Omnichannel Fulfillment: All You Need to Know

Omnichannel fulfillment strategy is not a new concept. However, the changed shopping habits in the post-COVID era made retailers focus on it.

And the present landscape of eCommerce made omnichannel fulfillment relevant more than ever. This business model allows retailers to meet evolving customer expectations. In fact, it has become essential to ensure the profitability and efficiency of the business.

Join me as I take you through the different aspects of omnichannel fulfillment, including its importance, its relationship with inventory management, steps to implementation, and challenges that might appear. 

Omnichannel Fulfillment and Its Significance in the Modern Retail Industry

Omnichannel fulfillment is a business model that allows retailers to streamline their order fulfillment process across multiple channels. The process includes receiving orders, picking the products from the warehouse, packaging, and shipping the order to the customer’s address. 

It lets you automate and speed up order fulfillment activities and make customers happy in the process in the highly competitive market of today. For that, logistics providers have to make their fulfillment workflows agile so that they can efficiently handle orders received from different channels from one facility. 

A centralized inventory is at the heart of omnichannel fulfillment. Also, an integrated inventory tracking system is essential to avoid setting up separate order fulfillment infrastructures for each channel.

eCommerce companies want to create a seamless experience for their consumer. For that, they join hands with third-party logistics (3PL) providers to deliver products on time. With omnichannel fulfillment, retailers can sell and fulfill orders more effectively, provide a unified shopping experience, and increase customer satisfaction and loyalty. 

Omnichannel vs. Multichannel Approaches

In omnichannel and multichannel fulfillment models, retailers sell their goods across multiple channels. Nevertheless, the difference between these approaches is in integration. Here are some basic differences between these models:

• Users get an integrated experience across all channels in omnichannel fulfillment. In the case of multichannel fulfillment, each channel operates independently.
• The omnichannel approach prioritizes customers, while the multichannel approach emphasizes the product.
• In omnichannel fulfillment, there is a single unified inventory that is accessible to all channels. For multichannel, there is a separate inventory for each channel.
• The omnichannel model uses an integrated approach for sales/marketing. The multichannel model uses different strategies for each channel.

Role of Inventory Management in Omnichannel Fulfillment

Omnichannel inventory management means managing the inventory of products that you sell across all channels, including eCommerce websites, brick-and-mortar stores, social media channels, and many more. 

Nowadays, customers expect to be able to buy products across multiple channels. So, if you want to be successful in omnichannel fulfillment, you need to excel in inventory management. 

In this case, there should be real-time inventory visibility. It will let you have an accurate idea about the stock you have in each of your warehouses and stores. A well-managed inventory will keep you updated on the sales made on one channel and the status of any returned items.

To keep track of warehouse storage and order management, retailers should have proper omnichannel inventory management. Thus, they can prevent issues like delayed orders, overselling, and excess stock. 

It also enables retailers to know which products they have in stock, where the location is, and how quickly they can deliver those to the customer. As a result, customers can get a consistent and reliable shopping experience.

Importance of Developing an Omnichannel Strategy for Retailers

As a retailer, you can not just start having omnichannel fulfillment and be successful. You must have a proper omnichannel strategy in place for your business for the following reasons: 

Saves Money

Omnichannel fulfillment uses an integrated process that involves the optimization of logistics and supply chain operations. As a result, companies can utilize a hybrid delivery method to reduce shipping time and offer a better customer experience. 

With its help, traditional retailers can enter the eCommerce business model without creating new fulfillment centers and warehouses. Since the existing physical infrastructure is enough to expand their business online, it saves them time and allows them to make more profit. 

Boosts Customer Experience

The omnichannel fulfillment model was developed to offer customers a smooth buying experience across different channels. Since businesses can use the same inventories for online and offline channels, the process can be integrated easily. 

Thus, companies can provide a seamless and streamlined shopping experience to customers through real-time tracking options and quick order fulfillment. When your customers get a better experience, they turn into satisfied and loyal customers who will get more sales for your business.

Offers Multiple Order Fulfillment Options

Instead of a linear fulfillment process consisting of the “warehouse to store to customer” workflow, omnichannel order fulfillment has a flexible workflow. The model enables businesses to process orders through a multitude of modes. 

Some of the omnichannel workflows are store to customer, warehouse to store, customer to store, warehouse to customer, warehouse to pick-up location, and many more.

Offers Scope for Exploration

Omnichannel fulfillment has a unified fulfillment process and integrated sales channels. These enable businesses to optimally manage their supply chains for process efficiencies. Also, businesses can conveniently explore new channels for business expansion as many of their tasks get automated, and they need to invest less time.

Frees Up Resources

Order fulfillment is an extremely significant component of an eCommerce operation. Businesses have to manage their inventories properly to ensure proper fulfillment of the orders. This approach allows employees to focus more on other business activities such as marketing, sales, and HR.

How To Implement Omnichannel Fulfillment for Retailers

Assess Your Business

First, you need to perform necessary assessments about your fulfillment capability. Aspects like in-store inventory management, logistics, and eCommerce infrastructure should be checked properly.

Determine Objectives

Every company has a definite goal behind implementing omnichannel fulfillment, such as better customer experience or higher sales. You should also be sure of the objective before proceeding further.

