Multichannel vs. omnichannel fulfillment: Which is the better choice for your business?

[Updated post from February 10, 2021]

Today's consumers have a plethora of options to meet their shopping needs, from mobile e-commerce to social media and the storefront. But shoppers don't merely want multiple selling channels; they want to ability to switch seamlessly between them. 

Long gone are the days when consumers were confined to brick-and-mortar stores or the online storefront. Let's take a look at a few stats:

• 73% of consumers prefer shopping through multiple channels.
• 82% of consumers want to be able to check product availability online before visiting a store.
• Over 50% of consumers have chosen a brand because it offered a click and collect option.
• 71% of brick-and-mortar shoppers with smartphones consider this important to the in-store experience.
• Multi-channel shoppers have a 30% higher lifetime value than consumers using just one channel.

This is where omnichannel strategies for fulfillment come into play to meet customer expectations for increasingly nimble shopping experiences. But how does this differ from the more familiar multichannel fulfillment process?

We're taking a deep dive into the differences between multichannel and omnichannel fulfillment, and what you should consider when deciding on your business's strategy. 

What is multichannel fulfillment?

Multichannel fulfillment is where each selling channel maintains its own inventory, order processing workflow, and delivery methods. This is the same as multichannel marketing, where one marketing channel will have a different strategy than another.

For example, a business might use Amazon FBA to fulfill orders placed on Amazon, while orders placed on their e-commerce website are fulfilled by a 3PL. If you have multiple store locations, each one will maintain its own separate inventory. In sum, a multichannel approach sees order fulfillment and selling activity confined to that one channel, with no crossover between operations.

What is omnichannel fulfillment?

Unlike multichannel fulfillment, an omnichannel strategy focuses on the complete integration of inventory, customer service, and the order fulfillment process.

Instead of being siloed, sales channels are holistic parts of the same operation to take advantage of all available resources. This enables merchants to offer a broader range of fulfillment and delivery options to customers for maximum flexibility and convenience:

• Click and Collect (Buy Online, Pick Up In-Store)
• Buy in-store for home delivery
• Store-to-store fulfillment and delivery
• Buy online, return in-store (BORIS)

In sum, an omnichannel approach to fulfillment sees a store location play multiple roles within the fulfillment process, such as:

• A source of inventory for orders placed on an online channel.
• An additional location for picking/packing online orders
• A click and collect point
• A place to return items bought either in-store or online.

So, we've defined what multichannel and omnichannel are in general terms – but what does this mean in terms of order fulfillment?

What is the difference between multichannel and omnichannel fulfillment?

Because multichannel/omnichannel fulfillment is often used interchangeably, it's easy to assume they're one and the same. However, there are distinct differences in how multichannel vs. omnichannel conceptualize the customer experience:

Let's compare two different scenarios to illustrate how the customer journey differs between an omnichannel and multichannel approach to fulfillment: 

Scenario A: The customer is browsing an apparel brand's social media pages and sees an ad for a dress they like. They click ‘view on website' and are directed to the product page, where they check the dress's stock levels at the nearest physical store. Upon arriving at the store, the customer shows a sales associate the dress on their smartphone, who invites them to try it on.

Scenario B: The customer sees a dress they like in an online store and purchases it for home delivery. When the dress arrives, they find that it's the wrong size and visits the nearest physical store to return it. Upon arriving, the sales associate informs the customer that they cannot process the return because it was an online order, forcing them to ship the item back to the warehouse and delay receiving a refund.

In Scenario A, the omnichannel customer journey involved no fewer than four different channels - social media, an online store, mobile commerce, and a store location - which the customer is able to switch between seamlessly.

‍‍In scenario B, the multichannel fulfillment approach means that the customer is siloed to just one channel – even when more flexibility it would make the customer experience better.

In sum, having an e-commerce store and a brick-and-mortar location doesn't necessarily make you an omnichannel retailer. The key difference between omnichannel and multichannel is whether selling channels can integrate according to a customer's needs. 

Omnichannel vs. multichannel fulfillment: Pros and cons

Multichannel fulfillment: Pros and cons

Because multichannel fulfillment allows you to pioneer different experiences in each channel, it's a good option for brands that:

• Want to design a unique sales and marketing strategy for each channel.
• Need to preserve a supply of inventory for each sales channel.
• Don't have the ability the necessary

But because every channel functions separately in a multichannel strategy, this does make management more difficult:

• Storage becomes expensive if you need separate locations for each of your channels.
• Customers might become frustrated if they don't have the option for in-store pickup or in-store returns.
• Inventory planning is more complex and time-consuming.

