Retail and ecommerce are evolving faster than ever, as are consumer expectations. Many businesses are finding their traditional distribution models unsustainable in a post-COVID world.

Industry leaders agree: Omnichannel distribution is the way forward. But it’s a relatively new concept, and can be hard to fully grasp—let alone apply to your own operations.

In this guide, you’ll find:

• Omnichannel distribution definition
• 5 types of omnichannel distribution
• Omnichannel vs. multichannel distribution
• Benefits and challenges of omnichannel distribution
• Top 10 actions to encourage customer satisfaction and brand loyalty
• Omnichannel strategy best practices
• And more.

Let’s get started.

What is Omnichannel Distribution?

Omnichannel distribution is a method of distribution that allows customers to buy and receive products through multiple sales channels that are connected to each other in a digital system.

For example, a customer can Buy Online, Pick Up In-Store (BOPIS), seamlessly switching between digital and physical sales channels.

To fully understand omnichannel distribution, let’s start with the basics.

Omnichannel distribution: the building blocks

Distribution: the processes involved with selling and delivering goods or services from a manufacturer to a customer. Distributor: a person or company that buys goods from a manufacturer and sells them to customers. (For example: a retailer.) Distribution center: a facility where finished goods are stored before being transported to retailers, wholesalers, or directly to consumers. (Distribution center is sometimes used interchangeably with warehouse or fulfillment center, but there are differences. A fulfillment center is specifically for pick-and-pack order fulfillment.) Distribution channel: the chain of businesses a product passes through on its way from the manufacturer to the customer (i.e., the path a product takes to reach a customer). Omnichannel: a method of logistics, fulfillment, distribution, etc. which focuses on data integration and synchronization between channels. (Omni = “all.”) Data integration: the process of combining data from different sources into one unified set. Data synchronization: the process of maintaining consistency between data sets across various sources, devices, or applications. Synchronization ensures that as data moves through a system, it’s kept up-to-date and doesn’t fall out of sync with the rest of the system.

So, omnichannel means data is synchronized between channels.

Omnichannel distribution means data is synchronized between distribution channels, such as between a website and a brick-and-mortar store.

For example…

Let’s say your business utilizes three software programs: OMS (Order Management System), WMS (Warehouse Management System), and IMS (Inventory Management System).

In an omnichannel system, those software programs automatically share data with each other. This requires the use of data integration software: a tool that connects the three software programs, allowing them to communicate, maintain up-to-date records based on shared data, and send/receive data to a centralized database where all information is stored in one place.

Digital ecosystem vs. solar system We don’t want to bore you with a callback to 6th grade science—but we’ve found the following metaphor helpful, so we figured you might as well. The phrase “digital ecosystem” is generally used to describe an interconnected system of digital tools and touchpoints. But for the purposes of understanding omnichannel strategy, try visualizing a “digital solar system.” In an ecosystem, energy flows from one thing to the next: from grass to gazelle to lion. In a solar system, things constantly revolve around a central hub: planets orbiting the Sun. An omnichannel system is like a solar system: data is constantly flowing through and revolving around a central hub that pulls everything together. That central hub is the data integration software you’re using to synchronize sales, order, and inventory data across various sales channels.

Now that we understand omnichannel, let’s circle back to distribution.

Omnichannel Distribution vs Multichannel Distribution

Both omnichannel and multichannel distribution allow customers to buy products through multiple sales channels, such as online and brick-and-mortar stores.

However, there are several key differences.

Omnichannel distribution	Multichannel distribution
Multiple channels	Multiple channels
Utilizes all available sales channels, often in combination (e.g. BOPIS)	Doesn’t necessarily utilize all available sales channels
Customer-centric approach—the customer experience is a singular journey that takes place across multiple channels	Channel-centric approach—each channel is a separate experience for the customer
Data is synchronized—all distribution touchpoints (websites, apps, physical stores, distribution centers, etc.) communicate and share data with each other	Data is siloed—distribution touchpoints do not automatically share data, and customer data does not cross between channels

What does this mean for customers?

