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Multi-channel versus Omni-channel Retail: What’s the Difference?

When online shopping, customers have the luxury of placing small, frequent orders, and they can demand shipments be delivered with Amazon-like speed directly to their doorsteps, workplaces, or other convenient pickup locations. And as choice in retail continues to grow, customer loyalty is harder to secure. On-time delivery to the customer’s destination of choice can make or break an opportunity for repeat business, and retailers are increasingly dismayed to discover that one delivery delay can lead customers to purchase from another online merchant.

As merchants strive to meet customers’ exacting expectations, endlessly chasing Amazon’s same-day/next-day delivery model, many deploy either a multi-channel or omni-channel distribution strategy to optimize success.  Here we explore how the two models vary when it comes to customer experience, and how they’re vastly different when it comes to back-end operations, from warehouse fulfillment centers to shipping delivery timelines.

What is multi-channel retail?

Multi-channel retail centers around the product, placing it in places of prominence, both physical and online, to create more sales opportunities. The assumption is customers will choose the channel that best meets their needs.

The upside?  The customer has multiple channels by which to discover and purchase their product, and the retailer has many sales channels at their disposal. The downside?  In a multi-channel strategy, all channels may be available, but not all are integrated. Each sales channel is often managed as an independent silo, from order processing to fulfillment and shipping. The customer has separate purchase opportunities, but lacks a seamless purchasing and shipping experience.  For example, buying online and picking up in the store is difficult for a retailer to execute and may not be available to customers.

What is omni-channel retail?

New call-to-actionIn an omni-channel retail model, the customer experience and brand equity are front and center. The goal is to leverage various sales channels to formulate a seamless purchasing and shipping experience for the customer.  In other words, the omni-channel model accounts for the entire purchasing process, from the customer first discovering the product… to ordering the product… to receiving the product, with fluid movement between sales channels. A customer can easily order a product online and pick it up in the store… or purchase the product in the store and deliver it to their home… or order it from one store and pick it up in another. Warehousing, order, and delivery data are synchronized between each channel, providing the retailer with full transparency into inventory and into how the order moves through the retailer’s fulfillment and shipping processes.

The Impact on Order Fulfillment & Shipping

The warehouse process, while not visible to the buyer, plays a major role in the customer experience. Every shipment is a key point for customer engagement, and the fulfillment process can make or break the experience. Failure to fulfill an order accurately and/or deliver it on time where promised, and all bets are off.

Multi-channel Fulfillment

In the multi-channel model, product fulfillment and shipping are carried out separately through each channel. These siloed processes can increase time and costs; in fact, order data in one channel often doesn’t reach other sales channels, causing the retailer to miss cost-saving order consolidation and streamlined shipping opportunities.

Omni-channel Fulfillment

The omni-channel model offers a more flexible fulfillment and shipping experience for both the merchant and the customer. By leaning on a variety of order completion strategies, omni-channel fulfillment allows the retailer to choose the shipping and fulfillment option that makes the most sense for each order.  For example, the merchant can fulfill an order directly from a store… or from a distribution center… or by moving inventory from a distribution center to a store and then fulfilling the order from the store. In doing so, the merchant is better positioned to meet customer expectations for delivery timelines and accuracy.

With the right omni-channel strategy in place, retailers can establish an approach that improves customer service and profitability. Plus, by centralizing all product data in one database, the retailer can offer more flexibility, choice, and accuracy in the shopping experience.  Stock-outs are less likely to occur, and customers can receive real-time information regarding a product’s availability at a designated location.

Omni-channel Strategy is the Key to Streamlined Operations

Today, one of the keys to success for modern retailers is the ability to achieve cost-effective parcel shipping while meeting stringent delivery demands.  Without an omni-channel strategy in place, this becomes difficult and the customer experience can suffer.

It’s time to improve the experience for all of your customers by implementing an omni-channel retail and fulfillment strategy that connects sales channels, payment methods, fulfillment, and shipping.

Need assistance implementing or modernizing your retail omni-channel fulfillment strategy?  Get in touch with a Logistyx expert today.