Omnichannel fulfillment is the process of picking, packing, and shipping customer orders across a variety of sales channels. It’s similar to multichannel fulfillment in that it involves more than one sales channel, but differs in that it focuses on data synchronization, not separation. It puts the customer, not the product, at the center of the digital solar system.

As a result, adopting an omnichannel strategy can lead to higher customer satisfaction and loyalty, brand recognition, and other key benefits for today’s DTC (direct-to-consumer) brands.

Each year, ecommerce accounts for a bigger percentage of total retail sales. More and more people are doing more of their shopping online—which means businesses must adapt to consumer trends and adjust their sales and fulfillment models if they want to stay afloat.

According to Cleo’s 2023 Global Supply Chain Executive Report, 99% of companies surveyed added new sales channels in 2022, with 51% adding three or more. Adding new channels led to quantifiable improvements in business agility, continuity, and scalability—as well as increased profits.

It’s clear:

The future of retail is ecommerce.

The future of ecommerce is multichannel.

The future of multichannel is omnichannel.

What exactly does that mean? Read on.

What is Omnichannel Fulfillment?

Let’s take a closer look at each part of the definition provided above.

Omnichannel fulfillment is the process of picking, packing, and shipping customer orders across a variety of sales channels.

The central idea of omnichannel fulfillment is that no matter how customers find your product (via social media, an online search, etc.) and no matter where they buy it (your online store, a retailer website, etc.) they’ll have a consistent brand experience—and behind the scenes, omnichannel fulfillment strategy requires that all data is synchronized between channels.

Omnichannel strategy focuses on synchronization, not separation.

All omnichannel is multichannel, but not all multichannel is omnichannel.

Both models involve multiple sales channels, but “multichannel” simply refers to selling products via multiple sales channels, while “omnichannel” takes it a step further: focusing on creating a consistent, personalized brand experience for the customer, rather than bombarding them with a high volume of generalized messaging.

With a multichannel model, customer experiences are siloed, meaning they happen independently of each other without sharing information between channels and touchpoints. Marketing focuses on the product, not the customer, and the goal is to maximize the number of sales and marketing channels: basically, your goal is to put the product in front of as many eyes as possible.

For example: Let’s say you run a small DTC business. Using a traditional multichannel model, your marketing, sales, and fulfillment “ecosystem” might look something like this:

The small gray arrows show a potential customer journey: The customer learns about your product on social media, follows the link to your website, and places an order. The order goes to your 3PL fulfillment center.

If their journey happens online, there are digital touchpoints involved: points where a customer comes into contact with your brand, directly or indirectly, through online channels (i.e., clicking an ad, seeing your brand name in the search results, visiting your website, and so on).

With a multichannel model, the digital touchpoints—most importantly, the data recorded when a customer actively clicks an ad, visits your website, clicks through your products, makes a purchase, etc.—are separated by channel. There’s no automated communication between channels—no integration or flow of data between different platforms, such as social media vs. a retailer website vs. your website. If a customer interacts with your Instagram ad, that data is siloed to your Instagram analytics. If a customer clicks around on your website, that data is siloed to your web page analytics. The platforms don’t talk to each other.

That’s the major difference between the two models. With an omnichannel model, the focus is on data integration and synchronization across channels: i.e., the platforms do talk to each other, automatically sharing information.

Think of it this way: multichannel is about breadth, and omnichannel is about depth.

Omnichannel strategy puts the customer, not the product, at the center of the digital solar system.

With omnichannel, your goal isn’t to cast your net widely by maximizing the number of channels. Your goal is to cast your net deeply: to share data between channels in order to personalize your marketing, create a seamless and consistent brand experience, and deepen the relationship between your brand and your customers.

So, returning to the example of your small DTC business…. Using an omnichannel model, your marketing, sales, and fulfillment system might look something like this:

Data flows between channels, with the customer at the center of the “solar system.”

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“Ecosystem” vs. “solar system”

You might have noticed we’ve used both “ecosystem” and “solar system” to describe the system of touchpoints that comprise the customer’s journey. 

We don’t want to bore you with a callback to 6th grade science, but using different metaphors to describe different data flows might help clarify the underlying concepts.

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.

