These days, retailers approach consumers through a variety of in-store and digital channels hoping to provide a memorable, personalized experience. Savvy retailers realize they can optimize results by combining separate sales channels into a cohesive system using omnichannel retail logistics.
Omnichannel retailing delivers customers a seamless shopping experience across in-store and online channels using supply chain and inventory visibility strategies that optimize costs and customer outcomes. These approaches are omnichannel retail logistics.
The omnichannel approach challenges inefficiencies and operating silos across the supply chain and drives change in the retail industry. In particular, the growing importance of online channels challenges retailers to be flexible and creative as they respond to consumer demand and integrate online sales into store processes.
Finding solutions means ensuring the right partners, technologies, and fulfillment approaches. A logistics partner such as Agility can help turn your multichannel supply chain into an omnichannel one, ensuring fast, flexible, low-cost solutions from order management to fulfillment and delivery.
Omnichannel logistics in retail
Consumer demand for an integrated, multichannel shopping experience drives omnichannel commerce. This experience includes traditional retail stores, e-commerce platforms, and an expanding list of other customer touchpoints, such as social media, online marketplaces, and self-service tools.
While multichannel retailing involves selling through multiple discrete channels, an omnichannel strategy unifies those channels throughout the supply chain.
An omnichannel approach focuses on the big-picture brand experience and aims to convert customer engagement into sales at any and all touchpoints. Through omnichannel retail experiences, customers remain connected to the brand, which feels ever-present.
What omnichannel retail means for customers and retail stores
Consumers want fast, flexible service (before and after purchase) with high levels of customization. This requires an omnichannel approach that integrates supply chain processes across different channels—for example, merging warehouse space or fulfillment operations to serve both the retail store and digital channels.
As more retailers offer pickup and in-store returns for online orders, retail stores are assuming new roles like storing and locating merchandise, fulfilling orders, and managing multichannel sales.
In omnichannel retail, the customer moves through the brand and sales ecosystem easily, encountering marketing and services tailored to their unique needs. So if a customer follows a social media ad to an online store, places an order with free shipping, and then later visits the retail store to return one or more items, the entire experience feels natural and cohesive.
How an omnichannel approach impacts inventory and the supply chain
Omnichannel retailers offer customers an equivalent experience regardless of where they make a purchase: in store, online, or via mobile device. Consequently, supply chains must adapt to become more connected, visible, and cost-effective, allowing brands to meet customer needs quickly on any channel.
A cohesive multichannel experience also means customers have the same access to available inventory across multiple channels. To accommodate this, the supply chain must be visible enough to allow retailers to easily locate and shift available stock to serve customers on their preferred platforms. Retailers must optimize inventory levels so they meet demand but avoid carrying excess inventory.
Omnichannel businesses are approaching inventory optimization and the omnichannel supply chain by integrating technology and order management processes.
What’s next in omnichannel commerce
In 2020, many consumers shifted toward online shopping in response to the challenges of COVID-19. Despite the demand and logistics challenges, retailers found some omnichannel success: Among US shoppers, e-commerce penetration rose to 25.7 percent during the holidays while online holiday sales rose 45.2 percent from 2019, and digital revenue increased $41.54 billion over levels originally forecast for 2020.
Embracing digital channels, for most retailers, is no longer a choice but a necessity. And as retailers transform their fulfillment and delivery processes to provide an omnichannel retail experience, e-commerce solutions and digital logistics are critical.
Logistics companies offer specialized tools and technologies for different points in the supply chain, helping multichannel retailers shore up weak areas that are costing them money or losing them customers.
Agility Ventures (Agility’s venture capital arm) supports omnichannel distribution through a partnership with Cairo-based e-commerce provider ExpandCart. The partnership pairs ExpandCart’s e-commerce tools with Agility’s last-mile logistics and e-fulfillment operations.
An additional partnership between Agility, ExpandCart, and digital logistics platform Shipa helps e-commerce sellers in the Middle East and cross-border retailers build digital stores and manage fulfillment and integration issues. The partnership provides critical service to retailers looking to strengthen online sales amid the COVID-19 pandemic.
