The days of consumers driving to retail outlets and selecting products from what’s available have faded in our rearview mirrors. That’s largely because e-commerce platforms exceeded $5.7 trillion in the U.S. last year and are expected to top $8 trillion by 2027. This trend has been a red flag for brick-and-mortar retailers and companies that rely on limited product supply chains. Omnichannel logistics has been trending high as decision-makers search for customer satisfaction solutions in a fast-evolving retail landscape.
What is Omnichannel Logistics?
Most retail store owners and operators are not necessarily immersed in software and technology-driven omnichannel logistics operations. To understand omnichannel logistics, it may be best to steer away from much of the confusing technical jargon and insider terminology.
Let’s consider a real-life scenario that your operation may have already experienced. Someone visits a brand’s website and is ready to purchase a product. They want to physically experience it. Noticing your outlet carries this brand, they travel to the store and discover it can only be ordered online. The annoyed customer not only goes somewhere else, but they also post a negative review about your operation.
An omnichannel logistics approach avoids this unfortunate interaction by syncing your inventory and order fulfillment capabilities with in-store availability, online-only options, warehouse stock, and third-party partners. In other words, when potential customers see the item they want, they know precisely what to expect and how to get it.
Integrating three or more product pathways typically results in an astonishing rise in orders, compared to outlets relying on a single channel. Today’s consumers are fully aware they can make purchases how and where they desire. The question is: Will those sales improve your bottom line or a competitor’s?
Benefits of Implementing Omnichannel Logistics for Retailers
Onboarding omnichannel logistical solutions differs significantly from other types of technology-based approaches to increased sales and increasing customer loyalty and satisfaction. Unlike programs that track inventory and manage revenue, it bundles the best aspects of wide-reaching digital retail tools into a highly efficient and unified sales driver.
Ranked among the most cost-effective and scalable options available to retailers, an omnichannel distribution strategy helps mid-market companies level the playing field with e-commerce giants and big box competitors. When everyday people visit your outlet or website and make a successful purchase, they are far more likely to return. To accomplish the following seemingly Herculean feats in a global economy, omnichannel logistics is a necessity.
Seamless Customer Experience
Omnichannel places a laser focus on the customer experience. Rather than turn people away because you have a product on backorder, you can provide a seamless experience by leveraging third-party logistics options and working in concert with trading partners.
Increased Customer Satisfaction and Loyalty
There are a variety of ways that omnichannel supply chain solutions can maintain and improve customer loyalty. Inventory management precision can let people know you have a particular item. They can physically experience the product, or you can ship it to them directly. In another scenario, your logistical insight allows you to communicate when it will arrive. Lastly, you can check its supply chain position and pivot to another channel to complete the transaction satisfactorily. All of these customer-first approaches garner loyalty.
Improved Inventory Management
Knowing what you have in stock and estimating when to reorder doesn’t have to be a matter of guesswork. Today’s supply chain management is deeply immersed in IoT (Internet of Things) technologies. Small devices and tracking networks are available to growing retailers. By tapping into real-time data through omnichannel technology, you can pinpoint shipments. Knowing where products are located and how long they take to arrive at your loading dock is the only way to ensure consistent inventories. It also reduces costs associated with overstocked items.
Enhanced Order Fulfillment
To say short attention spans plague online consumers would be something of an understatement. When someone is on your platform, ready to check out and they receive a text message or social media notification, it’s not unusual for them to tap the screen and forget all about that impulse buy. The good news for omnichannel retailers is that the system can keep that item in the cart until they return. And once they check out, products do not necessarily have to come from your address. They can be shipped from the nearest third-party logistics partner.
| Benefits | Challenges |
|---|---|
| Seamless Customer Experience | Inventory Syncing and Management |
| Increased Customer Satisfaction and Loyalty | Reverse Logistics and Returns Handling |
| Enhanced customer satisfaction | Last-Mile Delivery Efficiency |
| Improved Inventory Management |
Overcoming Common Challenges in Omnichannel Logistics
The greatest hurdle busy retailers face often involves maintaining a supply chain flush with products. Too often, store managers discover they cannot simply call or message their warehouse partner for quick delivery. Empty shelves, or the risks associated with overstocking, may be shrugged off as the only way to do business. Omnichannel logistics presents similar challenges for mid-level retailers who are not well-versed in the IoT approach.
Inventory Syncing and Management
The logistical challenges involved in maintaining a steady supply of goods and readying distribution points are genuine. Purchasers and other inventory decision-makers may feel overwhelmed by the prospect of managing stock across multiple channels. Syncing and managing inventory becomes a full-time job, particularly when it involves three or more channels.
Companies typically require third-party support to handle the changing landscape. Onboarding 3PL organizations at a scalable rate helps shepherd operations through busy periods and tap the brakes during seasonal lows. Working with 3PL professionals can resolve issues and help a brand keep promises such as “next-day delivery.”
Reverse Logistics and Returns Handling
E-commerce giants such as Amazon have won high praise for their ability to accept returns with a seamless process. Not only does the world’s largest digital retailer earn customer satisfaction props, but it also adds branding to the way it handles reverse logistics and returns.
