The Ultimate Guide to Omnichannel Logistics

May 18, 2022

Change is the only constant in today’s digital landscape. Likewise, innovations are constantly redefining the retail sector globally and with it, consumers’ expectations. 

An omnichannel experience – which once marked the frontier of retail – has now become a necessity for those in the industry. According to Mckinsey, more than 30% of Americans are using omnichannel features as part of their regular shopping routines and most of the younger generation evaluates brands based on the seamlessness of their customer experience.

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Having said that, it is essential for retailers to take a step back and consider all the underlying values of omnichannel logistics before rushing to adopt it. To that end, we have partnered with LUXASIA, Asia Pacific’s leading beauty omnichannel distribution platform, to discuss what omnichannel logistics is all about. From the benefits of offering an omnichannel experience to the complexities and the key ingredients to developing a successful strategy, this article covers everything that brands might need to make a more informed decision about whether or not they should take up this approach.

What is Omnichannel & Omnichannel Logistics?

While some may argue that an omnichannel retail model is a mere extension of a multi-channel one, the two strategies in practice are very distinct from each other. A multi-channel approach focuses on maximizing the performance of each channel separately, giving consumers the choice to engage on whichever one that they prefer. Omnichannel, on the other hand, attempts to blur the boundaries between them by adopting “a wholly centralized data management towards synchronization of existing channels”.

As for Satyaki Banerjee, Chief Operating Officer of LUXASIA and Managing Director of LEAP Commerce, omnichannel refers to “providing the same consumer experience regardless of where and how the consumer chooses to engage with you as a brand.”  When sharing with our team, Satyaki also brought up how paramount it is “to have the right set-up being optimized across the back, middle and front ends, while also maintaining consistency across them by using the same resource pool and technology or system backbone.” As an omnichannel strategy is built on synergizing across all the different channels as one network, having the same team deliver that “one” holistic consumer experience consistently across multiple touchpoints is extremely crucial.

Omnichannel Logistics is therefore the setup of the organization’s end-to-end fulfillment capabilities to deliver all supply chain demands of an omnichannel business. It is an operating model that meets the paradoxical needs of low volume bulk shipments and high volume eCommerce parcels. Beyond that, it must also be adept at managing significant sharp peaks of orders that come with seasonal eCommerce campaigns and revert to normalcy fast.

A Growing Need for an Omnichannel Strategy

Going omnichannel is no longer a competitive edge for brands but rather, a prerequisite for them to have the right to play in the field. According to a Coresight report74% of retailers have either started developing their omnichannel strategy or have already implemented it. This does not come as a surprise, considering the myriad of benefits omnichannel has to offer to consumers and businesses alike.  

One of the greatest benefits of omnichannel retailing is the enhanced customer experience derived from the availability of multiple purchasing channels – be it on the web, via a mobile app or physically in stores. Meanwhile for retailers, an omnichannel approach would mean a surge in sales and traffic as omnichannel customers spend 15 to 30% more than their single-channel or multi-channel counterpartsAnother joint study conducted by Google and a few others also revealed that 75% of consumers are more likely to visit a physical store if they found information about it on the web. In other words, omnichannel retail not only improves sales on e-commerce stores, but also drives significant traffic to stores, thus further increasing revenue in the process.

The Burning Platform for Omnichannel Logistics 

“Given that being omnichannel is a right-to-play in today’s business, the burning platform for omnichannel logistics is that the failure to deliver will lead to a loss of reputation and trust”, according to Satyaki. Giving the consumer a strong omnichannel impression at the front-end but failing to fulfill accordingly when purchases are made will lead to an asynchronous consumer experience. Given the increasing consumer disloyalty and the vocal nature of dissatisfied consumers these days, disappointed consumers imply not just the loss of future sales but also potential reputation erosion, especially if negative feedback goes viral.

From the technological perspective, if the infrastructure and systems are not integrated to deliver an omnichannel experience, the business will be rendered inefficient as more man-hours are allocated to replicate resources and address workarounds, rather than drive business. Following that point, teams who do not operate in an omnichannel manner work in silos will also face unnecessary disruptions in business operations as they spend more time resolving confusion. Consequently, these teams will likely buckle under pressure, which can be harmful to the company’s performance.

In the mid-long term, brands which did not make the early investment in creating an integrated backbone across the board will not just lose consumers but find themselves becoming obsolete. Now that the benefits of an omnichannel business and supply chain operating model are clear, how can companies get started on their digital transformation journey?

Key Ingredients to Developing a Successful Omnichannel Strategy 

For businesses eager to transition into an omnichannel retailer or distribution platform, Satyaki shared the following:

  1. The first ingredient is Talents; having the right people with the right mindset is key to kickstart any omnichannel strategy. These people have to be used to thinking as one team, not as departments and functions who work in silos. “At LUXASIA, we practice a ‘fail fast, learn fast” mindset to constantly reinvent ourselves as we work towards building a better working environment for every talent and grow as one team.

  2. Next is all about the Mindset. In Satyaki’s view, it is about having a transformation-ready attitude to anticipate shifts in what we were used to doing and this requires everyone to first believe in this vision together before moving forward as one team. As building the right omnichannel strategy will not come without bumps along the way, having that spirit to quickly pick ourselves up is what will set up for success.

  3. The appetite to invest is also important. According to Banerjee, brands need to invest in systems and technology that allow them to seamlessly integrate the different processes to create that “one” network across the organization. “But also, be prepared to bite the bullet as not all of them will have an obvious or immediate ROI,” warned Banerjee.

  4. Last but not least, it is prioritization of capabilities to be forged. Rome is not built in a day and likewise, neither is an omnichannel business or an omnichannel logistics model. Backing every strategy implementation is the process of prioritization – to be clear the goal, what is important, and what needs to come first. Taking a leaf from the Seven Habits of Highly Effective People, it is about “having an end in mind” and “putting first things first”.

Getting Started with Omnichannel Logistics

It is one thing to discuss the theory of omnichannel logistics, but something else entirely to put it into practice. Despite recognizing the importance of an omnichannel experience, businesses today face several challenges in creating seamless customer experiences, from fragmented customer data to the lack of appropriate technology to ensure a streamlined order fulfillment process.

Not sure how to get started with an omnichannel strategy? Learn from these leading retailers that have already implemented successful omnichannel user experiences.

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About LUXASIA:

LUXASIA is the leading beauty omnichannel distribution platform of Asia Pacific spanning 15 markets, powered by 2000 in-market talents. It has successfully enabled brand growth for more than 120 luxury beauty brands to delight local consumers through luxury retail, online & social commerce, and consumer marketing. Since 1986, the company has partnered the world’s finest brands, such as Bvlgari, Calvin Klein, Diptyque, Hermes, La Prairie, Montblanc, and SK-II, as well as established Joint Ventures with the likes of LMVH, Elizabeth Arden, Puig, Shiseido, Yves Rocher, and By Terry. Visit www.luxasia.com to discover more.

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