Over the past decade, ecommerce companies have been in a perpetual state of playing catch-up with Amazon. Arguably, their biggest challenge is that they lack the scale and resources to match Amazon’s lightning-quick order fulfillment process. Fast shipping is, after all, one of the top priorities for ecommerce merchants.
But in recent years, Amazon’s been giving its competitors a gift — in the form of a growing problem with damaged or defective products showing up on shoppers’ doorsteps.
The problem’s gotten so large for the ecommerce giant that it had little choice but to start reimbursing customers for damages caused by defective items sold from its marketplace sellers. And for smaller ecommerce businesses, the situation represents a massive opportunity. It means that they can capture a significant chunk of market share if they build a fulfillment process that gets products to shoppers on time and in pristine condition.
To accomplish this, sellers need to invest significantly in supply chain quality assurance. Here’s an overview of Amazon’s current woes, what supply chain quality assurance is, and why ecommerce businesses can leverage it to gain a foothold in the Amazon-dominated online shopping landscape.
Fast, but Customers Are Furious
The core of the problem Amazon faces is simple. It’s that they now operate what’s essentially the largest shipping service on Earth. And the reason they built such a sprawling operation is that they’ve prioritized speedy delivery of products above almost all else. In their view, it was the only way to provide the level of delivery service necessary to support their Prime subscription offering.
But that single-minded focus on shipping didn’t come without a cost. At the same time that Amazon was pouring billions of dollars into its logistics operations, it was steadily losing control over the other end of its supply chain.
In allowing third-party sellers to become a growing part of its sales — 55% of the total, at last count — Amazon lost the ability to make sure that the products that show up in their branded boxes weren’t damaged, defective, or misleading. On top of that, their prioritization of speedy delivery above all else fed a growing problem with poor care and spoilage in transit.
Because of the breakneck speed at which Amazon’s fulfillment centers operate, products often leave warehouses damaged or packed in a way that all but guarantees they won’t survive shipping unscathed. The result is a massive — and growing — problem with returns, which Amazon is now grappling with.
Supply Chain Quality Assurance as an Antidote
For smaller ecommerce businesses, the situation’s somewhat simpler. That’s because most of them handle their own product sourcing and leave the fulfillment to standalone logistics firms.
This model not only gives them greater control over the quality of products they sell but also provides them financial levers to control how their delivery partners manage the last mile of the shipping process.
Those two things are a big part of supply chain quality assurance. For the uninitiated, supply chain quality assurance refers to an end-to-end process that sets and maintains product quality standards and ensures safe and timely delivery of those products to customers. And it’s exactly what smaller ecommerce operations need to exploit Amazon’s current predicament.
How Supply Chain Quality Assurance Works
To maintain higher product quality standards, ecommerce forms can work directly with their product suppliers to implement production processes that include sufficient inspections at every stage. And in exchange, ecommerce firms can give high-quality producers preferential treatment, including higher wholesale purchase prices and enhanced access to consumer sales channels.
It’s a type of symbiosis that product suppliers wouldn’t have with a company like Amazon, and many are quite open to the idea.
On the order fulfillment shipping side of things, meanwhile, ecommerce firms can utilize enhanced tracking technology to gain insight into how their products move through the process. This can include the use of cloud-based shipment tracking software and IoT sensors to monitor the condition of products throughout shipping.
Those types of solutions can help ecommerce firms to isolate problems in their shipping process that lead to damaged products so they can address them with their logistics partners. As a result of such efforts, it’s possible to all but stamp out the issue of defective products and reduce instances of product spoilage in shipping to negligible levels.
Indeed, that’s the key to building a reputation for quality that can lure customers away from competitors like Amazon. Instead of trying to out-compete them based on delivery speed, it’s possible to beat them with a blend of quick, quality product delivery.
The Opportunity in the Perception of Quality
Going forward, as more consumers grow tired of receiving damaged or defective products from ecommerce giants like Amazon, it’s reasonable to expect that they’ll become far more open to alternatives than they are today. And the growing scale of Amazon’s returns problem indicates that this is a trend that may already be well underway. But the only way to exploit that is to provide a meaningful alternative — and that means taking investments in quality assurance for your supply chain seriously.
It’s the only process that improves customer outcomes by working on factors at every stage of the supply chain to eliminate product defects and last-mile damage. And by leaning into it, smaller ecommerce firms can build themselves a solid reputation for quality that Amazon won’t be able to match anytime soon.
And there’s another benefit that ecommerce businesses can get from investing in supply chain quality assurance. It’s that they’ll be able to turn their reputation for quality into bigger profit margins. Studies have shown that consumers rely on prices as a way to gauge product quality.
If an ecommerce firm does what it takes to ensure that they’re selling quality products — it means they’ll be able to raise prices without harming sales. As long as you can back those prices up with products that live up to them, everybody wins.
The Bottom Line
The bottom line here is that right now is the ideal time for ecommerce businesses to explore supply chain quality assurance as a key market differentiator. It’ll help you to compete with the industry’s 800-pound gorilla, and put you on a path to higher sales and bigger profit margins.
In other words, it’s the right solution to exploit a massive opportunity in the market that may not come again anytime soon.
