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Part 1:Omni-channel Flexible Store Fulfillment Series

By . 1 January 2016 . in Retail Omni Channel

“Building out our internal capabilities using an Omni-channel lens will help improve everything we do for the customer” – American Eagle, on their “ship from store” program

“53 Percent of millennials say their favorite retailers offer an omni-channel experience” – Apparel Magazine, 

“We’re still trying to figure out the best way to engage our customers in digital and mobile,” – Neiman Marcus during NRF 

Much has been said about Omni-channel and buy anywhere fulfill anywhere programs such as buy online, ship from store, buy in store deliver at home and others so we are not going to re-hash the same discussion “building a case” for omni-channel or their “necessity” to serve the new customer. Just to level set with the audience, in a study conducted by Forrester in Oct 2013, overwhelming majority of the retailers are doing something now or in next 24 months to acquire omni-channel fulfillment capabilities, and would like to build one or more of “Buy online, ship from store”, “Buy online, ship to store”, and “Buy online, pick up in Store”.

In this 3 part series of posts, we will share our viewpoints on how to go about
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  1. Selecting the right Omni-channel fulfillment format(s) and the Order in which these formats should be rolled out, and
  2. Critical design considerations based on characteristics of your enterprise (i.e. Stores size/layout, product, and customers) for design store fulfillment program that is executable and scalable, and
  3. Conclude with some key real life lessons learned on business and IT side from more than a dozen flexible fulfillment implementations for leading departmental stores, specialty retailers in the areas of apparel and shoes, and sporting goods

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PART 1

Selecting the right Omni-channel fulfillment format(s)

Irrespective of omni-channel fulfillment capabilities you choose to acquire for your business and their order about 70% of the organizational ground work stays the same and as a best practice, we recommend business to first strengthen foundational capabilities before any of such programs are rolled out to the customers.

The first step in the process is identification and across the board alignment on the strategic factors for your enterprise.

The Exhibit-A demonstrates a framework to go about prioritizing the omni-channel flexible fulfillment format for most common strategic factors as seen by us in the industry.

Omni Part 1_Graphic 1

Identifying the correct sequence to roll out Omni-channel fulfillment format(s)

The next step in the process is understanding risk exposure due to weaknesses in core organization capabilities for the various fulfillment formats.

The Exhibit-B shows the level of dependency of the omni-channel flexible fulfillment format upon the enterprise capabilities. Another way to interpret is risk exposure to the program due to weakness in the capability and change management involved to build the capability.

Omni Part 1_Graphic 2_Correct

Omni-channel fulfillment format(s) matched with strategic factors and balanced with risk exposure

Marrying enterprise strategic factors with level of risk exposure to enable omni-channel flexible fulfillment formats we find Buy online, ship from store ranks highest in terms of delivering in enterprise strategic factors balanced with risk exposure.

Omni Part 1_Graphic 3

In our experience, most retailers ranging from departmental stores, specialty retailers in the areas of apparel and shoes, sporting goods, started their omni-channel journey with enabling “Buy online, ship from store” fulfillment program. A large department store, with fairly unique SKU assortments for its online and store channels, witnessing significant growth in digital channels (relatively flat physical channels), realized tremendous value in “Buy online, ship from store” program. The results included higher sales growth, and faster and complete shipments to the customers. The justifications ranged from much higher match to strategic factors balanced and relatively less risk exposure from organization capabilities to enable. Marrying the two ensures the omni-channel customer gets convenience by ability buy online a wider array of products in the comfort of his home, and great service level of “confirmed availability” and “ETA” for delivery that is met consistently by the retailer.

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