Omnichannel retail. Sounds like another eCommerce buzzword, right? Well, in fact, it’s much more than that. Recently, you may have come across many articles that have advocated for the omnichannel approach without giving much context as to what it is, where it stemmed from and the benefits it can bring.
In order to understand if omnichannel retail really is a necessity for the near future, it is essential to get acquainted with the model itself.
What is Omnichannel Retail?
Omni - a Latin prefix which stands for “all”. Omnichannel retail is defined as a unified shopping experience across all sales channels, where the customer is at the center of the model. Instead of focusing on several different retail channels, omnichannel retail essentially combines them all. This creates a seamless shopping experience for customers, increasing satisfaction and retention.
Prior to this, many companies utilized the multichannel retailer approach - selling across several channels whilst keeping the firm at the center. The omnichannel approach differs in the sense that it is customer-centric instead of firm-centric, meaning that the whole process revolves around the customer. Initially, many retail companies dismissed this new-wave approach, preferring to stick to a more familiar way of doing business. However, a lot has changed during the past year as more companies began to adopt this way of selling in order to keep up with changing customer demands.
It can be said that the omnichannel approach stemmed from customers themselves, and their demands for a better purchasing experience. Many customers rely on multiple sales channels to make purchases - from brick and mortar stores, to online stores, to social media channels. Some customers may choose to switch between channels before choosing the best option for themselves, which is why it is preferable for all channels to be unified and consistently updated, and for retailers to focus on providing a unified shopping experience. Moreover, these customer demands were further amplified by the COVID-19 pandemic, as more shoppers were forced to rely on digital channels to meet their shopping needs.
The Foundation of the Omnichannel Model
The omnichannel eCommerce model relies on centralized data management, which brings both physical and digital channels together. Due to this, customers can switch between channels during the decision making and buying process, and create their own preferable shopping routines. In the current retail climate, consumer expectations are pretty high. Aside from expecting high-quality products and services, consumers will also favour retailers that provide a seamless shopping experience and take their needs into consideration.
According to CustomerThink, retailers that have adopted a strong omnichannel strategy will experience a 9.5% increase in annual revenue, compared to just 3.4% for retailers with weak omnichannel strategies. These numbers alone make omnichannel retail worth considering.
The Shift to Omnichannel Retail: Where Did it Come From?
In order to understand how the omnichannel eCommerce model emerged, it’s necessary to consider the progression of selling models over the past couple of decades. The traditional retail model is known as the single-channel model, which focuses on a single sales channel and distribution system. This could be a brick and mortar store, or an online store. The first online stores also operated using this model.
However, this approach soon became limited with the rise of other sales channels such as Amazon, Ebay and - of course - social media. This is where multichannel retail came into the picture. This approach took full advantage of the digital age and leveraged many sales channels in order to provide several purchasing options for customers. The multichannel model has dominated the world of eCommerce for quite some time now.
Nonetheless, this model also became outdated due to an increase in eCommerce opportunities and higher consumer demands. With the appearance of platforms like Shopify and shipping opportunities like dropshipping, the eCommerce world became saturated with many stores, all operating with the same multichannel retailer model. It was time for a change. A new approach that would put the customer at the center of the selling experience and provide a unified purchasing journey; a single brand experience instead of several separate channels. This is where omnichannel retail comes in.
Omnichannel vs Multichannel: What’s the Difference?
At first glance, the lines between multichannel and omnichannel retail may seem blurred. However, it becomes easier to understand when you compare what’s at the core of the two models. In multichannel retail, the brand is at the center of the model, and all sales channels are also focused around the brand. The opposite goes for omnichannel retail, where the customer is at the center of it all.
Picture a brand that utilizes several channels in their selling process: they have a physical store, an eCommerce store, an Amazon page and social media channels like Facebook and Instagram. However, each channel is separate and offers a different shopping experience. The design is different, the campaigns are different, customer service varies from channel to channel and the whole purchasing experience varies depending on which channel you choose to purchase from. That’s the multichannel retailer model.