In multichannel, sales and distribution channels are disconnected from each other.

Customers can only use one channel per order: i.e., online OR in-store.

For example…

If a customer places an order on your website and receives the order at home—the typical ecommerce sale—that’s one channel.

If they place an order on mobile and receive the order at home, that’s also one channel.

But if they place an order online and pick up the order in-store, that’s two channels: online and in-store. That requires data sharing between the website and the store location.

If a business doesn’t have the ability to connect their store’s order management system to their website’s order management system, they can’t fulfill BOPIS orders.

That’s the fundamental difference between omnichannel and multichannel: whether or not channel touchpoints are connected.

Omnichannel Distribution Channels

Sales channel: the method a customer uses to buy a product. Distribution channel: the method or pathway a product takes to reach a customer.

There are a few primary methods of omnichannel distribution.

5 types of omnichannel distribution

Buy Online, Pick Up In-Store (BOPIS)	Buy Online, Return In-Store (BORIS)	In-Store Purchase, Home Delivery	Ship from Store	Drop Ship
A customer places an online order, then collects the item(s) from a nearby store location. The store fulfills the order by picking the item from their shelves or receiving it from a distribution center.	A customer places an online order, receives the order at home, then returns the item(s) at a nearby store location.	A customer makes a purchase in-store, then requests the store deliver the item(s) to their home.	A customer places an online order for an item at a certain store. The store fulfills the order and ships it to the customer	A customer places an online order. The distributor uses a 3PL (third-party logistics) provider to ship items directly from a manufacturer, warehouse, or fulfillment center to the customer.
Distribution channels: online, in-store	Distribution channels: online, in-store	Distribution channels: in-store, store delivery	Distribution channels: online, store delivery	Distribution channels: online, 3PL fulfillment

Buy Online, Pick Up In-Store (BOPIS)

A customer places an online order, then collects the item(s) from a nearby store location. The store fulfills the order by picking the item from their shelves or receiving it from a distribution center.

Distribution channels: online, in-store

Buy Online, Return In-Store (BORIS)

A customer places an online order, receives the order at home, then returns the item(s) at a nearby store location.

Distribution channels: online, in-store

In-Store Purchase, Home Delivery

A customer makes a purchase in-store, then requests the store deliver the item(s) to their home.

Distribution channels: in-store, store delivery

Ship from Store

A customer places an online order for an item at a certain store. The store fulfills the order and ships it to the customer

Distribution channels: online, store delivery

Drop Ship

A customer places an online order. The distributor uses a 3PL (third-party logistics) provider to ship items directly from a manufacturer, warehouse, or fulfillment center to the customer.

Distribution channels: online, 3PL fulfillment

The rise of Omnichannel Distribution

Omnichannel—in the context of retail and the supply chain—is a relatively new idea.

It wasn’t until 2013-2014 that we saw an explosion of books and resources published on the subject of omnichannel retail strategy, omnichannel supply chain management, and similar.

This coincides with the steadily increasing rate of ecommerce in total retail sales.

Global ecommerce sales have increased almost 800% since 2010. From 2012 to 2013 alone, US ecommerce sales increased 17%. (Total US retail sales increased 4%.) To put it simply, more people are doing more of their shopping online every year—and as the retail landscape changes, distribution methods must adapt and change as well.

The COVID-19 pandemic caused a dramatic shift in how we shop.

eCommerce Share of Total Global Retail Sales 2015-2024

Source: International Trade Administration, “Impact of Covid Pandemic on eCommerce”

Though the ecommerce boom from the early days of the pandemic has slowed, ecommerce still has a bigger share of total retail sales than ever before—and it’s continuing to grow each year. Businesses in every sector have been forced to reassess their traditional business models and adapt quickly to an ecommerce-forward model.

