The premise of any sound omnichannel strategy is simple: let the customer purchase, get and put back products via whatever channel he or she prefers, and do it without your business ceding control of costs or stock. In Australia you are talking about bridging the gap between websites, marketplaces, stores and warehouses as well as carriers and customer service, over considerable distances and in conditions that can vary widely.
We find the best of the omnichannel fulfilment Australia strategies have in common sensible technology, firm ownership, delivery options with some give and an accurate handle on inventory. This guide will go through the principal models and the infrastructure they rest on, point out where mistakes are made and what the KPIs tell you about the operation’s true performance. I am Simon Redcliffe and my logistics counsel is of the sort that can stand up to a recalcitrant customer, a late road train or the rigours of a busy store.
What Is Omnichannel Fulfilment?
Put simply it is how orders are received, allocated, packed, delivered and returned from one sales channel to another. The customer might make a home delivery request, shop online and pick up in store, return something by post or come into a branch; the business has to see the order as a single connected affair. This also supports AI powered shopping personalisation.
You cannot afford not to be connected. A broken promise is what the customer gets when your site says there is stock the store cannot put its hands on. And if the warehouse, the point-of-sale and your customer service people are all working off different figures, you have siloed systems with a very convincing hat on.
One Order, Several Routes
Depending on the service the customer has opted for, handling cost, speed of delivery and where the stock is, an order could come from a third-party logistics partner, a micro-distribution centre, the distribution centre proper or a retail store.
Omnichannel order management will determine which location does the work and at what time. It is possible to split an order across locations but one should be circumspect with split shipments as they have a way of adding to freight and packaging bills and confusing the customer.
Four Pillars to an Operation
There are four pillars to a workable strategy: data that is consistent, fulfilment that is co-ordinated, inventory you can trust and a customer experience that is linked. They underpin the promise you make to the customer from the time of product discovery to the eventual delivery or return.
An AI driven approach to personalisation may be good for product discovery but it will not put right an inexact stock file. Personalisation can nudge a shopper to the right product, then fulfilment has to deliver on the fact that the product is there and can get to the shopper.
Relevance for the Australian Market
Retailers here do business in city centres, regional and remote towns, on islands. What is a workable model in Melbourne will call for a different carrier mix, stock position or cut-off in the Top End, the Pilbara or far north Queensland.
Then there is the matter of convenience, on which customers will judge you as much as price. Whether a sale goes through or is left to be abandoned can hinge on things like BOPIS, click and collect, tracking and how easy it is to return an item.
Economics of Distance
With Australia’s geography, last-mile delivery can be costly if you have put your stock in the wrong spot. You can expect a parcel from Moorebank in NSW to a capital to take a familiar path; a regional run will present more convoluted handovers, longer transit and limited transport.
Having localised inventory takes some of the kilometres out of it and ensures availability where the demand is, but you have to be clever about positioning stock near to the customer and not cluttering every shop with unsaleable goods.
Loyalty Through Convenience
Click and collect puts the timing in the customer’s hands and trims delivery expense. It also puts them in your store for the chance of an extra sale. Not if the staff are at a loss to find the order or parking is an issue and the instructions are not clear.
Store personnel require defined collection windows and return routes. The customer journey should deal with the practicalities: the right entrance, what identification is called for, where to park and the procedure for a damaged item.
A Comparison of Core Models
There is no one size fits all when it comes to product categories or the promises you make to customers. The operations in Australia that are making headway have rules in place to pick the optimal option for each order and employ a number of models. Here we set out the comparison, the operating conditions of consequence and where businesses tend to be caught out. Below is an overview of the various models and their attendant risks.
Proper Ship-from-Store
There is no better way to cut delivery times than ship-from-store if the product is on hand and near the customer. Provided the stores have the room to pack, a system for reserving stock and a routine for picking.
The mistake is to see a store as a small warehouse. A shop is a busy place with its own demands: sales targets, visual merchandising, staff breaks and deliveries. Should online picking get in the way of trading, any gain in delivery is lost to the rest of the business.
