Omnichannel Ecosystem: A Guide to Implementing Omnichannel … · 2020-04-02 · Omnichannel EcoSystem Now that you know what you want (a comprehensive ecosystem approach) and what

Publ ication Number: WP100

Omnichannel Ecosystem: A Guide to Implementing

Omnichannel Correctly

W H I T E PA P E R

500 S. KRAEMER BOULEVARD, SUITE 301, BREA, CA 92821 (714) 579-7979 NISUM.COMPG. 2

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Why Omnichannel? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Doing the Right Things is as Important as Doing Things Right . . . . . . . . . . . . . . 3

Omnichannel EcoSystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Consolidated Product Catalog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Cross Channel Inventory Visibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Distributed Order Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Fulfillment & Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

360° Customer Insight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Who We Are . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

500 S. KRAEMER BOULEVARD, SUITE 301, BREA, CA 92821 (714) 579-7979 NISUM.COM

IntroductionIn this white paper, we present a comprehensive approach for successful omnichannel implementation and provide an easy to follow guide for large scale omnichannel enablement. We will start off by looking at what omnichannel is and some of its pitfalls, and go on to explain how to best enable omnichannel on a large-scale, enterprise level .

Why Omnichannel?Shopping is no longer confined by space and time . With the advent of smartphones, social media and innovative apps, modes of customer interaction have changed dramatically . The shopping experience has been revolutionized, enabling consumers to browse and shop whenever and wherever they like. Today’s consumer is more educated on shopping and fulfillment options than ever before; in addition to competitive pricing and a broad range of products, they expect a feature-rich and seamless shopping experience .

Omnichannel is a multichannel approach to retailing that delivers that seamless experience, whether a consumer is shopping at a brick and mortar location, from a desktop computer or on their mobile device. A critical advance for retailers, omnichannel is not a trend that will fade over time. We’ve seen the results when retailers fail to embrace it: Blockbuster’s exclusive focus on physical stores failed to acknowledge the e-commerce marketplace, and as a direct consequence Netflix drove them out of business . By contrast, Amazon constantly reinvents itself: recently, they’ve introduced Amazon Lockers and same day shipping, and they’ve even begun using drones to compete with the brick and mortar advantage of physical retailers; Amazon has even opened a flagship store in Manhattan, a resounding validation of the omnichannel approach . In the modern business world, there are few who disagree: to remain competitive, retailers must embrace a comprehensive approach that incorporates all potential sales channels .

Doing the Right Things is as Important as Doing Things RightNow that we know omnichannel is the right approach, it’s time to learn how to plan and execute a proper omnichannel strategy. While most retailers know omnichannel is critical for the longevity of their business, very few know how to do it correctly.

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Omnichannel is often viewed exclusively as a front-end strategy for customers across a variety of touchpoints (e .g ., providing a find-in-store or reserve-in-store feature on your website). What’s often overlooked is that fulfilling customer needs across multiple channels doesn’t occur in a vacuum by implementing and upgrading customer touchpoints; a truly seamless shopping experience depends on the back-end operations and technology that drive the supply chain, order management and fulfillment behind the scenes .

At this point, it’ll be helpful to boil omnichannel down to its essence. A customer wants a product; the path to that product must be short and readily available, and consistently support the brand promise . Channels should be viewed as mere vehicles on that path. Only the path—that is, the overall experience of the shopper taken as a whole—has the potential to increase sales and customer loyalty . Instead of emphasizing the front end, retailers should focus on the shopping experience itself when formulating their omnichannel strategies .

To do this, organizations should zero in on back-end operations and applications that contribute to defining that path . Typically, attempting to enable front-end functionalities without a robust and scalable technology platform will lead to increased operational costs, increased customer dissatisfaction and reduced revenue . This failure to scale can easily lead to a supply chain nightmare, and at the very least, failing to upgrade a rigid platform will hinder future business agility .

The Leaning Tower of Pisa is a good analogy to consider in this case; a beautiful, historic tower built on a weak foundation, the tower leans nearly 4º off center, and engineers have been working for the past 800 years to keep it standing . Its visitors are fascinated by the picturesque tower, but only those who fund the faulty edifice know the pain it takes to maintain it.

Don’t let your omnichannel spending end up as another leaning tower


Omnichannel EcoSystemNow that you know what you want (a comprehensive ecosystem approach) and what you don’t want (a front-end only strategy), let’s take a closer look at the details. Leveraging our decades of experience implementing omnichannel strategies for large-scale retailers, we’ve designed an omnichannel ecosystem composed of five key foundation blocks:

n Consolidated Product Catalogn Cross-Channel Inventory Visibilityn Fulfillment & Logisticsn Distributed Order Managementn 360-Degree Customer Insight

Each of these blocks is made up of two essential components: the adaptable back-end system and API economy (also known as Omni-API).

