Consultants in Logistics

The Omnichannel Challenge

The Omnichannel Challenge

...and Opportunity

Omnichannel is the seamless cross-channel supply of goods or services. Simple, right?

Wrong! In practice this simple concept is much more difficult to achieve because of consumers' expectations of 'seamless'. A survey by Omnico revealed 61% of respondents don't feel retailers provide a seamless experience across multiple channels. With customers becoming increasingly fickle, retention is key for retailers to succeed.

Why is Omnichannel so difficult to achieve?

KPMG has completed research that allows us to understand what consumers expect from a seamless experience:

  • 78% of purchases had free delivery although 36% of consumers were prepared to pay. However, 93% expect click and collect to be free.  Why should they pay and incur travel costs?
  • 70% of retailers offer delivery tracking although only 49% is via the retailer website. 53% of consumers believe the delivery options have an impact on their choices although only 37% would select the same carrier. 44% have no idea which carrier delivered their goods and don’t generally care as long as the goods turn up on time.
  • 74% of consumers don’t physically check a product before purchasing, this leads to returns. 84% of consumers want free returns, 40% want returns by any method. With estimates suggesting that up to 30% of all online and 8% of shop purchases are returned the reverse supply chain is key. Consumers want convenience, why should they be limited to a post office or courier for returns, why can’t it be dropped in to the store?
  • 40% of consumers are frustrated and would walk away because they can’t see the full range of stock and availability through all channels. Distribution Centre stocks and store stocks are segregated. Most retailers only receive updates regarding store stocks overnight. It simply feels wrong to be told something is out of stock online and to see it in a store or vice versa. These are lost opportunities.

Consumer Defined Delivery Model

Consumers are clearly quite savvy. Why can’t they buy online, via an app or from a store, and return via any means? Why does it take 8 more days to process a refund when the return is posted or couriered? Why can’t they drop a return in to the local store? Why is an item not available online but is available in store?  Why are promotions not available across all channels? Why does it cost money to collect from a store, when the infrastructure is already in place? Why does the delivery take so long?  Why does it have to be delivered tomorrow? Why is it ‘out of stock’ but available online?

How to Achieve an Omnichannel Retail Experience

  1. A Review of the Associated Systems & Processes:  Often disjointed processes lead to duplication, misinformation and missed opportunities.
  2. A Review of the Contracts & Supply Lines:  Historical contracts lead to a segregation of routes, supply lines and responsibilities. 
  3. A Network Review & Optimisation:  Ad hoc development of the supply chain leads to suboptimal stocking locations, trunking links and network management.  How do stores fit in to the network solution?
  4. A Full SKU & Inventory Analysis:  What SKUs are stored where?  How are they stored and in what quantities?
  5. Warehousing & Fulfilment Optimisation:  Warehouse operations are often adapted ad hoc to meet the demands of end consumers, drop ship or online orders. Processes are adapted not developed.  Costs and service levels suffer.
  6. Planning & Routing Reviews:  Often with multiple delivery methods across the network the historical ‘rules of thumb’ work but are they efficient?
  7. Carrier & Courier Reviews, & Benchmarking:  Do your 3PLs , distributors, carriers and couriers deliver value for money?
  8. Returns Processing & Optimisation: Often an afterthought but if you are not careful it is also a wasted opportunity.

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