Want to Understand Omnichannel ecommerce? Someone said it beautifully “It’s easier said than done.” People tend to conceptualize multichannel and omnichannel as basically the same thing, which is given a different terminology.

In simple words, omnichannel ecommerce is more about the user experience of the customer x  as a whole while multichannel is being only product-centric. Now to achieve that seamless user experience, in omnichannel, there must be a perfect synchronous integration between all of its digital and physical channels.

Why do we need it?

A mere definition is not enough to understand its needs. Let’s try to understand it with the help of a simple example.

“Eva wants to purchase a specific product from an XYZ brand that has both digital and physical presence. Eva bought the product from its online e-commerce Store and oh! my god, and she is not at all happy with the faulty product she got. She is pissed and approached the XYZ brand’s physical store. The store manager elevated her anger to its peak by saying, “This product wasn’t purchased from our store, it’s an online purchase, so we can’t help you. Please contact the website’s customer care.”

Now, if I were in place of Eva, I would never purchase a product from that brand again. Anyways, the point is, Eva faced the trouble because the store and the online ecommerce platform’s inventory wasn’t integrated. Has there been a perfect integration between the two channels(store and the ecommerce platform), the XYZ company could have made the user experience of EVA much better by solving her issue through any of her preferred channels whether it may be an online channel or brick and mortar store.

If the example was not entirely clear then here’s what research has to say,

“Cost of not being omnichannel is about 10% in lost revenue.”

Difference between Omnichannel and Multichannel Ecommerce

Omnichannel is the next big thing in the ecommerce market. A company like Amazon is already in the implementation stage of the omnichannel ecommerce by creating physical endpoints, aka Amazon Go.

Omni means “all.” So, Omnichannel refers to all the channel unified and providing the best in the market experience to its customers.

Multi means “many.” Multichannel refers to many different channels of the brand in an attempt to sell its product to the end customer. Multichannel doesn’t focus on the end customer’s user experience. It is mainly focussed on creating multiple channels through which it can attract customers.

Characteristics	Multichannel	Omnichannel
Information Delivery	Channels	Channels with touchpoints
Integration	Non-switching between channels possible	Seamless switching among all channels and touchpoints possible
Management	Separated by channel	Across all channels and touchpoints
Goals	By channel	Across all channels and touchpoints
Interaction	Two-way	Any type
Data	Data are not shared across channels	Data are shared across all channels

Although both multichannel and omnichannel sell products across multiple physical and digital channels, the key difference is how the customer experiences the brand in both these channels.

Advantages of Omnichannel

1. Improve Sales

According to research, on average, an omnichannel shopper tends to spend 4% more during in-store shopping.

The figure extends to 10% more for their online counterpart than those customers who use only a single channel.

These are not sky-high numbers, but what makes it interesting is the fact that 17% of the returned omnichannel customers spend more in the near future(over a period of 6 months).

2. High Customer Retention

In the field of e-commerce, not only we need to focus on getting new customers, but we need the loyalty of our old customers towards our brand.

In Fact, According to a survey done by Invesp Consulting,

“44% of companies admit they have a greater focus on acquisition while 18% focus on retention while the rest claim to have equal focus.”

“76% of companies see Customer Lifetime Value as an important concept for their organization.”

When brands shift their focus from customer acquisition to customer retention, they see a more sustainable growth than others.

According to infographics on customer acquisition versus retention, courtesy of Invesp Consulting,

“Increasing customer retention rates by 5% increases in profits by 25-95%.”

Customer Experience plays a huge role in driving customer loyalty and retention.

Omnichannel ecommerce provides its customers with an excellent level of user experience throughout all of its channels, irrespective of the channel a customer prefers.

The numbers speak for itself,

“ Companies with better omnichannel experience retain on average 89% of their customers as compared to 33% for companies with weaker omnichannel engagement strategies.”

The increase in customer satisfaction results in high customer retention level.

3. Offers can be personalized easily.

Everyone’s need is different. Someone may be a bookworm, a gadget freak, needs a new mobile, seeing the furniture for their new home.

A study conducted by BloomReach reveals,

“31% of consumers would be more likely to buy products if they were tailored or based on more personalized recommendations.”

Consumers nowadays are more willing to share their personal information if they see an appropriate benefit in exchange.

According to the State of the Connected Customer Report by salesforce,

“63% of Millennial consumers and 58% of GenX consumers are willing to share data with companies in exchange for personalized offers and discounts.”

Omnichannel can make use of the customer’s data and their search profiles to ease the customer’s efforts by showing them the deals they are most likely to be interested in.

