The past year and a half has brought unprecedented change to commerce, both retail and wholesale. Amid increased urgency to advance their digital maturity, organizations are facing new economics of business survival that force them to accelerate their embrace of omnichannel commerce. Much of the omnichannel emphasis is focused on customers, and rightfully so: the top reason customers switch brands is because they feel unappreciated. However, an omnichannel commerce offering adds value to business as well as the customer.
A brand stands to lose big if customer churn is high, and aligning customer-centric business imperatives with the right technology enablers can drive growth. But while some companies still question the expense and need of omnichannel commerce, it’s become clear that businesses that approach it with the right strategy, priorities, focus, and investment can generate untapped business value across all retail channels.
Differences between Omnichannel Commerce and Multichannel Commerce
Omnichannel commerce represents a unified shopping experience for customers across multiple sales touchpoints. It also accounts for changes in consumer buying behavior and expects their behavior to evolve further in the future. Omnichannel commerce is often confused with multi-channel commerce, but there are some obvious differences.
Figure: Differences between single channel, multi-channel, and omnichannel commerce
Single-channel commerce often represents selling products or services through a single sales channel (e.g. the brick-and-mortar model, ecommerce, online marketplace, etc.). Multichannel commerce involves independent sales channels from which customers can purchase products, but each channel is siloed. Every channel may have positive sales outcomes, but the company must manage inventory, sales, marketing strategy, and metrics separately for each platform, driving up costs and confusing customers.
In contrast, omnichannel commerce is the integration of all channels with a unified approach to sales. The focus is on providing a seamless customer experience across any platform — device or in-store — turning any customer touchpoint and interaction into a potential sale. Omnichannel integrates all backend sales, inventory, and analytics across channels and connects to all customer engagements. This allows companies to offer customers exactly what they need, at the moment they need it, wherever they are, and on any device.
Omnichannel Commerce Addresses the Interests of Consumers and Companies Alike
Consumer habits are changing. Many customers are unknowingly differentiating brands that offer a unified experience versus a siloed journey. Companies will need to offer omnichannel commerce or risk falling behind the competition. In addition, while some companies may not be completely sold on the idea, an omnichannel offering resolves most of the pressing retail issues for consumers and companies alike.
The pandemic amplified the importance of convenience; now consumers expect it in every purchase journey. Companies must meet customers where they are, without forcing a particular channel. For example, a Forrester study found that of the 39% of US adults that used click-and-collect, 51% wanted to avoid delivery costs, 31% wanted to collect the purchase the same day, and 31% wanted to ensure the items were in stock during store visits.
Returns and instant refunds are also important: 73% of online shoppers say the returns experience affects their likelihood to buy again from a retailer. Effective inventory management can help bridge the online and offline channels, and it’s key to provide customer convenience and cost savings during order fulfilment. Omnichannel commerce offers seamless customer experiences with multiple delivery and return options, thus removing friction points.
With brick-and-mortar retailers under stress, an omnichannel strategy has become the mantra for business continuity and survival. Many companies’ omnichannel strategies have seen revenue increases of 80% and profitability improvements of 72%, while 52% reported increased Average Order Values (AOVs). An omnichannel commerce strategy also offers companies a way to generate incremental revenues and reduce operating expenses. In March 2020, Target reported nearly one-quarter of its drive-up sales as incremental.
With an omnichannel approach, companies can have a holistic customer data collection strategy – better data and metrics – that is more contextual. Better data means better informed decisions to improve customer engagement and reduced operating expenses. In fact, offering a high-quality customer experience can lower the cost of serving customers by up to 33%.
There can be long-term benefits as well. Companies with well-defined omnichannel strategies are enjoying 91% higher YOY increase in average customer retention rates, compared to companies without omnichannel programs in place.
Successful Customer Experience Scenarios
A successful omnichannel offering builds on unified data and processes across all channels, systems, and devices. Investing in the right technologies and platforms enablers can provide scalability, seamless integrations, and redefined business operations that drive the best omnichannel transformation.
For example, the beauty retailer Sephora offers an omnichannel experience that connects its customers’ online purchase to their in-store visits. By integrating online-cart features with tablets in its in-store environment, Sephora can help customers narrow-down choices and track a product to purchase. (Read the full case study.)
Similarly, U.K. fashion retailer Oasis has its sales reps use iPads to provide on-demand, accurate, and up-to-date information about all products. If a product is out of stock in the store, an online order is instantly placed and shipped to the customer’s home.
In another example, a leading North-American electronics retailer wanted to increase consumer reach and brand engagement by adding omnichannel ecommerce tools. Adding an auto-scaling commerce platform accommodated seasonal loads, offered multiple payment options, and empowered consumers to add home support and consulting right from the cart. (Read the full case study.)
With the ever-changing commerce landscape, an omnichannel strategy is necessary to meet changing customer needs. In fact, 81% of companies now view the customer experience as a competitive differentiator. Omnichannel commerce provides an advantage to customers and businesses because it can address many experience scenarios from a variety of industries. Leveraging user-journey data from one channel to another enables retailers to build a more personalized customer experience and, from the customer’s perspective, a positive buying journey. Personalization drives loyalty. And since loyal customers are five times more likely to buy again, the impact on future sales can be significant.