Ecommerce Operations 101: What Ecommerce Operations Managers Need to Know
October 11, 2021
Across any industry, operations is the backbone or the organization and the function that gets things done. And when it comes to ecommerce, there’s a lot that goes on behind the scenes.
It’s one thing to sell a high-demand product, it’s another to get it into the customers’ hands.
The operations manager plays a key role in an online brand’s growth. That means keeping a close eye on the industry, your competitors, and the needs of your customers to ensure that your operations can meet customer expectations and continue to grow.
This article offers an in-depth look at what ecommerce operations entails, the role of an ecommerce operations manager plays, and how to improve your operations for efficiency and growth.
What are ecommerce operations?
Simply put, ecommerce operations are the culmination of the inner workings required to sell products online. Depending on the size of the business, the organizational setup, and the distribution channels, some of the fundamental areas include:
- Supply chain planning
- Warehouse management
- Receiving and managing inventory
- Picking and packing customer orders
- Shipping logistics
- Customer service
As an ecommerce business grows, there are more responsibilities, such as managing a multichannel retail strategy, inventory distribution, and much more.
Ecommerce operations manager duties and responsibilities
Ecommerce operations managers play a vital role in supply chain optimization. Therefore, they are given several key duties and responsibilities. From operations planning to tracking performance, here is an overview what most ecommerce operations managers are responsible for.
Online business owners rely on an operations manager to help with the planning phase to ensure supply chain efficiency.
Operations planning often starts with warehousing. Since there are many ways to establish a strong ecommerce supply chain (from renting a warehouse to partnering with a 3PL), planning is an essential step in creating a sustainable operation.
Inventory management also takes a lot of time planning — how much inventory do you need to on hand to meet demand? How much will it costs to store inventory? When will you need to replenish inventory? How will you track inventory?
Lastly, you will also need to plan a shipping strategy by determining which carriers and shipping methods the business will offer its customers. Since customers expect fast, affordable shipping and are drawn to incentives like free shipping, you will need to ensure that operations are set up to enable a customer-friendly shipping strategy.
The ecommerce operations manager is also responsible for engaging and collaborating with all parties involved in inbound and outbound logistics. This ensures that operations stay on track throughout the supply chain.
Engagement involves overseeing partnerships (such as suppliers, carriers, and third-parties), as well as internal teams (receiving, fulfillment, and customer service).
In this department, an operation manager responsibilities include managing relationships with third-party vendors, maintaining a smooth line of communication across the board, coordinating regularly with different teams, and participating in process review sessions to improve operational efficiency.
Ecommerce operations managers also oversee execution and performance. During the execution phase, operations managers are responsible for ensuring that the daily, weekly, and monthly tasks are being performed as required, such as inventory audits and warehouse audits.
Since there are several moving parts throughout the supply chain and many people involved (sellers, manufacturers, warehouse staff, carriers, etc.), unexpected events, delays, and issues can occur.
As the operations manager, you and your internal team will know how to respond and act quickly when issues arise, so operations can continue to run and customer expectations can still be met.
In many companies, ecommerce operations managers also have to perform supervisory duties. This involves overseeing the performance of different teams (e.g., warehouse receiving, fulfillment, and customer service) to make sure that every team has what they need to get the job done.
Since there are several teams operating under one supply chain, an operations manager will also have a team that reports to them. Every team goes through a performance process and it’s up to the operations manager to work with the different teams and to find way to optimize and improve performance.
Analysis and reporting
It’s hard to measure effectiveness, from planning to execution, without the right data. An ecommerce operations manager is responsible for working with relevant teams to set up ecommerce KPIs, which will help track performance over time.
Operations managers rely heavily on supply chain technology to track and collect data in real time. That way, it’s easier to pull reports and accurate data at any time. This also ensures there are no discrepancies in the data due to human error.
Breaking down the main operations of an ecommerce business
With so many literal moving parts involved in ecommerce operations, managing it all can be a challenging endeavor. In many cases, an operations manager will hire a team to oversee different areas of operations since it’s a lot for one person to be responsible for. Here is an overview of the primary areas of the operations involved in running an ecommerce business.