For example, Alex bought a colorful white t-shirt and stylish black jeans for himself from XYZ brand’s online ecommerce platform. Now, the brand can predict his next purchasing move and next time when he revisits the online platform or the brand’s store, they can show him the appropriate deals that he may be interested in. For example, leather belt or matching shoes with his purchased outfits.

Omnichannel can also be used to reward long-time loyal customers by offering rewards and discounts to them.

4. Importance of all channels

According to research,

        67% of retail customers start shopping on one device and finish on another.

 63% of shoppers use multiple channels when making orders over $120.

No customer nowadays stick to one source of information. Customers tend to use multiple sources of information to research different products, read reviews,  compare brands, before making a purchase.

In Omnichannel ecommerce, we can make full use of the different channels for a complete widespread presence.

5. Improved Demand Sensing and better data collection

According to a study,

overstocks cost businesses around the world, approximately $1.1 trillion each year.

Poor data collection is the one to blame for loses due to overstock or understock.

Without adequate data collection, the forecasting of Demand Sensing can’t be up to the mark. These issues are often seen in brands that do not share data between channels.

Omnichannel excels in this region by offering integrated data collection throughout all of its channels. Thus, forecasting gets more productive, and the brand benefits from it.

Taking the example of Alex, his online search profile data, and his offline purchase data can be inter shared for relevant, personalized offers for him.

This can be achieved by two ways. Either the brand can share the data internally or through a cookie pool developed by a third-party provider.

6. Improved Profits

In conventional retailing, products that are hard to sell online are sold on massive discounts due to their abundant availability through offline channels.

A survey reveals,

“web-only retailers often see profit margins as low as 0.5% to 3.5%, which is lower than in other sectors.”

However, through omnichannel retailing, sellers can sell products to anyone at full price as omnichannel provides an efficient online & offline sales framework.

For example, offering the option of Buy Online Pick In Store(BOPIS) for customers who prefer to pick up stuff from a physical store rather than delivered at their doorsteps.

According to a survey done by sourcingjournal,

“stores can expect about a 23 percent profit margin from BOPIS(Buy Online Pick In Store) vs 32 percent for in-store purchases.”

Challenges of Omnichannel

1 – Technological Barriers

As previously mentioned, going omnichannel is “easier said than done.”

A survey concludes that,

“40% of the existing companies think that they lack behind in the domain of technology from going omnichannel.”

There must be a total integration of data between all its channels to go omnichannel completely.

Although this can be solved using modern-day technological advancements, it should be noted that technical upgrades are costly. Hence, most ecommerce are hesitant to go omnichannel as they are not sure about the benefits.

Besides, in case of limited capital, rather than technical upgrades, optimizing inventory management is always the priority.

2 – Synchronization of data in the integration process

The key to Omnichannel is the integration of the following:

Sales Channel

ERP

CRM

Social Media

Market

Transition to Omni-Channel means a colossal data transformation.

Taking the same example of Alex from the advantages of omnichannel let’s assume, this time he bought a checked shirt for himself from XYZ brand’s online store. It didn’t fit him in size. He went to the brand’s offline store to have it replaced.

The offline store executives won’t be able to help him in any way because they have no data regarding Alex’s online purchases. The best they can come up with is asking Alex to get it replaced through online’s return policy.

Integrating both online and offline channels is a challenge we have to face. Because, we want synchronous, error-free integration of data between these channels without losing any piece of information.

This will help us in providing customers the best experience while shopping.

3 – Struggling with channel conflicts

No one can master the omnichannel ecommerce overnight. Apparently, the starting point of any ecommerce must be a single-channel origin whether it may be online or a brick and mortar store.

As such, by the time when there are multiple channels available, people may still prefer the oldest channel more than the others. This results in the overshadowing of other channels.

According to a survey,

“16% of marketers say their marketing technology strategies are actually aligned with their business strategies.”

This shows that a tremendous amount of companies still need to change their marketing strategies to prevent channel conflicts from happening.

Its a challenge for the ecommerce business to encourage customers to engage in different channels because, in true omnichannel ecommerce, all the channels must be integrated and treated equally.

This can be achieved by selling channel specific goodies to encourage customers to explore different channels rather than sticking to the old ones.

4 – Lack of inventory visibility

According to the Supply Chain Resilience Report 2018 by insurance company Zurich and the Business Continuity Institute,

“16% of businesses said they did not even know whether they have suffered a disruption in their supply chain.”

This means that many companies out there are sleepwalking into their potential destruction.

In Omnichannel ecommerce, there should be a central inventory between all its channels. However, this is quite difficult to achieve as in general inventory of online & offline is different from each other.

Also, while the online inventory is maintained perpetually, offline inventory is generally managed periodically. This creates complications.

