Savvy business owners and logistics providers are adjusting their processes and testing out various fulfillment processes, workflows and strategies (including omnichannel fulfillment) to accommodate and effectively meet the demands of an informed consumer base.

To help you scale, stay ahead of the competition and cope with growing consumer expectations, let’s explore what omnichannel fulfillment is and why it is important.

What is omnichannel fulfillment?

Omnichannel fulfillment is a centralized strategy that enables businesses to streamline and seamlessly execute the order fulfillment process (receive, warehouse, process, pick, package and ship customers’ orders) across multiple channels. This strategy allows logistics providers to remain agile, optimize their fulfillment workflows and efficiently handle/dispatch orders received from multiple selling channels within a single facility.

Essentially, omnichannel fulfillment enables you to automate, simplify and speed up order fulfillment activities to increase customer satisfaction and boost your bottom lines in today’s incredibly competitive marketplace.

A centralized approach to inventory management is a core tenet of omnichannel fulfillment. An integrated inventory tracking system allows businesses to redistribute and reallocate inventory to multiple channels, enabling customers to easily find, order and receive items via their preferred channel. As such, businesses don’t have to set up separate order fulfillment infrastructures for individual sales channels.

The importance of omnichannel order fulfillment

As e-commerce sales volume continues to grow, a lot of online stores now struggle to handle the growing number of customer orders they receive from multiple buying channels. The proliferation of consumerism is also making it difficult for e-commerce stores to enhance the customer experience while keeping bottom lines healthy. This is where an omnichannel fulfillment approach comes in. Let’s take a look at a few of the biggest benefits of leveraging omnichannel fulfillment.

Reduces the cost of exploring alternative sales channels

At its core, omnichannel fulfillment uses an integrated process to optimize logistics and supply chain operations to efficiently fulfill orders across multiple channels. This approach enables brands to reduce shipping time and enhance the customer experience by leveraging a hybrid delivery approach (for example, using physical stores as fulfillment centers). As such, brick-and-mortar retailers can expand into e-commerce without having set up a new network of physical fulfillment centers and warehouses. They can use their already existing physical infrastructure to increase their online reach.

Boosts the customer experience

An omnichannel logistics strategy allows businesses to combine their inventories for online and offline sales channels and integrate the entire process into a unified entity. With this, you can provide customers with unrivaled access to inventory across all channels, real-time tracking options and quick order fulfillment, thus creating a streamlined shopping experience. Improved customer experience leads to higher customer satisfaction, which translates into customer loyalty and increased sales.

Enables flexible fulfillment options

Omnichannel order fulfillment avoids a linear fulfillment process (warehouse – store – end customer) in favor of a more agile and flexible workflow. Omnichannel fulfillment enables businesses to process and deliver orders via a combination of various channels, including:

• Store-to-customer
• Customer-to-store
• Warehouse-to-store
• Warehouse-to-alternative pick-up location
• Customer-to-warehouse
• Warehouse-to-customer
• Store-to-store

Allows businesses to explore new sales channels

A unified fulfillment process and integrated sales channels (both hallmarks of omnichannel fulfillment) make it easier for businesses to remain agile and optimally manage their supply chains for better cost and process efficiencies. Using a real-time warehouse management system and a holistic approach to fulfillment operations enable brands to explore new sales channels with ease.

Frees up time and resources

Order fulfillment is one of the most crucial components of an e-commerce operation. As online shopping becomes the norm and orders continue to increase, businesses need to properly manage inventory to ensure that customers’ orders are filled accurately. They also need to ensure timely delivery of customers’ orders, as well as handle marketing, sales, HR and other essential business activities.

Tracking your inventory in real-time can quickly become a hassle, especially if your sales channels have several touchpoints that require independent inventories. The omnichannel fulfillment approach solves this problem by integrating inventory for both online and offline channels.