Omnichannel fulfillment: Pros and cons

Because an omnichannel strategy focuses on brands leveraging all selling channels and inventory to fulfill orders, this offers multiple benefits:

• Unified inventory management, which maximizes efficiency and cost savings across sales channels.
• More flexibility and convenience for customers in they browse, purchase, and return items.
• Ensure consistent brand experiences between channels, helping to promote customer loyalty.

However, putting an omnichannel strategy in place isn't always as straightforward as it might seem:

• Can be expensive and challenging to implement the necessary infrastructure.
• Puts pressure on your brick-and-mortar operation due to returns and in-store pickups.

Multichannel vs. omnichannel fulfillment: Which is better for your business?

At first glance, a multichannel approach to fulfillment is much more straightforward for retailers to manage. Multichannel focuses on keeping your channels siloed off from one another, allowing you to focus on each channel in isolation. But this is where things can get tricky from the standpoint of customer care.

While you might classify your e-commerce store and physical locations as completely separate operations, your customers are unlikely to view it this way. 

From their perspective, your selling channels are different facets of the same brand – and shoppers expect to have the freedom to move seamlessly between them. Preventing them from doing adds friction to the customer experience and may result in people choosing to shop elsewhere.

By comparison, omnichannel fulfillment offers consumers much greater flexibility and convenience in how they navigate the shopping journey, resulting in positive customer experiences and enhanced brand loyalty. 

However, omnichannel necessitates a much more tightly integrated fulfillment process, requiring a lot of support in the form of technology and strong inter-channel communication that can be challenging for businesses to manage independently.

Top tips for a successful omnichannel fulfillment strategy

Opt for a unified inventory management strategy

Pioneering a successful omnichannel strategy demands breaking down the silos between multiple channels.

When inventory data is shared effectively, this creates a true customer-centered experience that puts convenience and flexibility first. For example, allowing shoppers to make returns in more than one channel streamlines the post-purchase experience and makes it easy for them to solve issues quickly. In the reverse, maintaining silos and forcing customers to return items to the channel they purchased in creates friction and frustration for customers.

Prioritize a seamless experience between channels

Whether an omnichannel strategy is just in name only depends on how easy it is for shoppers to move between different channels to receive customer service or compare products. If your operation doesn't have the necessary functionality to make this process seamless, it's unlikely that customers will have a positive omnichannel experience.

For example, customers are going to be more inclined to visit an offline sales channel like a store location if they're able to look up inventory levels via your online store first. Likewise, being able to log a return via an online portal and then drop it off at a store location or a return locker makes the returns process much more streamlined.

By actively encouraging customers to navigate between different channels, rather than just permitting it, you can deliver a stellar omnichannel fulfillment experience.

Prep your storefronts to handle more foot traffic

An omnichannel approach to fulfillment means that a brick-and-mortar store is far more than just a place to buy products. A unified approach to customer engagement and inventory transforms physical stores into a complete series of touchpoints, including browsing, in-store pickup, returns and exchanges, and more. This means you need to ready your brick-and-mortar stores to manage more customers driven in-store by online sales and marketing channels.

For example, if customers buying via online shopping are able to return items in-store, consider setting up a dedicated returns counter to prevent long queues from forming at the checkout and negatively impacting the customer experience.

When you're using store-based inventory to fulfill BOPIS or curbside fulfillment options, it's a common mistake to pluck items straight off the shelf and potentially cause stockouts. If potential customers walk in and see empty shelves everywhere, as happened to stores like Target and Walmart during the pandemic.

Have a real-time warehouse management system

For a successful omnichannel fulfillment strategy, brands need to have a sound understanding of real-time operational capabilities. A Warehouse Management System (WMS) can track SKU counts, orders and fulfillment capacity to help you manage fulfillment across sales channels.

With the power of a WMS, brands can determine which fulfillment location - whether it be a store location or a warehouse - can fulfill a particular customer order within the fastest timeframe for maximum customer satisfaction. Without real-time tracking in place, it’s very difficult to synchronize your inventory, which can lead to stockouts or customer orders being misplaced. 

Partner with an experienced omnichannel fulfillment provider

An omnichannel fulfillment strategy is only as good as the 3PL that's coordinating it. If your fulfillment partner has issues marrying separate channels, then it's going to be very difficult to offer customers the consistent experience they crave.

By partnering with an experienced omnichannel fulfillment provider like Ryder, your business can take advantage of real-time insights that enable seamless order and inventory management. Best of all, our powerful suite of technology integrations makes it easy to view information from all of your selling channels and business systems from one convenient interface.