The Role of Physical Stores in an Omnichannel Distribution Retail Strategy

Omnichannel distribution provides customers with the option of buying, receiving and returning orders from any sales channel they choose, and has become particularly enticing with the rise of e-commerce, where consumers have more purchasing options than ever before. Omnichannel distribution creates a convenient experience that many consumers have come to expect from preferred retailers, but has left some businesses wondering about the role of brick-and-mortar storefronts in the evolving omnichannel market. 

While online shopping is here to stay, physical stores still play a critical role in modern omnichannel distribution strategies. This article will explore the changing role of physical stores and the various ways they can be utilized in an omnichannel model. Further examine some challenges storefronts face in omnichannel implementation, you’ll learn how integrative technology solutions help retailers successfully navigate complex omnichannel networks.

The Evolving Role of Physical Stores in Omnichannel Strategy

For many years, e-commerce and online shopping provided an affordable alternative to physical storefronts and an opportunity for new retail players to quickly connect with customers. Today, however, this is no longer the case. Rising digital ad costs, an increasingly competitive and congested retail market and changing customer preferences are shifting the dialogue around online and in-person shopping. 

Consider these statistics regarding the role of physical stores in a modern omnichannel world:

  • 59% of consumers say they’re likely to browse online and buy in-store, and 54% are likely to look at a product in-store and buy online.
  • Enjoying the in-store experience is the main reason 35% of consumers shop in-store, and another 24% want to interact with products before buying.
  • 58% of consumers say flexible blended shipping options like BOPIS are important to them, and 53% say having flexible shipping options influences their decision to buy online.
  • 32% of brands report plans to establish or expand use of pop-up and in-person experiences in the year ahead, while 31% plan on establishing or expanding their physical retail footprint.

With consumer demand for seamless, immersive shopping experiences on the rise, modern retailers should look for innovative ways to engage audiences through multiple channels, and reconsider how they are approaching distribution and fulfillment with holistic omnichannel strategies. 

Omnichannel Fulfillment Paths for Store Operations

Given changes in consumer behavior and expectations, retailers should take a holistic approach to omnichannel strategy and the interplay between digital and physical channels. Online and offline channels should be embraced collectively for their abilities to deliver a high level of convenience for consumers as well as increased brand engagement across platforms. Omnichannel distribution should support numerous fulfillment options, including:

  • Buy online, pick up in store (BOPIS)
  • Buy online, dropship
  • In-store purchase, home delivery
  • Ship from store
  • Buy online, return in store

There are several models for engaging physical stores in these various omnichannel fulfillment functions:

  1. Store maintenance – Stores retain their existing physical footprint and layout with online fulfillment picking, in-store pickup and returns processes layered on top operationally.
  2. Dark stores – Physical stores are repurposed and transformed into omnichannel fulfillment centers, often offering both in-person pickup and home delivery options.
  3. Hybrid – A portion of an existing store is repurposed for omnichannel fulfillment, while the remainder of the store maintains its layout to support the in-person shopping experience.

Challenges Physical Stores Face in Omnichannel Distribution

E-commerce trends have shifted the role brick-and-mortar stores play in retail strategy, but there is no indication that physical stores are going out of style. Embracing in-person retail outlets as a critical component of omnichannel distribution is essential for a company’s success in the space. However, integrating stores into evolving distribution channels presents a unique set of challenges that must be taken into consideration in the early stages of omnichannel planning.

Siloed Processes

The power of omnichannel lies in its ability to connect consumers to multiple sales channels with seamless access to inventory across the network and optimized fulfillment options. The challenge for most retailers in executing omnichannel strategy is that 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, order management and point-of-sale systems to share data and maintain inventory visibility across channels can be difficult. This complexity is further amplified when layered with transportation, delivery and reverse logistics management systems.

