The pandemic disrupted the retail industry — shifting consumers’ preferences to online shopping out of necessity and accelerating the progress of omnichannel order fulfillment.
Retailers quickly adapted to the omnichannel fulfillment model in response to these sudden and unusual circumstances.
Moving forward, consumer expectations to keep flexible shipping and fulfillment options will grow as they’re accustomed to having more freedom in their shopping experiences.
In this guide, you’ll learn about omnichannel order fulfillment and its importance in your business. Specifically, you’ll learn:
- Benefits of Omnichannel Fulfillment
- Challenges With Omnichannel Fulfillment
- 5 Omnichannel Fulfillment Must-Haves
- Final Thoughts: What Is Omnichannel Order Fulfillment?
What Exactly Is Omnichannel Fulfillment?
Omnichannel order fulfillment is a process that empowers businesses to fulfill and distribute orders from multiple selling channels, regardless of which channel the customer used to place the order.
Omnichannel fulfillment makes every retail channel’s inventory fully available from any location and provides consumers with the freedom to purchase from anywhere (online, in-store, from their mobile devices, from digital displays, etc.) and get their orders fulfilled from anywhere (store pickup, home delivery, warehouse pickup, etc.).
Omnichannel retail enables shop owners to sell more, fulfill orders faster, reduce the cost of unsold inventory, and ensure customers find exactly what they are looking for.
Omnichannel Fulfillment vs. Multi-Channel Fulfillment Strategy
Many people confuse omnichannel fulfillment with multi-channel fulfillment strategies.
Multi-channel fulfillment was popularized by ecommerce sales giant Amazon, which introduced a program that handles the storage, packing, and shipping of products. You can have different selling channels, but fulfillment is siloed per channel.
For example, if your sales channels are your website, ecommerce platform, and brick-and-mortar store, you can only serve customers buying from that channel and can only take inventory from the warehouse assigned to that channel.
That can be a challenge because it means longer wait times for customers. Plus, more of your capital is tied up in inventory as you hold the same SKUs in different fulfillment centers.
In contrast, an omnichannel fulfillment strategy avoids a linear process that sees product flow in a single direction (such as warehouse → in-store → customer), focusing instead on the possible ways your product reaches customers.
That empowers you to come up with integrated fulfillment scenarios that bridge the gap between online and traditional brick-and-mortar operations, ensuring customer needs are fulfilled in the quickest and most efficient way possible.
For example, if a customer orders online, an omnichannel fulfillment system can identify a store nearby carrying the product and deliver the product instead of waiting for it to come from a warehouse farther away.
The store could also offer the customer a BOPIS (buy online, pick up in-store) option.
Here are some examples of ways your product interacts with different channels:
- Curbside pickup: Customer-to-store
- Ship to store: Warehouse-to-store
- Store transfer: Store-to-store
- Shipping: Warehouse-to-customer
- Warehouse pickup: Customer-to-warehouse
Benefits of Omnichannel Fulfillment
Omnichannel order fulfillment should be a no-brainer for brands that want to remain competitive in this market. Here are a few benefits of omnichannel fulfillment:
Reduced Inventory Costs and Higher Order Efficiency
According to the Retail Council of Canada, over 50% of North Americans say they will keep their new online shopping habits post-pandemic. That means increased orders and inventory.
Omnichannel fulfillment reduces inventory costs by accounting inventory for all channels in one system in stead of managing SKUs for different channels.
A single order fulfillment process overseeing multiple channels makes it much easier to ensure fulfillment, leading to improved order efficiency and faster delivery times.
More Satisfied Customers
Omnichannel fulfillment offers customers choices while leveraging personalization to give them the best service. According to HubSpot research, if you meet customer expectations, they're 93% more likely to keep doing business with you.
Brings Life Back to Your Retail Stores
Brick-and-mortar retailers were caught on the wrong side of the shift to digital. Many stores experienced declining foot traffic and in-store sales, leading to more store closures.
With omnichannel fulfillment options like BOPIS and shopping trends like showrooming and webrooming, many retailers are looking into using their retail stores as showroom and fulfillment centers.
