International Journal of Production Research

Running head: CHALLENGES OF ECOMMERCE
CHALLENGES OF ECOMMERCE
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Introduction:
Ecommerce also referred to as the electronic commerce or the internet commerce, refers
to the commercial activities which are one or conducted by and through the modes of internet or
by the help of electronic media. It refers to the buying and selling of the products and the
transferring of the money with the use of the internet and the electronic media. The concept or
the history of ecommerce began with the first online sale of a CD. Across the world. This
particular incident is known as the initiation of the ecommerce. Since then the practice of
ecommerce has been expanded exponentially and currently it is the present and the future of the
economy. One of the most important and effective aspect of practicing the ecommerce activities
is that it has helped in the discovery of the new products and in the development of the same
(Singh, S. and Singh. 2015). More importantly it has helped in expanding the market and now,
people can shop from the world market sitting at their homes. The ecommerce not only includes
the commercial products but ta the same time, it has made the business relationship easier as
well. More numbers of independent freelancers have come into the market, and the ecommerce
has made the online platforms an easier option to buy and sell the products. Therefore, the
ecommerce platform is steadily increasing, and according to the researchers the sale at the
ecommerce is expected to reach $27 trillion, by the end of 2020. The growth is mostly observed
in the field of retail. There is almost a 45% increase in the retail market (Yadav. and Rahman.
2017). In fact the wholesale market and the service industry is also gradually registering itself
into the ecommerce and now the ecommerce has become an industry in itself.
The basic types or forms of ecommerce business are, business to consumer, business to
business, consumer to consumer, and consumer to business, thus, from the types it can be stated

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that the almost all of the business and all the types of businesses are registered on the ecommerce
platform, contributing to the rapid growth and wide practice of this activity (Shemi. 2013).
In this notion, it is important to mention, that Logistics is an inseparable and inevitable
aspect of the practice of ecommerce. Therefore, in the following report, the challenges that
ecommerce faces due to logistics, will be discussed. The report will first discuss about the
relation between the logistics and the ecommerce industry, and thereafter the challenges the
logistics pose in the practice of ecommerce will be mentioned. Further a certain number of
recommendations will also be mentioned and discussed which will effectively state the ways and
the activities that can be helpful to overcome the challenges related to logistics.
Logistics challenges of E-Commerce:
Defining Logistics:
Logistics refers to the process of gathering or collecting the objects together, storing the
same, and then shipping the products to their end destinations. To continue and to successfully
managing the process of logistics it is very important to maintain a system and to develop a
proper planning system for the same. Different objects are to be stored and packed and sent off
differently (Grabara., Kolcun. and Kot. 2014). Therefore, storing the objects and the packaging
of the objects and the maintenance of the same must be designed strategically. Now, it is
important to mention, that different industries include different strategies to manage their
logistics. However, the three most basic and important strategies that the logistics department of
each of the industries include are,
 Identifying the potential suppliers and the distributors within the being available within
the considered perimeter.

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 Identifying the accessibility of the products and the services as well as identifying the
effectiveness of the business terms and production.
 Understanding and recognizing the potential conflicting area and the gets which can
contribute in the creation of the problems, and therefore finding the right solutions for the
same. It also focuses upon identifying the accessible of the solutions that are devised (Yu
et al. 2016).
Since this report is concerned about the business aspects of the ecommerce industry,
therefore, it can be said that logistics is one of the most vital aspects of the industry. All the
researchers have opined that behind the success factors of the ecommerce, the prime contribution
is of the department of ecommerce. Zhang et al. (2017) state that the main concern of the
department of logistics in the ecommerce industry is the fulfilment of the requirements of the
industry as well as of the customers. There are a number of layers involved within the
ecommerce industry. The products that the consumers receive, reach to them following a number
of steps and by scrutinizing through a number of layers. There are a good number of personnel
involved in the process of maintain the logistics and in reaching the products to the respected
customers. Therefore. Since the ecommerce industries have to manage a large amount of
diversified products, therefore, practicing a good logistics system is one of the prime aspects of
the companies. More importantly, since the products have to be reached to the consumers,
therefore, the collection of the products and the packaging and the storing of the products are
very important for the organizations belonging to the ecommerce industry. Ecommerce industries
are growing at an exponential growth and the prime reason for that is, more and more numbers of
people are finding it to be effective and helpful (Giuffrida et al. 2017). Therefore, the prime
concern for these organizations is to reach the consumers well packed and well products just as