Adaptable Backend System

This component focuses on building a robust and scalable software architecture and technology stack state for the back-end systems that drive omnichannel efforts. Having a robust and flexible back-end system increases agility, allowing business owners to drive change with fewer obstacles than arise from rigid, outdated systems . This approach effectively addresses architecture and technology bottlenecks, with a particular focus on specific retail sub-domains such as Catalog and Inventory .

API Economy

In recent years, the demand for omnichannel has accelerated the need to put flexible software (adaptable back-end systems) at the core of what organizations do.

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Consolidated Product Catalog

Cross Channel Inventory Visibility

Distributed Order ManagementFulfillment & Logistics

360° Customer Insight


This requires application programming interfaces (APIs) to universally access an organization’s core systems and resources within or outside the organization. By exposing data, business processes and other services and resources through APIs, organizations are creating compelling new business platforms . API Economy represents a new and already market-proven way of doing business that is flexible, powerful, and capable of on-demand integration with almost any external system .

API Economy is a path to future readiness for retailers, and exemplifies just how much APIs can positively impact an organization’s profitability. It has become clear: the traditional dichotomy of store versus site is not sophisticated enough to compete in today’s economy. With the advent of new marketplaces and the explosion of mobile apps, businesses must be ready to integrate new possibilities with minimal disruption, whether they choose to implement in-app Apple Pay, promote through Groupon, or create an Instagram collection store à la Target Awesome Shop .

In the following sections, we’ll explore each of these foundation blocks in detail.

Consolidated Product CatalogProduct attributes have never played a more fundamental role in the retail industry . Product information has evolved over time with the expansion of e-commerce and social media; prior to web retailing, product attributes for a traditional brick and mortar store consisted of UPC, color, size, product ID and product description . With the advent of e-commerce, product attributes have evolved to allow for more efficient search, and now include far more customer-centric attributes: care information, fabric information, place of manufacture, quantity at hand, return description, shipping description, product image, product video and consumer description are just some of today’s commonly used product attributes . With growing consumer demand for a diverse range of products, retailers are now required to manage more products, and that’s not all; they must also also be prepared to manage an ever-growing set of product attributes . These attributes have been proven to help consumers make more informed buying decisions, and they are a powerful driver of search results .

When shopping online, consumers have come to expect robust product information to assist them in making an informed decision. Product data is the connective tissue of retail, and can be used to augment nearly every area of a business, including

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customer acquisition, merchandising, demand planning, operations, warehousing and transportation .

Most retailers have product information for their e-commerce channel set up separately from their brick and mortar channel. Often this is because the two were implemented at different times, and the advent of a truly multi-channel experience wasn’t foreseen. Because of the number of attributes added to product information on e-commerce channels, consumers are now often equipped with more product knowledge than the average store associate; most of these new attributes were never inducted into the product catalog of the stores channel . (Traditional product management systems weren’t designed to include a complex set of information for a product, so retailers and suppliers tended to exchange a finite set of data through their legacy catalogs .) The sharing of product data is one of the foundations of a more relevant shopping experience for consumers, no matter where they choose to shop . The retailer’s need for a single catalog, irrespective of the sales channel in question, was the impetus of the consolidated product catalog concept .

General Challengesn A limited attribute set which doesn’t allow for the addition of customer-friendly attributes as products evolve n Tightly integrated systems which can restrict modifications of the product catalog due to their ripple effect on downstream systemsn Catalog maintained in more than one system (e .g ., separate databases for online and store catalogs) so any change will result in discrepancy or require significant investment

Adaptable Back-End System

Everyone feels the pain when integrating multiple data sources, but to obtain a truly omnichannel experience, it is a necessary step. It’s crucial to have an adaptable back-end system that can not only handle today’s demand for a seamless omnichannel experience, but also properly position a retailer for the future . With its rise in the marketplace, a large number of retailers now prefer to use NoSQL, either as a data store or for analytics purposes. By keeping a single product ID and maintaining the rest of the product information (both store and online) as attributes, a retailer can easily work within the ecosystem of the NoSQL database. The existing systems that a supplier or product owner uses to create new products and content (via content management systems) can easily be leveraged to integrate with the database and enhance the legacy systems with rich product attributes . This results in a single consolidated product catalog within the back-end system that remaining systems can leverage .


