The internet gives customers the ability to purchase any item from any location (i.e., Omni Channel Selling), and now more than ever, there is increased pressure for retailers to strategically move to an Omni Channel Planning model.
True Omni Channel Planning occurs at multiple steps in the value chain, not just at the point of fulfillment decision-making. Retailers need to ensure consistency amongst each step and precision is essential. To get started, retailers should consider the following approach to their Omni Channel Planning Strategy:
Assortment Planning: First, the Merchant Organization must rally around an Omni Channel vision for the product assortment. This vision should address questions like, “How broad should the in-store assortment be compared to online?” and “How much overlap should there be between in-store and online assortments?”. The pressure for change needs to be defined, and in some cases, ensuring alignment across channels may even require reorganizing the merchant community.
Pricing, Promotions & Markdown Planning: Customer price transparency across channels leads to a need for coordination of prices across channels. While it may be tempting to simplify the problem with a channel-price-parity or pricing strategy (i.e., the same price across all selling channels), that is neither required nor recommended from a profitability perspective. There is often an inherent value that the in-store channel provides that warrants a price premium over the online channel—for instance, the ability to touch & feel the product. And, until same-day delivery from major online retailers becomes pervasive, the take-it-home-today factor can command a price premium in-store.
Inventory Planning: To ensure future buys allocate the right amount of inventory to each location, retailers should design demand forecasts that assign historical demand to the order location, and not the fulfillment location. For example, suppose a customer in Store A wanted a particular shoe in size 7 but Store A was out of stock. Rather than lose the sale, the associate offered to have it shipped to the customer from Store B. The correct allocation of demand for future inventory planning purposes would be to Store A, not Store B.
Fulfillment Planning: The last step in the Omni Channel Planning process is to optimize the order-fulfillment-location logic, accounting for more than just shipping expense. Since potential fulfillment locations may have different inventory levels and prices, the fulfillment location logic should account for projected weeks of supply and any price differentials to preserve margin and prevent premature stock-outs.
Adopting a holistic Omni Channel Planning Strategy will ensure Omni Channel Selling Strategies can be achieved profitably.