Omnichannel is one of the biggest buzzwords within retail – and for good reason. Retailers who implement an omnichannel approach see 91% higher year-on-year retention than those that don’t – a major advantage in a marketplace where ‘new’ customers are becoming harder to find.
But while this might sound simple in practice, developing a strong omnichannel fulfillment strategy is much easier said than done.
Omnichannel requires a high level of communication, and powerful integration between management systems to ensure channels have access to the same information. Without this, mistakes are difficult to avoid.
We’re going to run through 4 of the most common omnichannel fulfillment mistakes that retailers make in their quest for more seamless customer journeys – and most importantly, the steps you can take to avoid them.
The idea behind omnichannel fulfillment is pretty straightforward. Instead of each selling channel having a separate source of inventory, stock is consolidated into one system that’s used to fulfill customer orders across channels.
In sum, omnichannel logistics allow for a much more flexible, multi-directional operation where retailers can use a variety of strategies to fulfill orders in the fastest possible timeframe. For example, an order that’s placed online could be fulfilled by a nearby store rather than a warehouse if it guarantees faster delivery. This means a more satisfying customer experience, and in turn, more loyal customers.
For more on the definition of omnichannel fulfillment, check out our dedicated post.
The whole objective of omnichannel retail is to remove siloes between your channels for more seamless customer journeys. But this isn’t possible if you’re lacking visibility over the state of your inventory.
Integrated inventory management is essential to prevent costly omnichannel fulfillment errors that could damage your brand’s reputation. For example, if a sold-out SKU is still available for online orders, this requires you to contact customers to apologize, offer a refund, or find them an alternative product. Insufficient insight into stock levels can also result in excess inventory, which will cost you valuable storage space.
How to avoid this mistake: Using WMS (Warehouse Management Software) that integrates with both your ecommerce platform and brick and mortar location. This ensures that all of your channels are singing from the same songsheet. If you don’t currently have these capabilities, you should consider outsourcing to a technologically advanced 3PL.
If you’re a retailer with a nationwide presence, running your operation from a centralized warehouse could be doing your omnichannel fulfillment more harm than good. While it might seem easier to coordinate just one location, you’re missing out on a huge opportunity to streamline the process.
This often happens when businesses rely on having multiple store locations to play the role of pick-up points or sources of inventory. However, this makes it difficult to guarantee the same delivery timeframes to all of your customers and can prevent your business from scaling effectively.
How to avoid this mistake: A multi-node fulfillment strategy utilizes multiple facilities that are strategically located near ‘hubs’ of end customers. It’s a good idea to work with a omnichannel fulfillment provider who can coordinate these nodes on your behalf and decide which orders should be sent to what locations for the most efficient last-mile delivery.
Using your stores as secondary omnichannel fulfillment locations is a great idea – in theory. The growing popularity of BOPIS (Buy Online, Pick-Up In-Store) has led some retailers to extend in-store fulfillment to ecommerce orders as well.
The benefits of this strategy are clear. If a store with the required inventory is closer to the end customer than a warehouse, shipping is both faster and cheaper for the business (especially during the last mile). However, this can also create a range of logistical problems.
Brick and mortar locations are not purpose-built facilities, and most will lack the space needed to store materials for packing and shipping. Furthermore, they’re unlikely to have the staffing levels needed to support both fulfillment and customer care – which can cause the in-store customer experience to become neglected.
How to avoid this mistake: Stick to using your bigger locations that have the necessary space and staffing for ecommerce fulfillment to be done effectively. Also, consider hiring staff who will be working specifically on the fulfillment side, rather than splitting their time between the shop floor and the back room.
In a multichannel strategy, where each of your channels has its own inventory, warehouse management is relatively straightforward; SKUs can be organized based on which channel they’ve been assigned to. But when online and offline stock is integrated and housed in the same location, inventory management can easily become confusing and inefficient.
When SKUs are fulfilling customer orders across channels, your storage strategy needs to consider how to maximize the efficiency of picking and packing. For example, items that are in high demand through your digital channels should be housed separately from slower-moving SKUs for better accessibility and reduced walking time for staff.
How to avoid this mistake: A well-resourced fulfillment provider will allocate you a fully customizable space within their facility and carry out Continuous Inventory Profiling to assess the speed of different SKUs, ensuring optimized storage and faster fulfillment times.
Omnichannel fulfillment offers retailers some great rewards in the form of higher customer retention and more efficient order fulfillment – but it’s also logistically complex and can be expensive to implement. Partnering with an experienced omnichannel fulfillment provider ensures you’re using the most cost-effective, optimized strategy for your needs while providing the best end-to-end experience for your customers – the key to lasting success as a retailer.