As demand for omnichannel rises, retailers are rolling out new services like buy online, pickup in store (BOPIS), free shipping and new return methods. But as these services roll out — and they are at a rapid rate — retailers need to ensure they have the backend support in their inventory management and other software systems to effectively meet consumer demands.
The problem is, many retailers are struggling. Too few are properly tackling inventory management across various channels and implementing the proper systems needed to offer omnichannel services. Here are three steps retailers can take to ensure their supply chains are ready for growing omnichannel demands.
1. Integrate Inventory Channels
Many retailers still maintain discrete systems for managing inventories across various channels. This does not provide the level of visibility needed to be able to tell shoppers what a retailer actually has in stock in a physical store or online. It also can create headaches for the retailer if it is promising the customer one thing but is not physically capable of fulfilling an order.
According to James Prewitt, vice president of retail industry strategy at JDA Software, retailers need to ensure their inventory systems are reporting accurate information and inventories across all channels are integrated to be able to determine what product is and is not available to customers for online shopping, home delivery or BOPIS services.
The retailers that have successful omnichannel strategies are those integrating their inventory capabilities, Prewitt said. A previous JDA and PwC study showed just 16% of CEOs said they were profiting from omnichannel fulfillment. What are these few retailers doing right?
“Those 16% have really thought about this in a holistic manner,” Prewitt said, adding they are looking at all the “pieces of the puzzle” — product information management, labor scheduling, distributed work management, etc. — that make an omnichannel strategy sustainable.
A recent JDA Software report showed half of all consumers who chose the BOPIS option with a retailer experienced an issue obtaining their purchase. Prewitt said the No. 1 issue consumers reported with BOPIS was the wait time at the store when they went to pick up their online purchase. Store employees are struggling to find the order.
Retailers need to think of the omnichannel as an “end-to-end roadmap,” Prewitt suggested. Determine what about your current inventory management systems needs to change to support the omnichannel services being promised to customers. Failing to address the people, processes and systems that surround the omnichannel will create issues internally and lead to disgruntled customers.
2. Communicate With Third-Parties
Another area retailers need to focus on is delivery dates, specifically being able to deliver a product on or before the date they promise to customers, Prewitt said. This becomes a bigger challenge during the holiday season as shopping activity grows, volumes of inventory rise and fall rapidly and unexpected roadblocks like bad weather come into play.
However, customers hold the retailers responsible for fulfilling the orders they place. From the time of purchase online to the time it is delivered, either at their door or picked up in a store, consumers count on retailers to deliver their products. If a retailer promises a specific delivery date, they need to hit that, Prewitt said. This means being in communication with UPS, FedEx or other third-parties, he said.
“It’s important for retailers to be in collaboration with the shippers to really understand that the dates they promise are attainable,” Prewitt said.
3. Accept Omnichanel is Here to Stay, and Prepare for It
There is no turning back — omnichannel services are not going away. Few retailers will be able to survive without offering these services, Prewitt said. That may not have been the case five years ago, but it definitely is today. The JDA and PwC study showed retailers are focusing 2016 spending on enterprise-wide inventory visibility to respond to omnichannel services. About 60% of respondents said they would focus specifically on shipping to the store for customer pick up services, 67% pointed to focusing on shipping directly to the customer and 71% said they would focus spending on handling returns from online and store orders.
As stated before, few retailers at the moment are profiting from omnichannel selling. Another recent study by IHL Group showed issues with the omnichannel are costing retailers $1.75 trillion a year. Out of stock issues, overstock issues and returns are continuing to prove problematic.
The attention and demand around retail omnichannel services this holiday season has already exceeded expectations, and the season is not even over, Prewitt said. This year will no doubt be a learning experience for the industry.
“I think it’s really going to be an eyeopener for a lot of retailers on how to better address this and be prepared,” he said.