Usually, you’ll see the phrase “digital ecosystem” being used to describe a system of interconnected channels, software tools, and touchpoints. But for the purposes of understanding omnichannel strategy, try visualizing a “digital solar system” where data is constantly flowing and revolving around a central hub that pulls everything together.

In omnichannel marketing, the central hub is the customer. In omnichannel fulfillment, the central hub is the data integration tool: the software platform you’re using to synchronize sales, order, and inventory data across channels. Without that central hub, the system breaks down.

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So, let’s bring it back to order fulfillment.

Key Components of Omnichannel Fulfillment

Inventory Management

If you’re selling a product via multiple sales channels, there’s a good chance you’ll have inventory spread across multiple warehouses/fulfillment centers as well. You’ll have to make a lot of decisions regarding inventory allocation to ensure stock availability and reduce the risk of stockouts.

In addition, when you’re selling the same products/SKUs via multiple channels, it’s easy to make counting errors during inventory assessment—i.e., double counting a unit (recording it as 2 individual units) when really it’s one unit listed for purchase in 2 different places.

Centralized inventory management means all your inventory is visible on one platform. You’re not using multiple inventory management tools—you’re using one integrated software system. All your fulfillment centers are interconnected, updating the central inventory database in real-time. That way, you can view your total inventory at a glance—and allocate inventory between channels with the click of a button.

Order Management

Similar to inventory management, order management across multiple channels becomes much easier when all your data is stored in one place. No matter the number of sales channels, all customer orders flow into the same centralized system, which is also your inventory management and order fulfillment system.

So, if you want to check on the status of an order, you don’t have to figure out where it got sent, where it’s being fulfilled, and so on. All you have to do is check your central dashboard. Whether the order came from your website or a retailer website, whether it’s being fulfilled by a warehouse in Florida or Nevada, all the data you need is right alongside your other orders.

Fulfillment and Shipping

Data integration is vital to help optimize your order fulfillment and shipping.

For example, let’s say your small DTC business utilizes two warehouses: one on the East Coast and one on the West Coast. The East Coast warehouse fulfills orders for two channels: your website and a retailer. The West Coast warehouse fulfills orders for one additional channel: an ecommerce marketplace such as Amazon. (This already sounds like the setup to a math problem.) If a customer on the East Coast places an order through Amazon, that order gets sent to the West Coast warehouse. They fulfill it and ship it across the entire US to reach the customer. That takes time, fuel, and money.

With omnichannel fulfillment, both warehouses are interconnected. The East Coast customer’s order is sent to the central database, where it’s automatically assigned to the East Coast warehouse. That way, the East Coast warehouse can pick-pack-ship the order, transporting it 200 miles instead of 3,000. Fast delivery = happy customer.

Returns Management

Returns are a reality of business—especially ecommerce. Depending on the industry, the average ecommerce returns rate can be anywhere from 20-30% or higher. If you’re selling via multiple channels, you’ll get returns via multiple channels—and that gets complicated fast.

With omnichannel fulfillment, one system manages all returns across all sales channels (physical and digital). That makes for a lot of benefits.

For the customer, benefits include a seamless return experience no matter where they purchased your product. They don’t have to deal with various distributors, drop shippers, or fulfillment centers—all they have to do is initiate the return and ship the item. Because one system manages everything from refunds to parcel tracking, the customer’s experience is quick, easy, and convenient.

For the business, omnichannel returns management means end-to-end tracking of all returns, from the time they leave the customer to the time the returned item is received, inspected, and recorded in the database. Centralizing that data reduces the risk of improper returns management, such as failing to inspect, authorize, and track returned items, which can lead to inventory mix-ups with double counted or uncounted units.

Storing all returns data in one place makes it easier to track returns patterns and make data-driven decisions. It also reduces the risk of returns fraud—when all the warehouses are communicating and sharing information, it’s much harder to game the system.

Benefits of Omnichannel Fulfillment

Increased Customer Satisfaction and Loyalty

Omnichannel strategy focuses on enhancing and deepening the customer’s connection to the brand. By centering the customer, not the product, a brand can reach customers via their preferred channels and touchpoints, relaying messages personalized to their preferences and previous brand interactions.

This approach is more engaging for the customer—they feel listened to, rather than sold to. It creates an experience that feels authentic rather than superficial. Fulfillment is part of that strategy.

