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Omnichannel Retailing – the Survivors’ Choice

22 minute read

Omnichannel versus multichannel

There are loads of definitions for omnichannel commerce, but keeps it simple and clear:

Omnichannel selling is a modern take on sales that focuses on creating a cohesive customer experience in each point of contact between customer and retailer. Whereas, in regular commerce, single channels (such as different shops of a chain and online shop) are not integrated in a way that focuses on customer experience as a whole.

Does omnichannel retailing differ from multichannel retail and if so, how? The difference is actually fundamental.

The term multichannel is based on the Latin word multus, meaning “multiple”. This means that the products are sold through several channels; in the traditional shop as well as the online shop. These channels might not be interconnected. Multichannel selling might have been innovative 15 years ago, but these days it is a hygiene factor, crucial for survival, and about as basic as electricity and warm water in our homes.

The term omnichannel is derived from the Latin word omnis, meaning “all” or “universal”. The major difference between omnichannel and multichannel is the level of integration. It is much more than a traditional store’s online shop. It includes channels such as physical locations, e-commerce, mobile applications, and social media.

How Mary went shopping

Here to illustrate how this change translates into real life is a scene from Mary’s day. Mary will be going on a holiday tomorrow to the south coast of Spain and is packing her suitcase. She realizes that she has nothing to wear, and decides to do some quick shopping.

Five years ago, she would have jumped into her car and rushed to a shopping center. There is no need to do it now. Mary chats with the mall’s account manager/stylist online, telling them what she wants. Shortly after, the desired ensembles appear on the screen of her smart-TV, worn by an avatar that looks just like her.

Meanwhile, Mary browses the internet, and sees that some of the selected garments are cheaper in another store. She orders from the other store, and has the stuff delivered to her by a courier the same evening.

However, a new outfit catches her eye. She wants to try it on, and drives to the mall. Facial recognition system identifies her; a sales assistant greets her by her name, and shows Mary to the fitting room.

Mary likes the outfit. She checks a price comparison app, and – lo and behold – the costume is 30 dollars cheaper in another store! Mary shows the price comparison to the sales assistant, and gets the discount matched. She also wants to buy another blouse to go with it. Mary stands in front of an interactive mirror that allows her to change the colors of the blouse. Blue and pink go together perfectly!

Even though she likes the clothes, she wants to know what her stylish friend thinks. Interactive mirror sends the video of Mary wearing the costume and the pink blouse to her friend. Before long, she gets the confirmation she needed: a pair of clapping hands appears on Mary’s screen. Beautiful!

Store robot packs the costume, and Mary walks towards the exit. However, the store’s POS software has registered each and every purchase over the years, so they know about her weakness for sunglasses there. Since a new collection has just arrived, the screen displays Mary’s face with a pair of sunglasses on. Meanwhile, Mary’s receives a text message about a 30% discount on those sunglasses for her as a longtime customer.

Mary leaves the store with the costume, pink blouse and sunglasses. She spends no time on payment – the POS registers all the purchases, and adds them to her phone bill.

That is the picture Bain & Company’s partner Darrell K. Rigby painted in his 2011 HBR article “The Future of Shopping”. He was the first to introduce the omnichannel term in detail, adding that all this was only the beginning. Indeed, most of his predictions have come true.

Disney’s clever omni-experience

Multichannel marketing means a functional website, Facebook and Twitter accounts, and blog. Cohesive integration turns this entire system an omnichannel – with all the technology and channels interconnected.

Creating an omnichannel requires a strong strategy and collaboration between all the divisions of the company. Manufacturer, sales teams, and marketing experiences have to be integrated in order to create a unified system.

Aaron Agius from HubSpot describes how the entertainment industry giant Disney – who uses Erply POS systems – has developed their own omnichannel strategy and is one of the pioneers and most skillful users in their field. Firstly, Disney has a mobile-friendly website. Secondly, booking a trip to Disneyland gives you access to the online environment My Disney Experience, where you can create a personal account.

The account provides you with a fast pass that comes with a lot of advantages on the trip. For example, you can check the waiting time for your favorite attraction or use the app to find all the sights that interest you in the theme park. You can also use their MagicBand wristband as a room key at the Disney hotel, to order and pay for food, and upload the thousands of photos you took with the Disney characters at the theme park on your account. Of course, the wristband also works as a ticket in the theme park and on tours.

When it comes to shops, according to Bain & Company’s partner Darrell K. Rigby, we can no longer talk about digital commerce in its initial meaning, where people were shopping either online or in a regular shop. Commerce in general will become so saturated with technology that it all becomes one big e-commerce. Today, using omnichannel in a store would ideally mean that all the sales assistants are equipped with iPads, to be on top of inventory and give accurate information about the product at all times and complete purchases through a mobile POS. If by chance they don’t have the product that the customer wants, the sales assistant places an order immediately, also determining if it will be delivered to the store or to the customer’s address.

Communication between retailer and customer through many different channels (store, computer, mobile phone, kiosks, catalogues, direct mailing, media, et al) is what commerce is becoming. And all these channels have to be interconnected into a convenient and smooth whole.

New life to old stores

Merchants know how to display the products in a traditional shop to tempt the customer. For instance, knowing how the color of lighting in different departments affects the shopper. However, they rarely know, or even want to know, how to turn sales into omnichannel selling.

Life is changing as we speak. New technologies are becoming cheaper, faster and more flexible. E-commerce isn’t the early adapters’ hobby anymore. Those who don’t jump on the omnichannel-logic bandwagon end up bankrupt, as was the case with the book and record retail giant Borders in 2011.

It is time for every retailer to ask: If 20% of the sales come from online, how does it affect the sales of the remaining 80%? What should be done differently? Is there any point in opening a brick-and-mortar shop? If there is, then what should it be like? How should I reorganize the other existing shops?

The situation seems pretty bad for traditional retailers, but luckily it’s not hopeless. As we saw from Mary’s behavior, she is a client who wants it all at once. She wants an unlimited range of goods with thorough product descriptions, price comparison, and other people’s feedback, i.e. all the things that e-commerce provides. She also wants free home delivery and a convenient return policy, which were an issue in the early days of online shopping. Plus, all this shopping can be conveniently done sitting on a couch at home or – even better – at work.

Thank you!

You will be contacted by an Erply consultant soon.

Start managing your inventory with Erply, contact us today!