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Why Should Logistics Be the Foundation of Your Omni-Channel Strategy?

Logistics and omni-channel retailing

Omni-channel retailing — providing a seamless customer experience across multiple shopping channels — is achievable if you have the right logistics.

An article on the Logistics Viewpoints website illustrates this point. Citing research conducted by global delivery company UPS, the article details why logistics is the foundation of a successful omni-channel strategy.

Among the research findings are the following: shoppers want to be able to make a purchase online and return the product to the store if necessary; customers are more likely to add additional products to their online shopping cart to qualify for free shipping; and many shoppers like the flexibility of being able to pick up online purchases at a store. Fulfillment often focuses on the e-commerce or distribution side, but this article does a good job of highlighting how it blends into retail.

For a brick-and-mortar retailer, an omni-channel approach ensures that consumers could order online and pick the item up from or return it to the store. Omni-channel retail is all about integrating the different channels so that everything flows seamlessly. Retailers must accomplish this.

In fact, looking at the survey numbers, it could make-or-break your reputation: 47 percent of customers said they have recommended a retailer who delivered their purchase as expected, while 43 percent said they negatively recommended a retailer that fell short of delivery expectations, such as the product arriving damaged. Retailers need to have a system in place that allows them to deliver on a promise they make, whether that’s a delivery or quality guarantee.

Your supply chain and manufacturing process ultimately determines your omni-channel logistics capability. For example, there’s a big difference between a clothing retailer and a pizzeria. The latter is able to manufacture what it sells. If you’re selling jeans and you don’t have them in stock, most likely you can’t simply make them. For retailers outside of very large cities, it will probably be more realistic to offer same-day, in-store pickup than offer the inherent complexity of same-day delivery.

Regardless, with any same-day service, retailers need to ensure that they can deliver what they advertise and promise in a sale. This means your backend systems need to be sophisticated enough to know what is on hand and immediately reserve inventory so that it is not sold before the customer picks it up or it is picked for shipment.

The alternative could be to focus on a certain subset of items that they know are always in supply. For an office supply store, printer paper or pens would be good examples of such items. If you have 10,000 pens in stock and rarely sell more than 100 per transaction, it’s highly unlikely you’ll run out of pens.

Logistics will determine your customer’s flexibility to purchase, return, ship or pick up across multiple shopping channels and ultimately provide them with a positive omni-channel experience.

Source: Logistics Viewpoints, July 2013