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they get it from the physical retail stores. Now, while some large organizations like Amazon, or
Flip kart or Alibaba believe in outsourcing the entire logistics department, smaller organizations
which usually work nationally rely on their resources and their people to carry out the activities
of the logistics department.
Challenges:
The timeliness of the delivery of the products is one of the prime concern and
requirement of the customers, and here lies the importance of the logistics. Now, as had been
mentioned that there are certain potential challenges that the ecommerce industries are faced
with in dealing and maintaining the department of logistics. These areas of challenges are
accounted in the following.
Hassle free Shipping and Proper Delivery of the Products:
Initially the thought of how the consumers will be receiving the products were given the
minimal thoughts, rather in what condition the customers will receive the products were given
the least thoughts by the organizational members. They were more concerned about promoting
the practice of the online retailers and in managing and gathering together the suppliers and the
distributors, and in identifying the wholesalers. However, with more numbers of order and with
more numbers of orders and with more numbers of escalation the organizations started to
identify the need of focusing more on the storing and delivering the products. Considering the
case example of amazon, it is found that during the initial days the organization was receiving
more numbers of escalation and the replacements and return orders due to breakage of the
products and the misplacement of the same (Leiras et al. 2014). Along with this they found out
that the consumers also have knack the packaging of the products. Thus gradually the importance

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of the shipments and the importance of the delivery and the maintenance of the products were
understood. However, this aspect of the business is quite difficult to manage and till date the
organizations are finding the shipment and the status of delivery of the products to be very
managed to be difficult (Abbasi. and Nilsson. 2016).
Operation of the Logistics:
The logistics the operational activity of the ecommerce business where the entire digital
operation is transferred from online to offline, as it is solely related to delivery of the products.
This is currently is the largest challenging part of the business. Often it is seen that the
organizations are confused whether to rely upon a third party to conduct their delivery processes
or to conduct the deliveries by themselves. It has already been mentioned that the big
organizations or ecommerce houses rely upon the third parties as they outsource their logistics
department, while on the other hand the new organizations or the small organization handle this
department by themselves. Now, in case of rolling out the entire logistics department to the third
party, it is often found that there are quality issues and delivery issues (Yu et al. 2016). The
standard of the delivery quality is often compromised and it is found that a substandard
performance on the part of the third party agency often impact upon the goodwill and the market
reputation of the ecommerce organizations. Therefore, finding the right third party and
thereupon, developing a reliable relationship with the same has often impacted upon the business
profile of the ecommerce organizations.
Payment Frauds:
There are two major payment options provide by the ecommerce organizations. First is
the cash on delivery system and the second one is the payment before the delivery. Now, there

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are example so fraudulency on both the cases. In case of the pre delivery payment options, it is
often found that there is no delivery of the product whatsoever, or in certain cases t is also
perceived that there is a late delivery of the products. Both these cases have impact negatively on
the reputation of the ecommerce organizations. On the other hand, in case of the post- payment
options or on the cash on delivery options, it is seen that the consumers often involve into
fraudulent activities or delayed payment activities (Fernie. and Sparks. 2018). There are also
certain instances of non- payments. There is another drawback or challenge in the cash on
delivery option, that is, the delivery of products are much faster in case of pre- payment rather
than the post- payment options (Schöder. 2016). Many of the consumers have accounted that
upon availing the option for cash on delivery the products have been reached to them quite late
than the estimated time provided by the organizations.
Along with this, there are also instances of sincerity in delivering the products by the
delivery personnel and in receiving the products by the customers. There is also a lack of
professional attitude on the parts of both, and along with this, there are also issues with
behavioral attributes. Many of the delivery personnel have complained to be behaved baldy to
the delivery personnel. A same complain has been registered by the customers as well where
they have said to have received ill behavior on the part of the delivery personnel (Ducret. 2014).
This impacts upon the reputation and the revenue generation of the organizations.
Exchanging or Returning Products and On Time Delivery:
A major challenge in the logistics department is faced due to the exchanges or the
returning of the products by the customers and with the timeliness of the deliveries. An ample

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amount of complaints have been filed by both the delivery personnel and the consumers in the
exchanging or return process of the products.
The ecommerce organizations use these two mentioned attributes in order to promote
their business. Therefore many complaints have been filed by the customers where the customers
have stated that even upon mentioning and promising about the exchange and return policies the
organizations do not comply with that. There are complaints where the customers have
mentioned that the delivery personnel have never reached to replace or take back the products.
Also, there are complaints where they have mentioned that even upon returning the products they
have not been paid their money back (Patil. and Divekar. 2017).
The delivery personnel, on the other hand have mentioned that they have often received
product which are used or, which are messed up with. Many complaints have been filed where
the delivery personnel have stated that the products had been used for at least one day and then,
they have been returned, and such complaints are mostly filed in case of the apparel and
electronic gadget industries (Nica. 2015).
Therefore, such activities impact upon the revenue generation of the organization.
Management of Extra Expenditure:
The organizations which aim for outsourcing their logistic department are essentially
found to be having problems with the management of the expenditure. They have to develop a
trade relationship with another organization and thereupon, they have to rebuild an entire
employee base to manage their shipments and products management. Therefore, this implies
more resources and more number of hiring and expenditure. The problem arises with the
management of a bigger geographical area, as for a smaller geographical area, the amount of the