Combining this approach with warehouse automation solutions helps reduce the time, cost, and hassle of executing core fulfillment activities and managing your inventory. For instance, 6 River Systems’ autonomous robotics solution streamlines fulfillment processes by guiding warehouse associates through work zones to minimize walking and directing associates through each task to improve efficiency and accuracy.

One leading fitness retailer leveraged 6 River Systems’ solution to manage 100% of its order volume across its U.S. distribution network, realizing performance gains including a 135% improvement in pick rate and a 50% reduction in in-aisle walking. Training time for new associates to reach target performance goals shrunk from three to four weeks to just one day, and the retailer also realized a reduction in worker fatigue and improved employee retention.

Looking ahead

Inventory management is an essential part of every retail/e-commerce business operation. Omnichannel order fulfillment combines a holistic approach to inventory management, fulfillment operations, marketing and sales channels to help brands improve accuracy, delivery speed and the overall shopping experience.

Learn how to jump-start your retail fulfillment operations and support next-gen fulfillment by downloading our white paper, How to Jump-Start Flexible Retail Fulfillment for Today’s Multi-Channel World.

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According to BRP’s 2019 Unified Commerce Survey, 87% of consumers want a personalized and consistent experience across channels, yet only 71% of retailers have plans that allow consumers to start and complete purchases on different channels. For example, just 28% of retailers offer a shared cart across channels, such as desktop browsers and mobile devices, making it challenging for consumers to shop on their mobile device and complete a purchase on a desktop or laptop. Here’s a look at some common omnichannel retailing challenges and three ways to solve them to increase profits.

Multichannel vs. omnichannel retailing

Many retailers today offer multichannel retailing, allowing consumers to make purchases and engage through their preferred channel, such as an eCommerce website or a brick-and-mortar storefront. However, multichannel retailing treats each channel as a silo, which can lead to a disjointed experience for consumers who make use of multiple channels throughout the buying journey, such as browsing an eCommerce website to locate products of interest and then making the purchase at a nearby brick-and-mortar store.

In the case of multichannel retailing, a product purchased through one channel typically cannot be returned through another channel. For example, if a customer purchases a clothing item online, they may not be able to return it to the retailer’s physical store.

Omnichannel retailing requires back-end integration between communications, promotion and distribution. That means customers can browse products on a website, make a purchase later through their smartphone, and then eventually pick the product up in a physical store. Omnichannel retailing and puts the customer at the center instead of the product, providing inventory visibility and seamless shopping and customer service experiences across every channel.

In omnichannel retailing, customers can check local inventory on their smartphone before visiting a brick-and-mortar retail store or make a purchase online and pick it up in a physical retail store within a few hours. When shopping in a physical retail store, they can use their mobile devices to compare prices and read product reviews before making a purchase. Rather than a series of distinct, siloed shopping experiences, every channel is interwoven and connected in omnichannel retailing. There are plenty of compelling reasons to adopt omnichannel retailing, including:

• Increased profits: According to Harvard Business Review, 73% of customers use several channels during their shopping journey. A study of 46,000 shoppers found that omnichannel customers spent an average of 4% more on every shopping visit to a physical store and 10% more online compared to single-channel customers. For every additional channel customers used throughout the buying journey, they spent more money in the store. Customers who used 4 or more channels spend 9% more on in-store purchases compared to single-channel customers.
• Better customer experience: There are customers who don’t shop online but prefer to visit the store. Some may have no time to visit, so they order online. With omnichannel, customers have the freedom to interact with your business any way they want. The COVID-19 pandemic highlighted this strength of omnichannel retailing, with retailers not limited to physical stores and those already set up with buy online, pick up locally options having a competitive advantage. Moreover, customers can switch channels for convenience or personal preference.
• Customer loyalty: In the same study reported in Harvard Business Review, omnichannel customers had 23% more repeat shopping trips within 6 months compared to those who used a single channel. Omnichannel customers are also more likely to recommend the brand, leading to more sales and increased profits.

