What is Omnichannel Logistics and How Does It Affect Customer Service?

omnichannel logistics customer service The word “omnichannel” seems like it’s everywhere these days, from the supply chain to marketing to e-commerce strategy. But what does it mean, exactly? At a glance, omnichannel refers to a kind of retail that integrates several different shopping methods—with in-store and online shopping the primary two in today’s consumer landscape. Omni comes from the Latin word omnis, which means all. Sometimes, you hear about omnichannel shipping, which refers to shipping to a consumer’s home, a retail store, a pick-up locker or some other location. You might hear about omnichannel design, which emphasizes the importance of making websites and apps work across both desktop and smartphones. The internet and online shopping, coupled with new devices that make shopping easier, have spurred the omni world. Customers expect the option to be able to buy, ship and return items in a variety of different ways, through a variety of different channels. The contemporary shopper doesn’t just go to the manufacturer’s website, check out and be on their way. Instead, they often travel from web ad to comparison shopping sites like Google Shopping to physical store and back to an online market all before they click “place order.” In the simplest possible terms, omnichannel addresses the consumer trend to ditch the straight and narrow buyer’s journey in favor of one that’s more zigzagged. omni-channel-overview-diagram So, what about omnichannel logistics? In short, this kind of logistics must be designed and tailored to suit a company’s omnichannel approach. Just like traditional logistics, omnichannel logistics is the method by which retail and e-tail gives the customers what they need in a way that suits their expectations. The omnichannel fulfillment, supply chain or logistics approach is the backbone of any omnichannel retail strategy—it allows businesses to create a seamless customer experience on any device or store, working to address issues like slow shipping, high prices and out of stock items. For example, it might allow a company to ship a product from a nearby retail store instead of a fulfillment center hundreds of miles away. This means faster shipping times and more positive reviews.   

Multi-Channel vs. Omnichannel Logistics

Usually when something is referred to as a “traditional logistics strategy,” it’s referring to a multi-channel one. Multi-channel assumes that customers prefer a single way to engage, so it was, naturally, the obvious choice before the age of digital everything when customers usually bought from a store or catalog. It has been carried into the digital era, even by some big-name companies, but it has a major downfall: It fails to integrate the different channels. A multi-channel retailer might offer the same products online and in the store, but they usually don’t connect, integrate or interact. Omnichannel, on the other hand, strives to close the gap between the different channels for a more seamless experience.

What’s Causing the Push for Omnichannel?

If your fulfillment strategy isn’t broken, why fix it? The trouble is, the ever-changing list of consumer expectations grows exponentially every day, and omnichannel is a good way to help keep up with their demands. There are a number of unique ways a modern business can support omnichannel–from easing the pain points of in-store shopping to making the online shopping experience feel more personalized and authentic. online-shopping-for-womens-shoes
  • “Showrooming”—Showrooming, otherwise known as research offline, buy online, is when a consumer researches a product in a physical store and then purchases it online. The consumer has so many different buying options, which has sparked the need for a more streamlined, omnichannel approach. If the customer experience is similar across online and brick-and-mortar shopping, consumers are less likely to showroom.
  • Mobile Shopping—These days, shoppers are no longer limited to standard business hours and geographical constraints — they can make a purchase anywhere, anytime. Traditionally, logistics centered around transporting containers of bulk products to physical stores and distribution centers, which would then facilitate direct-to-order sales. These days, there’s not as much need for the middleman, but consumers still expect the same speed and convenience associated with traditional shopping.
  • Shipping Expectations—Consumers not only expect fast shipping, but downright demand it. One study showed that nearly half of all shoppers want hyperlocal delivery, and that 80 percent of consumers want same-day shipping. When a supply chain quite literally meets you in the middle of your shopping journey—say, from somewhere nearby instead of a far-off fulfillment center—then shipping times can decrease drastically.
  • Competition—Let’s face it: E-commerce shopping isn’t going to die down anytime soon, and more and more big-name retailers and marketplaces are driving down prices while simultaneously driving up customer expectations. In order to stay relevant and have a leg up against the competition, companies must integrate logistics strategies that cater to buyer behavior.

Omnichannel in the Supply Chain

The goal of a well-oiled, modern supply chain is to support a business’s omnichannel approach. How they do that varies widely, but one thing’s clear: most good omnichannel logistics strategies focus on speed and efficiency of transportation. As you probably know, in the warehouse or fulfillment center, speed of transportation trickles down from the very first pallet of goods that’s shipped to your center. So, while the end goal is to speed up transportation and eliminate shipping hiccups, this often starts with your storage or picking and packing strategy. warehouse distribution center trucks outdoors For many businesses, omnichannel integration starts with inventory. They must create a single view across all channels and stores showing a centralized, up-to-date inventory. Of course, the best way to do this is through software and technology that properly tracks what’s in your warehouse or fulfillment center at any given time. Forecasting is another important piece of the puzzle—being able to successfully predict volumes will help create a more streamlined supply chain. Knowing the best areas to warehouse based on geographical demand can take omnichannel logistics a step further. Physical stores have been predicting what will sell best where for ages and now it’s the internet’s turn. But let’s get back to transportation. One way that logistics companies seek to speed up transportation in the traditional logistics framework is by using “last-mile” shipping. This format, otherwise known as hyperlocal delivery, refers to the final leg of an item’s journey from the store, warehouse or fulfillment center to the consumer’s preferred delivery destination. Essentially, this practice edges out standard shipping companies like UPS and FedEx because it can accommodate faster shipping times with a more localized, humanized experience.

