Sample Logistics Essay Paper on E-Commerce

E-Commerce

Introduction

            E-commerce defines a form trading that entails the use of computer networks to move products and services from retailers as well as electronic-based market places to consumers. The practice employs technologies such as mobile trade, electronic money transfer, internet marketing, web-based transaction as well as automated data interchange and collection systems to facilitate business to consumer or even consumer to consumer product or service transfer (Vijay 2011, 34). Traditional cross-border trade has proven to be an ineffective practice especially because it imposes heavy important duties on consumers, long delivery times as well as complicated return processes. As such, governments from all over the world have recognized e-commerce as the most reliable trade engine that can contribute to significant economic growth (Singh 2010, 112). This recognition has in return seen business-to-consumer (B2C) sales from around the world increasing drastically in recent years. Such growth in e-commerce sales has partly been driven by rapid growth in online population and partly by significant change in consumer behavior. As explained by Zheng (2013, 1298), consumers have increasingly gained great expertise in comparing products and services online and they as well know how to venture in the global market places to secure the best deal on a product or service that is not available in their home country. As such, online merchants are increasingly indulging in the rapidly growing online technology in order to sell as well as deliver their merchandise to different parts of the world (Yan 2015, 62). Despite this new development, e-commerce has proven to interfere with the physical execution of orders placed by consumers thereby impacting the supply chain networks necessary for efficient logistics provisions (Rabinovich 2015, 823). This paper explores how B2C e-commerce impacts supply chains as well as recommends the best practices that online merchants can put in place to ensure seamless order fulfillment processes.

B2C cross-border e-commerce in China

            B2C cross-border e-commerce is a rapidly booming business in different parts of the world as the number of countries where this venture contributes to rapid growth in GDP continues to grow. According to Lafond (2015, 70), China is one of the leading countries where the B2C e-commerce has rapidly grown. For instance, the pace at which the industry has grown in China as well as how it has impacted businesses as well as consumers has surprised many. While most countries perceive B2C e-commerce as a way of shopping, China perceives it to be a form of lifestyle. As argued by Jing (2014, 256), the Chinese path to E-commerce, in about a decade ago, was difficult to foresee despite the fact that technological boom in United States among other countries enhanced rapid development in E-commerce and the subsequent B2C channel. For instance, China had not created any e-commerce application in 2000 and it only had about 2.1 million internet users, although e-commerce transactions were already flourish in other countries. Rapid technological development however saw Chinese technological users rapidly grow to about 600 million by 2013 and e-commerce revenue expansion reaching 70% compounded yearly (Gibson 2014, 11). Essentially, China’s high and middle class consumers have increasingly become accustomed to making web-based purchases. Similarly, many e-commerce markets are continually developing technology-based strategies for creating brand awareness, increasing commitment to purchase high quality products as well as promote brand loyalty. This has in return created a new potential for China to overtake United States in becoming virtually the biggest e-commerce market (Fang (2013, 455). Although China’s B2C market places dominate only 20% of all online market places compared to C2C e-commerce that dominates 80%, explosive expansion of the B2C market is underway, which is rapidly fueling rapid growth in overall China’s e-commerce industry (Epstein M. 2011, 71).

            Despite this rapid expansion in China’s e-market market places, sufficient evidence indicates that cross-borderB2C e-commerce is capable of impacting the retail supply chains thereby interfering with order delivery processes. According to Chan (2010, 132), as consumers increasingly employ every available internet-based trade channel, purchasing process is hardly predictable. This is due to the fact that the process is dynamic, which is attributed by rapid internet usage and growing customers’ ability to compare different offers and chose the best available deal. As explained by EuroGroup Consulting (2012, 17), B2C cross-border e-commerce interferes with the traditional supply chain arrangement in processing consumers’ orders. This is because movement of goods from the manufacturing company to the end customer under the traditional supply chain has to involve multi-channel levels constructed in the form of factory warehouses, transnational warehouses, distribution locations as well as stores situated in different parts of the world Ford (2012, 21). Such arrangements only allow transnational warehouses to handle full pallets that can only be dispensed to distribution centers, which in return unpack and ship them to various destinations. As such, end consumers can only access small pieces of their desired products from the stores. B2C e-commerce however allows consumers to directly view and order for the available products directly from the company and can as well receive single-product deliveries directly from the company (Ford 2012, 87).

