Functions of e-Commerce

While the online shop is where the “sale” takes place, there are a number of other jobs to be done in e-Commerce. The online shop needs to integrate with other functions of e-Commerce to drive visits and sales, manage payments and deliveries, and keep customers happy. So, this guide covers the integration of e-Commerce with key functions like marketing, finance and supply chain. 

Functions of e-Commerce

How this guide raises your game.

  1. Learn how marketing and digital marketing activities connect to your online store. 
  2. Explore the role that financial management plays for your online store to manage sales, costs and profits. 
  3. Understand the importance of supply chain to support efficient storage and delivery of online store orders. 

In e-Commerce, the store website is the most visible part of online selling.

It’s where the “sale” takes place after all.

But on it’s own, the store is not enough to run a full e-Commerce business. It needs to integrate with many other functions in the business. 

There are 3 key other functions you need to include in your overall e-Commerce plan.

Rope - system

Ready to test your knowledge?

What’s your starting level of knowledge about the functions of e-Commerce?

Take the 2 minute, 5 question Three-brains functions of e-commerce quiz and see how much you know about the functions of e-commerce already.


3 key functions of e-Commerce

For example, marketing activities like marketing research and brand management help you understand online shopper needs, and build your store’s brand identity. And then you need communication and digital marketing activities to drive visits to the store, and drive sales conversions.

Once you start to drive online sales, you need financial management systems to manage payments. Those same systems also need to track all the sales performance of your store. And they need to track and measure costs, so you can make sure your store remains profitable.

Each order needs to physically move from where it’s stored to where they buyer wants it. So, you need good supply chain skills and processes to manage orders from the warehouse to the customer’s doorstep.

Let’s look then at how the overall e-Commerce experience “works” and how and where the key functions of e-Commerce fit in.

E-Commerce experiences

To understand how functions of e-Commerce support online selling, it’s helpful to walk though “how” an online sale actually happens.

What are the key events which need to happen to begin and end the e-Commerce experience for an individual shopper?  

Firstly, that shopper needs to visit the online store. And for that to happen, some sort of digital media needs to prompt them to visit.

The shopper sees a search result that takes them to the store, for example. Or they see advertising on their social media feed. 

e-commerce planning process - 5 key steps in e-commerce experience

To create this advert for e-Commerce, it’s likely you’ll have carried out market research. And the advertising should also be part of your brand identity.

So, already your one key skill of digital media is supported by the related marketing skills of market research, advertising and brand identity.

Then, the potential customer reviews what’s on offer on the store website. Based on the product range, price and any sales promotion, they make their decision to buy or leave the site. 

Order to delivery

Once they put in their credit card details though, you need to manage the payment. This means the set-up and operation of financial management systems to track and manage the details of the order.

You’ll need payment gateways so the money goes into your bank account. And, you’ll need a system to confirm payment has been received to notify the warehouse to proceed with the order. 

With the payment confirmation, you’ll need a supply chain system that then picks the order from storage and packs it ready for dispatch. Then, it actually needs to be transported to the buyer. 

Behind this delivery system, you’ll also need customer service support so the consumer knows when the order will arrive, and any issues in the process can be resolved. 

So, as you can see, there’s more to managing an order than just having a store website. 

Functions of e-Commerce to support online experiences

So, now that we have the basic flow of an order, it’s useful to dig into each of those major functions of e-Commerce in more detail. There are many interdependencies, but if you take each step in turn, it’s a logical a process to join all the steps together. 

Let’s look at how you can optimise performance and integrate systems at each key step. 

1. The Marketing of e-Commerce

Supporting your digital media activity are a number of other marketing skills that improve the quality and impact of this activity. 

Market research

Firstly. you’ll have any market research that you used to identify and validate the opportunity as part of the e-Commerce planning process. This will have identified the key benefit that the online shopper is looking for.

That could for example, be ease and convenience, range, price or product information. 

Marketing activities to drive e-Commerce

It’s highly likely that you will carry out some additional secondary research. So, looking at search trends on Google Trends for example. Ideally, you would also carry out qualitative and quantitative research with your target audience on their e-Commerce needs.

