What is omnichannel shopping and what implications does it hold for retailer strategy?
March 23, 2022 Show
What is Omnichannel Retail?Modern Behaviors, Modern PlaybookIn 1931, Sears encouraged its customers to shop the “modern way” with its 1,100-page catalog, free from the hustle and bustle of stores. And while Sears had brick-and-mortar locations, the company was an innovative retail phenomenon that stole hearts by shipping goods by mail order across a rural, western countryside. They’d been successful doing it that way since 1893. The mail-order strategy proved a successful multichannel approach that helped Sears dominate retail in categories from medical supplies to houses. At the time, visiting a physical store was often a challenge and a burden. Some customers were natural fits for mail order shopping since they were hundreds of miles from big cities. They paid extra for mail order service because of its “modern” convenience. On the other hand, city residents found more convenience shopping in stores, examining products before buying, and saving the cost of shipping. Much changed from the 1930s to the 1990s. Transportation networks blossomed, car culture dominated, and new stores opened in previous outposts. Although consumers didn’t need catalogs anymore, by the time Sears shut down their famous catalog in the mid-1990s, they’d helped make multichannel sales the norm. Modern retailers looked to predecessors such as Sears for ways to augment brick and mortar locations with alternative modalities. What they found were ways to expand sales and offer bigger inventories. eCommerce, as an emerging option, provided both advantages, but it also blurred the distinction between channels like “catalog” and “store.” In the last several decades, customers’ shopping habits have increasingly shifted to channels of convenience for engaging with brands as well as for making purchases. The expectation is that consumers can engage with a brand through the Internet, direct mail catalogs, kiosks, pop-up and brick and mortar locations. Many shoppers who can easily shop in-store prefer to research online before shopping, or like to visit a store to browse, then buy online. Their behaviors are unlike those of the previous generations, which often chose one channel over the other. Channels used to bridge the gap for customers who couldn’t access distant stores. Now, customers can and do access multiple channels en route to making a purchase. Today’s buyer lives in a lightning-fast world of same-day pick-up, overnight shipping, multiple stores close by, and online options, too. Their access has changed, and their expectations reflect their “get it now” reality. The change in mindset is important in moving from multichannel to an omnichannel strategy, since channels now complement one another rather than compete for customers. For example, customers using the internet to shop on an eCommerce site expect the same prices and styles they find in the store. They may buy online knowing they can return to a nearby store, regardless of whether that store carries their item. They expect to find items they’ve shopped in the store available to buy online. Pricing, promotions, customer service, and return options must now span channels, creating a singular buying and brand experience. Our customers’ behavioral reality has given rise to a need for new processes and systems to deliver that exceptional customer experience and to remain both relevant and competitive in a rapidly changing retail landscape. Unifying Commerce / Buying TouchpointsOmnichannel retail uses technological capabilities to bring together multiple channels, integrate their data, and provide shoppers with a unified experience across touchpoints. For retailers looking to build loyalty and market share, that means managing a combination of channels to coordinate how their customers search, buy, and use their products—and then understanding how each touchpoint functions in the overall customer journey. An integrated omnichannel strategy goes beyond single sales modalities, like brick and mortar or online sales, to having a presence and availability at every point where their customers shop. It seeks to craft a singular experience including customer service, price, marketing, and fulfillment across:
In an omnichannel world, touchpoints are not disparate sales outlets meant to help customers in different locations. They are parts of a buying journey, all with a role in customer satisfaction. Common Multichannel LimitationsThe goal of channels like online shops, kiosks in partner stores, and retail stores is no longer just to sell to an isolated pool of customers. So, the purpose of channel management must also change to fill gaps in an older, multichannel approach. Here are some of the most significant multichannel limitations:
