In the world of online commerce, frequently used buzzwords often lack a true depth of meaning.
Omnichannel retailing is one such phrase. Undoubtedly, any brand with a digital presence has heard this term thrown around in conference rooms, marketing summits, and across the web.
However, what does omnichannel retailing really mean?
In this piece, we will dive into the true meaning of omnichannel, cutting through the noise and looking at what a strategic and meaningful omnichannel experience should involve. The result will be key practical insights that your brand can apply to your customer journey optimization in the year ahead.
An Evolving Term
While omnichannel is a frequently used term, it is also confusing and, in many cases, used without context and a lack of detail. If you were to search online to find one perfect definition for omnichannel retailing, you’d come back with a dozen or more definitions from market leaders.
In part, this confusion and lack of clarity are due to the evolving nature of omnichannel retail. Unlike a brick-and-mortar experience, which has remained largely unchanged over the years, omnichannel is still in the early stages of development.
Therefore, it helps to begin with where omnichannel started to understand where it is today and where it might head tomorrow.
Early on, omnichannel retailing simply meant that a retailer had both a physical and digital presence. For example, a clothing store that sold clothes both in-person and online.
However, as retail began to dig in and their true digital transformation began to boom over the years, it became painfully obvious that retail was structured so that it would always favor the brick-and-mortar experience.
A great example of this can be seen in the evolution of Walgreens’ journey from a siloed digital experience to a true omnichannel strategy.
In 2008, Walgreens provided a subpar digital experience. The company focused solely on digital marketing and had a limited number of resources dedicated to its digital strategy.
Leading into 2010, Walgreens saw an opportunity to initiate a digital transformation. During the next year, Walgreens shifted investment dollars away from the brick-and-mortar experience and poured funding into an immersive digital experience. A critical component of this strategy involved combining business channel P&Ls to break down silos and ensure all teams headed toward the same goal — a unified customer experience.
In 2011, Walgreens took a bold move forward, creating a president-level position in digital, showcasing that it was serious about its transformation. In the years ahead, the company introduced a web pickup service for online orders and invested in an enterprise digital competency.
From 2013 to today, Walgreens has continued to pave the way in omnichannel retailing. It introduced live text chat with pharmacists via its mobile app, rolled out virtual doctor visits in multiple states, and launched mobile store mapping, which assists both shoppers and employees in finding products faster.
Today, omnichannel retailing means a cohesive user experience for customers at every touchpoint. No longer should omnichannel involve siloed marketing attempts that don’t take into consideration the whole commerce experience.
Multichannel vs. Omnichannel
Adding to the confusion of omnichannel retailing is the concept of multichannel retail.
The difference between the two was described perfectly by Hubspot when the company stated:
“All omnichannel experiences will use multiple channels, but not all multi-channel experiences are omnichannel.”
Historically, the issue has been that many companies have invested in multichannel experiences defining their omnichannel strategy by the presence of a website, blog, Facebook page, and Twitter account. Incorrectly, the assumption has been that by having these multiple channels for interaction, they are taking part in omnichannel retailing.
And for a time, perhaps consumers partially bought it. But then D2C commerce became prevalent, and the online channel started to gain in importance, setting consumer expectations. Iconic brands such as Warby Parker, Casper, and Allbirds created such a rich digital experience that traditional retail had to take notice.
These brands designed high-quality products and then disrupted the scene by bypassing traditional brick-and-mortar stores, focusing instead on an incredible online experience as rich as in-person shopping.
The Pandemic’s Forced Omnichannel Experiment
While there will always be brands, such as Warby and Dollar Shave Club, who are trendsetters in the omnichannel space, something interesting happened in 2020.
COVID-19 created a forced trial for omnichannel commerce. This trial pushed both retailers and consumers into a space they may not have otherwise occupied.
According to research by McKinsey, the pandemic has accelerated the digitization of customer interactions by several years. Globally, the adoption of digital channels was accelerated by an incredible three years in only a matter of months.
When your stores aren’t open, suddenly investing in digital channels becomes a no-brainer. When you are worried about contracting a deadly disease, suddenly trying out curbside pickup makes logical sense and doesn’t seem so overwhelming.
The result of 2020 was that retailers were left scrambling to assemble a new omnichannel experience.
The Benefits of Omnichannel Retailing
Brand Perception and Loyalty
One of the key differentiators between multichannel and omnichannel retailing is the consistency of brand and experience. While having a website, a social media page, and a brick-and-mortar store is nice, it doesn’t necessarily translate to a strong brand image.
Omnichannel retailing should provide your customer with the same experience and brand presence regardless of how and when they interact with you. Not only that, but any interaction should be seamless between channels.
Think of it like this: rather than technology driving your digital commerce experience, an optimized customer journey should naturally result in an omnichannel experience. This is not a forced adoption of digital tactics but rather the realization that some digital solutions will pair perfectly with your customers’ journey.
