FedEx Express Talks Omni-Channel Logistics
At FedEx, Omni-Channel logistics is seen as “the corporation of retail store locations into the fulfillment and distribution network to improve stock management, inventory utilization and delivery time to shoppers,” as according to David Carden, Managing Director of FedEx Express, Thailand and Indochina. He adds, “The objective is to reduce stock-outs and provide efficient delivery to enhance a shopper’s overall experience with the retailer.”
The rise of Omni-Channel retailing is supported by the several trends that we are seeing, explains Mr. Carden. Firstly, consumers are increasingly expecting “brick-and-mortar” stores to offer integration in their shopping experience. For example, they expect to be able to order items online, have them delivered to their front door and return them in the store if they are unhappy with it– creating a seamless cross-channel experience between online and retail stores.
From a merchant’s perspective, the benefits of Omni-Channel retailing include the opportunity to accelerate delivery to customers through local or regional shipping. Omni-channel retailing also enables retailers to leverage store assets to compete with “pure-play” merchants such as Amazon, and manage peak-shipping periods without the need for extra distribution center space.
There are factors for clients to consider before deciding to adopt the Omni-Channel model. Like planning in other areas of business, clearly identifying, understanding and prioritizing their goals is the first step. Clients could design a system and operation to achieve these goals, whether they are improving inventory utilization, peak responsiveness, faster delivery times, or reduced stock outs. The next step is to then analyze potential barriers or parts of the business that need to be changed. Some factors include determining the impact on current distribution center inventory stocking levels; the staffing impact on current stores; whether goals can be achieved by using only a limited number of stores in each district covered; and what IT changes are needed – for example, whether a cross-store inventory visibility system is required.
The Omni-Channel is an exciting development in the evolution of retail, therefore there must be new logistics demands associated with this model.
When asked how FedEx is responding to these new demands, Mr. Carden replies, “Drawing on our experience in the US and Europe, FedEx is well positioned to serve our Omni-Channel customers with world-class reliability and service.” An example in the US is FedEx’s Metro Services portfolio, which offers customized same day and overnight local delivery, enabling merchants to ship from stores, often with later pick up times.
For merchants with offshore growth ambitions, FedEx offers access to a global network of transportation and logistics solutions. The scale and reach also enables FedEx to engineer customized solutions for their merchant customers.
Commenting on the challenges of Omni-Channel logistics services, Mr. Carden reveals that drawing on the experience of their US teams, “one of our greatest challenges is helping Omni-Channel merchants manage their deliveries from multiple locations such as fulfillment centers, as well as stores.” In response to this, and to enhance speed and efficiency, FedEx offers local delivery options, later pick-ups and customized solutions in the US.
Omni-Channel fulfilment places new demands on the merchant. The merchant wants new ways to leverage their existing store footprint and staff, to lower fulfillment costs and provide greater customer access to products. This is one the most important logistics requirements from Omni-Channel clients.
E-commerce consumers’ needs and expectations are also evolving rapidly. In the US, this has driven demand for customized solutions like FedEx Delivery Manager, which offers detailed options including customized delivery times and address options, specific delivery instructions, requesting delivery at a FedEx location, and signing for delivery in advance.
Feedback from customers in the US reveals that one of the greatest challenges faced by Omni-Channel merchants is the expanding warehouse fulfilment operation to include in-store fulfilment. And while fulfilling orders accurately is the merchant’s responsibility, FedEx offers experience and insight, in addition to practical tips and advice to help merchants work through many related issues. Mr. Carden comments, “As the world’s largest express transportation company, we can offer outstanding reliability, service, speed and reach.”
“FedEx has well-established delivery networks and advanced delivery notification capabilities,” Mr. Carden informs. They can provide detailed data to help retailers accurately anticipate the delivery of orders to stores. The information can also be used to plan reorders and advise customers when an item will be available in the store. To help manage peak shipping periods, FedEx provides resources that work with retailers to accurately plan for peak shipping demands and ensure that delivery expectations are met.
The FedEx software portfolio offers customers a number of options to directly integrate its services into their existing systems. “We have a world-class team of IT providers that can create tailored solutions to meet our Omni-Channel merchants’ needs,” says Mr. Carden. An example is the FedEx Compatible program, where a group of certified technology providers offer customized solutions to help customers manage their logistics needs from warehouse management to marketplace integration.
FedEx has a number of solutions for specialized delivery scenarios, such as COD and Signature Services, as well as returned products. Mr. Carden informs that they are especially excited about their recent addition of GENCO to the FedEx portfolio. GENCO provides FedEx with industry leading Returns management solutions and flexibility to meet their Omni-Channel customer needs in not just returns, but also test, repair and re-marketing of products.
We have a world-class team of IT providers that can create tailored solutions to meet our Omni-Channel merchants’ needs.
“Although Omni-Channel retailing is relatively new here in Thailand compared to more established retail sectors in the US or Europe,” says Mr. Carden, “it is predicted to grow rapidly with major players leading the way.” For example, here in Thailand, Tesco Lotus features 20,000 food and grocery items on its portal, and the Central Group has redesigned its online shopping site and developed a new warehouse to support significant online sales in the future.
It is “creating many new competitive advantages that can be provided through an innovative logistics strategy,” replies Mr. Carden, when asked how Omni-Channel retailing is affecting the logistics industry. It can provide logistics-based solutions that increase sales, reduce stock-outs, reduce inventory stocking levels, reduce discounting and increase customer satisfaction.
While Omni-Channel is mainly used in the B2C sector today, Mr. Carden believes that the systems can be customized to support the traditional B2B needs such as store-to-store inventory balancing and enabling the fulfilment of smaller commercial orders from surplus stock at retail locations.
Omni-Channel logistics has been established and proven to be a huge success in Europe and the US. Although it is predicted to grow rapidly in Asia, does it have the potential to size up to the west? Could its success or failure rely solely on the shoppers’ habits and the way they want to shop or would Omni-Channel logistics need to force this type of retailing on the customers in order for it to be successful? Do people in Asia want to shop this way?