Complete Guide to Omnichannel Strategy in Retail
Now more than ever, customers prefer multiple options in which they can purchase their products and services. While traditional shopping enables customers to interact with products before they make a purchase, online stores provide an incomparable level of convenience.
Businesses that offer multiple platforms do not force their clientele to adjust their standards around the strengths and weaknesses of one channel. Instead, they enable consumers to choose whichever medium is most convenient for them at the time. Therefore, retailers that limit themselves to a single sales channel also restrict their customer reach, revenue, and growth.
By implementing the omnichannel strategy, retailers can expand their commerce capabilities and impact.
What is the Omnichannel Strategy?
An omnichannel strategy in retail is the integration of multiple sales channels so customers can seamlessly switch from in-store to online shopping. This ensures that consumers receive the same shopping experience, regardless of the sales channel they prefer.
Studies show that 73% of customers use several sales channels for shopping. Many consumers research products online first before making a purchase, regardless of whether the transaction is virtual or in-person.
Therefore, businesses need to ensure whichever sales channel shoppers choose is ready and easy-to-use.
While traditional brick-and-mortar and online stores are the most known sales channels, many businesses also use
- Online marketplaces
- Catalog subscriptions
- Telephone purchases
With omnichannel commerce, companies can optimize the entire customer experience rather than prioritize some channels, while others lag.
Omnichannel vs. Multichannel vs. Single-Channel
Many organizations confuse the terms omnichannel and multichannel, as they have similar qualities. However, these strategies are different when it comes to customer experience.
Firstly, single-channel commerce refers to when a company features and sells its products on a single platform. While businesses can still find success in single-channel commerce, they significantly limit their customer reach and experience.
Multichannel commerce is when retailers sell their products and services on multiple platforms, both online and offline. This enables organizations to interact with customers on various channels and gain a foothold on their most popular platforms.
Omnichannel commerce, much like multichannel commerce, involves several sales platforms. The major difference between the two strategies is that omnichannel marketing integrates the various channels, so consumers have a seamless shopping journey.
Benefits of Omnichannel Commerce
Retailers that use single or multichannel commerce are denying themselves and their customers of additional sales opportunities. With an omnichannel strategy, businesses can take advantage of several benefits.
Enhanced Customer Experience
The majority of modern customers want an omnichannel experience so they can switch between multiple sales channels without any issue.
As technology advances, there are more and more touchpoints where businesses can reach consumers, making omnichannel commerce a must. Now, shoppers can browse products via
- Social media advertisements
- Email newsletters
- Mobile applications
- Traditional stores
By breaking down any barriers that separate these channels, companies enable consumers to shop via whatever platform is most convenient for them that day.
Increased Sales and Traffic
By expanding their sales channels, retailers can promote their products and services to consumers outside their customer base to increase potential sales and traffic. This may result in increased customer acquisition and income.
In fact, studies show that omnichannel consumers spend more than single-channel shoppers, and sales only increase with every channel added.
As a result of channel expansion, omnichannel businesses experience better customer loyalty than single-channel brands, as they have more ways to interact with each other. A study found that retailers that switched to omnichannel commerce increased their repeat customers by 23% within six months.
Customers are also more likely to advocate for an omnichannel business rather than a traditional store, spreading brand awareness. This word of mouth and consumer-generated advertisement is more effective than generic marketing promotions, as shoppers trust unbiased testimonials.
Enhanced Data Collection
Businesses with multiple sales platforms have more opportunities to collect valuable customer data, enabling them to continuously improve their shopping experience. Retailers can use this data for
- Marketing campaigns
- Product development
- Customized content
- Loyalty programs
For example, retailers can track each customer's online shopping habits to generate personalized email newsletters, promotions, and discounts.
Real-Life Examples of Omnichannel Strategies
The omnichannel strategy often looks different between businesses, depending on their type of retail. The most well-known omnichannel companies range from entertainment to fast-food industries.
Disney has one of the most extensive retail approaches, with mobile-responsive websites and apps that allow consumers to retrieve content from any device. Disney offers
- Online event planning
- Streaming services
- Traditional stores
- Online stores
- Amusement parks
- Loyalty programs
For example, a family can plan their trip to Disney Land online, visit their local Disney store to purchase merchandise, and secure a Fast Pass at the amusement park, all under an integrated loyalty program. These interactions are recorded and stored in their membership profile, which can be accessed via a mobile app for convenience.
Disney customers can even use their mobile app to store their hotel room key, food delivery, and photo storage for a seamless vacation experience.
Starbucks offers a rewards app that allows customers to collect points with every purchase to eventually receive a free drink or piece of merchandise.
To start, customers can either purchase a gift card or open a free rewards card in the Starbucks app. Once the card is registered within the loyalty program, consumers can link it to their credit card for automatic or manual reloads. Cards can also be reloaded via mobile app, telephone, online, or in-store, depending on the shopper's preference.
After each purchase, members receive a prompt on their mobile app asking if they would like to tip their barista. If yes, the tip is deducted from their gift card balanced and immediately transferred to the employee. Each of these interactions is recorded and updated across all platforms, regardless of which device it was performed on.
