Transition from multi-channel retailing to omni-channel retailing

Question:

Discuss about the Realignment of Physical Distribution Process.

The omnichannel is considered as one of the most important multiple channel approach related to sales, in which the customers are being provided seamless shopping experience irrespective of the shopping medium they are using (Verhoef, Kannan and Inman 2015). This report would identify the major themes associated with omnichannel in supply chain management and discuss about the same.

As opined by Christopher (2016), there has been a paradigm shift from the multi-channel retailing to the broader perspective of omni-channel retailing. The multichannel supply chain was common in the last decade but now it has shifted its focus to the omnichannel retail practices, which are closely related with the supply chain job task (Cao and Li 2015). The omnichannel supply chain is concerned with the using of the central stock pool so that a number of factors such as sales, fulfillment, ordering, stock management can be controlled. The omni-channel is considered as the emerging trend in the retail industry, which aims to make coordination between the technologies and the processes in the supply chain domain (Cao and Li 2015). This framework can be applied to a wide variety of cases which also includes the integration of the visual enablers applied to a wide range of retail models of the supply chains.

As commented by Hübner, Holzapfel and Kuhn (2016), the distribution system in the omni-channel retailing remains a challenge and is one of the prime concerns of the omni-channel supply chain. There should be effective direct-to-consumer approach as well as store deliveries in the omni channel supply chain network and this should also be concerned with the associated return processes (Sanders 2014). There have been several sources of the omnichannel sources such as suppliers, retailers and the final destinations such as stores or homes, which define the pattern of the supply chain (like store pick up or the home delivery).

The findings of Hübner, Kuhn and Wollenburg (2016) indicate one major theme such as planning of the supply chain distribution networks in omni-channel grocery network. There has been inadequate research as well as practice in the integrated fulfillment of the distribution concepts in the store as well as home deliveries of the omni-channels (Cao and Li 2015). The planning process of the OC logistics can be divided into last mile distribution concepts as well as back-end fulfillment process. The back-end fulfillment process is concerned with the in-store picking and the warehouse while the last mile distribution concepts deals with the attended or un-attended delivery processes (Galipoglu et al. 2017). The design choices are dependent on the country specifics, customer behavior and others.

Distribution systems in omni-channel retailing

The viewpoints of Bell, Gallino and Moreno (2013) reveal that the omnichannel networks have led to the increased implications on the demands of the customers as well as operational issues like the return of the products. The article focuses on the concept of the channel matching where the customers have great need of physical access who needs a higher amount of information. The introduction of certain offline display of the inventory is essential for increased chances of customer purchases.

As commented by Fairchild (2014), the omni-channel commerce involves the combination of traditional commerce along with online commerce by the process of integrating the processes in a complementary manner. This also includes the external logistics partners embedded in the processes (Cao and Li 2015). The objective of the research is to aid the third-party logistics partners for the product delivery. The omnichannel commerce is considered as the cross-channel business model where the companies aim for improving the customer experience (Raymond 2016). The companies using this concept give importance to customer values and try to be in touch with the customers through more than one modes.

One of the most important themes in the omnichannel aspect of the supply chains is the realignment of the physical distribution process for the different retailers who are usually store-based so that the online business channel can be incorporated into the business model (Ishfaq et al. 2016). It is important to align all the physical resources of the firm so that there is successful integration of the online and the offline resources (Cao and Li 2015). This is one of the most important approach in which the retailers are in the process of developing unique physical distribution process in which there is a greater role of the physical distribution process in delivery and fulfillment (Modak 2017). The size of the distribution network, number of years of engagement and the number of sales associate at the store determine the nature of the omnichannel infrastructure (Bernon, Cullen and Gorst 2016).

The central theme discussed by Ailawadi and Farris (2017) demonstrates the fact that it is important to do omni-channel marketing, which would help in the greater awareness of this concept among the consumers. The omni channel marketing has made shopping more favorable among the customers and also for the marketers (Cao and Li 2015). The marketing efforts would also be instrumental for the downstream retailers and the upstream suppliers (Fulgoni 2014). This kind of marketing provides seamless experience to the customers where they are being bombarded with both online medium as well as offline mediums. The omni-channel assumes that the customers may commence with one channel as well as move to the other channel so that they move towards a resolution.

Planning of omni-channel grocery retailing

The key points of Saghiri et al. (2017) reveal an important theme which is named as the three-dimensional framework of the omni-channel. The three-dimensional framework of the omnichannel network includes type, channel type and agent. These layers are being integrated by the process of omnichannel supply network. This three-dimensional nature can be witnessed in the social media also, where there is a two-way exchange of the important information.

(Source: Created by author)

Conclusion

The omnichannel in supply chain is fast gaining its capacity in the supply chain domains. The retailers are choosing the omnichannel networks so that they can connect with the audience in a more precise manner. This paper has discussed some of the major themes such as three-dimensional framework, omni-channel marketing, realignment of the physical distribution process and paradigm shift from multichannel to omnichannel network.

References

Ailawadi, K.L. and Farris, P.W., 2017. Managing Multi-and Omni-Channel Distribution: Metrics and Research Directions. Journal of Retailing, 93(1), pp.120-135.

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Bell, D.R., Gallino, S. and Moreno, A., 2013. Inventory showrooms and customer migration in omni-channel retail: The effect of product information. Available at SSRN, 2370535.

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Hübner, A., Holzapfel, A. and Kuhn, H., 2016. Distribution systems in omni-channel retailing. Business Research, 9(2), pp.255-296.

Hübner, A., Kuhn, H. and Wollenburg, J., 2016. Last mile fulfilment and distribution in omni-channel grocery retailing: a strategic planning framework. International Journal of Retail & Distribution Management, 44(3), pp.228-247.

Ishfaq, R., Defee, C.C., Gibson, B.J. and Raja, U., 2016. Realignment of the physical distribution process in omni-channel fulfillment. International Journal of Physical Distribution & Logistics Management, 46(6/7), pp.543-561.

Modak, N.M., 2017, September. Exploring Omni-channel supply chain under price and delivery time sensitive stochastic demand. In Supply Chain Forum: An International Journal (pp. 1-13). Taylor & Francis.

Raymond, J., 2016. How does the level/type of interactivity in an omni-channel environment affect the attitudes, involvement and engagement of retail shoppers? (Doctoral dissertation, Auckland University of Technology).

Saghiri, S., Wilding, R., Mena, C. and Bourlakis, M., 2017. Toward a three-dimensional framework for omni-channel. Journal of Business Research, 77, pp.53-67.

Sanders, N.R., 2014. Big data driven supply chain management: A framework for implementing analytics and turning information into intelligence. Pearson Education.

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