Why Omnichannel Commerce is The Future of Business  - two women talking at a checkout counter

Why omnichannel commerce is the future of business

Thursday, December 02, 2021

You may not even realize it, but your latest shopping experience was probably done through omnichannel retailing. For example, you may have purchased your running shoes online with your cell phone using a coupon that you found on social media. The next morning, you picked your shoes up from the retailer's store two blocks away from where you live just in time for that 10k run you’ve been training for. 

This is a simple example of omnichannel commerce. But let’s dive deeper into what exactly omnichannel commerce is.

What is omnichannel commerce?

Simply put, omnichannel commerce is a multichannel approach to retail sales that combines all of your retail platforms with multiple access points which equates to a seamless customer experience.

More specifically, an omnichannel retail experience focuses on your customer by combining all of your retail channels such as brick and mortar stores, online stores, and social media. Your customer can personally visit your physical store or access your product online, and even if they switch between social channels, their shopping experience remains seamless.

Customer data is captured that helps with future marketing of your products. This is because upon each purchase, your omnichannel customer unknowingly provides information about their purchases, such as what they buy, when they buy, and at what frequency. This enables a retailer to focus their marketing strategies where it is most effective. Here are some examples of omnichannel marketing:

  • A customer receives an SMS message about a promotion that is offered in the same store they’re shopping.
  • A promotional email alerts recipients to check their physical mailbox for coupons.
  • A shopper is retargeted on Facebook with the product they removed from their online shopping cart.

Now that we’ve looked at what omnichannel commerce is, let’s look at the difference between single-channel, omnichannel, and multichannel.

What is the difference between single-channel, omnichannel, and multichannel?

Here are some comparisons between single-channel, omnichannel, and multichannel retail marketing strategies.

Single-channel

  • When marketers use single-channel marketing strategies, they tend to focus your business on a single means of reaching your customers. 
  • Single-channel commerce is basically just like it sounds – retailing through one single channel. Single-channel commerce is the traditional form of retailing with one location, one way to purchase, etc. A retailer might have a brick and mortar retail space, or they might have an online shop. They may sell their products or services through another ecommerce outlet such as Amazon or eBay or only rely on catalog sales. Nevertheless, it is only one channel – a single channel.
  • Advantages to single-channel retailing is the simplicity and the minimal expense in marketing and overhead. However, customers seeking additional channels make single-channel commerce a risky method because of the missed sales opportunities.

Multichannel

  • The brand is at the center of your marketing strategy.
  • Primarily static communication, with messages that are relatively the same, sent across several channels.
  • Channels don’t update and personalize to suit your customers’ needs.
  • Channels operate independently.
  • Multichannel retailers combine and blend different distribution channels in an effort to offer more options for the consumer. This type of marketing focuses on where and how the customer buys, and targets their marketing efforts in that area.  
  • Many times, the different distribution channels are managed separately, thereby creating marketing silos that do not cross over segments. This can lead to confusion and frustration for the customer since different channels could offer different views, or even pricing, of the same product. For retailers, consistency can be difficult because the different touchpoints offer different experiences.
       

Omnichannel

  • The customer is at the center of your marketing strategy.
  • The message changes and adapts to how the customer has interacted with your brand.
  • The customer’s behavior prompts updates to each channel.
  • Channels work together.
  • Omnichannel retailing places the focus on the customer. It allows the customers’ preferences and buying history to assist the merchant in establishing leads and incremental sales. Data collection is done at a centralized point, keeping the customer's view consistent and current.
  • Omnichannel commerce allows access in several ways and via different platforms. You can use a mobile device such as a phone or tablet, use your computer or laptop, or have a face-to-face shopping experience inside a brick and mortar store. You can receive information and marketing through social media platforms, texts, emails, or through notifications or messaging from their mobile app.   
     

The key difference between multichannel and omnichannel commerce is that although both types of retail commerce use multiple platforms and channels to market and sell their products, omnichannel connects all of these together.

Why is omnichannel valuable for retailers?

The ultimate reason that the omnichannel experience is valuable to consumers is that it is easy, efficient, and consistent. For the retail industry, it offers a better, more profitable way of gathering data, therefore creating customer loyalty and increased sales.

What are the benefits of omnichannel commerce?

There are many benefits in creating an omnichannel experience for your customer. As retailers, many of these are mutual benefits, which is what retailers are looking for. Let’s look at some of the benefits.

A good customer experience will create a return customer

A study of 46,000 shoppers that was conducted in June 2015 shows that 73% chose multiple shopping channels. Since online shopping during the COVID-19 pandemic has increased, the percentages for the year 2021 are substantially higher. In fact, online retail sales increased 32.4% year over year in 2020 and were up 39% in Q1 2021. Ecommerce was growing fast before COVID-19 hit, but the pandemic pushed even more U.S. consumers online, contributing an additional $105 billion in U.S. online revenue in 2020 and accelerating ecommerce by two years.  

