Since the advent of eCommerce, the number of sales channels for retail have soared. People can shop through retail stores, malls, mobile apps, eCommerce websites, social media, and more. But, they also have different brand experiences with each channel. This gave rise to omnichannel retail.
The concept dates back to the early 2000s. But, it was first proposed as a strategy for successful retailers in 2010 by IDC Retail Insights. The report showed how retail brands using an omnichannel strategy can increase transaction size by 15-35% and customer loyalty by 5-10%.
The omnichannel retail strategy continues to show fruitful results even in 2023. Customers of omnichannel brands spend 20% more than single-channel customers. Omnichannel retailers also have an 89% customer retention rate, which is considerably higher than the 33% retention rate of single-channel retailers.
This article sheds light on the definition of omnichannel retail, its advantages, challenges, strategies, and best practices. Let us begin by understanding the concept of omnichannel retailing and how it differs from single-channel and multichannel retail.
Omnichannel Meaning in Retail
Omnichannel retail is a strategy where the brand facilitates customer engagement and sales conversion across multiple channels. It is a unified approach to commerce that creates a seamless experience across all retail touchpoints. These include retail stores, eCommerce, social media, online marketplaces, mobile apps, etc. The purpose of omnichannel retailing is to create a singular brand experience for customers across all channels.
In omnichannel customer experience, the brand offers several transaction points. But, the customer receives similar treatment regardless of the transaction location. You can better understand omnichannel retailing by comparing it with other retail strategies.
Single Channel Retail
In a single channel retail strategy, you sell products exclusively on one channel. This can either be offline or online. For example, if you only sell your products on Amazon, that’s single channel retail. A brand only selling its products in-store is also an example of single channel retailing.
Some multichannel and omnichannel retailing brands also adopt a single channel selling for certain products. These are usually limited-edition products. For instance, Coca-Cola launched gold and silver limited edition Daft Punk bottles that were only available at the Colette boutique store in Paris.
In a multichannel retail strategy, you sell products across several channels. These can be both online and offline. As opposed to omnichannel retail, transactional channels in multichannel retail are not integrated. The sales, marketing, and customer service strategies for each channel are almost independent of the others. Hence, the customer experience through one channel has little to no impact on other sales channels.
For example, a retail store creates an eCommerce website and also starts selling its products through marketplaces. But, the purchase experience is different on each channel. This is an example of multi channel retail.
In multi-channel selling, retailers can offer unique experiences, rewards, and customer service for different channels. Owing to this, customers develop a preference for shopping from one sales channel over the other.
For example, a customer browses for products on the website and gains all the information. But, they buy the product from the store as it offers a better shopping experience. This is an example of a customer journey in multichannel retail.
Omni channel retail is a centralised version of multichannel retailing. In omni channel retailing, the brand integrates all the touchpoints for brand engagement and conversion to create a seamless customer experience. Unlike multichannel retail, the customer experience at each channel in omnichannel retailing has a direct impact on other channels.
For example, a customer buys a MacBook from Apple’s website. But, they can pick up the product from Apple’s store. The customer can buy software for the laptop from the App Store. If they face an issue, they can connect with Apple Care online or at Apple’s retail outlets. This is an example of omnichannel retailing.
Regardless of the purchase touchpoint, the omnichannel customer experience remains seamless across all channels. Furthermore, all channels are integrated to create a unified marketing network. When the customer interacts with one channel, it has a direct impact on their subsequent interactions on other channels.
The Importance of Omnichannel Retail
The effectiveness of an omnichannel retail strategy stems from the multichannel shopping behaviour of customers. A study into omnichannel shopping behaviour by Google showed that online and offline activities have a significant impact on purchase decisions.
The study conducted in Australia showed that 42% of sales in retail outlets began online. And 40% of online shopping began with offline brand impressions. The below image outlines the complex purchase behaviour of shoppers.
Alongside being interconnected, online and offline shopping channels also have their own dedicated audience. The 2023 retail trends report by Shopify shows that 59% of shoppers enjoy browsing for products online, but prefer to buy them in-store. On the other hand, 54% of shoppers prefer to check out products in-store to interact with the physical products. But, they make their purchases online.
