How Customer Expectations Influence Omni-Channel Retail Distribution
Thanks to the ever-increasing reach of e-commerce in today’s world, shoppers and consumers now more than ever expect an omni-channel buying experience that seamlessly integrates brick-and-mortar shopping with the web-based, app-based, and social-based channels.
Because of this new reality, many retailers find themselves needing to spend more and more time, money, and effort to not only attract new customers but to retain them once they have been acquired. When implemented correctly, an omni-channel experience like the one described above can help increase your company’s revenues and stave off losses to online behemoths like Amazon. When implemented incorrectly, you risk shoppers abandoning your channels for the competitor’s very quickly.
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So how can you ensure that your omni-channel experience achieves the results that you need it to achieve? By aligning the process with the expectations of your customers.
What Consumers Expect from Omni-Channel Retailers
Broadly speaking, online shopping and e-commerce have conditioned customers to expect three things from their retailers:
- A personalized experience
- Extreme convenience
- Quality customer service
1. Personalized Experience
Online shopping has made it possible for customers to learn everything that they need to know about a product and make a purchase decision on their own, without the help of a salesperson. The modern consumer has already seen the product they want to buy, knows the fair price, and knows that they have multiple channels that they can purchase through.
This last factor, in particular—the ability to easily look elsewhere if they are not happy with their experience—is of great importance for retailers of all stripes. Because consumers now have so many options, it is even more critical that they have a worthwhile experience when they interact with your brand.
Convenience (as we discuss below) of course plays a role in customer satisfaction. But just as important is ensuring that your consumers have a personalized experience when they try to buy from you. While this used to be impossible or extremely difficult to do, it is now relatively easy for retailers to personalize the shopping experience.
Websites, apps, and social media all gather user data, which can be used by retailers to prefill forms, offer product suggestions, and remember preferences—all of which have the potential to dramatically increase consumer satisfaction. In fact, without this customized shopping experience, the consumer will default to bargain shopping other retailers for the absolute lowest price.
Today’s consumers have grown accustomed to unprecedented levels of convenience. They want and expect to be able to purchase whatever they want, with the options and features they desire, and to receive it quickly. And if they can’t get that level of convenience from you, they’ll find it elsewhere.
In the past, if a customer wanted a particular product asap, they likely would have gotten in a car and driven to your store. But nowadays, the customer likely has an entirely different strategy. They may purchase online and select same-day or next-day shipping in order to have it delivered within 24 hours. Or they may check online to make sure that a product is in stock, make the purchase online while they are at their office, and then decide to pick up the ready-to-go order from your store on their way home from work.
Customers want what they want, when they want it, but they also want the buying experience to be as easy as possible.
The good news? While meeting these ever-shifting customer expectations can be challenging, the more retailers can satisfy these types of consumer preferences, the more loyal those customers will become.
3. Quality Customer Service
What do you expect when you try to reach customer service? In the past, the phrase customer service referred to an actual representative whose job it was to speak with customers either over the phone or in person at your brick-and-mortar stores.
Today, customer service means a very different thing. Your customers expect that they will still be able to connect with an actual human representative if they have an issue or problem that they cannot resolve. But they don’t just want to be limited to contacting your customer service reps by phone or in person: They also want their issues resolved through secondary interactions such as email, live chat, or social media.
In order to support an omni-channel retail strategy, it is critical that retailers also create an omni-channel customer service strategy that meets the customer where they expect to be met. If it isn’t, then you risk alienating your consumer and sending them into the arms of a competitor.
How will you Enhance your Omni Channel Experience?
Companies engaging in omni-channel retail fulfillment need to look at their specific industry and customer base to make intelligent decisions about how and where to optimize.
At the heart of the issue are inventory control and visibility. This is the path towards profitable order fulfillment. Omni Channel fulfillment can be very difficult and time-consuming (i.e. expensive). As a marketing team builds out the infrastructure of how customers will interact with the brand, the supply chain must adapt to support the overall strategy. If the products are not available when promised, the consumers’ trust is diminished, and they may not come back and give your brand a second chance.
So how can a retailer drive revenues while minimizing operating costs? Below are some strategies that can help.
1. Think about optimizing your DC strategy
Omni-channel supply chain planning has changed the way that physical order fulfillment works in the 21st century. When there were two separate channels (retail and eCommerce), retail DCs were located nearest the stores, and eCommerce DCs were located near a major parcel carrier’s hub. This was the most effective set up for the way that business was done.
Single or centralized locations in the middle of the country may be the best for a new DCs lowest possible net cost (inventory + product + shipping cost). Is your business capable of using store inventory to get the consumer the product more cost efficiently?
2. Consider implementing a Buy-online, Pick up in store (BOPS) policy
Implementing a BOPS strategy, where consumers can place orders online and then pick up their purchase in store, can be a game changer if the typical eCommerce customer can be drawn into the store to pick up their order. This provides the retailer with an opportunity to engage the customer on a personal level, add complimentary sales while the customer is in the store, and provide additional services such as warranty, repair, and upgrade services.
That being said, it does come with its own unique challenges, which must be kept in mind:
- Retail order pickers can be high cost
- Newly-added order fulfillment tasks can take away from the one-on-one service retail consumers are looking for
- A clear inventory management process will be required to ensure that the correct level of inventory is in each location to meet customer demand
- Inventory controls must be seamless between retail and supply chain operations
3. Free Shipping
There’s no such thing as a free lunch, but it seems that everybody believes in (and expects!) free shipping. While online behemoths like Amazon can easily absorb this cost by charging membership fees and thanks to bulk shipping discounts, it can be harder for smaller retailers to pull such maneuvers to stay competitive.
Unfortunately, this has led many companies to temper customer expectations by either charging for all shipping, or by offering free shipping only on orders that have met a minimum price point. The fact of the matter is: Customers expect free shipping, and retailers must get smarter about the shipping options that they offer. Whether this is done by evaluating new freight carriers, implementing new pick-up locations, or leveraging brick-and-mortar locations as miniature warehouses from which to ship product, there are a lot of options for today’s retailers.
4. 3rd Party Logistics
If a retailer has a small volume of e-commerce orders with low service levels, they may consider using a 3PL to fulfill e-commerce orders. 3PLs can also be used during peak times of the year and some will even supplement store pickup orders. Pushing inventory to a 3PL can be a great way to flex your distribution, but it can also increase inventory costs.
5. Inventory Management
Today, more than ever, companies need to have real-time visibility into their inventory so that they can understand:
- Where there is the greatest demand for a particular product
- Where product should be housed to limit shipping costs and maximize availability to customers
- Understand and facilitate product returns from customers.
This is a complicated problem, but an essential one for any operation to be able to solve. Luckily, there are a number of tools, software, and strategies that can be put in place to help omni-channel retailers have better visibility into their inventory.
Integration Throughout your Omni Channel Supply Chain
While each of these strategies can be effective in helping an omni-channel retailer meet the expectations of their customers, a comprehensive remedy will likely need to incorporate multiple strategies. A qualified systems integrator can help design the perfect solution for your operation’s unique challenges.