Omnichannel retailing gives assurance to the customer that wherever and however they purchase, they will receive the same product, deals, and benefits. They can shop offline in the storefront and still be able to access the Facebook or email coupon without printing and clipping. Your customer now has several touchpoints to choose from, and they expect a seamless integration from one to another.  

Not only does the customer want to be comfortable switching between devices, they also expect integration, even if using a chatbot, a push notification from their mobile app, or speaking with your staff at the checkout counter. It is all about a seamless experience with ease and comfort for the customer, so making that a priority will keep them coming back.  

Offers consumers fast and efficient payment checkouts

The way you as a small business owner handle checkouts is very important to a retail consumer. In an omnichannel experience, most customers expect to have payment options that are quick and efficient, regardless if it’s in-store or online; and with omnichannel checkout, there are multiple options, including card readers, PayPal, and Apple Pay.  

Allows you to personalize your customer offerings

Another thing omnichannel offers is suggestions for products similar to what your customers frequently purchase. For example, let’s say a customer buys sneakers on average every 6 months. By sending a discount offer via text or a push notification just prior to the next 6-month period, your customer will both appreciate the savings and be reminded that it’s time to buy another pair of shoes.  

Customer loyalty is increased

Customers who enjoy their omnichannel experience are usually more loyal than customers shopping via single or multichannels. Not only are they more likely to return, but they are more apt to spend each time they shop. As a result, you increase brand loyalty, which in turn positions you for increased sales.   

Omnichannel commerce allows for seamless data collection  

With omnichannel commerce, retailers are able to track customers seamlessly over all channels and platforms. This omnichannel approach gives their customers a more 
 

What are the omnichannel commerce foundations?

In order for omnichannel retailing to be successful, you have to have a foundation in place that is both strong and well managed. Your sales channels, your marketing and advertising segment, as well as your operations and order fulfillment areas have to work hand-in-hand so that the consumer can’t detect that there are actually separate departments working together rather than one seamless company. 

Sales Channels

Simply defined, your sales channels are the ways you sell your product. The key to utilizing omnichannel retailing is to find a balance in using these different channels. Some retailers were unable to survive the COVID-19 pandemic because of the emphasis they put solely into their brick and mortar stores. That is not to say that one channel won't sell more or be more profitable than another, but by balancing your channels, you will have the best chance of being successful. 

Let’s look at some different types of sales channels. 

1. Online storefronts/direct to consumer

This includes websites with direct to consumer sales.  

2.  Ecommerce marketplaces

This includes sales on sites such as eBay or Etsy where products come from multiple sellers.

3.  Social media platforms 

This includes selling on platforms such as Instagram or Facebook.

4.  Mobile channels

Mobile channels include mobile apps, mobile browsers, and mobile optimized websites.

5.  Brick and mortar stores

These are the physical stores where consumers go to purchase your product. This could be one store, a number of stores, or pop-up locations.

6.  Business-to-business/wholesale sales

Some retailers sell both business-to-business (B2B) and directly to the consumer. An example is an office supply company. They may sell to a business, to an individual consumer, or may offer wholesale sales to a distributor.

Marketing Channels

So maybe you have several brick and mortar stores, a strong website, and an app, but you still need a way for consumers to find you. That is where marketing comes in. In a perfect world, the right marketing message gets to the right customer at the right time.  In order to achieve your marketing, and ultimately your sales goals, your omnichannel retail strategy should include several market channels that when combined will offer the customer the ultimate shopping experience.

Let’s look at some marketing options that you can use for your small business.   

1. Google Shopping Ads

These ads appear when you search for a product on Google. They usually include a high quality image as well as the price on the listing.

2. Marketplace Advertising

This refers to ads developed that are placed on marketplaces such as Amazon, Walmart, Facebook, etc.

3. Retargeting Ads

These are ads targeted to consumers based on prior internet behavior. Customer loyalty programs sometimes offer coupons on products that a consumer frequently purchases.

4. Social Media Advertising

Social media ads are found on Facebook, Pinterest, Twitter, or other social media platforms.  

5. Email/SMS Ads

Email and SMS ads are sent via email or text.

Operations

Operations includes all jobs that are performed in your back office. This includes all functions from product (or production if you also manufacture), purchasing, and inventory management. Logistics and fulfillment information is collected and processed through operations. The importance of the operation segment cannot be overlooked. If inventory is not properly managed, and data supplied on a real-time basis, your success in an omnichannel approach to retail will be limited. In order for your omnichannel shopping experience for your customer to be successful, you must have a current, centralized inventory visibility to keep your customers happy and your supply chain running smoothly.

