4 Omni Channel Myths to Leave Behind In 2018

July 23, 2018 Peter Edlund

In the world of board games, such as Monopoly, playing by the rules and having a sound strategy are critical components for success.  Smart investments in property, utilities and railroads, for example, would pay handsome dividends later in the game.

Now consider this.

What is your likelihood for success if the rules of the game suddenly changed?  What if the other players wrote the new rules?

In the past, most retailers invested in brick and mortar stores to grow revenue with the following formula for success:

Build more stores + Gain more foot traffic = Turn a profit.

A generational change, the emergence of Amazon and advancements in supply chain automation converged simultaneously to create rising customer expectations in which consumers dictate where, when and how they shop. 

How do traditional brick-and-mortar retailers succeed in the ever-changing omni-channel game?

Myth #1 Brick and Mortar Retail is Dead

Myth #1 Brick and Mortar Retail is Dead

Traditionally, the retail strategy was simple.  Set up shop in new geographic locations to expand your brand presence and reach new customers. Since the emergence Amazon, retailers have been scrambling to compete with the efficiency and convenience of the e-commerce giant.

For most retailers, however, this is a flawed approach.  Most retailers can’t compete with Amazon by attempting to match their strengths head-on. Instead, today’s retailers should aim to differentiate themselves by investing in the experience within their brick-and-mortar stores.

For example, Nordstrom’s recently opened a Men’s Store in New York City that offers a lineup of debonair men’s fashion along with personal stylists, a coffee bar, VIP dressing rooms and more. Taking cues from its customers, the Container Store enables customers to personalize their shopping experience by uploading a photo or video of their living or work space and setting up an in-store meeting with a design specialist.

To compete with the players, many of whom are writing the rules, retailers must reinvent the customer experience, which in some cases may not be more footprint, but more relevant footprint.    

Myth #2: The Order Management Systems of Yesterday Will Continue to Work Today

Myth #2_ The Order Management Systems of Yesterday Will Continue to Work Today

In the past, managing inventory was the basis for order management. Traditional supply chains allowed more slack and occasionally included more manual processes. Once online shopping became mainstream, brick-and-mortar retailers rushed to hire “e-commerce experts” and tasked them with growing online assortment and revenue, independent of the allocation and distribution of in-store inventory and order management process.

Today’s growing consumer expectations has forced retailers to centralize and automate their order management systems to deliver on whichever fulfillment the consumer chooses; whether it’s buy online and pick-up in store, same day delivery, or other order customizations.

In addition, least cost routing enables retailers to orchestrate inventory across their complete domain and hold inventory positions at strategically positioned locations.

Myth #3: Dropshipping Does Not Deliver a Return on Investment

Myth #3_ Dropshipping Does Not Deliver a Return on Investment

Many in retail are concerned that dropshipping may not yield high profit margins. The first concern is that in a single SKU shipment the retailer pays more per item when they don’t buy in bulk from their suppliers. The second concern is that the dropship fulfillment model provides easy market entry for smaller, less established e-commerce retailers who create additional competition which can affect pricing and margins.

In reality, dropshipping enables retailers to expand their number of SKUs without having to manage inventory related to those e-commerce orders, thereby enhancing brand recognition and increasing online sales. However, retailers are now more collaborative than ever with their vendor communities.  Retailers and vendors can profit by tying their systems together and turning an ROI by carefully curating slow or static warehouse inventory and having it virtualized on retail websites with little to no effort.

Myth #4: Retailers and Vendors Both Lose Control with eCommerce Fulfillment

Myth #4_ Losing Control with eCommerce Fulfillment

Many retailers are skittish about opening virtual inventory via drop shipping due to concerns around brand management and relinquishing control of the fulfillment process. However, retailers also realize that the risk of not having an item in stock or available through dropship fulfillment may lead their customers into the hands of a competitor with a “longer virtual aisle”.

On the vendor side, the investment associated with accommodating a dropship program without a forecasted quantity sounds risky, time-consuming and expensive.

The good news is that retailers can now tailor their dropship processes around new dropship automation tools that provide visibility and control over their entire omni-channel process. With these tools, vendors can more easily comply with customer dropship requirements, including updated inventory feeds, creating shipping labels and retailer-branded packing slips for inclusion with each shipment.

Conclusion: Smart Technology a Game Changer in Today’s Ever-Changing Supply Chain

Emerging smart technology has enabled today’s consumers to proactively prevent everyday misfortunes than ever before - from refrigerators that alert you of depleting grocery supply to garage door sensors that can be programmed to close when inadvertently left open. 

The same preventative technology that protects your home will be the game changer in helping you win in today’s supply chain game.  Today’s supply chains rely on smart technology to send mobile alerts to managers warning them of pending business rule violations before they occur and provide actionable insights to keep data transactions flowing.

Retailers gain needed control of the ecommerce fulfillment process and suppliers reduce the risk of penalties, such as chargebacks, order errors, and unhappy customers.

To learn more about how supply chain exception management and mobile alerting can be the game changer in your supply chain, register for the webinar below.

Webinar - Eliminating the Element of Chance with Business Rules Management

About the Author

Peter Edlund

Founding member and executive at Dicentral, a global B2B integration company with over 20 years of solving complex supply chain integration problems. I am passionate about helping people in the retail, automotive and healthcare industries achieve revenue growth through a better understanding of the world of connected commerce. Frequently published, sought after speaker and host of “The Connected Show”, a video blog that connects our viewers to the people and news that influence today’s integrated supply chains.

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