Omnichannel adventures with Magento
Omnichannel is a necessity if sellers want to be competitive and do not want their business to die a natural death. Why? Omnichannel allows us to provide the same level of customer experience and satisfaction in both traditional and online stores, as well as in all new brand channels - social media, internet of things, marketplace, etc.
It’s good to remember that effective implementation of omnichannel strategy concerns many areas of business operations: sales, merchandising, IT infrastructure, logistics and customer service. It's not just a matter of a well displayed web-shop on various devices, but above all of a well-functioning business process.
“Customer expectations go beyond a simple ‘buy anywhere, anytime’ mentality. Retailers must continually optimize their programs with added value and service levels to deliver a smooth customer experience for cross-channel ordering and fulfillment.”
Be truly omnichannel with Magento
What do today's consumers want? They want to buy both online and in stationary stores. They want to be sure that the shop will allow them to place an order from anywhere. They want the shop to deliver the order to the selected location. They want to get their order home, but they also want to be able to buy online and pick up the order in store. The list is really long.
At the end of the day, customers may not even remember which shopping channel they used. However, they will surely remember that there was no problem with buying and receiving products. And this is really important in the context of the implementation of the omnichannel strategy.
How to meet the ever-increasing customer demand for trouble-free shopping? Retailers must invest in people, processes, and technologies, which also requires them to be agile and fast in action. All of this is needed in order to create a smooth and consistent shopping experience at all customer touchpoints.
One of the main keys to success in implementing an omnichannel strategy in business is an accurate and complete overview of the inventory of products in all possible channels and locations.
Bridge the Online-Offline gap
When are we dealing with a gap in online-offline? For example, if a brand only has a stationary or an online shop. As a result, customers either cannot check their products in a traditional shop or cannot buy them online at all. It also happens that brands sell both online and offline, but these two channels work separately, e.g. customers can only buy a gift voucher from a stationary store or the product is only available online. In both cases, a gap is created between the shop's capabilities and the buyer's requirements.
Imagine such a situation - a customer enters a stationary shop and looks for specific trousers in size 40. A shop assistant verifies whether the product is in the shop and it turns out that it is not available in this particular size. What does the shop assistant do then? If the shop is not supported by appropriate technology, all that remains is to say "I'm sorry". However, when the shop has implemented Magento solutions, a few clicks are enough for the shop assistant to find out about the availability of the product and then pass it on to the customer. For example, other brand stores can be recommended, where the customer will find the desired product; or the shop assistant may suggest buying it online with home delivery. In this way, the assistant armed with information does not lose the selling opportunity and the customer does not leave the shop disappointed.
Multi-Source Inventory (MSI) and Order Management System (Magento) prevent similar situations from occurring and offer a number of improvements for traders who want to implement omnichannel in their business.
Multi Source Inventory
Multi-Source Inventory (MSI) is a new Magento tool that allows merchants to manage their
inventory in multiple locations so that it can properly reflect their physical inventories without the need for additional extensions. Moreover, thanks to MSI, merchants can shape sales based on many warehouses, e.g. when you order products that are in different warehouse locations. The MSI project was carried out by contributors of the Magento Engineering Community. This makes the tool a native function of Magento 2 Open Source.
New to Magento Multi Source Inventory are Sources. The Source represents the place where the stocks are located. MSI creates a Source for every location where products can be physically located, e.g. warehouses, brick-and-mortar stores, distribution centres and drop shippers.
What does MSI give in short? Let's assume we're selling 10 dresses. So far, the exact statement that we have 5 dresses in stock in Toronto and 5 dresses in stock in Barcelona has been difficult to achieve. Now, MSI makes it possible because it determines the actual quantity that is in stock in many warehouses around the world. In this way, it increases merchants' control over their inventory and allows them to better utilize it in many sales channels. MSI uses algorithms that track every available product in warehouses and stores. Algorithms run in the background, updating the number of products for sale, checkout and ordering shipping options.
Source Selection Algorithm (SSA)
It can be difficult to grasp multiple source locations, global customers and carriers with different pricing options, while knowing the actual inventory and finding the best shipping option. The SSA does this work for the merchants. It is used to calculate from which source an order can be delivered in the most efficient way. It uses all information that is available about customers, products, addresses, stock and sources. For example, by using the customer's delivery address, the order can be sent from the nearest department store or, if several suppliers offer the same product, the algorithm can select the option with the highest product margin.