Retail is not what it was pre-COVID. Customer expectations have changed—because customers adapted to the new normal as well.

In 2019 and 2020, BOPIS (also called “click and collect”) saw a huge increase in use:

Change in click and collect retail sales in the US from 2020 to 2025

Source: Statista

Though BOPIS rates have dropped since 2020, it shows no signs of being a temporary fad.

• Statista forecasts that BOPIS sales will continue to experience annual growth at rates above 15%.
• Research And Markets forecasts that the global BOPIS industry will grow at a rate of 19.3% until 2027—increasing from $243 billion in 2021 to a predicted $703 billion in 2027.
• Insider Intelligence reports that US shoppers spent $95.9 billion through BOPIS in 2022, totaling 9% of all ecommerce sales.
• According to the 2023 Global Digital Shopping Index, nearly one-third of US consumers who made a recent online purchase chose BOPIS—a 37% increase from 2022.

Why Omnichannel Strategy is the future of retail Here’s a quick breakdown: The worst of COVID is behind us—but it has permanently altered the retail landscape. Customers have returned to shopping in-store, but ecommerce rates continue to grow—and the in-store/online combination shopping that grew out of necessity during the pandemic is part of the new normal. Even beyond in-store/online, cross-channel shopping—i.e., switching between desktop and mobile, mobile and social media, etc.—is the new normal as well. Today’s customers expect an omnichannel experience. They want choice, convenience, and fast delivery speed—and often, the fastest way to get a product is to buy it online and take a quick trip to the nearest store, rather than waiting for a package to arrive. Customers don’t want siloed online and offline experiences. The world is increasingly interconnected, and people expect that interconnection—the blurred lines between digital and physical—to apply to shopping as well.

Benefits of Omnichannel Distribution

A 2016 Harvard Business Review study of over 46,000 retail customers found:

• 73% of consumers shopped via multiple channels
• On average, multichannel shoppers spent 4% more in-store and 10% more online than single-channel shoppers
• Each additional channel resulted in more spending—customers who used 4+ channels spent 9% more in-store
• Multichannel shoppers showed more loyalty than single-channel shoppers—logging 23% more repeat shopping trips within six months.

The benefit of providing multiple pathways for customers to buy your products is clear. Customers want brands to meet them where theyare. They want the option of choosing which channel works best for them on a given day.

When multichannel is elevated to omnichannel, it makes distribution faster and more streamlined for customers and merchants alike. Not only that—it boosts your bottom line.

Customer Satisfaction

“Start anywhere, finish anywhere.” That’s the core concept behind omnichannel distribution. A customer can start shopping on their phone and finish by picking up an order in-store. They can find your store on Instagram, click through to your website, and place an order on Amazon. If they need to make a return, they can use whichever channel is most convenient for them—taking the hassle out of the returns process.

Since all their data is synced between channels, the customer experience is consistent and unified—as opposed to multichannel, where the customer experience can vary greatly depending on the channel.

“The future of shopping is omnichannel,” said Sam Greenspan (Head of Content, Demand.io) in an interview for Raydiant’s Future of Shopping series. “Customers will be able to buy from their favorite stores wherever they may be. That could include the store’s website. The store’s mobile app. Inside of email. At larger online marketplaces. Within social media. And, yes, even in-person. […] The onus is on the merchants to go to their customers, not vice versa.”

Revenue Growth

On the most basic level, adding new revenue streams and taking a customer-centric approach focused on convenience, personalization, and delivering a stellar brand experience is a great way to encourage customer loyalty—and cash flow.

But integration between distribution channels doesn’t just affect the end user. It also fosters increased visibility and communication between links in the supply and distribution chains, which in turn strengthens a business’s ability to respond proactively to disruptions, consumer trends, and other market fluctuations.

