Following a sharp decline in December, retail sales jumped 3.8% in January per the U.S. Commerce Department, accompanied by a 14.5% rise in ecommerce sales, despite inflation. While the ecommerce boom usually takes the spotlight, the increase in traditional retail makes reassessing your omnichannel fulfillment strategy all the more important and timely.
Omnichannel fulfillment means handling orders across all sales channels with a unified approach and encompasses B2B, B2C, and ecommerce. As a third-party logistics (3PL) provider, you may think you have traditional retail fulfillment figured out and that you can handle the increased order volume. Per the 3PL Warehouse Benchmark Report, only 22% of 3PL warehouses report performing omnichannel fulfillment. However, retail is evolving; with multi-channel retailers becoming the norm, you need to support your customers with an omnichannel fulfillment strategy.
Consumers demand more avenues to shop from brands, forcing them to adapt and blur the lines between wholesaler, retailer, and e-tailer for a multi-channel approach. They no longer have one or maybe two options for how to buy from a brand. In addition to shopping either in-store or online, consumers can now select more hybridized purchasing options like buy online pick-up in-store (BOPIS)/curbside or order in-store for home delivery, giving them more flexibility in how they choose to shop. The same goes for returns: consumers can return items ordered online in-store, or they can ship items bought in-store back to a brand’s warehouse, usually with a prepaid shipping label tied to their receipt.
The list of brands adopting omnichannel selling continues to grow, and not just from major brick-and-mortar retailers looking to maintain relevancy. Omnichannel selling works for e-tailers as well. Even Amazon offers omnichannel options for delivery to their lockers and in-store returns for online orders, with many other previously online-only brands following this trend and even partnering with brick-and-mortar businesses for in-store return options. Omnichannel selling is the new normal; according to Mark Pilkington, a brand will become a “'free-floating’ concept with the goal of optimizing sales across all channels.”
Implications for Fulfillment
What does this retail revolution mean for 3PLs? Clearly, traditional fulfillment strategies do not accommodate the flexibility consumers have now when shopping. A warehouse needs ship orders to retailers and direct to consumers and to accept returns for orders coming from ecommerce as well as brick-and-mortar sales. Keeping these fulfillment lanes separate will only cause confusion as consumers cross these lines themselves; the only way to handle increased order and return volume is with an omnichannel fulfillment strategy that considers all channels of fulfillment with one unified, wholistic strategy. Many 3PL warehouses view omnichannel fulfillment as pulling inventory from the same available inventory instead of allocating one set of inventory for retail backfill and another for ecommerce fulfillment, which gives them better flexibility to use inventory in the channel where it is moving fastest. This helps better manage inventory levels especially when supply chain disruptions occur. No more getting stuck in silos! Your omnichannel fulfillment strategy will enable you to have a bird’s eye view of your fulfillment operations and tackle the challenges of the changing retail landscape.
What You Need for Omnichannel Fulfillment
The most important thing you need to manage omnichannel fulfillment is technology that records data on and tracks your inventory and orders. Omnichannel fulfillment is simply too complex to keep track of manually or with spreadsheets; instead, you should rely on a warehouse management system (WMS) platform to record all the transactions in your warehouse and organize receipts, orders, and stock. A cloud-based WMS scales with your customers and improves efficiency and accountability over error-prone paper-based methods, and customers looking to expand their omnichannel selling will want to partner with a 3PL that utilizes a robust WMS.
Additionally, you can–and might need to–synchronize your WMS with your customer’s order management system (OMS) so you and your customers have greater insight into order and inventory tracking over the course of an item’s entire lifecycle, from production to warehousing to consumer, and can plan for bottlenecks. With so many moving parts and different avenues for fulfillment, omnichannel thrives with more technology.
With eMarketer predicting that 23.6% of all retail sales will come from ecommerce by 2025–compared to 11% in 2019–omnichannel selling is here to stay; sooner or later, you will have to adopt an omnichannel fulfillment strategy to stay ahead of the competition, so why not get started now?
For more industry insights and trends, read the 2022 State of the Third-Party Logistics Industry Report.