Omnichannel commerce is one of the most powerful trends to sweep through the retail world in recent years.
In search of more efficient ways to control the
flow of inventory, companies in nearly every corner
of the retail industry are experimenting with various distribution strategies, whether it’s filling both
e-commerce and store replenishment orders from a
single DC, running separate fulfillment operations,
or filling online orders directly from brick-and-mortar store shelves.
But building a fast and profitable omnichannel
fulfillment system can challenge every department
in a company, from supply chain management
to IT, marketing, store operations, and order
fulfillment.
To get a better understanding of how companies
are meeting the challenges of omnichannel distribution, DC VELOCITY and ARC Advisory Group,
a management consulting firm in Dedham, Mass.,
teamed up to conduct our third annual survey on
retail fulfillment practices. Respondents answered
about 40 questions on their approaches to meeting
current challenges in omnichannel commerce and
their plans for the future.
The results show that companies are moving
toward omnichannel operations with a goal of
gaining customers and boosting revenue. Asked to
list the top three reasons their company was par-
ticipating in omnichannel commerce or building
up those capabilities, survey respondents appeared
to be squarely focused on revenue, saying they did
it to increase sales ( 57 percent), increase market
share ( 56 percent), and improve customer loyalty
( 55 percent).
Although our survey respondents clearly shared
a common goal, that’s where the commonality
ended. The research results also showed that they
used a wide variety of strategies and methods when
it came to their omnichannel distribution practices.
THE MECHANICS OF OMNICHANNEL
DISTRIBUTION
When we asked how they fulfilled e-commerce
orders, the respondents’ answers were all over the
map: 63 percent said orders were fulfilled through
a traditional DC that also handles e-commerce, 47
percent used a Web-only DC, 43 percent fulfilled
orders from the store, and 36 percent said e-commerce orders were filled directly from the manufacturer or supplier. Respondents were allowed to
select more than one response, and as the percentages indicate, a number of those companies are
using multiple methods. (See Exhibit 1.)
SPECIAL REPORT
By Ben Ames
AS THEY GRAPPLE WITH THE LOGISTICS CHALLENGES THAT
OMNICHANNEL BRINGS, RETAILERS CONTINUE TO TWEAK THEIR
OPERATIONS—WHETHER THAT MEANS ADOPTING TRIED-AND-TRUE
TECHNOLOGIES OR EXPERIMENTING WITH DRONES.
STUDY: OMNICHANNEL
RETAILERS STILL FINE-TUNING
FULFILLMENT OPERATIONS
