By Ian Goldman
The promise of omnichannel fulfillment has finally become a reality, and many of the largest retailers in the world are positioning themselves to better optimize order fulfillment.
That means things like second-day delivery for the same price as standard shipping for most customers and even same-day delivery are on the way. This will usher in a new world order of the already lofty expectations from ecommerce customers, and retailers without sound procurement strategies, that use multiple stores as shipping centers, will lag behind.
This is great news for retailers dealing in merchandise affected by seasonality, changing trends or advancing technology, because satisfying increasingly quick shipping times relies upon keeping inventory out of warehouses - and on store shelves. Whether a merchant has an established network of distribution centers around the country or has never shipped an item before, tying up inventory in warehouses is no longer a necessary component of running a successful ecommerce business. In fact, warehouses are quickly becoming hurdles to omnichannel success.
Tapping into existing "warehouses"
Every retailer with multiple locations has an existing network of warehouses because each store keeps inventory, even those that lack storerooms and display every item on sales floors. Omnichannel fulfillment makes this inventory available to any customer, whether shopping in person, by phone, computer or mobile device. The barriers to entry for leveraging this inventory on every channel is technology and training.
Lines between sales channels are blurring as more customers shop on multiple channels. Those channels are merging to form more complex shopping journeys as single customers touch each SKU many times on several different channels before making a final purchase. That's why it's more important than ever to integrate every channel into a software platform that can manage them together seamlessly.
When brick-and-mortar POS systems are integrated into ecommerce sales, they can be engaged to actively fulfill orders received from online sources. Having the capability is only the first step in successful fulfillment; the question then becomes, which store (or "mini-warehouse") should ship which products to which customers?
Optimized paths from here to there
Using automated business logic, integrated retail management systems can execute an automated process that then selects the best location to fulfill each order. The decision is based on simple prioritization parameters set by the retailer. For example, imagine a customer orders a blouse from a website and the SKU is in inventory at five different locations. Which one should fulfill the order? Based on a determined set of parameters, the software will automatically select the most appropriate location and update the entire system to reflect that one less item is now available in inventory.
The business logic used to select an order fulfillment location is determined by overall strategy and influenced by market conditions. If the retailer in the example above has determined that speed of fulfillment is the most important parameter, the system will fulfill the blouse from the location that is geographically closest to the customer.
But what if the customer is located in California (where the blouse is a top seller) and it is barely moving in Ohio and the store there has an abundance of them in inventory? If the retailer has prioritized sell-through highly, the system may fulfill the blouse from an Ohio store instead. This logic can be updated seasonally as well, so more lightweight blouses may start to fulfill from locations in cooler climates as winter approaches to get them out of inventory and keep them off of clearance racks.
Prioritization of fulfillment parameters can be changed at any time and can fluctuate to reflect seasonality, changing customer preferences or any shift to business goals. The software always looks for the best routing option, so if an item turns out to be unavailable at the first location due to an inventory mistake or loss, the next-best fulfillment center is automatically chosen and receives the order.
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Any store can be used as a warehouse, but many retailers do not have shipping capabilities at each location. Integrated retail management platforms that have shipping built in can quickly transform every store into a mail order fulfillment center by simplifying the process. The system provides a list of orders, automatically calculates shipping, and prints out prepaid package labels. For most small to mid-sized retailers, it only takes one employee trained on the system to pack and send online orders, providing huge operational efficiencies and dollars saved.
Talked about for years, the reality of true omnichannel fulfillment is creating opportunities for small and large retailers alike. As established retail leaders shift their strategies away from large distribution centers, emerging merchants can craft their models similarly from the ground up and begin using every location as a store, warehouse and shipping center.
Ian Goldman, president and CEO of Celerant Technology, is an expert software engineer and entrepreneurial enthusiast with an extensive knowledge of point of sale systems, CRM and inventory management.
