Omnichannel Fulfillment: What It Is and How to Use It to Scale Your Business
Periods of growth are some of the most exciting times for business owners. However, when considering ways to scale your business, it’s important to be strategic. Implementing new strategies for business growth like omnichannel fulfillment can help you reach your goals while providing your employees with the resources they need to keep the backend running smoothly.
Scaling your business by shipping through multiple channels all under the same inventory umbrella can help you increase revenue, reach new customers, and increase overall brand awareness. Keep reading to learn everything you need to know about omnichannel fulfillment.
What Is Omnichannel Fulfillment?
Omnichannel fulfillment is a business strategy that allows retailers to pick, pack, and ship orders originating from several different sources. Inventory levels are shared across all channels and updated at once when stock enters or leaves the supply chain.
The ultimate goal of omnichannel fulfillment is to be able to deliver your products as fast as possible to your customers and to the places most convenient to them.
For example, let’s say your customer places an online order but your retail store is located closer to that customer than your fulfillment center. In that instance, you’d pack and ship the product from your retail store which will limit shipping costs and transit times. There is no linear path for your products to follow, giving you greater flexibility to reach your customers.
Omnichannel fulfillment can occur in a few different places:
- Retail stores
- Manufacturing facilities
- Fulfillment centers
- Distribution centers
- Business office
Using this fulfillment method means you’ll need to implement processes that sync data, such as inventory and logistics information, for things to go smoothly.
Single-Channel Fulfillment vs. Multi-Channel Fulfillment vs. Omnichannel Fulfillment
When it comes to your shipping strategy, you have a few different options: single-channel fulfillment, multi-channel fulfillment, and omnichannel fulfillment.
Single-channel fulfillment involves packaging and shipping orders from one place. This strategy is ideal for small retailers that prefer to use their home or office to conduct picking and packing.
As businesses grow, merchants often need more space and manpower to keep up with customer demand. This is where multi-channel and omnichannel fulfillment come in. These two fulfillment methods are similar; they both focus on shipping from multiple channels like retail stores and fulfillment centers.
The biggest difference between multi-channel fulfillment and omnichannel fulfillment is how inventory is accounted for. Multi-channel fulfillment accounts for inventory at each individual shipping location. Omnichannel fulfillment, on the other hand, accounts for and updates inventory across all channels simultaneously.
How Are Omnichannel Fulfillment and Omnichannel Retail Strategy Related
Adopting an omnichannel fulfillment strategy is all about providing customers flexibility in the fulfillment process. Like omnichannel fulfillment, omnichannel retail strategy aims to create a seamless experience for shoppers that allows them to shop wherever is most convenient for them.
In a nutshell, omnichannel retail strategy refers to selling on multiple platforms while keeping a consistent brand image and message. For example, in addition to selling on your own website, you could also offer products in a retail store and via online marketplaces, like eBay or Amazon, all featuring the same branding. You sell to your customers wherever they are and with omnichannel fulfillment, you send their orders to wherever they are.
Why It’s Important to Fulfill Orders from Multiple Channels
Perhaps the most important reason why you should use multi-channel fulfillment or omnichannel fulfillment is to increase customer satisfaction. Giving your customers options when it comes to the fulfillment of their orders means you can more closely match their expectations and create a more positive customer experience every time.
Here are a few examples of fulfillment channels that omnichannel fulfillment can enable you to offer:
- Curbside pickup
- Home delivery
- Alternative pickup location
Since omnichannel fulfillment can also help you cut back on fulfillment costs by sourcing inventory from the closest location to the customer, it also enables you to offer competitive pricing that gives you an edge against the competition. It’s also worth noting that nearly 70% of customers reported abandoning their cart due to unexpected costs like fulfillment-related charges, so any initiative you take to lower these costs is beneficial.
However, without the right strategy, doing so can lead to disaster.
With omnichannel fulfillment, you’ll have the tools and strategy you need to optimize sales across as many channels as you like without sacrificing customer satisfaction or revenue. You’ll also find your employees more productive and your processes more efficient.
