Despite its success in bringing online consumers to the retailers, multi-channel retail also led to several supply-chain challenges, starting from distribution to inventory management, data management, etc. The core problem lies in multi-channel retail design, which envisioned different channels as separate entities resulting in conflicts between these channels.
From the customer"s perspective, however, online and offline channels were two sides of the same coin. They may come across an ad on Instagram, then look up the product on the company website, then use the mobile app to make a purchase and expect the product to be delivered to their doorstep from the company store or the warehouse. To provide customers with such a seamless and glitch-free experience across platforms and channels, a more integrated approach was required, and thus Omni-channel retail was born.
Omni-channel retailing constitutes a business model wherein a seamless shopping experience is delivered to the customers by integrating all the existing channels. It combines both the models" features and integrates them with a centralized data management system, blurring offline and online modes.
Some of the brands that have successfully managed to adopt omni-channel retail in India include – Van Heusen, Zivame, Pepperfry, Raymond’s, Adidas, etc. A case in point is Reliance’s JioMart, which would enable local Kirana stores’ digitization through Jio’s point-of-sale solution at the back end and connect of end-users through the JioMart app on the frontend. Reliance’s AJIO in the fashion and apparel industry aims to integrate the e-commerce site with Reliance Trends to cater to emerging consumer trends.
Successful omni-channel retailing strategy requires four major pillars. These are an integrated supply chain strategy, inventory transparency across channels, technology footprint to facilitate the execution, and right alignment of the operations & supply chain strategy with the marketing strategy.
Diagram 1 An integrated supply chain strategy constitutes a distribution system that drives forward and backward processes. Broadly, it involves fulfilling customer orders at stores, offer home delivery and store pick-up services, and home pick-up or in-store pick-up of return from online orders. The distribution network would combine different modes to deliver products and services to customers at their convenience. Additionally, the retailer must also develop return logistics capabilities to handle the return of goods across channels. This requires the omni-channel retailer to anticipate demand accurately to ensure availability, manage lead-times across channels, and factor-in cost implications to ensure business feasibility.
The fourth factor addresses the necessity to have proper overlap and synergy between marketing and supply chain strategies to deliver a differentiated customer experience. The supply chain must be designed to augment the marketing effort and thus be able to serve the customers where they are and render the ability to engage with customers on a real-time basis.
To summarise, the overall industry trend is to adopt new, innovative channels to reach consumers and integrate them to deliver an omni-channel experience. According to a joint report by Deloitte Touche Tohmatsu India and FICCI, hyper-local distribution models and omni-channel strategy will be the key to businesses" growth in the near future. Further, the Covid-19 pandemic has forced many businesses to re-think their strategy and are trying to build capabilities to serve customers across online and offline channels. Thus, it is imperative for companies to successfully implement an omni-channel strategy to remain relevant and competitive going forward.
By Professor Amar Sapra, from the Production and Operations Management area at IIMB, and PGP students Ronak Bose and Tushar Dhande.
First Published: Mar 05, 2021, 10:28
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