Globalization has completely transformed the market economy and changed the way businesses compete for market share. It is particularly true in the retail industry. Businesses must increasingly rely on strong and efficient supply chains to succeed in this cutthroat economy.
As a result, in order to be successful, all online stores must have a well-oiled supply chain management system. Well, it's a surprising fact that these companies are constantly reinventing themselves to meet the challenges of ever-changing customer needs and market volatility. The majority of this reinvention is taking place in the supply chain space. The following are some of the supply chain concerns of online retailers.
1. Challenging Indian Tax Restrictions
Surprisingly, the current tax regime in a few states does not allow material to be sold to an individual when it is directly shipped to him/her from another state, without the completion of time-consuming VAT formalities.
· While most e-commerce shipments are currently treated as an exception by VAT authorities because the product is purchased for personal consumption, the legality of inter-state transactions remains a major concern for retailers
· On top of that, there are other taxes, such as Octroi and Entry Tax, that are applicable in many states and municipal limits and are levied on shipments purchased from outside, and are collected later from the customer at the time of delivery – and this does not sit well with some customers
· Maybe even a seamless GST could be the long-awaited answer to all of the concerns, but how effective it would be is a question that industrialists have begun to consider
2. Road Distribution System
Involved in the complex government tax rules and the incapability of last-mile delivery services and providing solutions to fit the Indian legal mechanism, companies have to resort to using expensive flight services for interstate motion, leading to higher dispatch costs for the company that really can transfer on to their consumers.
A robust pan-India road network is critical to the evolution of e-commerce companies as they expand their product and customer bases to the most remote parts of the country. To make it profitable for retailers, the road infrastructure and warehouse capabilities still require larger investments from organized players.
3. Employment Opportunities
With the country's B2C businesses expanding at an exponential rate, there is a severe shortage of skilled supply chain talent. B2C or e-commerce necessitates a very specific supply chain setup, and the corresponding skill gap is rapidly expanding.
Also, at this early stage in the industry, no one is quite sure what skills are actually required!! With a scarcity of skilled labor and a high attrition rate, the stability of operations and scale ramp-up are hampered.
4. Payable on Dispatch
Despite the fact that this COD accounts for up to 70% of all sales, the legality of the entire transaction is once again in doubt. A collection agent / logistics service provider can collect cash from a customer under RBI rules.
However, the exact monetary instruments collected (the same 'note') must be handed over to the e-commerce company. This means that the funds cannot be deposited in the service provider's personal account prior to being transferred to the company.
There is also the issue of title change, which results in VAT liability. The solution in both of these cases is to collect on behalf of the e-commerce company and deposit directly into their bank, but this creates huge hassles of reconciliation across multiple delivery locations, as well as a risk of banking errors, fraud, and a significant waste of human effort.
5. Information technology and analytical tools
To be better informed about product trends and customer tastes, to deliver services efficiently and effectively, and to combine this with constant innovation and rethinking of supply chain strategy, online retailers must invest heavily in IT systems and the right partners.
Successful supply chain management is critical in any business. Even more, so in the current e-commerce model. For a retail online business to succeed, it must have a supply chain management system that is linked to fine-tuned analytics, allowing it to develop and source products in real-time and service the consumer's ever-changing demands.
To be successful, retailers must align organizational objectives, evaluate business processes, and streamline order and inventory management, as well as use the appropriate technologies to deliver goods to customers.
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