Today, it’s already shifting retail paradigms and business models.
Just look at Amazon. One of the largest online retailers has officially entered the physical market. Not only did its purchase of Whole Foods last year confirm that, last week it opened Amazon Go, the first cashier-less grocery store.
Though it’s still too early to tell how successful Amazon Go will be, its very existence solidifies two things:
- Physical stores are a critical sales channel for eCommerce retailers
- Purchasing models for physical stores is changing—blending online components and technology to improve the shopping experience
Initially, the focus on omnichannel surrounded legacy brick-and-mortar retailers establishing an online presence. At first, that meant having a website and selling through it, which required a sturdy inventory and order management system. However, shipping times were longer, giving retailers more time to source and transport products. Today, increasing demands for faster, more affordable delivery means decentralized inventory, real-time information, and shorter distances from distribution center to end consumer.
36% of online shoppers start their search on one channel, but purchase on another, indicating the importance of having both a digital and physical presence.
Omnichannel is complicated. But changes in buyer expectations and behaviors are forcing retailers of all shapes and sizes to rethink their business models and the supporting technologies that can help them meet demand.
To do omnichannel successfully, retailers need a strong logistics strategy. Here are three ways retailers are mastering omnichannel retail by leading with their logistics strategy and why you should, too:
Revamping Retail Formats
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Physical retail isn’t going anywhere. It is still the most popular way to shop. We’re seeing adjustments being made to physical stores in several different ways. Target has recently opened small-format, metropolitan stores creating a new retail format that caters to both in-store shopping and easy pick-up for online orders.
Walmart just recently announced that it will convert 10 Sam’s Club stores into eCommerce fulfillment centers. Sam’s Clubs’ proximity to higher-density markets will make it easier for eCommerce orders to be delivered more quickly and with reduced transportation costs.
Offering a Variety of Delivery Options
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Retailers don’t have it easy, but customers do. Shop in-store. Shop in-store and have it delivered. Buy online and pick up in-store. Buy online with standard shipping, or two-day shipping, or maybe even same-day. Free shipping. Pick up at a locker.
The options only continue to evolve. Those options, however, create a lot of complications for retailers. Retailers have to account for multiple buying channels and ensure the right inventory is in the right place to be picked up or routed most efficiently. That means having an integrated system that updates inventory data, in real-time, across inventory and order management systems.
Once an order or purchase is complete, ensuring the order is routed and fulfilled to meet order specifications is critical. So not only are retailers responsible for offering a variety of buying options, the logistics that support those options are critical to retaining customers and keeping them happy.
Varied Distribution Formats
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Retail used to be straightforward. Be a retailer, open stores, find a centrally located distribution center, and build a client base. Not easy, but certainly more straightforward than the demands that eCommerce and omnichannel shopping has created.
Today, an omnichannel retailer could have a larger distribution network comprised of multiple warehouse formats. Big-box legacy retailers could have their massive regional DCs with a number of smaller, urban fulfillment centers that carry a select number of popular SKUs to augment their network. A brand could have a number of DCs dedicated to bulk distribution to physical stores and various online channels. A retailer with a strong eCommerce presence and dense customer market may have a high number of smaller fulfillment centers in urban areas, catering only to online purchases. And then finally, one company could have a mix and match of the above.
The point is distributions aren’t as cookie-cutter as they once were. Distribution and fulfillment footprints should be tailored to match the nature of the business and meet customer demand. In an eCommerce and omnichannel world, that may mean having more locations, with fewer square feet in order to shorten the last mile of delivery—be it to the store of the doorstep of a customer.
Traditional warehousing models were built to support the decentralized nature of eCommerce and omnichannel—it wasn’t really built to support the buying options and flexibility that customers crave.
Though today’s retailers and brands have a lot to live up to in terms of meeting customer demands, they also have a lot of technology and logistics solutions at their fingertips. Commercial real estate is changing, older buildings are being repurposed, new technology companies are emerging to create end-to-end visibility across the supply chain—from raw material to doorstep.
Just as omnichannel is built around the ability to have options in how, and what, and when we buy, so too, is technology evolving so retailers and brands can do the same. It’s now possible to build the supply chain and distribution network that makes the most sense for you.
