Omnichannel Logistics: A Guide for Growing E-Commerce Brands

With limited time and resources at your disposal, it can be difficult to make this choice. After all, you can only realistically focus on one or two, because it would be too complicated to cover every base and sell through every option available.

Or is it…?

There is a way to bring all your target sales channels into an integrated ecosystem, and simplify and coordinate the management of all of them in one go with omnichannel logistics. In this blog, we’ll explore how it works, how e-commerce businesses like yours can benefit from it, and the various options available to you.

Jump to:

• What is Omnichannel Logistics?
• How Does Omnichannel Logistics Work?
• How Can Omnichannel E-Commerce Fulfilment Benefit Your Business?
• Choosing the Right Omnichannel Logistics Model for Your Business
• What Should I Look for in an Outsourced Omnichannel Logistics Partner?

What is Omnichannel Logistics?

Omnichannel logistics is the practice of unifying inventory and order information in one system, irrespective of where that order was placed, from websites and mobile apps, to marketplaces, social media and even physical retail outlets. Technology platforms allow information to be coordinated, so that all fulfilment processes, such as inventory updates, stock control, packing, distribution and shipping can be made together.

Effectively, omnichannel logistics acts as the ‘zip’ of your fulfilment processes. Orders come in from multiple sources – but from the moment they’re aggregated in the centralised system, they’re all managed by the same platforms and people, the rest of the way to the customer.

How Does Omnichannel Logistics Work?

A good omnichannel logistics operation combines several different practices and functions, all of which link together within the centralised system. Generally speaking, this will include:

Linking sales channels together

There are countless different sales platforms out there in the world of e-commerce – and virtually all of them can be integrated into omnichannel logistics. These include your existing e-commerce platforms, third-party marketplaces such as eBay and Amazon, social media shopping channels, and even sales from physical stores.

Across all of these, data such as inventory levels and product information are synchronised and kept consistent. For example, if stock of one particular item runs out, listings for that product across all channels are updated as ‘sold out’ automatically.

Centralising inventory and order management

No matter where they come from, the data generated by every single order flows into a central Order Management System (OMS). This therefore allows every order to be dealt with in the same way, so that the same established processes are followed every time.

By having all order data coordinated in this way, inventory data can then be kept consistent and synchronised across all platforms, enabling the real-time updates and consistency mentioned above.

Enabling transparent fulfilment processes

Having all relevant order information in one place makes it much easier to keep customers updated on the stats of their order. In real time, customers can receive information when their order moves to the next stage of the fulfilment journey, from emails confirming that the order has been received, to SMS messages confirming the data and time of delivery. And if the customer gets in touch themselves for an update, the customer service team can quickly and easily access the most up-to-date information.

Driving insights from integrated data

Having so much coordinated and rationalised data opens the door for generating deeper insights from analytical tools. The insights generated cover areas as diverse as sales trends, customer sentiment, inventory and fulfilment costs, and performance from one channel to the next, among others. This level of insight gives e-commerce operations like yours more confidence when making important decisions on where to focus your business in the future.

How Can Omnichannel E-Commerce Fulfilment Benefit Your Business?

Through omnichannel logistics, you’ll find that you’re able to:

Lower costs

Looking after different channels separately can be expensive for a number of reasons. You may have to hire extra staff to take care of all the management for you. Inventory and fulfilment may be handled by different suppliers and partners, all of which will have their own prices, and which collectively may be less cost-effective than one coordinated agreement. And if you outsource your omnichannel logistics, you will be able to cut down on a number of costs by using their facilities instead.

Reduce admin burden

Integrating all your sales channels together makes it much easier and quicker to manage them all, instead of addressing each of them in turn. If this admin burden is still likely to be too much – or you’re expecting your e-commerce operation to keep growing in the future – then outsourcing to an omnichannel third-party logistics provider can relieve you of your logistics admin workload entirely.

Increase efficiency

Many of the inefficiencies that hold e-commerce operations back can be removed by adopting omnichannel logistics. For example, having a clear, real-time view of inventory levels can reduce the risk of overstocking, or losing sales because items sell out. The insights generated from analytics can also be used to inform changes in staffing levels, product line-ups and future stock investments, helping smooth out cash flow across different times of the year.

Improve customer experience

Now more than ever, consumers expect to be able to shop where they want, when they want, and receive a seamless and transparent process from browsing to delivery. And in a highly competitive global e-commerce marketplace, they’ll quickly take their business elsewhere if your experience doesn’t meet their high standards. Omnichannel logistics can help you meet those expectations, through data coordination and transparency that keeps customers moving smoothly through the journey and fully informed, whichever channel they choose to shop from.

Have greater flexibility to scale and expand

In such a fast-paced and constantly evolving world as online retail, being able to react to new trends and take advantage of new opportunities quickly is critical. Omnichannel logistics can help in this area, as it becomes easier to add and integrate new sales channels (for example, emerging social media platforms) when the chance arises. Additionally, a more comprehensive range of data means that inventory and fulfilment capacity can more accurately be scaled up and down as the business demands.

Choosing the Right Omnichannel Logistics Model for Your Business

Different e-commerce brands approach omnichannel logistics in different ways. You can either take care of it in-house, outsource it to an omnichannel third-party logistics provider, or go for a combination of the two. Here’s how each option works:

In-house

If you decide to run your omnichannel logistics in-house, you’ll have to take care of everything from inventory management and order processing, to packing, shipping, returns and customer service.

The benefits to managing omnichannel fulfilment in-house include retaining full control, making faster decisions, and customising the inventory management in ways that perfectly align with your business. But on the other hand, it can be incredibly time consuming, costly, and you’ll be fully responsible for fixing anything that goes wrong.

Hybrid

Under a hybrid arrangement, certain parts of the fulfilment process are handed over to a omnichannel fulfilment provider, while others are retained in-house.

This allows you to mix and match different services, handing the most complex and risk-heavy functions to the outsourced provider while retaining control over other key processes. This does give you some scalability and flexibility, as you can adjust who takes care of what over time, but it can create some complications in communication between the two parties.

Outsourced

The outsourced option means handing over the omnichannel logistics strategy, in its entirety, to a third-party logistics provider (3PL). They will use the greater scale of their workforce, distribution centres, expertise and supplier relationships to make your omnichannel logistics run seamlessly and flexibly.

Generally speaking, the financial outlay of this arrangement can be lower than if you try to run it in-house yourself. And while you’ll lose some control over how everything works, this can be more than counterbalanced by the greater potential, scale and professionalism you’ll gain from.

What Should I Look for in an Outsourced Omnichannel Logistics Partner?

There will be specific characteristics of your e-commerce business which will stand out from everyone else, and those are the factors you should prioritise when looking for an omnichannel third-party logistics provider.

This could be the volume of goods you’re selling, the target markets you’re selling into, the level of technological support you need, and even the type of goods you sell. For example, the fulfilment demands for small items like jewellery, make-up and fragrances are very different to those for industrial machinery or furniture.

Ideally, you should partner with an omnichannel logistics provider with expertise in your chosen areas, that’s able to take care of the whole process end-to-end, and has the flexibility to accommodate your business as order volumes grow.

To find out more at how all this works at ILG, take a closer look at our order fulfilment services today, or get in touch with our team to discuss your specifics.