The omnichannel, despite all of the attention being paid to that capability today, isn’t for everyone, says Dunlap. Retailers don’t necessarily have to embrace it in order to survive. Some may have low price points and engage in deep discounting, with already thin margins that would erode further if the seller were to attempt to compete with omnichannel entities. “Pure-play e-commerce companies are going to have to deal with significant capital investment in opening up brick-and-mortar stores to compete with their peers,” he says.
Sellers that are suited to the omnichannel approach include those that already have a mail-order or catalog operation, or do a significant number of each-picks with a brick-and-mortar presence. On the opposite side, companies with an emphasis on handling pallets and cases will find it much more challenging to migrate to an omnichannel model.
In addition, says Dunlap, companies need to undertake a capability maturity model, which can help to clarify where they are on the fulfillment spectrum, and where they hope to be. In the process, they can identify any gaps or investment needs as they drive toward that goal.
There are many challenges to be addressed along the way. Companies that mostly handle large product orders, with minimal each-picks, have likely attempted to outsource their e-commerce fulfillment as a means of postponing the need to acquire that capability. They could find it especially difficult to segment inventory in a manner that accounts for both traditional fulfillment and e-commerce activities.
Retailers are also feeling the pressure to step up the order cycle, with next-day or even same-day delivery of e-commerce orders. Again, says Dunlap, it’s a question of achieving the right level of product segmentation, accompanied by a determination of which markets are best served by a given seller. “Same-day is just one segment of the omnichannel,” he said. “It doesn’t mean they have to do it.”
Branded products that can’t be found anywhere else on the market don’t necessarily have to be subject to same-day demand. “Those who try to differentiate their supply chains become the ones that hopefully are increasing their revenue,” Dunlap says.
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