Omnichannel is a growing buzzword in e-commerce and retail. Similar to its predecessor, multichannel, omnichannel refers to a sales and marketing strategy that utilizes multiple avenues to drive sales and revenue. The biggest differentiator between the two is in regards to fulfillment. Multichannel relies on multiple sales channels to drive orders, but manages inventory in each channel independently. Omnichannel distribution, on the other hand, integrates inventory across the network to be visible and shared across all sales channels. Due to its higher level of flexibility, many businesses are turning to omnichannel solutions.
The popularity of omnichannel retail models has been growing with consumers as well. Harvard Business Review observed the shopping behaviors of 46,000 consumers and found that around 73% of consumers prefer shopping through multiple channels. Comparatively, 7% of consumers shop online exclusively, and 20% of them still shop only in-store. The same study also suggests that for every additional channel they use, customers spend more money. Specifically, omnichannel customers spend 10% more online and 4% more in-store than single-channel customers. These statistics show the importance of embracing a sustainable and scalable omnichannel approach to ensure long-term brand success and growth.
This article will explore omnichannel distribution in more detail, including the challenges of implementing and scaling omnichannel models, the value of an effective omnichannel implementation and how technology solutions are driving omnichannel efficiency.
What Is Omnichannel Distribution?
At its core, omnichannel distribution is a model that provides customers with the option of buying, receiving and returning orders from any sales channel they choose. It has become particularly enticing with the rise of e-commerce, where consumers have more purchasing options than ever before — from buying online and shipping directly to their door to buying from a mobile app to pick up in store. Omnichannel distribution creates a convenient experience that many consumers have come to expect from preferred retailers.
Omnichannel distribution requires that all processes related to shipping, inventory visibility, in-store customer pickups and network agility must be considered to ensure a positive customer experience. For this model to work, companies need multiple supply chain systems communicating and sharing real-time information, including WMS, OMS, ERP and TMS. For omnichannel distribution to work, every system in the network should be optimized.
Challenges of Scaling Omnichannel Distribution
Growth-minded businesses undoubtedly recognize that mastering omnichannel distribution is an important long-term strategy. However, while it may seem straightforward in theory, implementing an effective omnichannel strategy can present significant challenges.
The power of omnichannel lies in its ability to access inventory from across the distribution network to provide customers with a variety of fulfillment options. The challenge for most retailers is that their inventory and distribution channels have long been siloed, with physical stores maintaining inventory that is independent from e-commerce and online channels. Integrating various warehouse and order management systems to share data across platforms can be difficult, particularly when layered with complex transportation and delivery management systems.
Poor In-Transit Visibility
Visibility is essential to omnichannel distribution. From monitoring the movements of inbound inventory to real-time tracking of last mile deliveries, knowing where goods are at any given moment often determines the success of an omnichannel experience. Unfortunately, achieving this level of visibility can be difficult, as it requires a high level of collaboration and communication from parties throughout the supply chain. Coordination of these communication channels and the integration of automated tracking technology can help to improve visibility, but implementation is often complex.
Unreliable Order Fulfillment Processes
When retailers promise fast delivery, like same-day or next-day, it is absolutely critical that they deliver on that promise. For omnichannel shipping and distribution to work, the order fulfillment stage is critical — ensuring that orders are captured, packed and shipped efficiently. Without adequate technology to manage and monitor these processes, orders may slip through the cracks or fail to be routed correctly for guaranteed delivery schedules. Missteps in the order fulfillment stage are invariably difficult or costly to correct and can lead to poor customer experience and negative brand sentiment.
Optimizing Delivery Networks
Omnichannel distribution models may offer numerous fulfillment options, but many customers continue to rely on the convenience of home-delivery. This means retailers must have the ability to quickly identify the most efficient and cost-effective delivery method for each order, or for each item in an order, which can be difficult in complex nationwide distribution networks. Effective omnichannel shipping requires advanced inventory visibility, combined with automated technology for comparing costs across multiple modes and creating courier delivery orders. On the backend, this technology should support real-time tracking and exceptions alerts to ensure orders are being delivered on-time.