API Economy

With the help of API Economy, retailers are able to not only sell products on their own websites, but also on partnering websites like eBay (e.g., Target and Best Buy). This expansion benefits retailers, whose goal is to compete for the consumer’s business . Third parties are able to call the same set of APIs used by retailer websites, leveraging existing systems. The look and feel of the partnering website mirrors their own website, making social commerce just one more area where retailers can benefit from APIs .

Having an omnichannel Lookup API that can access the new catalog and return information about the product (including its availability, price at the store/online and any applicable promotions) enables not only consumers but also store associates, who are empowered to provide better customer experience by recommending the right product for the customer. Likewise, online shoppers can easily determine if a desired item is available at a nearby store for pick-up, or if it would be more convenient to have it shipped .

Product Catalog

Product Catalog

POS SystemCall Center

In-Store Signage

Web

Mobile

© 2015 Nisum Technologies

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Product Catalog




Cross Channel Inventory VisibilityNow that consumers can shop for an item in any one

of a number of available channels, retailers must be

equipped to immediately provide an item’s availability

and location, making inventory status a primary

attribute for every product . Consumers expect to

pull up an item either on their smartphones or on the

retailer’s website, and be able to quickly determine

its availability at nearby locations . While traditional

product information systems weren’t designed to

handle inventory and location, in today’s world that data is crucial for timely delivery.

To effectively compete for consumers’ business, retailers must have control of both

real-time inventory and rich product information .

The consequences of poor inventory management can be devastating. Retailers

routinely cancel orders placed online because a product reads as out of stock, only to

find they still have the product at their physical stores, resulting in loss of revenue .

By leveraging cross-channel inventory, smart retailers can avoid such fiascos .

Unfortunately, even today most retailers still have dedicated inventory for each

channel as a result of implementing e-commerce domains at a later stage than their

physical stores .

General Challengesn Channels suffer from an inaccurate view of product inventory status, resulting

in cancelled ordersn Separate warehouse systems are maintained, resulting in inventory that is not

visible across all channelsn Inventory systems are transaction-sensitive, so any change incurs a significant risk


Maintaining a cross-channel inventory requires a scalable and robust back-end system

that can provide inventory information to any platform – online, mobile or brick and

mortar . At most enterprises, inventory on the shelves of the distribution centers is

the domain of the warehouse management system (WMS), inventory on the shelves

of the stores is the domain of point of sale (POS), and inventory in the supply chain

falls under the enterprise resource planning (ERP) system . The idea is to consolidate,

in near-real time, inventory from these disparate systems into a single data store that

provides an enterprise view of inventory .

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It is beneficial (but not mandatory) to have a consolidated product catalog prior to integrating cross-channel inventory, ensuring that every channel will have the same kind of product details instead of conflicting data. Sharing inventory details across channels becomes seamless in such scenarios, as there is no need to map different product IDs against the associated inventory statuses . Inventory becomes one more attribute in the product catalog and can be leveraged to use the existing NoSQL database without redesigning from scratch . Maintaining cross-channel inventory will empower retailers to leverage advanced analytics, enabling them to predict future demand based on past performance, and to easily create a breakdown of products sold at various channels by region . Cross-channel inventory sharing opens up the doors for a host of powerful omnichannel features, including find-in-store, ship-from-store

and order-in-store .

API Economy

If your cross-channel inventory is visible across channels and systems, it can be exposed as APIs, encouraging easier partnerships with retail market places and social media platforms . If a consolidated product catalog is already in place, it can be used to expose inventory status as well, reducing the effort that must be expended to expose inventory levels and resulting in the same product status across internal channels and external marketplaces.


Distributed Order ManagementThe distributed order management system is an e-commerce engine responsible for managing information, executing processes and monitoring performance to ensure customer orders are fulfilled accurately and cost-effectively across a complex network of sourcing and fulfillment processes. Key capabilities of the system include intelligent order sourcing, multichannel support, global inventory visibility, real-time order execution and demand sensing for greater responsiveness to customer behavior . It delivers consistent functionality across channels, so that consumers can use the same promotions, shipping choices and other functions, without worrying whether or not a specific feature is supported on given channel (e .g ., mobile) . General Challengesn Delays in order processing and deliveryn Incomplete visibility of products across all channelsn Lack of inventory visibility across channels from OMSn Inconsistent feature support by channel; features supported on some channels and not on othersn Optimized sourcing, particularly ship-from-store and item transfer planningn Lack of communication on back orders and out-of-stock items during peak periods


