Any-Channel Fulfillment: Big Risk Or Big Reward?

By Matt Pillar, chief editor

Consumer empowerment and the Amazon experience have created a conundrum for cross-channel retailers. Shoppers have been spoiled by the store brands that are willing to cater to their demands. The stores whose associates are trained to put in the time to find the merchandise their customers want, whether it’s in another store, in a warehouse or DC, or somewhere else in the supply chain. The stores that more heavily weigh the consummation of a sale and the resulting customer experience than they do the cost associated with fulfilling an order.

These stores have set aside channel protectionism, store performance turf wars, and fulfillment costs. As a result, they’ve set the consumer experience standard.

Yet, the cost of ‘any-channel’ fulfillment remains the scariest, and thus, the most formidable objection retailers voice when they consider channel convergence and the consumer fulfillment expectations that come with it. It’s a legitimate concern. Offering fast, free home delivery of an item that’s not in stock at brick-and-mortar adds measurable expense to the cost of the sale. Sourcing that merchandise from another store or channel adds more difficult-to-measure, yet very real cost in the form of resetting the corporate culture. It costs money to implement the operational and systemic change and training necessary to make a concerted move away from fostering internal ‘credit for the sale’ competition and toward customer centricity.

When I listen to the vendor community’s emphatic appeal for the adoption of ‘omni-channel’ retail systems, this is my first concern. Consumer centricity? Yes, that’s very important. But at what cost to the business? What’s the proper balance between meeting the customer’s high expectations and maintaining profit in the cost of the sale? What’s the break-even point? More importantly, what’s the profit point?

So, I’ve been asking the retailers who are enabling any-channel fulfillment about their experiences. They’re telling me they’re winning.

Last week, I spoke with Lisa Lavin, director of customer experience at Orvis. It’s Lavin’s job to make sure store-level associates, call center employees, e-commerce teams, and the back office supply chain pros who orchestrate the movement of merchandise throughout the Orvis enterprise are playing off the same sheet of customer-centric music. When I asked Lavin the questions posed above, she told me confidently that the company is spending more money to meet its customers’ fulfillment demands. She said Orvis is working diligently to obliterate the division of channel-specific sales metrics. And with the help of some sophisticated cross-channel analytics tools, they’re also measuring a significant increase in sales, and their customer satisfaction scores are going through the roof. Orvis had the stomach to fulfill at any cost, and it’s selling—and profiting—more as a result. “We’ve been doing this long enough to know that our incremental revenue gains justify continued investment in fulfillment flexibility,” said Lavin.

The story mirrors the experience at up-and-coming high-end outdoor apparel retailer Ibex. Since implementing a commerce suite that facilitates inventory and fulfillment fluidity, the young retailer has experienced an astounding 82 percent transaction growth. Ibex CFO Bill Hill says the increased cost of fulfillment is entirely insignificant in the context of the company’s ever-expanding revenue. 

Both of these stories will be fleshed out in greater detail in an upcoming issue of Integrated Solutions For Retailers. For now, the takeaway is simple. The more I talk to retailers that have the guts to change and the patience to let amazing customer experiences parlay into increased sales, the more convinced I am that your ‘any channel’ fulfillment cost concerns are holding you back.