ZZZ Customers struggle to interact across channels ZZZ Brands use digital channels to mitigate potential brick-and-mortar downturns Increasingly, retailers need a coordinated strategy to be everywhere their customers are, with the ability to evaluate channels systemically. Omnichannel sees unified commerce touchpoints along the customer journey, and the approach pays off. One study found that customers who used four or more channels spent 9% more in stores. The State of Omnichannel RetailOmnichannel retail builds on the multichannel goal of reaching customers in many places, unifying those places as a single digital landscape. And that landscape has barely known what hit it. COVID-19 did not so much start a cascade of digital adoption as it fast-tracked the need for retailers to serve customers they could no longer engage in person. Let’s look at some key statistics: ZZ 70% of retailers have introduced or increased their online channels. ZZ 80% of customers in-store are comparing prices and inventory online while they are shopping Unsurprisingly, most brands responded to lockdowns with an increased digital presence. 70% of locally-based retailers introduced or boosted their online channels. Yet, in 2020 Nike opened a cavernous Paris store with digital experiences embedded. The result? Its online sales jumped 37%. This cross-channel effect shows that retailers can benefit from choosing their channels wisely and understanding their synergistic effects. Omnichannel is here to stay. Digital isn’t going anywhere, either. Smart devices are a regular fixture in the lives of customers, so it’s logical that the shopping experience would be increasingly influenced by these constant companions. In fact, some sources say customers will own an average of 15 smart devices by 2030. That opens up possibilities for heightening the shopping experience in and out of stores. Over 80% of in-store customers are already comparing pricing or checking inventory online on a smart device while they browse. Necessity accelerated the evolution of multichannel to omnichannel retail. But it continues to grow with new customer expectations and technologies leading the charge. Increasingly, business leaders see the benefits of integration for both business intelligence and customer experience. What Channels are Key in an Omnichannel Retail Strategy?With new channels available to reach new customers, as well as platforms to engage with existing ones, brands planning on adopting an omnichannel approach should start by surveying what channels are available to integrate. Brick and Mortar StoresBrick and mortar stores fulfill the in-person shopping experience, complete with sounds and sights that lend to brand loyalty. An omnichannel approach recognizes that store engagement is more than a place to complete fulfillment, but one that can lead to purchases at other stores, outlets, and channels. That includes different types of stores alongside different individual locations: big box stores, mid-sized retailers, small, independent local shops, and kiosks that serve a growing demand for touchless experiences, as well as online purchases. Large and mid-sized retail stores increasingly serve an omnichannel strategy as modern showrooms, helping potential online shoppers examine physical products. Casper’s “Dreamery” is one such showroom. Customers pay to try out Casper mattresses, complete with snacks and pajamas, then buy online. Big-box retailer Best Buy has focused on what physical stores do well. While in the store, they encourage customers to touch, compare, and get advice, with in-shop brand stations and experts on hand. Out-of-store showroom experiences are also on the rise. Using augmented reality (AR) app features, these modern showrooms have retailers like Home Depot help shoppers “try on” sink fixtures, front doors, and even patio furniture to see how it looks in their spaces. Amazon’s app has a similar AR feature for shoppers to scroll through products and virtually place them into their future homes. eCommerce Sites and Direct to Consumer (DTC) eCommerceIn 2000, eCommerce made up 1% of retail sales worldwide. By 2010, that was over 7%. It currently makes up more than 13% of retail sales in North America, spurred on by the value it provides in a fast-moving world. While many have returned to stores following pandemic lockdowns, eCommerce has become a staple of many customers’ lives and is a significant channel that complements the overall omnichannel experience. For example, while some customers want to examine goods in a store and then buy online, others shop online and make purchases in-store, called “webrooming.” The practice has encouraged retailers to integrate channels, enabling customers to buy online and pick up without shipping charges in a local store, for example. This leads to cross-selling and instant gratification for customers who don’t need to wait on shipping. eCommerce sites come with their own omnichannel considerations. ERP-specific or custom eCommerce solutions may have been designed to work with a retailer’s inventory management. Leaders find they must now integrate with multiple other third-party logistics providers, warehouses, inventory systems, and suppliers. Other brands use an eCommerce platform such as:
