True omnichannel strategy delivers where multi-channel doesn’t

by | Nov 21, 2017

There are more sales channel possibilities in retail than ever before. Every day it seems there’s a new way for retailers to sell and for consumers to buy.

More channels, more methods of delivery to consumers means more potential sales opportunities, right? Depending on the approach taken with sales channels and delivery options, it could also mean the potential for more problems.

When systems aren’t properly calibrated to work together and communicate, it increases chances for inventory issues, stockouts, backorders, late delivery, refunds and, most importantly, customer dissatisfaction, reduced loyalty and the lower profits that follow.

Getting all of your sales and delivery channels to work together isn’t easy. The reality is, though, you need to be prepared for customers who want to buy in a variety of ways and want options for how to procure it. Modern consumer shopping trends demand retail presence on multiple channels and more convenient, faster ways to receive their purchases. Retailers that work at perfecting a true omnichannel strategy will make big wins with consumers.

Scourge of data silos

Though it should go without saying by now that siloes are bad, it never hurts to be reminded the reasons why. On a farm, silos are great, they serve a purpose keeping stuff stored and separated; they have absolutely no business being in retail. Keeping channels, data or other pertinent resourses obscured and separate from other channels, data or resources is disastrous. It’s impossible to get a complete picture where silos exist, and therefore impossible to make the most well-informed business decisions.

There are probably more silos in your business than you realize. With every application that doesn’t connect to other systems, there is potential for silos. According to some stats, small businesses use an average of 14.3 different applications within a typical organization. That number jumps to 500 for enterprise level companies.

Depending on the functions and data contained in those apps and systems, that’s huge potential for silos and blind spots, making true data-driven decisions essentially unattainable.

Multi-channel success and failures

Consumers have more and more options for shopping these days, and more (strategically chosen) channels increases retailers’ chances of being found by people who are ready to buy. Multi-channel retailing might include a combination of stores, an e-commerce site, selling on social, marketplaces, mobile apps and other channels.

At any given time, the consumer is going to interact with you on whatever channel they prefer. Most consumers will interact with you on multiple channels, even on a single purchase. They might see it in the store, then research it later online, check out reviews and social media before they circle back around to your e-commerce site. If you’re missing channels, you could be missing sales potentials. On the flip side of the coin, if you’re on the right channels, but the consumer experience and brand presence aren’t consistent, they may lose some of that trust customers need to feel confident making a purchase.

Multi-channel strategy can lead to improved customer experiences and somewhat better decisions, but it has huge pitfalls. Delivering on multi-channel promises requires cross-collaboration. With multi-channel, there are still siloed channels; if the channels are siloed and not communicating the right data with each other, there can be inventory issues, delivery problems and upset customers.

The information and insights gleaned from data and transactions across multiple channels are valuable, but it’s not the omnichannel approach required for the current retail landscape. Data doesn’t lead to big insights, efficiencies and opportunities if you can’t bring it all together.

Omnichannel for the win

“Omni” means “all” or “universal.” Translated literally, “omnichannel” means “all the channels.” Omnichannel retail strategy is essentially being present wherever your customers are, however they want shop, whenever they want to make a purchase from you. It’s also however they want to receive it and having the supply chain alignment to deliver on expectations, whether they pick it up from a store or have it shipped to where they want it. Multichannel becomes omnichannel when all the channels cooperate to create a seamless approach and deliver a consistent experience.

Omnichannel availability that connects consumers across multiple touch points both online and off is what customers have come to expect from retailers. Consumer shopping preferences vary widely from mobile devices to computers, brick-and-mortar retail stores to e-commerce sites, even old-fashioned catalog shopping. A well-executed, true omnichannel strategy reaches more customers, boosts sales, provides the most comprehensive data insights and enables better decisions to reach even more customers for sales.

Omnichannel isn’t just where to sell, but how to get the product into customers’ hands. Throughout the buying decisions, the consumer is considering how they want to get the product home. If they’re already in the store, they’re likely to just pick it off the shelf, unless it’s a larger item that need to have a coordinated delivery via truck. The buy online, pickup in-store (BOPIS) option is gaining in popularity. When they want the order delivered, more consumers seek varied shipping options – anywhere from same-day to 2-day to just plain free.

Local delivery options are sprouting up, too – Walmart even recently proposed delivering groceries directly to your refrigerator, in your house, while you’re not home. Amazon seems to be pursuing a similar inside-your-home delivery service. Though these are extreme examples, missing the services and channels customers expect results in opportunities you don’t even know you lost – they just go find another retailer that can give them what they want, when, where and how they want it.

If the item is to be shipped to the consumer, a truly omnichannel approach can save money, speed up delivery and better satisfy customers. With inventory visibility across all channels, you can ship the package from the closest distribution center or ship from a brick-and-mortar store. The savings on shipping costs are the obvious benefit, but the side effect of fast delivery and customer satisfaction is increased potential for future purchases and higher customer lifetime value.

Retailers that master a unified omnichannel retail approach, with all channels successfully working together to deliver on consumer expectations, have the greatest potential for success.

True omnichannel strategy is rare

True omnichannel is clearly the preferred approach for retail over multi-channel. However, retailers that have reached a true omnichannel strategy are in the minority. Even though we’ve been moving through this new retail landscape for years, most retailers continue to resist the changes needed to truly satisfy the expectations of modern consumers. That means there’s plenty of opportunity to make gains in the marketplace by striving for a truly omnichannel strategy.

Forgetting or ignoring the transparency and availability that the internet provides is a fatal mistake for retailers to make. Consumers can basically pick a priority for their shopping decision (low price, high quality, immediate availability, speed of delivery, etc.) and use all the tools available at their literal fingertips to find exactly what they want. They could be in the aisle of your store, standing in front of a product they want, flip out their phone – and decide to make the purchase elsewhere.

Importantly, an omnichannel approach isn’t just the channels and the systems working together, it’s the people, too. As previously noted, it takes a cultural transformation within an organization to truly embrace omnichannel strategy. Organizational silos that block different departments from understanding priorities and goals of their colleagues also block departments from working together towards those goals. Employees are all on the same team, ensuring information flows freely between all departments in an organization, from the front office through the backend, from the CEO down to the most recent hire, is essential for true omnichannel to work.

Consumers have many varied demands, and an omnichannel approach can help retailers better meet them. They want flexibility, accuracy, convenience, speed, all at a good price. It can be done, but communication and collaboration are essential to breaking down the silos that stand in the way of omnichannel success.

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Jim Frome

Jim Frome

Executive Vice President & Chief Operating Officer at SPS Commerce
As Chief Operating Officer at SPS Commerce, Jim Frome oversees global strategy, sales, marketing and operations. Since joining SPS in 2000, he has secured and expanded the company's leadership position in cloud-based supply chain management. With more than 24 years of experience in technology marketing and management, he has been named a "Pro to Know" by Supply & Demand Chain, written numerous white papers and is a frequent speaker at customer and industry events. Prior to Information Advantage, Mr. Frome held several marketing and product development positions in which he focused on building business partnerships and resellers for IBM's AS400 division.
Jim Frome

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