Flexible Fulfillment Strategy: How Retailers Can Leverage Their OMS System to Delight Customers and Streamline Operations

In 2021, retail e-commerce sales amounted to $5.2 trillion globally; the industry is forecasted to grow at a steep trajectory over the next several years to reach$8.1 trillion by 2026.

As e-commerce expands, retailers are contending with converging pressures: heightened customer expectations, increased competition, and emerging fulfillment and logistical innovations. Because customers expect continuous improvement on convenience, speed, and personalized options, retailers are investing in technologies and infrastructure to support these service levels.

As 2023 unfolds,survey results show that consumers are cost conscious but eager to upgrade their pre-pandemic e-commerce experiences. Resulting from continuous technological advancement, shoppers are demanding seamless in-store and online experiences that align with their lifestyles and pocketbooks.

To meet these expectations, retailers are building efficient, customer-centricoperational capabilities to increase their competitive advantage. As part of this effort, savvy companies are focused on implementing flexible fulfillment strategies to meet the needs of individual customers.

Upgrading the quality of the order fulfillment experience

The quality of retail order fulfillment plays a pivotal role in delivering a positive customer experience. Well-executed fulfillment strategies help build customer loyalty, encourage repeat purchases, and drive positive word-of-mouth sentiments; conversely, substandard processes can lead to delays, order inaccuracies, damaged products, and dissatisfied customers.

To keep pace with customer expectations, sophisticated retailers are implementing a variety of fulfillment options, such as buy online/pickup in store (BOPIS), curbside pickup, expanded pickup locations (e.g., home, store, or locker), vendor drop ship, and store-to-store transfers.

Offering multiple fulfillment options can lead to increased sales, higher conversion rates, and better profitability. For example, offering BOPIS can drive incremental opportunities for upsell and cross-sell while reducing cart abandonment rates. Additionally, expanded pickup locations and vendor drop-ship options enable retailers to offer a wider range of products without incurring the cost and operational drag associated with excess inventory in-store.

Incorporating fulfillment data early in the buying journey

Early access to fulfillment data instills confidence in customers by reducing the uncertainties and hesitancies that can stall purchase completion.

When customers have clear visibility into when and how their orders will be fulfilled, they’re more likely to complete their transactions faster and with confidence, which results in higher conversion rates and increased revenue for retailers. Providing fulfillment data upfront also reduces cart abandonment, because customers aren’t deterred by concerns about unknown shipping costs, availability, or other fulfillment-related uncertainties.

Early incorporation of fulfillment data can also help retailers optimize their inventory management, resource allocation, and overall operational efficiency. When customers select a fulfillment option early in the buying cycle, retailers can align their fulfillment processes to optimize inventory levels and reduce shipping costs.

Retailers that offer early access to fulfillment options can use this benefit to differentiate from competitors. Because customers value and seek transparency and convenience for their shopping experiences, offering these value-added services can enhance brand reputation and attract new customers.

When retailers have visibility into how customers prefer to have their orders fulfilled, they’re empowered to get ahead of potential fulfillment issues before they arise. For example, if a certain product is out of stock for a particular fulfillment option, providing that information early in the buying process allows customers to choose another method or adjust their expectations. This proactive approach helps retailers avoid negative customer experiences and reviews while reducing customer service inquiries.

Building the operational agility needed for a flexible fulfillment strategy

A flexible fulfillment strategy requires a combination of strategic planning, process optimization, and technological capabilities.

Accurate and unified inventory data is crucial to operational agility and seamless customer experiences. Retailers need to implement inventory management practices that enable them to track inventory levels, demand patterns, and order fulfillment status in real-time. These measures help prevent overstocks and stockouts while ensuring that inventory is allocated efficiently across fulfillment options.

To build these capabilities, retailers need to invest in a robust order management system (OMS) that can manage and process orders across channels, such as online, in-store, and mobile while extending relevant inventory and fulfillment data to the customer. A centralized OMS delivers real-time inventory visibility, order routing, and fulfillment optimization, enabling retailers to allocate inventory and fulfill orders from the best source based on customer demand and inventory availability.

Retailers should regularly assess their fulfillment processes to find opportunities to improve them. For example, retailers might decide to reconfigure store layouts, implement barcode scanning, or retrain staff to handle various fulfillment options. Some might consider automation options for order fulfillment, including robotics or autonomous vehicles.

Building omnichannel order routing capabilities

Using their OMS system, retailers can intelligently route orders to different fulfillment centers based on factors such as inventory levels, proximity to the customer, and shipping costs. They can also optimize inventory allocation and offer a variety of fulfillment options, such as ship-from-store, ship-to-store, or in-store pickup.

An OMS can also prioritize and allocate orders based on fulfillment parameters set by the retailer — for example, customer loyalty, order value, or shipping service level. Using these capabilities, retailers can better manage tailored fulfillment options that meet customer expectations.

Applying these technologies, retailers can implement a flexible fulfillment strategy that offers the adaptability required to meet broader customer demands in a dynamic retail landscape.

Meagan White is the head of marketing at Kibo Commerce.