            As argued by Elvira (2014, 130), implementation of the B2C cross-border e-commerce further enhances the platform for greater consumer engagement. Implementation of the B2C channel significantly impacts the number of orders being met, which primarily depends on the order placed, and hence need to be shipped to the end consumers. For most retailers in the traditional supply chain, distribution centers are meant to dispense as many products as there are stores with most deliveries comprising of full truckloads (Harsono 2014, 13). The implementation of the B2C e-commerce however requires deliveries to be made by filling a truck with several boxes that hold a few products or thousands of products a day depending on the number of orders being processed. On this note, the major impact that the B2C e-commerce channel instills on the supply chain is increasing the number of deliveries made to the end consumers while significantly reducing the number of line items standing in the supply chain systems (GEA. 2014, 5). Similarly, B2C e-commerce attributes to the unpredictability of online ordering, which in return demands that companies would increase the number as well as the portfolio of products that they stock to enhance consumer demand. This is because having the exact products needed to process customer orders is important in retaining a huge number of customers as they expect delivery of their ordered products to be as quick as possible (UNCTAD 2015, 16). On this note, B2C e-commerce impacts the retail supply chain by ensuring that retailers are able to expand their product portfolio while reducing the amount of delivery lines dispensed per delivery (Kourimsky 2014, 17).

             Implementation of the B2C e-commerce impacts the product distribution process by eliminating possible contradictions that may arise when making deliveries either from stores or distribution outlets. According to (Hoffmann 2012, 22), product delivery in the traditional supply chain requires creation of a standard strategy that allows the company to stop the distribution process and deliver products directly to customers. The distribution outlet is the most probable place where such products would be directly shipped from because they are close to the end consumer (Zheng 2013, 1305). Delivery from the stores could be even easier depending on factors such as transportation cost, human resource factors and picking efficiency. As such, supply chains often have to choose between these two options. On the other hand, the warehouses cannot be a viable option for direct delivery of products to the customers because they are already packed with delivery boxes (Lafond 2015, 89). Implementing the B2C e-commerce however eliminates such contradictions within the supply chain by ensuring collective logistical operations that can simultaneously be accomplished from the warehouse. For instance, consumers using the B2C channel can select products directly from the warehouse, place orders online and receive them without necessarily waiting for deliveries to be made either from the distribution outlets or stores (Kourimsky 2014, 29). While this trend greatly affects participating distributors, it demands that they too would develop e-commerce activities so as to increase their value within the supply chain and subsequently enhance their overall productivity (Jing 2014, 300).

            The significant impacts that B2C e-commerce instills on supply chains confirms that consumers are interested in seamless order fulfillment processes, which makes them intensify their reliance on online purchases rather than the traditional trade. This shows that traditional merchants might be phased out by the rapidly growing e-commerce if they do not adopt practices that could enhance efficiency in their order fulfillment activities (Ford, H. 2012, 31). On the other hand, high delivery performance is critical for web merchants because it enhances success in their business model. As such, it is critical for merchants to pursue seamless order fulfillment processes to ensure that they increase their relevance in the market. China has put in place best practices intended to ensure that merchants are able to pursue this goal. According to Rabinovich (2015, 960), China has implemented a B2C logistics program that target e-commerce players in the country. The program arranges order deliveries to end consumers in more than 1600 cities in the country, thereby promising fast and flexible solutions to e-commerce customers. The program covers the whole trading process from inbound goods, customer order receipt and the ultimate delivery. First, the program manages the process of receiving domestic as well as imported goods into a particular location in the country (Hoffmann 2012, 34). This can entail quality control, custom clearance and temporary storage. While customers, in the highly competitive e-commerce market place, always pursue for the highest fulfillment standards, the newly implemented program enables companies to guarantee them the expected level of service (Gibson 2014, 67).

            China has also put in place “duty-prepaid shipments” that allow merchants to pay duties before hand and incorporate the cost in the total selling price of a product. The need to implement this practice is justified by the fact that processing shipments as “duties unpaid” will require the consignee to cater for duty cost at the destination, which takes more time. The practice is integrated with pre-clearance process, which allows merchants to clear their products with the customs authorities in advance so as to accelerate the shipment process (GEA 2014, 43). Through this process, the logistics service operators can submit a manifest relating to varying shipments before they reach their destination instead of clearing each shipment individually. Upon the provision of relevant information on shipments in advance, merchants influence authorities’ decision to clear the entire bunch before arrival, which in return speeds up the order fulfillment process (Ford, H. 2012, 57).

Conclusion

            E-commerce is a rapidly growing trading channel that has continued to outface the traditional trading practice thereby curbing various trade-related complexities that include hefty import duties, long delivery times and complex return processes. B2C e-commerce trading practice has particularly been employed in different countries, which include China. The practice has proven to instill potential impacts on the supply chains, which include interfering with the traditional supply chain arrangement, enhancing the portfolio for consumer engagement and eliminating contradictions on order delivery. Certain best practices have however been put in place to ensure that merchants can increase efficient in order fulfillment processes, and they include implementation of a B2C logistics program that arranges orders to the end customer, a pre-paid duties process and a pre-clearance process that allows merchants to deliver small bunches of orders to suit consumer demands.

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