Chipotle takes online food ordering a step further by allowing guests to place their order in advance and choose when they would like to pick up their food.
The Chipotle website and mobile app locate nearby locations automatically, so customers can easily place their orders. While guests do not need an account to do this, loyalty members are able to save their favorite locations and dishes for fast order placement.
The ordering app also makes it easy to customize dishes. With comprehensive menus, consumers can easily add sides, extra condiments, and drinks without confusion.
Sephora offers a highly engaging customer experience both in-store and via their mobile app. Customers can purchase beauty items from any outlet, and their loyalty membership will reflect all transactions.
Some Sephora stores also have tablets that customers can use while shopping, makeovers, and beauty seminars. These tools introduce shoppers to new items and allow them to add the products to their wish list to purchase later.
When customers add products to their Beauty Bag, Sephora is able to define shoppers' likes, dislikes, and purchasing patterns to improve their shopping journey.
Even pharmaceutical companies are implementing the omnichannel retail strategy to streamline shopping. Walgreens offers a mobile app that allows consumers to refill and check the status of their prescriptions at the click of a button. This eliminates the need to call the doctor or pharmacy directly.
The Walgreens app also uses reminders to alert customers if their prescriptions need to be refilled. While this tool isn't necessarily groundbreaking, it significantly reduces wait times and long lines.
Where U.S. Consumers Shop
Not every consumer prefers to shop at the same sales channel. Many customer preferences depend on the shopper's demographic, such as age, as it generally narrows down what platforms they are familiar with and comfortable using.
For example, studies show that Generation Z consumers are up to three times more likely to shop on social media outlets than the average consumer. Less than 10% of this demographic purchases items in-store, whereas at least a quarter of the older generations, including Millennials, Generation X, and Baby Boomers, shop at traditional retailers.
However, the top three sales platforms across all consumer demographics are Amazon, e-commerce sites, and traditional stores.
A branded e-commerce website automatically offers some level of trust, as consumers are able to research the brand and its reputation. Shoppers also mentioned that convenience, price, and free shipping were the primary reasons they choose to purchase from online stores.
Millennials and Generation Z consumers are already used to speed, convenience, and a customized shopping experience, creating an attraction towards online shops. However, many Generation X and Baby Boomers also prefer branded websites for their user-friendliness.
Studies show that consumers use Amazon because of its prices and convenience. Shoppers also enjoy free shipping when they reach the spending target, regardless if they are a Prime member.
Amazon offers extremely competitive pricing, making it difficult to find products at a cheaper rate. They also track shoppers' browsing and purchase history to generate suggested products and promote impulse buys.
Even with the rise of online shopping, many consumers still enjoy shopping at traditional brick-and-mortar stores. The biggest advantage that conventional retailers have is allowing customers to touch and interact with products before purchasing. This reduces the number of returns and exchanges these businesses experience.
The younger generations also reported that service speed, convenience, and pricing are other reasons they shop in-store.
5 Steps of Launching an Omnichannel Strategy
Adjusting the business model to include the omnichannel strategy can look different for companies depending on if they are strictly traditional or online retailers. Either way, organizations need to follow the five primary stages to launch their strategy.
1. Understand the Customer
First and foremost, businesses need to understand their target market in order to provide the best customer experience. After defining the customer base, project managers need to identify their
- Pain points
Management can conduct research or customize a questionnaire to generate unique feedback.
2. Choose the Correct Sales Channels
Next, managers need to locate the sales channels their target market prefers and how they access them.
For example, companies may find that their base prefers branded websites but typically accesses them from their phone. This tells the businesses they need to make a mobile-friendly site or an integrated app.
Competitors are often defined in this stage as well.
3. Determine the Purpose
Omnichannel businesses often assign purposes for each of their sales channels, rather than just offering the same services on all platforms. This creates exclusivity for each channel, making customers want to engage in every medium.
For example, while shoppers can browse and purchase products through Ulta's mobile app, it is mainly used to interact with other shoppers in the beauty community and collect rewards.
4. Integrate Channels
Once the channels are outlined, management needs to integrate all platforms to ensure a seamless transition. This will require software that can update information across all channels, such as advertisements, inventory, and reviews.
For example, inventory management software keeps track of real-time stock levels to ensure online items are blocked when inventory is exhausted to prevent backorders.
5. Maintain the Channels
Once the channels are integrated and launched, retailers must maintain the platforms to ensure no pain points emerge. Managers should continue testing each channel and generating customer feedback to continuously improve the shopping experience.
While strategizing an omnichannel approach can be overwhelming, retailers should remember
- Omnichannel retail is centered around improving the customer experience. Therefore, businesses must understand their shoppers' needs and preferences.
- This approach can significantly drive sales, customer reach, and income if done correctly.
- The omnichannel experience is only possible if the transition between platforms is seamless.
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- Complete Guide to Omnichannel Strategy in Retail
- Complete Guide to Omnichannel Strategy in Retail