New Logistics for a New Culture: Omnichannel Solutions Drive Retail Success
The culture of retail has been evolving for decades. In the 90s, the growth occurred in brick-and-mortar stores; from 2000 to 2010, retailers had to shift their focus to offer better online shopping experiences; and this decade is all about the evolution of omnichannel. Today, retailers are charged with creating the ideal shopping experience everywhere. For consumers, it must be seamless and simple no matter where their purchases take place.
This transition is happening very quickly, and some retailers are even shrinking floor space to accommodate their growing online customer base. Even more telling, some retailers are seeing 75 percent of sales coming via their mobile apps. And according to Forrester Research, by 2017, 60 percent of U.S. retail sales will involve the internet in some way.
Since online purchases can happen anytime and anywhere, if a consumer can't find what he or she is looking for, retailers must respond swiftly and efficiently to help them within their distribution network. The most successful companies will be the retailers who make it the simplest for their customers.
More Than Just a Store
Every omnichannel solution starts with bringing inventory closer to the customer — wherever they may be. With two-day shipping the industry standard, this is vital. Simply put, if a customer orders something online, they expect to receive it in two days. Some retailers meet this expectation by shipping directly from their stores. The challenge, however, is ensuring that the stores function at maximum efficiency, like a "mini distribution center."
Typically, this is where a strong third-party logistics (3PL) partner can add value. 3PL providers can support retailers by managing the complete ship-from-store function. This means identifying the appropriate space and staff allocation and ensuring that picking and packing are done right. When inventory management, fulfillment and shipping are accurate and efficient, retailers can focus on what they do best — delivering a great customer experience for shoppers visiting their stores.
DOM Rules the Supply Chain
Distributed order management (DOM) is another key to a sustainable and efficient omnichannel solution. DOM creates an intelligence layer across all distribution channels, allowing retailers to fulfill an order from the most optimal location. It includes all of the business rules that inform shipping locations, a retailer's inventory options, shipping costs and the ultimate impact that these elements have on customer satisfaction. The right 3PL partner knows how to devise and implement DOM to overcome the challenges of legacy inventory systems, address cultural challenges and ensure that you can track inventory accurately across the entire supply chain. By leveraging a DOM strategy, retailers can also avoid huge losses by eliminating the markdowns often required to move merchandise.
When it comes to ensuring the best customer experience, returns management is another important element of omnichannel success. Consumers want to be able to buy online, have the option to return in-store and, if necessary, place an alternative order and have it shipped directly to their home. With an effective returns management system, driven by intelligent software that tracks every SKU sold through any channel, retailers can deliver on the promise of a truly seamless omnichannel solution.
Most retailers understand that omnichannel is essential to their current and future success; they're already working toward solutions that make them more competitive. In the end, the biggest winners will adapt the fastest and most universal to meet all consumer demands. The time is now for retailers … your customers are waiting.
Curt M. Bimschleger is the senior vice president, retail logistics, at GENCO, a third-party logistics provider for retailers.