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Home » Promises and Challenges of Omni-Channel Retailing

Promises and Challenges of Omni-Channel Retailing

January 24, 2014
SupplyChainBrain

Multichannel retailing and omni-channel retailing both reflect the many means that consumers use to interface with online and brick-and-mortar retailers, but multichannel implies independent management of each channel, while omni-channel implies an integrative approach, says Sodero.

The promise of omni-channel retailing is that companies will fulfill all orders from a single stock of inventory, "but firms are still struggling to get to that point," Sodero says.

The physical and virtual channels each have strengths. The physical channel, or retail stores, enable consumers to touch and inspect products and take purchases home immediately, he says. The virtual channel requires a consumer to order without touching the product and to wait for delivery, but it can offer a wider variety of products at a lower cost. "We call that the long-tail phenomenon. Consumers can buy more obscure products and discover products online easier than in the retail store," he says.

Having both physical and virtual channels gives retailers the best of both worlds, says Sodero. In virtual retail, inventory can be strategically positioned upstream in the supply chain and then shipped directly from vendors to the consumer. "Instead of carrying inventory in the stores, they can keep inventory upstream and drop ship it, which is a powerful competitive weapon," he says. For drop-shipping to work, however, retailers must have visibility to the inventory being held by vendors. In some cases, it may be more efficient to partner with a third-party logistics provider to provide that visibility and process returns, he says.

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    KEYWORDS 3PL Annibal Sodero assistant professor at the Sam Walton College of Business Business Strategy Alignment consumer packaged goods Global Supply Chain Management Global Trade Management inventory control Inventory Management inventory management IT inventory management systems Inventory Planning/ Optimization IT supply chain IT supply chain management logistics & supply chain logistics IT solutions logistics management Logistics Outsourcing logistics services Retail retail supply chain SC Planning & Optimization supply chain Supply Chain Management supply chain management IT supply chain management SCM Supply Chain Management: Retail Supply Chain Planning supply chain services supply chain solutions supply chain systems Supply Chain Visibility supply management Technology Third Party Logistics Transportation & Distribution Transportation Management University of Arkansas Warehouse Management Systems
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