JeffAshcroft

Every week I’m interacting with more and more e-commerce professionals who’s day to day job is coming up with the best methods of delivering OmniCommerce solutions for their customers. One thing I can say is there’s alot of angst and confusion out there, so I thought it might be helpful to share some of the best practices, opinions and trends that seem to be emerging.

Those of you who know me are aware of my work in coining and developing the ‘Matrix Commerce’ concept, however I’m sure you’ll have noted today that I’m using term OmniCommerce. This is simply a reflection of blunt reality, before any firm can even think of accomplishing a full Matrix Commerce implementation, they and their organizations have to master and implement the basics of OmniCommerce logistics. Think of how mountain climbers get to the summit of Mount Everest, the first step in that trek is to get to Base Camp and when it comes to implementing Matrix Commerce in your organization, the first step or Base Camp is to effectively implement OmniCommerce.

Simply put OmniCommerce is allowing your customers to effectively access, research and purchase your products in any manner they choose PC, mobile, tablet, kiosk, virtual store, in-store; and then deliver them, or have them available for pick up, when and where your customer would like. To do this you need to ensure that at ALL locations where stock is held or displayed for retail sale ACCURATE and TIMELY inventory information. Without this you don’t have a hope of delivering even a basic level of satisfactory omnicommerce customer experience.

As this post is about the logistics strategies to support Omnicommerce I will not deal with the front end ordering or online technology, but rather the logistics surrounding where product will be stocked, picked and shipped from for either delivery or pick up by your customers.

The major models being utilized to date are:

National Fulfillment Centre

Regional Fulfillment Centres

Ship From Distibution Centre

Ship From All Stores

Regional Hub Stores

Pick Up Centres and/or Lockerboxes

Direct From Drop Ship From Vendors

Each of the above will be briefly explained and then we’ll touch on some of the potential advantages and disadvantages of each approach. And of course it is important to note that the above are not mutually exclusive and many retailers will utilize a combination of approaches to support their online clients.

National Fulfillment Centre

To date this has been the most widely used model

Regional Fulfillment Centres

As customer’s continue to demand more rapid delivery service levels we are seeing an increase in

Ship From Distibution Centre

Although not optimal some have chosen to utilize their existing distribution centres to service e-commerce business.

Ship From All Stores

Some retailers rather than introduce a fulfillment centre or ship from their distribution centres have decided to ship their online orders directly from the closest store to the end customer.

Regional Hub Stores

Recently we have seen the emergence of Hub Stores (The Gap) (article link)

Pick Up Centres and/or Lockerboxes

One variant on traditional online delivery models is the introduction and use of Pick Up Centres or lockerboxes

Drop Ship From Vendors

As many online sellers seek to expand their assortment and cover more product categories in their online offerings they shift to an “endless aisle” model where products are listed on their site and kept in inventory at the original vendor’s warehouse. As soon as a product is sold on the website, the order is passed along to the vendor who then Drop Ships the product to the end consumer.

Customer demands for more rapid and cost effective e-commerce delivery seem to be increasing on a daily basis. In fact not a week goes by now without my speaking with retailers and etailers that since the dawn of e-commerce have successfully serviced Canada from one fulfillment operation for the country and are currently rethinking this model.

In most cases their national fulfillment operations are either positioned in Toronto or Montreal, as well as some in Vancouver, which up until now have been totally acceptable solutions. However, it definitely appears the days are numbered for a single e-commerce fulfillment operation being a viable customer delivery experience solution for all of Canada.

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Early in January of 2012 I found myself struggling with the general terms around multi-channel, cross channel and omni-channel to adequately describe the rapidly evolving retail and e-commerce marketplace reality we all currently face.

Searching for a term that would better capture the full complexity and many drivers impacting the business, on January 3^rd 2012 in a moment of epiphany I came up with the term and concept of Matrix Commerce on which topic this whitepaper is a primer.

Matrix Commerce describes the complex construct integrating marketing, sales, sourcing, pricing, profitability, service levels, delivery and consumer perceptions. Inherent in this is the notion of complete customer centricity from many of the above items extending to include customer desires for positive social outcomes relative to cause alignment and even the sustainability performance of companies they choose to do business with.

A mouthful for sure, but while you’re chewing on that start considering the types of real time and rapid processing systems which will be required to support such multi-facetted business decisions, not to mention the reams of big and not so big data that will be necessary for companies to collect in order to make them.

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As the world of commerce continues to become more complex, volatile and socially transparent the need for a strong linkage between the CMO and the Chief Supply Chain Officer (CSCO) grows. In our ongoing exploration to better understand this need within the emerging reality I call Matrix Commerce, last week I had an opportunity to connect with John Mesberg of IBM.

The below Q & A points capture John’s insights into the growing need for C-Level bonding between CMO and CSCO. I then wrap up with a few thoughts on some of the SCM factors CMOs may want to consider as they begin to build out this relationship facilitated by technology for enhanced brand protection and longevity.

Ashcroft: Why is it important now for the Chief Supply Chain Officer and Chief Marketing Officer to partner?

Mesberg: When it comes to both marketing and supply chain and we consider consumer demand and supply, both sides are simultaneously becoming more volatile. On the demand side, you have consumers who expect more. They expect products to be delivered more quickly than we ever envisioned in the past. Consumers expect products to be available in an hour at a local store. They expect to walk into a store and if the store doesn’t have what they want, they expect the store to fulfill that order to make the sale. So the level of expectation on the consumer side is changing. On the supply side, we’re now dealing with a global supply chain with significant commodity price fluctuations. There’s political unrest, supplier volatility, and managing the risk of those suppliers. Both the consumer and demand side are undergoing more volatility than we saw even ten years ago. When it comes to marketing, I tell my clients, CMOs and marketers are the ones responsible for making brand promises. CMOs are telling their customers what to expect of the brand, whether that’s fashion, service, etc. And to a degree, marketers are now telling the customer to not just expect a certain product, but to expect a certain experience. And ultimately, marketers are dependent on supply chain officers to fulfill that brand promise and deliver on the experience. These promises however, are becoming increasingly more difficult to fulfill due to the increase in customer expectations and the challenges faced on the supply chain side in order to deliver the product and that experience.

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It is with heavy hearts that the members of The Social CMO Crew for the first time say farewell to one of our own and much too soon.

@TreyPennington was one of the earliest members of @TheSocialCMO Crew and this week at the age of 45 he lost his battle with depression.

In his time with us, Trey contributed much to The Social CMO penning 21 posts (see them here) and probably the most poignant of these is Gratitude Fuels Community which I’m sure you will all agree is a very tough one to read this week.

Two of his best are Cut Through the Marketing Clutter with Storytelling and Confessions of a World Traveller. In both cases Trey was over the top with the image selections made which took both of these defining posts on his passion for the story and his social journey to another level.

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