The most successful retailers today don’t distinguish among their shopping channels — rather, they design the digital experience with store fulfillment in mind. The challenge, however, is in determining how profitable such customers are, according to a recent study released by Retail Systems Research, entitled,  “Achieving Profitability In An Omni-Channel Fulfillment Model.”

As far back as 2007, retailers began identifying the importance of the

consistency of the shopping experience they were providing customers. Back then, retailers without a robust e-commerce site were at a distinct disadvantage. Whether the site was independent of its brick-and-mortar sibling, or an extension of it, retailers knew it was another avenue of potential revenue.

Today, it’s an absolute necessity for a brick-and-mortar to have an e-commerce channel, but the wrinkle is, it must be seamlessly integrated into the shopping experience. Increasingly, customers begin their purchase in one channel, and finish it in another. Back in 2007, shoppers who started in-store and bought online were called “showroomers.” But in the past eight years, because of a concerted effort by brick and mortars to stay alive and relevant, that trend is reversing itself. Nowadays, a buyer is just as likely to start the shopping journey online and complete it in store, as it is vice versa. So, while retailers met the challenge of showrooming, RSR reports that many are wondering at what cost. While 35 percent of those surveyed said multichannel customers are significantly more profitable than single channel customers, 24 percent reported they could not judge profitability. A number of factors RSR identified as crucial to achieve profitable fulfillment are addressed by solutions such as those provided by Retail Pro:

1. Can your company track inventory across the enterprise? If so, is your company able to put the right amount of inventory closest to the points of demand, at the right time? That’s important because bringing customers to the store — where the potential for add-on merchandise is high — is preferable to the “one-and-done” reality of many online orders.
2. Are non-store customer orders fulfilled in a way that maximizes profitability? Assuming the answer above is “Yes, I can see all my inventory,” then the retailer must determine what the most profitable fulfillment method will be. That can vary by individual case: Providing the lowest shipping cost to customer may be satisfactory in one situation, while another may be choosing a fulfillment point closest to the customer’s location.
3. Who will fulfill the orders and returns? Retailers are loathe to adding head count, but RSR notes that in an ominichannel environment, return rates go up. Customer service becomes even more of a differentiator when shoppers have problems. Reallocating resources to service reps from other areas is a potential answer. Retailers should consider optimizing non-selling store processes, such as stock management, in order to cover the new costs associated with handling non-store orders.

Creating an omnichannel and multichannel experience that consumers see simply as  “shopping” requires the behind-the-scenes technology that will provide seamless fulfillment. Retailers that treat all channel as complementary, and integrate them into a holistic brand experience will be the first to maximize customer profitability.

Tags: brick and mortar, multichannel, omnichannel, RSR study, showroomers

This entry was posted by Jennifer Bosavage on Tuesday, May 26th, 2015 at 10:22 am .