Omnichannel is a buzzword that has been around for more than a decade. Omnichannel appears in many presentations, but some customers struggle to define both their omnichannel strategy and the services they require.

What is OmniChannel? 

Let us define an omnichannel distribution network versus a multichannel network. A company relying on multichannel distribution is deploying multiple partners to service the specific needs of its customers. A company would select only one partner to fulfill all customer requirements in an Omnichannel scenario.

Often, executive teams deploy an omnichannel strategy without ever consulting on the organization's requirements needed to succeed.

For this discussion, we will limit ourselves to only the benefits and risks of Omnichannel distribution.

Five Types of Omnichannel Distribution Channels

• Online purchase and pick up at store location
• Online purchase and delivery to home or business
• Purchase at retail and deliver to home or business
• Drop shipped
• Buy online or retail, then return at the store or online

Why OmniChannel?

Companies choose to pivot to an omnichannel strategy with the expectation that brand loyalty will increase due to reduced friction in customer interaction.

Additionally, brand loyalty increases from omnichannel distribution because of the frictionless consumer experience, leading consumers wanting to come back for more.

The decision to employ an omnichannel strategy relies on an expectation that it will increase sales channels, lower transit times, and improve customer engagement. It requires a company to choose a distribution partner, who reflects their customer service values, has expertise in the different methods of fulfillment, and can integrate IT systems.

Omnichannel Distribution Channel Challenges   

• Real-time Inventory Visibility
• On Hand and In Transit
• Partner expertise in E-Commerce but not to Retailers
• Channel Specific Process (Routing Guides, Returns, Segregation of Freight Rates)
• Drop ship from a warehouse or manufacturing center to a store, home, or other location.
• Returns Processing
• System Integration

Partner Selection 

Partner selection is the most critical component for a successful transition from Multi to Omnichannel. In a Request for Proposal (RFP) or Vendor Selection meetings defining the relationship and the shared values are the keystone to shared success.

The relationship can be broken down into three key components. Here are the components and issues that need to be considered.

Core Values   

• Do you and your partner agree on customer service expectations?   
• Does your partner have a history of partnerships to reference?
• Is your potential partner financially stable?

Warehousing and Transportation   

• Can your potential partner fulfill both e-commerce and traditional channels?   
• Do they understand the specific requirements that each channel demands?
• What are their fulfillment KPIs, and do they reflect the information shared with the customer?
• Do they have multiple locations to fulfill from?
• Do they have expertise in retail management?
• What kind of customer return options can they process?
• What transportation options do they bring into the package?
• Are they willing to meet regularly to report on KPIs and improve where needed?

System Integrations   

• Can they interface with the necessary systems, for example, Shopping Cart, Retailer EDI, ERPs, and Freight Carriers?   
• How long do integrations take?
• Do they use API or EDI?
• What is the lag time on inventory and order visibility?
• How do they push the data back to you?

These questions are examples of the issues the planning team will need to identify and plan for before a successful move to omnichannel can be executed. It is imperative the planning team gets involved anytime a company considers moving to omnichannel as early as possible to maximize the opportunity for success.

If you or your team are looking for an Omnichannel distribution partner, contact your NNR Account Manager to learn more.