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What Is the Difference Between Omnichannel Fulfillment and Multi-Channel Fulfillment?

Many assume omnichannel and multichannel fulfillment is the same because the terms come up interchangeably. However, there are distinct differences in how the processes conceptualize the customer’s experience.

Unlike omnichannel, multi-channel fulfillment means each selling channel maintains its inventory, ordering workflow, and delivery processes. These channels are digital, physical, or a combination of both. For example, a business will sell products on a website and a physical location through different marketplaces or platforms.

From the multi-channel fulfillment definition above, it’s clear that the omnichannel strategy relies on the former’s foundation. However, critical differences are present in a customer’s experience, goals, and execution.

Omnichannel is Customer-Focused and Multi-Channel Is Product-Focused

Omnichannel fulfillment relies on identifying all touchpoints between the customer and the brand. Next, the strategy seeks ways to capitalize on each moment to increase the convenience for customers or enhance their connection to a brand.

A multi-channel fulfillment strategy focuses on putting products in front of as many qualified customers as possible. However, the emphasis is on increasing the online presence and not fostering a better customer experience.

Omnichannel Creates New Customer Experiences and Multi-Channel Limits Experience

Adopting the capabilities of different channels at once helps your business build new and memorable customer experiences. These are experiences your customers would see while on a single channel.

Multi-channel aids your customers in finding the products they want. The strategy lets them purchase on channels they prefer, such as Amazon, but limits exposure to your brand on that specific channel. You can deploy more marketing tactics for incorporating your Amazon business into a holistic omnichannel fulfillment strategy.

Omnichannel Retail Links Channels for Synergy and Multi-Channel Doesn’t

Omnichannel retailing refers to how physical stores and your online operations can work together. Multi-channel retailing is how a business has online and physical stores that implement separate channels.

Multi-channel marketing will use multiple selling channels to send your customer to the same or unrelated content. Omnichannel marketing requires building upon the interactions from other pipelines to advance customers to a touchpoint.

The Importance of Omnichannel Order Fulfillment

Many physical retailers are not leveraging the retail digital shift that’s currently happening. Many of these businesses are experiencing reduced foot traffic, a decline in sales, and closures. Over 800 stores will close in 2023 in the U.S. due to a “retail apocalypse.”

Businesses adopting an e-commerce-only approach are making their way to success atop the digital commerce rise. For example, Amazon accounts for over 53% of its growth in online sales.

The predicament means physical retailers are using omnichannel order fulfillment methods to power their stores and in-store inventory to compete better in the e-commerce space. So, running a retail business means dealing with a high volume of orders daily and messy shipping.

The key components to satisfy customer expectations and optimize the trend are fast and timely responses and a consistent shopping experience. Omnichannel fulfillment offers many benefits, making it an indispensable business activity factor.

What Are the Difficulties of Managing Inventory and Orders Across Channels?

Poor inventory management is costing the business world over $2 billion. A lack of centralization, automation, and visibility accelerates the problem as some retailers try cutting corners.

Below are common multichannel inventory management difficulties to avoid.

• Overstocking: Overstocks cause losses of about $471.9 billion annually. One reason for these losses includes poor inventory planning. For instance, overestimating or guessing anticipated sales volume leads to higher costs and less room in the warehouse for more profitable and newer items. Posting a part of your inventory on one channel and the other portion in another to mitigate overselling is also a problem. A platform that displays “out of stock” prematurely means you’re losing out on potential sales.
• Inaccurate Forecasting: Using poor-quality data leads to a domino effect; the same applies to e-commerce. It’s difficult to backtrack when you wrongly forecast inventory because your business runs continuously. A massive 54% of retailers don’t use forecasting software and instead focus on manual calculations using the 30, 60, or 90-day model. Lack of centralization and real-time data means businesses are not catching new buyer behaviors and re-order items efficiently.
• Overselling: Sellers are losing out on $634 billion annually due to out-of-stock items. Major contributing factors are: Phantom stock OR Stock is available at the physical location in an inventory system but is not there. These are possible results of lacking software, inaccurate entries, or typos. The lack of centralization software for synchronizing sales across all channels and updating the quantities in real-time also becomes a big issue. This is especially true when promoting a low-stock product that sells out on different channels. The situation will force you to cancel orders and other consequences of stockouts.
• Poor Utilization of Available Warehouse Space: Many retailers try to divide their stock across different fulfillment centers to increase omnichannel coverage fulfillment and achieve fast shipping across all channels. However, a lack of insight leads to high shipping costs, split shipments, and longer delivery times.
• Increased Order Defect Rates (ODRs): Lack of control over inventory can lead to late deliveries, delivery exceptions, incorrect shipments, or canceled orders. The cumulative effect is a negative impact on your performance. An ODR over 1% in Amazon is a major cause of headaches, while the threshold for Walmart and eBay is 2%.

