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Omnichannel fulfilment in 2017
The retail landscape is rapidly changing. In order to win the battle for consumers, retailers have to seize opportunities. However, today’s key challenges are not easy to crack. For example, pure players disrupt the marketplace and consumers have an abundance of choice with fingertip-access to a global assortment, while switching costs are low. In our study, we zoom in on omnichannel fulfilment, ranging from ordering to return. What do consumers value when it comes to your proposition and how can you enable this proposition in a profitable way?
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What services do you want to deliver?
In order to win in the marketplace, you want to listen to the voice of the consumer. When it comes to customer fulfilment, the following service propositions are in line with the desires of consumers:
- Brick remains complementary to Click: 42% of online consumers favours store and website evenly, while 32% values store most.
- Improve your mobile landscape: Digitally savvy consumers favour mobile channels 1.5 to 2 times more than the average consumer.
- Enable payment after purchase: 53% of consumers prefer to receive products before payment
- Product availability drives behaviour. Consumer loyalty to sales channel is low: up to 45% of lost sales can be saved by offering alternative availability in stock-out situations
- Pursue no cost standard fulfilment strategy: Delivery cost is 3 to 6 times more important than e.g. speed. For return costs, the effect doubles
- Leverage willingness to pay for same-day delivery or other premium services: Up to 60% of consumers is willing to pay for same day delivery
- Exploit return channel as a sales opportunity: Up to 50% of consumers is open to suggested add-ons to their basket
- Delivering upon the promise is key: Up to 54% of consumers would not return after a disappointing fulfilment experience
In all mentioned fulfilment areas, retailer service offerings have a degree of mismatch with consumer expectations, especially when it comes to offering added value fulfilment services on top of standard delivery.
Omnichannel fulfilment 2017
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How to offer these services?
In order to enable the desired fulfilment service proposition, Deloitte designed a capability framework as guidance for retailers. The framework shows there are three sections of capabilities:
- Enabling capabilities: build the foundation to effectively enable operations with end-to-end inventory visibility, optimized tax routings, organizational and partnership structures, analytics and inventory management, and a single customer view
- Supply chain capabilities: create the operations to enable customer fulfilment services by building a cost efficient bottom tire to deliver the standard cheap, and a flexible top tier to enable added-value services. This means building a cost-efficient network design (e.g. centralized) and make additional local stock accessible by, for instance, using stores or local hubs. Attention needs to be payed to the inventory deployed in local hubs. The sales contribution and demand variation of products should be complemented with a premium service aspect (e.g. a shirt that has a high sales contribution but is never sold with a premium service has less need for local access). In addition, by translating willingness to pay and cost to serve to a customer fulfilment service proposition for your company, you can differentiate yourself while maintaining as profitable as possible. Finally, fast reverse logistics to avoid markdowns and dynamic return allocation improves efficiency and flexibility
- Commercial capabilities: translate operations towards consumer value by offering the optimal experience. Leverage your store’s potential, build a strong web and mobile infrastructure and engage in network retailing
The detailed results of the study can be found in our report. The study is based on a customer fulfilment benchmarking study, retail management interviews, a consumer survey, and Deloitte’s in-house expertise.
We hope you find this report interesting and useful, and we welcome your feedback. Please let us know if you would like to discuss any of the findings.