Omnichannel: the new winning formula?

Driven by the emergence of e-commerce, competition in the consumer goods market today is fiercer than ever.

In a context where the consumer wants to be delivered faster, anywhere, anytime and by any means, omnichannel is the solution to avoid over-promising and under-delivering!

But finally, what is omnichannel?

New modes of consumption

The figures from a recent GfK study for Swiss Post speak for themselves: in 2017, Swiss e-commerce will account for 8.6 billion francs, representing growth of +70% since 2010. Today, more than one in two Swiss people search for products online, a considerable ratio.

At the same time, consumer behavior is changing. A Zetes study shows that 78% of customers are no longer considering turning to a retailer after 3 delayed or incomplete deliveries. Similarly, 70% of customers do not agree to wait more than five minutes to find out the availability of an article in stock.

It is therefore better to have solid logistics to offer your products online and in-store; otherwise the consequences can be dramatic.

From Multichannel …

The emergence of e-commerce initially contributed to the birth of a so-called multichannel distribution strategy.

Its challenge: to distribute articles through different sales channels, via new customer contact points.

However, multichannel is characterized by distribution channels that are independent of each other. These channels are based on their own processes, without any interaction being possible. In a multichannel environment, therefore, a customer cannot purchase using several channels, such as ordering online and picking up in the store.

In multichannel, each sales channel has its own dedicated stock, often within the same warehouse. Thus, an “e-commerce” stock can be located in the same warehouse as a “store” stock without the knowledge of the “store” suppliers.

A store may therefore be out of stock, even though an e-commerce stock – physically in the same place – is full of the desired item … The multichannel strategy reaches its limits here.

… to Omnichannel

Beyond a change in consumption patterns, technological advances now make it possible to continue optimizing the Supply Chain.

The omnichannel thus breaks down silos and establishes communication between the different channels. The consumer now has several points of contact, but the products can come from any stock.

In an omnichannel world, the interaction between channels allows the customer to buy anywhere and pick up the product wherever he wants (Click&Collect, home deliveries). In addition, the company has real-time 360° visibility over its Supply Chain, which encompasses all channels.

If a customer is looking for a book online and it is out of stock in his country, he can now have it delivered from another country … or even another continent – stocks have become one and the same!

Supply Chain Challenges

However, few retailers can claim to have achieved such a degree of integration and transparency.

Moreover, if the prevailing discourse focuses primarily on the necessary transformations in terms of customer experience (marketing, sales…), the Supply Chain remains the keystone of the transformation and success of the omnichannel.

We note that in order to carry out this transformation, retailers with successful omnichannel strategies have developed three main competencies.

• A transversal approach
  • Implementation of a 360° visibility in real time on the sales channels
  • Creation of multidisciplinary teams for better communication
  • Integration of information systems and the creation of a single data source for all channels

• An agile Supply Chain
  • Analysis of product and consumer flows (orders)
  • Offers fast and consistent delivery solutions (last mile delivery)
  • Implementation of multi-format warehouses, able to manage in cross-docking and break-bulk all articles, regardless of their origin and destination.
  • Improvement of planning and stock management, much more important in terms of SKU’s.

• A transition plan
  • Segmentation of different channels, product categories, geographical areas, customer groups
  • Change in the mentality of the organization
  • Quick, flexible and pilot-tested changeover

How’s Switzerland doing?

In 2017, a Roland Berger study pointed out that 80% of the retail chains in the DACH region had not yet developed an omnichannel strategy. The German firm also pointed out that in Switzerland, the multichannel strategy is still an important issue for many retail companies, and often remains only at the initial planning stage.

However, Tobias Kindler, CDO Mediamarkt Switzerland, recently told ICT-Journal that “in terms of digital development, Switzerland is one of the countries with the greatest potential in Europe because of its level of education, infrastructure and purchasing power. »

Some coming change for our distribution companies.