The omnichannel eCommerce model focuses on combining all channels in every way possible: from the content that is posted, to customer service, to design. A brand engaging in omnichannel retail will track consumer activity across all channels and will offer personalized suggestions via ads and notifications, making the customer feel as though they are part of a unified experience.
The Benefits and Challenges of Adopting an Omnichannel Approach
There is no doubt that the eCommerce landscape has changed. However, is omnichannel really necessary for a successful retail business? The short answer is yes. The longer answer will be explored below, where we take a closer look at some of the benefits and potential challenges.
Higher customer satisfaction and retention
It cannot be denied that most customers will be more satisfied with a seamless, unified approach. This means higher ratings and reviews, as well as better customer retention. People will be more likely to purchase from your store again and become loyal customers if their needs are prioritized.
Many retailers have been cautious about adopting the omnichannel approach, or have only implemented minor changes. By enhancing the customer experience, you are also gaining a competitive advantage over retailers who remain loyal to the multichannel approach.
This particular benefit has been magnified by the current lockdown climate. As more customers switch to online shopping, they will be looking for ways to purchase from their favorite retailers from home. If you provide a unified experience across all of your channels, you will not only retain existing customers but also bring in new ones that are searching the web for products and services.
If customers see that your channels are connected, many of them will prefer to remain engaged on all of them in order to avoid missing updates, discounts or new releases. This includes increased activity, such as more followers, comments, likes and reviews.
Not only will customers gravitate more towards your brand, but internal activities will also become more consolidated. This will be a direct result of channel unification and the delivery of a single brand experience. Departments will be working together more often to ensure that the omnichannel retail strategy is up to par, thus creating more unification inside the company.
This goes without saying. If customers have a good experience and are satisfied with the outcome, they are far more likely to return and make more purchases. Moreover, they are also more likely to recommend your store to friends and acquaintances, resulting in more conversions.
Improved customer service
One of the main drawbacks of multichannel retail is a lack of good customer service. Requests and complaints are scattered across channels, making it more difficult to solve issues. Upon switching to an omnichannel approach, this process becomes more automated and customer requests become easier to track, especially with the appropriate technology.
Challenging to adopt
An omnichannel approach may be difficult to implement at first, depending on the current position of your company. If you haven’t fully mastered the multichannel model first, it’s best to work towards that goal prior to diving into omnichannel retail. However, some companies may find that they can transition quite smoothly, so it’s best to discuss such ideas on a corporate level.
Requires additional effort
Sure, omnichannel is beneficial in the long-run, but that’s not to say that short-term challenges will not arise. Adopting this approach requires effort from all departments - from marketing, to sales, to inventory management, to customer support. Nonetheless, if you create a clear plan and onboarding process, this can be implemented without too many issues.
Can be costly
Switching to an omnichannel approach will incur additional costs, and the expenses will vary depending on the level of change that needs to be implemented. First of all, investment in new technology is required for improved eCommerce solutions, data collection, inventory management and more. Becoming an omnichannel retailer will not only require a shift in marketing and SMM activities, but also an upgrade in the IT infrastructure, so it’s best to research this aspect in advance and define a clear budget. If the costs are too high, your company can opt for a more gradual approach. Even small steps in the right direction will result in some noticeable benefits.
Tips on Switching to an Omnichannel Retail Model
So, we’ve established that switching from a multichannel model to an omnichannel model requires a considerable amount of research, time and investment. However, Rome wasn’t built in one day and neither should your new strategy. We have come up with a list of main starting points you can consider whilst making the initial shift, so take these points into account before starting your journey into the world of omnichannel retail. Consider the first two tips as preconditions.
Establish your online presence
If you haven’t created an online store for your brick and mortar business, or your eCommerce platform has become a bit outdated, now is the perfect time to establish your online presence by creating a website. Look through all of the options and decide on the best one for you. You can create an online store in a matter of minutes with Ucraft, and choose from a wide range of pre-designed templates to suit your business model. We also provide a mobile editor which will allow you to optimize your website for mobile devices - a staple aspect of omnichannel retail, since many people prefer to browse on their phones.