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resources are less and therefore, the expenditure is also likely to be less (Taniguchi., Thompson.
and Yamada. 2016). But, in case of a huge geographical area, the resources and the expenditure
are likely to increase, and therefore, the management of the business also gets difficult.
Recommendations:
The logistics challenge can be acknowledged by the organizations, ether are certain
effective measures or recommendations suggested in the following.
Identifying Logistics Partners:
Finding or identifying the perfect logistics partner. The researchers have opined, that
identifying a perfect logistics partners is one of the most difficult jobs that the big ecommerce
organizations have to involve into. While developing a partnership, the organizations must
decide upon certain ethical grounds and certain basic ground rules to ensure a quality production
and effective management on the part of the third parties and the goal planning and management
of the two organization smuts be aligned.
Focusing on the Competencies:
In case of conducting the activities of logistic by themselves or in case of outsourcing the
logistics department, the organizations must be assured of their own core competencies.
According to the researchers not all the ecommerce organizations are strong at maintaining and
managing the logistics department, and therefore, they must be outsourcing that department.
Therefore, in order to understand whether to or not, outsourcing the logistics department, the
organizations must focus upon their core competency skills (Okholm et al. 2013). At the same
time, while practicing the activity of logistics the organizations must understand what ate the

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potential abilities and therefore, must put into use those aspects while conducting the logistics
responsibilities.
Assuring Quality and Order Accuracy:
Two major challenges that the ecommerce organizations face are, the quality of the
quality of the products and the proper management of the orders. Initially, many of the
ecommerce organizations had faced issues like swapping up of the orders in the times of
deliveries, and many escalations on the part of the consumers had affected the position of the
company. Therefore, the logistics departments of the organizations must ensure proper
management of the products or the orders and thereupon must ensure that the orders have been
delivered to the right people or to the right consumers (Haryanto. and Chang. 2018).
The prime concern of the ecommerce industries are satisfaction of the consumers,
therefore the quality of the products must be assured and satisfactory. Both the quality of the
products and major errors like swapping up of the products are counted as major drawbacks on
the part of the organizations, and hence the logistics departments must be more effective and
mindful in these two sectors (Kou. 2015).
Management of the Warehouse:
The prime part of the logistics activities are done at the warehouses of the organizations.
The logistics departments work region wise, therefore, the organizations mist ensure that there is
enough connection between the warehouses and the organizations. More importantly, the
organizations must have a proper knowledge of the activities being done at the warehouses.
Therefore the connection between the ware houses and the organization must be effective
(Berglund. and Nordqvist. 2019).

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One major success factor of the ecommerce industries, is the timeliness of the delivery.
Therefore, it is very important for the organizations to have a regular connection with the
warehouses to keep track of the products and thus being able to convey proper notifications and
information to the customers.
Proper Synchronization:
Fernie. and Sparks (2018), have opined that inventory management and inventory
synchronization are the important aspects of managing the business. The management of
inventory is more science and is completely based upon proper communication among the
various layers which are involved for a proper conduction of the business. Management of the
inventory basically refers to have a proper knowledge of the stocks and the management of the
same, and measuring the buffer time, that the organizations have or can afford. It also includes
the communication management with the dealers and the wholesalers as well as with the
suppliers. According to the management department of the ecommerce organization excess at the
inventories are bad investment. As well as, stocking up less, can also affect the business.
Therefore, it is very important to measure the inventories and to measure the buffer time in order
to ensure satisfied customer base. Customers wanting to order a product, but are not being able
for the lack of the products are one of the worst experience on the part of the customers, and the
ecommerce organizational members are of the opinion that such a situation can affect their
business position (Knop. 2019). Hence, management and control of the inventory must be
management effectively.

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Conclusions:
Ecommerce industry is the next future of business and market, therefore, it is very
important for the ecommerce organizations to better their logistics department. The ecommerce
industries are solely dependent upon customer satisfaction. Timeliness, quality of delivery and
the products and the behavior of the delivery personnel are some of the dominant success factors
of his industry. Therefore, the ecommerce industries must ensure that they have an effective
logistics department. The above discussion has also focused upon the importance of the
outsourcing of the logistics department, as big ecommerce organizations mostly outsource their
logistics department which makes their jobs quite easy. However, in such scenarios, the
responsibility of the ecommerce organizations also increase since they have to gather more
resource and increase their expenditure to afford the partnership. Hence they aim at bettering the
customer experiences with the management of the products and by ensuring the quality of the
delivery and the quality of products.

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