Some Good Examples

garlord-box-being-delivered-to-customers All of this sounds great, but you have to be able to apply these findings and strategies in a real, measurable way. Looking at some of the best examples of omnichannel logistics can help us visualize exactly how companies are meeting high consumer demands through omnichannel.
  • Walmart is consistently cited as one of the best examples of omnichannel retail done right, with the shopping giant investing big bucks in omnichannel tools. For example, it recently launched the Scan and Go app, which allows shoppers to scan items in-store and then pay their final bill through the app. Walmart is also pretty impressive in the logistics department. Last year, it announced that it would pay employees extra to fulfill and deliver local orders, effectively turning retail stores into distribution centers.
  • Amazon is no stranger to unique last-mile delivery options, either. You may have recently noticed a plain-clothed delivery driver dropping off your Amazon package. That’s part of its in-house Amazon Flex program. And then, of course, there’s that whole drone delivery effort, which aims to get packages to customers in 30 minutes or less via unmanned aerial vehicles. Lastly, let’s not forget Amazon’s acquisition of Whole Foods, which has given the retailer new ways to get Amazon devices in the hands of customers without the need for shipping.
  • It’s not all about the big players, though. Small businesses can also jump on the omnichannel bandwagon, especially if they partner with the right omni-focused logistics company. One of the simplest ways integrate omnichannel into your small e-commerce store is to offer buy online, pick up in store and to create personalized, store-like experiences across your online stores.

How it Affects Customer Service

As you’ve probably gathered, there’s one overarching theme to all things omnichannel and it’s two little words: customer experience. The end goal of any thriving, competitive business is to keep up with consumer demands, and this trickles down from the manufacturer to the third-party logistics supplier and everyone in-between. There’s more pressure than ever on the logistics side of things, since consumers expect lightning-fast delivery and will switch to a competitor in an instant if shipping takes too long, costs too much or is considered unreliable. omnichannel customer experience graphic  
  • Faster Shipping—Of course, good omnichannel logistics strategies often fulfill products based on where a customer lives, eliminating time spent shipping a product from across the country or taking an out-of-the-way journey. Not all companies can build distribution centers in every city, so they’re using their brick-and-mortar stores to get consumers their goods faster. This is benefit number one, since a fast e-commerce delivery strategy is more important than ever.
  • Less Shipping Mistakes—Not only can omnichannel logistics help prevent shipping mistakes by shortening the journey to the consumer, it can also help a company quickly address and fix shipping issues. Say your customer received the wrong item. Rather than having to mail the item back and wait for a replacement, he or she can return or exchange it in the store the same day.
  • Maximize Stock—Another great thing about omnichannel is that it helps you make your inventory more efficient. With proper predicting, you can stock items in areas where you think it will sell better to prepare for demand. For example, if you sell a lot of regional sports gear, you can bank on the fact that a good portion of your inventory will be distributed to a certain geographical area.
  • More Loyal Customers—Did we mention that consumers prefer shopping with companies that offer fast delivery? In case that wasn’t clear, we’ll say it again! Of course, when you’re able to offer something that consumers want—especially if you can do it more often or better than the competition—you can bet that your customers will stick with you for future orders.
  • More Modern and Mobile-Friendly—According to this comprehensive report on omnichannel logistics from DHL, 90 percent of the world’s population will have fast internet connection by 2019. This means that retailers will have to find more and more ways to address omnichannel shopping in a way that still caters to the consumer. Integrating it now is a step towards preparedness for the consumer landscape of the future.
  • A More Seamless Shopping Experience—Perhaps the most important and beneficial thing about omnichannel retail and logistics is the seamlessness of it all. Consumers want an integrated, personalized customer experience no matter where and when they shop. Merging your on and offline experiences is good for eliminating shoppers’ pain points and helps you maintain or forge a positive brand image.
 

The Bottom Line: Omnichannel is Worth Your Investment

omnichannel roi quoteAll of this sounds good, but how does it translate into dollars? The same report from DHL emphasized that omnichannel has a good return on investment. Although justifying the investment is one of the major reasons why businesses are hesitant to push omnichannel forward, they often underestimate the major financial benefits of catering to the consumer and building a loyal base of customers. You don’t have to be Amazon or Walmart to get a good ROI on your omnichannel efforts. Small- and medium-sized organizations should take it slow by integrating omnichannel on a small scale—make sure that you have your inventory visible across all channels and offer as many shipping options as possible, for example—over a slow period of time. You can see that omnichannel logistics is the future of logistics, so getting your strategy right early on can propel your business forward.

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