The modern customer journey involves many information and purchase-oriented touchpoints. A successful omnichannel retailer can engage with their customers at several touchpoints and hence increase the likelihood of a purchase.
Additionally, one of the biggest advantages of omnichannel retailing is that the brand can influence purchase decisions at several stages of the customer’s journey. An omnichannel retailer can use all different sales channels to promote their brand and products to a variety of audience segments at the discovery, consideration, and purchase stages.
Challenges of Omnichannel Retailing
Omnichannel retail management involves juggling several customer touchpoints without compromising the customer experience. This can result in a complex network encompassing various business operations, which can lead to a variety of challenges.
Here are some of the biggest challenges that omnichannel retailers can face:
Data & Information Management
Each retail channel can generate volumes of data that provide insight into customer behaviour and operations performance. In omnichannel retailing, a company has to manage data gathered from multiple channels.
Furthermore, they also need to understand the impact of one channel on another. For instance, you need to know the impact of marketing campaigns on different channels to predict sales and manage inventory levels.
Lack of Integrated Systems
Retailers juggle with many software when managing a single channel. These would include POS, inventory management, order fulfilment, retail logistics, CRM, and so on. Additionally, they also need to manage various software for different marketing channels.
Omnichannel retailing requires integrating all these software for multiple channels to create a unified system. This may require a major shift in operations. The company would have to adapt to new software that offers integrated solutions, develop its own unified system, or face the herculean technological challenge of integrating varying software with one another.
Streamlining Omnichannel Retail Supply Chains
Managing omnichannel supply chains for order fulfilment across different channels is one of the biggest challenges for omni channel retailing. An omni channel strategy may require you to manage multiple supply chains or at least multiple operations at each level of the omnichannel supply chain.
For instance, the inventory management software in omnichannel selling has to manage stock levels for several POS. These would include eCommerce websites, retail stores, marketplaces, and more.
You can choose to create different supply chains for different channels or develop a unified omnichannel retail supply chain to manage all channels. Either way, it is a complex and challenging endeavour for omni channel retail management.
Maintaining Consistency Across Different Channels
Consistency is the key to creating a truly omnichannel customer experience. This requires a lot of effort and constant vigilance. An omni channel retailer needs to maintain consistency in product information, purchase experience, offers, discounts, marketing communications, product quality, customer service and more.
As each customer touchpoint has unique features, it can be difficult for omni channel retailers to manage consistency across all channels. For example, while you can offer a highly personalised shopping experience on your website, you might have the same degree of control with online marketplaces.
Understanding Purchase Journeys through Multiple Channels
Customer journeys can become quite complex in omni channel retail. It can begin online and end with in-store purchases and vice versa. While omnichannel retailers monitor the performance of each channel and touchpoint, they also need to consider its role in the overall omnichannel customer experience.
For instance, your website might not be generating a lot of sales. But, it can be an important juncture in the customer journey for product research. Similarly, a retail store might not contribute much to sales but can be a crucial part of the after-sales experience.
Such complexity makes it challenging for omnichannel retailers to understand the role of each channel independently and as part of the purchase journey.
How to Define Your Omnichannel Retail Strategy
Your omni channel strategy has to overcome several challenges. That is why you need careful planning and judicious execution to pull off omnichannel retailing. The following strategy will help you define:
- Point of Sales for Omnichannel Strategy
- Channels for Omnichannel Retail Marketing
- Supply Chain Management for Omnichannel Retailing
- Order Fulfilment Strategy for Online and Offline Retail
- Software Requirements for Omnichannel Retail Strategy
Let’s dive into how you can develop an omnichannel retail system for your brand. The first step in this strategy is to understand your customer’s behaviour.
Find Out Where Your Customer Shops
One of the biggest advantages of omnichannel retailing is that it creates a singular brand experience across all channels. But, you first need to identify the channels you want to include in your brand’s omnichannel experience.
Let’s dive into how you can develop an omnichannel retail system for your brand. The first step in this strategy is to understand your customer’s behaviour.
