We have written a lot of blogs recently talking about the rise of ecommerce and omnichannel fulfillment, and much of the time the terms seem interchangeable. However, they have very distinct definitions and encompass different parts of the supply chain though they are strongly correlated. If you have wondered what the difference is between ecommerce and omnichannel but too afraid to ask, this blog will answer your questions!
What is ecommerce?
Ecommerce refers to any sales conducted digitally. Although we tend to think of ecommerce strictly as a B2C sales avenue, Gartner predicts that by 2025, 80% of all B2B sales will be digital as well, though online shopping by consumers remains the largest driver of ecommerce. A less common sales avenue, consumer to consumer (C2C) also offers a viable sales channel of ecommerce on sites like Ebay and Mercari.
Growing rapidly since the pandemic, Insider Intelligence expects United States ecommerce sales to continue growing by 16.1% this year, reaching a total of $1.06 trillion in 2022, making it the fastest growing sales avenue for many brands. Mobile ecommerce is also a growing sector of ecommerce where consumers–especially millennials and younger generations–make purchases from their smartphones and other mobile devices like tablets. Mobile ecommerce is expected to reach $3.79 trillion globally in 2022.
Building more robust ecommerce fulfillment strategies should be a top priority for third-party logistics (3PL) warehouses to accommodate this large increase in demand and help their ecommerce customers stand out. According to Pitney Bowes, during the ecommerce fulfillment stage, a brand gets to connect with its customers beyond just a digital transaction and greatly influences brand perception by consumers through packaging, free samples, and shipping carriers. Repackaging and rebranding is an essential value-added service for 3PLs, and this is particularly true for 3PLs servicing ecommerce customers.
What is omnichannel fulfillment?
Omnichannel fulfillment refers to using a unified approach to streamline fulfillment processes and distribution of orders from multiple selling channels. This means looking at fulfillment holistically as opposed to breaking up fulfillment strategies into traditionally siloed categories of B2B, B2C, ecommerce, etc. Omnichannel differs from cross- or multi-channel fulfillment because of its emphasis on having a single approach to fulfillment regardless of sales channel. Cross- and multi-channel fulfillment may handle all the same channels, but they look at each channel separately and only use inventory for orders in the channel it is assigned to, which causes logistical headaches when 3PL warehouse customers flow between channels on individual orders.
As such, ecommerce fulfillment is just one part of the larger omnichannel fulfillment picture, but ecommerce fulfillment drives a large part of omnichannel because of the flexibility consumers have with online order fulfillment. For example, buy online pick-up in-store (BOPIS) is expanding across verticals to be an immensely popular shopping method post-pandemic wherein consumers place orders online but pick up their products at the brick-and-mortar stores instead of having the orders shipped to their homes. Additionally, ecommerce produces a lot of returns, so having an omnichannel strategy that can accommodate reverse logistics will reap tremendous benefits.
But, ecommerce is not the only sales channel of omnichannel. Omnichannel fulfillment includes B2B, B2C, and ecommerce in a multitude of configurations: store-to-consumer, warehouse-to-store, store-to-store, warehouse-to-consumer, consumer-to-warehouse, warehouse-to-pickup location (like an order pickup locker), consumer-to-store, etc. Navigating all these sales channels seamlessly will not only improve consumer satisfaction as they have more flexibility and choice when shopping but will also grow your customers’ businesses – as well as your own. Although only 22% of 3PLs claimed to use omnichannel fulfillment per the 2021 Third-Party Logistics Warehouse Benchmark Report, of those that did, 92% saw increased order volume in 2021.
What is needed for omnichannel fulfillment?
Simply put, technology is your best friend when it comes to omnichannel fulfillment. To manage inventory across sales channels, you will need warehouse management system (WMS) software that can track inventory; integrate with online selling channels for order management, communication, and accuracy; and manage shipping. Additionally, brands may want to invest in an order management system (OMS) that integrates with your WMS so they can keep track of their orders across channels, from inception to final delivery. No matter the size of your or your customers’ operations, the right technology stack is vital for omnichannel fulfillment.
Want to learn more about omnichannel and its impact on the supply chain? Read the 2022 State of the Third-Party Logistics Industry Report!