Monday, September 25, 2017

Comment: Challenges of multichannel fulfilment

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According to Retail Systems Research (RSR), 65 per cent of retailers report that customers who shop across multiple channels are more profitable and have a greater lifetime value than single-channel shoppers. In order to attract and retain these high-value customers, retailers must be capable of fulfilling orders according to the expectations of today’s tech-savvy shopper.

Pandora’s Box

However, in its benchmark report titled “Omni-Channel Fulfilment and the Future of Retail Supply Chain,” RSR says: “Even the simplest questions in cross-channel fulfilment lead to a Pandora’s Box of challenges. Take the most basic: buy online/pick-up in store. As soon as a retailer starts asking questions about how to enable the fulfillment piece – where will the inventory come from? From stores? From e-commerce shipped to stores? – they rapidly find themselves descending into the middle of a strategic review of the entire supply chain network.”

The retail supply chain was built around a single channel: stores. When most retailers added channels, they also added completely separate supply chains to support those channels, and they considered the sales to be separate, with e-commerce sales competing against retail sales.

According to RSR, however, 54 per cent of retailers are now allowing inventory allocated for one channel to be used for another channel’s fulfilment – for example, by leveraging inventory from retail warehouses for direct fulfilment as well, thereby increasing order fill rates whilst reducing inventory across the supply chain through better inventory balancing and further satisfying their green credentials though a reduction of ‘inventory miles’.

Ultimately, the goal is for the consumer to be able to buy any available inventory from any selling channel, anywhere and at any time, and return it anywhere.

This presents challenges and opportunities in equal measure.

Buy on-line, pick up in store

For example, whilst ‘click and collect’ is an increasing number of consumers’ preferred choice, for the retailers providing it, it means linking the selling channel directly with the fulfilment channel, making inventory visibility a crucial attribute.

Save the sale

The same applies to ‘save the sale’ capabilities. Out-of-stocks are a persistent problem for a lot of retailers trying to keep in-store inventory lean. In a situation where a particular item, size or colour isn’t available, in order to ‘save the sale’, retailers are giving their customers the option to order that product in the store and then have it shipped directly to their home or to a store for later pickup. However, ‘saving the sale’ also means possessing real-time inventory visibility to determine where in the supply chain a particular item is located, even within the store – back room, high rack or customer shelving – enabling a store to capture an order to be fulfilled from another fulfilment source elsewhere in the organisation.

Endless aisle/Vendor drop-ship

A close cousin to save-the-sale, ‘endless aisle’ initiatives involve offering products in a store that are not normally stocked. Doing so often requires the retailer to set up relationships with vendors that can ship to customers directly from any point in the supply chain, which in turn necessitates a direct link between selling channels (store, e-commerce, mobile, call centre, etc.) and deep points in the supply chain.

Buy anywhere, ship from store

Reducing shipping costs is often a goal for retailers looking to save on their parcel operations. Allowing consumers to shop anywhere and then fulfil those orders directly from a retail store’s inventory has reduced inventory and transportation costs for a number of retailers. In addition, expanding fulfilment options out to stores gives the retailer mor

1 COMMENT

  1. Multi-channel fulfillment is a business that has to face so many challenges. Above mentioned are few of them. Thanks for sharing this post. This really adds value to the retail business as omitting these challenges may result into better business and a bertter results.

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