What is omnichannel distribution?
Omnichannel distribution is an approach to distribution that enables customers to buy and receive products from multiple sales channels that are seamlessly integrated. This means that a customer can make a purchase through one channel and even choose to receive it through another. Think a customer placing an order online and having it shipped to the store, where they can pick it up.
This type of omnichannel approach saw a surge in adoption since the COVID-19 pandemic, as retail businesses had to offer new ways to safely interact with their customers. Brick-and-mortar stores started building an online presence while retail stores offered creative new ways for customers to shop.
As a result, customers get to enjoy a seamless shopping experience regardless of the channel they want to use. This gives them more reasons to continue buying from your business. In fact, 50% of businesses were able to maintain their profitability during the pandemic after adopting an omnichannel approach.
Omnichannel vs. multichannel distribution
Both omnichannel and multichannel distribution strategies involve providing multiple channels for customers to buy products. However, the key difference is that omnichannel focuses on all the available channels whereas multichannel doesn’t necessarily utilise all of them.
Additionally, in an omnichannel strategy, the customer experience across all sales channels is integrated with one another since it takes a customer-centric approach. That means a customer can easily switch between channels and pick up their shopping journey where they left off.
Meanwhile, the customer experience in multichannel logistics is typically siloed for each channel since it takes a channel-focused approach. The main goal is to simply be present across various sales channels. As such, customers face a risk of having an inconsistent experience across various channels when brands use multichannel distribution.
Examples of omnichannel distribution
Omnichannel distribution has become a norm for top retail giants. Let’s take a look at some examples to get a better sense of how these retail brands have made it work.
Target
Target is one of the best examples of omnichannel distribution success. While the retailer relied on physical stores for decades, they eventually started to build an online presence. To remain competitive, the retailer invested $7 billion to overhaul the customer experience to deliver a more omnichannel approach.
Through this investment, Target ensured that their offline and online channels were integrated seamlessly. This involved expanding to curbside and in-store pickup options as well as offering same-day delivery. As a result of these efforts, the retailer saw significant growth in 2020, even during the height of the pandemic.
Walgreens
Although Walgreens already had a strong offline and online presence, the retailer really ramped up their omnichannel efforts during the pandemic when there was an increased need for personal protective equipment. Customers wanted the convenience of shopping at health and wellness retailer while minimising the risk of exposure. As such, Walgreens quickly sped up their omnichannel capabilities.
Their efforts included offering same-day delivery by partnering with third-party delivery services. Customers also got access to curbside pickup, which gave them the freedom to collect their orders in as little as 30 minutes.
Omnichannel distribution benefits
While integrating all of your sales channels with one another can be highly challenging, many retailers are making the move because it gives them an opportunity to enjoy the following benefits.
UX
The most obvious benefit is that you can create an enhanced user experience across all touchpoints for your customers. With effective omnichannel order management, you’ll be able to provide your customers with the freedom to buy from anywhere and receive their orders through the most convenient channels. In addition, they’ll also be able to make effortless returns no matter which channel they choose.
Since all their experiences will be consistent and integrated across all these touchpoints, the customer journey will flow seamlessly. They’ll be able to start shopping from anywhere and pick up where they left off through a separate channel if they choose to. This enhanced customer experience will not only make your customers more likely to buy from you, but it also makes them more likely to come back.
Company growth
Another key benefit of omnichannel retail is that it creates new revenue streams for your business, which will potentially grow your sales. An omnichannel approach creates more convenient ways to shop for your customers as they can easily buy through any channel they choose. This would make them more likely to go through with their purchases and even indulge in the occasional impulse purchase.
So an increase in sales channels subsequently contributes to an increase in revenue. Moreover, it enables you to reach more shoppers across multiple sales channels. These factors combined will help you to scale your business and achieve long-term growth.
Increase company efficiency
With an omnichannel approach, you ensure that all your operations are integrated with one another. This includes everything from marketing and inventory management to sales and order fulfilment. The customer data and other essential information collected through one touchpoint are easily shared across all your channels, which helps to eliminate redundancy and unnecessary labour. As a result, you can enjoy better efficiency throughout your processes.
