Author: Extensiv Aug 31, 2023 8 Min READ

The Ultimate Guide to Ecommerce Operations [2023]

8 Min READ
The Ultimate Guide to Ecommerce Operations [2023]


How Optimizing Operations Can Help You Stay Competitive in an Increasingly Crowded Market

The ecommerce market continues to grow, albeit at slightly slower rates than at the peak of the pandemic. This year, sales are expected to exceed $1 trillion, up 10% from 2022, and across all retail services will account for more than 40% of market growth.

This multi-year growth, which is a boon for business, is increasing competition across the industry, making the space ever more crowded. Adobe cites a claim that in 2023, there are more than 26 million ecommerce websites around the world, while another report from BuiltWith, a business intelligence company that specializes in ecommerce data and trends, sets that number even higher at nearly 33 million global ecommerce stores and indicates that nearly 40% of those are in the United States.

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As an existing ecommerce business, it may sometimes feel like you’re drowning in the competition. So how do you stay afloat? How can you edge out the competition without over-extending your capabilities or making promises to customers you can’t keep?

The solution isn’t adding more products (although you can) or expanding into new markets (which you could). Instead, it’s about taking a closer look at your existing operations and finding ways to maximize efficiencies, streamline processes, and reduce costs—all without hiring more people or scaling before you’re ready. How effectively you develop clearly-defined strategies to meet business goals, keep your customers happy, and attract new business may very well be the key to edging out the competitors gnashing their teeth for a piece of your retail pie.

What Are Ecommerce Operations?

Ecommerce operations encompass all of the processes and activities needed to manage an online retail business. It can include everything from setting up your digital storefront, stocking it with products, marketing to customers, conducting point-of-sale transactions, and all the fulfillment, logistics, inventory management, and shipping and return processes that go along with it. Think of it as everything you have to do behind the scenes to ensure your customers have seamless interactions with your business. Essentially, it’s end-to-end ecommerce lifecycle management.

While a variety of professionals can oversee your ecommerce operations, some companies choose to hire an ecommerce operations specialist with specific skills and training to manage strategies, procedures, reporting, and other functions to ensure smooth operations across your business, including ecommerce operations management tasks and responsibilities.

What Is Ecommerce Operations Management?

Ecommerce operations management includes all processes to oversee all of your ecommerce operations to ensure you meet your business objectives, including delivery of quality products that meet customer expectations, efficient and timely order processing and fulfillment, and other areas of business management such as customer acquisition, retention, and customer service, and managing supply chain and logistics challenges.

What Do Ecommerce Operations Entail?

While ecommerce operational strategies are unique for each business, there are some commonalities across many ecommerce operations such as:

Order management

Order management involves the processes related to receiving, tracking, and fulfilling ecommerce orders, starting with a customer order, then fulfillment, shipping, and tracking, and all the way through until when the customer receives (or returns) that order.

Inventory management

Managing inventory levels of products in stock, including tracking inventory levels, monitoring sales trends, forecasting future demand, automating reorders, and preventing overstocks and stockouts.

Warehouse and fulfillment

Receiving products from suppliers, storing them in one or more warehouses, picking and packing orders, and shipping them to customers.

Product catalog/electronic storefront management

Creating product listings; updating product descriptions, pricing, and other relevant information; and managing product categories.

Payment processing

Accepting payments from customers, including processing credit card payments, verifying payment information, and managing refunds.

Customer service

Providing customer support to address questions or order issues, including responding to customer inquiries, resolving complaints, and providing post-sale support.

Returns and refunds

Processing product returns, issuing refunds, and restocking returned items.

Website maintenance and performance

Ensuring your website/electronic storefront functions properly, including updating operating software, fixing bugs, addressing misconfigurations, patching vulnerabilities, and optimizing website performance.

Analytics and reporting

Analyzing ecommerce operational data, including tracking sales trends, monitoring website traffic, analyzing customer behavior, and forecasting future product demand, customer behaviors, and inventory levels.

Integration with third-party services

Working with third-party service providers such as payment processors or shipping carriers, including vetting new vendors, conducting risk assessments, setting up and testing integrations, and troubleshooting issues.

Top Challenges in Ecommerce Operations for 2023

As ecommerce market competition increases in 2023, it will likely introduce a wave of new challenges for ecommerce operations across logistics, order fulfillment, and the supply chain. By identifying these challenges early on, you can make plans to overcome them and stay a step ahead of your competitors.

