The conversation about omnichannel retail has been magnified in recent years, and it is becoming increasingly clear that it is an essential strategy for retail companies in the modern market. Omnichannel fulfillment integrates sales channels across the distribution network — including physical stores, online stores and marketplaces — to provide customers with a seamless shopping experience and the best-possible delivery outcomes.
Omnichannel fulfillment sounds reminiscent of the multichannel fulfillment model, but the two should not be confused. Multichannel strategy relies on multiple sales channels that are entirely siloed in nature, with separate and independent inventory stocks for each channel. This means that an online customer fully depends on warehouse inventory, which may take days to be dispatched for fulfillment and delivery.
On the other hand, Omnichannel integrates inventory to be shared across all sales channels, effectively streamlining fulfillment processes and reducing delivery times. An omnichannel system can identify inventory availability across the network and select the closest fulfillment location to ensure fast delivery. Omnichannel also supports buy online, pick-up in-store (BOPIS) options, giving customers more flexibility and control over the shopping experience.
During the pandemic, many Americans adopted omnichannel features as a part of their regular shopping routine, and the majority of these individuals plan to continue. Younger buyers are the most enthusiastic about new ways of shopping and view brands and retailers on the seamlessness of their experience. Due to this massive shift in consumer expectations, omnichannel fulfillment is looking less like a luxury and more like a requirement for retail brand longevity.
This article presents a detailed look at the strategic framework for modern omnichannel fulfillment and delivery, as well as the challenges and benefits of omnichannel implementation.
The Current Challenges of Developing an Omnichannel Fulfillment Strategy
Creating an omnichannel experience is essential for today’s retailers, but achieving truly seamless fulfillment is no small feat. It requires concerted effort and collaboration across the organization to provide a consistent and unified experience for the customer. From emails and websites to physical stores and social media, companies must be able to provide a seamless transition between channels. The sheer magnitude of omnichannel fulfillment presents several challenges that companies must be ready to face when developing an omnichannel strategy.
Unclear Goals & Objectives
Many retailers struggle to define goals for their omnichannel strategy and lack clarity on which parts of their operations to prioritize. Without a unified vision, investments and implementations become scattered and unfocused. Organizations must establish alignment across their internal teams and consider the unique needs of their e-commerce, store operations, supply chain, marketing and technology teams. Organizations can ensure their strategies are aligned and focused by taking a holistic approach.
Failure to Plan
Too often, retailers focus on rushing to market to meet consumer demand rather than evaluating the logical starting point and the specific steps needed to succeed. Unfortunately, taking this approach to omnichannel fulfillment is more detrimental than helpful and can lead to more significant issues in the long term. Crawling before walking will ensure that the right foundations are in place and that investments are not wasted, providing maximum returns and a sustainable omnichannel strategy.
Fragmented & Siloed Channels
Retailers who previously utilized multichannel fulfillment may struggle to bridge communication and operational silos between sales channels. Technology to connect systems often requires additional training and can further create confusion if it’s not rolled out in a thoughtful and synchronized way. Encouraging collaboration and simplifying communication between parties is essential to getting buy-in at every level and ensuring a streamlined, effective omnichannel fulfillment strategy.
For omnichannel to be successful, there must be accurate inventory visibility across all locations — stores, warehouses, distribution centers and 3PLs. This requires an inventory management system that updates in real-time as transactions occur across the organization. Sharing inventory across channels can prevent waste, reduce carrying costs and provide customers with a better buying experience, but only when inventory counts are accurate and reliable.
Customer Delivery Expectations
With the boom of e-commerce and the rise of free two-day shipping from online retail giants, consumer expectations for fast delivery have never been higher. This puts enormous pressure on companies to rush to omnichannel models. Still, when not done thoughtfully and strategically, these initiatives may create more issues than solutions and actually increase delivery times.
It’s easy to recognize the importance of omnichannel, but delivering on the promise of omnichannel is far easier said than done. However, companies that provide smooth, painless experiences that cross multiple channels will reap the rewards of a growing and loyal customer base for the long term.
The Continuum of Omnichannel Strategies
Retailers looking to succeed must consider their strategic goals and customer experience when choosing an omnichannel approach because failing to do so invariably leads to confusion and disarray. According to McKinsey & Company, three primary omnichannel strategies lie on a continuum: commerce, personalization and ecosystem.
Retailers of all types, both physical-first and digital-first, are realizing the importance of cross-channel sales strategies to boost sales and drive an integrated and convenient customer experience. This may look like a historically physical retailer extending its online shopping capabilities or offering BOPIS options. Or it might be an online retailer introducing physical stores in key geographic markets to increase brand awareness and convenience.
The omnichannel strategy of personalization is growing rapidly, with more retailers leveraging customer data, purchase history, and preferences to drive customized, tailored messaging via text, app, email, or even in-store. While this level of personalization requires enhanced data management and process integration, the rewards are evident in higher sales revenues, customer engagement and brand loyalty.
