How to build a supply chain for multichannel retail?

For a very long time, retailers used a linear approach to the supply chain. It meant that products moved in just one direction. Products would move between the manufacturer, the wholesaler, the retailer and onto the sales channel. This sales channel meant the brick and mortar store, in all its variations, for a very long time. Now it’s time to build a supply chain for multichannel retail.

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With the internet revolution came the concept of eCommerce, where customers would place the orders on an internet store front and they would receive it at home. Medium and large retailers used the same method of silo-management to the online store.

One way supply chain

The “silo” approach meant that each new sales channel would be treated as a separate silo, independent from the other stores. Basically the in-store operations were one thing, the ecommerce operations a totally different thing. Ideally – there was no connection between them.

But this doesn’t work. The fact is that there are very few exclusive online shoppers. People like to spend time in stores, touching merchandise, they spend time on social media, get informed, place calls to ask for info and generally live in a complex world that mixes online and offline experiences.

Your customers deserve a multichannel supply channel

Customers demand new options from retailers, things such as “buy online, pick-up in store”, “order in store, receive at home” – things one might note are common sense.

If you want to build a supply chain for multichannel retail, you need to step up your game. And it’s not just marketing. Customers demand a real change in the way they are engaged. Companies such as Macy’s have invested in creating experiences that handle multiple journey maps for their customers and the results are satisfying.

Supply chain for multichannel retail / omnichannel retail

To make this work retailers adopt a thing called omnichannel supply chain. This is a supply chain built for in store and online commerce, as well as other channels (social media, live shopping etc.) .

The biggest difference between this type of approach and the previous is the fact that it is omni-directional. Whereas the classic supply chain was mostly linear, flowing from one place (manufacturer) to the other (customer), the omnichannel supply chain moves products across multiple sales channels.

How can I build a supply chain for multichannel retail?

Here’s some tips:

  • make inventory transparent across all sales channels (online, in-store, warehouses, suppliers and others)
  • clearly understand what is your customer journey (ex.: customer places a call in the call center, gets informed, places the order online, picks and pays for the order in a brick and mortar store)
  • connect your company with external suppliers to manage all potential fulfillment in your supply chain

Author: Mihai Mike Dragan

Mihai Mike Dragan is an ecommerce expert and the cofounder and COO of Oveit, a global company focusing on live experiences technology, both virtual and in-person. Mike has an experience of over 15 years in building digital products, with a focus on ecommerce. He has worked with some of the largest consumer brands in the world, advising on their digital go to market strategy.   Mike Dragan is also the author of the "Understanding Omnichannel Retail - beyond clicks vs. bricks" ebook, a guide for companies that understand consumer behaviour across media. He holds two degrees, one in International Economics and one in Computer Science.

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