What is Omnichannel Fulfillment? Benefits and Risks of an Omnichannel Strategy
September 25, 2019
What do you want to learn?
One of the most predominant shifts in the last decade has been the need to realign retail fulfillment to the changing needs and demands of the consumer.
Omnichannel retail has become the next big leap for brands of all sizes and has led to a broad rethink of how to ensure customer satisfaction and ongoing brand loyalty.
Consumers in the digital age expect their experience with businesses to be seamless from an initial product search right through to after-care.
The rise of ecommerce has only served to make that goal more challenging to meet. When efficiency and profitability are vital, omnichannel fulfillment is no longer an option but a necessity for brands that want to grow.
What is omnichannel fulfillment?
Omnichannel fulfillment is a lot more than a phrase; it is a method for fulfilling customer orders that have come from a variety of sources and a strategy that takes advantage of those multiple channels.
Channels may involve warehouse fulfillment, in-store product pick-ups, home delivery, or any other way to get a product into the hands of a consumer.
Different from traditional methods of fulfillment, omnichannel makes sure that the right product is found, product allocation is optimized, and delivered to the buyer as seamlessly as possible.
When consumers can buy in such a wide variety of ways, and from a wide variety of platforms, there are almost a limitless number of permutations that need to be taken into account.
Omnichannel fulfillment is about making the right shipping choices every time without the risk of things going wrong.
Types of omnichannel fulfillment strategies
An order management system allows a business to establish their own rules to match their brand image. These rules ensure that the best fulfillment strategy is used across the full scope of the business. Here are the three main forms that omnichannel fulfillment takes:
Third-party logistics (3PL) providers are an excellent option that covers almost every aspect of omnichannel fulfillment. Customers place their orders with you, and the 3PL provider fulfills that order.
It’s a quick, seamless process that acts as a link between the business and the consumer, and is one of the most beneficial forms of outsourcing available to modern brands. This is evident in the rising number of 3PL providers, as well as the ongoing growth of dedicated ecommerce solutions.
Taking on many of the traditional concerns and tasks of the business itself, 3PL providers take charge of inventory and shipping, meaning that you can focus your attention on the customers themselves.
A less efficient method for fulfilling orders, warehouse fulfillment is when a business leases or owns its warehouse facility and ships customer orders directly from that location. That leads to issues with space and inventory management that can become a time-consuming and costly approach.
While some businesses use this method from their own facilities, there are also a growing number of warehouse providers that allow you to lease out the space that you need. The risk is that the costs of inventory storage and shipping can outweigh the value that you get from them, as well as the ongoing costs that may impact your overall ability to trade.
For those businesses with their own physical outlets, this option means keeping stock within the store until it needs to be shipped. This use of a brick-and-mortar store as a central hub for order fulfillment can be a useful option for smaller businesses.
It takes the physical resources that you already have and transforms them into a warehouse and distribution center. This can be advantageous, but it also gives rise to some challenges.
One of the most consistent is that retail outlets do not tend to have the systems and equipment in place to operate a fully-functioning fulfillment center, or to access real-time visibility into stock levels and returns management capability.
Omnichannel fulfillment boasts big benefits
There are many benefits to using a more proactive omnichannel fulfillment strategy. For the modern business that sells across a variety of platforms, establishing and delivering that seamless service that consumers demand is a vital stage of business development. With the right fulfillment strategy, businesses benefit from:
1. Higher order efficiency/accuracy
Fulfillment becomes much easier to ensure as it streamlines multiple channels into a single process. This leads to improved efficiency, more accuracy in the delivery processes, and a seamless shipping system.
2. Happier customers
Modern customers expect immediacy. Omnichannel fulfillment means that they can receive their home-delivered goods faster, or opt for in-store pickup if they prefer. When consumers expect the best service at the best price, omnichannel fulfillment keeps them coming back and more willing to return to your digital and real-world outlets.
3. More accurate reporting
When you use a 3PL, you have a provider that will oversee all of your channels. It means you get access to instant reporting that can highlight your most important channels and identify the ones that will require improvements.
4. Stronger brand image
Customers want to know that no matter where they are, they will have access to your product. They want to have the option of in-store pickups, home delivery, or real-world store browsing. Those channels all need to be consistent if you wish to maintain your established brand image, such as Target. As in-store pickup, delivery, and regular shopping is consistent; this builds Target’s reliable brand image.
The risks of adopting omnichannel
An omnichannel business is not without its risks. Identifying and avoiding those risks is possible with the right approach and an awareness of where things can go wrong.
Hard to adopt without similar fulfillment strategy
It can be a challenge to implement and launch an omnichannel strategy if you lack the necessary infrastructure. This is why it is the medium to large business models that are making the most of this method, and making greater use of established channels and proactive fulfillment partners.
Less than optimal store communication
Communication is the key to a more streamlined fulfillment strategy. For businesses that use brick-and-mortar stores, it can be more challenging to get that vital communication in terms of inventory and on-demand delivery. Synchronization is the key to an effective omnichannel strategy, and without access to the available resources, that strategy can collapse and fall apart.
ShipBob can help you build your omnichannel strategy
ShipBob makes it a seamless process for you to sell your products across a multitude of platforms and channels. They combine inventory management software with nationwide fulfillment to help get your products where they need to be. Best of all, it integrates seamlessly with Skubana, a leading multichannel inventory software.
Omnichannel fulfillment is more than just a business buzzword. It is a transition to a customer-first approach that allows you to take charge of the consumer experience. In the business climate of today, omnichannel fulfillment enables you to excel where you need to excel and deliver the service that your customers demand.