Orderly Click And Collect
An email notification does not a click and collect make. The store must have a process for high-value or age-restricted pieces, an order status that is to be relied upon and a staging area with proper labelling.
Be realistic about what can be prepared. If an order comes in on a Saturday when the product is still in an unprocessed cage, “ready in two hours” is empty talk. Make your promises according to the demand and the staff you have, not what one would like to think.
On Distribution And 3PL
The distribution centre model is for retailers with the volume to warrant a full warehouse management system and dedicated processes; it affords more command over dispatch, inventory and the layout of the warehouse.
A 3PL makes sense for peak season or to cover Australia with specialist transport. Do your due diligence before you put pen to paper on carrier coverage, reporting, how returns are dealt with and the procedure for a missing parcel, as well as cut-off times and who owns the inventory.
Technology For The Operation
It should render fulfilment decisions more transparent and prompt. Not put up a dashboard that is looked at for a moment then abandoned for the spreadsheets.
One wants a centralised order management system to take the orders, verify what is available and put in place the rules of fulfilment, relaying correct instructions to the carrier, warehouse and store.
Control Of Inventory
You cannot have real-time visibility without accurate counts from scanning and synchronisation across channels and disciplined adjustments. An item might be there in name only: damaged, in an out of the way spot, under inspection or already put aside for another customer. Have your thresholds set for safety stock, display, reserving and selling accordingly.
Systems In The Warehouse And Store
While a WMS will see to receiving, put-away, cycle counts and the like, store fulfilment is a lighter affair. Still, it calls for barcode scanning and task queues. Cloud platforms such as Manhattan Active Omni can link these things to your commerce and POS systems. The decision will come down to what your budget and internal resources can stand in terms of scale and integration.
Keeping Customers Informed
Tracking ought to tell a story beyond a number. Has it been packed or picked up? Is it being redirected or has it arrived?
Automated messages should be plain and true. When a carrier has issues or the weather and road closures put back the schedule, say so. There is nothing for it but to be upfront with a delay notice rather than put on some cheerful front and then go quiet.
Make A Workable Strategy
Work from the sort of customer promise you can keep and move backwards through the people, the locations, the carriers and the systems. Put the strategy to the test in stages; if you put all your options on the table at once you will not know if the issue is with the store, the forecast or the transport.
Customer Journeys
Put them on paper: the home delivery, the online return to store, the ship-to-store and so forth. Note the handovers, the exceptions and the route for returns.
Should you have a day to put things right, focus on click-and-collect and getting the inventory numbers right. A customer is more forgiving of a lack of options than of being told something is in stock that is not.
Product And Location Segmentation
Some products call for different rules. You may want to handle regulated or fragile goods, or anything of value or bulk, in a separate manner.
Fast-moving stock should be placed where demand is to be found, and for that you have demand forecasting. In a densely populated area the extra complication of a micro-distribution centre can be warranted by the delivery times it affords. But with slower lines a centralised approach will prove more economical.
Test Before Scaling
Put a strategy to the test on a small scale in a single region or product category, or with a handful of stores. You want to see how order accuracy, preparation time, store workload and any cancellations or complaints from customers fare before you put your expansion plans in motion.
Make sure the conditions are realistic. A wet-weather delivery run, a promotional weekend or a week of peak returns are all part of the test. If something only works on a quiet Tuesday then it is not a strategy but a happy accident.
Common Problems And Practical Fixes
Fulfilment does not usually fail on account of some dramatic technology breakdown. More often it is the little things, the gaps between what is promised and what the teams and systems deliver.
Retailers need to design for exceptions as a matter of course. There will be late deliveries, cartons that arrive damaged, missing stock and changes from the customer. What matters is the speed and consistency of the response.
Stock Accuracy Gaps
Do not put your faith in periodic full stocktakes alone; cycle count the products that are important or move quickly. Look into any discrepancies that keep cropping up by shift, location and type of product.
