Published February 18, 2016
By Thompson Brockmann
Partner, Tompkins International
Your target customers have completed their research and are ready to purchase your product. Now, the final step in the purchasing process, you must select the delivery method (logistics channel) that best fits their immediate needs. In today’s world, whether customers realize it or not, they are driving companies to become more flexible in their logistics capabilities.
It is no longer about how you deliver the product to customers. It is about how the customer chooses to have the product delivered. The final delivery options vary and customers expect seamless logistics in their shopping experiences regardless of the channel.
While eCommerce still only makes up about 5% of all retail sales, double-digit growth is expected to continue, meaning more and more often, a customer will choose some level of eCommerce as their preferred source. At the same time, multiple channels are often in play with a customer’s desire to personalize their logistics experience.
Today’s consumer craves a flawless experience, the ability to order exactly what they want, when they want it, and how they want it, regardless of where they are located. To take full advantage of this, traditional retail and wholesale distribution centers and fulfillment centers will need to evolve into flexible, personalized distribution centers, fulfillment centers, and / or a combination of distribution centers and fulfillments centers.
Using the “click and collect” delivery channel, consumers have the option to purchase their merchandise on-line and pre-select the retail store location at which they can pick up their order. The “click and collect” fulfillment model does not impose any shipping or pickup charges to the customer.
Multichannel logistics has many challenges to overcome. Traditionally, warehouse facilities were designed with the ability to efficiently serve only one channel, lacking the flexibility to expand. They are either effective in their ability to ship cases to wholesale and retail customers or they are effective in fulfilling smaller mixed case shipments directly to a customer. Repurposing a single channel facility requires significant changes to be able to fill orders across multiple channels.
Flexibility is the key when transitioning to multichannel logistics. Order and shipment size are vastly different, seasonality is more volatile, cycle times are shorter, return rates are higher, and personalized value-added services are required.
Meeting customer demands for “personalized logistics” can be done through a traditional single channel of facilities or a flexible network of multichannel facilities.
Expanding facility capabilities to meet distribution and fulfillment requirements of personalized logistics across all channels is certainly not easy, but, when done correctly it creates huge advantages. Some of the benefits include: minimizing labor costs, inventory cost savings, and consolidation of the IT strategy.
More Resources:
