Fulfillment: Key to Omnichannel Success
Omni-channel retail sales are expected to become a $1.8 trillion dollar global market by 2016, and then quickly grow to $7 trillion by 2025.
Winning in this arena will require a seamless delivery of goods that meets increasing consumer expectations for assortment, convenience, flexibility and all at the lowest possible cost. The pick, pack and delivery of the right products at the right service level represent significantly higher costs —up to 15-20% of an order’s basket value, or >3-4 times compared to traditional brick & mortar settings. Fulfillment also carries more brand impact than traditional settings, as digitally connected customers expect to order “what they want, when they want and how they want it”.
Retailers and brands must strategically consider the structural changes taking place today across the value chain. From the continued blurring of retailer and manufacturer’s roles, to the rise of marketplace for last mile delivery, these trends will radically shape and transform future supply chains. (read “Is Your Supply Chain Ready for the Omni-channel Revolution”, Supply Chain Management Review, 2015; Powerpoint version).
Based on our case experience with global clients, we see a clear separation in strategic and capability best practices of leaders vs. the rest of the pack to achieve omnichannel supply chain transformation success. (read “Best Practices in Multichannel Fulfillment“, Ivey Business Journal, 2013; click here for the Forbes India Reprint, 2013).
The Last Mile: An Emerging Battlefield for Differentiation
The most expensive and complex aspect of omnichannel fulfillment is the last mile.
For small format categories, the holy grail challenge is enabling economically viable Same Day delivery. Numerous Same Day models are emerging, from 3PL crowdsourced platforms like Deliv to marketplace options like Google Express. Retailers and brands must weigh the structural pros and cons of each option to ensure the right fit.
For large format, big-box products, both cost and service are falling short of consumer expectations, driven by a fragmented, under capitalized home delivery supply market. Based on our client work and research, we see that successful transformation in the large format space requires do-different action from all the actors in the value chain – retailer, manufacturer and logistic provider. (read “Heavy Lifting Required: A Large-Format Home Delivery Breakthrough“, A.T. Kearney whitepaper, 2013).