Have Necessary Applications

Implementing an omnichannel fulfillment strategy is impossible with software and applications. You need to use integrated software solutions for various inventory and order management purposes. 

Optimize Inventory

Now, you have to efficiently manage inventory to ensure that customers get the best experience across all channels. It also helps you with in-store fulfillment, centralized distribution centers, and cross-docking.

Implement Order Management System (OMS)

Since omnichannel means managing orders from several channels, implementing an OMS is a must. It allows you to route orders to suitable fulfillment centers and track order status.

Ensure a Consistent Customer Experience

When these are done, retailers should ensure a consistent and seamless shopping experience for their customers across all channels. Only when they get the same level of service from online and offline stores omnichannel fulfillment implementation will be successful. 

Manage Returns

If customers are not happy with the products and want to return them, the process should be smooth. So, there should be a return option with a transparent policy in your omnichannel strategy.

Train Your Employees

To manage the entire process of omnichannel services, your staff should be properly informed and trained. You should arrange for training sessions so they know how to provide the best service to the customers.

Integrate Supply Chain

Product restocking is crucial to avoid any kind of disruption in order fulfillment. For that, retailers should collaborate with suppliers to streamline the supply chain. 

Communicate With Customers

Customers should stay informed of the order status. You need to provide information like delivery date and package tracking status to the customers.

Get Feedback

Any policy improvement needs feedback from the stakeholders. For this business model, too, one must set a feedback loop. It will help in gathering insights from customers, staff, and partners. 

Monitor KPIs

To find out the success of this business approach, measure the KPIs such as inventory turnover, customer satisfaction, and sales growth.

Never Stop Testing

No omnichannel fulfillment strategy is effective forever. This calls for continuous testing and optimization of omnichannel fulfillment processes according to customer feedback.

Challenges of Implementing Omnichannel Fulfillment Strategies

Now that you know the steps to implement an omnichannel fulfillment strategy, it is also wise to be aware of the challenges that might appear in your way of implementation.

Inventory Control Across Various Channels

The very first challenge that businesses stumble upon while using the omnichannel fulfillment method is to synchronize your inventory in real-time across multiple touchpoints.

With orders coming from different channels, the inventory has to be updated instantly through a central fulfillment platform. Thus, you can avoid inventory-level inconsistencies and keep track of your stock.

Complicated Order Tracking Process

If you want to provide your customers with a modern buying experience, live order tracking is essential. It allows you to always be aware of the number of products that have been ordered. When you are managing your sales for multiple channels from one place, tracking the orders could be difficult.

Inventory Visibility

Being aware of the state of your inventory is crucial for an omnichannel strategy. No retailer wants to miss the delivery of products they had promised to the customers because the product is not in your inventory. Having last-minute inventory visibility is not possible all the time, and it is a challenge for omnichannel fulfillment.

Timely Delivery

You can only make your customers happy if you deliver the products quickly. The problem is that you have to predict the delivery date when they place the order. With accurate inventory information, the delivery date can be correctly predicted in most cases. However, shipping delays and service disruptions are not always possible to predict, and these can cause delayed delivery.

Managing Multiple Channels

As you are going to offer service to your customers through different channels, you will face the challenge of concentrating on those separately. Each channel is different in nature and requires attention from your end for management.

Ease of Returns

You must have an omnichannel logistics system in place that ensures easy return of unwanted products. However, it is not always feasible if the customer lives in a remote place or if some connectivity issues come up after the product delivery. In the return policy, you must include clauses considering all the possibilities.

Maintaining Fulfilment Strategy

To implement an omnichannel strategy, businesses need to have the required infrastructure and strategy. Investing in the warehouse, tools, and team for an omnichannel fulfillment approach is often time-consuming and expensive. Developing an appropriate strategy for the company is also a challenge.

Emerging Trends and Innovations in Omnichannel Fulfillment

#1. Warehouse Automation

Automating the warehouse for processing, picking, and packing orders has become a standard trend for high accuracy and efficiency.

#2. AI

The use of artificial intelligence (AI) is also seen in this field for better inventory forecasting. Apart from this, AI is used in other aspects of omnichannel fulfillment.

#3. Mobile Apps

The use of mobile apps for purchasing products is also trending for easy customer journeys. Most companies are opting for dedicated apps that allow customers to make the most of the omnichannel strategy.

#4. AR Apps

Now, customers do not need to visit brick-and-mortar stores to check out a product. They can do that from online stores as well through Augmented Reality (AR) applications.

Purchasing products directly from different social media, such as Facebook, has also become an omnichannel trend in the present time.

#6. Wearable Technology

Warehouse staff and other workers involved with the process are taking help from wearable devices like wearable glasses to avoid mistakes and make quicker transactions.

Summing Up

Customer demands have evolved over time, and people have become more business than ever. Now, they are open to purchasing products from various online and offline channels. 

As a business, your aim is to stay prepared to serve them with the best experience across the channels while managing your inventory properly. This can only be done by having a well-planned omnichannel fulfillment strategy in place and implementing it.

However, the implementation involves some challenges as well as I have mentioned in this article. Following these, you can take the necessary steps to avoid the issues and implement the approach smoothly.

You can also read this comprehensive guide to eCommerce.