The Concept of Omnichannel Retail & Its Importance
Omnichannel Retail is a concept that uses consistent and centralised customer data management (across all offline and online channels) to provide an integrated customer experience across all possible channels for a seamless shopping experience. The different Offline and Online channels are and not limited to Brick and Mortar Store, Social Media, E-Commerce/Online, Mobile App etc.
It provides Single Point of View Data for each customer across all channels which facilitates extremely personalised marketing and customer support to offer seamless shopping experience. This enables Customer Starting point and Ending Point in different channels.
For Example, Customers can begin their journey or engagement with a brand online and close it by a purchase in the brick and mortar, supermarket or superstore or vice verse. This means, that they can start their Customer Journey even in a Supermarket and close the purchase by buying the product online. For example: If a Customer opted for a membership program of a big box retailer in a physical store, they would get the same benefits in the online store of the same retailer.
Example Video Guide on Multi-Channel Vs Omnichannel Marketing Strategy
Omnichannel Retail is an Enhanced or Extended version of Multichannel Retailing with a 360 Degree View of the Customer. The massive rise of digital technologies, platforms, mobile devices and Social Media has disrupted the Retail Landscape. The increased opportunities for the Customers has forced the Retailers rethink about their marketing strategies.
Omnichannel marketing has redefined Personalised Customer Experience by introducing the concept of Hyperpersonalization of the Customer Experience. This is facilitated by the Customer Behaviour Analysis both online and offline in the brick and mortar stores by using Advanced AI, Big Data and Analytics Tools.
In Omnichannel Retail, the use of one Centralised Data Repository or backend (which has data from Web, Mobile, POS system in the physical store) ensures single point of view of the customer. This helps in generating 360 Degree View of the Customer and helps in Hyperpersonalisation of all the Customer Marketing Strategies. It also helps in Pricing, Promotion & Distribution.
As per Statista Report: Almost one in two e-commerce decision-makers in Europe and North America believed Omnichannel strategies to be very important in 2021, an October 2020 survey revealed. Another 20 percent thought having an Omnichannel strategy was quite important for their business in 2021.
Multiple Online Reports suggest, as of 2022, approx. only 1/3rd of retailers have optimised their customer journey for buy online, return in-store services.
The Concept of 360 Degree Unified Customer View in OmniChannel Retailing
- Sometimes Customers are searching for product information in the physical brick and mortar store and simultaneously they are getting additional notifications on their mobile devices about offers and discounts on the products. This is only possible when there is a unified Customer View. Unified Customer View is the key focal point of the OmniChannel Retail.
- Unified Data across channels has allowed speedy order fulfilment, efficient application of Policy of Easy Returns and Same-Day Delivery. This has also boosted online commerce and integrated seamless shopping experience for the customers.
- Unified Customer Data in a Centralised Backend ensures Efficient Inventory allocation and also provides a real time view of Inventory Distribution across Different Locations and Channels. This helps in better planning for Inventory allocation, Reduced Wastage and reduced Stock outs.
- It ensures seamless interactions between customer, brand and retailers.
What is Single Channel Retail and its limitations?
Single-channel is the typical retail model or channel in which customers start their product search or engagement and end their product search or engagement by purchasing or abandoning it in the same channel. For Example- A Web Store or a Brick and Mortar Store.
This Channel has a cost and efficiency advantage due to focussed effort on single channel that eliminates waste and drives Sales. Also many Brick and Mortar stores offer Location advantage and convenience to the Customer (stores nearby to customer residence offers huge ease of physical shopping advantage).
But it comes with its own set of disadvantages as listed below
- Its not a Convenient Shopping Experience as it does not offer consistent experience across multiple Channels. Offline and Online Channels are not integrated.
- The Single Store Cannot quickly push promotions to the customer or its latest products or offerings if there is no Centralised Customer Data or even Digital Data. It will have to rely on fliers or in-Store Leaflets or Displays.
- Does not offer consistent experience across multiple platforms or devices in the new digital age. The Brick and Mortar with no online presence limits Online Product Search by the Customer.
- In the new era of digital age many more sale channels have risen, hence, Single Channel Retail does not offer the customers flexibility and ease of shopping convenient at their own pace and at their own time.
- Customers now expect a more convenient and flexible shopping experience across devices, platforms and channels which a Single Channel Retail is unable to offer. Single-channel Retail does not have that built-in system that can satisfy demanding customers
- Does not offer 24 hour Customer Sales Support.
- It offers very limited options to the Customer. A Single Store that is not integrated with other Channels, might lose out Customer due to lack of Personalised Engagement, Pre Sales or Post Sales Customer Support.
What is Mutlichannel Retail and its Advantages?
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 of Multichannel Retail ?
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.
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.
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.
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).
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.
Omnichannel Retail and Multichannel Retail – The Key Differences
The key central focus in Multichannel Retail is the more channels for Product Distribution. In OmniChannel Retail it is the Centralised Data Repository to provide 360 Degree holistic view of Customer on any given channel at any time. Customer is at the heart of overall strategy in Omnichannel Retail. This contributes to enhanced Customer Experience and higher CLV.
Multichannel Retail lacks data uniformity between different Channels i.e. its not possible to get 360 Degree Single View of the Customer While OmniChannel Facilitates 360 Degree Single View of the Customer.
What are the challenges in Omnichannel Retailing?
The biggest challenge is to have a single consistent 360 Degree of Customer Data, irrespective of what channels Customers have used. Channels of contact include Smartphones, Mobile Apps, Websites, Physical Brick & Mortar or Pop-up Stores, Telephone, Brochures, Fliers, Catalogs, Print Ads etc.
These Contact Channels often lack the built-in data integration system which can help unify the data across channels. Due to lack of unification of Data, there is lack of consistency about the Customer Data.
Product, Pricing Data etc. You could have different pricing data about a particular product on different Sales Channels. For Example: A Kettle could be cheaper online than in the physical store.
What is the Solution to address the Data challenges in Omnichannel Retail?
The key solution is to break down the disparate data repositories in the retail channels and focus on centralised data integration system. Data has to be unified across all systems and all channels and made seamlessly available to all channel systems. This will give a unified 360 Degree View of the Customer at any point of time.
Below are some Omnichannel Strategy Examples
- Omnichannel Customer Strategy of Walmart
- Omnichannel Strategy of Nike
- Digital Transformation Strategy of Walmart