Today we live the rise of omni-channel and “me-commerce” in retail, in which the customer is the new boss and seeks complete and integrated consumption experiences. For this to be possible, however, companies need to eliminate existing operational barriers between the various existing sales and service channels. And has this already been done?
Only among the minority of large companies, is what the survey indicates CEO Viewpoint 2016: The Journey to Profitable Omni-Channel Commerce, performed by PwC in partnership with JDA Software. Of the 305 executives at some of the largest retailers located in China, Germany, Mexico, the UK and the US, only 18% said they had broken down operational silos across channels and were delivering barrier-free shopping experiences for their customers.
To enable omni-channel experiences, large investments are required, and ensuring efficient operation has been one of the biggest challenges for retailers moving in this direction. Data revealed in the survey, however, indicate that omni-channel retailers already seem to be benefiting from some advantages and see a promising path ahead:
Figure 1 – Growth expectations
Source: Adapted from CEO Viewpoint 2016
When we look at costs, the outlook looks the same. While 74% of companies that have not yet removed their barriers said that their service costs are rising, only 59% of the remaining companies said the same.
The survey also revealed the activities that, in the executives' view, make omni-channel customer service more expensive: 32% of the companies that removed operational barriers and 45% of the other companies indicated that delivering the order directly from the DC to the customer's home customer is the practice responsible for most of your service cost. Processing and collecting the items involved was the second most marked option (51% among companies with operational barriers and 67% among others).
Despite the omni-channel having the objective of improving the service offered to the customer, the executives were prone to carry out some actions that tend to disaggregate consumers, as a way of being able to deal with the increase in costs and close the account:
- Increase the minimum purchase amount to deliver with free shipping (39% of responses)
- Increase the minimum purchase amount to offer the option to pick up the item purchased online for free (31% of responses)
- Increase delivery shipping (29% of responses)
The survey also showed that there are considerable differences in the omni-channel maturity observed across the countries surveyed. The more established markets generally have more mature omni-channel capabilities, but it is the emerging markets that are investing more heavily in this trend and offering more and more options to improve the customer's shopping experience. This can be noticed in Figures 2 and 3, which show, respectively, the tendency to adopt the Click & Collect service (buy online and search at an indicated point) and adoption of new delivery time options among the companies surveyed.
Figure 2 – Expectation of adoption of the Click & Collect service
Source: Adapted from CEO Viewpoint 2016
Figure 3 - Expectation of adoption of new delivery time options
Source: Adapted from CEO Viewpoint 2016
With regard to the investment made by the companies, the interviewed CEOs revealed that around 26% of the investment budget is being used for practices directly linked to the omni-channel. Figure 4 shows the main investments made by the companies surveyed:
Figure 4 – Main investments in omni-channel
Source: Adapted from CEO Viewpoint 2016
Investments in omni-channel are greater each year and leading companies continue to seek to better understand customer desires in order to offer more complete services. Companies that lag behind not only need to remove the operational barriers that impede seamless shopping experiences, they also need to increase investment to provide new customer options. Every day there are new signs that those who do not invest in the omni-channel will finish the race before the finish line!
References
<http://mhlnews.com/global-supply-chain/retail-ceos-need-remove-organizational-silos?page=2>
<http://apparel.edgl.com/news/Silos-Persist-Despite-Rise-of-Omnichannel104592>
Fernanda Monteiro
More than 11 years of experience in training and consultancy projects, focusing on Logistics and Supply Chain. In consultancy, he carried out projects such as Transformational Logistics Plan, Diagnosis of logistics operations, Strategy and Calendarization of Transport Operations, Measuring the Cost of Serving, Market Study, Mapping of Inventory Reduction Opportunities, Review of the S&OP Process, Management Plan Training and Implementation of Commercial Processes in companies such as Nestlé, Raia Drogasil, Ipiranga, Lojas Americanas, B2W, Coca-Cola, Andina, Embraco, Martins Atacado, Loja do Mecânico, Santo Antônio Energia, Ecoporto and Silimed. She is currently one of the teachers of the Inventory Management Course taught every six months by ILOS. She worked on the development and management of Online Courses in Logistics and Supply Chain, Supply Processes, Demand Planning, Inventory Management and Industrial Management. Still in the training area, she was responsible for applying ILOS business games in companies such as Raia Drogasil, Fibria, NEC, Novartis and Moove.