The Value of Omnichannel for Growth-Minded Retailers
The value of omnichannel distribution should be considered in both the short and long term. Of course, the immediate value of omnichannel lies in its appeal to an evolving customer market. Since the early days of the pandemic, consumers became increasingly reliant on fast, cheap home delivery options, and omnichannel better supports these new expectations. Further, the expansion of retail channels from physical stores and websites to social media and mobile apps has driven an even greater demand for seamless omnichannel experiences, making omnichannel strategy less of a luxury and more of a requirement for retail brand longevity.
The benefits of omnichannel distribution extend beyond meeting customer expectations, though. Businesses that are able to successfully pivot to effective omnichannel strategies with the right technology support will realize long-term value through comprehensive data collection and analysis. With access to standardized data from inventory, sales and distribution networks, retailers will have the ability to forecast, plan and optimize to minimize costs at every level of the supply chain. This means more accurate procurement strategies, less inventory overhead, more targeted marketing and sales efforts, and optimized transportation networks, seamlessly connected to reduce costs and increase revenue.
Harness the Potential of Omnichannel Distribution with Orchestration Technology
While the value of omnichannel is undeniable, the reality is that there are significant challenges to successful implementation. Fortunately, OneRail’s fulfillment orchestration technology is designed to remove the friction in omnichannel distribution, by bridging communication gaps and orchestrating technologies and processes into a single system. In other words, it works as a delivery management platform that links siloed processes to streamline omnichannel fulfillment and execution. To understand how this works, let’s take a look at the orchestration solution’s unique capabilities.
Channel & System Integrations
The OneRail fulfillment orchestration solution integrates data on existing inventory and incoming orders from systems like WMS, TMS and ERP. This provides organizations with a high level of visibility into inventory across the network and allows them to more accurately plan merchandising and warehousing needs. Additionally, the delivery management platform (DMP) further improves distribution planning by evaluating inventory needs across various sales channels and routing goods to fulfillment centers and stores with the highest-projected demand.
Fulfillment Control Tower
OneRail integrates order data from across sales channels to provide a fulfillment control tower. This powerful dashboard offers visibility across fulfillment and delivery processes to ensure that new orders are captured, packed and shipped efficiently — and in the most optimized manner. The control tower dashboard provides powerful real-time insight into shipments across the network and can help retailers identify inefficiencies and opportunities to further optimize fulfillment processes.
Flexible Capacity Networks
With OneRail’s orchestration technology, retailers get access to the largest integrated last mile courier network, including over 10 million drivers and 600 courier entities. Their network solutions rely on advanced automated rate shopping, compared against every available mode, to ensure the best carrier at the best price for every omnichannel shipping order. Whether a delivery requires courier, parcel or LTL, OneRail’s network can get it there — hotshot, same-day, next-day, expedited or economy.
Real-Time Last Mile Visibility
OneRail’s fulfillment orchestration solution offers significant value by providing visibility in the last mile. Their technology integrates real-time tracking updates from across the delivery courier network to quickly identify shipments at risk of missing delivery targets, enabling speedy escalation and exceptions management to address issues before they turn into missed deliveries and dissatisfied customers. Staying ahead of problems before they impact the customer experience is essential for retailers looking for omnichannel distribution success —a single bad experience can cause irreparable harm to brand sentiment and loyalty in today’s highly competitive market.
Get High-Level Omnichannel Execution with OneRail
Now more than ever, retailers need a reliable partner to help them implement a technology-driven omnichannel distribution approach that streamlines fulfillment and last mile processes. OneRail’s fulfillment solution delivers an enterprise-capable API for integration and a vast, reliable last mile delivery network that is proven to be nearly 99% on-time.
With OneRail, brands can overcome the challenges of omnichannel distribution and more quickly realize the benefits of long-lasting customer loyalty, network optimization and advanced, data-driven decision-making. Schedule a demo today to see how OneRail can simplify your omnichannel operations.