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Aydin Usluca10/14/22 7:29 AM7 min read

3 Strategies to Navigate an Ever-Changing Fulfillment Innovation Landscape

Formula One international racing may have some of the fastest cars on the planet, but they still lag behind the race to offer the best omnichannel fulfillment experience possible. A true, end-to-end connected shipping experience is now the expectation, not the exception, and companies worldwide are going “all in” to provide it. So what do customer omnichannel expectations look like?

According to a study by Mckinsey, more than 90% of consumers expect to receive their packages within two to three days, and 30% expect same-day delivery. To meet consumers’ great demands, more than 75% of specialty retail supply-chain leaders have prioritized two-day delivery, and 42% are aiming for same-day deliveries by the end of 2022.

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But a true omnichannel shipping experience isn’t just about how long the package takes to arrive. Every transaction has to be a seamless process across channels, from start to finish, and that isn’t always easy to provide. For example, suppose a customer starts an order on a Monday morning but can’t complete it until the evening. In that case, they will be frustrated if they have to start it all over again, likely abandoning their order unless it’s absolutely essential. And that’s just one scenario. It’s easy to see why many companies have a lot of trouble connecting every touch point.

So, how do you keep up? Here are three omnichannel strategies to help out!

#1 Understand your customers better (sometimes it takes a free baby blanket!)

Without a deep and fundamental understanding of your customers’ personal qualities, basic lifestyle, and preferences, their loyalty to you will remain shaky at best. To help strengthen this delicate relationship, some retailers are looking to please their customers like never before. Take Zappos, the popular shoe retailer. They understand how much their customers want robust and personalized customer service where 24/7 support and free returns (with a year to make them) are just the basics. In fact, their customer service representatives are encouraged to respond to customer needs that go above and beyond just their orders. For example, if they hear a baby crying in the background, they may include a free baby blanket in their customer’s shoe order. Talk about personalization!

We’re now in the age of hyper-personalization, where collecting and understanding your individual consumer habits is a crucial way to drive a successful and rapid omnichannel strategy. And creating customer segments can be a business owner’s best friend. With segments in hand, companies can take a more targeted approach to their fulfillment strategy to prioritize specific services for individual customer groups and uncover their purchasing priorities. For example, some customer segments prefer speed and convenience and are willing to pay a premium for it, while others in often rural areas will likely choose to wait a few days rather than pay a higher price. Much like consumer preferences, this strategy needs to be employed on a segmented basis rather than a “one-size fits all” approach to omnichannel.

A robust loyalty program will help you understand your customers.

With robust customer loyalty programs, some brands and retailers know things about their customers that even their friends might not know — Sephora’s Beauty insider program notes their customers’ eye color and skin tone. The company uses the information to tailor recommendations when their customers are shopping–and to reach them when they’re not to make offers they know will entice them.

#2: Innovate with the horsepower of a corporation and the speed of a startup.

Offering a seamless omnichannel fulfillment experience absolutely relies on today’s tech. So, it needs to be lightning fast, intuitive, and automated, supporting all the ways your customers want to pay as easily and quickly as they’d like. And that can be a problem for large companies who are often slow in innovating and can’t change course once one has been determined–which is just the opposite for startups. Startups have the agility to take on and pivot using the latest and most innovative technologies. This is something large organizations often envy.

But large companies need not remain envious of the startup world. At Pilot44, we’ve helped some of the world’s biggest corporations innovate like crazy with hundreds of successful pilot programs. To do so, we’ve purposely worked with dedicated, hyper-focused, agile, and autonomously operated units within the organization. Helping them attain a deep and fundamental understanding of their products, market segmentation, and, perhaps most importantly, where their innovation can outperform and underperform within their organization.

Years of experience and successful pilots have proven that enabling innovation transformation requires starting small. For your pilot program, you’ll want to choose a specific product or segment to target that will ensure your goals, success metrics, and strategy can be clearly defined and acted on quickly.

It’s also wise to start with a segment or product with rapidly expanding demand in a particular city where a new go-to-market strategy can be quickly established (and assessed). And after you’ve specified what you want to pilot, choose the right team to maximize success.

Cutting-edge teams need cutting-edge performers, so build a cross-functional team by picking leaders with a proven track record of successful projects. They should also have clear and unrelenting budget expectations, providing internal key stakeholder and owner support and an autonomous environment where the team is encouraged to fail fast, iterate, and ultimately succeed.

#3: Take an “empty miles” approach to your physical footprint.

To save time, money, and resources, there’s been a recent big push for truck companies to adopt “empty mile reduction” or the optimization of truck space as much as possible. Similarly, how you structure and use the space of your physical footprint can be critical to a very successful omnichannel push.

Here are some of the ways:

➜  Turn to Buy Online, Pick Up In Store (BOPIS). During the pandemic, BOPIS kept many retailers in business by turning customers’ local stores into last mile pickup options for online purchases. Often these efforts help repurpose underutilized spaces and turn them into local pickup centers or delivery warehouses. The more convenient (closer) to the customer, the better.

➜  Become a shipping center. In another massive innovation, Amazon has recently started accepting e-commerce returns at your local Whole Foods, without a label or packaging. While the return is initiated online, it’s completed by simply dropping the package off at the grocery store. Additionally in-store Amazon order pickup is also offered.

  Create a distribution center. With a shift from the physical store to e-commerce, there’s a unique opportunity to repurpose old spaces to act as distribution centers. These are readily available commercial spaces, often equipped with the infrastructure (building, loading/unloading docks, large physical footprints), and conveniently located near customers (for last mile delivery). Plus, companies don’t have to use the entire space to benefit. Amazon gives shoppers the ability to pick up packages and return them at the Whole Foods.

➜  Partner with a large brand. Many large brands are partnering with retailers to lease some of their shelf space to use as micro fulfillment centers. And “quick commerce” or “q commerce” (super speedy on-demand delivering, think 10 minutes) has threatened even the two-day shipping model. These instant delivery models utilize “dark stores,” which are essentially mini-fulfillment centers in densely populated areas for ultrafast delivery services. Similarly, “ghost kitchens” and “virtual restaurants” are being used as backend fulfillment infrastructure of delivery-only restaurants. All three focus on transforming open spaces (e.g., urban real-estate, parking facilities) into multi-purpose places that support the on-demand economy. Although they have higher operating and labor costs, they work incredibly well for customer segments demanding hyper-speed and who are willing to pay the price for it.

To learn more about these various last mile delivery strategies, check out our blog post Winning the Last Mile: 4 Critical Channels for CPGs.

Get in the driver’s seat for smooth navigation.

The demand for omnichannel fulfillment is here to stay and likely will only increase in demand and sophistication, so it’s important to adopt it now. Investing in getting to know your customers, innovation transformation, and/or redesigning your physical footprint can ensure your company remains competitive and relevant in this quickly evolving market.

Contact us today to learn how Pilot44’s dedicated Supply Chain Practice experts can help your company innovate your way to providing customers with a seamless end-to-end experience.