OmniChannel Retail: What it is, Value, Challenges and Success Factors
OmniChannel Commerce (or OmniChannel Retail, also spelt as omni-channel) refers to the practice of selling products or services via multiple commerce touchpoints (both online and offline), while maintaining brand and customer experience consistency across all the channels. It could be relation to your branding, positioning, pricing, products and services offered, cross-promotion of offerings not present at the touchpoint at the time, communication style, merchandising and more. Since the word “Omni” literally means “every”, true omnichannel dream would be achieved when a brand is present of all the possible avenues relevant for them.
While sales are the primary outcome achieved under OmniChannel Commerce, the other equally important aspect of OmniChannel Commerce is OmniChannel Marketing. In this article we explain in detail about both the aspects of sales and marketing, the opportunity it presents, give an glimpse into what the omnichannel world looks like, finishing with the challenges and critical factors required to achieve the same. You can jump to these sections with these links:
- Omnichannel Sales
- Omnichannel Marketing
- Omnichannel Commerce Glimpse
- Real Value of Omnichannel
- Omnichannel Strategy: Critical Success Factors
Many businesses these days ask what is the difference between Multichannel and Omnichannel Ecommerce. Is omnichannel just a buzz word or it is actually different from MultiChannel ecommerce? Well there is a difference and let’s see what that is by first defining what multi-channel ecommerce is.
OmniChannel Vs MultiChannel Ecommerce
In terms of transactions here are the differences between multi-channel commerce and omnichannel ecommerce:
Multichannel ecommerce means the following for each of the mentioned seller type:
- For a purely online seller: Multichannel selling means selling via one or more of the following:
- Own branded online store (based on Magento, Shopify, etc.)
- B2C Online Marketplaces (eg. Amazon, Flipkart, Paytm, etc.)
- B2B Online Marketplaces (eg. Udaan, Power2SME, Alibaba, etc.)
- Comparison sites (eg. MySmartPrice, Junglee, PriceDekho, etc.)
- Social media store (eg. Facebook, Whatsapp, Pinterest, etc.)
- Mobile app
- For a general retailer: Multichannel would mean selling via:
- A real-world store; and
- One or more of the above.
Note: For a multi-channel seller, all its stores may be operating as separate entities even though they may sport the same brand logo, one does not cross-sell the products on the other.
Omnichannel applies to a business that is ideally selling through all of the above channels and has a way to tie them all together to give a consistent experience to the customer, no matter which touchpoint they choose to interact with.
The ways to achieve omnichannel include:
- Click-and-collect: Applies to brick-and-mortar shops which provide the ability to the customer to view and order their products online, and collect them from a real-world store.
- Buy in-store, get home-delivered: A customer explores the products in a store, pays for it in the shop, but gets the product delivered at their doorstep.
- Endless Aisle: A customer can walk into a store, see the products present in the store, but also be able to see products available in a nearby store or online on a tablet/tv screen and place an order to be delivered at home or in the same store for a pickup later.
- Brand consistency: Same brand identity (usage of logo, colours, fonts, icons, prices, etc.) across all sales channels so that when a customer visits any of the channels for the seller, he/she get the same experience.
- Cross-selling across channels: The seller would promote their other channels on a particular channel as a means to explore and buy the products and to contact them.
- Consolidated customer support: The online and offline buyers have the same number to call or website to visit to inquire about their shipment and to lodge their complaints. And the customer rep on the other side would have the access to the info required to help the customer.
While the above points talk about the transactional customer touchpoints within OmniChannel Retail, there is another component which engages and entices the customers to gain mindshare and eventually push sales – OmniChannel Marketing.
The true meaning of “omni” gets realised when a brand is truly present everywhere, not just for completing the transaction with the customer, but also to be visible and readily available for people who may be interested in information about the brands and/or its products. That’s what Omnichannel Marketing targets to achieve.
Omnichannel Marketing is being present on all the information channels that a brand’s target audience usually uses to find information, transact and to communicate with the brand before, during and after the purchase. It aims to create fans that have top-of-mind recall of the brand.
Capturing customers’ mindshare translates to having good presence on one or more of these channels:
- In-Store Promotions: Brands promote as usual in stores with creative merchandising options, now powered by technology to display fast selling items upfront in the prime display area. When a customer likes something but the style is not available in their size, brand can get the size delivered from the nearby store to their home directly.
- Brand’s own Online E-Store: It is mandatory to have your own online store since that becomes a destination for all visitors seeking out your brand. Sales a brands own store is the cheapest way of capturing an incoming sale since there are no middlemen and promotions for new merchandise can be done for free.