Here are some sales channels you should consider for your omnichannel retail strategy:
- Retail Store
- Pop-Up Store
- Multiproduct Stores
- Reseller Stores
- Ecommerce Website
- Mobile App
- Ecommerce Marketplaces
- Social Media Marketplaces
Identifying where your customers are likely to shop is crucial. Almost every other aspect of omnichannel retail management depends on it. It will decide your marketing strategy, supply chain management, and order fulfilment strategies. There are many ways to accurately identify the points of sales for your brand’s products.
Ways to identify sales channels for omnichannel retailing:
- Survey your existing customers
- Check where your competitors are selling
- Study omnichannel brands in your industry
- Study existing research reports on the subject
- Conduct market research
Through these research methods, you need to understand the shopping behaviours of your customers. You need to learn about their preferences for products, brands, and services. As an omnichannel retailer, you also need to learn about unique shopping methods and motivating factors for sales on each channel. These insights will guide almost every other aspect of your omni channel retail strategy.
Identify the Resources for Omnichannel Retailing
Once you have identified the points of sales for your products, you need to figure out the resources required to facilitate omnichannel shopping on each of these channels. You will need to identify resources for omnichannel marketing, point of sales, supply chain management, order fulfilment, and customer service.
You need to identify the following resources for all the sales channels:
- Software Requirements
- Human Resources Requirements
- Technological Requirements
- Financial/Investment Requirements
- Manufacturing Requirements
- Supplier/Vendor Requirements
- Storage Requirements
- Logistics Requirements
- Marketing Requirements
- Customer Service Requirements
To simplify your omnichannel strategy, you can bifurcate the resource requirements into two categories:
- Centralised Resources: A single resource that can facilitate all channels.
- Specialised Resources: A resource that only serves particular channels.
For instance, your manufacturing unit can be a central resource that supplies products for all the sales channels. On the other hand, 3PL shipping is an example of a specialised resource of omnichannel retailing if you only use it for fulfilling online orders.
Create an Agile Omnichannel Retail Supply Chain
Supply chain management is perhaps the most complex and challenging aspect of omni channel retailing. The supply chain becomes more convoluted as you add more sales channels and customer locations.
You need to carefully plan each aspect of the omnichannel retail supply chain to streamline product supply for each sales location. The easiest way to do this is to first map out the supply chain for each channel separately. You can reverse engineer the supply chain based on:
- Goods/Services Procurement
- Inventory Management
- Fulfilment Centre
- Point of Consumption / Customer Location
You need to consider the special needs of each channel when mapping out the supply chain. For instance, you have to design a supply chain for just-in-time delivery for online sales while you need efficient freight logistics management for retail stores.
Once you have mapped out the supply chain for different channels, you can classify each stage as a centralised or specialised resource. Based on the location of these resources, you can develop a logistics strategy to facilitate the movement of goods and products throughout the omnichannel supply chain.
Define a Logistics Strategy for Omnichannel Retail Supply Chain
Logistics is one of the most crucial aspects of the supply chain in omnichannel retail. Efficient distribution logistics planning can help you simplify several aspects of omnichannel retail management. Just as with the supply chain, you can begin planning logistics by reverse engineering the fulfilment process of each sales channel.
Locations to consider for logistics planning in the omnichannel retail supply chain:
- Customer Location
- Warehouse / Fulfilment Centre Location
- Manufacturing Location
- Supplier Location
You will need to plan the logistics for the movement of goods between all these locations. Some of these locations can serve multiple supply chains. Based on these centralised resources, you need to figure out the order fulfilment process for each sales channel and customer location.
You can consider the following order fulfilment strategies for your omni channel supply chain:
- In-House Logistics
- 3PL Services
- Hybrid Logistics
You have to define a transport strategy at each stage of the omnichannel retail supply chain. These include:
- Supplier to Manufacturer
- Manufacturer to Warehouse
- Warehouse to Fulfilment Centre
- Fulfilment Centre to Point of Consumption
- Fulfilment Centre to Micro Fulfilment Centre
- Fulfilment Centre to Customer Location
You can use different logistics methods for each stage of the supply chain. You can also adopt different strategies for different sales channels.
