Charting a course to omnichannel fulfillment
To meet the demands of shoppers who expect to be able to buy in the channel of their choice and receive the merchandise wherever they prefer, retailers are unwinding their channel-specific supply chains and heading toward omnichannel fulfillment. Roughly half (48%) of retailers have implemented a single commerce platform, according to Boston Retail Partners’ (BRP’s) 2019 POS/Customer Engagement Surveyi, and an additional 46% plan to have one in place within three years.
However, retailers that claim omnichannel capabilities can be at very different places along a continuum. BRP’s 2018 Customer Experience/Unified Commerce Survey2 found that only 5% of retailers have achieved "shop anywhere/ship anywhere" unified commerce, while 53% reported some amount of omnichannel integration and more than one-quarter (28%) were still in the "multichannel" phase.
"Many retailers have taken the 'just get something done' approach over the last few years to attempt to deliver a cross-channel customer experience," according to BRP. "The unfortunate result of this quick-fix approach is a 'faux' omnichannel model that doesn’t execute as promised and risks disappointing customers."
Delay is increasingly risky
It's not too late for lagging retailers to embrace omnichannel fulfillment, but as fulfillment becomes more of a competitive differentiator, it will be harder and harder to close the gap with more mature competitors.
"Pressure from competitors to achieve faster fulfillment to consumers" was retailers' number-one supply-chain challenge in both 2017 and 2018, and the portion of retailers providing that answer rose from 44% to 59% within just one year, according to Retail Systems Research’s December 2018 supply chain management benchmark report.iii
Putting off omnichannel order management implementation means delaying competitive and financial benefits. According to "Put fulfillment at the heart of the customer experience," a Forrester Consulting thought leadership paper commissioned by IBM, "it’s clear that omnichannel fulfillment is about more than increasing the efficiency of order management: It’s a conversion strategy."
More than half (51%) of 300 retail decision makers in North America and Europe surveyed by Forrester saw improvements in customer experience as a result of their omnichannel fulfillment programs. In addition, 45% of retailers recorded increased purchase frequency, 44% improved their ability to cross-sell and upsell, and 43% registered gains in overall revenue.
Partnering with store operations
Because an order management system (OMS) is integrated with so many other systems within a retailing enterprise, retailers must consider the impact of any technology change on the whole organization. But an advanced OMS can be deployed in a step-by-step approach that allows retailers to take the winnings and learnings from one implementation to ease the cost and disruption of the next, explains Jeff Geoffroy, global product marketing manager for IBM Watson Supply Chain.
Developing real-time, enterprise-wide inventory visibility is the first step any retailer must take before rolling out any customer-facing omnichannel capabilities. "If you don’t know where your inventory is or if your data is old, you cannot meet your promises to the customer," Geoffroy stresses.
Once a retailer has established a foundation of global inventory visibility, it can offer new fulfillment options that fill in the seams between its online and offline presence. Geoffroy points out that many retailers will start with buy online/pickup in store (BOPIS) or ship-from-store services, adding that this decision should involve the operations team.
The implementation pathway
For BOPIS, associates will have to learn to put together orders in the most efficient way from store and/or backroom stock, how to box or bag the merchandise and where to put orders for customer pickup. Giving consumers real-time, store-level inventory visibility is crucial for BOPIS. If customers know an item is out-of-stock while placing an online order, they can make a substitution before they set out to the store. However, at least one item is missing from the order in approximately one in eight BOPIS or click-and-collect trips, according to research from IHL Group.iv
Ship-from-store might be a less risky place to start for retailers as they develop confidence in their store-level inventory visibility, Geoffroy points out. If associates putting orders together find an item missing, they can arrange to have it shipped from another location and still satisfy the consumer. To implement ship-from-store, associates need training to prepare shipping labels, pack orders for the rigors of shipping, and organize packages for postal, UPS or FedEx pickup. Retailers also must find space for boxes, bubble wrap and other packing materials.
Once a store has BOPIS and ship-to-store up and running well, the next step is "save-the-sale," whereby associates can order out-of-stock products while the consumer is in the store and have them delivered to the customer or routed to the store for customer pickup. According to IBM research5, 81% of shoppers "expect your store associates to be able to 'quickly and efficiently' locate an out-of-stock item at an in-stock location and find a way to get it to them."
The fourth core omnichannel capability is buy online/return in-store (BORIS). Although any return could be viewed as a lost sale, BORIS offers the possibility of replacing that revenue. According to the BigCommerce 2018 Omnichannel Buying Reportvi, 67% of consumers who enter a brick-and-mortar store to return an online purchase will browse or shop while there.
Assessing your capabilities
This story has outlined the steps retailers typically take as they roll out omnichannel capabilities, but there is more to it. The Omnichannel Maturity Assessment developed by Forrester takes a deeper dive into the topic and includes an assessment tool that allows retailers to rate their organizations across 20 dimensions.
"Today, customers expect seamless interactions with brands across multiple touchpoints, forcing organizations to shed legacy ways of thinking and acting and instead replace them with new ways of doing business," according to Forrester. "However, most e-commerce leaders do not know where they are lagging most in delivering omnichannel experiences to customers... Organizations need to understand where to start, which initiatives will have the biggest impact to their business and what mature companies are doing well."
i. BRP. 2019 POS Survey
ii. BRP. 2018 Customer Experience/Unified Commerce Survey
iii. RSR. Supply Management 2018: In Service of the Customer
iv. IHL Group. Out of Stock, Out of Luck white paper
v. IBM. Consumer Expectations Soar: What does it mean for retailers? Findings from the 2016 IBM Consumer Expectations Study
vi. BigCommerce. The 2018 Omnichannel Buying Report