For example, Walgreens didn’t simply invest in technology for technology’s sake. Instead, the company looked at what their customer needed across its purchasing journey, and it built solutions to ensure a true omnichannel experience.
When Bobby is looking for allergy medication, he might also have questions about how that medication might interact with the prescription drugs he takes daily. Historically, this might require waiting in line in a brick-and-mortar store, hoping to speak to a pharmacist.
Walgreens saw that it could close the gap, creating a centralized hub within its mobile app. Now, Bobby can quickly live text chat with a pharmacist, find out which allergy medications are safe to take in conjunction with his prescription, and rapidly locate that exact allergy med at his corner Walgreens.
Technology should simply be the conduit rather than the driver.
Related reading: Digital Transformation in the Pharmaceutical Industry
Aligning to Purchasing Habits
Another benefit of a quality omnichannel retailing strategy is that you actually teach your customer that your experience aligns with how they purchase. The beauty of this is that, in many cases, customers don’t even know exactly what shopping experience they want, leaving you with the opportunity to influence them to follow your customer journey.
According to Harvard Business Review, “Customers only know what they have experienced. They cannot imagine what they don’t know about emergent technologies, new materials, and the like. What customer, for example, would have asked for the microwave oven, Velcro or Post-It Notes?”
A solid omnichannel experience provides consumers with a shopping experience they might not have even imagined on their own.
The benefits to this are far-reaching. According to Harvard Business Review, on average, omnichannel customers spend 4% more on every shopping occasion in-store and 10% more online than single-channel customers.
Omnichannel Retailing Strategy
For companies that are either entering the omnichannel retail world for the first time or are realizing they need to rethink their existing strategy, the process is twofold.
Part one is establishing clear goals and objectives. Defining these goals and objectives is a necessity before any omnichannel initiative can begin.
To start, perform a critical self-assessment of your business. In a survey by Deloitte, 87% of survey respondents “know” that their industry is going to be disrupted to a moderate or great extent by digital technologies; however, very few respondents — only 44% — actually think that their business is doing enough to respond to this disruption.
Ask yourself these key questions:
- Do you have the people in place you need to create a successful strategy?
- Do you have the right processes in place to support the strategy?
- And, do you have the right technology to leverage an omnichannel experience?
The nice part about omnichannel strategy and the road to a great omnichannel customer experience is that you can start small and add to it over time.
Part two of developing an omnichannel strategy involves company agility.
In the world of digital, new channels constantly come and go. Integrating new channels to capture customer data, personalize the customer experience across channels, and then orchestrate the journey is the differentiator for brands offering omnichannel customer experiences that drive growth.
Trends in Omnichannel Retailing
The wonderful thing about omnichannel retailing is that it is very much still in its early stages of development. This means that there is a great amount of opportunity to think creatively and drive increased sales in wholly unique ways.
For instance, consumer concerns regarding data privacy have led to a rise in first-party data. This data is collected directly from a company’s own audience, preventing data privacy issues while ensuring that they provide a better digital experience for their customers.
This opportunity, aided by customer data platforms, has led to a shift in marketing priorities. In 2021, 88% of marketers set first-party data as a key focus.
Besides positioning brands to use new channels to acquire customers, omnichannel also better positions brands to deepen relationships with existing customers.
For example, one omnichannel trend is to use a return from an online purchase in-store to convert to a larger sale. According to research by Deloitte, the rise of eCommerce over the past decade has driven a 33% increase in the return rate of overall retail sales.
The same study unearthed the following two equally interesting statistics:
- 96% of consumers would shop again with a retailer based on a good returns experience
- 55% of customers between age 21 and 29 prefer in-store returns
What does this mean for omnichannel retailing? It means there is a great opportunity to leverage every return as a chance to encourage a customer to either replace the item — or even purchase additional items — while they are in-store. The buy online/return in-store trend is a perfect example of how if omnichannel retailing is done well — it is a win for both the customer and the business.
From a technology standpoint, omnichannel retailing is to utilize headless commerce to improve flexibility and offer commerce options to customers anywhere they are located. Headless commerce decouples the front-end and back-end dependencies that eCommerce traditionally was constrained by.
In this way, brands are provided with endless customization options, ensuring the optimal experience from mobile/desktop to in-store.
Vaimo Leads the Way in Omnichannel Strategy
For businesses that are looking to invest in a true omnichannel retailing strategy, Vaimo is here to help. For years, we have been assisting companies in creating a holistic view of their retail experience.
With the increased adoption of technology by both consumers and competitors, now is the time to think long and hard about where your business ranks. At Vaimo, we can begin with a deep dive into what your customers currently think about your omnichannel experience. After discovering an honest perception from your consumers, we can use this data to build a quality strategy forward.
Omnichannel retailing is about optimizing your customer journey so that technology is simply the natural solution. Talk to our team today about building out a robust omnichannel strategy.