Excellence in omni-channel distribution

At the beginning of each interview, we asked the managers without prompting them, which areas in OC retailing are relevant achieving excellence in OC fulfillment and logistics. The experts then had to prioritize the topic. On average, every retailer named four to five fields of action. The explanations were aggregated, grouped into categories, and ranked according to the interviewees' priorities. Forward and backward distribution topics are the most relevant topics when it comes to striving for excellence in OC operations. The ranking produced the following top five topics that are all associated with forward distribution issues:

(1) Developing and optimizing modes of delivery to the customer is the most important topic for fulfilling distribution requirements, according to the retail experts. Planning problems arise in connection with new delivery modes, particularly in terms of integrating the retail outlets into the delivery concept.

(2) The importance of increasing delivery speed is based on the fact that most customers want to receive a delivery the day after placing the order, or two days later at most.

(3) Interviewees described inventory transparency as another leading issue. It means simultaneously providing customers with information on the availability and delivery times of products in all channels. Customers then have an opportunity to choose the channel, online or offline, they would prefer purchasing the products they want.

(4) The aim of optimizing the cross-channel processes in DCs and stores is mainly to improve operations in OC retailing. This means processing varying order volumes between the distance channel and the stores, as well as adapting DC processes. In the retail outlets, processes for integrating the distance channel have yet to be developed, e.g., due to online reservations of customers.

(5) Inventory integration and allocation is mentioned as another critical issue by the interviewees. Consolidating online and offline inventories reduces overall inventory level and, therefore, reduces logistics cost.

What is noticeable is that hot topics (1) to (3) mostly relate to expanding services in OC retailing, while secondary topics (4) and (5) focus more or less on reducing logistics costs. Further topics with lower relevance that were mentioned multiple times aim to improve overall warehouse and store operations, make it easier to expand to additional markets and integrate the IT landscape across channels. Almost all participants stated that improving and enhancing forward and backward distribution concepts plays a dominant role in designing fulfillment and logistics systems for OC retailing. These fields of action and the associated explanations will further be used to inform the discussion of distribution typologies and to investigate the associated contextual factors.

Beside the main distribution process in OC retailing, i.e., fulfilling customer orders, additional ancillary processes emerge. For example, in the online business, efficient return processes are required, ensuring that returned products are instantaneously worked up and reintegrated into the forward distribution system. The following two sections develop typologies for OC forward and backward distribution and analyze the associated concepts.