Preparing logistics for the omni-channel revolution

Businesses are revolutionizing the face of retail in order to provide customers with a seamless, personalized shopping experience.
19 March 2019

At an upscale supermarket in Shanghai, there is no need for cashiers.

Shoppers can walk around Alibaba’s sprawling Hema supermarket and take their pick from a spread of fresh produce — be it crabs from Sri Lanka, cod fish from Hokkaido, or strawberries from Australia.

They then scan the barcode on each item with their mobile phones to check the prices, before confirming their purchase with a single tap.

Miles away, another consumer is also shopping for fresh produce from the comfort of his own home.

Once his order goes through, staff members at the store gather and pack the fruits and vegetables, before sending them for delivery to the e-shopper by courier.

With the advent of technology, consumers have begun to develop new habits and needs, making one thing clear — the world of retail is changing and it is happening rapidly.

The more, the merrier

A study published by the Harvard Business Review last year showed that 73 percent of customers shopped across multiple channels throughout their shopping journey.

In order to keep up with a consumer base that is increasingly digitally connected, businesses are moving beyond traditional means of retail and expanding their purchasing touchpoints in the form of mobile apps, social media platforms and even augmented reality technology.

Businesses are reaching consumers through mobile apps and social media platforms.

This, in turn, has paved the way for the omni-channel experience — a fluid and interchangeable shopping experience where customers can seamlessly switch between different shopping touchpoints. It allows consumers to pick up where they left off on one touchpoint and continue the experience on another.

Not only does this strategy bring convenience to customers, it also empowers them to make purchases however they want, whenever they want. These days, customers expect nothing less.

For example, a customer who intends to apply for a credit card might communicate his queries with the bank’s automated chatbot on its website, and receive a breakdown of potential packages based on his salary and personal banking details.

If he decides to end the chat and head to a nearby branch instead, all of that information is then transferred to a bank teller who can easily help him proceed with the application, essentially continuing the retail experience offline.

A no-frills shopping experience

The omni-channel experience is putting huge strains on traditional supply chains because of a rise in the “anytime, anywhere and any device” mindset when it comes to shopping, according to a report by DHL.

For businesses, this means that their logistics operations must be able to adapt in order to keep up with rising consumer demands. One way companies can look at this is to incorporate innovation and technology into their everyday operations.

The DHL report listed four key steps that organizations can adopt to transform their traditional retail businesses into successful omni-channel platforms that can better serve their customers.

The first step is to merge existing inventory across all channels. This means sharing data and consolidating operations between the different sales channels to ensure that everyone is on the same page.

Secondly, businesses should rethink the way they view their traditional distribution networks. Existing storage and processing capacities will have to be transferred over to a virtual network.

Given the fluid nature of the omni-channel experience, they also need to ensure that suppliers and logistics providers are appropriately aligned with flexible, dynamic contract terms.

A shared warehousing approach can generate significant cost savings.

Thirdly, companies can look at maximizing the use of their physical assets in order to better support the omni-channel strategy. Stores, warehouses, and distribution centers can serve a greater role in direct-to-consumer fulfillment.

A shared warehousing approach can generate cost savings for companies by consolidating demand, fulfillment, and logistics expertise at a single location.

Companies can also evaluate fulfillment options based on product characteristics such as value, volume, seasonality and service requirements.

The final step that businesses should embark on is to enhance their speed and efficiency when it comes to last-mile delivery.

In Germany, for instance, smart lockers like the DHL Packstation allow consumers to place their returns safely and securely into e-lockers for pick-up. The 3,500 lockers strategically located across the country means that almost 90 percent of the population live or work within a 10-minute walking distance of a locker.

Within Asia, the Singapore government is looking to build a nationwide network of parcel lockers to help boost last-mile delivery options — one of the first countries to do so.

With demand for omni-channel services on the rise, it is becoming critical for businesses to step up and ready themselves for the future of retail. Businesses must continue to integrate their supply and demand chains in a more seamless manner with technology and data analytics, which lie at the heart of the omni-channel experience.

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