Omnichannel Retail

The way consumers shop has drastically changed. Learn how a strong omnichannel strategy will ensure you deliver a consistent brand experience everywhere you sell.

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Omnichannel Retail Strategy: How to Meet Today’s Shoppers’ Needs with an Omnichannel Approach
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Multi-Channel Retailing and the Buyer’s Journey: Opportunities and Challenges
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The Definitive Guide to Selling on Amazon [2021 Edition]
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Selling on Online Marketplaces: Best Platforms for Selling Your Products
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Omnichannel Retail Strategy: How to Meet Today’s Shoppers’ Needs with an Omnichannel Approach

COVID-19 isn’t the first pandemic that spurred ecommerce innovation. When the SARS outbreak hit China, Alibaba was still a company in its very early stages. 

They responded by developing a philosophy of “New Retail” — referring to the “seamless integration between online and offline worlds” that enable frictionless shopping experiences.

“Learning how to digitize, adapt and integrate online-offline behaviors to overcome physical world limitations are all lessons embodied by New Retail,” wrote Andrew Lipsman for Insider Intelligence.

We’ve seen similar things happen across the globe over the past year. With some physical stores closed down or operating at reduced capacity, merchants had to make some quick business decisions to meet their customers’ needs.

But it goes beyond making physical stores’ products available on an online store as well. It’s about meeting consumers, many of whom have experienced unprecedented disruption to their daily lives and routines, in new online channels.

Today, consumers are discovering brands in brand new ways and seeking new conveniences to guide their shopping decisions. This article will cover the integration of online and offline sales channels — and all your operations — to deliver a cohesive and comprehensive experience across touchpoints.

What is Omnichannel Retail?

Omnichannel retailing refers to transacting across multiple channels, which may include marketplaces, social channels, in brick-and-mortars and more. Omnichannel has become a popular buzzword, but it’s not just another way of saying that you sell on multiple channels. Let’s look at the sometimes-subtle differences among omnichannel, multi-channel and single-channel commerce.

1. Omnichannel.

A true omnichannel approach must deliver a consistent brand experience everywhere you sell to meet your customers where they are and build relationships that transcend channels. It should also include an emphasis on optimizing your business through channel diversification and comprehensive integration of your data and systems.

2. Multi-channel.

Like omnichannel, multi-channel commerce refers to selling across multiple channels. However, multi-channel experiences are often disparate, thanks to marketing efforts happening in silos, lacking a defined cross-channel message. Multi-channel philosophies focus on optimizing by touchpoint rather than by journey. 

In an article from McKinsey, analysts write, “While companies can be tempted to focus on optimizing individual touchpoints, believing that the whole will automatically be greater than the sum of its parts, such targeted intervention can magnify variations in service and inconsistencies in other interactions.”

3. Single channel.

Unlike omnichannel and multi-channel sellers, other retailers choose to sell via a single channel only. Some sellers limit their activities to their own ecommerce storefront, while others rely on the Amazon marketplace, for example.

Shopping Behavior Has Shifted to an Omnichannel Experience

In October 2020, eMarketer increased their outlook for 2020 ecommerce retail sales from 20% growth to 30%.

That acceleration due to COVID-19 “has forced everyone to operate at a much higher level of digital maturity,” said Sharon Gee, General Manager, Omnichannel at BigCommerce. “To succeed today, retailers need to put a stake in the ground and define a unified channel strategy from a digital and physical perspective.”

But the move from offline to online channels wasn’t the only behavior shift. 

Consumers favored different products and services than usual, they tried new brands or retailers, and they engaged in the shopping process with new constraints — e.g., finding stores with curbside pickup or delivery options.

“Marketers got to see a new type of behavior in customers and if they were doing their homework, they got to understand something different about them,” said Andrew Kandel, head of sales for North America at Waze. “There will be a return to normalcy, but there will be an evolved customer that sees the world differently.”