Identify Touchpoints for Omnichannel Retail Marketing Strategy
An omnichannel customer experience can involve several touchpoints before and after the purchase. You first need to identify the various touch points involved in a customer’s journey. You will need to consider both online and offline touchpoints for omnichannel retail marketing.
Online Touchpoints for Omnichannel Retail Marketing:
- Social Media Content
- Ecommerce Website
- Online Marketplaces
- Website Blogs
- Influencer Content
- Digital PR Content
- Online Events
- Mobile App
- Search Ads
- Social Media Ads
- Marketplace Ads
- Affiliate Website Content
- Online Customer Support
- Customer Community Forums
- Product Reviews
Offline Touchpoints for Omnichannel Retail Marketing:
- Retail Store
- Product Packaging
- Print Ads
- Out of Home Ads
- Television Ads
- Branded/Sponsored Events
- Media Product Placement
- Radio Ads
- Customer Support
Once you have identified the touchpoints, you need to devise an omnichannel retail marketing strategy for each channel. Once again, you can bifurcate these into centralised and specialised marketing mediums.
Once you have classified the touchpoints, you need to consider two crucial factors:
- How you can use the touchpoints at different stages of the customer’s journey
- How touchpoints connect with each other during the customer’s journey
Based on this, you can design the overall omnichannel retail marketing strategy as well as the strategy for each marketing medium.
Design a Seamless Omnichannel Customer Experience
The purpose of omnichannel retail is to create a singular brand experience across all touchpoints. Hence, you need to optimise the brand experience at each touchpoint. To design an omnichannel customer experience, you need to consider the following factors:
- Common customer experiences across all channels
- Unique customer experiences specific to certain channels
This classification will help you identify the resources you need to employ for designing omnichannel experiences for different channels. For instance, fast delivery is a customer experience unique to online sales channels. However, attractive messaging can be a common brand experience across all channels.
The best way to design omni channel customer experience is to understand the complex journey before, during, and after the purchase. A key aspect of the omnichannel experience is that all touchpoints are integrated with one another and interact with the customers in different ways. Yet, they create a unified brand experience.
You need to understand the importance of each touchpoint independently and in the omnichannel ecosystem. Then you need to define how you can create a consistent brand experience during different stages.
You need to ensure consistency in the following aspects to create a seamless omnichannel customer experience:
- Brand Presentation
- Brand Values
- Branded Messaging
- Content & Copywriting
- Branded Visuals
- Customer Communication
- Conflict Resolution
- Product Quality
- Product Packaging
- Purchase Process
- After-Sales Services
Consistency in the brand experience regardless of the purchase channel is critical for omni channel retailing. It is the primary factor that separates multichannel and omnichannel retailers.
Omnichannel Retail Trends & Best Practices
Here are a few important omnichannel retail trends and best practices to help you optimise your strategy.
Use Data Analytics to Improve Omnichannel Strategy
According to IDC’s 2023 Retail Predictions, 20% of top global retailers will use predictive data analysis by 2025. Using insights from data analysis can help you improve several aspects of omnichannel retail management.
But first, you need to establish an infrastructure to collect and analyse data regularly. You also need to create a culture of data-driven decision-making throughout omnichannel retail management. You can gather data from:
- Marketing Channels
- Web Analytics
- Social Media Analytics
- Sales Channels
- Customer Surveys
- Supply Chain Software
- Logistics Software
- Customer Support Channels
- Market Research
The insights derived from this data can help you with:
- Demand Forecasting
- Optimising Supply Chain
- Cost Reduction
- Target Market Analysis
- Customer Experience Analysis
- Price Optimisation
- Trends Prediction
- Optimising Marketing Strategy
- Customer Retention
- Improving Brand Engagement
You can also use data to understand the impact of different aspects of omnichannel retail management on one another.
Automate Omnichannel Retail Supply Chain
Automation can help you overcome some of the biggest challenges of an omnichannel strategy. First, you need to integrate various software that you use for each stage of the omnichannel retail supply chain. These include:
- Point of Sales System
- Order Management System
- Supplier Management System
- Inventory Management System
- Production Management System
- Logistics Management System
- Order Fulfilment System
- Marketing Management System
Then you can use automation to create a streamlined workflow between these systems. For instance, your inventory management system can balance available to promise inventory levels based on inputs from a different point of sales systems.
