12 February 2024 The way we consume has undergone significant transformations in recent years, and amidst so many changes, the word most talked about when promoting and offering a service or product is: experience. Today’s consumer is not only looking for elements like price and quality but also desires agility, personalization, and satisfaction throughout the entire purchasing process. All these factors have become decisive in choosing a brand or product and completing an order. Moreover, the hybrid purchasing journey, which is the fusion between experiences in the physical and digital environment, is gaining ground and attracting attention. A recent survey conducted by MindTree shows that 60% of consumers prefer to combine the best of both worlds (physical and digital) when it comes to shopping. With the emergence of this new scenario, many companies are already investing in the omnichannel format and prioritizing offering an unparalleled experience to their customers. Although it is the right path for those who want to grow and remain competitive in the market, changes in business bring a series of challenges for logistics. To help you better understand this context, in this article we talk a bit more about phygital. Why is this new market trend so important? How to adapt the company’s current logistics to provide new experiences to the consumer and ensure business success? This is what we will talk about next. What is phygital and how does it relate to a company’s logistics? Phygital is the abbreviation of two English-origin words: Physical + Digital, meaning it suggests an integration between the physical world and the digital world. In business practice, this concept aims to provide new consumption experiences by uniting and improving offline and online channels. The phygital trend grew and became more evident during the Covid-19 pandemic, where many companies needed to find and develop new ways to interact with their customers safely and efficiently. Since then, the strategy has been so well-received that it has become a significant trend in the current market. In logistics, the phygital approach involves the ability to optimize order fulfillment processes, qualify and speed up deliveries, increase efficiency, integrate sales channels, and improve the customer experience. In other words, being phygital in logistics means being able to holistically manage all orders, coming from both physical and digital channels, unifying the service and ensuring the same standard for all customers. In summary, we can separate the phygital concept into three major strategic categories: Immersion: every strategy is designed directly for the customer and how it can impact their experience. Immediacy: the company is ready to meet market demands and provides order fulfillment methods regardless of customer preferences. Interaction: customers can try products in physical spaces and perform actions in digital spaces. With the integration of specialized technologies, such as the WMS system, the OMS system, automations, and artificial intelligence, companies today have become capable of meeting the needs of a phygital business. This is because these innovations allow real-time monitoring of logistics operations, providing precise information to customers and reducing service times. Omnichannel Universe vs. Phygital Now that you know the concept of phygital, you might be wondering: “But what is the difference between omnichannel and phygital?”. The differences between the two terms are minimal, as both, in most cases, work together and aim to collaborate with the integration of processes to serve consumers physically and digitally. As we have explored, the concept of phygital is related to the fusion between the physical and digital universe, allowing the development of new relationship and consumption experiences. Omnichannel, in turn, is a retail trend based on the convergence of all sales channels used by the company. In omnichannel, the guiding principle is the standardization of the consumer experience, meaning the channels must be well-connected so that the customer receives the same service, regardless of where the purchase was made. Phygital in Business Practice So far, you have understood the concept of phygital and how it goes hand in hand with the omnichannel strategy, and you are probably wondering how all this works in practice, in your daily business activities. In the past, the relationship with the consumer was unilateral, meaning the customer would start and complete their purchase in a single channel: either in a physical store or via the internet. Today, all this has changed: a new range of opportunities has opened up, allowing consumers to choose, based on their preferences, how to start and conclude a purchase. For example: 1- Buy online and pick up in a physical store This mode is perhaps one of the most well-known in the market and perfectly suits those customers who are familiar with online sales channels but need to optimize their time and love to save on shipping costs. However, it is up to the company to organize itself logistically to be ready for the pickup day, executing the service quickly and accurately, after all, there is nothing more unpleasant than going to pick up an order and it is not available, right? Similarly, arriving at a store to look for a product and the seller does not know what it is about is equally frustrating. Therefore, the company must not only manage its inventory well but also integrate information across all channels. 2- Buy in the physical store and receive it at home Widely used in the furniture and electronics segments, this phygital strategy suits those customers who want to have a greater experience with the product, touch it, feel it, and try it before making a purchase. In this scenario, it is important to ensure that the customer receives the goods at home quickly and safely. In this case, any miscommunication or error in order management can lead to delays and consumer dissatisfaction. Therefore, integration between sales data from all channels is essential, as well as good inventory management. 