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Is omni-channel logistics finally coming of age?

For the majority of businesses operating in Asia, omni-channel logistics processes are no longer just possible – they’re necessary. Recent talks with our customers show that some 8 in 10 have at least begun to consider an omni-channel model, which naturally includes rethinking their logistics.  So what differentiates omni-channel logistics from the status quo?

Most business leaders already understand the basic principles of an omni-channel approach. Rather than selling through multiple channels that don’t communicate with one another, an omni-channel business provides today’s shopper with a single and seamless customer experience, no matter what channel they use. Buy an item on your mobile device and you’ll be prompted to have it delivered to a retail store near you; visit that store and you might receive an exclusive discount based on your online purchase history.

To do this successfully, businesses need a new approach to their back-end logistics – one that’s more personalized and flexible than ever before. Early adopters are paving the way, focusing on three main areas:

  1. Highly visible and available inventory

Traditionally, all you had to do was walk into a store and take a look around to see which products were available or not. Today, you can often check stock availability online, but normally only in one place, like the retailer’s website. How to offer this visibility in every sales channel is the challenge of omni-channel. To do this, you need a single management platform that provides complete inventory visibility. Your platform should also support data analytics and other software capabilities that can guide demand and supply planning, particularly during peak season.

Australian retailer Harvey Norman did exactly that after its staff noticed customers were frequently checking in-store product availability online. The company integrated a range of legacy enterprise resource planning and order management systems and now customers can easily find the closest store with their desired item in-stock. Harvey Norman improved the customer journey: no more wasted trips to out-of-stock shops or longer-than-necessary delivery times. And the company itself benefits from improved inventory turnover and higher sales.

  1. Omni-channel warehouses

Omni-channel businesses are investing in warehouses that serve all channels out of the same locations. Omni-channel warehouses are also playing new and increasingly dynamic roles such as direct fulfilment centers and even product showrooms, allowing consumers to browse through and purchase products or pick up orders themselves.

In the US, Walmart now offers a “drive-through” service at their warehouses to customers with limited mobility like senior citizens, people with disabilities, and families with young children. After placing an order online, all they have to do is drive up to their local Walmart warehouse and watch service staff put their order right in their car. This model not only cuts delivery time and costs, it also means a higher level of service and convenience compared to solely online or bricks-and-mortar retailers.

  1. Micro-warehouses for faster fulfillment

E-commerce hasn’t killed off retail stores: in fact, they’re more important than ever before. Consumers increasingly prefer picking up online orders in-store or having them shipped from the nearest store. It’s often the fastest way to receive their orders. That’s prompted many omni-channel retailers to turn their backrooms into “micro-warehouses” to fill orders more quickly and efficiently. This not only improves delivery time, but also curtails the costs of establishing new warehouses as operations grow or demand shifts.

Not all retailers have the in-store capabilities needed to operate these mini-distribution centers. So what can they do? Joining forces with partners who have complementary platforms is one option. Clothing brand Jack & Jones has taken this route and achieved success. When someone in Beijing buys an item via Tmall – a Chinese online shop – the order never goes near the Danish brand’s warehouses. Instead, Tmall sends the order directly to the Jack & Jones store nearest to the customer, where the order is filled and delivered to the customer’s doorstep by a local logistics provider. For an up-and-coming label like Jack & Jones, this model promises to support rapid growth without requiring a heavy capital investment.

Logistics is a key enabler for each of these three areas: Streamlined, well-coordinated logistics processes are just as important as the online and offline consumer touch points. For many retailers, logistics partners play a major role in managing the cross-border deliveries, preferred payment options, and even real-time customer service that omni-channel sales demand. For these retailers, logistics is not just a cost center, but a business accelerator and an integral part of delivering on their customer promise.

Take a look around and you’ll find many more examples of omni-channel at work. The model is truly coming of age – what was once an emerging trend is now becoming a requirement, especially here in Asia. That said, its success hinges on how businesses adapt to evolving customer journeys. The front runners are doing just that and reaping the rewards.

To read more details on omni-channel logistics and the case studies mentioned here, visit www.dhl.com/omnichannel.

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