The biggest differences between order fulfillment by electronic commerce versus the traditional retail store are turnover and volume, Hedges says. E-commerce typically involves much smaller orders and fewer items. At the same, it gives retailers another valuable opportunity for reaching their customer base.

E-commerce's high level of throughput activity translates into higher labor requirements and additional travel time within the distribution center. Companies must cope with the change by finding new efficiencies within their warehouse operations.

Traditional catalog fulfillment offers some lessons for e-commerce. Yet that sector has been struggling to develop new models to support multichannel distribution, Hedges says. Meanwhile, many brick-and-mortar companies are successfully growing their internet business.

A possible roadblock to the continued growth of e-commerce is higher rates imposed by UPS and FedEx. Hedges says e-tailers will struggle to continue offering free shipping, which has been a core part of their services. Smaller entities will find it especially challenging to keep on absorbing the cost of shipping. Whether they can remain competitive with larger e-commerce providers is an open question. Add in the end of the sales-tax exemption for online purchases, and shipping becomes a cost that all internet companies will have to address.

E-tailers should also watch out for governments seeking to regulate internet access, or turn it into a fee-based service. Such a development could restrict the ability of business owners to tap new global markets. In addition, says Hedges, they need to be focusing on ways to improve security and control spam.

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Keywords: supply chain, supply chain management, inventory management, inventory control, retail supply chain, international trade, supply chain planning, warehouse management