Developing an omnichannel approach has become a popular tactic for retailers, logistics companies and marketing businesses over the past decade. This approach involves using multiple channels to provide the best possible customer experience, whether using online platforms (via laptop, smartphone or other mobile advice) or shopping in-store.
In modern business, eCommerce is a critical platform. Consumers today use several different channels to purchase goods. An omnichannel consumer is described as someone who uses multiple channels throughout the shopping journey. A report by Harvard Business Review found that 73% of customers used various channels to purchase goods.
Successfully implementing an omnichannel strategy is dependent mainly on managing and integrating all business channels. To be omnichannel-effective, businesses must focus on every aspect of the customer experience, from the ordering process to the shipping boxes products are delivered in. Although omnichannel strategies are becoming more popular, they present some unique challenges.
1. Order Fulfillment
Introducing omnichannel strategies complicates order fulfillment significantly. Selling from multiple platforms means that businesses may introduce new channels and subsequently change how they carry out fulfillment. In many circumstances, companies have to manage different types of orders from the same place. For example, wholesale orders may have to be picked from the same place as retail orders or eCommerce purchases.
There are significant differences in the fulfillment process of different order types. Businesses that operate solely out of a brick-and-mortar store don’t have to worry about any channels unrelated to the core of their business. Organizations that utilize an omnichannel approach must cater to an in-store consumer base and an eCommerce audience. eCommerce often involves mobile, social media and website sales.
From processing orders to delivering products, each step of the fulfillment process must be adapted. Fulfillment is particularly tricky if you offer shipment time guarantees. Orders must be processed from various platforms before being transported to the final destination in the promised time frame.
The key to streamlining order fulfillment for an omnichannel-based business is utilizing the right technology. Technologies that can help with order fulfillment include a comprehensive inventory management system, a warehouse management system (WMS) and software to help with item sorting.
2. Reverse Logistics
For a successful omnichannel strategy, the reverse logistics process must be as straightforward and understandable as the purchasing process. However, reverse logistics is notoriously complex and often proves to be a difficult area for businesses. Organizations must focus on streamlining the returns procedure to ensure a comprehensive omnichannel approach.
Businesses that implement a comprehensive reverse logistics process are more likely to get repeat purchases. However, this involves much more than guarantees or promises regarding unwanted purchases. Companies must offer consumers an easy-to-understand returns policy that they can deliver.
If a business wants to improve its reverse logistics process, it should first identify the reasons, if any, that it isn’t working well. If possible, they should offer free or affordable returns. A suitable method of doing this is including return labels with the original packaging. Pay on-use return labels are a great option as a business only pays for them if the label is scanned within the mail system.
3. Managing Inventory
Essentially, an omnichannel-based business’s core function is selling products or services across several channels. As each channel has equal importance, in terms of customer experience, inventory management involves organizing items on the same control and distribution system. This becomes difficult, as management generally has to prioritize and pick inventory on the most active sales channels while watching out to make sure orders aren’t missed from the less active channels.
The gap in supply and demand between channels can lead to missed orders, harming the customer experience within some channels. Therefore, inventory management must be a major focus to ensure transparency across all channels. Order handling and employee management must also be well-organized to ensure order fulfillment is taken care of effectively.
Two of the best ways to keep on top of inventory management with an omnichannel strategy are to ensure SKUs are consistent within each channel and to prioritize maintaining basic but unique barcodes on SKUs.
4. Location Expansion
Adopting an omnichannel approach can open up your business to new marketplaces. For example, a brick-and-mortar business that delves into the world of eCommerce may have fresh opportunities to sell internationally. However, expanding to new locations can cause a host of challenges for companies.
If a business’s warehouse locations are unsuitable for fulfilling orders in new areas, the customer experience is likely to suffer. Expanding to new locations may require businesses to acquire additional warehouse space, distribution companies and shipping materials.
To manage market expansion, businesses should focus on maintaining inventory fluidity. To optimize operations in the new marketplace, inventory turnover is key. This is a ratio that demonstrates how often inventory is sold and replaced during a particular time. Understanding this ratio allows you to plan for fulfilling orders and managing returns efficiently.
5. Stock Allocation
If specific sales channels are dominant, they can end up cannibalizing other channels. For example, a high-performing brick-and-mortar store may mean that your online store is consistently out of or low on stock. This is not a desirable outcome for an omnichannel approach.
This issue can be overcome using the following strategies:
- Adjusting the availability of inventory for certain sales channels
- Monitoring supply levels and ensuring orders are timely
- Prioritizing reordering for fast-moving goods or high-volume sales items
- Trying to have items picked and packaged before peak warehouse hours
6. Upskilling Staff
Transitioning to an omnichannel strategy requires significant upskilling of key staff members. If the stock and inventory management processes are changing, employees must be aware of the new approach. New software, such as warehouse management systems (WMS), needs to be taught to the appropriate workers. Item availability and stock information should be readily available to all relevant staff.
Upskilling your workforce to a new sales model can be time-consuming and expensive. However, this shift in focus is hugely beneficial in the long term.
Overcoming Challenges for Future Prosperity
If an omnichannel approach is new to your business, the transition can be daunting. However, in the age of eCommerce, consumer expectations are more demanding than ever. A multichannel strategy may be necessary to meet the needs of a modern customer. They expect all processes to be smooth and painless.
Despite the challenges, developing an omnichannel approach is possible. Overcoming these obstacles can contribute to a prosperous future for your business.