Today’s consumer is increasingly drawn to brands that provide a holistic experience and embrace omnichannel ecosystems that integrate with their needs and lifestyles. From personal events to mobile payments and rewards, many major brands are creating opportunities for customers to interact with them in ways not possible through traditional retailing. This has resulted in deeper relationships with customers, increased loyalty and new revenue streams while simultaneously providing customers with a sense of community with other like-minded users.
Retailers can choose one strategy and excel in that particular vertical or decide to establish practices that move them toward the omnichannel ecosystem to expand their business models over time. Either way, aligning an omnichannel fulfillment strategy with the customer base and the company’s long-term goals is critical. This means looking beyond current market trends and expectations and identifying ways an organization can differentiate itself from its competitors while staying true to its customers’ needs. For example, while an omnichannel ecosystem experience is an effective strategy for legacy and lifestyle brands, it may not be the best strategy for a company whose customers value accessibility and convenience.
The Strategic Framework for Today’s Omnichannel Fulfillment
Once a long-term goal and strategy have been solidified, an organization can start to establish the omnichannel strategic framework that will guide the customer experience from pre-sale through fulfillment and delivery.
A comprehensive omnichannel framework should include an evaluation of every possible channel that a customer may interact with a company or brand, not simply the sales channels. Consider marketing and social media channels, in addition to sales touchpoints. This includes:
- Social media
- Call center
The Omnichannel Execution Path
The path to omnichannel execution includes two specific tracks: business processes and the technologies that support those processes. Having a clear understanding of how these processes and technologies interact is essential to driving value and efficiency in an omnichannel framework. The stages of execution and their corresponding business processes and technologies can be outlined as shown below.
The Fulfillment Orchestration Solution
With so many processes and technologies to consider in an omnichannel fulfillment framework, it’s easy to see how organizations may stumble in their execution by failing to connect disparate data sources and systems. Retailers cannot effectively monitor inventory or optimize fulfillment processes without ensuring that systems across various channels and business processes are communicating in real-time. This can easily spiral into delays or the inability to fill customer orders as promised, damaging customer relationships and brand reputation. Additionally, this can cause confusion and frustration in the workforce, putting undue strain on employees at every level of the fulfillment chain.
OneRail’s fulfillment orchestration solution technology is designed to remove the friction in omnichannel fulfillment, by bridging communication gaps and orchestrating technologies and processes into a single system. In other words, it works as a delivery management platform that brings together planning, pre-purchase, purchase and post-purchase processes to streamline omnichannel fulfillment and execution.
In the graphic above, the technologies in dark blue represent those that a retailer is likely already using to manage omnichannel processes, while the teal represents how OneRail integrates those processes to create an optimized and comprehensive fulfillment operation. Let’s take a look at each of those stages and solutions in detail.
In the planning stage, 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.
Pre-Purchase & Purchase
Streamlined and efficient pre-purchase and purchase processes are critical to a successful omnichannel strategy. While much of the pre-purchase experience seems outside the scope of fulfillment, eCommerce offers a unique opportunity to drive customer decision-making at the time of purchase with dynamic shipping module integrations. The fulfillment orchestration solution does just that, providing eCommerce customers with fulfillment and shipping options based on an item’s real-time availability across the provider network.
OneRail also integrates data across purchase technology systems 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.
OneRail’s fulfillment orchestration solution also offers significant value in the post-purchase phase, as it can integrate real-time tracking updates from across the delivery courier network to quickly identify shipments at risk of missing delivery targets. This enables speedy escalation and exception 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 success, as a single bad experience can cause irreparable harm to brand sentiment and loyalty in today’s highly competitive retail market.
OneRail’s solution to omnichannel fulfillment delivers an enterprise-capable API for integration and enhanced security and identity management features (SOC I Type II, ISO, GDPR) to ensure that valuable information about the organization and its customers is safe.
The Benefits of the Omnichannel Fulfillment Framework
With the fulfillment orchestration solution in place with a comprehensive and well-planned omnichannel fulfillment framework, companies can expect a host of retail superpowers and benefits.
- Expanded delivery service options to meet customer needs. This may include same-day; scheduled delivery; expedited; buy online, pick up in locker or many more options.
- New fulfillment options realized. Omnichannel models provide the ability to remove shipping and delivery costs by offering customers the option to order online and pick up at stores or vendor locations.
- Higher order efficiency and accuracy. Streamlining multiple channels and systems under a single technology hub improves inventory visibility and drives a more efficient and accurate fulfillment process.
- Lower delivery transportation costs. Omnichannel fulfillment ensures that delivery networks are optimized to minimize shipping costs by matching inventory availability and carrier costs for every order.
- Happier customers and a stronger brand image. Seamlessly connecting customers to the products and brands they care about undeniably impacts brand loyalty and reputation, increasing the likelihood of repeat orders and referrals.
Ready to build out your strategy framework to create an unparalleled omnichannel experience? Schedule a demo with OneRail today.