Primary challenges with omnichannel retail logistics
The primary challenges with omnichannel retail logistics are operating silos and visibility and supply chain management issues.
When different supply chain processes or sales channels function as separate entities, without collaborating and sharing information, retailers struggle to provide the omnichannel experience shoppers want.
How omnichannel retailing challenges supply chain inefficiencies
Inventory visibility in the supply chain means knowing exactly what inventory is available and where it is located. In addition to ensuring retailers have the inventory to fulfill orders, visibility helps track and forecast customer demand and manage transport efficiencies across the supply chain.
Without accurate inventory quantity and location data, retailers cannot make optimal decisions about how to manage inventory and fulfill orders in the least costly way. Moreover, without the right strategies, inventory management, demand planning, and fulfillment (including managing store inventory for in-store pickups) all become more complex and potentially more costly.
Returns present unique challenges for e-commerce retailers but offer a competitive advantage if done well. In omnichannel retailing, customers often place online orders intending to return one or more items or item variations in the retail store. Retailers need an omnichannel approach for handling returns and the “reverse logistics” of returning inventory back into the system.
Omnichannel retailing also requires retail staff to collaborate more closely with digital channels, embracing new processes and tools. Retailers, for their part, must create a workflow and incentive system that allows for and encourages omnichannel sales. Omnichannel fulfillment is about meeting the customer’s needs rather than maximizing sales in one particular channel.
Retailers must also address the technology and training costs of combining online orders with retail store processes. Without the training and technology to approach sales in an omnichannel way, retail staff cannot retrieve and act on data from other channels to optimize the customer’s experience.
Logistics technologies also drive omnichannel success by helping sellers leverage data. Four disruptive technologies—blockchain, Internet of Things, robotic process automation, and data science—offer new possibilities to make the retail supply chain more visible, responsive, and accurate.
How customer expectations drive omnichannel logistics
Customers drive omnichannel logistics by demanding services and fulfillment options that meet their needs. These requests challenge omnichannel retailers to optimize logistics processes and costs associated with warehousing, fulfillment, and delivery.
One critical driver is consumer demand for inexpensive, convenient shipping options. A National Retail Federation report found 75 percent of shoppers expect free delivery, even on orders under $50, and among those choosing in-store pickup, the top reason was avoiding shipping costs.
Moreover, customer expectations for low-cost, convenient transactions are unlikely to go away, with 56 percent of customers reporting they will continue using models such as buy online, pick up in store (BOPIS) after the pandemic.
The contemporary customer is also highly aware of price and delivery options and skilled at gathering product and brand information. Omnichannel shoppers regularly compare prices using mobile apps and use their online research to make in-store purchases.
Despite the rise of online shopping, it’s clear retail stores still play an important role in satisfying the omnichannel customer and shaping omnichannel logistics.
How restaurants optimize omnichannel fulfillment
Restaurants have embraced omnichannel fulfillment by introducing or refining online order and delivery sales channels and using the BOPIS model to capitalize on the COVID-19–driven shift to e-commerce and contactless service.
Like retailers, restaurants face challenges finding cost-optimized systems and technologies and effective fulfillment partners and processes to manage the increased workload and complexity.
Finding solutions for omnichannel logistics
Omnichannel solutions combine operations, IT, and customer data to optimize costs and processes across the multichannel supply chain. At each part of the supply chain, logistics tools and trade infrastructure can reduce costs and fulfillment errors.
A successful omnichannel retail strategy integrates digital resources and physical processes to provide the unified shopping experience that omnichannel promises.
Optimizing the retail supply chain
The supply chain is key to optimizing omnichannel operations. Successful solutions build infrastructure that supports key challenges of omnichannel retailing: inventory optimization, low-cost last-mile delivery, and retail store warehousing and fulfillment processes.
Inventory optimization allows retailers to track and replenish stock, transfer stock between channels, and fulfill orders in the least costly way. Solutions include integrating IT systems, enhancing supply chain visibility, and merging warehouse and fulfillment operations.
