A Blueprint for Omni-channel Profitability

Omni-channel commerce continues to be among the hottest topics in supply chain management and retail operations for retailers, manufacturers, and distributors along the end-to-end value chain. A self-reinforcing cycle between technology adoption and consumers promises to make it even hotter in years to come. Technology enables omni-channel engagement, which leads to increasingly sophisticated consumer engagement, which in turn, leads to further advances in technology. This cycle will continue.

However, among all the topics associated with omni-channel, profitability has now come to the forefront as the hottest topic.

E-commerce sales are growing at five times the rate of traditional brick-and-mortar retail sales. While brick-and-mortar sales are still more than 90% of overall retail sales, the outsized growth of e-commerce means that it is taking an ever-increasing slice of the overall pie. Thus far, almost all e-commerce sales have been unprofitable or breakeven, at best. This means that most companies have seen overall margin erosion as their sales increasingly shift to e-commerce. As the e-commerce portion of overall sales continues to grow, this margin erosion will only get worse.

In the cover story of the 2015 fourth quarter edition of CSCMP’s Supply Chain Quarterly, I offer a blueprint for companies to consider as they seek to evolve their e-commerce sales towards profitability that is consistent with their business models (10 steps on the path towards profitable omnichannel growth). In this article, I assert that companies must increasingly turn to their supply chains, adopt an end-to-end strategy, and employ technology-enabled advanced decision-making in order to profitably grow their omni-channel sales. This blueprint is only a start and will be further developed as time goes on.

What are your thoughts on this proposed blueprint and what is your blueprint for omni-channel profitability?

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