Omnichannel fulfillment synchronizes customer data, making their end-to-end shopping experience simpler, more convenient, and consistently branded at every point. If there’s a problem with an order, it’s easy to track down the necessary information and solve it. Omnichannel infrastructure means reduced risk of errors with orders, shipping, and delivery, plus faster and more efficient order fulfillment and delivery across the board.

Improved Inventory Management

Inventory allocation requires forecasting: using your sales history to determine where to send inventory and how much to send, as well as predicting and preparing for “peaks and valleys.” To accurately forecast, you have to factor in customer behaviors and patterns, returns rates, shipping speeds, warehouse capacity, and so on.

So what happens when you’re storing 5 channels’ worth of inventory in 4 warehouses managed by 3 different 3PL companies, all using different Warehouse Management Systems (WMS)?

At best, that situation is a headache. At worst, using individual fulfillment infrastructures for individual channels can result in frequent overselling, overstocking, or overspending on small shipment fees when you need to reallocate inventory between channels/warehouses.

That’s a problem that omnichannel fulfillment solves. It allows a business to manage inventory across all channels by simply putting everything in one place—that central hub. And that makes it much easier to track patterns, using data analytics to make critical decisions.

Reduced Shipping Costs

Omnichannel strategy can help you save money on shipping and transport by reducing costs such as small shipment fees, which add up quickly when you frequently need to reallocate small amounts of inventory between warehouses—especially if you’re using multiple 3PL companies or sourcing your own transport.

When all your fulfillment centers are connected, it’s much easier for your 3PL provider to optimize transport routes (i.e., find the shortest path from point A to point B) to ensure the most mile- and cost-efficient transportation of your product.

Increased Sales

Earlier, we mentioned the benefits of improved order and inventory management as a result of data integration. Those benefits can also lead to increased sales—not only due to higher customer satisfaction and retention rates, but also due to a reduced risk of lost sales from stockouts. Using one centralized database, with access to real-time inventory data, makes it much easier to see exactly what you have in stock and what stock you need to reorder. There’s a much lower chance of accidentally selling 100 units when you only have 50 units available.

Challenges of Implementing Omnichannel Fulfillment

The biggest challenge associated with omnichannel fulfillment is the need for a centralized, integrated system. If you’re managing your fulfillment in-house, it can be complicated and costly to implement that kind of software and technology to your existing fulfillment infrastructure.

Managing orders and inventory across multiple channels can also get predictably complicated. A multichannel model requires more inventory, more storage capacity, more labor, more packing and shipping supplies, more transport… more everything.

Overcoming these challenges is a lot easier with the right partner. Instead of trying to overhaul your fulfillment systems and infrastructure by yourself, partnering with a 3PL provider that specializes in omnichannel fulfillment strategy can transform an impossible task to an easy fix: one as simple as downloading a software program and importing your channels and SKUs. The right provider will already have the interconnected physical and digital infrastructure required for omnichannel fulfillment.

Book a demo with EcomHalo

We’re EcomHalo—a nationwide fulfillment provider specializing in omnichannel fulfillment solutions, including storage, pick-pack-ship services, optimized logistics, data analytics, and more.

Our easy-to-use software features a cloud-based dashboard where you can view real-time order and inventory data across all your channels. The dashboard displays orders, fulfillment and shipping status, inventory, and data analytics to help optimize your business.

With 7 fulfillment centers strategically located across the US and 2-day ground shipping nationwide, we make it easy to optimize your storage and transport, integrate all your data, reduce logistics spending, and most importantly: keep your customers happy.

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

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

In summary, here’s what we covered:

• Omnichannel fulfillment is the process of picking, packing, and shipping orders across a variety of sales channels.
• It requires data integration across channels, and a centralized order and inventory management database with real-time data visibility.
• It can ease a lot of the headaches associated with multichannel fulfillment by simplifying and consolidating a business’s physical and digital fulfillment infrastructure.
• It can be complicated and costly to implement on your own—it’s easier to partner with a fulfillment provider that already has the necessary technology and infrastructure in place.

Still have questions about omnichannel fulfillment? Connect with an EcomHalo Guardian—we’re here to help.