Because OMS plays a critical role in order processing, it should be scalable to customer demand . OMS functions should be accessible across channels and the system should act as a centralized order orchestration hub, going beyond channel-specific processing . Cloud-based technologies can be employed to horizontally scale OMS; ideally, you should have the ability to scale selected modules horizontally somewhere in the line of micro-services . In most businesses, demand for the order-creation module is higher than that for the order-cancellation module; a business may need ten instances of order-creation and just two instances of order cancellation, rather than ten instances of each . Often OMS databases are heavily loaded and very sensitive, as they are high on writes and reads . We recommend partitioning databases by brand, month or some other parameter, which boosts performance tremendously, improving the overall order processing experience. Often businesses must contend with harsh consequences when dealing with sourcing changes, and having the ability to implement order-sourcing logic through a metric-driven configuration gives them the flexibility to tune order sourcing to customer demand, season and other parameters .

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API Economy

With their cross-channel integration capabilities, distributed order management

solutions provide store associates with visibility into available-to-promise inventory

at eligible fulfillment locations . They also indicate the optimal location from which the

product should be replenished, and whether it should be shipped, held for pickup or

transferred . Standard APIs also provide the ability to integrate with existing in-store

point of sale systems . Finally, the distributed order management system can trigger

the appropriate notifications to the designated replenishment locations, maintaining

comprehensive order status visibility throughout the process .

Fulfillment & LogisticsIn a traditional supply chain, retailers orders items

from vendors, vendors ship them to the distribution

centers (DCs) and DCs ship them to stores as needed .

Under this model, whenever a retailer opened a new

channel, (e-commerce, for instance) they would use

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a completely different supply chain in which the orders were fulfilled from a different DC, thus avoiding a complicated integration with their traditional model . This resulted in degraded customer experience between channels, duplicated processes and unavailable inventory information at their DCs . Because channels were isolated, retailers were often unable to meet their required demands.

General Challengesn Split inventory means maintaining multiple warehouses and inventory sets, along with additional warehouse staffn Shipping inventory between warehouses can become necessary, introducing an additional direct cost to the companyn Adding new fulfillment options such as ordering online for in-store pickup or purchasing in store for home delivery is a massive undertakingn Peak-season demand is difficult to manage


There is a huge gap between existing back-end systems and the real needs of retailers. The rapid increase in fulfillment alternatives brought on by technological and behavioral advances has made legacy back-end system architectures obsolete, and exposed retailers’ failure to support fulfillment complexity. Instead of building isolated


processes and infrastructure that don’t scale for unanticipated requirements, it is better to embrace an adaptable back-end system that supports dynamic fulfillment requirements. Omnichannel fulfillment must be carefully engineered so that retailers can hold just the right amount of inventory on a wide assortment of products, ensuring the right inventory is at the right store . When a customer orders an item, it is important to weigh the logistical benefits of either fulfilling the order at store or from DC. Retailers must walk the tightrope between missing an order due to out-of-stock items, and ordering too much inventory only to end up with overstock items that must be discounted . These days, consumers expect near real-time home delivery, and the key is having a WMS solution that allows for complex slotting, supporting granular understanding of the costs of fulfilling orders by SKU, by customer and by channel. WMS is a way to improve DC and store-level inventory accuracy and expand support for omnichannel features, including order online/pickup in store, order online/deliver

from store and order online/return in-store .

API Economy

The fulfillment software used in one DC is often different from that used in another DC, and from that used in stores . As a result, each channel yields data in its own format, which is often incompatible with data from other streams . In order to create an omnichannel data stream so that near real-time events can be captured across fulfillment centers and stores, communication must be standardized across different applications . Exposing APIs from such discrete systems not only eases cross-system integration, it also enables real-time consolidated reporting and predictive analytics .

360° Customer InsightOmnichannel commerce has put customer insight at the center of the process, and retailers are eager to use these new tools to provide more customizable customer solutions . Consumers, on the other hand, want the ability to engage with the retailer via a variety of channels, as well as the freedom to pick up where they left off on one channel and continue on another .

From another perspective, technology has made it possible for companies to collect massive amounts of information about the consumer. It’s now possible to examine a customer’s browsing patterns, past shopping history, buying behavior, social media interactions and channel preference – and that’s only the beginning. In today’s

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marketplace, companies need to maintain a 360° view of their customers, and to

leverage that data to provide those customers with a more seamless customer

experience . This involves integrating customer information from multiple comm-

unication channels in addition to customer communication from disparate sources,

telephone, email, social media and live chat among them . Getting the data together

is only half the challenge; just as important is properly interpreting that data, and

using it to make the right decisions.

