and this will affect the customers’ perception. According to Kwon et al (2015, p. 968), online customers rely on limited number of reviews and information to make purchasing decisions, highlighting the need to ensure the product description tallies with the actual products. Warehouses play an important role in the flow of goods and proper storage to avoid damage, theft and misplacement. The interaction of demand and supply as well as warehouse management affects the operations of the online retailers.   The traditional retailers require physical locations and there are high costs associated with this model, but the online retailers still require warehouses (Hays, Keskinocak & de López, 2005, p. 221). However, even when there are central warehousing and distribution systems the level of activities during Black Friday is high and this affects the efficient operation of the warehouses.   This is further complicated as there is no information on order fulfillment so the customers do no not have information on whether they are likely to be affected by delays associated with problems in the warehouse.             Logistics capability is an important aspect to the success of e-commerce logistics with the ability to handle orders and deliver them on time (Colla and Lapoule, 2012, p. 850). To ensure this, there is a need to communicate and share the logistics information with the channel members to facilitate distribution and even handle return products. The adoption of various technologies, including cloud computing, big data analytics and the Internet of Things (IoT) will possibly facilitate better e-commerce logistics (Yu et al., 2017, p. 2270). Because of the high number of bargain hunters during the holiday season, there is a rush among the customers to make more purchases during this time of the year and combined with the high number of shoppers there is increased demand for traditional and online retail services.  One of the major differences between online and traditional retailers is information provision, with consumers searching information online and this can influence their purchasing behavior (Nguyen, Leeuw and Dullaert, 2016). The extra pressure puts a strain on the retailers to address logistic operations to be effective and efficient where some retailers experience higher sales volume in two weeks time that many months of sales. Even when the retailers do not offer discounts, the shoppers are motivated to search for bargains. 2.2 Material (or product) flows             It is expected that the organizations offer e-commerce, logistics services that feature quality products and deliver such products as ordered.  The material flows affect movement of products  including the transport, loading or delivery (Qin, Li, Chang ,& Li, 2014, p. 180).With the growth in e-commerce it is becoming more difficult to oversee the whole supply chain when even low quality products may be bought and sold. This is further complicated by the need to lower logistical costs without focusing on the product quality. During Black Friday, there is a spike in demand based on discounts offered and belief that customers will get better deals than during other times of the year. There are opportunities for unscrupulous dealers to use shortcuts to reduce logistic costs and even sell products that fall below the quality expected.             Customers have no guarantee that what they ordered will meet their expectations and even past reviews cannot be used to assess the performance of online retailers at a time when there is high demand and constraints in the supply chain. There is a risk of fraudulent sellers misleading the customers, and while customers can ask for refunds and get response from vendors, especially the big players, many are disappointed during the holiday seasons when they purchase sub-par products. The flow of material during the shopping is slower because of increased demand, and the system being overstretched and this is complicated when there are few delivery personnel meaning that loading and unloading takes more time than expected.   Sometimes the customers bring forward their purchases, buying   lower price even while the retailer experience higher logistics costs during Black Friday while there are marked-down prices (Chrisopher, 2016, p. 156). The flow of materials is critical to meeting the customer needs and customer satisfaction, but the retailers still contend with the problem of failing to forecast the demand levels, which may create shortage and this is especially when there is no proper management of inventory (Herman, 2016). If there is a reputation that certain retailers are slow to address customer requests, the retailer suffers bad reputation.  Order fulfillment and delivery remain big challenges in e-commerce, as the traditional retailers including supermarkets allow customers to order pick and deliver their products. E-commerce has necessitated more deliveries, but sometimes there are delays and it is the big players who have warehouses that allow them to store, sort out and deliver products. Smaller online retailers rely on third parties to facilitate delivery of customer order picks, and when there are many deliveries in one place there are lower costs per delivery compared to cases where the customers live far apart. 2.3 Money flow              Money flow is associated with payments that are compensations for the raw materials and products. While there has been an improvement concerning measures to reduce online fraud these measures have not always had the desired effect, and people are vulnerable during the shopping season.  The financial service sector is one of the most affected by online fraud and this affects the retail sector for those shopping online and having to provide banking details. There is recognition that the threat of fraud affects business activities and even as organizations try improving online platforms and authentication, there is still a concern that the flow of money is lower than expected because of the risk of fraud. The sharing economy has also made it possible to seek various services.             There are differences between the conventional retailers and online retailers since the store model relies on the available distribution channels to move producers, and this can be used to facilitate delivery to the online shoppers. However, the success depends on whether the money flows like the buyers and the sellers (Stadtler, 2015, p.10).  During Black Friday and Cyber Monday, the volume of transactions is unusually high and there is a high risk of glitches associated with the online transaction systems, this may overwhelm the payment service platforms. Online customers expect to receive the same products as conventional shoppers, but the delay in money flows may make it more difficult to get the required products on time and it is more likely that customers will receive products that are substitutes.             Because there is higher freight volume and transport required the retailers handle more online transactions catering to a customer base that is far and wide. One of the challenges is how to connect to customers and deliver the goods on time without suffering payment glitches.  The retailers try delivering individually and if the intended recipient is absent, it is more likely that more trips will be made (Stadtler, 2015, p.15).  Online logistics practices are different from those of traditional retail supply chain,   where you deliver the packages or products to the recipients that are present. At the same time, there are higher rates of returns and the demand is unpredictable. This complicates money flows since there is no way to know about the storage and transportation and packaging costs, which affect the total cost. It is difficult to improve the distribution network within a short period of time, like during the holiday season. The accuracy of e-commerce logistics is then likely to be low during such times, but the widespread use of e-commerce information systems helps the retailers improve the distribution and delivery process. The lack of seamless connection in the online commerce platforms is at times the result of lack of seamless flowing as expected because the systems are overwhelmed when there are many orders during a short period of time.  Material flow requires information flow and when there is delivery of products on t...