But knowing what your target audience need from online shopping is only the first step. You need to work through key brand management skills to make sure your brand fits those needs. In particular, your brand identity needs to be able to cover the online shopping experience. 

Brand management

So, for example, do your essence, values and personality fit with the need of the online shopper?

Look back at those core needs of ease and convenience, range, price and product information and consider where your brand identity best fits. 

Do you have the right assets in place to sell online? 

These can be as simple as pack images, product copy and key selling messages. But think about other assets like logos, colour schemes and typography.

Do all of these assets that you created to persuade people to buy, also work when it comes to persuading people to buy from an online store? 

Brand identity wheel

You then also need to consider how the online selling experience will fit into your marketing plan. And, in particular, the marketing mix. 

Products

You may well gave developed your products to sell in traditional channels, but this doesn’t always mean they suit selling through e-Commerce channels.

Do you need to evolve areas like the packaging for example to make them more e-Commerce friendly?

How will the packaging look on a screen for example compared to on a store shelf? 

And, will your product need extra packaging to protect it as it moves from the warehouse to the shopper’s doorstep?

Marketing mix 4Ps and 7Ps example variables

Price

As we mention in our guide to the e-Commerce planning process, your pricing will be highly visible and comparable online. Consumers can go to price comparison sites to look at price offers, you need to consider how this price will compare to other channels where you sell.

From a e-Commerce pricing point of view, you can also target sales promotion prices to specific consumer groups at specific times. With an online shop, it’s possible to run a short “Flash sale” where a discount price is only available for a short time, for example. Or, you can target and send specific price promotion codes to people who visit your store, but do not buy.

Promotion

There are a number of promotion activities which cover advertising, media and digital media, which we’ll come back to, shortly. 

Place

Then, there is the idea of place as part of the marketing mix. The online store website becomes the “place” where the consumer buys the product. So, you need to factor in how to optimise that experience. 

This usually covers the different interactions the consumer has on the store after they first enter it. How do they navigate round the online store for example? Where do they find out information? What’s the process to add to basket and check-out? We answer some of these user experience challenges in our guide to online store websites.

People, process and physical location

Your e-Commerce store then also pulls in broader marketing mix factors like people, process and physical location. Shoppers want to know that there are “real” people behind the store, for example. This builds trust. 

You need people to make sure the product moves from the warehouse and is delivered properly. And if there are issues, shoppers will want to speak to a real person to ask questions. 

These processes to take payments, manage orders and respond to customer enquires are important. We’ll cover them in more detail later in the guide. 

Lastly, there may not be a physical store that the shopper visits to buy. It exists “virtually” through their device, after all.  But what happens in that virtual online store needs to trigger actions in the real physical world. Order products need to move from warehouses for example. And someone needs to physically deliver the product to the customer.

Communications and Digital Marketing

So with your market research, brand identity and marketing plan in hand, you then move on to your communication and digital marketing plans.

You would put together a communication brief that outlines the brand identity, business objectives, communication objectives, the brand rationale and any project specific information such as budgets and timing. 

Advertising and media

In particular, your communication brief will identify the advertising and media objectives to support your online store activities.

Marketing Communication brief - blank template

As we cover in our guide to advertising and advertising evaluation, you’ll need to create advertising messages that are relevant, impactful and unique.

The creative idea needs to meet the online shopper need. If your online shopper need focusses on price for example, then your advertising message will focus on sales copy and online sales promotion activity.

E-Commerce advertising is usually focussed on the point of purchase. It’s heavily sales copy driven, so consider what will drive the potential customer to buy. 

What’s the timing of the sales promotion for example? Is there a time of day or day of the week that will make an offer more impactful?

Or, what about seasonal offers like Christmas, Easter, Black Friday and Singles Day? At these times of year, online shoppers are likely to be more open to buying. 

These advertising and sales promotion activities then need to get in front of the target audience, and be seen in the right context. This forms your online store media plan. 

Digital media

Bigger online retailers may use traditional media channels to advertise their services such as in this example from Woolworths. But it’s much more common to focus on digital media channels for e-Commerce. 

