Multichannel Retailing offers more Sales Distribution Channels to the Customer. But the key central focus is the Product instead of the Customer. The Sales Channels include Brick and Mortar Physical Stores, Online Stores, E-commerce Platforms, Marketplaces like E-Bay, Amazon etc, Social Media, Social Commerce (Facebook, Pinterest etc) and Mobile Applications for shopping in real time. It is a Decentralised Business Strategy of dealing with Customers and Inventory Allocation. Product Discovery, Analysis and Purchase typically happen in different sales channels in Multichannel Retail.
The Key objective in multichannel retail is to provide multiple engagement channels to the customer for product evaluation and purchase. Multichannel Retail Strategy helps in achieving the following:
- Enhanced Sale and Purchase Experience for the Customer with Flexible Ways to Shop.
- Quick and more convenient ways to shop for the Customer.
- Expand the Target Audience with wider reach (via more and different Online Channels)
- Sustained Customer Engagement via different Channels (like different online channels)
- Increased Customer Acquisition as there are more ways to shop for the Customer.
- 24 Hr access to Customer Builds Brand Loyalty.
- Higher Customer Lifetime Value as Customer prefers to stay with the Brand
- All of above lead to an Increased Customer Retention Rate.
What are the limitations/disadvantages of Multichannel Retail ?
Multichannel also comes with limitations which are listed as below.
1. Customer Journey with different Sales Channels is not Seamless
You cannot start your Product or Service Discovery in one channel, Product Analysis in another channel and finish Product Purchase in another channel in Multichannel Retail. This is because the Customer Data is not unified across all the channels and does not offer single 360 Degree View of the Customer.
2. Fulfilling the expectations of Demanding Customers:
- Customer Expectation Fulfilment meant retailers’ IT systems and Data Infrastructure had to be robust and developed. Unfortunately, Multichannel Retailers’ IT and Data Infrastructure was and is unable to cope with the burgeoning needs and expectations of the customers in this new digital age era.
- A customer is increasingly looking for Single Point of Contact with the Retailer, which can give him a unified and seamless shopping experience. This is unfortunately not possible with Multichannel Retail.
3. Order Fulfilment and Speedy Delivery Challenges :
- In Multichannel Retail, its very complex to synchronise and integrate purchases from different channels.This further complicates and poses challenge for the Order Fulfilment Department or Speedy Delivery or Same Day Delivery if there is a huge demand.
- This occurs because Customer Data is not integrated across all channels. This causes inefficiency and delays in Order Fulfilment and Speedy Delivery. Hence customer gets further disappointed. In case of fast business growth, sustained success could be thwarted if the business is not equipped to address the issue of logistics and operations.
4. Seamless Customer Support :
Customer Service also becomes a huge challenge as the retailer shopper interaction is occurring in multiple windows or channels and the Data Warehouse or the IT System is not well developed to address the data synchronisation for each customer.For Example, a Customer Complaint ticket raised online is unable to get resolved in Physical Store (whenever customer passes by the store and wants to check the status of his complaint).
5. Issue with Product Pricing across different Channels :
- Product pricing is not often consistent across different sales channels. Sometimes Products are listed online cheaper. So customers can rush to that particular online channel to purchase the product at a lower cost, which can cause the overall net profit to dip.
- Also Costs of Shipping could vary between different Online Channels. It could be higher on the Retailer’s E-Commerce website and cheaper on another marketplace like E-Bay or Amazon.
- Also you could have Inconsistent Price Promotions on different channels which can also dilute the Brand Value in the longer run. Brand Equity suffers if customers only buy your products during Price Promotions.
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