- Social Media: India has the largest population on social media sites and people are spending hours engaging with content on these mediums. Social media channels include channels like Facebook, Instagram, Pinterest, Twitter, Whatsapp, Youtube, etc. Having presence on these channels is as important as it was having a landline number two decades ago. Tracking methods like the Facebook pixel allows advertisers to track a new visitors actions and show them relevant content based on their past interactions with the brand.
- Search Platforms: Creating a good content strategy is a great way to achieve a consistent organic non-paid traffic to your digital assets. This of course making the content engaging so that customers find it relevant and useful while being SEO optimised will ensure being visible to people looking for it. Search ads (also called Search Engine Marketing or SEM) provide a cost-effective way of targeting searchers with your products on platforms like Google Ads and Bing Ads.
- Online Marketplaces: Online marketplaces like Amazon, Flipkart, Paytm, Myntra, etc. get millions of visitors every day. Making your products visible on these platforms is akin to being present in an offline mall where large organic the footfall happens.
- Coupon Sites: Coupon sites help drive traffic to brand’s own website by running sales and promotions via the coupon sites. Some examples of these sites are Coupon Raja, CouponDunia, CashKaro, Desidime, etc.
- Product Packaging: Whether the products are handed in-person in an offline store or delivered via courier, the contents of the package can include promotional material that encourage the customer to engage further with the brand. Eg, a delivered package could have a flyer about the online website with a discount voucher that pushes them to make a purchase, or a QR code that takes them to your Facebook page to join it.
One might think that all of this is exactly what we were doing as part of our multi-channel strategy. That would be right, however, the primary difference here is that in omnichannel scenario all these channels are seamless tied together. Let’s look at an example of how omnichannel strategy might play out for a brand by looking at a customer’s journey in the omni channel world.
In an omni-present scenario, this is what a customer’s journey of interacting with your brand might look:
- A woman is searching for a perfect little black dress for that the party she had to go to next week. She starts browsing online on Amazon to look for it.
- In the sea of products, your trendy dress showed right upfront via your paid marketing campaign on Amazon, so it gets clicked and eventually bought.
- She receives a box customised for Amazon with the dress nicely wrapped in butter paper, accompanied by return instructions in case it didn’t fit right (with your your in-store return policy) and your branding material with shots of the latest collection. All this instils confidence, builds curiosity and creates brand recall in her mind.
- Inspired by your customer delight factors, she searches for the brand to learn more about it and lands on your website. As she lands on your website, targeting pixels for Facebook and google are activated for her. She browses your website but decides not to buy something for now.
- But as she is about to leave the website, you prompt her with an incentive of 10% off coupon on her next purchase if in exchange for subscribing to your newsletter or for liking your Facebook page. She decides to ‘like’ your Facebook page.
- Over the course of next few days, you target her with retargeting marketing campaigns across Google and Facebook so she sees your latest collection wherever she goes, along with engaging content like your best-sellers being advertised on Facebook (because she liked your page). She actively seeks to like something to avail of her hard earned discount voucher.
- Finally, a few days later she comes across something she really likes and decides to make a second purchase, this time from your website using the 10% discount. She discovers that you offer store pickup and returns as well which comforts her and closes the sale.
- Again you delight her with the same excellent unboxing experience with box tailored especially for your website customers. You let her know that there are 3 stores in her vicinity where she can try the latest collections, order and get it delivery at store or her home.
- Since you got her email address and phone number when she completes the purchase, you send her invites to exclusive members-only pre-releases at stores before anyone else gets access.
- And thus you keep engaging with your customer and keep increasing their Life-Time Value (LTV) – the cumulative amount they will spend with a brand over multiple purchases.
Let’s assume that with respect to omnichannel retail and marketing (which is still quite new in India), India is moving to where US was couple of year ago. Hence, we looked at where US has moved to with Omnichannel over the years. According to an extensive study conducted by McKinsey and Harvard Business Review, a whopping 73% customers in the US use both online and offline mediums to interact with brands while only 7% were online only and only 20% shopped only via stores. Such omnichannel customers used various means such an mobile apps, tablets, in-store interactive catalogs, social media and price comparison sites to facilitate their buying decisions. The same study also concluded that customers using both offline and online mediums on an average spent 4% more on in-store purchases and 10% more on online purchases as opposed to the ones that operated only on one medium.
According to a Comscore study, in 2017 online users in India spent 89% of their online time on a mobile and most of that time was spent interacting with social media sites like Youtube, Whatsapp, and Facebook. These mediums have thus become a great opportunity for brands and advertisers to get audience’s mindshare, with video being a choice of format most effective.
However, it is not necessary that you be a great content creator to utilise these platforms (although that will be great). All these platforms provide a great opportunity to run paid advertising campaigns, specifically targeted to niche segments. It is imperative to leverage this opportunity as it is a highly cost-effective means of scaling sales.