Agility’s inventory management and warehousing solutions helped a clothing retailer achieve supply chain visibility and solved transport and warehousing challenges for a global personal care products company. Agility solutions also facilitated customs clearance and order packing and distribution for a car manufacturer.
Creative logistics solutions for inventory management have also emerged from the COVID-19 crisis, including improved visibility tools and data analytics, movement of stock closer to markets, and innovative storage and warehousing solutions.
Managing omnichannel information flows
Maintaining and tracking customer data is crucial to optimizing your omnichannel retailing strategy. For example, if a customer buys a membership online and then later visits the physical store to make a discounted purchase, is the information available to store employees?
Managing information requires an omnichannel and logistics approach that connects data sources and optimizes fulfillment by tracking products through the supply chain. Logistics solutions unify important data about customers, products, and processes across channels and customer service systems.
Finding software and tools for omnichannel operations
A proactive approach to omnichannel logistics requires a powerful front-end strategy for e-commerce plus IT integration of order management, fulfillment, and warehousing.
The digital supply chain can improve omnichannel operations through incremental, data-driven changes to specific areas, with BIRD technologies leading the way. Blockchain (B) establishes trust in data, Internet of Things (I) provides numerous data points, robotic process automation (R) improves data accuracy, and data science (D) extracts value.
Logistics partners offer tools for tracking and managing shipments and integrating data. Agility Connects is a flexible customer portal that offers features to optimize supply chains and produce end-to-end visibility plus data integration and order management.
Tracking technologies can offer visibility beyond basic supply chain movement, protecting sensitive products by detailing transport and storage conditions.
Integrating technologies and customer data makes customers more identifiable across systems and enhances customer experience through a tailored, long-term brand relationship. Everything from marketing attribution to sales training and customer service is easier with integrated systems and high-quality data. Digital logistics save money and improve the retail experience.
Top solution providers for omnichannel retail logistics
Top omnichannel logistics solutions meet customer expectations while optimizing both the shopping experience and the retailer’s cost of providing that high-level experience.
Integrating fulfillment and retail operations
A critical question in omnichannel retailing is how to achieve inventory visibility to fulfill orders effectively and integrate customer touchpoints before and after a purchase.
Retail supply chains should center the customer and support multidirectional inventory flows, according to Supply Chain Quarterly. Retail stores must develop omnichannel capabilities across teams. This means building relationships and skill overlap between supply chain professionals, fulfillment and retail staff, and buyers to equip stores and operations for omnichannel fulfillment.
Integrating complex processes and large quantities of data is intimidating, but a logistics partner can provide strategies and technologies at each step.
Agility helped a manufacturer and distributor of electrical equipment and lighting manage eleven brands and achieve 100 percent stock accuracy and transparency through an integrated, cost-saving approach to warehousing and inventory.
Building efficiency through supply chain logistics
As more retailers embrace an omnichannel supply chain, logistics companies are innovating and responding with new services that address the delivery challenges of an omnichannel approach.
Logistics service providers are also helping companies expand their geographic reach, partner with firms that fill critical service gaps, and invest in digital omnichannel distribution and fulfillment solutions. When logistics companies partner with other service providers, they can offer new tools and cost-saving options and help businesses deliver higher customization.
The ideal logistics partner also optimizes sustainability and positive impacts on local communities.
Exploring value-added services
A logistics company with global infrastructure and partnerships can assist with inbound logistics, including receiving, customs support, and quality checks. They may also provide value-added services such as special packing and product labelling.
Packaging solutions are important at the fulfillment stage of the omnichannel supply chain when suppliers must locate available inventory, ensure it’s branded consistently across distribution channels, and optimize shipments for transport.
Finding an omnichannel retail logistics partner
Whether large or small, established or start-up, any business can benefit by incorporating logistics management into their supply chain strategy.
Agility is one of the world’s largest integrated logistics providers and the largest private owner and developer of industrial real estate in the Middle East and North Africa. An experienced Agility team can analyze your business, apply predictive analytics to find improvement opportunities, design customized solutions, manage implementation, and provide quality assurance.
Optimize your supply retail chain today by contacting Agility for logistics solutions.