Ensuring efficient order fulfillment

There are few things that can turn customers away more quickly—and potentially permanently—than not ensuring efficient and accurate order fulfillment, which is critical for ecommerce operations. If you don’t have products in stock or you’re slow to process orders, your customers may choose to buy from your competitors instead. Yet many businesses struggle to process orders quickly and accurately and can’t always ensure that products are delivered to customers on time. To ensure efficient order fulfillment and streamline processes, consider adopting an order management system like Extensiv’s Order Manager so you can see—and control—everything across your sales and fulfillment channels.

Balancing inventory levels

Similar to challenges with order fulfillment, many ecommerce businesses, especially those that manage their own logistics, struggle with balancing inventory levels. That’s often because they don’t have the right tools to ensure they have automated insight into their inventory levels, and few have the ability to correlate orders with inventory in real time. When this happens, you can run out of stock or complicate your receiving and warehousing operations by having too much supply on hand. To balance inventory levels, use inventory management software to track inventory levels along with orders and forecast future demand.

Scaling ecommerce operations

As ecommerce businesses grow, they often face challenges as they try to scale operations. Often, businesses struggle with meeting increased demands, which can have a direct negative impact on product quality and process efficiency. To scale ecommerce operations more effectively, while staying on top of your existing obligations, consider adopting an omnichannel order fulfillment platform to automate processes and manage all of your operations—in a single solution—from point of sale to product delivery.

Exceptional customer experience

Providing an exceptional customer experience is critical for ecommerce businesses, yet many businesses don’t know how to do this effectively. Many struggle to create seamless and positive customer experiences. That’s often because these businesses don’t have the tools or resources in place to address customer engagement quickly and efficiently. To improve your customer experience, look for a customer relationship management (CRM) tool that will directly integrate with your inventory and order management platform’s customer support portal to get real-time visibility into all of your customer interactions so you can provide personalized support. Look for a CRM software that is more easily customizable so you can tweak it to the needs of your business.

Technology and integration

Since ecommerce lives online, many businesses are comfortable adopting and implementing new technologies. Yet, many of the technologies marketed to ecommerce weren’t built for the industry. While some of them may have been designed for brick-and-mortar retail, they don’t take into account specific needs or risks associated with digital commerce. As a result, some businesses get bogged down trying to make integrations work that were never designed for an ecommerce environment. To overcome this challenge, use an integration tool, like Extensiv’s Integration Manager to connect your ecommerce platform with other key systems.

Fraud and security threats

Ecommerce businesses are perfect targets for fraud and cybersecurity threats. Attackers know your business manages a lot of sensitive and protected information, like credit card numbers, bank information, and personally identifiable information (PII). Yet many businesses don’t have the resources or skilled personnel to secure customer data and process transactions safely. Incorporating a cloud workload protection platform can significantly enhance your security posture by providing comprehensive visibility and protection across all cloud environments, further safeguarding sensitive data and workloads. To overcome this challenge, consider adopting fraud detection software and implementing industry-recognized cybersecurity measures and controls. You may also benefit from working directly with a consultant, like an MSSP or other cybersecurity business, to manage these tasks for you.

Expanding into international markets

The internet and applications like social media make the world more interconnected than ever before. That means in an instant your market potential can expand beyond where you are and appeal to customers around the world. While scaling at this level may be tempting, it also introduces new risks that you might not have the skills to address, like how to adapt your operations to meet customer needs in new regions or countries. One way to overcome this challenge may be to work directly with a third-party logistics (3PL) provider who is more skilled in navigating international sales, fulfillment, and shipping strategies. If you don’t already have a 3PL partner, check out Extensiv’s Fulfillment Marketplace to find a partner that can help you scale with compliance and confidence.

Market saturation and competition

As discussed earlier, the ecommerce market has continued to grow post-pandemic, and while the growth rate has slowed some, the industry is still experiencing growth of nearly 10% year-over-year. That means the market is increasingly saturated and there’s always competition for customers. Because of this, you’ll need strategies that will help you stand out from the competition. To overcome these challenges, ensure you’re optimizing all of your business operations by automating tasks and streamlining processes. A platform like Extensiv can ensure you have the comprehensive insight and data you need to make more informed business decisions to rise above the crowd.

Omnichannel integration

While ecommerce businesses may have once been able to operate in just one online location, like a website storefront, today, customers want to be able to interact with you across a growing number of sales channels, from in-person to online marketplaces and across all their favorite social media applications. And they want to do more than just find you there. They expect a seamless experience across all the channels they engage with your business. Yet, most ecommerce businesses are struggling to keep up and can’t ensure their customers have a consistent experience across all of their channels. To provide a seamless omnichannel experience for your customers, implement an omnichannel fulfillment solution that includes warehouse and order management tools to track all your inventory and orders, regardless of where a sale originates.

