The ecommerce environment and the needs and behavior of today’s customer change very rapidly. Business strategies focused on single or multichannel sales are no longer able to keep up with present and future trends of retail that belong to omnichannel – this shift represents the synergy and integration of all available sales and communication channels in order to provide the customer with the best shopping experience.
New customer needs
A Google survey shows that 85% of online customers begin the shopping process on a device other than the one on which they finalize it. They buy online with smartphones, tablets, desktops, laptops, and recently even technologies like virtual or augmented reality. Customers also order goods online and complete their purchase directly at the store. The online and offline environments blend and complement each other, and this is the essence of the omnichannel.
Today’s customers are beginning to take advantage of a wider range of communication and sales channels. Business owners observe the so-called ROPO effect (research online – purchase offline), where the customer chooses a suitable product through online channels, but makes the purchase in a physical store. Conversely, shoppers may also spot a product at a physical store and then make the purchase online (eg. electronics, furniture, household goods).
Basic principles of an omnichannel strategy
Omnichannel is a strategy that seeks to make the most of the existence of multiple sales or communication channels in order to improve the customer experience. It blurs the boundaries between the various sales and marketing channels and creates a unified integrated whole. Frost & Sullivan define omnichannel as a “seamless and effortless, high-quality customer experiences that occur within and between contact channels”.
Omnichannel uses segmented customer data for targeted and personalized marketing communication and better customer service. Thanks to this approach, the seller can recognize specific customers, which helps to personalize each interaction. This is possible thanks to data acquisition, regardless of whether the buyer used an online store or shopped at a brick-and-mortar store. The biggest advantage of omnichannel is consistency. The customer has the same information and services at their disposal, no matter which sales channel they choose.
The key to a successful omnichannel is data integration. Inventory management systems, customer databases, loyalty programs and other solutions must be integrated so that shopping assistants have access to all data in real-time and can provide the best service.
Benefits of the omnichannel strategy
- increase customer loyalty
- customer identification regardless of used sales channel
- streamlining and personalizing communication with customers
- increase sales and profits
- cost reduction
- the ability to respond more flexibly to the needs of customers
Multichannel vs. omnichannel
The omnichannel retail expression has been used for many years, but many people still use it as a synonym for multichannel, which can create misunderstanding. Although both the omnichannel and multichannel strategies make use of many sales channels, the main difference results from how closely these channels are integrated with each other and how as a whole they influence the user’s shopping experience.
Visually, with omnichannel-based businesses the customer is at the center of the strategy (in the middle of a chain of different channels). In the multichannel, on the other hand, it is siloed to each different channel.
In practice, this means a multichannel company has limited data about the behavior of its customers across many channels because they can’t fully track it. On the other hand, the advantage of an omnichannel company is that they gather meaningful data about customer’s shopping habits.
The pandemic accelerated shift to omnichannel
COVID-19 has brought huge changes in terms of customer’s shopping habits. For several weeks many retailers could trade only in the online channel. Online shopping was booming and even started to be adopted by people who had never done it before. At the same time, many retail businesses realized that multichannel sales alone would not guarantee their companies success in the long run. This pandemic has demonstrated the benefits of investing in technological innovation, primarily by implementing an omnichannel strategy.
During the pandemic, omnichannel companies gained an advantage over other companies through knowledge of the current state of stocks at any time in all stores and distribution warehouses. Although it may seem simple, having up to date information and data requires close integration of many IT systems in a large retail company. This enabled them to offer their customers instant contactless pickup whether in the form of click and collect or drive-thru.
The omnichannel strategy is a great opportunity for many retail companies. The integration of all available sales and communication channels provides the customer with the best shopping experience. Omnichannel retailing is superior over multichannel because it provides retailers with real-time and consistent data. As a result, COVID-19 has accelerated the shift of many retailers to omnichannel.