For example, John wants to purchase a product from XYZ brand’s online store. He ordered a lovely t-shirt for him. At this point, the online inventory is updated instantly for the purchase made by him, because online inventory is maintained perpetually.

However, he received the wrong color for his t-shirt. He went to the local store of XYZ brand and returned it. Now, the offline store is maintained periodically. So, by the end of the month, they will notice that they have extra stock in their offline inventory.

What happens here is, the sales target of online is achieved, but in reality, it is not. The worst part of not having a perpetual inventory for offline is that we will get to know about it by the end of the month. This will affect another month’s sales target, and so on.

An easy solution to evade from such circumstances is to maintain your offline and online inventory perpetually in synchronization. with each other using an inventory management software like Orderhive.

5 – Reverse Logistics

Returns are inevitable. As much as we hate it, there is nothing much that could be done about it.

Gen Z is the most likely generation to return more than 75% of the goods they buy online. Millennials expect to return 50%.

On an average, all generations return approx 25% of what they buy online.

Considering the example of John, in most cases, he will be refused by the offline store as he has purchased his product from the online store because companies tend to distinguish these two inventories differently.

This is because of the fact that they are maintained differently and without synchronization with each other.

In truly omnichannel experience, a customer will expect to be able to return products they have purchased through any of their preferred channels`. The feasibility to do so will generate loyalty amongst customers.

For such experience, maintaining one central inventory for all its channels solves the problem.

With over 20+ online integrations, Orderhive is a life savior for all ecommerce businesses.

Reason For Failures

1. Channels Specific Goals

Omnichannel failure is also due to different channels not working together towards one set goal.

Every ecommerce business has different management teams for different channels working independently from each other. There is no cross coordination amongst them. Each unit is working individually to achieve their specific target.

For example, management teams responsible for the online platform, look into the matters of online ecommerce platform only while management teams of brick and mortar store has no idea about the performance of the online channel.

To succeed in omnichannel, companies need a dedicated team to set cross channel goals and try to achieve them.

2. Lack of Investment

Ecommerce is not transforming itself into omnichannel because of the lack of investment. Small companies lack investment, whereas big giants can’t foresee the benefits of going omnichannel.

A perfect example of problems due to lack of investment is a case study on Macy which states that,

“Macy’s focused too much on sales and customer services without noticing the Inventory Management.”

“The inventory degradation occurs at a rate of about 2–3% a month, which could equate to 24 percent by the end of the year.”

“In 2008, Macy’s had applied RFID (radio frequency identification) separately on their inventories. As a result, Macy’s Inventory Visibility increased 4 times.”

For most ecommerce business, going omnichannel is a risk that they don’t want to take at the moment. People tend to follow fast-paced, sure shot techniques with easy returns. For example, investing in another brick and mortar store, maintaining a good inventory, etc.

3. Lack of Human Resource

One of the prime reasons to fail in omnichannel business is due to a lack of human resources.

Employees are unpredictable. We can most certainly make a bad hire who is not fully engaged towards their jobs.

In fact, according to Gallup, U.S.Daily Survey,

“32% of employees are engaged in their jobs, while 50% of employees are not engaged.”

Quite Interestingly.

“30% of time employees spend time in attending the customer and spends the rest on inventory management and operational tasks.”

To be successful in omnichannel retailing, we need to create a new team of professionals and hire new dedicated employees having the specific skill set and desired experience.

Ideal candidates for such team will be someone who can think outside the box, have a broader perception and who can visualize clearly about the future goals that will benefit the company in the long run. This is particularly helpful in managing different channel management, foreseeing future goals for the company rather than individual channel goals, creating cross-channel goals to work together.

4. Poor Mobile Experience

According to research,

Business Insider reported that American adults spend 59 percent of their Internet time on mobile devices, but only 15 percent of ecommerce sales are from those devices.

The problem is that consumers do not feel engaged towards ecommerce mobile app. Problems including lags, difficultly navigating, or the whole UI is fouled, generating a bad experience for the customers. Very few retail offers an excellent mobile experience.

5. Inconsistency at Customer Touchpoints

How would we feel when we have to narrate our same problem to a bunch of different people? Irritated right?

The customer feels the same if they have to do the same thing again and again at different touchpoints. For example, explaining a problem at the online channel and then explaining the same thing again at a brick and mortar store.

All the touchpoints should be integrated well enough for splendid customer experience.

Final Verdict

Omnichannel is the next big thing in the retail business. Companies like Apple, Argos, Harrods have already implemented omnichannel. Technology has advanced, and now we have the means and resources to go omnichannel. The only question that arises is, “Are you ready?”

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