A comprehensive customer profile can now be derived by linking customer transaction

histories, interaction histories and insights gathered from across retailers’ multiple

brands, business units and channels – far more than ever before . Combined with

syndicated data in the form of demographics, gender, discretionary income etc ., this

data provides the retailer with an extremely detailed picture of a customer’s buying

potential, lifestyle and preferred product lines, even sensitivity toward price ranges .

General Challenges

n Lack of insight into customer preferences and shopping patterns

n Inability to provide localized or personalized experiences to customers

n Lack of access to consolidated account information and other data for products

360° Analytics

© 2015 Nisum Technologies

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Innovations such as Big Data-based listening and sentiment mining take customer reviews to a whole new level of granularity and clarity. Now that it is possible to read millions of conversations taking place simultaneously across multiple channels, customer insights can be combined with a customer’s core profile to provide enhanced understanding of customer behavior . Harvesting useful insights from such a holistic knowledge repository opens new frontiers for customer engagement and improvement of the shopping experience . A powerful set of analytical tools built on top of the customer capture repository will help retailers infuse customer insights into their merchandising, marketing, e-commerce, mobile and social processes, and open up newer features like more relevant product recommendations, localized assortment

of products in store, and targeted marketing campaigns.

API Economy

Providing an API that facilitates data accessibility and customer information can help retailers deliver product content and ads that are customized for each customer and focused on user experience, and the use of external facing APIs can effectively expose your business as a service to any consuming app in any of your business channels . Whether it be your main web portal, your iOS or Android app, or the POS in your physical store, the decision to centralize the execution of your IT automations in web APIs will allow you to bridge the channel gaps, allowing all touchpoints to contribute to the familiar experience your customer demands while affording you a 360º view of their transactions .

ConclusionThere is no getting away from omnichannel; consumer expectations and the demands of modern business now clearly require it. That being said, rushing into it blindly can land you in a complicated and expensive situation, leading to counterproductive results and the inability to meet rising demand. Rather than taking a front-end driven approach, retailers should embrace a holistic view, align front-end priorities with back-end needs, and work to create a long lasting application platform that is agile in implementation and built to meet current and future business requirements. Incorporating years of research and experience, Omni-Channel EcoSystem allows retailers to take just such a comprehensive approach.


Who We AreNisum enables transformation for industry-leading brands: we know how to build strong emotional bonds between B2C clients and customers via smart technology solutions .

Nisum is a global consulting firm headquartered in Southern California. Founded in 2000 with the customer-centric motto, Building Success Together™, we’ve grown to comprise over 900 consultants and 8 offices across the United States, India, and Chile. Our philosophy and deep technical expertise result in integrated solutions that deliver real and measurable growth .

Whether you’re a hot start-up or a major global brand, our approach is the same: forge the most powerful connection possible between people, processes and products to achieve unparalleled success. At the intersection of business and technology, Nisum has everything you need to grow your organization . From Strategic IT Planning, Agile Enablement and Business Process Engineering to Application Development, Test Automation and DevOps, Nisum has you covered. We specialize in building Adaptable Back-End systems such as Order Management, Inventory and eCommerce to facilitate true omni-channel success for our customers .

Nisum strongly believes in an organizational culture that is open, transparent and progressive . We encourage creativity and innovation and consciously maintain an environment that is conducive to positive employee growth, learning and performance .

Disclaimer: Nisum Technologies, Inc.’s white paper is made available for educational purposes only, as well as to give you general information and general understanding regarding Agile and Agile Next Door Models. The information herein is not advice and does not create any obligations, relationships or duties on the part of Nisum Technologies, Inc. This white paper is provided “as is” and with no guarantees, representations, undertakings or warranties whatsoever, including any warranty of merchantability, fitness for any particular purpose, or any warranty otherwise arising out of any proposal, specification or sample .

The contents of this white paper, the names Nisum Technologies, Inc. and Agile Next Door, the logos and artwork used herein, are protected by the copyright, trademark and intellectual property laws of the United States and other jurisdictions. No license, express or implied, to any intellectual property rights is granted or intended hereby . You may print a copy of any part of this white paper for your own use and reference, but you may not copy any part of this white paper for any other purpose, and you may not modify any part of this white paper. You may include any part of the content of this white paper in another work, whether printed or electronic, or other form, or include any part hereof in another web site by linking, framing, or otherwise only if you provide all proper credits and references to Nisum Technologies, Inc.

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Omnichannel Ecosystem: A Guide to Implementing Omnichannel … · 2020-04-02 · Omnichannel EcoSystem Now that you know what you want (a comprehensive ecosystem approach) and what