EC - Payment and Logistics [LESSON

Payment and Logistics

Online Shopping Process and Payment Options

There is a four-step process to shopping online. That process begins when individuals use the Internet to connect to an online storefront. The second step involves browsing through the e-tailer's catalog to search for items. It is during this step that individuals can make several selections by clicking on the object item button to add items to their electronic shopping cart which is the third step in the process. The fourth and final step involves checking out at the electronic counter which entails the payment process.

Before checking out, individuals should check to determine if the website is secure by looking at the URL. If the URL begins with https or if an image of a padlock is viewable in the taskbar, those are indicators that the website is secure.

There may be other options that are available to individuals if they do not feel comfortable using their credit card. Those options include paying by person-to-person which involves an online payment or a third-party payment that wires money over the internet. PayPal is an example of this service. There are many online payment systems. Most of these are either free or charge a low monthly fee; however, they all charge payment and processing fees which can be as low as 2% + 10¢ per transaction. 

Using a one-time credit card is an option that allows consumers to make purchases while keeping their actual card number hidden. Shoppers should communicate with their credit card company to obtain information about obtaining such a card. The one-time-use credit number only works for a single online purchase. If a hacker manages to steal the number from this card, it will not be accepted for any other online or offline purchases.

The electronic wallet also referred to as the digital wallet, is software that stores billing and shipping information which can be submitted during checkout. This option eliminates having to enter all the details of the billing address and credit card number.

Digital currencies are becoming more prevalent. Digital currencies, such as Bitcoin, use blockchains to allow for secure transactions. Blockchains are a type of distributed database or ledger that is often on public networks. Since they are public, they are secure and trustworthy because others in the network can see what is happening. 

Once the payment has been processed, order fulfillment occurs. This involves the process of picking sold items from inventory, packaging the items, and shipping them to the customer. Many companies utilize USPS, FedEx, or UPS to assist in the delivery process.

Logistics of E-Commerce

Logistics is the process of getting goods and services to the customer, it is everything in the process from transporting raw materials to the manufacturer, shipping from the manufacturer to the warehousing company or distribution center, the warehousing itself, shipping from the warehouse or distribution center to the retailer or the final customer. Anything involved in that process is part of logistics.  If there is a problem at any point in the supply chain, then there will be a problem getting the product to the customer. For e-commerce, logistics is the process of transporting goods from the online seller to the customer. 

Order Fulfillment

Order fulfillment is the process of receiving, packing, and shipping orders. After the order is placed, the order may go to the distribution center or to the manufacturer, depending on the situation. The order is pulled and packaged for shipment. This is a very important part of the process, because if there is a problem, for example, the right thing isn't pulled for shipment or the packaging isn't done correctly, then the customer will not be happy. The company must have processes in place to ensure that they are not only getting the right product shipped but that it is packaged in a way that makes sure the product is protected and looks good when the customer receives it. Think about packages you have received; how does it affect your image of the company if the package is packaged very nicely? A customer can get the exact same product, but in one case it is packaged nicely and in the other case it seems it was just stuffed into the envelope or box and shipped without care. Customers will have a much higher opinion of the first product because of the way it was packaged and shipped. Therefore, e-commerce businesses must take extreme care throughout the process. It is important that customers perceive the brand positively.

Inventory Management

It is very important for the e-commerce business to have good inventory management. They not only need to have the correct merchandise, but it needs to be inventoried in an organized way so that the online store has correct amounts in the database and the items can be easily located when they are sold. Businesses use inventory management software to keep up with their inventory and keep things updated. 

Shipping

E-commerce businesses must determine their shipping methods when they get started so they will know the cost of shipping. Shipping can be very expensive, so this is an area of the business where the business must weigh the costs of shipping against the benefit of getting the product to the customer quicker. In today's marketplace, customers have become accustomed to getting things they ordered very quickly. If customers have to wait you will lose customers. However, quick shipping is expensive, so it must be determined how quickly the customer really needs the product. If they are ordering something like medicine, they may need it very quickly and the cost isn't as important; but if they are ordering something like decorations, they usually don't need it right away and you can find a less expensive method of shipping. The most important thing is to be upfront with your customers and let them know how long it will take and how much it will cost, you can even give them options to choose a quicker delivery time at a higher price.  If customers are in control of their shipping and costs, they are less likely to be upset at the amount of time it takes.

Dropshipping

A lot of e-commerce businesses use a method called "dropshipping," this is where the business doesn't warehouse the product but orders it from the manufacturer and has it shipped directly to the customer, without the business ever touching it. This isn't an option for all businesses and types of products, as most manufacturers want to sell in bulk and not one item at a time. 

Subscription Services

Another type of product is subscription services. This is great for the e-commerce business. If the business can sell a product on a subscription, then they have basically guaranteed sales for an indeterminate amount of time. Netflix and other streaming services are one type of subscription service.  You pay a monthly fee to have access to their content. They take the amount of money out of your account each month, so they don't have to keep marketing to you, and they know that you will be giving them that amount of money each month. There are many types of subscription services, you can subscribe to get items from Amazon, Walmart, Target, and other stores on a regular schedule. You don't keep placing orders, they know they have so many orders each month, so they can plan their orders and shipping. 

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