Why is Omnichannel Valuable for Retailers?

In short, the acceleration in consumer behavior change in 2020 has made an omnichannel strategy more important than ever. In research conducted by BigCommerce and Retail Dive in 2020, 46% of retail executives said they planned to increase their investment in omnichannel retailing moving forward, compared to their plans prior to COVID-19.

Why? As Andrew Lipsman wrote in a May 2020 report on Frictionless Commerce: “The timeless truths of retail are that consumers will always want better prices, selection and convenience. With the internet having already driven major progress on the first two customer needs, attention is now turning to convenience.”

Ultimately, an omnichannel strategy can help drive increased sales and revenue. An eMarketer report found that streamlined digital experiences, curbside pickup and touchless checkout contributed to increased shopping frequency and incremental sales. Here are some of the factors that make omnichannel so valuable.

1. Meet customers where they are.

Consumers have been engaging in transactional activities for thousands of years. COVID-19 hasn’t stopped people from transacting — it’s just diverted and dispersed much of that activity across different channels.

Ecommerce became table stakes, social channels leveraged a captive audience to deploy new commerce features, and marketplace traffic surged.

Where customer journeys used to be relatively linear, today they’re anything but. People are discovering new brands and products in all kinds of new ways — Facebook and Instagram ads, Google Shopping, Amazon and other marketplaces, product reviews, in-store discovery, word of mouth and more. They may encounter your brand on their desktop computer, a television or a mobile device.

Showing up where your customers are makes the shopping journey more convenient for them. That convenience is more important than ever, in a world changed by COVID-19 — but then again, it always has been. According to a survey conducted by NRF prior to the pandemic, 83% of shoppers indicated that convenience while shopping was more important to them than five years prior.

“Shoppers want the logistics of their lives to be as simple as possible. A strong omnichannel strategy is sensitive to changing consumer behavior and puts the technology and operations in place to meet customers where they are — and where they want you to be,” said Sharon Gee, General Manager, Omnichannel at BigCommerce.

2. Stand out in a crowded playing field.

With more retailers vying for online attention, standing out requires a more resonant brand, better shopping experience and great service.

To do that, you’ll need to adapt to new consumer needs and behaviors, and recalibrate your understanding of your target consumer. Some of what you’ve always known about your customers may have changed; use data to understand if you’ll need to rethink any of the following:

  • Product assortment
  • Sales channels
  • Advertising channels
  • Messaging

Doing this well and consistently will give you a better chance of weathering any unforeseen changes.

3. Optimise your business with data and analytics.

With such a sudden and drastic change in consumer behavior, some retailers may need to adjust their sales and marketing channel mix to optimise for the new reality. Understanding your data will help you identify where and how to focus your energy.

A comprehensive, integrated omnichannel strategy empowers you to centralize data from all your sources and channels to determine the best ways to balance inventory, meet customers where they are and provide the best service, wherever they shop.

The Four-Pillar Approach to Omnichannel Commerce

The four pillars of a successful omnichannel strategy include sales channels, marketing and advertising, operations, and fulfillment. All these functions need to work together seamlessly to provide the best possible omnichannel customer experience.

1. Sales channels.

With more sales channels to choose from than ever, you’ll have to carefully evaluate your audience: where they spend the most time, and where products in your category are typically sold.

Channels can include (but are not limited to): 

  • Online storefronts/DTC 
  • Ecommerce marketplaces
  • Social media platforms
  • Mobile channels
  • Brick-and-mortar stores — or anywhere you use a POS 
  • B2B/Wholesale sales

“If you are over-invested in any one channel to sell your goods or products, and that channel goes away for any reason, you’ll be in a tight spot, and that’s what many retailers are experiencing today with the COVID-19 pandemic,” said Sharon Gee, General Manager, Omnichannel at BigCommerce.