An integrated system allows a business owner to view their entire business at a glance—rather than only viewing order, inventory, and customer relationship management (CRM) data for one channel at a time. This makes it easier to make data-driven decisions regarding inventory allocation, stock levels, omnichannel marketing strategy, and so on. It also reduces the risk of overstocking and stockouts, because all the tools you use for inventory tracking, order management, warehouse management, etc. are connected and synchronized.

Efficiency

Improved visibility, communication, and access to real-time data allows for greater flexibility between channels—and that helps you move products more efficiently.

“By being in multiple channels, you can funnel products based on consumer demand and go where the best margin lies,” said Scott Lerner (CEO, Better Choice Company) for Forbes. “[…] You can direct inventory to a different channel if a product isn’t turning over fast enough at a retail store. With multiple avenues, there are more chances to deplete back stock and maintain margin. It also allows for flexibility in managing commodity cost increases and protects your consumers from any interruptions.”

Finally, sharing customer data and other important information between channels helps reveal redundancies, bottlenecks, and other inefficiencies in your distribution system. Streamlining your operations saves you time, money, and headaches in the long run.

Overcoming Omnichannel Distribution Challenges

Omnichannel distribution may sound like the perfect solution, but it’s not without its challenges. The biggest hurdle is the very first one: implementing an omnichannel system.

Inventory Visibility

Real-time inventory visibility across all your distribution channels is vital for a successful omnichannel business. This is a challenge multichannel businesses face as well: the need to manage separate inventories, destined for various channels, stored in various locations. Without proper inventory management, it’s all too easy to sell units of product you don’t actually have—because those units just sold through a different channel, and your other channels didn’t automatically receive that information and update their product pages accordingly.

Logistics and Supply Chain

The right software can turn the above challenge into a benefit. Shared inventory data allows you to optimize your shipping and logistics process. Because your entire operation is drawing from one data pool, your inventory management doesn’t need to be channel-specific. No matter where an order originated, you can fulfill that order from the most cost-efficient, shortest-route warehouse location—which means faster shipping for your customers, and reduced transport costs for you.

That said, omnichannel distribution requires a level of digital infrastructure that can be costly to implement—though it’s certainly a worthwhile investment for most businesses. It means connecting all the links in your distribution system, which requires coordination and cooperation up and down the supply chain.

Competition

More channels = more ways for customers to find your product. But it also = more competition. The wider your reach, the more chances your customers have to shop around for other options. This is already a major challenge for DTC (direct-to-consumer) businesses vying for success in the fast-paced world of ecommerce, especially when you’re up against extreme-low-cost competitors like Amazon.

What does that mean? You have to differentiate yourself from the competition. We know, we know: obvious. But it comes down to providing an exceptional shopping experience: hitting the basics like easy checkout and fast, accurate order fulfillment, then going a step further by using omnichannel strategy to deepen your relationship with customers.

According to McKinsey’s 2021 Next in Personalization Report, 71% of customers expect companies to deliver personalized interactions—and 76% feel frustrated when that doesn’t happen. In addition, 76% of customers said that receiving personalized communications was a key factor in their overall perception of a brand, and 78% said personalized communications made them more likely to repurchase.

Customers defined “personalization” as positive experiences of being made to feel special. They want brands to demonstrate investment in the relationship, not just the transaction. Thoughtful touchpoints such as checking in post-purchase, sending a how-to video, or asking customers to write a review generate positive brand perceptions.

Omnichannel personalization Top 10 personalization actions for first-time customers (% respondents): Make it easy for me to navigate in-store and online – 75% Give me relevant product/service recommendations – 67% Tailor messaging to my needs – 66% Offer me targeted promotions – 65% Celebrate my milestones – 61% Send me timely communications tied to key moments – 59% Follow up with me post-purchase – 58% Personally address communications to me – 54% Send triggers based on my behavior – 53% Engage and onboard me when I buy for the first time – 51% 4 main types of brand personalization: Meet me where I am Know my tastes Offer something just for me Check in with me Source: McKinsey & Company.

