Designing the Future of Retail Logistics with Phygital Solutions

The logistics sector has undergone profound transformations driven by technological advances that came alongside the evolution of buying and selling models, reflecting changes in consumer behavior. As this was happening, physical stores were going through significant changes and today also play a strategic phygital role, integrating product distribution across both physical and online environments simultaneously.

But how can this integration enhance retailers’ workflow while strengthening the consumer experience? To understand a bit more about this realm, I spoke with Helson Santos, CEO of Logstore, a company that’s a benchmark in logistics innovation.

After a career in the industry with an emphasis on logistics and e-commerce, Helson noticed that many retailers were migrating their digital operations to a model known as “Third Party Logistics” (3PL). This approach involved outsourcing inventory management, which created challenges in terms of control and efficiency.

From the outset, the startup positioned itself with a focus on solving real problems in the logistics sector, and DOMO believed in its innovative solutions, resulting in a partnership formalized in 2020 that has since evolved into both a business relationship and a friendship.

Algorithms that Transform Sales into Experiences

When a customer makes a purchase at a pharmacy — whether through telesales, in-store, online, or via apps like Rappi and iFood — Logstore centralizes the order and processes it at one of the client’s physical stores. This model ensures the integration of multiple sales channels. The ideal store is selected by an algorithm that considers three factors: the customer’s proximity, stock availability, and availability of trained staff. This system enables quick deliveries with minimal error margins.

In addition, the algorithm manages the entire logistics process, from carrier integration to financial reconciliation optimization, facilitating service administration for partners like Farmácias Indiana, Drogaria São Paulo, Decathlon, Leroy Merlin, Imperatriz Supermercados, and Vivara. Thus, Logstore not only manages orders but also verifies in real time which store can best meet demand. This optimizes resource use and reduces operational costs, providing consumers with a smooth shopping experience.

New Era of Customer Service

At the heart of the phygital concept is the idea of omnichannel — the unification of customer interaction channels to provide a seamless experience, whether online or physical. According to Helson, “retailers need to eliminate the friction that arises when transitioning between channels.” This means solving logistical issues that directly impact the shopping experience, such as delivery delays, stock inconsistencies, and fragmented returns processes.

A survey conducted by Logstore indicated that more than 80% of negative shopping experiences are directly linked to logistics failures. This demonstrates that for the customer, logistics is not just part of the buying process; it is the buying experience itself!

Industry Revolution…

While this integration offers significant opportunities, it also presents challenges that retailers need to address. One of the most critical is inventory management. Helson Santos states, “Inadequate management can lead to excess or shortage of products, resulting in customer dissatisfaction and lost sales.” He highlights the importance of having a holistic view of inventory, allowing for a more precise allocation of products between physical and digital channels.

Moreover, effective communication between the different channels is necessary. Information exchange failures can create discontent, such as a lack of visibility on order status or difficulties with product returns. Solving these issues requires investment in systems that integrate real-time information, enabling both retailers and consumers to access updated data on their orders.

The Future of Retail

One of the main drivers of successful integration between the physical and digital worlds in logistics is the use of technologies such as Artificial Intelligence and Machine Learning. According to Helson, these innovations play a vital role in optimizing logistics processes, ensuring that retailers can offer a smooth and efficient shopping experience.

AI, for example, is applied in conversational solutions, like chatbots that automate customer communication, making processes such as returns and stock inquiries faster and more accurate. This reduces the workload on customer service teams and allows retailers to focus their efforts on more strategic areas.

Machine Learning, on the other hand, is invaluable for making intelligent purchasing decisions, analyzing data to determine which store is best suited to fulfill an order based on factors like proximity, available stock, and active staff.

These technologies help minimize errors and personalize the shopping experience, adapting operations to each customer’s specific needs — this is the main goal in the phygital context.

Retail is undergoing a revolution, and phygital integration is the path to the future.

Logstore, with its strategic vision and focus on innovation, is helping retailers adapt to this new reality where the line between digital and physical becomes increasingly blurred.

Companies that adopt this approach will be better prepared to face the challenges of the modern market and provide a superior shopping experience to their customers.

So, the question remains: Are you ready to embark on the phygital journey and transform your business?