CONNECTING THE DOTS ACROSS CHANNELS WITH OMNI-CHANNEL FULFILLMENT

A RETAIL DIVE PLAYBOOK

component of any retailer’s strategy, if that retailer wants to be a successful player.

With the heightened expectations of shoppers for convenience and service, retailers have to be able to provide a seamless omni-channel experience that merges both online and in-store. By properly leveraging store networks, streamlining order execution and enabling customers, retailers can create an omni-channel fulfill-ment strategy that gives shoppers visibility to inventory and flexible fulfillment options while also ensuring the customer delivery promise is met in the most efficient and cost effective way possible.

s technology expands and influences an increasing portion of day-to-day life, consumers are expecting more

and more from retailers and the overall shopping experience. They expect conve-nience, ease of use, and most importantly, they want fast and free delivery and flexible fulfillment options like buying online, pickup in store and return to store.

As in-store shopping experiences declining sales numbers1, mobile technologies and online shopping are on the rise, providing consumers with two things they love: more purchase options and convenient access and delivery. Even those consumers who still patronize brick-and-mortar stores are using mobile or online sites to comparison shop, check availability or read reviews on the item they want before or while they are in the store itself.

Customers have always been king, but now more than ever they are ruling retail. And being able to provide for the customer regardless of shopping channel is a key

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With the heightened expectations of shoppers for convenience and service, retailers have to be able to provide a seamless omni-channel experience that merges both online and in-store.

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he ability for a retailer to link stores with the online experience and use inventory from one channel to

serve customers from another is key in today’s retail landscape. Interconnecting stores and distribution centers leaves no option unturned for finding merchandise and delivering it to the customer when and where they want it.

But how can retailers create a network that meets both their business goals as well as consumer expectations?

Having a digital channel that converges with a physical experience offers shoppers the flexibility and convenience they seek in orchestrating orders.

Cross-channel visibility is key, says Rob Poratti, product marketing manager for IBM eCommerce and Fulfillment, because not only can shoppers see the merchan-dise available, but they can also receive merchandise quicker and in more con-venient ways – benefits that can actually influence purchase decisions.

In order to make this scenario a reality, however, retailers need an accurate and up-to-the-minute view of inventory across channels via an order manage-ment system, Poratti says. The system must be able to pull inventory reports from all of the retailers’ ERP and back-end systems, and present that information in an accurate way to shoppers.

LEVERAGING THE STORE NETWORK

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TCross-channel visibility is key because not only can shoppers see the merchandise available, but they can also receive merchandise quicker and in more convenient ways – benefits that can actually influence purchase decisions.Rob Poratti, product marketing manager for IBM eCommerce and Fulfillment

That way, he says, “shoppers know exactly when merchandise is available to them, and they know exactly what to expect in the delivery of their order. They know if they buy something online for pickup in-store, that item is going to be there when they arrive, and hasn’t been sold in the meantime.”

Leveraging the store network helped improve sales for GameStop, according to Han Oster, senior development manager at the retailer.

“We wanted access to the store’s inventory, and we started on a small scale with only one store in a pilot program. On the first day the store was deployed, there were hundreds of orders placed. There was a need for the service, and we didn’t know about it until that store came into our network,” Oster says.

An intelligent order management system that provides cross-channel inventory visibility allows retailers to make better,

and more intelligent, fulfillment decisions based on geography, inventory velocity, shipping costs, and other factors to get products to customers faster and in the most cost effective way possible.

In stores, says Mike Deaton, IBM Global Commerce Solution Executive, the biggest challenge retailers face is having the right merchandise in the right place for the consumer walking in. From the large number of SKUs, size and color combinations, or the type of models of items makes it hard to have that entire inventory in every store location.

“Exposing not only the online inventory but other stores’ inventory to store as-sociates so they can have access to it, and be able to promise customer orders against it and save the sale is having a huge impact on retail sales, as well as same-store sales,” Deaton notes.

By leveraging the store network, inventory from one channel can be used to serve customers in another, increas-ing inventory turns, capturing more sales and eliminating the potential for future markdowns due to overstock.

“Exposing not only the online inventory but other stores’ inventory to store associates so they can have access to it, and be able to promise customer orders against it and save the sale is having a huge impact on retail sales, as well as same-store sales.”Mike Deaton, IBM Global Commerce Solution Executive

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liminating the barrier between in-store and digital channels to provide the consumer with a

seamless shopping experience is key. But to truly optimize a retailer’s fulfill-ment network, an order management system infused with intelligence and the ability to understand, reason and learn is essential to creating a network that can exceed consumers’ expectations, and do it in the most profitable way possible.

“Retailers need to look at the efficiency and effectiveness of their omni-channel execution processes,” Poratti says. “Using cognitive computing we can help retailers build a more efficient fulfillment pipeline.”

STREAMLINING EXECUTION

EFor example, that can mean looking at his-torical demand from the previous holiday shopping period, and building a fulfillment model that would have filled those orders more efficiently and cost effectively.