As an essential part of your ecommerce operations, order fulfillment refers to the warehouse picking and packing stage of the order. Once orders are placed and processed, the correct items must be located, then picked and packed before shipment.
The complexity of overseeing fulfillment depends on the size of the business, the order volume, the number and size of SKUs they sell, and the number of warehouse locations from which orders are shipped. Choosing between managing in-house fulfillment or partnering with a 3PL also affects how you will manage fulfillment operations — especially when it comes to cost.
For instance, fulfilling orders in-house can lead to leasing a long-term warehouse, paying for storage, forklifts and other equipment, technology, recruiting and labor, and many hidden fulfillment costs. Shipping carriers might not offer shipping discounts if your order volume is too low too.
That’s why many operations managers rely on a 3PL to take care of fulfillment. For example, ShipBob takes care of all fulfillment needs using a simple pricing model and offers insights into fulfillment performance relating to accuracy, speed, and costs.
“I shipped everything myself and made a lot of trips to the post office. It was intense and pretty tough. You quickly reach that breaking point, where you cannot do it any longer, and it’s not worth the compromised quality of life.
We did some market research, and I knew some other brands that used ShipBob. Everything just works. We are super happy with ShipBob and very impressed by how well they’ve pumped out our large volume of orders.”
Sergio Tache, CEO of Dossier
The bulk of the ecommerce shipping process involves processing the order, picking and packing it, and shipping it out to the delivery destination. But collectively, shipping logistics involves first-mile delivery — having inventory shipped from the supplier to one or more distribution centers.
Then you have last-mile delivery which refers to the actual process of transporting shipments and getting them to your customers on time.
As an operations manager, you work closely with shipping carriers to establish a reliable operations network. Additionally, understanding production lead times and working with reliable manufactures and suppliers helps to make sure that inventory gets delivered on time.
“Since partnering with ShipBob, we now have an automated system for shipping and can focus our time on new product launches. We continually are able to reliably and quickly fulfill thousands of orders during a single apparel drop. This partly has to do with ShipBob saving us time by automating the order fulfillment process.”
Jason Ton, CFO of 100 Thieves
To run an efficient ecommerce operation, you also need proper inventory management processes and technology. Since inventory is constantly moving, being able to track inventory in real time (across locations) is a necessity.
Real-time inventory management software helps automate and streamline the inventory management process by tracking inventory levels, orders, sales, and shipments. It can also help automate inventory tracking across channels and warehouses, saving time and preventing human error.
For instance, ShipBob’s technology includes built-in inventory management tools that utilize historical order data to provide insight into how and where you should store inventory throughout our fulfillment network. This gives you the data needed to establish an ideal product allocation strategy.
Based on where most of your customers are located, you can offer quicker shipping times and reduce shipping costs.
Additionally, ShipBob’s inventory control functionality keeps tabs on what’s in stock, offers notifications when inventory is getting low, and allows you to easily order more to keep up with demand.
“Now we’re at two ShipBob fulfillment centers, and being able to have the analytics and see how everything is working together has been extremely helpful for me on the operations end.
It definitely helps me with inventory management and seeing what’s going on. Even though we’ve grown, I haven’t spent more time on the business from an operations standpoint.”
Dana Varrone, Director of Operations at Organic Olivia
Along with inventory management, warehouse management involves overseeing the operations within an ecommerce warehouse if you manage one, from equipment to personnel.
Warehouse management processes include receiving storing, and tracking inventory, monitoring the movement of finished goods entering and leaving the warehouse, as well as overseeing the efficiency of warehousing processes.
In many cases, a warehouse management system (WMS) is integrated to track the flow of inventory and other activity throughout a warehouse (i.e., what’s being received, stowed away, fulfilled, and shipped and by whom).
A WMS eliminates manual processes, saves time, and provides a more accurate snapshot of what’s going on inside a facility without needing to conduct continuous warehouse audits. The information gathered from a WMS helps operations managers identify areas of improvement and track progress to drive supply chain optimization.
