For retailers, the pressure to provide an omnichannel shopping experience is inescapable. Many companies have gone to great lengths to adapt systems and processes to meet omnichannel demand and deliver a high-quality shopping experienceacross channels. While only four or five years ago cross-channel retail was considered innovative, today it is table stakes — no longer a “nice to have,” but a “must have” for retailers to remain competitive. And as consumers’ expectations for shopping continue to evolve, the importance of successful omnichannel adoption — and the urgency with which that adoption must take place — is heightened.
Most retailers have invested in omnichannel in some capacity, but many brands have taken a piecemeal approach, with targeted investments or platform upgrades to enable specific functionalities. However, the retail industry is nearing an inflection point: brands that don’t go “all-in” on omnichannel will see a negative effect on sales, and those that fully adapt their systems and processes to the new omnichannel way of doing business will be much more likely to retain and grow market share.
An Evolving Landscape
Initially, retail transactions only occurred in stores. As the retail industry developed, catalogs, call centers and eventually web sites were introduced, and orders placed through those channels were fulfilled from a designated warehouse. Order fulfillment is much more fluid and complex in today’s retail environment. Stores now also often serve as fulfillment centers for online orders, which introduces a new set of complications.
The Inventory Imperative
When the concept of omnichannel first hit the scene, “buy online, pick-up in-store,” or BOPIS, became the first cross-channel function to garner interest and force retailers to rethink fulfillment. The growth and increasing sophistication of e-Commerce quickly drove consumer demand for this function — as well as other omnichannel experiences — and retailers were pressured to respond.
In the rush to meet demand, many took a piecemeal approach to augmenting their systems, bolting on new technology and processes to what they already had in place. While these systems fulfilled an immediate need at the time, they were never truly designed for the omnichannel world. And as more channels were introduced and consumer needs evolved, the limitations of these systems became increasingly evident, especially in the areas of inventory visibility and management. A satisfying omnichannel experience depends on a retailer’s ability to reliably keep omnichannel fulfillment promises, like a specific order pickup time or same-day delivery. These promises can only be made if inventory availability is highly accurate.
The Importance Of Order Management
Retailers can’t fulfill orders on-time if they lack stock. With the increasing immediacy of fulfillment needs — think same-day store pickup or same-day delivery — the accuracy of inventory availability becomes even more critical. A key “must have” for effective omnichannel fulfillment execution is a complete view of inventory, so obtaining inventory authority should be a top priority for investment. For this reason, a strong order management system (OMS) that provides accurate visibility into global inventory is critical.
A sophisticated OMS delivers a complete and real-time view of inventory levels across every fulfillment location in the enterprise, including store, in-transit, on-order and third-party owned/fulfilled inventory. The functions of an OMS are especially important with the rise of BOPIS and stores having to play a greater role in fulfillment processes. Unlike warehouses, stores see two-way inventory traffic and are subject to theft and more general disorganization of stock, making it far more difficult to keep accurate track of product levels. And without a powerful OMS, retailers cannot achieve a complete picture of inventory and can easily run into customer experience challenges, such as a missed store pickup commitment.
Beyond timely and accurate visibility into inventory availability, an advanced OMS also considers how to optimally use available inventory. Intelligent fulfillment optimization can evaluate large numbers of parameters across fulfillment points in real time to ensure available inventory is used in the most efficient, cost-effective way possible.
For example, inventory is available in a specific store, but is ship-from-store the best way to fulfill a next-day delivery order? The order management system would evaluate characteristics of the store such as historical performance of fulfillment activities, staffing load, in-store traffic and inventory levels before determining if the store is the best option to handle a next-day delivery order. Optimizing how stores are leveraged for fulfillment opens the opportunity for quicker delivery times by leveraging proximity to customers and optimal inventory utilization for profitability and service commitments.
The Critical Relationship Between Store Associates And Inventory
While the importance of technology investment is clear, going “all in” on omnichannel also means a change in how stores are viewed and utilized. Retailers are looking for new ways to leverage their stores and make the most of the investment in floor space. Often, stores are physically closer to the customer than warehouses, which means an opportunity to meet customer demand for immediacy, like same-day delivery. It could also mean saving on shipping fees and cutting shipping times for online order delivery, a critical differentiator in the battle against pure-play e-Commerce retailers.
Making this possible means rethinking the role of store teams. Store associates are at the front-line of managing inventory in the store. They must receive, adjust and update inventory with precision to ensure global inventory accuracy. Further, they must be able to quickly and easily find product in the store and manage order picking to make sure store order fulfillment is completed promptly and accurately. It is becoming more and more essential for retailers to equip store associates with tools that improve the effectiveness of store inventory management, which in turn improves inventory accuracy, enhances sales, lowers out-of-stock risks and reduces the steps for in-store replenishment.There currently exists a great opportunity for physical stores to enhance the shopping experience, but seizing that opportunity requires redefining in-store associate responsibilities, training practices and the systems that support them.
At this point, the writing is on the wall: omnichannel is here to stay, and the stakes keep getting higher. Facilitating omnichannel commerce is not an “if” for retailers, it’s a “how.” To succeed in the new retail space, brands must move away from a piecemeal approach and embrace omnichannel fully, making holistic investments in both technology and staff. In 2019 and beyond, retailers that fully embrace and invest in omnichannel will be the ones that stay competitive, earn market share and come out on top.
Chris Shaw is a Senior Director of Product Marketing and Analyst Relations at Manhattan Associates. He has been developing ordering solutions within retail since the early 2000s and brings a wealth of experience as an implementation architect and marketing leader. He has a passion for the buying experiences of customers around the world, and is interested in exploring how digitally empowered customers are forcing all merchants to respond to a new world order in retailing. At Manhattan Associates, Shaw is focused on the significant challenges and opportunities that unified commerce brings to retailers today, and delivering solutions designed for the way we shop today.