The potential customer is already online when they see the advertising. And the advertising can be more targeted. It can reach specific consumer groups based on the digital data available.

You can manage the time when it’s shown, so it’s more relevant to the purchase. Breakfast cereal ads in the morning, or alcohol ads in the run up to the weekend, for example.

For the online shopper, responding to online advertising takes minimum effort. It’s easy to click on a link to visit a store or landing page.

With traditional media, it’s not so easy. You need to go online, remember or search for the URL and then click to the store. That takes more effort. 

You can also track and measure these digital media clicks with digital data and analytics. With digital media you can see how many people saw an advert, how many people clicked on it, and how many then actually purchased. So, digital media impact on e-Commerce is much easier to calculate than traditional media. You can work out your Return on Investment much more easily. 

We cover digital media channels in a lot of depth in another guide. But, let’s consider the key ones from a functions of e-Commerce point of view. 

Search

Search is a great tool for e-commerce. When a consumer searches for something, it is a signals that they have a need. And that need could be to buy something.

You can use Keyword Analysis with Google Ads to identify these potential ‘needs’.

We cover how to do this as part of our guide to secondary research. 

It’s also important to understand the skill of SEO writing to boost your online store visibility through search. 

Research on your own using tools from Google

You should base how you name your product and write product descriptions on Keyword research, for example. The more people see links to your store, the more people will visit. And the more people who visit, the more sales you will see.

It’s worth also looking at Google Shopping via the Google Merchandise Centre for extra search visibility. We cover how this works in our article on product information systems

Social Media

Social is another great channel for e-commerce. These’s three key reasons for this.

Firstly, most social content is highly visual in nature. On sites like Facebook, Instagram and Twitter, you can bring your products to life.

You can create eye-catching advertising messages and video content that makes your products look and feel more appealing. 

Secondly, it’s also easy to set up links to specific product pages from the social post.

This puts an immediate call to action in front of the shopper. They can “find out more” or “shop now” or “book an appointment” at the touch of a button.

Example of facebook instagram post for three brains online store

Advertising response rates

When your advertising is focussed on one of these outcomes, this ability to immediately respond leads to better advertising response rates.

With traditional advertising, there’s always a time gap between the consumer seeing the advertising, and when they need to do something about it. This time gap leads to people forgetting about the advertising and and so, no action. Of course, with some advertising, the focus is more on building the brand identity and brand equity, so the call to action is not always the most important thing.

And finally, because social media generates a lot of data, you can be quite specific and targeted in who sees your advertising, and when they see it.

For example, the Facebook pixel allows you to target groups who have already had an interaction with your website. This is called retargeting. So, if they visited your store but didn’t buy, for example. Or, they added a product to the cart, but then abandoned it before check-out.

You can show a different advert to these people, than to anyone who is totally new to your website.

Display advertising

Display advertising on other websites can reach new audiences and be impactful if they find the right types of consumers at the right time. The quality of other websites and the media space they offer can he highly variable however. It often requires the services of a specialist media agency to identify the best sites. You need to set up a strong media planning and buying process to book, measure and optimise the performance of display ads. 

For smaller business, search and social are easier to manage and offer a lot of test and learn flexibility. They can often be managed in-house, without having to pay media agency commission fees. So, your overall bang for your media dollar buck can be higher. 

Online store website

Once your digital media attracts people to visit your online store website, you need to create a good online shopping experience for them, so that they feel confident enough to buy from you. 

The skills to set the store up can be quite broad. 

We’ve written a whole separate guide on how to set up an online store website. So, we won’t go into a lot of depth here. 

At a very high level, you need to make sure you cover technical technical areas like the choice of software platform.

Three-brains online shop screenshot

And you need to be clear on areas of design and functionality like user experience and the use of colour, typography and SEO copy.

You need to take those core areas of marketing knowledge like your market research and brand identity and apply them to the online store. This leads to you developing a clear sales proposition and offer on the store, so that it’s clear why the online shopper should buy from you.

2. The finances of e-Commerce

e-Commerce is driven by the exchange of money for goods and services, so finance is an important function of e-Commerce.