Talent acquisition and retention

Like other internet and tech-related businesses, ecommerce companies struggle to attract and retain skilled professionals. To overcome this challenge, consider offering competitive salaries and benefits packages, providing opportunities for professional development, and fostering a positive work culture. And, where you can, make it easier for the people you hire to do their jobs by using solutions that help automate most of the manual, repetitive tasks across sales, order fulfillment, and logistics, so they can focus on putting their skills to work in ways that have a tangible, positive impact on your business.

Improving Ecommerce Operations

Even if you have years of experience in the ecommerce market, there are still opportunities to improve your operations so you can stay competitive as the market continues to expand and evolve. In addition to optimizing the user experience on your ecommerce website and improving conversion rates, here are five recommendations to consider:

Inventory management

To improve inventory management processes, look for a warehouse management solution (WMS) that includes inventory management tools such as the ability to provide real-time data about current inventory levels as they align with existing orders, automate inventory receiving and reorders, and facilitate accurate picking, packing, and shipping while adjusting inventory levels as needed.

Returns management

To improve returns management, implement software to streamline your returns processes (including restocking) and create a positive experience for customers. To make this process as hassle-free as possible for you and your customers, ensure you have a clearly defined and well-displayed returns policy that details what’s covered, which return options are available, and when to expect the returns and/or refund processes to be complete.

Product bundling

With product bundling, you have the potential to reach more customers, increase sales, and provide additional value to your customers. To improve this process, use data analytics to better understand customer behaviors and needs. From there, you can identify which products/services your customers frequently purchase together and create bundled packages based on this data.

Automation, AI, and analytics

Automation and AI tools can help streamline operations and improve efficiencies for everything from order fulfillment to inventory management. You can also use AI and machine learning to collect and analyze data across your operations such as sales trends, website traffic, and customer behavior. You can use this data to establish baselines and create key performance indicators and other metrics to better understand your operational efficiencies and areas that need additional addition. These tools can also help you accurately predict and forecast future needs so you can make more informed business decisions, especially as you scale to stay competitive in the changing marketplace.

Personalized customer experience

The ability to personalize customer experiences may be one of the key strategies that sets you apart from other ecommerce businesses. Customers no longer just expect this, in many cases they demand it, and failure to deliver could lead them right to your competitors. Use an order fulfillment solution that integrates with your point of sale system, like Shopify, and your CRM system to manage customer interactions and provide personalized, seamless support.

Managing Ecommerce Operations with Extensiv

Extensiv is an end-to-end ecommerce platform that can help you maximize all of your ecommerce operations so you can save time and money, and remain competitive no matter how much or how fast the market grows.

By implementing an ecommerce platform like Extensiv, you can:

  • Enhance performance tracking with comprehensive data spanning all of your day-to-day operations, empowering you to establish key performance indicators (KPIs) and other metrics to measure performance and improve strategies and processes as needed.
  • Break down data and process silos to increase efficiencies, save time, and decrease costs.
  • Deliver a seamless and positive experience for your customers across all of your sales channels.
  • Use data analytics and forecasting to manage and project growth, ensuring you scale at the right pace without sacrificing product quality or customer service.
  • Align your ecommerce operations with your overall business goals and objectives.

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Ecommerce Operations FAQs

What are some key metrics to track in ecommerce operations?

Some key metrics to track in ecommerce operations include website traffic, conversion, and churn rates, average order values, customer acquisition costs, cart abandonment rates, shipping times, fulfillment speed and order accuracy, inventory and order metrics, and return rates. Tracking these metrics can help your ecommerce business identify areas for improvement and optimize your operations.

How can I handle international operations in ecommerce?

To handle international operations in ecommerce, consider localization tools to translate your online storefronts and websites into different languages. Adapt marketing strategies for new regions. Work with fourth-party logistics (4PL) providers or other supply chain companies to manage international requirements (for example, customs, imports, exports, tariffs, taxes, declarations, and more) to ship products to customers in different countries. Also, consider using secure payment processors that support multiple currencies.

How can I handle peak seasons and high order volumes in ecommerce operations?

To handle peak seasons and high order volumes in ecommerce operations, employ automation tools that will streamline your order fulfillment process and improve efficiency. Inventory management software, for example, can track inventory levels and forecast future demands. Look for solutions that offer real-time inventory management insight that aligns with all incoming and outgoing orders so you never overstock or have stockouts that disappoint your customers.

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