Mapping The Shift – Omnichannel Retail

The pandemic has had profound changes in the way we eat, drink, shop or even interact as social creatures. It has caused major disruptions within the retail ecosystem as well as consumer buying behavior across the globe.

But it is also true that changes in customer expectations are being triggered due to Covid-19 due to the increase in the surfing habit of customers and the change in their lifestyles seeking more security and adopting safer methods of shopping. With the physical movements being constantly restricted, customers are migrating into the virtual world at an unprecedented rate and are being exposed to more influences than ever before.

The UN trade and development expert UNCTAD sums up the situation with the e-commerce sector having a “dramatic” rise in its share of all retail sales, from 16 percent to 19 percent in 2020.

In addition to consumer online purchases, this figure includes “business-to-business” (B2B) trade, which put together was worth 30 percent of global gross domestic product two years ago.

“Some of these statistics show glimpses of the growing importance of online activities,” said Shamika Sirimanne, UNCTAD’s director of technology and logistics. “They also point to the need for countries, especially developing ones, to have such information as they rebuild their economies in the wake of the COVID-19 pandemic.”

Understanding the shift tectonics

The pandemic accelerated the shift to online shopping across the world and categories. An extensive survey conducted by McKinsey last year found that the COVID-19 crisis has changed our behavior as consumers. But which of these changes will stick? We predict several that will be key:

  • Flight to online
  • Shock to loyalty
  • Need for hygiene and transparency
  • Back to basics and value
  • Rise of the homebody economy

Even when customers are willing to come back to stores and when they do, the shift in behavior to online shopping will be more lasting and will continue. Customers see stores as a channel to enhance their physical interaction with the products they are buying, however, the expectations from stores are increasing:

Three big shifts that are happening:

  1. For most planned purchases (across categories), the online channels (web & mobile) are the very first touchpoint
  2. Brand & product discovery is now largely online – social media, Ads, Searches (Google, Amazon)
  3. Fulfillment experience is becoming critical – speed of delivery, omnichannel experience, convenience

The fulfilment experience

Let’s focus on fulfilment experience: here is what most customers have now started to expect. And not just expect – but demand!

  1. Free delivery (Amazon Prime does that)
  2. 1–2-day shipping (why do I need to wait for the product to arrive). Shipping speed is becoming one of the most crucial factors in deciding where to purchase the product from
  3. Ease & convenience of returns & exchange (Can I walk into the nearby store & pick up the right size – does it even have it?)

What are retailers doing to meet these enhanced customer expectations?
meet these enhanced customer expectations

  1. Smarter Order Orchestration – To improve the speed of delivery and optimize shipping costs, retailers are investing in smarter order orchestration technologies & processes. Smarter order orchestration focuses on optimizing delivery time & shipping costs, thereby allocating the order to the most optimal fulfillment center or store. This also allows retailers to offer more shipping options as value-added services (10-minute delivery or 1-day delivery, curbside pick-up and get a 3% discount coupon, etc.)
  2. Investing in more fulfillment centers – Retailers are making a shift from a few large hubs to smaller fulfillment centers across the country & regions to be able to reduce delivery timelines & shipping costs
  3. Dynamic inventory allocation – To support smarter order orchestration, retailers are investing in more agile inventory management that uses predictive analytics to allocate inventory to the fulfillment centers and stores. This helps in higher fulfillment rates & higher inventory turnover ratios
  4. Visibility across the value chain: to support omnichannel interactions, retailers are investing in platforms & data technologies to give their staff a 360° visibility of the customer and ensure more seamless cross-channel transactions.

In the context of the Next Normal and over the next 2-3 years, we are likely to witness higher investments in building more agile supply chains with a focus on aligning order orchestrations with agile inventory management practices to create a seamless omnichannel ordering & fulfillment experience for customers.

Rather than indulge in idle crystal-gazing, we at Iksula are proactively partnering growth along with some of the best-known names in e-commerce in helping them transform their omnichannel capabilities.

Know more about what we are doing or talk to our experts to understand how Iksula is helping e-commerce businesses reinvent their omnichannel experience.

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