By contrast, many brick-and-mortar retailers only take returns at a physical location. Consumers once understood that was the only viable option. That ship has sailed. People in urban and suburban communities prefer to slap a label on the box and drop it at a convenient location. In rural areas, residents want to label returns and place them in the mailbox for a mail carrier.
Onboarding a 3PL outfit to manage the shipping and tracking back through the supply chain helps companies compete on the return side of online sales. Third-party logistics organizations can manage this aspect as retailers address the scalable fees like any other pass-through cost.
Last-Mile Delivery Efficiency
Both e-commerce platforms and big box retailers address last-mile deliveries in essentially the same way. More extensive operations use a mix of employee delivery personnel and third-party partners. But for upstart and mid-sized retailers, doorstep delivery has been a thorn in their side. The omnichannel approach is an absolute game-changer in this regard.
Some of the best last-mile order fulfillment strategies include working with third-party delivery companies and independent contractors. Your operation doesn’t have to suffer delays and missed sales opportunities. The technology is available to tap local companies and have them carry products on the last leg of their journey.
It’s important to keep in mind that omnichannel logistics doesn’t just digitally pass the baton in a supply chain relay race. The next-gen approach also tracks inventory in real time, and the right 3PL operation can establish efficient regional and last-mile distribution routes. In a nutshell, omnichannel thought leadership is about doing it better, faster, and at a lower rate. Business professionals know precisely what that does for their P&L ledgers.
Best Practices for Successful Omnichannel Logistics
Leveraging omnichannel distribution methods does not happen in a vacuum. Real people drive the decision-making process. That’s why experienced professionals in the retail sector need to be involved, even when portions or the entire manufacturer-to-doorstop process are managed online. These rank among the best practices companies would be well served to consider when leveling up their operation.
Utilizing Data Analytics and Automation
The advanced analytics integrated into the omnichannel system provide critical data for inventory and sales decision-makers. Sales tracking information highlights product trends and customer demands, with intelligence articulating where, when, and how. A savvy purchasing agent or inventory administrator can also leverage automation to oversee consumer goods that are considered staples.
Seamless Integration of Physical and Digital Channels
Successful organizations typically understand their entire team needs to move as one to achieve goals. When departments or individuals do not necessarily buy into the brand’s approach, outliers can become a drag on efficiency and profitability. In many ways, an omnichannel strategy unifies almost every aspect of a retail business.
It can track product movement from the manufacturing plant, tabulate warehouse stock, show what’s on the shelves at outlets, and pinpoint last-mile deliveries. The seamless integration of all these moving parts binds everything. A unified approach speaks volumes to the professionalism of the brand. That, in turn, helps build customer loyalty.
Providing Real-Time Shipment Tracking and Notifications
Although consumers generally expect products to arrive as anticipated, delays are a part of life. But what upends customer expectations and loyalty is not knowing when a late shipment will arrive. Part of the omnichannel solution is to provide prompt notification regarding shipments. Taking proactive measures to use automated notifications preempts what could be an otherwise angry customer.
Offering Flexible Delivery Options
Retailers cannot ignore the success Amazon enjoys through its multiple delivery options. Besides a fleet of drivers and third-party delivery services, it also uses standard mail and pick-up locations. Building out your delivery options through an omnichannel-based strategy mirrors the way large corporations grow their customer base and profits.
Financial Benefits of Omnichannel Logistics
We live and work in an environment that no longer supports the single-channel sales model. Even most grocery stores now allow customers to order online, pay digitally, and pick up their already-bagged goods. This buy-online, pick-up in-store model has spread across brick-and-mortar operations of all kinds.
In 2020, this approach to “shopping” increased by more than 100 percent in the U.S. and continues to gain popularity. It will likely have a significant influence across retailers in the coming years. Like supermarkets, other businesses can attract customers and enjoy the financial benefits that accompany omnichannel logistics systems. These are proven gains companies can expect.
- Increased Revenue: The omnichannel approach improves customer satisfaction, leading to greater brand loyalty and repeat sales.
- Reduced Costs: Adopting an omnichannel model tears down silos and minimizes an organization’s operational overhead.
- Improved Conversion Rates: Omnichannel logistics positions your operation as the go-to resource due to seamless order fulfillment.
- Scalability: Outsourcing to an omnichannel logistics provider can be balanced against seasonal highs and lows. That means it can represent a percentage of revenue.
Growing companies have an opportunity to compete with multinational corporations and expand by onboarding this innovative system. Whether you have plans to expand into new markets or dominate regional ones, omnichannel provides the competitive edge needed for goal achievement.
Case Studies: Successes in Omnichannel Logistics
There’s little disagreement regarding the results omnichannel logistics providers have played in high-profile operations. Walmart adopted the model as e-commerce giants took customers and profits away from their single-channel model. The fact mom-and-pop operations are filling orders for customer pick-up indicates the omnichannel future has already arrived. Retailers that want to flourish are tasked with integrating the omnichannel philosophy by working with a 3PL firm.
ShipCalm For Your Omnichannel 3PL Needs
ShipCalm’s omnichannel solutions create an efficient, cost-effective inventory management and order fulfillment process for retailers. We’re confident our scalable pricing options will serve your operation well. Contact us today, and let’s get the process started.
