Distribution Systems in Omni-Channel Retailing
This scholarly article addresses the question that several marketers now face in our new e-commerce, internet-based marketing. Omni channel marketing has become common among marketers in recent years because more consumers can be reached by offering different channels of distribution. Omni channel marketing, however, presents challenges to the firm, as the article describes.
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.