Since you’re now using omnichannel fulfilment, you can maintain a single source of truth for all your inventory and order-related processes. This helps you properly account for your inventory, allowing you to avoid overstocking and stockouts. Moreover, now that you have multiple channels to fulfil customer orders, you can more efficiently get orders into the hands of your customers.
Omnichannel distribution challenges
While omnichannel distribution offers such a host of benefits, it’s not without a few challenges of its own. Before you implement this approach, it’s crucial to be aware of the following challenges so you can prepare to face them.
Competitive field
One of the main challenges of omnichannel distribution is increased competition. Since you’re expanding to more sales channels, this automatically creates more competition for your business. And with more businesses realizing the importance of taking an omnichannel approach, the competition’s only going to get fiercer.
Now that customers have access to multiple options through various channels, it’s easier than ever to shop around and compare their options. This makes it crucial for businesses to differentiate themselves from the competition. Whether this involves offering an exceptional shopping and fulfilment experience or providing an incentive to shop from you, you need to find a way to prevent the competition from outshining you.
Inventory visibility
Retailers also face a challenge when it comes to maintaining inventory visibility across all their sales channels. You need to be able to provide real-time information on inventory availability regardless of which channel the customer chooses to use. For this, you also need real-time internal data on how much stock you have left and how many items you’ve sold.
If the inventory data isn’t updated in real-time, you run the risk of overselling and stockouts. Your product page may still show that you have 1 unit left in stock even if you’ve sold out the last unit through another channel. As a result, businesses need to invest in inventory management software that integrates with all their sales channels so that they get real-time visibility into their inventory.
Reverse logistics
Omnichannel distribution isn’t just about selling and delivering products through multiple sales channels. It also involves providing customers with the freedom to return their orders through the channel of their choice. Your omnichannel strategy wouldn’t be complete if customers didn’t have the option to make returns as easily as they made their purchase.
However, the reverse logistics process can be extremely complicated in omnichannel retail. You have to make sure that the customer and order info is easily accessible through integrated systems across all available channels. Customers should then have the option to choose between having the item picked up from their chosen location, self-shipping the item, and returning it at a store or returns centre.
Omnichannel distribution strategy
Effectively managing your omnichannel distribution logistics requires having a solid strategy laid out. Here are some omnichannel distribution strategies to give you a strong start.
Centralise your data for enhanced visibility and decision-making
Since you have to ensure that all your sales channels are working seamlessly together, you need to maintain a single source of truth for all your information. This isn’t just limited to your inventory and sales data but also includes your customer data and other essential information.
Waredock’s inventory software provides you with a central location to track and maintain your omnichannel data. Information about your orders and inventory are synced to give you real-time visibility. That way, you can easily see how your inventory should be distributed between different fulfilment centres, how much stock is left, when you need to place orders, and how many units you need.
Use software that integrates with all your sales channels
One of the most challenging parts of omnichannel distribution is keeping track of orders coming in from all your sales channels. Having a distribution partner like Waredock helps you solve this issue with fulfilment software that integrates with all your sales channels. This keeps track of and processes all the orders as they come in across various sales channels.
Regardless of where the order was placed, it’s automatically sent to Waredock fulfilment centres (WFCs), where a team of professionals prepares it for shipping. This makes it easy to fulfil orders coming in from your online store as well as through major retail partners.
Optimise the fulfilment process
Opening up more ways to buy your products essentially means having more orders to fulfil. As such, you need to set up a reliable fulfilment process that’s capable of efficiently fulfiling all orders regardless of where they were placed.
Waredock offers 3PL distribution solutions so you can leave the entire fulfilment process to the experts. As your partner, Waredock will handle all the complicated logistics processes including procurement, inventory receiving, storage, picking, packing, shipping arrangement, and even reverse logistics. The result is an optimised fulfilment process where orders are quickly fulfiled no matter which sales channel the customer decides to use.
Get started with Waredock
If you’re ready to partner with a fulfilment partner that can help your brand achieve successful omnichannel distribution, request a quote to connect with our team and get started.