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Behind the Scenes of Online Shopping

Written by David Glenn on February 11, 2014

Shopping carts

With more and more publishers introducing e-commerce as part of their offerings, it's a good to be reminded that there's more to online shopping than just placing an order. E-commerce companies have come a long way since their inception and have implemented new technologies to ensure customer satisfaction and provide excellent customer service. But receiving orders, processing them, and getting products to customers' doorsteps is not as easy as it might sound. And though shoppers may not need to go anywhere to get their hands on purchases, e-commerce companies need to do a lot of work to keep track of their inventory and make sure they get products to customers on time. Because they need to compete with familiar retail outlets where customers can get what they need immediately, it would've been reasonable to be skeptical of the e-commerce companies' prospects during their infancies. Now, however, they've begun to give brick-and-mortar stores a run for their money.

Product Stocking & Inventory Management

That great selection you get from online stores doesn't fit in a box. Many online businesses offer so many products that they can't possibly keep all their inventory on-site. For this reason, larger e-commerce companies have invested enormous amounts of money in warehouses to protect their products from weather and provide an ideal environment for them. Products are stored using pallet racking and sometimes even automated storage and retrieval systems. Pallet racking is racking accessible by forklifts and can be configured to hold items of various sizes. Products are differentiated from one another by internal SKUs. The SKUs are entered into databases to keep track of the items a business sells.

Since product warehouses require significant investments, many smaller e-commerce businesses turn to fulfillment companies to manage inventory, storage, and shipment for them. This is more efficient because the fulfillment companies specialize in providing fulfillment services and often have surplus storage that can be provided at low costs.

Order & Shipment Processes

E-commerce companies provide online interfaces at their websites that query inventory information and allow customers to place orders. Once they are placed, these interfaces also collect billing and shipping information from customers that's submitted to the company.

Following this, items are prepared for shipment. In most cases, staff referred to as pickers locate the item in a company's automated warehouse and bring it to a designated area for processing. Internal SKUs often provide information on the product's location.

Other staff members known as packers then begin the packaging process by comparing orders as they appear in the company's database and making sure the picked items create a perfect match. Products are then packed in a manner that minimizes damage potential. Labels are then applied to shipments showing the address information and usually tracking bar codes and order numbers. Automated labeling systems are often used for this purpose. Packages are then given to courier services for shipment, which then efficiently transport the packages to a number of regional distribution hubs before placing them onto delivery trucks for shipment to customers' homes.

The Future

At this point, advances in shipping technology and inventory management have managed to create a significant threat to traditional brick-and-mortar stores, and the primary issues that the e-commerce business needs to deal with are human error and shipment times. Eventually, technological advancements will likely eliminate or reduce these issues. For one thing, automation will soon replace many workers at fulfillment warehouses. The technology, in fact, already exists. As prices go down, more and more businesses will find that automated storage and retrieval systems will have become the profit-maximizing solutions that they wish to make use of. Automation will also make vast improvements to the accuracy and efficiency of shipping systems — the CEO of the world's largest e-commerce company has already announced that testing has begun on drones that will one day directly deliver products from distribution hubs to customer doorsteps by air.

Though e-commerce can be a complicated business, e-commerce companies have matured and now have become formidable competitors of traditional neighborhood stores. Technological advancements will contribute to the industry's development and will push e-commerce companies' shipping speeds and service quality to levels that would have been completely unimaginable in the past. Knowing this, the future expansion of online shopping seems inevitable, and it's poised to make our lives more and more convenient.

Written by David Glenn| February 11, 2014


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