Until about a decade ago, a physical store was the only destination where retailers could meet their customers. But, gradually with the emergence of eCommerce and mCommerce, the proximity and availability of the retailer has become irrelevant. However, this dramatic change has not resulted in a concurrent change in the retail delivery organization which still thinks in terms of fixed "origin" and "destination" within their silos.
What this means is that the division managing catalogue sales has its own inventory, warehousing and delivery systems to manage that are distinctly different from the divisions managing stores, call centers, online portal, mobile, TV, kiosk, etc. Retail must free itself from the concept of channel-based customer service and delivery. Customers themselves want a unified Omni channel experience, so why should the retail delivery organization lag in meeting those expectations? Besides, using the potential of Omni channel integration, retail can ensure that delivery costs are reduced and customer satisfaction is improved. Many retail organizations are leveraging their warehouse, stores, and distribution partners to provide customers with same-day and next-day services in an Omni-channel environment. How do they do it?
Let’s look at a simple case to understand what this means. Imagine you, as a customer, place an online order with a store for a linen shirt. The online channel transfers the order to its sales team which then alerts the warehouse to ship the product. Delivery of the linen shirt could take anywhere between 5 to 18 business days to reach the customer. How can this process be improved to reduce delivery time and cost?
One way to reduce time and cost is to provide the online channel with visibility to inventory across its channels. A brick and mortar store may be closer to the customer than the warehouse of the online division. In such an event, the order could simply be transferred to the brick and mortar store that could then potentially home deliver the product overnight, at considerably reduced costs.
Systems can even be created to recognize the fact that the customer passes the brick and mortar store on the way to work (what retailers need is data analytics to manage such high responsiveness) and can perhaps be given the package on the commute to work or back. This is an extreme case, but it demonstrates the course retailers must aim for to fine tune their delivery organizations.
The big challenge is that retailers operate their channels as different business units. Most retailers, for example, manage replenishment to their stores and to their eCommerce channels separately. This was good in the past that demanded limited replenishment capabilities. For example, store replenishment would be created around palletized orders. eCommerce fulfillment would be around individual orders. In an Omni channel environment, retailers must build systems around unified supply chains that allow flexibility in terms of fulfilling orders as well as managing returns, regardless of the channel used by the customer.
Imagine that after you get the linen shirt, it turns out the color is not right and you want it returned. As a customer, you should be able to return it at the closest brick and mortar store of the retailer or send it back by post to the nearest warehouse. Today, in most instances, this cannot be done because channels lack integration. Integrating these rigid business units and building a unified merchandizing system that embraces forecasting, visibility, supply chain, logistics and returns, removing the silo effect, is the key.
Perhaps the weakest link in a unified Omni channel strategy is logistics. This demands a high level of integration with logistics partners in order to ensure low cost and faster home deliveries with adequate oversight.
One way is to look at this as a technological issue. Systems need to be integrated, data shared, visibility into the supply chain improved, communication enhanced, and unified dashboards made available. But our experience shows that while technology can be created to manage faster and cheaper home deliveries using cross channel strengths, organizations must equally be ready to adapt to the process changes this spells.