An ecommerce customer service team plays a major role in a business’s operations as a whole. For instance, the first thing customers will do if they have an inquiry about an order is contact customer service. The customer service team must have an understanding of any fulfillment or shipping delays, promotions, and the company’s shipping and returns policy.
Returns also start with customer service. If a customer needs to make a return, the customer service team works with the customer to process the return and makes sure that the product gets shipped back and a new order is shipped out right away if the customer initiates an exchange.
From balance sheets to inventory write-offs, keeping track of your brand’s financial transactions and ensuring your books are in order are essential parts of your ecommerce operations. For ecommerce businesses, inventory is the most important (and often valuable) asset, which means any discrepancies in inventory counts can impact your bottom line.
Accurate ecommerce bookkeeping provides you with insights into your spending as well as revenue, while enabling you to be prepared for tax season.
Note: It’s always a good idea to consult with a CPA. An operations manager usually works close with a CPA to make better business decisions, especially when it comes to logistics costs associated with inventory, warehousing, and fulfillment.
“We utilize ShipBob’s Inventory API, which allows us to programmatically retrieve real-time data on how many units of each product are currently stored at ShipBob’s warehouses. We currently use this API to generate custom reports to tie this inventory data into our accounting platforms.”
Practical ways to improve your ecommerce operations
Well-executed ecommerce operations can not only improve backend efficiency, but also enhance customer relationships and fuel business growth. Here are some practical ways to improve ecommerce operations.
Leverage technology to automate tedious tasks
Since ecommerce operations involves many diverse tasks, ecommerce automation tools can help cut out time-consuming tasks and reduce human error, helping operations managers improve internal operations.
For example, implementing an automated order processing system that connects with the business’s online store and other sales channels will automatically process and verify orders as they are placed online, allowing the fulfillment process to start right away.
Much of the fulfillment process can also be automated, especially if you partner with a tech-enabled 3PL like ShipBob. You and your team can focus on other initiatives that help optimize operations, rather than be bogged down by picking, packing, and shipping every customer order.
“When I was gearing up to launch the business, I was looking for someone who would automate fulfillment for us. I chose ShipBob, and it turned out to be a very easy and scalable solution.
Everything was automated, from setting up my store, to sending product, to fulfilling orders.
It was pretty remarkable how a 24-year-old like me with very little money and no prior logistics experience could launch a product and have distribution be automated.”
Josh Hollings, Founder & CEO of Drop FX
Collect employee feedback
No one knows your processes better than the people who actually work on the floor, executing the tasks needed for your operations to run smoothly.
So even when it comes to improving your ecommerce operations, start by listening to your employees in the trenches. Try to understand the unique problems that they face, which your reporting and analytics tools can often not detect.
See if they have any suggestions on what you can do to make their jobs easier and the process more efficient.
“Getting to share product feedback and future ideas with ShipBob has been so refreshing and reassuring. I’ve worked with three other 3PLs, and no other one has taken this approach.
ShipBob implements changes so quickly and doesn’t make empty promises. It feels like we’re working with a company that’s on the same path as us with perpetual growth.”
Wes Brown, Head of Operations at Black Claw LLC
Make more data-driven decisions
Having access to important data – such as how much inventory you have left, which orders you couldn’t fulfill due to stock shortages, which shipping methods your customers prefer, and more.
Whether you use an inventory scanner system to track inventory performance, or have an ERP inventory system in place, having access to real-time data identifies areas of your operations that need attention and sometimes improvement — where you currently stand, where you’re falling behind, what’s holding you back, and how to plan ahead or make improvements to your current processes.
For example, ShipBob’s logistics network is powered by premium technology that offers full visibility and transparency into operational performance. Through advanced data and reporting, you’re given all the supply chain analytics you need for everything from year-end reporting to better day-to-day supply chain decision-making.
Data includes insights into which fulfillment center locations you should stock, days of inventory left before you run out, the impact of promotions on stock levels, each shipping method’s average cart value, your average shipping cost and days in transit, your fulfillment cost per order, storage cost per unit, and much more.