Fulfillment

Order fulfillment and product shipping are the final part of the omnichannel equation. Retailers have a number of shipping software options which allow them to get the best negotiated rates, visibility to shipping status, and reporting that provides information on delays, inventory errors, or any other information that might impact the fulfillment process. If a retailer chooses to use a third party logistics company, that party must be able to provide the same online information so that information flow is available and up to date.

What are the ways to create an omnichannel strategy?

Not only is omnichannel retailing the commerce strategy of the future, it is the tool that retailers must use today. Success in a competitive marketplace depends on your ability to remain at the top of the technology game, all the while marketing and selling quality products through a seamless customer experience. Though each brand and product has their unique needs and your business model may vary from others, the common thread among retailers is their ability to adapt to an ever-changing, even more demanding customer base. To help you with your approach, here are some steps to take to get started:

Customer segmentation is the first step

Chances are you probably already know who your target customer is. The things that define your customer are the targets to begin putting your efforts into. Look for things like the following:

  1. How old are they? Are they millennials or baby boomers? Are your products targeted toward a particular age group?
  2. Where do they live? If you are selling snow blowers, there probably isn't a large demand in Florida.
  3. How do they live? Are they apartment dwellers or farmers? Do they rent or are they homeowners?
  4. How much money do they make? Does your product appeal to a particular financial segment?  
  5. How do they buy? Are most purchases done online or at a physical location? Do they use deals or coupons for the most strategic purchases?

Knowing your customers and determining their past purchasing behaviors will offer you opportunities to selectively market to them. Once you can answer the general questions above, drill down a little deeper to further narrow the scope of your customer.

What channels do your customers use?

Once you have determined the demographics of your customers, take the next step to determine the channels they use to purchase. Are they shopping on social media, through an app, or do they prefer visiting your brick and mortar store?  
In order to reach your customers, you have to go where they go. And to do that, you have to know their shopping habits. Determine where they spend their time shopping and what clinches the sale.  

How do you get this information? The best way is to use information that represents the customer's past performance and then use that information to determine profitability and efficiency. Put your emphasis on that channel in order to bring in new customers and cultivate return visits with current customers. 

What is your customer's persona?

Remember that omnichannel retailing differs from multichannel retailing by placing focus on the customer. So combining your target customers into generic personas will no longer be successful with omnichannel commerce. As you market your product, collect the data to adopt person-level insights into the customers who are purchasing your product. Once you have an analytics platform, you can proceed with a marketing strategy to optimize how your messages are being received by your customers. You can use this information to determine the touchpoints that your customers use this information to determine the touchpoints that your customers use, the channels they use, and how their omnichannel experience has impacted their purchases.  

Plot a customer journey map

Your customer wants a seamless purchasing experience. To be sure they are getting this, you need to investigate their purchasing journey. How many touchpoints did the customer use to get to their destination? Did they check out the web page and then purchase the product in person? Were they able to get the information they needed without being distracted or leaving your site? Keeping your customers engaged in a seamless process is an important part of the omnichannel experience.

Provide cross-channel customer support  

Without all channels offering the same customer service, information, and inventory status, your customer will not have the seamless experience that they desire. If the customer has a question, they should get the same answer whether they are on the phone or speaking with a staff member in the store.

Automation and technology are essential  

Without the proper automation and technology, omnichannel retailing is not possible. Probably the most essential part to the process is having access to real-time information, particularly in inventory management. Included in this inventory management module must be consistency in all areas of product information, such as description, price, etc.  

Applying technology integration to all back office functions also allows for a pleasant customer experience if they can communicate through various channels with equal efficiency.

Employ ongoing A/B testing

A/B testing is a way to compare two versions of something to figure out which performs better. During your omnichannel journey, you have to continue to test to stay on top of changes as well as to make sure pertinent data is being captured. Test systematically and at determined frequencies to ensure you are optimizing your omnichannel marketing approach.

Is omnichannel retailing right for your business?

Technology has impacted every facet of our lives. Our business plans have changed, our marketing theories are different, and the channels for retail sales have expanded.  In order to remain competitive, retailers must offer customers an efficient, seamless way to shop from a number of touchpoints, on several channels, using multiple platforms.  

Today's customer is more demanding when it comes to making purchases. They want their shopping to be quick, efficient, and easy. They want to be able to seamlessly find what they want, for the price they want, when they want it. They want flexibility, not only in purchasing, but also in customer service functions, to get the information they need from any device or platform that they choose.  

Omnichannel retailing offers solutions to retailers that will fulfill these customer requirements. It is a comprehensive system that combines all facets of retailing from back office through fulfillment. The analytics provide ways to identify and target your customer as well as keep information consistent and available in real-time.


Ready to get grow omnichannel commerce in your business?

Heartland has helped nearly a million entrepreneurs by guiding them through market changes and challenges, while keeping them competitive through technology and systems that let them focus on further building their businesses. Learn more at Heartland.us.