While e-commerce still represents less than 10 percent of retail sales, it’s the fastest-growing segment and doesn’t look to be slowing anytime soon. Seeking to leverage their brick-and-mortar presence, many retailers have been offering “omnichannel” fulfillment options such as order online and pick up in store as a competitive alternative to e-commerce retailers’ shipping costs. But, with more and more e-commerce retailers offering free shipping, is the advantage losing steam?
Old thinking has led many companies to look at omnichannel from a fulfillment perspective. To avoid shipping costs, retailers offered consumers the option to order online and pick up at a store location or kiosks/lockers to minimize “last mile” delivery cost. However, the more progressive retailers are taking omnichannel to new levels.
Rather than focusing on the fulfillment options, many retailers are targeting the “customer experience” as the source for developing their omnichannel strategy, Take H-E-B, the Texas retail grocery giant, for example. The retailer is studying their consumers’ buying behavior and adopting what was once a home delivery option and expanding it to different service options based on the preference of its consumers.
For example, for those shoppers who don’t need home delivery but dislike the task of shopping, the store offers a shop-online order feature that is picked by in-store personnel and the consumer can pick it up in a kiosk at checkout. Why not offer to load it in the consumer’s vehicle. Well, of course, they offer that option — just text your vehicle’s parking space number in the pickup area and they’ll load it for you. However, in the first case, this shopper doesn’t like to shop, but also doesn’t like someone else picking their fresh fruit and vegetables — so, store personnel pick the goods the consumer doesn’t want to deal with and the consumer picks the veggies, then picks up the rest of their order after checkout.
By focusing on the consumer behavior and preferences, H-E-B offers a customer experience that includes multiple variants of fulfillment choices, including multiple ordering options. Consumers can download the retailer’s app and shop from their phone, they can order from their computer, or they can call the order in. They have the option of full or partial order picking, maintaining grocery lists, and, of course, credit card payment. Shoppers can scan their goods into their shopping cart with their mobile phone and proceed to a self-checkout station to QR code their order for payment. Or, they can use the store’s self-scan checkout or traditional checkout.
The bottom line is that H-E-B and other progressive retailers are focused on consumer segmentation to develop customer experience options based on whatever way a consumer prefers to shop. Starting with the consumer experience enables the retailer to design their workflows and material flow paths backward from the point of demand creation and digitally enable the flows to extend personalized demand fulfillment options based on technology and efficiency. It also eliminates unnecessary steps and potentially costly options. And the result is a loyal, profitable and highly satisfied customer!
In 2019, expect to see more and more companies, not just retailers, offering personalized fulfillment options leveraging omnichannel capabilities. The capabilities will require digitalization, especially mobile, device data collection, and advanced analytics focused on individuals and micro-market location-based segments.
Rich Sherman is a senior fellow at Tata Consultancy Services’ Supply Chain Center of Excellence.
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