3- Scan and go A trend in supermarkets and convenience stores, scan & go is a model where the customer makes their own purchases and pays independently, scanning the barcode of each desired product on the shopping list and placing it in the cart. This strategy consists of offering a digital experience in the physical space, in addition to promoting agility and avoiding queues. But for it to work well, the company must have good operating systems, as customers seek speed in service. If any problem occurs, convenience is lost. 4- Virtual Reality Virtual reality has become one of the major attractions today, and it is no coincidence, after all, it is a great way to delight people, providing a visual and sensory experience. Some niches can use these practical actions to promote enchantment and improve relationships with customers, trying on clothes, accessories, and even visiting places. How to Implement the Phygital Approach in Logistics? Now that you know how the physical and digital integration works in practice, it’s time to learn how to implement the phygital approach in your company’s logistics. We have separated some necessary steps for success: Step 1: Conduct Tests Before starting with everything in phygital, conduct small tests on small samples of customers. If your business is 100% online, try offering local pickups, directly from the warehouse or in a small store. Now, if your business is conducted in person, how about conducting some sales tests on digital channels? Websites, social networks, and marketplaces are options that can help you start in the online world. Conducting market tests with a smaller sample can eliminate risks and provide valuable feedback on how to improve your future physical or online store and how to organize and integrate your inventories. Based on the observed points, it is possible to implement actions permanently. Step 2: Choose Purchase Options Earlier, we talked about some practical options when making purchases in physical and digital environments. Therefore, you, the manager, can choose the best integration options based on the market niche you serve. But remember: it is important to consider the volume of requests and if the company is willing to manage integrations and also invest in robust technologies that help organize processes, ensuring service quality and customer satisfaction. Step 3: Identify Strengths and Weaknesses Every logistics process must be monitored from the beginning, so monitor metrics and results, identify weaknesses in the current logistics process, and, most importantly, evaluate where technology can be applied to improve efficiency in the workflow. At this point, it is possible to analyze some KPIs, such as: inventory x sales ratio, inventory maintenance costs, inventory turnover rate, storage cycle time, picking efficiency, picking accuracy, picking and packaging cost, main order delivery time, order cycle time, return rate, etc. (Learn more about logistics KPIs). The important thing is to closely monitor the progress of your operation to offer the best service to your customer, regardless of the channel where the sale was made. Step 4: Invest in Cutting-Edge Technologies It is necessary to ensure that all business gears work to provide quality, agile, and safe service. In this context, having specialized technologies makes a big difference, as they eliminate operational errors, delays, and communication errors. In the case of a phygital company, whose logistics present a high level of complexity, having good logistics management software, such as the WMS system, as well as a solution that integrates sales channels and allows complete order monitoring, like the OMS system, is a game-changer. The OMS, in particular, will offer all the support for integrated and efficient management of sales channels, ensuring that the consumer is well served in every channel. This is possible because the system monitors the entire customer flow, allowing not only the visualization of the status of each order but also quality post-sales. And this advantage is not limited to your websites. Even on marketplaces, it is possible to access sales information, ensuring total control over the standard of service offered. Step 5: Train Your Team Every change requires a change in internal culture and a general update of your team, so when choosing the phygital strategy for your business, also invest in training employees of physical and digital stores. Make sure they know how to use key technologies that help save time. Step 6: Listen to the Customer The biggest influencer of your brand is your customer, and that is why consumers pay particular attention to positive and negative comments about your company. In this sense, consider the idea of listening to them and encourage them to comment on changes and integrations in your business. Therefore, in addition to leveraging feedback to promote improvements in your logistics operations, you can display positive customer reviews online next to the related product in your physical store. This increases the immediate experience and ensures good business and satisfaction with the brand. OMS System: The Key to Phygital Success! For companies looking to the future and wanting to take advantage of phygital opportunities, in addition to changes in internal culture, one of the biggest challenges to ensure quality and efficiency in physical and digital integration is relying on modern software and equipment that are the foundation of digital transformation. Given this reality, the OMS (Order Management System) is one of the main tools that help in managing and processing orders. In a phygital business, the OMS system is an important element to ensure that logistics operations are carried out efficiently, assisting in several ways, such as: Inventory Management: the OMS system can efficiently and quickly monitor product inventory levels in real-time, allowing companies to know exactly what is available in their warehouses and physical stores. With this information, it is possible to plan product purchases more precisely, avoiding excesses or shortages of stock, ensuring that an order is a reality at any point of sale. Multichannel Order Processing: the software also allows managing all orders, regardless of where they were made (through physical store, e-commerce, app, marketplace, etc.), ensuring they are processed efficiently and quickly. In this way, the customer can enjoy the same shopping experience, regardless of the channel used to place the order. Order Tracking: the OMS system also offers order tracking features, allowing customers to monitor the status of their order in real-time, from start to finish. This feature not only offers transparency to customers but also reduces the need for customer service inquiries for order information. Integration with Other Systems: finally, the OMS system can be integrated with other business systems, such as WMS (Warehouse Management System) systems and inventory management systems, to ensure a global and coordinated management of the entire logistics chain. In conclusion, for companies aiming to offer a seamless shopping experience, both in the physical and digital world, implementing a modern and advanced OMS system is essential. This tool not only helps manage and optimize logistics operations but also ensures that customers receive high-quality service and that the company remains competitive in the rapidly evolving market. Phygital: How to Integrate the Physical and Digital Worlds in Logistics Deagor WMS per ecommerce può aiutarti!