When you sell through online retailers, the online business acts like it’s another trade customer. Your financial systems need to capture data, and report performance on all sales, costs and profits generated through e-tailers. 

Dollar signs in lights

But when you run your own online D2C store, it’s more complex from a finance point of view, because you also have to manage orders at an individual transaction level. This payment process that moves money from the shopper’s credit card to your bank account needs to have clear processes and controls to make sure it runs smoothly.

And your finance system in this case, also needs to be able to roll up all the individual payments to report and analyse performance of the store at a total business level. It also needs to be able to identify and track all the costs associated with running the store. 

When you sell through multiple channels, it’s important you have clear systems that allocate sales and costs to the right channel. This is the only way you’ll know for sure if your online store is profitable. 

Payment

As we cover in our guide to the Order to Delivery process, online payments are made though a Payment Gateway. This online portal acts as an intermediary between the shopper’s credit card and your bank account. 

Payment gateways work to improve the security of the transaction for both the shopper and your business. 

For the shopper, they ensure that the shoppers credit card details are kept hidden, so they can’t be copied or stolen. With most payment gateway set-ups, you never see the specific details of the shopper’s credit card.

When there are dubious transactions on a credit card, payment gateways can flag where there might be an issue and put a hold on payments. 

For your business, the payment gateway will vet and validate the payment before processing it.

So for example, it will check that the card is a genuine card and that it has not been reported stolen or cloned. It will check that there are no “red flags” such as the order being placed from a country with no link to the owner of the card.

Credit card payment

You can set “rules” of what types of payments you will accept. And, with these “rules”, you can be more certain that only genuine orders come through to your website.

Chargebacks

Payment gateways are also important when it comes to refunds. They handle the transfer of money back from your bank account to the buyer’s card when there needs to be a refund. These refund transfers are called chargebacks. 

Again, this system is designed to protect shoppers and business. It keeps bank details separate from each party and manages the transfer of money securely.

But why you run an online store, there’s another side to chargebacks that is more of an issue. And that’s online shoppers who exploit this system. 

The exploitation goes like this. The credit card company always guarantees the transaction to protect the shopper from fraudulent sites. 

And If the online shopper cancels or queries the payment, they’ll refund the customer. But, the assumption is you are the wrong party, so they pursue YOU for payment. The default position is the shopper is right, and you have to prove otherwise. Even if you have done nothing wrong. 

Because, with this set-up, unscrupulous buyers can order products from you, have them delivered and then challenge the payment, and get a refund. 

So, in effect, they get the product for free. You’ve paid for it. 

Chargeback management

Now, a lot of the payment gateways work to prevent this sort of activity. They can recognise credit cards that exhibit this sort of behaviour and put warnings on them, so that your payment gateway won’t accept orders from these risky credit card owners. But, if someone gets a new credit card, they can repeat the behaviour again, until the new card gets flagged. 

While the vast majority of online payments go though with no issues, it is accepted that a certain percentage of transactions will have some of the issues like chargebacks and fraud that we outlined above. This can vary by category, and typically may only be around 1% to 2% of total sales. But we do know of cases, where it has been as high as 10% of online transactions. 

Financial management of payment issues

So, part of the role of finance as one of the functions of e-Commerce is to manage all of these issues. To manage refunds for example. Or to respond to transaction queries and fraudulent transactions. 

This means when you take payments directly, you need someone with the appropriate level of financial understanding and authority to make these decisions. It’s important to have the right controls in place to ensure everything is above board. 

You want to make sure that the person who gives out refunds checks that the refund is for a valid reason before applying it, for example. Appropriate checks and processes need to be in place to make sure the payment system works smoothly.

Financial performance tracking 

Beyond individual transactions, there’s also a requirement to manage your finances as you would with any other business.

This is usually focussed on a combination of financial planning and financial reporting around your Profit and Loss account.

Your profit and loss account is a standard accounting tool used to measure the on-going financial health of your business. 

It’s outside the scope of this guide to cover a full Profit and Loss account review. Your finance team or accountant is best placed to do this. 

e-commerce d2c simplified profit and loss

But, even if you don’t have a lot of financial management expertise or experiences, it’s still important to understand the overall shape of the P&L. In particular, you should know how to look at the key areas of sales, costs and profits.