Automation can help you drastically reduce the workload and streamline omnichannel retail management.
Create Engaging In-Store Experiences
According to Shopify’s 2023 Commerce Trends Report, 82% of retailers believe that physical stores will continue to be an important touchpoint for the purchase journey. But for an omnichannel experience, you need to ensure that your offline stores are not removed from the online brand experience.
You can introduce a variety of features in your store to increase engagement with online channels. For example, you can provide interactive screens for customers to browse your eCommerce website for product information. You can also provide QR codes that lead customers to review sites or your social media channels.
In-store engagement is one of the most popular omnichannel retail trends. 40% of brands have invested in technology to improve in-store shopping experiences. Such tactics will help you increase the number and variety of touchpoints in the customer’s omnichannel experience. Despite the popularity of online shopping, in-store experiences are the present and future of omnichannel retailing.
Offer Different Fulfilment Options
Omnichannel retailers can facilitate their customers with a variety of fulfilment options for delivery as well as returns. While traditional ways of order fulfilment such as shipping and in-store shopping still prevail. Omnichannel retailers can also offer fulfilment options such as:
- Buy Online, Pick-up In-store
- Buy In-store, Ship to Home
- Buy Online, Return In-store
- Buy In-store, Ship Return
Some of these options are crucial if you are offering customisable products. You can also use these fulfilment options to increase the number of touchpoints between the customers and your brand. For instance, you can also use your retail stores as self-fulfilment centres for your online customers.
Furthermore, these options can make fulfilment faster and more convenient for the customers. And you can’t overstate the value of rapid delivery in omnichannel retailing. But, you need efficient integration of all aspects of the omnichannel strategy to successfully facilitate such fulfilment options.
Build a Unique Brand Community
In 2023, consumers look at several aspects of a brand when making purchasing decisions. 71% of customers prefer to shop from brands with similar values as themselves. Building a community around your brand values can be crucial for omnichannel retailing.
It can help you increase customer loyalty, get more referrals, improve brand awareness, increase after-sales engagement, encourage repeat purchases, and more. As an omnichannel retailer, you need to build your community online as well as offline.
You can use social media channels, offline forums, branded events, website blogs, and several other mediums to build and foster your brand’s community. You need to encourage the interaction of customers with your brand as well as with one another. Inter-customer interactions can strengthen brand loyalty and can also help expand your community.
Omnichannel retailing will keep evolving as customers adapt to new ways of shopping and interacting with brands. Although it is a challenging endeavour, omnichannel retail management allows you to tap into new markets and consumer segments.
If you need help with logistics solutions for your omnichannel retail business, you should consider PACK & SEND. We can provide end-to-end logistics solutions to facilitate the movement of goods and products throughout your omnichannel supply chain.
Frequently Asked Questions (FAQs)
How to make the most of omnichannel retailing?
The biggest advantage of omnichannel retailing is that it allows you to sell your products and promote your brand across several channels. To make the most of omnichannel retailing, you need to expand your network of sales and marketing channels. This requires you to include all the customer touchpoints in your omnichannel retail network.
How to implement omnichannel in retail?
You can implement omnichannel in retail by using various different channels for sales and marketing. But, the most important aspect of omnichannel retail is to create a unified brand experience across all channels.
What is the difference between omnichannel and multichannel retailing?
The key difference between omnichannel and multichannel retailing is that omnichannel retailing uses several channels to create a singular brand experience. All the sales, marketing, and customer service channels in omnichannel retailing are integrated. While in multichannel retailing, all channels act independently from each other.
What is omnichannel retailing?
Omnichannel retailing is when a retail brand uses several different sales channels to sell its products. The retailer sells its products simultaneously through retail outlets, pop-up stores, eCommerce websites, online marketplaces, etc. But, all these channels are integrated with one another so the customers only experience one brand instead of individual channels.
What is an omnichannel retail strategy?
An omnichannel retail strategy involves integrating different sales, marketing, and customer service channels with one another to create a unified brand experience for the customers. It also involves streamlining the omnichannel supply chain process to facilitate order fulfilment to customers of all channels.