At a high-level, omni-channel refers to the ability of a retailer to offer a consistent shopping experience across multiple channels, whether it is a physical store, an online store, or via social media. More specifically, omni-channel fulfillment¹ describes the multi-channel integration of in-store (brick and mortar) shopping with information offered by back-end, web-enabled systems.
This configuration allows for consumers to shop in-store or to view items via the retailer’s website(s). When shopping online, consumers can select products from individual store and distribution centers’ inventories, giving the online consumer the options of having their orders shipped from a distribution center or a store, as well as allowing pre-purchase of items for in-store pickups. Customer information may also be retrieved by staff members at various locations, to enhance the overall client-experience.
The definition of omni-channel, in writing, sounds relatively simple, but the scope of this definition covers a huge amount of business processes. From online and physical shopping, to inventory management, fulfillment, customer service and reverse logistics (returns), implementing an omni-channel solution can be a massive and complex undertaking.
Therefore, for the purposes of our discussion focusing on logistics, we will narrow the topic to omni-channel supply chain, specifically fulfillment.
How and Why Omni-Channel Distribution Evolved
In the pre-eCommerce days in a retail company, the inventory at the distribution center (DC) was used for replenishing the physical stores, where it could then be purchased by the consumer. When eCommerce started to grow dramatically, many companies pivoted and began using their distribution centers to also fulfill eCommerce orders as well as replenish stores.
Over the last few years, the term “omni-channel” has become one of the most used buzz words when referring to retail sales Experts regularly extol the virtues of omni-channel delivery as a distribution practice and facilitate the belief that any retailer that wants to survive the next decade will need to adopt at least some sort of omni-channel strategy.
Omni-Channel and Inventory Visibility
A true omni-channel solution provides a company with full visibility into all of its inventory, whether it’s in a distribution center or a brick and mortar retail store location, and thereby making it possible to source inventory from any of its facilities and fulfill orders from the entire inventory pool in the most efficient way.
For example, a shoe company with a DC in Los Angeles and retail stores throughout the country including Austin, TX receives an online order from a consumer in San Antonio, TX.
With an omni-channel fulfillment solution that offers inventory visibility at all locations, the shoe company could fulfill that online order from its Austin store instead of the DC in Los Angeles. This would result in cheaper freight due to the shorter distance, as well as the shoes arriving to the consumer faster, resulting in a better customer experience.
Is Omni-Channel Fulfillment Right for Your Company?
Again, at a high level, this seems like a huge advantage for the shoe company, and it can be. However, there is much to consider when looking at moving to an omni-channel fulfillment model. Questions to consider include:
- Do you have a way to reserve individual store stock for instore shoppers so it isn’t all used to fulfill online orders?
- Will it require extra staffing (or training) to now ship from your stores?
- Can your IT system ship from store?
- Would it be better to choose certain stores per region with larger back rooms to act as mini DCs and limit fulfillment activities to only those stores?
While each company must consider what sort of omni-channel solution would be the best fit for them, if you are evaluating an omni-channel program there is a great deal to consider. While all of this appears very logical, should you decide to implement an omni-channel logistics solution you’ll have many questions to answer and policies to discuss.
If you need any assistance in making or reviewing these decisions, our team at Creative Logistics Solutions is always happy to help answer any questions you might have regarding omni-channel or other fulfillment models, and how to configure your multi-carrier shipping system for omnichannel shipping.
¹ Wikipedia definition of omni-channel fulfillment.