Omni-channel the trump card

Omni-channel the trump card

Although online retail seems like a great success story, the hard truth is there is a long way ahead for the industry. The only way to expand and scale up is to shift gears and focus more on omnichannel. The market size of the online retail was estimated at $39 billion until 2017 (according to Please quote the source here). If we evaluate the growth trend, the industry was majorly dependent on the category-wise growth and online retail has not yet reached the nook and corners of India. Of the total retail pie, which is estimated at a market size of around $ 750 billion, the online retailer has a contribution of just 6 per cent in 2017. Can you please mention a line what’s the omnichannel strategy? The intense fight between the country’s top e-commerce portals is still within this meagre 6 per cent only. Each player claims themselves as the winner, but no one is a winner yet when the lion’s share is still with the offline retail.

Speed breakers of the e-commerce industry

There are various reasons that hinder the growth of the most potential Indian e-commerce industry. Here are the top three reasons impacting the future of the industry – 1.Working more and more with downstream supply chain partners (retailers) as sellers leading to inability to maintain cost advantage. (Can you explain a bit here with example) 2. Logistics cost percentage to sale of e-commerce varies between whooping 12 -25 per cent across various categories compared to offline retail which operates between 3-7 per cent. This huge leakage is mainly due to the inefficiency in consolidation at each node of supply chain and huge returns from the customers clubbed with insufficient reverse logistics infrastructure. 3.The e-commerce industry has efficiently touched just more than 3,500 pincodes out of the 30,000 plus pincodes in the country.

Recipe for omnichannel strategy

Now the only trump card is the omnichannel strategy where-in the online retail can piggy back on the infrastructure of the offline retail to penetrate faster. Rather than online versus offline, the smart strategy will mean online and offline. Many players claim to have mastered the strategy, the reality is that offline and online supply chains function as silos within the organisation. It is termed as multichannel rather than omni-channel. So, what we fail to achieve is the seamless integration of the online and offline supply chain to emerge as an omnichannel supply chain. The root of this misalignment is the lapse in planning for omni-channel and the right technology to drive omni-channel supply chain.

1. Omni-channel’s success relies on how efficiently the supply chain network is designed to achieve the service fills of the offline and online customers

2. Efficiently utilise the resources to the brim and seamlessly utilise resources for the online and offline fulfillment

3. Leverage the comfort of online supply chain and widespread reach of offline supply chain to scale up The omni-channel can bring down the overall supply chain costs of the online retailers by 5-10 per cent. This can be observed on the P&L (profit and loss) faster and it also brings out efficiency from the existing offline infrastructure by using the resources to the brim.

Myths about omnichannel

Most of the organisations are wary of adapting omni-channel and believe that implementation will need change in the infrastructure, systems and processes. The multi-channel approach can use the existing infra to full potential and all the systems we use today are scalable to an omni-channel supply chain and nothing goes waste. The other myth is omnichannel is not a good idea and specialising in one channel is the best strategy. This may sound good, but the organisation will be left far behind in the race because online penetration will take a lot of time even as offline can never match the comfort of online shopping. The biggest myth is that the omnichannel confuses the customer but the truth is that customer gets multiple options to place orders and how the fulfillment is managed is up to the organisation to plan and execute. Therefore, omni-channel is a boon to the customer and the organisation which masters the omni supply chain will have a competitive edge. It is evident that omni-channel is the only effective way to bridge the gaps of the current e-commerce industry. On top of that, a value proposition of bottom-line savings of around 5-10 per cent on the supply chain cost to sale makes the omnichannel a gold mine which is yet to be tapped. Seamless integration of online and offline would be the business mantra each organisation should be working towards to be the market leader.

Velvex