Benefits of Omnichannel Fulfillment
Shipping through multiple channels all under one inventory count can have some seriously positive impacts on your business. Whether you’re looking to create a more positive customer experience or reduce fulfillment errors, omnichannel fulfillment might be the perfect solution.
Let’s take a look at a few of the upsides to omnichannel fulfillment:
Order Efficiency and Accuracy
When selling through multiple channels, it’s vital to have a single process that works regardless of where the order originated from. Omnichannel fulfillment establishes procedures for fulfillment that help to improve order efficiency and accuracy every time.
One popular practice when implementing omnichannel fulfillment is working with a Third Party Logistics, or 3PL, partner to handle shipping and delivery. Collaborating with 3PL partners allows you access to accurate reporting that gives valuable insight into which sales channels are succeeding and which might require special attention. It will also help in showing which fulfillment centers or locations in your supply chain are fulfilling the most orders. By utilzing their technology you can get a holistic picture of your businesses.
Time to Focus on Other Initiatives
If you’re selling through multiple channels and not using an omnichannel fulfillment strategy, you’re likely wasting precious time tracking inventory for each channel separately. Omnichannel fulfillment integrates inventory management for all channels simultaneously. The result? Valuable time that can be used to focus on the areas of your business that matter the most.
Establish New Sales Channels
You might be surprised to learn that omnichannel fulfillment can help your company explore new sales channels for less.
For example, physical stores can be used as fulfillment centers with an omnichannel fulfillment strategy. That means brick-and-mortar retailers can quickly and easily break into the e-commerce space without obtaining a warehouse or fulfillment center. Instead, orders can be filled directly from store shelves, which saves time and money, and can move more inventory in a shorter period.
Challenges of Omnichannel Fulfillment
Although there’s no shortage of benefits to using omnichannel fulfillment, the strategy is not without flaws. While the transition can help you in the long run, getting started with omnichannel fulfillment can be difficult for some. Luckily, learning what struggles you might stumble across can help you better prepare to overcome the obstacles in the future.
Here are some challenges of omnichannel fulfillment that you should be aware of:
Inventory Management Can Get Tricky
Even though adding more fulfillment locations can be beneficial to your business, it can make inventory management more difficult. You’ll need to be careful when counting inventory to ensure stock isn’t counted multiple times for each sales channel.
Remember: the idea of omnichannel fulfillment is that a single set of inventory is shared across multiple sales channels. It’s vital to be precise in inventory management and to take special care to avoid common mistakes like overcounting.
Difficult to Implement Without Infrastructure
Shipping through multiple channels isn’t always a breeze to implement. If your business doesn’t already have the infrastructure to support a seamless transition, you might find the road ahead more difficult.
For the easiest transition, you’ll need a fulfillment warehouse along with inventory-tracking technology and software. If you don’t already have these items as a part of your workflow, you’ll likely have a more difficult time getting started.
Luckily, even if you lack these tools, it’s not impossible to get up and running with omnichannel fulfillment. Although it will require an initial investment to establish them in your toolbelt, you’ll find the investment worthwhile in the long run.
What You Need for an Omnichannel Fulfillment Strategy
There’s no doubt that using omnichannel fulfillment can pack an impressive punch when it comes to customer satisfaction and revenue. However, if you want to see the best results, there are a few things you’ll need.
Shipping through multiple channels can make it more difficult to manage warehouse processes and keep track of inventory. When problems occur in these areas, they can have a detrimental effect on your business.
Luckily, tools like Warehouse Management Systems (WMS) and Inventory Management software can help you reduce errors and increase your bottom line simultaneously. By using tools like these, you can cut back on human error, which increases efficiency internally and leads to a more positive customer experience overall.
Working with fulfillment partners like ShipHero and Shipbob is another way to fortify your omnichannel fulfillment strategy. Partners like these are experts in fulfillment and logistics and can help you with the heavy lifting in those areas. That means you’ll have more time to spend honing your omnichannel fulfillment strategies and providing a seamless, positive experience for your customers.