Omni-channel: the key to retail evolution

Two years ago, none of us could have imagined how important eCommerce would be today for our everyday lives. We could all see the eCommerce train coming down the tracks, but we had no idea just how quickly it would arrive at the station. The same can be applied to the arrival of an omnichannel strategy for retailers. The acceleration in both cases is driven by the same factor—consumer habits.

Changing ingrained consumers habits is never an easy task, but the global pandemic brought an almost overnight shift in behavior with consumers using their digital wallets for almost everything they could possibly need. In addition, they wanted every item delivered to their homes, so they didn’t have to leave that safe environment and head for the shopping center.

The retail industry had to learn very quickly what customers wanted and how they wanted to receive it and then to adapt processes and a supply chain to match that reality. It was a dramatic change and in the shortest imaginable timeframe.

A recent industry survey showed that 78 percent of consumers now expect permanent changes to their shopping experience, while 44 percent are unlikely to return to the way they used to shop. That means that merchants and their logistics providers have to provide a much more digitally enabled path to success. And the brands that are now thriving are those who have overcome the potential challenges, creating and embracing a seamless customer experience in an omni-channel environment.

That’s backed up by a McKinsey report from April (“Omnichannel: the path to value”) that notes just a handful of years ago offering a compelling omni-channel experience was at the leading edge of retail. Now it’s nearly a requirement for survival. The report also highlights that the total value of omni-channel distribution will continue to grow 7 percent annually and hit US$840 billion by 2025.

Retailers themselves need a clear understanding of which parts of the omni-channel equation to prioritize in order to make the right levels of investment in eCommerce, store operations, supply chain, marketing and technology. Omni-channel is now seen as setting the standard for success in the retail environment by combining all these elements to achieve maximum results.

As I mentioned in a previous eCommerce article on the subject of marketplaces, what the pandemic essentially did was bring the industry and its development forward by about five years. In one way, that was as a result of the sheer volume of shipments that have been moved over the last 18 months as a result of purchases. In other, it’s a result of the penetration into new user groups who are now familiar and comfortable with using the internet to buy all manner of goods for which they would have once visited a bricks and mortar store.

In addition, there was an impact from adding new goods that were not previously seen as mainstream items for eCommerce—food, DIY goods and furniture come to mind here. Despite these new entrants to the online market, consumer products and electronics remain the two largest sectors in eCommerce, and as a logistics company, it’s imperative to be in both those arenas.

The role of LSPs is simple, it’s to be a trusted partner to their customers and then deliver satisfaction to their end-customers.

It sounds simple, but the reality is rather different as there’s no off-the-shelf solution for eCommerce, rather a set of solutions tailored to each customer’s needs. When trying to create a seamless experience for the online and brick-and-mortar shopper, the fulfilment warehousing, last-mile deliveries and return solutions all need to work in harmony. Crucial to the delivery of it all are end-to-end IT solutions.

Traffic in stores is almost certainly going to be down permanently, and a lot of the resources previously ploughed into brick & mortar stores will now be put into technology—the same can be said for the logistics companies, as many of those retailers need partners to deliver their “back-end.” That trend will remain steady whether it’s a global conglomerate or a mom-and-pop store with an online presence—they all want the customer experience to be something that keeps their customers coming back for more.

As a result, 2020 and 2021 have seen an alignment of warehousing and facilities globally. This might seem strange, but it has not been uncommon in years gone by to find even big-name retailers with different pricing structures and supply chains for online and offline goods. The logic for the alignment of marketing and pricing strategies has forced many to streamline their offering.

In addition, pre-pandemic supply chains would frequently have two warehouses for the same product, one for B2C business and the other for B2B—now it’s combining. This shift makes for a much more sensible business model, particularly in relation to click-and-collect, which has become a hugely important topic for retailers. For retailers barely in the eCommerce arena pre-pandemic, the click-and-collect capability proved a “must” in order to meet online demand.

Another aspect seen by some customers is the changing role of their brick-and-mortar stores. With the rise of a ship from store option, stores themselves can become places of storage and order preparation.