Omnichannel Fulfillment — How to Get Your Goods to Customers, Really Fast
For the past few weeks, you’ve seen the same ad in your Instagram feed for a backpack you like — but you haven’t clicked on it yet. One day, you see a YouTube ad for the same backpack and you think, “What the hey.” You go to the retailer’s website to check out prices and product specs.
You’re not happy with the prices on the official site. You do a Google search for the backpack and find it’s offered on Amazon by the same retailer for a cheaper price. You order from that storefront and opt for Amazon’s two-day delivery.
Unfortunately, when the cool backpack arrives at your front door it has an unstitched seam. You get in touch with that backpack brand’s customer service department and ask for a replacement. You’re in luck — even though you bought their product through Amazon instead of their website, they still count it as a sale with a full warranty. They tell you to drop it off at a retailer down the street and send a replacement a week later.
You’ve just seen the power of omnichannel fulfillment in action. We’re going to explain exactly what it is, why it’s a powerful tool for brands, and how you’re business can build a great omnichannel fulfillment network.
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What is omnichannel fulfillment?
Omnichannel fulfillment is when a business allows customers to digitally order and receive their goods through multiple sources or “channels”. This is sometimes referred to as “multichannel retailing” from the customer side.
Today, shoppers have many more options for where they can buy and receive goods online. Let’s take Nike again as an example. Customers can purchase Nike shoes:
- Online from the Nike store.
- Online on a platform like Amazon that sources directly from the Nike store.
- Online from another third-party storefront like Shopify run by Nike.
They also have multiple ways they can receive their goods:
- Delivered directly to a residence through a Nike-sourced last-mile provider.
- Ordered online and sent to a retail store nearby to pick up over the counter.
- Delivered to a secure locker or convenience store nearby.
With the power of the internet and better technology, every online channel becomes a chance for brands to reach customers and give them a positive experience. They no longer need to rely on their own websites and fulfillment networks.
This lets brands meet their customers where they are most comfortable shopping — whether that’s Amazon in the US, Shopee in Southeast Asia, or Shopify in Canada.
Omnichannel vs. multichannel
Omnichannel fulfillment is sometimes confused with multichannel fulfillment. While both terms are occasionally used interchangeably, multichannel implies a siloed approach while omnichannel refers to a network approach.
In multichannel fulfillment, brands manage inventory lines to different channels separately. That means the brand will have one shipping and warehousing process for one retailer and a different one for orders done directly on its website. This is how most brands have traditionally operated.
An omnichannel approach means that you feed every part of your supply chain from the same source. From an overhead perspective, it's much easier to pivot if one channel suddenly gets more or less traffic from customers.
For example, if sales from Shopee to East Asia go way up, Nike could move goods from their warehouses feeding Amazon orders in the US in Hong Kong to their East Asian warehouse in Vietnam. This lets them manage inventory levels before their goods ship across continents.
The benefits of omnichannel fulfillment
Omnichannel fulfillment creates a whole host of desirable outcomes for brands and customers. Here are three:
- Customers feel they are interacting directly with a brand wherever they shop, which means increased loyalty to the brand over third parties.
- Customers have more options for pickups and returns. For example, they can return an item to a local storefront or pick it up from there if they are uncomfortable having goods delivered to their door. One UK-based survey from e-commerce fulfillment provider, PFS, listed slow delivery, lack of available items, and difficult returns as causes of reduced interest in using a brand.
- Brands are better able to manage and measure inventory and sales. McKinsey writes that stores generally have lower inventory-accuracy rates (70 to 90 percent) than distribution centers typically enjoy (more than 99.5 percent). By switching to a fulfillment-centric approach, brands can keep much better tabs on their supply and demand.
How to build an omnichannel fulfillment network
A recent McKinsey survey showed that five of the top nine factors driving customer value in omnichannel retail are related to logistics. A great logistics network, means you’ve done over half the work (the other half being a great product and selection).
To create a successful omnichannel fulfillment network you need to get three things down right:
- Fulfillment centers
- Last-mile logistics
- Tech integrations
The same McKinsey survey mentioned above estimated that most retailers can provide two-day delivery to 80 percent of the US population with as few as three distribution centers. But offering next-day delivery to 80 percent of the US would require as many as eight fulfillment centers.
Most retail businesses cannot realistically afford three much less eight full-size fulfillment centers in one country. Fortunately, there are a rising number of entities like “dark stores” filling that gap. Brands can rent out space in former shops in densely crowded areas as mini fulfillment centers.
You should usually select regional fulfillment centers in an effort to offset the costs of last-mile fulfillment. Often the closer you can place a fulfillment center to your customers, the less you have to pay for in the last mile. If you’re close enough, you can ask customers to come in and pick up their goods themselves.
Last-mile is the hairiest part of logistics, especially in countries like the US with high surcharges from national carriers in 2022.
Customers today like fast deliveries. For less established businesses, the best solution for a timely last mile is a mixture of providers. If you’re trying to reach customers in remote locations, leaning on national parcel carriers like UPS or FedEx may be your best bet.
However, in city centers, brands are beginning to work with more regional services and even delivery drivers for food companies (a trend popular in Asia since e-commerce took off). One popular example is American Eagle’s partnership with ecommerce delivery service, ShopRunner in 2021.
Successful omnichannel fulfillment relies as much on technology as physical assets like fulfillment centers. Much of how we run this process today is because of how far technology and analytics have come in logistics.
To keep up with ebbs and flows at your different fulfillment centers, brands need to see a regularly updated and accurate list of inventory at all of their warehouses. If you predict running out of goods in one market right as you expect a spike in purchases, you might need to quickly transport goods between fulfillment centers or warehouses. That means using logistics software that integrates with every part of your supply chain, including fulfillment centers and last-mile that tracks every parcel shipped.
Work with CBIP to access a bespoke omnichannel network for your business
While fulfillment has gotten significantly easier for brands trying to keep up with retailers like Amazon and Walmart, successful omnichannel networks are prohibitively difficult to set up quickly. You may want to start by working with a partner that can create a bespoke network for you — we may be able to help.
When you work with CBIP you immediately connect to a global, fully-integrated network of warehouses, fulfillment centers, and last-mile providers. We provide all the tools you need to manage a successful omnichannel strategy including tech integrations with every single one of our providers. You get access to the kind of data and oversight usually only enjoyed by top brands with advanced networks that let you pivot as fast as possible.
We aren’t an inflexible courier service either — we’re a fourth-party logistics business. If you want to change anything about your logistics, we can help you do it. We aren’t locked down by any single provider in our network
Curious about exactly how we could help your business with omnichannel fulfillment? Sign up for a free call with one of our experts.