Omnichannel retail is the current buzzword in eCommerce with many small retailers aspiring to it. However, there is still some lack of consistency in how the strategies are implemented.
Several businesses have made a successful transition to omnichannel selling. Several others could use clarity and insight on it.
Omnichannel retail challenges are many, beginning with the setup. Many retailers struggle to go beyond the set ways, metrics, logistics, and systems typical to their single-channel origin. Thus, the operations can be skewed in favor of one particular channel, often the first or original sales channel.
Omnichannel retail success hinges on completely integrating and managing all channels effectively. Not doing so can erode all of the investment you have made in the transition and also set you up for failure, especially when so many others are doing it right.
Here, we list the 10 potential pitfalls along the way to omnichannel success and suggest strategies to overcome them.
Challenge #1: Inventory Management
Omnichannel retail basically means listing and selling products across various channels. All sales channels, online as well as offline, are under the same control and distribution system. Inventory management and allocation end up being prioritized along the most active channels, but at the risk of missing orders from other, less, frequent channels.
This supply-demand gap could prove costly in terms of missed orders and you may even lose customers due to poor service. Retailers need to prioritize inventory management to make the most of inventory visibility across channels. At the same time, order handling should also be streamlined so that all orders are fulfilled successfully.
- Keep SKU codes consistent and recognizable across channels
- Keep barcodes simple and unique across SKUs.
These two steps will go a long way in helping you manage inventory better.
Challenge #2: Warehouse Locations
Warehouse locations should be optimal to your retail network, store locations, distribution, and shipping channels. Contents of a warehouse should be organized so as to keep stock more accessible to employees who manage the packing and shipping.
This keeps inventory fluid and can help you improve your inventory turnover ratio. The layout of the warehouse should be designed to best facilitate omnichannel order fulfillment. Bear in mind that your existing stores will also likely serve as fulfillment centers for both offline and online orders. To design a seamless experience, you need to ensure that orders and returns can be processed from any of these touchpoints.
Challenge #3: Overstocking/Duplication of stock
Over-ordering stock by overestimating potential sales can be dangerous. So can duplication of stock as a result of keeping incorrect inventory. Both can end up blocking your working capital.
Optimizing inventory management should be high on your priority list, especially where you have attempted the omnichannel retail challenge on a tight budget. Moving inventory fast will supplement your working capital. By using a good inventory management system, you won’t have to worry about understocking or overstocking issues.
Challenge #4: In-store stock allocation to online channels
The “bird in hand” approach isn’t the best one in omnichannel retail. Immediate sales to brick-and-mortar store customers can end up cannibalizing your own online sales of that product in case of low inventory.
There are a few ways to offset this omnichannel retail challenge:
- Reduce the inventory availability of fast-moving items on online channels
- Keep the supply steady through timely orders to your vendors
- Accomplish your pick-ups from warehouses and packing of items before peak hours if possible
- Consider “dark stores.” A dark store can be like a mini-warehouse with minimal walk-in traffic.
- Keep a high reorder point for fast-moving inventory items and high-frequency, multi-channel sales.
Challenge #5: Uninformed employees
Employees, especially customer-facing employees, should always have the stock levels at their fingertips, or some way to access info quickly. They should not have to turn customers away due to an item’s unavailability. This is one omnichannel retail challenge you can do without. Adequately train your staff on the new sales model. Ensure that no one ever leaves without a product.
Employees should always have alternatives at the ready: suggest nearby outlets, or place an order online for an item not available at their store. The key is to not lose a single sale. Instead, use the available channels more effectively.
Challenge #6:Channel-specific returns
Consistency in systems across channels is a big advantage. It makes it easier, efficient and altogether delightful to the customer to be able to buy through one channel, receive it through another and return it through a third.
Customers love options. Your infrastructure should enable this. Customers who return, and stay with the brand for a long time, contribute to much of the brand’s profits. Make it a rule to process any return or replacement through every channel. This way, you can even entice customers to consider other product alternatives when they return items in your store.
Challenge #7: Technology
Often, when a business goes omnichannel, existing technological infrastructure and processes fall short and scramble to catch up to vastly increased needs. Make technology work for you, instead of the other way round. In other words, don’t create your process and then look for technology to fit it. Start with the best industry practices supplemented by the best matching software.
In addition to smoothing out operations, technology can help you analyze best-and-worst performing stores and channels. You should get real-time updates so you can make decisions immediately.
Harnessing technology and automation is one of the best ways to mitigate some omnichannel retail challenges.
Challenge #8: Software adoption “ramp”
The speed with which your employees grasp and adopt your software goes a long way in offsetting omnichannel retail challenges. The learning curve- how difficult/ easy your employees may find new software, impacts order fulfillment for days to come.
You could try running an omnichannel pilot in a trial location to see which software and which strategy is the best fit for you.
Challenge #9: Ignoring stock-takes
Undertake regular stock-taking as this ensures the most correct figures on your systems so you’re not left in the lurch. Despite having multiple systems, the actual stock may not always accurately reflect system figures. Frequent stock-taking accounts for pilferage and damages in addition to exchanges and returns.
Challenge #10: Choosing the right partners
Tying up with the right shipping, logistics, and especially drop-shipping partners is critical for successful order fulfillment. Customers expect speedy delivery and regular updates on shipping status. This will affect your brand/ business ratings.
In addition to all these measures, a company should rethink its customer engagement programs and strategies. Going omnichannel requires a multi-level customer engagement and retail marketing strategy. This should typically include:
- Understanding of customer behavior
- Data analysis of buying behavior
- Retail marketing suitable for your target market
- Consistent, recognizable branding, marketing and messaging
- Tracking customer-centric KPIs such as customer lifetime value, profitability and engagement levels
- Predicting demand through sales history by channel
- High inventory visibility
What omnichannel retail challenges do you encounter most frequently? How do you usually solve for them? Let us know in the comments.
Primaseller is committed to ensuring retailer success. We stay current with industry trends and analyses so we can provide these to you in easily consumable nuggets such as blog posts and monthly webinars. This article is a condensed summary of one of our exhaustive webinar discussions. Don’t miss out! Sign up here to stay in the loop when we announce the next one.
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Armed with a degree and a pen, loves to tell stories. When not telling stories, she also works. Hard to decide which one she likes more.