An Introduction To The Omni-Channel Distribution Model

An Introduction To The Omni-Channel Distribution Model

  • Best Inc. by Best Inc.
  • May 3, 2020

These days, consumers are spoilt for choice. They have the whole internet full of products at their fingertips when it comes to shopping, be it online or offline. And not only do they desire options in terms of products – they also increasingly look for options when it comes to logistics, such as shipping times, delivery rates, whether they pick up the item at the store or pay in person and have it delivered later, and so on.

An-Introduction-To-The-Omni-Channel-Distribution-Model

For e-commerce companies, this translates to giving consumers as many options as possible for when, where, and how their orders will be fulfilled – be it from their online purchase or an in-store one. This integration between physical stores and online stores is known as Omni-Channel, and in order to fulfill consumers’ increasing demands, companies have to start adopting omni-channel distribution into their supply chain process.

What Is Omni-Channel Distribution?

Omni-channel is a distribution system which enables customers to complete a purchase and receive their orders from any channel they choose. It is a one-touch integration between operations and physical product flows across all channels, providing a seamless shopping experience for the customer. It encompasses not only the delivery of goods to stores and customers, but also reverse logistics to allow customers to return products as well.

Omni-channel distribution can be classified into seven types:

  • Buy online, pick-up in store
  • Buy online, drop-shipping
  • In-store purchase, home delivery
  • Ship from store (transferring products between stores)
  • Drop-shipping (transferring products from a warehouse to a store or home)
  • Buy online, return in store
  • Same day / on-demand delivery (for online purchases)

Benefits And Advantages

There are several benefits to implementing this distribution channel:

  • Customers enjoy the much greater flexibility of choice in terms of how they may pay for and receive their item
  • Number of customers lost due to inconvenient or unsuitable shipping options decrease significantly
  • Revenue increases due to shoppers spending more, and costs lower due to more efficient methods of delivery

Challenges Faced

The biggest challenges of the omni-channel distribution system would be:

  • Ensuring inventory management accurately reflects the most updated information across all stores
  • Being able to effectively calculate delivery speed and rates for a customer based on the different options for delivery (from store, from warehouse etc)

How To Effectively Implement Omni-Channel Distribution

In order to reap the full benefits of omni-channel distribution, there are several aspects that need to be covered.

First, there needs to be a full integration of data and inventory across all possible purchasing platforms as well as distribution and/or fulfillment centres, including physical stores. A CRM that is able to effectively contain all this information, and keep them available for easy access on the cloud, would be needed.

Another important criteria would be to partner with a capable and reliable full service supply chain company which can meet all your fulfillment needs. Such a company would have to be able to handle a wide range of services. Plus, if you are dealing with cross-border transportation, for example you have warehouses in a country X, shops in country Y and customers in country Z, you would certainly want to choose a service provider with expertise in the field.