In my last article, I discussed several emerging online business models that are disrupting the traditional supply chain. These models point to a world in which the consumer is in charge and the entire supply chain must adapt to this new reality. In this article, I’ll tackle the topic of channel integration and the critical importance of providing a consistent customer experience across all touch points.
E-Commerce 1.0 versus 2.0
A brief recap of the tenets of e-commerce: during the first Internet boom in the 1990s, e-commerce was essentially a land grab. It was all about lower start-up costs and the ability to sell directly to the consumer beyond the geographic limitations of a physical store. The goal was to achieve scale as quickly as possible. Its history is littered with early failures. The buzzword was “channel conflict.” Companies up and down the supply chain had to figure out how best to participate in the new world of e-commerce without losing their core bricks and mortar partners.
Fast forward to 2013 and “channel conflict” has evolved into “channel integration.” It is now widely accepted that consumers seek information and shop via the channel of their choice whether online, in-store, or on a mobile device. They often use multiple channels in the course of a single transaction (e.g. researching a product online before making a purchase at a local bricks and mortar store). They have come to expect a seamless experience across channels. This is the ultimate goal of most retailers. But it is easier said than done. As the CEO of an emerging growth retailer, you need to ask yourself whether your company is ready for a channel-agnostic consumer. Are you organized to deliver a truly omnichannel experience in whatever way makes sense for your business model?
Siloed channels were the norm for decades. Most companies, at their start, chose to drive sales through one main channel – whether store, catalog or online. They deployed systems that best fit their primary channel and adapted from there. Operating in a single silo is now a recipe for failure. Retailers must ensure that product availability, promotional strategies, and brand experience are consistent across all channels.
Retailers must embrace the blurring of these channels and take the following steps towards channel integration:
- Determine a role for each channel and how channels will complement each other.
- Implement cloud-based supply chain technology to gain visibility into your performance across all channels on a single, real-time information platform.
- Choose fulfillment options: third party logistics (3PL), vendor-direct, separate or combined warehouses, or an inventory-sharing model
The keywords are visibility and transparency. Customers must be able to purchase, take delivery, or return a product through the channels of their choice. They must experience a single, consistent brand identity across all channels. There are no easy answers as to how to accomplish this. However, one thing is certain. Consumers will weed out the laggards from the leaders based on their shopping experience.
In my next article, I’ll address the particular challenges that confront the emerging sector of e-commerce pure players and will outline a framework for them to hone their strategy for an omnichannel world.
About the Author
Jennifer brings to Newport over 10 years of C-level experience. She has demonstrated an ability to take strategy from conception to execution, achieving excellent results for family businesses and private equity-owned companies. Contact or learn more about Jennifer here.
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