Your Omnichannel Distribution Strategy

We’ve gone over the importance of personalization for encouraging customer loyalty. Now let’s dive into other omnichannel strategy best practices.

Use an Inventory Management System

With omnichannel, you must be able to provide and access real-time data on inventory availability for any given channel, as well as for your business as a whole. This requires investing in inventory management software that integrates with all your sales and distribution channels and tracks stock levels across your entire distribution system, so all channels update in real-time.

In general, the key to successful omnichannel distribution strategy is using the right technology. Supply chain integration, centralized data, and proper order and inventory management are vital to an omnichannel business.

Maintain Supply Chain Flexibility

Flexibility is the future—and the best way to future-proof your brand. Being able to pivot quickly, divert product and resources to different channels to leapfrog disruptions, and scale your distribution network as needed are all important factors in maintaining business continuity.

Tomorrow’s supply chains must integrate new areas of focus in order to adapt and survive to a post-COVID world. Where before supply chains were built on the tenets of service, cost and capital, and quality, now they must also focus on resilience, agility, and sustainability. (Prioritizing flexibility: How grocers can get the most out of technology, McKinsey.)

How do you create and maintain supply chain flexibility? The first step is to move away from the traditional “chain.” Supply chains are evolving into complex, shifting webs with various spokes and nodules—networks fragmented into smaller, dynamic micro-networks that can move at the same speed of consumers, able to predict, prepare for, and respond to rapidly changing markets and demands.

Realistically, this requires an overhaul of existing supply chain infrastructure. Agile supply chains often need to be built from the ground up, with businesses adding new technologies and KPIs (Key Performance Indicators) to their systems in order to thrive long-term.

Streamline Your Data

A major benefit of data integration is improved data analytics. Insights from data related to customer behavior and engagement across channels, consumer and market trends, and so on help identify high-value, high-performance areas in your business—and low-value, low-performance areas that require attention, resources, or other solutions.

The more insight you have to your business, the easier it is to optimize your operations end-to-end, from customer relationship management all the way back up the supply chain to your suppliers and manufacturers. Where are you outperforming? Where are you underperforming? It all starts with collecting, analyzing, and utilizing data.

Get a Partner

By far the easiest way to go omnichannel is to partner with an experienced omnichannel 3PL provider—one with the necessary digital and physical infrastructure already in place, plus integration technology that can join seamlessly with various order, inventory, and warehouse management systems.

With the right partner, overhauling your operations is an upfront investment that fosters long-term resilience and success.

A partner that specializes in omnichannel strategy will be able to help you:

• Integrate your technologies, interconnecting your sales and distribution channels
• Centralize your order and inventory management so all your data is stored in one place, visible at a glance and automatically updating in real-time
• Optimize your logistics to reduce transport spending and provide faster, more efficient shipping for your customers
• Maintain a flexible, scalable fulfillment network
• Provide an exceptional brand experience for your customers, allowing you to stand out from the ecommerce competition
• And so much more.

They’ll be able to work with you closely, tailoring their solutions to your needs—and your vision of the future.

Conclusion

Looking for an experienced omnichannel 3PL partner? You’re in luck.

We’re EcomHalo: an omnichannel fulfillment provider redefining what it means to be a partner.

We provide full-service fulfillment for all orders across all your channels—and help you enter new channels by leveraging our partnership network of 25+ top retailers.

Our cloud-based digital dashboard was designed for omnichannel operations—with real-time visibility of orders and inventory across all channels, advanced data analytics, prebuilt EDI and API connections, and seamless integration with top ecommerce platforms.

We make it easy to expand your brand, add new revenue streams, and reach millions of customers in stores and online.

Ready to grow? Request your free 15-minute consultation to receive:

• A rundown of our omnichannel fulfillment services
• Pricing options and a free quote
• Referrals to other 3PLs if we’re not the right fit

Still have questions about omnichannel distribution?

Connect with an EcomHalo Guardian—we’re here to help.