McKinsey study reveals need for order management

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Companies that have physical stores, online stores, and catalogs have quite a bit of order management to take care of.  According to this McKinsey report on multi-channel retailing

consumers who shop across a number of channels—physical stores, the Internet, and catalogs—spend about four times more annually than those who shop in just one. Companies that get multichannel retailing right can enjoy larger profit margins and yearly revenue growth more than 100 basis points higher than companies that don’t.

The chart below (from the article) shows an example of apparel industry.

Multi-Channel Spending

The McKinsey article also emphasizes that multi-channel retailing is not just about opening a website or mailing your catalogs. All the different channels (your websites and your brick-and-mortar stores) should work well together in sync. If they don’t work in sync, you will end up dealing with nightmares around order fulfillment, order management, inventory management, and even supply chain management.

The challenge is that while making sales through a number of independent (or, at best, loosely connected) channels is relatively easy, capturing the full benefits of multichannel retailing in its true form involves much more than simply publishing a catalog or replicating an in-store product assortment online and assuming that consumers will click and buy. The kind of multichannel retailing that fuels sustainable growth and margin expansion requires a tightly integrated strategy across all channels, including physical stores, catalogs, the Internet, and mobile—and even homes, in the case of certain service offerings. Each channel needs to play a clear (and often quite distinct) role in supporting and reinforcing a retailer’s overall brand equity.

Order Management for Multi-Channel Retailing

If you are a multi-channel retailer, you could probably benefit from a good order management system, among other things. It’s very crucial for your brand identity to remain the same across channels. This means your product information, marketing, purchase order agreements, customer service, work order forms, and fulfillment all need to be consistent, whether you’re doing business in your physical stores, catalogs, or online stores. You can’t overlook things like vendor management either. You can look into finding some order management software and inventory management software that help you keep these things consistent across channels.

The McKinsey study proves that being a multi-channel retailer can be highly profitable, so think about extending your business efforts to catalogs and the online world, if you haven’t already. Just keep in mind that multi-channel retailers have some extra work to do when it comes to order management and keeping their brands consistent.