A true omnichannel solution integrates each POS and eCommerce platform for coordinated online and offline sales, offering inventory checks and features like “buy online, return in store” and “buy in store, ship to customer.” eCommerce platforms can connect to ERP or accounting systems and vice versa. You can utilize the platform’s API for custom control, use a third-party with the platform’s API (without customization), or use an ERP integration. Third-party solutions via API are connectors, software solutions that, along with an integration partner, sync your eCommerce with your backend management systems like inventory or ERP when direct integration is not available. For example, the Magento Marketplace offers ERP connectors for various systems that make integration possible out of the box. They allow functions like pooling inventory from multiple stores for order fulfillment, numerous return options, local inventory searching, omnichannel gift cards, and loyalty programs. MarketplacesOnline marketplaces can be a valuable part of an omnichannel plan. Customers expect a brand’s presence in common marketplaces, which offers brand exposure to markets they might not otherwise reach. Choose channels where your customers are likely to be, as well as those that enhance your brand presence and reputation:
Another omnichannel benefit of marketplaces is the ease with which they make international scalability possible. With their own warehouses, affordable shipping costs, and multi-language sites, marketplaces can help retailers have a global presence. MobileMobile commerce accounts for nearly 73% of all online commerce and is growing. Further, customers spend 90% of their time on mobile using apps, so it makes sense retailers would increasingly see the channel as an opportunity to meet customers where they are and deliver a customized experience. Starbucks’ mobile app is a classic example of mobile apps done right, with a personalized omnichannel experience throughout. While customers make their own playlists, they collect rewards across channels, add cash to their accounts, choose nearby stores, and order ahead for a convenient and consistent experience. Social media is a driver of purchases, with millennial buyers saying they trust 84% of recommendations from friends on social media but only 10% of ads they see online. Social influencers increasingly promote brand awareness and sway purchasing decisions with coupon codes. Once a site for product research, social media sites increasingly feature “buy” buttons for customer interaction. Shoppable Instagram posts let buyers make in-app purchases from a brand’s photos and videos across the app. Pinterest has also introduced shopping page results with purchase capabilities. Brand leaders can also use transactional bots and chat programs within social media apps. Chatbots use machine learning to handle transactions within an app or message-based channels, from Facebook messenger to SMS or on an eCommerce website. You can make your own Twitter chatbot to help manage all kinds of customer needs, from order confirmation to personal shopping assistance. Like social media POS systems, chatbots eliminate the need for customers to switch channels to get their needs met and personalize the customer experience. WholesaleAlongside retailers, wholesale brands have responded to rapidly shifting demand online and in partner stores following lockdowns and differing regional COVID restrictions. Omnichannel can help support their retailers by allocating products to eCommerce channels when stores are closed. It’s about partnership. Think about whether distributors, sales reps, and customers reach you in ways convenient for them and how you can make ordering and fulfillment flexible to meet the demands of your buyers. FulfillmentOmnichannel fulfillment is a way of satisfying customer needs, but it forces retailers to coordinate their distribution networks in novel ways: their own stores, warehouses, partner stores, drop shipping, and logistics. In all of these omnichannel fulfillment options, the goal is to give customers more options and provide them with quick delivery. Fulfillment options increasingly include more and more of the following:
Why Do You Need Omnichannel Retail?The synergistic promise of omnichannel marketing means payoffs for firms. Because it enhances communication, access, availability, and transparency, it can raise lifetime value, market share, and profits. Centralizing customer data through unified commerce is part of the equation since it allows for marketing campaigns across customer touchpoints, leading to brand loyalty and increasing sales from a customer-centric point of view. Let’s look at some key statistics: zz Campaigns using an omnichannel approach have a purchase rate 287% higher than single-channel campaigns. In 2020, Order value was up 13%. And the order gap is only widening. zz Omnichannel shoppers are valuable, with a 30% higher lifetime value than their single-channel counterparts. zz The number of orders placed online and then picked up curbside rose 208% during the pandemic. The trend continues as customers hope to avoid waiting on items they might otherwise have delivered. zz 39% of customers are unlikely or very unlikely to visit a physical store if the online store does not provide inventory information for their location. Business Impact of Omnichannel RetailA 360-degree view of customer activities helps enterprises offer channels that appeal to customers, get the information they need when they need it, and increase value in five core areas. 1. Enhanced Brand Reputation and Customer Loyalty
2. Supply Chain Resilience and FlexibilityWith a bigger network and multiple nodes, omnichannel can leverage partner capabilities better than legacy systems. It’s also more attuned to customer needs. Transportation costs and times can be tuned to multiple channels and markets, dramatically lowering costs and increasing revenue cycle efficiency. 3. Realigned Cost Structure
