Despite investing huge money, energy and time on omni-channel models, retailers and consumer goods manufacturers are are not earning profits, reveales a new JDA report ‘The Omni-Channel Fulfillment Imperative’ conducted by PwC on behalf of JDA Software Group, Inc.
The report was prepared after a global survey of more than 400 retail and consumer goods CEOs from around the world, in late 2014. Considering the growing importance of omni-channel presence, report states that only 16 percent of companies was able to fulfill omni-channel demand earn profit.
About 67 per cent of respondents reported that they are not making profits due to the high cost of fulfilling orders as they have increased their focus on selling across channels. The percentage costs associated with omni-channel selling, according to the respondents, varies between; handling returns from online and store orders (71 per cent), Shipping directly to the customer (67 per cent) and shipping to the store for customer pick-up (59 per cent)
However, the CEOs in the JDA study recognized that reducing the associated logistics costs is not the primary focus; there is a need to invest in enhancing omni-channel performance. About 57 per cent of CEOs recommended spending capital on creating new customer experiences and 53 per cent focused on reformatting physical store footprints to focus on expanding the ecommerce business.
“Every time retailers receive an online order, they have a number of options to fulfill that demand. They can pull the product from a local store, send it from a centralized warehouse or ship it directly from the supplier. JDA’s new study demonstrates that most retailers lack the insight to make these decisions in a profitable manner — and are not sufficiently focused on this critical capability gap,” says Kevin Iaquinto, chief marketing officer at JDA.
While they might not be focused on actions today to create profitable fulfillment and delivery schemes, the JDA study leaves no doubt that CEOs are aware of the importance of profitable omni-channel fulfillment to their future survival. Seventy-one percent of respondents said omni-channel fulfillment is either a high or a top priority. And these CEOs are planning to invest an average of 29 percent of their total capital expenditures for 2015 on improving their omni-channel fulfillment performance.
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