Understanding the Omnichannel World
The modern shopper expects businesses to be available anytime they need. Brands should take advantage of omnichannel processes if they want to create the ‘always on’ environment needed to compete in the market.
But what actually is omnichannel, and how can you implement it into your business?
What is Omnichannel?
An omnichannel approach to logistics allows businesses to create a fulfillment network for both online and in-store sales. Everything from warehouse locations to inventory optimization is used to fulfill orders as quickly and as efficiently as possible. By doing this, businesses can improve their customer satisfaction and boost their economic performance.
However, there are several tradeoffs involved in integrating omnichannel logistics. Businesses need to find the perfect balance between inventory management and the facilities available within their network.
4 Omnichannel Network Designs
There are several omnichannel network designs that are commonly used across the world. The first option is the standard ship-from-warehouse option. Warehouses are used to fulfilling online orders, as well as ship stock to physical stores.
The second is ship-from-store. This can be beneficial for getting product to customers quicker, as long as they are in close proximity to the store. This is particularly good for businesses that have a huge selection of physical stores dotted around the country. The store will be used to sell to both online and in-store customers.
Store backhaul is the third option. If an item is ordered online and available in a store, the product can be sent back to the warehouse to be processed. All online orders will be dealt with in a ship-from-warehouse design, but inventory can be replenished using local store stock.
Finally, businesses can use a mixture of shipping from warehouses and stores. This is where inventory management can become hugely complex, as staff (or computers) will need to stay on top of stock levels pretty robustly.
Tradeoffs in the Omnichannel World
Businesses of any size can benefit from the omnichannel approach and see significant growth as their customer service improves. However, there are a few tradeoffs required.
Creating multiple fulfillment centers in key locations, for example, can be a great way to reduce transportation costs, as well as CO2 emissions. However, establishing these sites requires additional operating costs and the need for inventory at every location.
Using both the warehouse and physical stores to fulfill online orders can help your business reach new customers faster, and reduce the need to pay out for premium, priority shipping. However, the more locations you use for fulfillment, the more complex your business processes become. Stores can often have stock inaccuracies or may be limited on the space needed to pack and ship orders.
The best option for businesses just starting up is often to stick to using warehouses or an ecommerce fulfillment center.
In the modern world, there are constant advancements being made to create new omnichannel processes. Dark stores, click and collect, and same-day shipping are all part of these developments, with the pandemic bringing a strong focus onto the market. Over the past year, online customer demands have increased, and businesses have had to heavily adapt in order to stay afloat. All of this will lead to omnichannel becoming ever-present in the post-pandemic world, so make sure your business is on board.