Challenges With Omnichannel Fulfillment
Omnichannel fulfillment isn't perfect. It comes with some challenges, such as:
Inventory Management
Multi-channel inventory management is difficult on its own, but when you sell the same products on different channels, it can be easy to count the same SKU multiple times.
So it’s important to have a robust warehouse management system or an omnichannel order fulfillment solution that merges SKUs from different stores in a centralized platform.
Synchronizing Channel-Specific Processes
Each channel has different processes.
If you can't get each channel’s process to meet at certain points, you can't ensure customer satisfaction. You’ll need an order management solution with complete inventory visibility, powerful order orchestration, and routing capabilities.
5 Omnichannel Fulfillment Must-Haves
Overcome the challenges of omnichannel fulfillment by choosing a solution with the following criteria:
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Seamless Integration and Unified Inventory
An API-first omnichannel order fulfillment solution allows for simple external data integration that helps you easily import/export and synchronize products, inventory, prices, and orders.
It also enables you to unify inventory visibility across all your stores and distribution centers, making all products available to customers wherever they shop.
In-store inventory can be accessed online, which reduces the risk of cart abandonment and increases the range of products available for online purchase. This contributes to higher conversion rates and a significant increase in online sales. Markdowns are less necessary, thus improving overall profitability.
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Advanced Order Routing and Orchestration Capabilities
Advanced order routing and orchestration capabilities ensure that retailers use inventory from the best location and manage orders as efficiently as possible, ensuring customers find the products they want and deliver them faster — and at a lower cost.
Configurable order routing and workflows can be defined based on store inventory, location, hours of the day, and more. Fully customizable workflows help you put the proper rules and processes in place, ensuring the most appropriate store fulfills every order.
Omnichannel order fulfillment also provides retailers with the ability to split orders between two or more stores, or between stores and distribution centers, when no store can fulfill them completely.
Through configurable service level agreements (SLAs), retailers are able to design scenarios and control how stores must fulfill each order, all the while making sure that customers get their products as quickly as possible.
For example, a time limit may be set for stores to acknowledge and complete an order before it is routed to the next best fulfillment location.
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Easy Product Return Management
The way returns are handled also plays a crucial role in customer experience and satisfaction. According to a study by Klarna, 84% of online shoppers surveyed said they would turn their backs on an online retailer if they provided a bad returns experience.
An omnichannel order fulfillment solution allows retailers to accept returns using their existing returns management process by integrating with the systems that are already in place.
For example, customers can easily return their online purchase in-store, and store associates can leverage their internal POS to process an online return as they would a return for an item that was sold in-store.
In a world where returns weigh substantially in the shopper’s decision to select your brand, a simple omnichannel returns process is an important success factor.
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Productivity-Enhancing Tools for In-Store Execution
As part of an omnichannel order fulfillment solution, mobile apps and tools are available to simplify the fulfillment process for store associates.
For example, a fulfillment app makes it easy for your store staff to acknowledge and process online orders in-store, ensuring accurate and timely order preparation.
Stores receive order details directly into the app and are guided through the fulfillment process with all the relevant order information, including high-resolution product images.
Status notifications should also be available to alert and guide staff through the fulfillment process and also to provide visibility for the management team.
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Actionable Reporting and Analytics
Fulfillment analytics is also a key component of omnichannel order fulfillment. Retailers must leverage detailed fulfillment data to get the visibility they need to optimize their operations.
Retailers should capture all the key fulfillment events tied to every order, providing them with insights on the types of orders being sent for store fulfillment, the performance of different stores in fulfilling those orders, and the performance of the overall store fulfillment program.
They can then dive directly into any specific order to troubleshoot problems more deeply.
Final Thoughts: What Is Omnichannel Order Fulfillment?
Moving forward, customers are going to expect quicker and more flexible fulfillment operations from retailers.
Prepare your ecommerce platform to succeed at omnichannel order fulfillment with Orckestra.
Download our eBook or contact our experts to discover tips and insights on how to implement an omnichannel fulfillment strategy for your business.