Profit and Loss #1 – Sales 

You calculate your total sales by multiplying the total number of items sold (often called the volume) by the selling price per item. This gives you an overall sales value. This is usually called the “gross sales” 

In some businesses, if you have other income streams such as interest on savings or other investments, sales might roll into a higher number called Income or Revenue, but for the purposes of this guide, we’ll keep it simple and focus on sales.  

However, when selling direct online, your “gross sales” number is not necessarily your true sales number. 

Sales tax

Depending on where you sell, the selling price the customer pays may also need to cover any local or national sales taxes. This is money that you have to pay the government as a % of the transaction. The name and rate of the tax can vary by country and even within countries. 

In Australia, it’s called GST (Goods and Services Tax). In the UK, it’s VAT (Value Added Tax). And, in the US, you usually just call it a “sales tax” but the % rate can vary by state.

As part of your reporting and financial management, you need to make sure records are kept of this tax. You need to make sure it is paid to the appropriate body at the right time and in full. 

Delivery charge

When you sell direct to consumers (D2C), you also need to consider how you will manage the part of the price that covers the delivery charge. The total price the customer pays you includes a payment for delivery. 

But you then use that part of the payment to pay for the delivery. It never actually makes it to your profit line. The money comes in, and then goes out of your bank. 

Essentially, you are collecting the delivery fee from the customer and paying it to the delivery company. So, there is a question of whether that is actually part of the “sale” from a tax and reporting point of view.   

It’s particularly important because it can impact how you calculate your percentage profitability, if it changes the “sales” number. We share an example of this in our article on D2C financial modelling, and how it can freak out accountants. 

Nonetheless, after any tax and delivery factors have been dealt with, what you are left with is what accountants call “net sales”. This is your “true” level of income from which you have to then cover all costs for which you are liable. 

Profit and Loss #2 – Costs

From that “net sales” income though, there are a lot of costs that have to be paid.

Transaction costs

Firstly, you need to cover any transaction costs associated with the payment. 

Typically, the credit card company and/or the bank will take a % of the transaction value as a fee for processing the transaction.

So, you either need to charge this separately, or include it in the total price the customer pays.

Burning money

It’s more usual to roll the credit card fee into the price the online shopper pays. Otherwise shoppers can perceive the credit card fee as a “hidden” charge and decide not to buy.

It’s also usual that the payment gateway provider, also takes their own % from the transaction. Payment gateways will also usually charge an initial set-up fee, and may also charge a fixed annual amount for the service, particularly where there are a low number of transactions.

Credit card and payment gateway fees can vary between markets and suppliers. But it would be normal to factor in anywhere from 1% to 3% to cover these fees.

Cost of goods

Like any normal transaction, you then have to cover the cost of the item itself. This cost of goods is how much the item cost you to produce in terms of materials, staff and any other relevant production costs. 

Delivery costs

You then need to account for all the delivery costs to move the product from where it is stored to where the consumer receives it. 

As we cover in our guide to D2C costs, the cost of delivery of a single item can be much higher than the delivery costs associated with delivery to a retailer. The delivery charge to pick, pack and deliver is usually a much higher % of the sale, when selling online. 

It’s much more cost efficient to move trucks loaded with pallets to a central location such as a retailer’s warehouse, than to move single items to an individual shopper’s house.  You also need to consider any additional packaging costs required to protect the product while it’s en route to the customer.

Products that are fragile or temperature sensitive for example, will require additional packaging. This adds more cost. 

All these costs add up to your operational cost of doing business and are seen as variable costs. They vary in direct relation to the sale.

Fixed costs

However, that’s not all. There are also fixed costs to consider.  

We talked about about all the marketing requirements to drive traffic to the store and to generate sales through market research, brand identity and digital media These all come with costs which you need to cover from the sales income of the store. 

There are also a number of other operational fixed costs to consider. 

For example, do you own the warehouse where your goods are stored? If so, what about all the costs associated with storage such as staffing, security and utility bills? Even if you rent space, in someone else’s warehouse, your rent is an on-going fixed cost you need to pay, whether you sell or not. 