The system tracks warehouse requests for the entire purchase process, i.e. when adding products to the basket, finalizing transactions (checkout) and managing returns. Once an order is placed, a Reservation is made to ensure that the stock is sufficient to fulfil the order. With Reservation, the checkout becomes more efficient even with large parallel sessions. In addition, it prevents over-selling of available resources.
In what situations is MSI useful? Let's imagine a theoretical scenario:
The UK online shop has delivery partners in France and Ukraine. It also has websites in 5 languages: English (UK), Spanish (ES), French (FR), German (DE). The UK, Spanish and French shops can sell products from the stock available from a partner in France. The German store can sell both the stocks available from the order fulfillment partner in France and the stocks available in Ukraine. This is possible without complications thanks to MSI.
Building a scheme of warehouses in Magento requires little effort. If we want to open an additional warehouse in the Netherlands, it is enough to create a Source (Sources) system and link it to the shops in Europe. Similarly, if you want to expand your sales to new markets and, for example, send orders in the USA from warehouses in different cities in the United States.
With MSI, merchants can:
- Better manage all physical locations (Sources), and products stored there (SourceItems). This allows them to control stock levels in each source.
- Increase Inventory visibility for more efficient sales. By improving the visibility of inventory, retailers know where the products are: whether in their own warehouse, at an external supplier, franchisee, retail partners, shippers, or in local and worldwide physical stores. This knowledge allows us to satisfy consumer expectations, affects sales growth and management of implementation costs.
- Improve the efficiency of transaction execution (check out) - allows traders to eliminate excessive blocking of databases during the purchase process, adding products to the basket, transaction execution.
- Easier to handle Drop Shipping - set up an external source for Drop Shipping. Simply add your shipping partner to your list of available sources.
- Control your inventory and receive low-level, up-to-date reports - Magento supports inventory control at all physical locations (Sources) and notifies you when products in some locations end4.
- Send orders in parts - e.g. when a customer wants a specific product to be delivered in advance. A merchant can create a separate shipment and choose a different warehouse that offers faster delivery time to implement delivery in advance. The remaining items will be sent using the specified algorithm.
- "Buy online and pick up in store" option to increase consumer convenience and shop traffic. It is worth knowing that omnichannel customers spend on average 4% more each time they are in a landline store and 10% more when shopping online.
“73% of digital business professionals surveyed tell us that their firms are investing in ‘buy online, pick-up in-store’.”
Magento Order Management
Magento Commerce offers additional, advanced features that affect more effective sales in multiple channels. These are the following:
- "Ship from store" capability for more efficient use of inventory. Customers who buy online will be able to receive the product from a local store instead of a central warehouse, which significantly speeds up delivery.
- The possibility of "ship to store". The ship to store (STS) function allows optimizing inventory in different sources for in-store picking orders. It also makes it possible to reduce costs through local shipping and reduce margins on unsold goods.
- The ability to "save to sell" with access for co-workers to all inventory. Consumers have more options to purchase items from a global warehouse. Retailers of individual stores can "record sales" that they have lost due to lack of inventory in the store, and the customer never leaves empty-handed.
- Expansion on a global scale with multiple brands, using different devices. Manage your global business with a central procurement system across all channels, including multiple brands or websites, markets, mobile devices, kiosks, stores, and call centers.
- Build a single source for orders, inventory and order fulfillment.
- Support more advanced order scenarios such as pre-sales, return orders, etc. Orders can be realized for a group or an individual customer. Orders can be retrieved in advance of product release and "no inventory" with an estimated shipping date.
- Enable customer service to have a better overview of your orders. Order information from all sales channels is centrally available and available inventory information is updated in real time. This allows customer service to easily help customers process orders, exchange or return products.
Technology helps meet consumers expectations
With Magento, you can fully integrate functions that enable your customers to search for products online and take advantage of various pick-up and delivery options. However, Magento is much more than just providing customers with the best experience in the online store. The system gives an insight into inventory details across all channels, providing full control and access to inventory anywhere. Providing customers with omnichannel purchases makes it possible for sellers to have a huge influence on conversion rates in their stores.
Read our case study about Implementation of the world's first version of Magento Commerce 2.3 with MSI live for Tous Poland.