“At my previous 3PL, nothing seemed to come easy. Even getting a reshipment was nearly impossible. I felt like I had to babysit them. Everything was done on spreadsheets and it was very difficult to get the fulfillment data I needed. Now, we’re working with a tech-enabled 3PL that seamlessly provides data to help us make business decisions.
ShipBob’s analytics tool is a game-changer and it’s helped me grow my business tremendously. With ShipBob’s free analytics tool, it’s so easy for any of my team members to pull data in real-time.”
Courtney Lee, founder of Prymal
Outsource the tricky parts
One of the best solutions is to leave some of your ecommerce operations to the experts so you can focus on the processes that need your attention.
For instance, outsourcing logistics operations to a 3PL like ShipBob allows you to focus on business growth, rather than being tied down to day-to-day operations related to warehousing, fulfillment, and shipping.
Rather than picking and packing customer orders, your time can be spent on launching into new markets and different sales channels to reach more customers.
“I partnered with ShipBob in May 2019. I was terrified to outsource fulfillment at first, but I knew that what I was doing was completely unsustainable. I would have prevented my own success had I kept trying to do everything myself. It turns out ShipBob has exceeded my expectations.”
Anastasia Allison, founder of Kula Cloth
Find ecommerce operations jobs
ShipBob launched the Ecommerce Operations Job Board to help people find the best jobs and hire top talent for ecommerce operations, supply chain, logistics, fulfillment, and shipping roles. Post a job here, or browse jobs here.
How ShipBob turns fulfillment into a revenue driver
Retail fulfillment can be one of the most costly, time-consuming parts of running an online business. But with ShipBob, you’re able to turn your fulfillment operations into a growth lever by enabling fast fulfillment and offering reliable shipping — all while freeing up more time to focus on other ecommerce operation initiatives.
Once your store is connected to ShipBob’s fulfillment software orders are automatically sent to our fulfillment center locations, where inventory is picked, packed, and shipped (and tracking info is pushed back to your store and shared with your customers).
The video below provides a glimpse inside one of our fulfillment center operations in 3D:
With ShipBob’s global fulfillment centers, you can strategically distribute your inventory across our locations to get your products delivered faster and more affordably.
Whether you ship from one or multiple fulfillment center locations, you also have the option to utilize services like ShipBob’s 2-Day Express Shipping to offer 2-day shipping to 100% of the continental US .
No matter what you needs are, ShipBob’s fulfillment services help you optimize for time and cost, and provides the infrastructure and technology needed to meet customer expectations.
“We are growing really fast and won’t slow down anytime soon. With ShipBob, we have the option to use more of their warehouses to further reduce shipping costs.
Because ShipBob has a lot of people to handle our orders and additional warehouses we can expand into, we can scale up with ease as we continue to grow quickly. If we ran our own warehouse, it would be much harder to hire people and we’d inevitably outgrow the space.”
Oded Harth, CEO & Co-Founder of MDacne
To learn more about how ShipBob helps ecommerce operations managers, click the button below to start the conversation.
Ecommerce operations FAQs
Here are answers to the top questions people have about ecommerce operations.
How can I improve my ecommerce operations?
There are several ways to improve ecommerce operations. In the era of on-demand logistics, automation and technology play a key role, allowing ecommerce operations managers to automate time-consuming processes, provide visibility into operations, and collect accurate, real-time data to help support decisions on business optimization.
What are the main operations of an ecommerce company?
The main operations of an ecommerce company involve warehousing, inventory management, order fulfillment, shipping and logistics, website operation and maintenance, marketing, customer support, and business accounting.
What does an ecommerce operations manager do?
An ecommerce operations manager is responsible for planning, executing, supervising, and analyzing different processes within the ecommerce supply chain to make sure that operations run as efficiently as possible.
How much does an ecommerce operations managers make?
The average ecommerce operations manager salary is around $70,000 while top earners may even earn more than $100,000.