Executive Briefings

Cross-Channel Retail Logistics

Walmart provides a good example of the changes brought about by multichannel sales, says Bob Heaney, senior research analyst in supply chain management with Aberdeen Group. The retailer has more closely aligned its booming online fulfillment operation with its logistics organization.

With the dotcom era imploded, so did many of the great expectations that the internet marketplace would ever provide a significant channel for merchandising. Nevertheless, online commerce has been growing steadily in recent years. Still, Walmart's recent announcement that it is seeing 20-percent growth a year in online sales is pretty remarkable. As a consequence, the retailer has decided to mesh its logistics operations with those of its domestic internet fulfillment arm.

Online ordering has profound implications for Walmart, Heaney says. First of all, outbound is entirely different, with delivery made direct to customer in many cases versus the traditional in-store delivery model. Perhaps more important is the breath and depth of product lines that online sales make possible; many more than can be offered at the largest superstore.

"How do you handle that?" Heaney asks. "We're finding many companies feeling the pressure. In the past it was largely addressed by farming out the newer components of the supply chain, like online fulfillment, to others. But recently, we're seeing a reversal of that trend. Now they're handling the logistics internally because there are synergies between direct-to-consumer and traditional channels."

A lot of companies are doing vendor-direct shipments, whether they go to the store or to the end consumer. But what do smaller companies do? Heaney says Walmart, while hardly small, exemplifies a successful approach for everybody. It outsources certain functions to specific partners. "By doing that, you can extend your capabilities from a technological standpoint and accommodate the nuances of a given channel," Heaney says.

If there is any advice going forward, it's this: "We've seen a trend to address process first, followed by managing people, and then technology."

To view this interview in its entirety, click here

Walmart provides a good example of the changes brought about by multichannel sales, says Bob Heaney, senior research analyst in supply chain management with Aberdeen Group. The retailer has more closely aligned its booming online fulfillment operation with its logistics organization.

With the dotcom era imploded, so did many of the great expectations that the internet marketplace would ever provide a significant channel for merchandising. Nevertheless, online commerce has been growing steadily in recent years. Still, Walmart's recent announcement that it is seeing 20-percent growth a year in online sales is pretty remarkable. As a consequence, the retailer has decided to mesh its logistics operations with those of its domestic internet fulfillment arm.

Online ordering has profound implications for Walmart, Heaney says. First of all, outbound is entirely different, with delivery made direct to customer in many cases versus the traditional in-store delivery model. Perhaps more important is the breath and depth of product lines that online sales make possible; many more than can be offered at the largest superstore.

"How do you handle that?" Heaney asks. "We're finding many companies feeling the pressure. In the past it was largely addressed by farming out the newer components of the supply chain, like online fulfillment, to others. But recently, we're seeing a reversal of that trend. Now they're handling the logistics internally because there are synergies between direct-to-consumer and traditional channels."

A lot of companies are doing vendor-direct shipments, whether they go to the store or to the end consumer. But what do smaller companies do? Heaney says Walmart, while hardly small, exemplifies a successful approach for everybody. It outsources certain functions to specific partners. "By doing that, you can extend your capabilities from a technological standpoint and accommodate the nuances of a given channel," Heaney says.

If there is any advice going forward, it's this: "We've seen a trend to address process first, followed by managing people, and then technology."

To view this interview in its entirety, click here