What about the website you set up to run your online store? You need to consider operational costs like server hosting and maintaining the URL license. Then you need to consider costs to generate content. If you need to create photography, video or write sales copy, each of these takes time and money to produce. That doesn’t even take into account the time and effort to set up and design the website in the first place. 

As we mentioned above in the section on payments, there are also the costs associated with chargeback and fraudulent transactions. These costs will also appear as part of the “debit” section of your profit and loss account. 

But once you factor all those in, then you get to the reason why you set up an online store in the first place.

Because, what’s left is your profit. 

Profit

The profit line which is what is left from after all the costs have been taken out. At the most simple level profit equals sales minus costs. It is how much you actually earn from the store. It’s by far the most important financial measure.

You want to track changes in profit over time, and understand what drives changes in sales and costs that affects your profit line. This diagnosis helps you decide where to prioritise your activity and feeds back into your marketing plan. 

When profits drop for example, this flags a need to increase sales – attract more shoppers or get shoppers to buy more or buy more frequently. Or, it can also push you to review costs and look where you can do things more efficiently. 

3. The Supply chain of e-Commerce

Supply chain, or sometimes called logistics is the system that stores and delivers your products to the end buyer. It usually also includes customer service teams who will respond to any issues that come up the delivery of goods. 

Storage

There are many questions related to the storage of e-Commerce products. 

Who will store the products? 

Unless you manufacture to demand, it’s likely you’ve already produced the goods you will sell. But, they need to sit somewhere until they are sold. 

You need to consider whether you have space to store these yourself. Or, whether you need to outsource storage to a specialist company.

Often delivery companies like DHL and Fedex will manage the whole storage and delivery system for you. But, obviously they charge fees for both storage and delivery.

Where will the products be stored?

As we mention in our guide to the e-Commerce planning process, one of the benefits of e-Commerce is access to global customers.

But that means you need to consider where in the world your orders will come from, and therefore where best to store your products. 

 

D2C warehouse

If your products are stored on the other side of the world from your customers, it will take longer to deliver them. This can lead to lost sales, if customers don’t want to wait. But if you store your products near your customers, this can lead to faster deliveries. That can mean more sales.

It’s a delicate balance to match the delivery time needs for the sale, and the costs associated with where you store the goods.

How will you store the products?

You need to make sure the products are stored appropriately in the warehouse. They need to be easy to find and dispatch when ordered. It’s also important that the goods are stored safely and that they won’t deteriorate over time, if they are perishable, 

This means you need to set-up clear inventory management systems so that you can check on best before dates. These inventory management systems need to know when goods are dispatched, so that it can re-order and replenish stock so that you don’t run out. 

What are the costs associated with this storage?

As we mentioned in the finance section above, all costs associated with storage and delivery need to factor in to your P&L, So, if you manage your own warehouse, that includes staff costs, security and any utility bills. If you rent space in someone else’s warehouse, it includes your fee to cover those types of costs. 

Delivery to consumer

From when the product first moves off the shelf in the warehouse, to when it arrives in the customer’s hands, it incurs costs at each “touch” along the way.

There are staff costs associated with each person who “touches” the product along the way. At the most basic level, this is the wages of the person who picks it from the shelf, and the one who delivers it to the customer.

But depending how far the product has to travel, it may be “touched” by intermediaries who move it from one location to the next until the delivery driver picks it up. Each of these “touches” incurs a cost.

Delivery driver handing over a brown package

Influences on delivery costs and customer experience

How far the product has to travel is another cost of delivery to consider. Products that have to go to other states or countries will cost more to deliver. You need to consider whether to pass this geographic delivery cost on to the customer, or try to average it out across all customers.

You should also think about speed of delivery. It’s common to offer standard delivery for free or at a low rate. But to then, offer an express delivery option that the shopper pays extra for. As an example, we recently reviewed the delivery speeds and costs of some the bigger Print on Demand companies. 

Another delivery consideration is whether the delivery company offers a tracking service. With this, the online shopper can track the progress of their delivery. This is very popular with online shoppers as it gives them confidence their product is on the way. It reduces the need to contact your customer services team. 