The importance of ecommrece is reflected in a report on Indian Retail Industry by IBEF (Indian Brand Equity Foundation). The report quotes numbers by ASSOCHAM-Forrester study which state that the the e-commerce market in India is expected to grow at a staggering pace of 20% YoY till 2026 to become around $200 Billion market from $39 Billion in 2017. Moreover, physical store retail is pegged to grow at the same rate as online retail over the next five years. This further fortifies the fact that both strategies are equally important for a healthy competitive ecommerce strategy.
Despite the opportunity and great value of multi-pronged marketing presence, a study by E&Y on marketing trends among the large corporates discovered that only 44% of brands took a 360-degree integrate approach to marketing, incorporating offline as well as digital mediums to be truly omni-present and capturing the consumer mind share.
Last but most eye opening fact, according to an article by HBR, is that it is 5 to 25 times costlier to acquire a customer than to make an existing one spend more with you (translates to increasing the Life-Time Value). As a study by Frederick Reichheld (of Bain & Co) suggests, a 5% increase in customer retention of your customers can result in 25-95% increase in profits! With these mind-boggling numbers it becomes a no brainer to have an effective omnichannel marketing strategy that helps in the recruiting, and more importantly, retaining customers by making them brand loyalists and fans.
In a true OmniChannel environment, the entire retail organization works in concert. From merchandise planning, to assortment planning, purchasing, allocation, replenishment, and to promotions, price optimization, and event management. This significantly reduces inventory costs, and increases customer service lever at each channel to maximize gross margin.
Centralised and connected technology plays a vital role in achieving the OmniChannel dream. Since an ERP is usually the central system from which all data is consumed or generated, everything needs to be connected to it either feeding into it or feeding off it in order to keep all systems in sync.
For example, Browntape Enterprise Middleware allows connecting the ERP to online marketplaces and brand website for orders and inventory sync. It enables the brands to show the in-store inventory on online properties like their website and online marketplaces thus increasing the chances of converting sales opportunities. The middleware also allows the processing and fulfillment of orders right from the ERP itself with the help of extendible APIs or file-based protocols. These relay the information between the systems in real-time or batch mode, as preferred, which increases the effectiveness of various functions like Marketing, Analytics, Planning, Purchasing, and Accounting.
Marketing channels including social media channels should have the latest information about the best sellers and stock availability so the latest popular items can be advertised to the visitors on the website and social media alike. This ensures that marketing dollars are not spent on advertising items that may not be in stock at the time, thus losing both money and opportunity. The data gathered from the middleware into the ERP enables the brands to run campaigns based on latest data ensuring the relevance and effectiveness.
Performance campaigns such as Amazon’s CPC, Google’s Ads and Facebook Ads benefit specially from the data gathered from sales across all online and offline channels. For example, sales from the stores in a particular city in the North-West region in winters could help create and target campaigns towards customers from that region with extreme winter products, while customers from the South can be targeted with mild winter or even summer collection. Again in this scenario middleware plays the role of providing the combined online-offline picture straight from the ERP.
In-store Operations, Supply-chain & Logistics
When we think of Omni-channel we normally think of customer transactional touchpoints like website, instore POS, marketplaces etc. While that is important, in order to deliver a good and timely experience at those customer touchpoints, it is critical that the supply chain and logistics operations under the hood are in place.
When a customer places an order for your in-store inventory that was visible online on an online marketplace, it is supremely important that the products are packed in the store, picked by the courier (self-handled or third party powered) from the store and delivered to the customer on time. For this to happen the store staff need to be alerted for the orders in time, they need to be trained with the picking and packing procedures, store staff need be sensitive to the SLAs as per customer’s expectations and the logistics partner needs to be notified about the pickup when relevant.
Same would be the case when a customer comes to return or exchange a product at the store. There needs to be a predefined counter where this is possible with a known process which makes the customer’s experience a breeze rather than an arduous one.
Browntape’s software and team of experts can equip a brand’s operations with the right technology and in-store staff training in order to achieve the above.
In the 21st century, it is imperative for brands to deliver a 21st century experience to its customers. It is evident that customers are spending a considerable amount of time on multiple digital platforms, providing a huge opportunity for brands to engage with them on multiple fronts in order to get a piece of their mind and build loyalists.
When a brand uses the right communication, provides relevant information and provides the right opportunities to close a sale with a customer at the touchpoint that they are at, that’s the essence of Omni-channel Commerce. With the use of right technology, infrastructure and strategies, a brand can successfully leverage the potential of retaining and growing their customer base exponentially, because let’s face it not every brand will be able to capitalise the opportunity. Be the brand that does! Happy sales.