How to solve the biggest omnichannel retailing challenges to boost profits

Despite the benefits, omnichannel retailing is not without any risks and challenges. According to a study by 1WorldSync, cross-channel commerce challenges resulted in 45% of sellers and suppliers losing more than $1 million in revenue and another 13% losing more than $3 million. To succeed in omnichannel retailing, businesses must break down the barriers between online and physical stores. Here are three ways to solve the biggest omnichannel retailing challenges to boost profits.

Integrate offline and online platforms & channels

Having excellent products isn’t enough to keep customers. In multichannel retailing, a business may be managing fewer channels, and typically, one channel is paramount over others and given the most focus. But in omnichannel retailing, neglecting one channel risks losing customer engagement, sales and loyalty.

To succeed in omnichannel retailing, retailers should integrate their online and offline platforms for a seamless shopping experience. Marketing strategies should incorporate all channels and provide a unified brand experience across all touchpoints. Retailers should also ensure that all channels have equal amounts of control and distribution.

Update technologies and processes

Obsolete technologies and processes lead to a host of challenges for retailers, such as slow or unresponsive websites, delays and lengthy queues for in-store pickups and obsolete order tracking processes that leave customers in the dark about where their purchases are and when they’ll arrive. Manual processes in warehousing and distribution bog down order fulfillment processes, and staff shortages, especially during peak times, compound these issues.

Retailers adopting an omnichannel retailing model should update their technology and other investments to ensure that their infrastructure is up to the task of managing omnichannel complexities. One global home goods retailer streamlined omnichannel fulfillment by implementing 6 River Systems’ collaborative robotics solution. With eCommerce driving most of the retailer’s fulfillment needs, the retailer struggled to dedicate adequate resources to store replenishment. In just three months after implementing 6 River Systems’ collaborative mobile robots, the retailer realized a 62% increase in pick rates and ensured greater accuracy in ordering, resulting in fewer mispicks and happier store managers.

Collaborative mobile robots are a flexible automation solution that’s faster to implement and less costly compared to traditional automation systems, such as conveyors. Collaborative robotics companies like 6 River Systems also enable warehouse operators to rent additional units to accommodate demand during peak periods and return them when demand returns to baseline, making it possible for omnichannel retailers to adapt to shifts in demand with ease.

Optimize inventory management

Poor synchronization and the disuse of data leads to retail inventory management challenges (duplicate stocks, overstocks, out of stocks, supply-demand discrepancies). Retailers who prioritize inventory allocation and management on the most active channels miss out on sales from less-active channels.

For example, if a retailer can’t fulfill a buy-online, pickup in-store (BOPIS) order because the item is out of stock due to in-store purchases, that is a negative experience for the customer. When customers are unhappy, there’s a 91% chance they won’t do business with that company again. What’s more, dissatisfied customers tell as many as 15 to 20 people about their negative experience, which can damage a retailer’s reputation.

Prioritize making your inventory visible across all channels, ensuring that SKUs are consistent across channels for easy recognition. Watch out for overstocking or duplication of stocks. Balance the stocks between physical and online shops by reducing the availability of high-velocity products on online channels, while maintaining steady replenishment with optimized re-order points. Streamline your order fulfillment to meet customers’ delivery expectations and provide an efficient returns process, processing returns and replacements through all channels, regardless of the purchase channel.

Wrapping up

With the challenges brought by the COVID-19 pandemic, going the omnichannel route is likely to pay off for many businesses. By addressing common omnichannel retailing challenges with full channel integration, the right technologies and processes, and inventory management practices that are up to the task of meeting omnichannel expectations, retailers can provide a positive, seamless customer experience that drives sales, increases customer loyalty and boosts profits.

Check out our webinar, Optimize Fulfillment with Collaborative Robotic Picking, to learn more about how collaborative mobile robots like Chuck by 6 River Systems can help your company meet the demands of omnichannel retailing by speeding fulfillment processes.

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