Beginner’s Guide to Omnichannel Fulfillment

How does omnichannel fulfillment come about and what does it look like? It all starts with an idea and evolves through specific stages of business growth, moving from a single channel to a fully integrated ecosystem.

The Evolution of a Retailer: A Real-Life Scenario

Step 1: Jane has an idea. One fine day, Jane was perched on her windowside sofa, sipping her favourite beverage. All too swiftly, an idea popped into her head and she muttered to herself, “Hey, why don’t I start selling illustrated boutique coffee mugs?”

Step 2: Jane starts selling online (becomes retailer). Jane opened up her own mug boutique online, called it Jugz and became an online retailer. Soon, Jane found herself fulfilling thousands of orders every month.

Step 3: Jane opens up a chain of outlets (becomes multichannel retailer). With a promising profitable outlook for Jugz, Jane started selling multichannel via both online and offline channels. She opened up a brick and mortar store in a mall, continuing to sell online while operating her physical store. However, in multichannel retail, sales channels are not yet integrated. Her brand Jugz started receiving 1-star Google reviews from disgruntled customers. For example, an enthusiastic customer saw a pink mug online that stated “20 items in stock,” but as soon as she reached the store, Jane told her the item was out of stock. The customer felt misled as the website only indicated stock levels for the online store. In a nutshell, Jane’s customers were treated to the idea that offline and online channels function as separate entities.

Step 4: Jane integrates offline and online stores (becomes omnichannel retailer). To streamline operations, she decides to integrate her offline and online channels. Her brand starts attracting more 5-star Google reviews because customers find that the stock levels are consistent. This change is attributed to unified inventory management thanks to omnichannel fulfillment. Contrasted to before, Jane’s customers get treated to the idea that Jugz offline and online channels are one and the same.

Step 5: Adopting omnichannel fulfillment. Omnichannel fulfillment simplifies operations for Jane. It is the evolution that allows the customer to be the authority within the buying process.

What is Multichannel Retailing?

Multichannel is a business strategy that offers your customers different sales channels to connect and spread a message about your brand. The channels are separate and don't interact with each other—almost like a hub and spoke model where each channel functions independently. This reduces the dependency of getting sales from a single channel and uses all available channels linearly like an online store, brick and mortar store, and marketplaces. However, the biggest drawback of multichannel is the lack of personalisation since the customer journey on each spoke is unique and not connected back to a central database.

What is Omnichannel Retailing?

Omnichannel retailing is an integrated approach to sales that makes customers the center of the ecosystem, making it easy for them to purchase while adding in an element of delight. It focuses on providing a seamless customer experience across all touchpoints or channels, whether the customer is shopping from a brick-and-mortar store or online from a mobile device or laptop. It intelligently integrates each touchpoint like ecommerce marketplaces, social media, and personalized email marketing. Businesses that use omnichannel marketing with 3+ channels had an 18.96% engagement rate, which is three times higher than single-channel strategies.

Omnichannel vs. Multichannel: Key Differences

When comparing the two, the biggest difference arises within integration of systems and data. Below are the primary distinctions between these two strategies:

• Integration: Multichannel functions in silos where data and journeys are kept on the dedicated channel; omnichannel believes in transparency, and therefore customer data and journeys are synchronized across all channels.
• Inventory Management: In multichannel retail, inventories are managed separately for every channel. Omnichannel relies on unified inventory management thanks to omnichannel fulfillment.
• Business Focus: Multichannel is often product-centric, choosing a distribution strategy that works for the business. Omnichannel is customer-centric and will always put the customer experience first.
• Operational Efficiency: Companies that use tools like customer journey maps reduce their cost of service by 15-20%, which is only possible on omnichannel.
• Customer Support: Under an omnichannel model, customers receive consistent quality of support on every channel because channel data are in complete sync with each other.