Multichannel retail strategies open up selling opportunities to the vendor, increasing the level of interaction with consumers and offering a more and more customised approach to retail. However, this does not come without impact to the supply chain, both positive and negative. So, what are some of the effects to be aware of?
Top of the pecking order – your suppliers
A multichannel strategy has a significant impact on your own suppliers at the top of the supply chain. Adding more channels increases the pressure on your suppliers. This may impact the order lead times and your suppliers’ ability to fulfil orders.
To mitigate this, foster honest and open communications with your suppliers, make sure they understand any increases and address potential issues. Learn more about building a stronger relationship with your supplier.
Shipping and distribution logistics
The potential for errors in shipping and logistics increases with each new channel — variable order sizes and content will need to be accurately shipped to more sites. Mistakes in the shipping and distribution process can result in the correct products not being available for when the customers need it. This can result in lost sales and negatively impact customer satisfaction.
One way around this is to centralise inventory management. One caveat is to ensure stock is not sold twice through more than one channel. A successful multichannel strategy requires a robust inventory management system in place so that all orders across different channels are accurately recorded in real-time. This will ensure inventory is not mismanaged and that the team always has clear visibility over stock levels.
Multiple channels, multiple interactions
A growing number of consumers are utilising more than one retail channel for a single item. Consumers are becoming more and more knowledgeable and are prone to researching an item extensively prior to purchasing; this is often done on computers or even on a smartphone while in-store. After perusing your website for a product, they make a selection and will even buy the product online and then opt to pick up in-store to avoid shipping fees. How does this impact the retailer?
Your accounting and inventory management systems need to be integrated. Of course, with multiple interactions, there are multiple opportunities to cross and upsell and so your sales representatives, be it online or in-store, must be trained for this.
The dreaded returns
Returns are always a tricky part of retail and inventory management and can create major discrepancies and lost revenue if not handled correctly. It also is not acceptable to simply refuse to take returns as research shows the vast majority of consumers will only make a purchase with the assurance that returns are accepted and convenient.
Retailers need to design a robust returns system that can accurately accept items that were bought from a different channel while reconciling them with the channel in which they are returned so that they can still be sold rather than left as lost revenue.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.