Increased Reliance on Last Mile

Omnichannel distribution models 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, which often includes fulfillment from a nearby physical store with delivery by a last mile courier. Due to the fragmented nature of last mile carrier networks — which may include a combination of multinational parcel services, local courier providers and crowdsourced gig drivers — cost comparisons and last mile carrier management are pervasive challenges in omnichannel distribution.

Poor Tracking & 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. Tracking packages across a large number of potential fulfillment points, including physical stores, requires a high level of coordination and communication from parties throughout the network. Automated tracking technology undoubtedly helps improve visibility, but implementation across a large omnichannel system is often complex. 

Complex Reverse Logistics

Omnichannel strategy extends beyond fulfillment and distribution, as consumer expectations for simple returns are increasingly important to their retail experience. Recent studies show that 54% of consumers prefer in-store returns over mail-in returns, making physical stores a critical player in reverse logistics. While having the ability to buy online and return in-store is convenient for the consumer and can minimize return shipping costs for the retailer, it puts a heavy operational burden on store employees and can further complicate inventory visibility across an omnichannel network.

Lack of Actionable Data

Omnichannel distribution creates a massive amount of data moving between parties, but often this data is fragmented, unstructured and siloed in channel-specific programs. Evaluating omnichannel performance and identifying strategic improvement opportunities is nearly impossible without a holistic, analytic view of data. Collecting, structuring and analyzing data from systems and channels throughout the distribution network is critical to informing future decision-making and optimizing omnichannel operations.   

Successfully Integrating Store Ops in an Omnichannel Distribution Strategy

In today’s fast-paced retail environment, a seamless customer experience across all sales channels is critical for success. An effective omnichannel distribution strategy must include integration of brick-and-mortar stores to meet growing demand for flexible shopping, fulfillment, delivery and return options. These tips can help retailers optimize store operations for successful omnichannel fulfillment:

Centralize Inventory Management

Establish a single, unified inventory management system that captures inventory levels and new orders from all sales channels, including physical stores, e-commerce and mobile apps. This ensures consistent product availability, minimizes stockouts and provides customers with accurate, real-time inventory and fulfillment options.

The OneRail omnichannel distribution solution eliminates inventory visibility gaps across the omnichannel network by integrating data on existing inventory and incoming orders from systems like WMS, TMS and ERP. Additionally, their delivery management platform further improves distribution planning by evaluating inventory needs across various sales channels and routing goods to fulfillment centers and stores in high-demand consumer markets.

Optimize Last Mile Delivery

Continued demand for the convenience of fast, cost-effective home delivery should keep last mile optimization front of mind for today’s retailers. 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 to support deliveries from both distribution centers and physical stores. OneRail’s 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. 

Get Real-Time Visibility and Exceptions Management

Issues in omnichannel fulfillment and delivery have substantial negative impacts on retail businesses. Costs associated with redelivery and returns quickly cut into revenue, while poor customer experience leads to poor brand sentiment and decreased chance of repeat business. OneRail’s omnichannel solution offers significant value by providing visibility in the last mile for both retailers and their customers. This 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.

Leverage Technology and Analytics

Utilize advanced technologies and data analytics to understand customer behavior and preferences as well as monitor trends across warehousing, fulfillment and delivery networks. OneRail’s fulfillment solution helps retailers glean insights from online and in-store data to offer personalized promotions, tailor product assortments and make informed decisions on pricing, merchandising and store layouts. These solutions also give retailers access to meaningful data on every order and delivery, helping to predict outcomes and forecast future delivery needs and network coverage.

Simplify Omnichannel Distribution with OneRail

Now more than ever, retailers need a reliable partner to help them implement a technology-driven omnichannel approach that integrates store operations to streamline fulfillment and last mile processes. OneRail’s advanced omnichannel solutions simplify comprehensive omnichannel distribution and help retailers create a unified customer experience that builds brand loyalty, drives sales and fosters long-term growth in the competitive retail landscape.

Take the next step toward faster, easier, data-driven delivery fulfillment: Schedule a demo with OneRail today.

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