However, it does require some technical know-how to send the tracking details from the delivery company with the invoice when the customer places an order. This is another cost to factor in to your online store business. 

Customer service considerations

You usually plan the process of shipping products from your warehouse direct to consumers, so that it runs relatively automatically and smoothly. 

But there are a number of things that can and do go wrong. It’s important to plan for those. You should have customer service systems and processes set up to respond to challenges like these common scenarios.  

  1. Non-delivery : The product never arrives with the customer
  2. Claimed non-delivery : Delivered to the customer, but the customer claims they never received it
  3. Damaged goods : The product arrives damaged
  4. Mis-delivered goods : The wrong product or quantity is delivered
  5. Stolen delivery : The product was left, but someone else took it

When your customer emails or calls with these types of questions, it’s important to know how to respond. Preparation for these scenarios is hugely important.

Scenario preparation

If you have a tracking number for example, the delivery company should be able to provide more details of where and when the product was delivered, or wasn’t. 

Often, they’ll take a photo of the delivery to ‘prove’ that it was delivered for example. Or, if you make it that a signature is always required for delivery, this reduces this number of items which go missing. It’s also common to request “permission to leave” the package, or an alternative address to deliver if the customer is not at home. This puts the onus on the shopper to manage the delivery at their end.  

If the driver can’t deliver the product for example, you need to agree with the delivery company how that to handle that. Do they try to deliver again the next day for example? Or, is it sent back to you? These are all extra “touches” that add costs, and those costs will eventually come to you. 

it’s important to have supply chain and customer service skills to develop these systems and processes to respond to delivery challenges. You need to train, manage and empower staff involved in implementing them, so they can work to keep customers happy. 

Product specific storage and delivery challenges

Some product categories come with additional challenges to store and deliver goods. These can add further to your costs. 

So, for example, if you ship food products, does the product have a shelf life? If so, how do you check that you don’t ship any expired shelf life products? 

Could the product be affected by extremes in temperature, if you live in a very hot or very cold country?

Fragile delivery

In this case, how will you keep the temperature constant at each stage of the supply chain? For example, how do you stop an ice cream or chocolate delivery from melting in a hot country? Or, keep liquid products from freezing in a cold country?

If you sell high value items, how do you reduce the risk of theft? Do you hide the fact that it’s high value for example by putting it in plain packaging? Or, do you only ship with premium delivery options such as tracking and signature on delivery?

Supply chain management is a significant skill in its own right. But, when it comes to online selling, it requires new and different levels of expertise. The relatively complexity of shipping small items to multiple diverse locations, and the large amount of things that can go wrong can be a challenge.

From an e-Commerce management point of view, it’s important to understand all these considerations. They impact greatly on your customer experience and your store costs. That’s why supply chain is such an important part of the functions of e-Commerce.

Functions of e-Commerce conclusion

There are three key functions of e-Commerce – marketing, finance and supply chain – which sit outside the set-up of the e-commerce website itself. You cannot do e-Commerce without getting people to visit your store and driving sales, managing payments and managing deliveries. 

Each of these functions of e-Commerce come with their own set of challenges. So, the online store owner needs to be able to both understand those challenges and identity the best ways to solve them. 

You can choose to manage these functions of e-Commerce in-house, partially outsource them or even fully outsource them. 

The more in-house you manage these, the more control you have. But, you also then have to factor in the level of complexity. 

Outsourcing gives you less control, and you have to factor in more costs and fees. But it can significantly reduce the amount of complexity involved. 

It’s your call to decide on the level of control you want and the complexity you can manage. 

Three-brains and e-Commerce

We have worked on many e-Commerce projects and have good experience across e-Commerce strategy, working with online retailers and building D2C stores. We know how to connect these expertise areas back into driving your brand marketing and growing your sales. if you want to grow in e-Commerce, we can help you figure out the right level of control, and how to manage complexity.

If you want to know more about how we can support your e-Commerce to grow your business  through our coaching and consulting services, click the button below to send us a message.

We can coach you to reach the top of your competitive game.

Latest e-Commerce blog posts