Start selling on multiple platforms
After your new storefront is ready and functioning, start selling on social media channels such as Facebook, Instagram and even Pinterest. All of these platforms play a crucial role in your omnichannel retail strategy: the advertising opportunities provided by the Facebook store, the shoppable post feature on Instagram and people’s devotion to Pinterest as a platform for inspiration all play a part. Likewise, make sure to sync your store with platforms like Amazon and Ebay. They are the classic eCommerce giants, and many consumers still prefer to purchase from them because of convenience and familiarity.
Most eCommerce builders, including Ucraft, will allow you to sync your storefront with the eCommerce and social media platforms discussed above, allowing you to dive straight into omnichannel retail. For more information on how you can do this with Ucraft, check out this article.
Create a unified experience across channels
It’s important to remember that a customer can begin their buying journey anywhere, and every touchpoint is an essential one. Consumers do not care about what goes on behind the scenes - they just want to make the best purchasing decision. For them, it is a single experience. A good experience on one channel will positively impact the whole brand, and vice versa.
Creating a unified experience means that your channels should begin to function as one unified retailer instead of separate platforms. This means making sure that content such as product descriptions and pricing are consistent across all channels. The same goes for discounts, new releases and general changes or updates. Customers should be notified about changes across all channels as soon as they occur. Moreover, any change on one channel should be visible on the others. If a product has sold out in the store, it should also be displayed as sold out on other ecommerce platforms and social media channels.
The same applies to your design, since your brand should be immediately recognizable across platforms. This means using the same logos, color schemes, fonts and image styles. It’s okay to make minor changes, as long as the general brand stands out and can be instantly recognized by consumers.
Collect and use data to personalize customer experience
In order for this step to be successful, it is necessary to invest in a good CRM software - consider checking out Zoho. When switching to an omnichannel approach, a common customer database should be established so customers can be clearly identified on all channels. Also, it’s important to collect individual consumer data across channels and observe their behavior, such as what products they view, add to the cart and purchase. After the data has been collected, you can make individual suggestions to each customer such as displaying products they have purchased before or may be interested in.
Remember to integrate the channels as much as possible, especially when it comes to data collection and overall conclusions. After tracking customer activity, all of the pieces should be put together and data should be linked between channels.
Invest in the necessary technology
As mentioned above, a good CRM system is necessary for the organization and segmentation of customer data. Likewise, it would be wise to switch to a good inventory management system that will support sales across multiple channels, process orders, handle inventory and update information from a single interface. An automated inventory management system can be very helpful when switching to an omnichannel approach. Primaseller is a good solution to try.
The Verdict on Omnichannel Retail
So, is omnichannel retail an eCommerce necessity for the near future? It surely seems like it. Of course, each individual retailer still has a choice, but switching to an omnichannel approach is definitely worth considering. Not only will this give your brand a competitive advantage over other brands who haven’t adopted this approach, but it will also reap many benefits inside of the company. Furthermore, customer expectations should always be taken into account when engaging in retail and eCommerce, and can only be ignored for so long before they have an effect on the business. With brands who have adopted the omnichannel approach, consumers have already experienced what it’s like to be at the center of the purchasing process. As a result, they will definitely favor brands who provide that kind of experience.
However, there is no rush. Your business will not combust tomorrow if you don’t dive straight into the omnichannel model. It is understandable that such changes require research, investment and employee onboarding. In order to achieve the best result in the long-run, we would advise you to start the process step-by-step. The most important aspect is a clear omnichannel retail strategy, which can later be implemented over an specific period of time, depending on the company’s resources and capabilities. As we mentioned above, even small steps in the right direction can reap considerable benefits.
The new year is right around the corner, providing new opportunities and a fresh start, so consider including omnichannel retail into your marketing strategy for 2021. Good luck!