“The retailer can use this histori-cal information to model fulfillment scenarios based on how they expect to see demand over different time periods,” Poratti says, “and then put those models into execution so they can fulfill orders most effectively.” That, he adds, can save retailers as much as 5 to 10 percent on shipping and fulfill-ment costs, which is one of the biggest expenses an online retailer can incur.

“Retailers have lacked tools and tech-nology to model and optimize their fulfillment pipeline,” Poratti explains. Now they can run ‘what-if scenarios’ to see how adding a distribution center or bringing additional store fulfillment capacity online might improve fulfillment cost, and their ability to serve customers and meet delivery commitments.”

At GameStop, there were some products that had been on shelves for a longer period of time, taking up space. “Then suddenly, when the store came online, there was a consumer who wanted that particular product, so sales went up because consumers could find niche

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products they were searching for. We maximized the opportunity for our customers,” according to Oster.

Deaton warns that taking advantage of advanced analytics can still be as difficult to do, however, as merchandise allocation engines have to predict where customers will walk into stores. What’s more, there is the need to have the right product at the right place at the right price.

“Those three P’s have to be in place to maximize your sales, but you don’t know which store a customer is going to walk into to look for, say, a size medium green shirt,” Deaton says. “You have to do the best you can based on historical demand.” Having full exposure to inventory, then, can have a great impact on the retail model, he adds, because customers and retailers alike know exactly where merchandise is

located, allowing the customer to pick it up in store or deliver it directly to their point of preference.

“That’s a very significant capability that’s really changing how the customer even perceives the retailer,” Deaton says. “They have come to expect that type of capability.”

“We maximized the opportunity for our customers.”Han Oster, senior development manager at Gamestop

ENABLING CUSTOMERS

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or today’s consumers, re-searching products before they purchase — either online

or in store — has become the norm. According to a recent study2, 54 percent of people read reviews before they made a purchase online, and 39 percent of people who made purchases in-store did the same. But it’s not just product reviews consumers are looking for online — they’re also comparison shopping, looking for promotions and deals, and checking for availability.

To consumers, these activities are all just part of today’s shopping expe-rience. But for retailers, it’s another

example of why an intelligent om-ni-channel fulfillment strategy is essential to success.

“In the digital channel, consumers can now have access to the inventory that is in store, as well as a variety of other vendors, manufacturers, and market-

places where the inventory might be available,” says Deaton. “And a retail-er’s digital channel can have visibility that promises against that inventory, no matter where it is. So even though you may be out of stock online, you still have a fallback that can meet the customer’s needs.”

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“In the digital channel, consumers can now have access to the inventory that is in store, as well as a variety of other vendors, manufacturers, and marketplaces where the inventory might be available.” Mike Deaton, IBM Global Commerce Solution Executive

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The store associate is a key player in using an efficient omni-channel strategy to meet consumers’ needs. In today’s retail environment, adding ship from store, and fulfilling online orders from stores only adds a layer of burden on already-stretched store associates. But, says Poratti, providing associates with the right tools that are intuitive to use, and giving them dedicated time and in-store space to support omni-channel execution, can increase the likelihood such initiatives will be successful and enhance the customer experience.

Mobile tools in particular, can help store associates manage ship-from-store orders, and aid in picking those orders and preparing them for delivery. At GameStop, the asso-ciates had to learn how to package and prepare items for delivery — something that had traditionally been done by a fulfillment group located elsewhere. That was a learning oppor-tunity for the retailer, who made sure

those lessons were passed on to all the stores, Oster says.

“Moreover, an order management system that takes into consideration the unique constraints of each and every store is important,” Poratti explains. This might include recog-nizing that a store is having a launch or a special promotion, and would be unable to commit store associate resources to fulfilling online orders.

“The order management system needs to support the store associate and also take into consideration the circumstanc-es of each and every store before it starts blindly routing online orders to the closest store,” Poratti says. “The closest store to the online shopper may not be the best, most efficient, or most cost effective option for fulfilling orders for various reasons.”

It’s key, he adds, to have a system with the intelligence to evaluate those

types of tradeoffs in making decisions for the retailer that is the best decision from a cost standpoint, but also meets customer expectations for delivery.

“An order management system that takes into consideration the unique constraints of each and every store is important.”Rob Poratti, product marketing manager for IBM eCommerce and Fulfillment

CONCLUSION

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everaging the store network, streamlining execution and enabling consumers can provide

retailers with an optimized omni-chan-nel fulfillment strategy. As consumers become savvier in their shopping habits and continue to expect more from their retailers and the overall shopping experience, the complexity of omni-channel fulfillment will also continue to grow.

“The requirements of today are not going to be the requirements of the future,” Deaton says. But, he adds, “However you activate these capa-bilities, now you have to do so in a manner that is flexible and easy to adapt and change for future require-ments. The model will continue to

evolve, which drives complexity back into your retail operations.”

Keeping that flexibility to ensure adapt-ability is just how retailers will continue creating a strategy that benefits both consumer and company.

L“The requirements of today are not going to be the requirements of the future.”Mike Deaton, IBM Global Commerce Solution Executive

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1. http://www.businessinsider.com/declining-store-traffic-is-killing-top-brands-2016-6

2. https://www.internetretailer.com/2016/03/11/more-online-shop-pers-read-reviews-buying

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