Have a rule in place as to when online stock is to be taken off sale. An order cancelled and put back in inventory too soon is an invitation to fail the next customer.
Dealing With Peak Demand
A promotion has a way of revealing any shortcomings in your demand forecasting, carrier capacity or packing benches. Your plan for the peaks should be robust: factor in the additional labour and packaging, have adequate customer service cover and do not make delivery promises you cannot keep.
Lay out the cut-off times well in advance of checkout. Should there be a cyclone alert, flooding, a road closure due to bushfire or the like, alter or put a hold on your promises instead of taking orders you would be hard pressed to honour.
Lessening The Burden Of Returns
Reverse logistics is about more than authorising a return and issuing a refund; it involves receiving and inspecting the goods, determining if they are fit for restock or repair and then making the outcome known. It is a cost and it impacts on trust.
With good product information and reliable sizing advice and straightforward instructions for returning items, the process is smoother. One should track why a return is made. A high rate of returns due to a poor description calls for a different remedy than one where the transport packaging was at fault.
The Customer Perspective
Customers are the ones who feel the impact of operational metrics. So a warehouse productivity number may look fine but if orders are being misdirected or put on hold it is of no consequence.
A balanced scorecard is called for to get a view on service, cost, stock and outcomes. Examine the results by channel, carrier, location and product so that the averages do not obscure the problem areas.
Some Fulfilment Measures Worth Noting
- Order accuracy (correct items and quantities as a proportion of total orders).
- On-time dispatch (those dispatched by the cut-off against the total).
- Inventory accuracy (what the records show as correct once verified).
- For click-and-collect, the number of orders ready in the collection window versus the total.
- Return cycle time, from receipt of the item to a final decision or refund.
- Split-shipment rate.
It is better to set targets in line with the product and the promise made than to follow some generic benchmark. A standard metro parcel and a bulky item for a remote delivery are subject to different constraints.
A Reality Check On Costs
There is picking labour, freight, packaging, markdowns, failed attempts at delivery, refunds and the like to be tracked. A quicker service is commercially sound provided the margin or retention makes up for the cost.
When talking costs in Australian dollars, review your delivery promises and put a base to every percentage. A 2 per cent cancellation rate is two orders for every 100 you measure; absent that it is merely decoration.
Retail Fulfilment: Frequently Asked Questions
In comparing omnichannel models retailers put these questions forward. The answers below are brief and pertain to what must be decided prior to putting money into systems or new delivery commitments.
What Are The Four Pillars?
Accurate inventory, consistent data, coordinated fulfilment and a connected experience for the customer. They are what ties together everything from shopping and order allocation to service and returns.
Omnichannel Strategies?
These are strategies that give the customer consistent information as he or she moves between sales and service channels. Ship-from or to store, click and collect, unified service and the ability to return an online order in store are cases in point.
What Constitutes Omnichannel Fulfilment?
The process of seeing an order through from the most appropriate venue, be it a 3PL, a micro-distribution centre, store or distribution centre. The system has to find a balance between cost, transport time, what is available in stock and the promise to the customer.
Which Platforms?
Manhattan Active Omni and other cloud based options are among the platforms a retailer might look at. They bring together commerce, inventory, order management and the rest. But let operational needs dictate the choice, not a popularity contest.
Where To Begin?
With one high-value journey such as click and collect, and with order visibility and stock accuracy. Pilot it, put the numbers to the test, sort out the exceptions and from there you can go on to ship-from-store and more involved returns.
Deliver On The Promise
To be successful in Australia with omnichannel fulfilment one has to align the convenience of the customer with the reality of operations. Train the staff in store, be smart about where you put stock, have your systems in order and ground your delivery promises in what is real. Measure the whole cost of it.
I have a simple test: is the customer able to put in an order and know where it is, have it when you say and put it back without having to force the dunny door off? If so, the supply chain is working as it should. For the consumer guarantees and remedies under Australian law the ACCC has guidance to offer.
