E-commerce business has significantly grown and is expected to continue doing so. Despite a decline in the speed of growth since economic reopening post-pandemic, the Comscore State of Digital Commerce report showed online non-travel retail sales surpassing $1 trillion to reach $1.09 trillion in 2022 — a new record for e-commerce sales.
With e-commerce clearly a part of the new retail landscape, there is increased demand for omnichannel fulfillment as a way to manage and optimize logistics for getting online orders into the hands of customers. Omnichannel fulfillment is a model for meeting expanding customer expectations for physical and online shopping options, with the ability to receive and return goods as quickly and easily as possible. While this sounds simple enough in theory, successfully implementing an omnichannel model presents many challenges for today’s retailers as well.
This article examines the challenges of omnichannel fulfillment and presents five essential tips for a successful omnichannel strategy and implementation.
What Is Omnichannel Fulfillment?
Omnichannel fulfillment is a strategy that utilizes numerous selling channels and fulfillment options with the goal of delivering to the customer in the best way possible for each situation. All selling channels are integrated with a single inventory system to efficiently match fulfillment and delivery for each order. There are an array of options businesses use to adjust to each situation, which include store-to-store, warehouse-to-store, warehouse-to-designated pick-up spot, warehouse-to-customer and so on.
For example, omnichannel fulfillment might include various items from a single order being sent from both a warehouse and a retail store location, depending on inventory location and delivery to the customer’s delivery address. There might also be the option for the customer to buy an item online and pick it up from the store for more immediate access to their order.
Omnichannel also supports improved exchange and return options. After purchasing online, a customer can choose to return an item to the store or send it back via mail. Alternatively, an out-of-stock item at the store could be ordered online by the sales associate and delivered to the person’s home or to the store, whichever is preferable for the customer.
Challenges Facing Omnichannel Fulfillment
Omnichannel fulfillment services provide an effective way of satisfying customers by getting packages to them sooner and providing them with options that create a better experience, such as returning an online package to the store. Omnichannel better meets customer expectations and preferences for a cohesive shopping experience.
Nonetheless, there are challenges to carrying out this type of fulfillment strategy. As can be imagined, it can be challenging to adapt to the needs of each situation and adjust logistics to fit. It’s necessary to integrate logistics, distribution and inventory, and to have real-time visibility, which are complex on their own and even more complex when combined. For instance, a company may face incomplete or inaccurate data, conflicts with channels, a lack of visibility, and not enough efficiency or optimization of operations.
It’s important to create effective strategies that promote an omnichannel experience, and to utilize the right technology that brings the many pieces of the retail puzzle together. Technology makes it much easier to integrate multiple channels and adjust to each customer preference or challenge.
5 Tips to Optimize Omnichannel Fulfillment
It’s more than possible for businesses to improve their omnichannel order fulfillment strategies. Here are five tips for making significant strides:
1. Streamline Software
One of the most important aspects of an omnichannel fulfillment model is the ability to connect existing channels and systems to improve full network visibility. Shippers should utilize API software to connect demand signals from various channels to the inventory and delivery systems necessary to complete the fulfillment process. A cloud-based program that connects through a series of API microservices is able to find the right carrier and service level for every delivery order, based on a range of factors and customer preferences. Advanced platforms also have the ability to utilize multimodal and multicarrier solutions when necessary to ensure the best possible delivery outcomes.
2. Refocus on Routing
Successful omnichannel fulfillment requires shippers to face the challenge of last mile delivery, which accounts for up to 53% of total shipping costs. Effective last mile delivery requires a multimodal approach to complex network management — matching each shipment with the right mode and service level to hit an on-time delivery. API-driven last mile solutions deliver optimized route planning through a network of vetted and trusted carriers. Shippers can rest easy knowing even their most complex and time-sensitive shipments are in good hands.
3. Prioritize Visibility
Visibility is more than a supply chain buzzword; it’s an essential component of the omnichannel and last mile experience. Inventory visibility is critical to fulfillment operations, while last mile delivery visibility is critical to exceptions management and meeting on-time delivery. Optimized omnichannel fulfillment strategies should include solutions for real-time last mile updates, with the ability to proactively intervene to mitigate risks of missed deliveries and dissatisfied customers.
4. Don’t Compromise on Rates
Matching carriers within an omnichannel fulfillment model is complex. Shippers must consider the speed and the best services to meet the customer’s delivery needs, as well as the costs of fulfillment. It’s essential to explore options to find the best price and service combination, but obtaining multiple carrier quotes can be time-consuming and tedious. Too often, shippers rely on a handful of known last mile couriers without taking the time to compare rates to better control costs. By utilizing an automated rate shopping platform, shippers can quickly compare rates from multiple couriers within a vetted carrier network, without numerous individual phone calls and emails. This allows them to be more efficient and more cost-effective immediately.
5. Optimize Analytics
Analytics is an important factor in optimizing operations to ensure that all links within the omnichannel chain are functioning at their best. By implementing technology that collects, standardizes and analyzes data on every order and delivery, shippers get access to meaningful insights and predictions to assist in forecasting future fulfillment needs and optimizing network coverage.
The Bottom Line: What Does the Future of Omnichannel Hold for Your Business?
There is increasing pressure for businesses to become “phygital.” The concept of “phygital” refers to the combining of the physical world of an in-store channel and the digital world of an online channel. People want the best of both worlds — bringing the immediacy and seamlessness of physical shopping to the e-commerce experience — and shopping has changed to expect this new way.
As the customer expectation for a seamless shopping experience grows, shippers will be under ever greater pressure to provide smoother fulfillment and delivery. Omnichannel fulfillment provides shippers with a competitive advantage and allows them to adapt to a range of customer expectations. It helps shippers adapt so they can get items to customers as quickly as possible, with a variety of additional options like return-to-store or pick-up-at-store to improve the customer experience.
The omnichannel model works by optimizing the pathway between inventory and the consumer. It focuses on getting inventory to the consumer as efficiently as possible, and working other aspects of business operations around that. For this to work, the business needs a clear idea of where each SKU unit is within the supply chain, throughout fulfillment and delivery, and all the way to the returns process when necessary.
How to Implement Omnichannel Fulfillment Services
Omnichannel fulfillment is the answer to giving customers what they want within a modern shopping experience. It combines online and physical shopping experiences to create options that fit each person’s needs and preferences. It’s the way for shippers to get inventory to customers as efficiently as possible and to provide customers with options that help improve their overall experience. Nonetheless, it comes with challenges.
Technology is what helps shippers go from the idea of omnichannel fulfillment to implementing and executing it with ease. OneRail’s fulfillment orchestration solution provides numerous features that help shippers create and run an omnichannel experience.
- Real-time visibility: Integrations with WMS, TMS and ERP provide real-time visibility to existing inventory and incoming orders to improve planning, while courier integrations provide tracking visibility to last mile delivery movements and exceptions.
- Automated rate shopping: Find the fastest and most cost-effective path to delivery with instant, multimodal courier pricing.
- Multimodal optimization: Use the right mode for each order, regardless of shipment requirements. OneRail supports FTL, LTL, courier, parcel, hot-shot, same-day and economy shipments with a nearly 99% on-time rate.
- Exceptions AssistTM: OneRail understands that when it comes to last mile delivery, chatbots and emails don’t cut it. Get 24/7 access to our USA-based Exceptions AssistTM team of logistics experts with rapid issue escalation.
OneRail helps businesses rise to the challenges of omnichannel fulfillment so they can exceed customer expectations and deliver an unparalleled omnichannel experience. Take the next step with OneRail today.