4. Improved Health and Safety for Shoppers
5. Increased ProfitabilityLocal fulfillment helps companies avoid rising shipping costs and sidestep delivery delays, enhancing profitability. Omnichannel retail is a customer-centric development ― it allows for customer preferences, not a single system, to dominate the fulfillment experience. However, enterprise leaders who plan their supply chains can also realize the benefits. What Kinds of Retailers is Omnichannel Good For?Omnichannel is not only suitable for retailers of all sizes, it’s an essential strategy. Large companies benefit from an increasingly frictionless customer experience. Small retailers get better market data and customer segmentation, but both benefit from more interaction with customers. In a world where over half of customers use multiple channels to make purchases, failing to take part in the customer journey at every step means losing opportunities to educate and engage. Omnichannel retail was growing prior to the COVID-19 eCommerce spike. But lockdowns did significantly alter buying behavior, and those expectations remain. That makes omnichannel retail more important than ever. Customers have seen new methods of delivery, new ways to learn about products, and new options all along the buying journey. They aren’t likely to surrender them, so omnichannel’s growth continues. At the height of the COVID-19 crisis, the omnichannel retail platform industry hit $5 billion but is projected to rise to $14.5 billion by 2027, growing at a CAGR of over 14.8%. Omnichannel’s popularity builds on increasing demand for the “phygital” — digital experiences within the physical world. As customers spend less time in stores, their visits take on new meaning. They don’t come just to buy products, which they could do online. Instead, they come to compare, research, and explore. How Do You Know When You Need an Omnichannel Retail Solution?Because the shift to omnichannel can include multiple threads, it’s helpful to know when you’re ready to implement. Here are six guidelines: 1. Reclaim CustomersYour brick-and-mortar stores are still recovering from the pandemic, and new channels could rekindle your lost relationships. Omnichannel is a competitive differential that includes the entire customer lifecycle. Not only can the approach stimulate shop activity, but it can also grow your retail ecosystem outside retail shops. 2. Web and Social GrowthYour web and social traffic are growing. Customers are still moving through the customer lifecycle but in new places. Have you added transactional social commerce? Options for customers to reserve online but pick up in-store? What about via a touchless check-out app while checking inventory in their preferred channels? 3. Inventory VisibilityCustomers, salespeople, partners, and other stakeholders ask when and if your products will be available online. Online retail is growing. eCommerce sites serve as ordering platforms but also places to research cost and availability before venturing to stores. Retailers who do not offer both experiences miss the chance to capture store customers and online business. 4. Plans for GrowthYou’re planning growth in new markets. Market discoverability is globally scalable with omnichannel orchestration. Channels can be localized, but digital reach is broader. 5. Acquiring New SuppliersYou’ve added new vendors and suppliers to your supplier network and want to make fulfillment more efficient. Your retail supply chain is getting more complex, and you need a broader view to plan for demand and realize shipping efficiencies. 6. Drop in eCommerce SaleseCommerce sales are suffering because customers want to experience your product physically. Omnichannel offers the opportunity to reach customers who feel safer at home with digital experiences, bringing products to them. It also recognizes the strategic importance of the showroom experience for retailers with products customers love to see in person, from glasses to high-end furniture, exercise equipment, or mattresses. Steps for Creating a Successful Omnichannel StrategyOne scholar characterizes omnichannel adoption as “crawl, walk, run, sprint,” while another identifies omnichannel orchestration as having “beginning, middle, and final ” stages. Needless to say, the process is incremental. A successful journey advances through these four steps: 1. Identify Your ChannelsLike many retailers practicing multi-channel, you’ll first identify where your audience lives and determine the channels that are most appropriate for them across:
In this stage, retailers have a sense of their company’s desired channels or a working multichannel strategy with minimal integration. Channels are independently planned and implemented, and each has its own customer loyalty. Different items might be shipped from separate supply chains depending on the channel. Channel owners cannot see how other channels perform or where customers go when they leave their channel. They may not share customer information, inventory, or strategy. 2. Enable Purchases and Payments Across ChannelsMethods can include:
This stage requires some overlap between channels. For instance, customers who buy online and return in-store (BORIS) will likely meet your staff check-out person, who will need to process items that were not initially sold in that store. 3. Create a Consistent Brand Across Channels
