Today, with the ever-changing economic landscape, consumers envisage locating their products both in traditional stores and on websites, employing technology to buy products with the click of a button and have their products delivered directly to their residences or offices as soon as possible or pick up the items themselves from any of the stores. A big ask. And this high expectation of immediate customer fulfilment is why companies are rushing to streamline their supply chain to deliver economic on-time delivery services.
Today, successful businesses are able to enhance their customer journey to ensure their products or services are purchased and delivered in the most optimum way possible to consumers, thanks to omnichannel logistics. Here we will consider food retailers and non-food retailers that adopted the omnichannel model.
Food retailers vs non-food retailers
The main differentiator of omnichannel logistics between food retailers and non-food retailers is that the former are more disposed to arranging fulfilment and other last mile functions in-house. Non-food retailers, on the other hand, prefer to collaborate with logistics service providers.
According to Food Logistics, grocery e-retail sales increased by 9% in 2017 to hit 17% in that year. And because food retailers were a bit slow in responding to changes due to the challenges involved in revamping their distribution, transportation, technology, visibility, analytics and logistics, smarter online retailers were cashing in. For example, Amazon secured 84% of all online grocery queries and 59% of online grocery purchases. Walmart was quick to catch up when they invested billions in eight virtual storehouses and grew its curbside collection program as well as their service delivery systems. To entice shoppers, they even attached a 30-day free trial offer on their 2-day delivery service.
For smaller food retailers, reconditioning their fulfilment systems is a Herculean task, which is why several supermarkets have assigned this function to e-commerce as compared to taking up a pure omnichannel blueprint. Paul Laman, vice president of DMW&H, which is a material handling system integrator, states that omnichannel retail supply chains must include these components.
The customer experience has been drastically transformed over the last few years, with shoppers being able to easily locate, compare prices, pay and purchase online or in store, get quick delivery and return options. To facilitate staying competitive, businesses should provide options for time-slot delivery, omnichannel logistics, parcel lockers and so on.
Some companies like Amway have employed a 3PL network strategy to ensure logistics are optimised. A robust 3PL service is an amalgamation of operations management, strategic consultation and technology. When a shopper places an order with Amway, the warehouse team draws up a ready-to-ship package and through its FarEye’s platform, informs one of its many 3PL partners. In addition to employing an agile and adaptable logistics solution, Amway also ensures that their delivery times are optimised because they closely monitor their 3PL partners’ performance so that they can separate the wheat from the chaff.
Similarly, Walmart India has also overhauled its service experience as well to ensure customers enjoy a seamless voyage. For retailers to provide affordable and on-time delivery, predictive analytics and data visualisation will help them forecast customer demand patterns so that they can stock inventory closer to their consumers.
Some of the main logistic challenges facing businesses are:
- Reduced inventory visibility and metrics
- Supply chain processes that are not synchronised
- Procuring the perfect transportation
- Undependable fulfilment procedures
- Building a seamless return process
- The inaccuracy of manual, paper-based methods
- Poor inventory in transit tracking capabilities
- Establishing a seamless 3PL blueprint
For a more in-depth understanding of the challenges of omnichannel logistics, click here.
When inventory, logistics and distribution operations are effectively harmonised across all sales channels to keep up with increasing consumer demands, then the omnichannel logistics function of a business is optimised and significantly contributes to customer satisfaction and ultimately, brand loyalty. The cost-to-serve metric is a vital factor in determining how efficiently supply chain logistics functions, which is why manufacturers, retailers, distributors and wholesalers are involved in creating the most augmented omnichannel logistic service systems. The question is, are retailers developing them fast enough to keep up with the new age of customer impatience?