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Omni-Channel: A Primer for Retailers & Wholesale Distributors

Until recently, pundits had been predicting that online shopping would spell the end for many bricks-and-mortal retailers. In response, many traditional physical retailers established new business functions charged with building out web-commerce business channels.

Meanwhile, consumers proved that their demands were driven by factors above-and-beyond the conveniences of shopping from one’s own couch. They wanted to feel products, see them in showrooms, and seek the advice of knowledgeable customer service representatives. So, many among the new breed of web-commerce retailers entered the bricks-and-mortal retail world. They built out business functions responsible for establishing physical retail outlets.

Consumer behavior indicates that offering both physical and virtual experiences is only the starting point. What consumers really want is a seamless retail experience. They want to partially build their order on the web, and complete the configuration in-store, with the assistance of the service expert. They want to order online, and pick-up or return the item at a nearby retail location.

In other words, they want a frictionless, integrated experience. The consumer doesn’t care if the retail outlet is independently owned. Nor does it care that the retail store is operated separately from the corporate distribution or returns center. The consumer wants to have the flexibility and freedom to choose the channel that makes the most sense for it in the circumstances.

From the retailer or wholesale distributor’s perspective, an ability to provide a seamless customer experience across any and all channels is what is referred to as omni-channel.

For many, successfully executing an omni-channel strategy will involve an overhaul of their business models. They may need to retool business strategies, organizational structures, enterprise performance management metrics, business processes, IT systems, and data structures. The following provides a brief discussion of the issues and a few examples:

  • Organizational structures: Companies would be well-advised to evaluate whether their organization is optimally structured. Many developed their web-commerce and traditional sales channels as separate divisions, lines of business, or departments. Now, it’s becoming increasing clear that these silos create conflicting requirements across the enterprise – conflicts that impede a seamless customer experience.
  • Enterprise performance management: Together with structural realignment, companies might need to rethink how they measure business performance. Traditional performance measures – such as revenues and profitability – by online and traditional sales channels might not be appropriate indicators. Companies should create key performance indicators that reflect role of the channel in an integrated sales and service environment.
  • Business processes: Delivering an effective omni-channel experience will inevitably require business process re-engineering. Historical order management, supply chain, fulfillment, and reverse logistics processes might no longer be adequate. Companies should map their ideal customer experiences, and design the process flows to best deliver those experiences.
  • IT systems: The delivery of a seamless customer experience requires tightly integrated systems both internally and throughout the value-chain. Many companies have yet to develop a long-term IT roadmap that aligns with an omni-channel roadmap. In such cases, the challenge lies in acquiring and implementing systems to satisfy short-term needs without compromising a yet-to-be-defined IT strategy.
  • Data Management: Effective data management is one of the more challenging aspects of executing an omni-channel strategy. These should be carefully designed in cross-functional workshops before committing to structures. Companies need to decide on data structures, ownership, and systems of record – particularly for customer and item master data.

At Pemeco, we lead transformation projects for wholesale distributors and retailers by developing and executing on roadmaps that align IT, operations, and business strategy. Contact us today to learn how we can help your business.

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