Multi-channel retailers are adopting a new fulfillment process

The move to multi-channel selling is driving retailers to adopt the distributed order management model of fulfillment, says Beth Enslow, vice president of enterprise research at Aberdeen Group.

“Companies realize they have to be able to serve their customers better. That means customers don’t want to wait for goods, and they want to have accurate information about costs, delivery dates and times,” Enslow says. “Their traditional ways of doing it out of one location or having disconnected systems that are managing the process just doesn’t cut it anymore, because it drives up a lot of those costs.”

The distributed order management process is designed to help multi-channel retailers cope with their increasingly divergent customer demands and broader geographic bases. In the past, multi-channel retailers built separate fulfillment facilities for Internet sales, store sales, and catalog sales, Enslow says. “They ended up with piles of redundant inventory to serve the different channels,” she says.

With distributed order management, multi-channel merchants use systems that let them serve customers across the different channels out of the same facilities. As a result, they are able to improve service levels and cut inventory costs, Enslow says.

To convert to a distributed order management system doesn’t require merchants to rip out and replace their existing fulfillment systems, Enslow adds. “The good thing is these systems can usually wrap around whatever systems they had in place,” she says.

Conversion can cost six figures or more, depending on how many bells and whistles retailers want and how many locations they need to integrate, according to Enslow.

However, smaller retailers can obtain such systems from their existing warehouse or management enterprise resource planning system vendors at a much lower cost. “Rather than having to buy a high-end, best-of-breed solution, those companies look to their existing vendors and see how they can leverage some of those capabilities,” she says.