The Advantages of Omni-Channel Fulfillment

With omni-channel fulfillment businesses can offer:

• same day shipping or on demand delivery
• shipping for items bought in a retail store to the consumer’s home.
• in-store pickup for items bought online
• lower costs due to fully automated distribution.

Other advantages include real-time reporting, adjustment to seasonal demand, and accurate inventory management. Omni-channel fulfillment leads to new sales opportunities as retailers discover different ways to market items through different channels.  Streamlined warehouse operations get the product to the consumer quickly and with less cost. Satisfied customers are more likely to come back, and this makes your brand look better than a company that doesn’t use this fulfillment method.

Here are the five biggest benefits of deploying omnichannel order fulfillment in your business.

1. Improved Order Accuracy: Order fulfillment comes from different channels and silos down into one process. The result is increased delivery process accuracy and efficiency due to a seamless shipping system.
2. Accurate Reporting: Using Third-Party Logistics (3PL) lets the provider have an overview of all your channels. The system offers instant reporting, which can help highlight critical channels and identify those with poor performance. Real-time reporting helps businesses adapt and improve their warehouse processes.
3. Improved Warehouse Productivity: The system leverages new technology to streamline your fulfillment process. Your warehouse personnel gains detailed insight into critical areas, including inventory, which helps increase efficiency.
4. Happy Customers: Your modern customer expects immediate responses. Omnichannel fulfillment ensures their deliveries arrive faster, or the customer can pick them up from their preferred brick-and-mortar locations. The strategy helps you offer the best service at the best price, building customer loyalty across your physical and digital outlets.
5. A Better Brand Image: Your customers expect access to your items wherever they are. You can achieve this by offering options for brick-and-mortar store browsing, in-store pickups, and home delivery. All these channels must be consistent in establishing your brand image.

Top Strategies for Omnichannel Fulfillment

Unfortunately, there are no one-size-fits-all omnichannel fulfillment methods because each business has its unique needs. But four strategies can work across the board.

Outsourcing to a 3PL Provider

Outsourcing your omnichannel fulfillment to a 3PL provider ensures you cover all aspects. The strategy also makes it easy to get into new sales channels while managing your orders and inventory from a single dashboard.

Keep Everything In-House

The strategy involves maintaining your products and delivering them to the post daily or renting a warehouse and running a crew for fulfillment. However, inventory strategy can be a challenge when you keep fulfillment in-house. A major issue is getting locked into a long-term warehouse lease as your operations outgrow the facilities or use less of the space available to you.

Using Diverse Services and Strategies for Different Channels

Some businesses prefer the hybrid fulfillment approach. They fulfill some orders and partner with service providers on other channels. Others have a physical store from where they sell out, which allows for curbside or in-store pickups. The stores can also fulfill orders and act as hubs for product distribution.

Using Technology That Works With All Channels

Using an ERP and order management system allows you to set the rules and consolidate different channels for a complete fulfillment strategy. Service providers often have the software, but make sure you evaluate it.

Some solutions include B2B shipping, which integrates e-commerce platforms and marketplaces with other tools, including order, inventory, and returns management modules.

Consumers’ Expectations are High

Due to the “Amazon effect” consumers now expect options that were impossible in the days before e-commerce. They expect faster, easier and less expensive shipping. According to an article on retailTouchPoints, Amazon pioneered fast shipping and versatile stock options, but this now means that consumers expect the same from most other retailers. Speed and accurate delivery through an omni-channel supply chain allows your business to compete with big companies such as Amazon Fulfillment. During the record holiday sales season of 2014, retailers such as Macy’s Target and Best Buy greatly improved delivery with omni-channel fulfillment .

Considering the variety in modern e-commerce, omni-channel fulfillment allows companies to look consistent across all of their retail channels. The consumer sees the same shipping policies, prices and product availability on Facebook as they do in the retail store or on the web site. These areas are more consistently and accurately updated.

Using omni-channel fulfillment not only brings your company up to date, but it allows for speed, accuracy and efficiency. For more information about fulfillment options, please contact us.