The Road to Omnichannel Retailing

4/16/2013
Most future-thinking retailers agree that the future is in omnichannel retailing. But what exactly is omnichannel? Simply put, it is giving customers a seamless shopping experience whether they are shopping via computer, mobile device, catalog or the more traditional brick-and-mortar stores. The key, however, is to provide the right merchandise, at a fair price and on time, whether the merchandise is coming from a distribution center or from a physical store.

Today customers are bombarded with tens of thousands of advertisements every day, plus social media and new technology that provide a new ability to quickly do a comparison on item availability. Further still, consumers can access reviews and other detailed information on any product they could possibly wish to buy.

Onsite customers demand that stores meet their finicky requirements regarding price and variety of merchandise that they want and that they receive exceptional customer service – all the time! It's not asking too much, but it can be challenging to offer this high level of service over several purchasing mediums.

On the other hand, the online customer's experience has to be particularly exceptional the first time because of the lack of the human element or physical interaction with the product. If not, the chances the customer in question will return are slim tonone. Thus, the pressure is on to get it right the first time.

What is required to establish a seamless customer experience? Inventory management, period.

One of the challenges for retailers is the lack of connectivity between items sold via a catalog, Internet connection or a physical location. This becomes a significant issue because when a customer places an order via the Internet, they may use item #1234678, which is a red dress but the same red dress in a physical (brick and mortar) store location may have a different item number in perhaps a different format.

The lack of connectivity between item numbers significantly impacts a company's ability to track inventory and, more importantly, exceed the consumers' demand for 100 percent satisfaction.

Some retailers have taken steps to establish common inventory SKU's and ensure consistently high customer service ratings. One solution is to build an in-house inventory management solution and mandate the usage of UPC's and EDI (Electronic Data Interchange) to manage an accurate link of SKU's across all business channels. Others have taken the laborious and cumbersome approach of manually linking inventory – but this is a rare and dying approach with all the affordable technology at our disposal these days.

According to Andrea Smith, chief adventurer for Lord & Taylor, "Omnichannel is a seamless approach to the consumer experience through all available shopping channels, i.e. mobile Internet devices, computers, bricks-and-mortar, television, catalog, and so on. We are committed to servicing this new 'Super Customer.' She is knowledgeable and smart with a need to optimize her time. She is an executive, a mother, a student and a wife, and she is loyal. We endeavor to assist her in getting all the information she requires to make a purchase that will meet her expectations. Seeking to make her shopping experience memorable is our number one priority."

Supply chain solutions are growing in popularity and are an excellent way to streamline processes and increase revenues. Still, retailers face the decision to acquire a supply chain solution that will help them become an omnichannel retailer or to stay in the dark ages.

When evaluating supply chain solutions, companies should keep in mind that the winning option should accommodate the integration and routing of orders from all sales channels quickly and seamlessly. This solution should also be able to dynamically route the merchandise from disparate fulfillment locations, including warehouses, suppliers, and brick-and-mortar stores. A transportation routing system will help to accelerate delivery times and reduce transportation costs by reducing the number of shipments that go out on half-full trucks.

In addition, any solution considered or developed in-house should track inventory and product performance. These analytics are important and the solution should also track metrics that measure customer behaviors and touch points, which will make it a more complete process.

Customer reviews have also become great marketing tools that help retailers provide the extra push that their customers require to make quicker purchasing decisions. Today's consumers more often rely on reviews to make decisions that will assist them in getting the most value for their money. Product reviews from actual customers carry more weight than retailers' own description of the product and what a great bargain it is.

The bottom line is that due to technology and increasing customer demands, omnichannel retailing is here to stay.

Mary Kleespies is director of supply chain consulting for DiCentral, an EDI software solutions provider.
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