4. Unify Online and Offline ChannelsCreate a single source of truth.
This is the highest level of integration. It actualizes a seamless customer experience across the buying journey and company channels, integrating marketing, supply chain, customer service, and brand. An integrated omnichannel retail system can alert nearby customers of a new store opening in their area. It can send customers an offer based on their purchase history online and in stores. And it can get a product to them quickly no matter where it was ordered. Businesses can have operations across these phases. For example, they may allow returns across channels regardless of product assortment but not share customer data across channels. Ultimately, a retailer must break silos for profit and loss reporting data, inventory, supply chain, and customer databases to realize the true potential of omnichannel. A Phased Approach to Omnichannel OrchestrationThe multiple steps in omnichannel orchestration suggest a phased, rather than a single, behemoth implementation. After all, Rome wasn’t built in a day. The largest implementations take time and build on strategic goals to integrate channels, one benefit at a time. Here’s what to look for in an omnichannel retail management system: It Has Cloud-based or Hybrid OptionsCloud-based systems are more efficient. They’re a simplified, adaptive operating model that automates many previous IT operations. Over 90% of users also find it easier to comply with government regulations.
It’s Fully Integrated
It’s Modular and Scalable
It Provides Robust Financial Reporting and Business Analytics
It Has Rich Features for Modern Retail Operations and Store Operation ManagementFeatures should include:
Shoppers are returning to stores more digitally savvy than ever before. They’re hungry for physical experiences built on digital ones, applying online knowledge to the real-world shopping experience. On top of it, they expect lightning-fast shipping and flexible delivery options. In other words: omnichannel is here to stay. How ArcherPoint Can HelpWorking with a partner like ArcherPoint can help integrate channels to meet customers’ new expectations, giving you the solutions, guidance, and expertise you need to adapt to the new retail landscape. Talk to one of our sales consultants about how partnering with an experienced retail operations partner can help your business unleash the power of omnichannel retail. What is omnichannel shopping?Omnichannel retail is a strategy in which retailers engage customers through multiple digital and physical touchpoints. As customers move across these channels, applications and data move with them. This creates a consistent, on-brand experience from start to finish.
Why is omnichannel important for retailers?Omnichannel allows retailers to achieve more availability, drive sales and traffic, and integrate digital touchpoints. An omnichannel retail strategy improves the customer experience and provides more channels for customer purchase––whether it is on mobile, web, or in stores.
What is omnichannel and the strategies of this concept?An omnichannel strategy is a sales and marketing approach that provides customers with a fully-integrated shopping experience. Omni-channel strategies unite user experiences across multiple touchpoints, including brick-and-mortar, web, and mobile apps.
How does omnichannel improve retailing?Top 8 Tips on Building an Omnichannel Retail Strategy. Influence of Social Media. ... . Strong correlation between physical stores and online stores. ... . Map customer purchase behaviour. ... . Boost customer engagement. ... . Create fulfilling store experiences. ... . Present virtual viewpoints. ... . Provide valuable services.. |