“But the reassuring strength of an omnichannel sales approach is that it’s a risk mitigation strategy at its core. It allows retailers to ask, ‘Where are my shoppers and how can I be where they are?’ and make changes accordingly.”

2. Marketing and advertising.

No matter which sales channels you choose, consumers aren’t going to find your products naturally — even the best products and the best websites need an omnichannel marketing strategy to drive traffic and sales. 

Surfacing the right message at the right time and in the right place — all tied together by a consistent brand experience — can make a huge difference to your bottom line.

Here are some of the most recommended digital marketing and advertising channels for retailers going forward:

3. Operations.

Operations encompasses everything in your back-office, from product, order, and inventory management to logistics and fulfillment. From an operational perspective, the key to a functioning omnichannel approach is connectivity. Exactly what technologies make up your back-office operations will depend on the scale and sophistication of your business.

Inventory visibility is arguably the biggest barrier to proper omnichannel inventory management. Without it, you can’t access data for accurate reporting or promise customers items will be back in stock on all platforms. And when you’re expanding to new channels, you must have centralized inventory visibility so you can optimise your supply chain and never miss a beat between sales platforms.

4. Shipping and fulfillment.

When it comes to shipping and fulfillment, retailers have the option of using shipping software or a 3PL (third-party logistics) company. 

Shipping software offers specially negotiated rates with various carriers, visibility into shipping statuses, reporting, and the ability to send orders to fulfillment providers. 3PLs also include other logistics processes like inventory management, warehousing and fulfillment.

“Most people see logistics and fulfillment as the technical side of ecommerce, but it’s actually another extension of the customer experience,” said Matt Crawford, General Manager of Shipping at BigCommerce.

Steps for Building an Omnichannel Strategy

Creating a personalized customer journey across all relevant marketing and sales channels as part of an omnichannel strategy is also referred to as orchestration. 

Your specific process for orchestrating your omnichannel strategy will be unique to your business because you’ll choose the sales and marketing channels that best align with your goals and objectives. Plus, your operations will vary based on your unique needs. But the general approach can be described in these seven steps.

1. Segment your customers.

You can segment your customer base in a number of different ways — you’ll have to determine which will work best for your business. Also known as market segmentation, the goal is to identify different distinct groups within your target market so you can further personalize your offering to them.

Some of the factors by which some merchants segment their customers include: 

  • Income range
  • Geographic region
  • Generation (e.g., millennial, Gen X)
  • Online behavior
  • Values
  • Interactions with marketing campaigns

Once you’ve identified clear customer segments, you can dig deeper into how to position your offer to each one.

2. Determine which channels each customer segment uses.

Let’s say you’re planning to buy a gold watch. There are countless places you could look, depending on what type of watch you’re looking for.

  • Interested in a previously owned, antique or hard-to-find watch? You might go to eBay. 
  • If your taste is more modern and fashion-forward, maybe you’ll browse Instagram for ideas. 
  • Looking for something extremely high-end? You may want to go into a brick-and-mortar jewelry store to see and feel their wares in person. 

It’s like that with any product and any target market. To reach consumers in the right place at the right time, you have to know how they behave, where they browse, where they buy and what motivates them to purchase.

A mix of qualitative and quantitative data can help you make measured decisions about your most important channels. Talking to customers can provide a multitude of qualitative insights and give you a more acute sense of empathy for them. But tracking key performance indicators will round out the picture forming in your mind. 

Use analytics to determine which of your channels are the most profitable, the most efficient and/or the ones which acquire the most new customers. Then, put most of your focus on ensuring the best possible shopping experience on and among those channels.

3. Map the customer journey.

Let’s think about that gold watch again, and pretend you’re looking for the fashion-forward option. Here’s one possible journey from research to purchase:

  1. Search “gold watches” on Pinterest 
  2. Research a few eye-catching brands’ Instagram profiles 
  3. Start seeing retargeting ads for a number of jewellery brands, which you click on, if they catch your eye
  4. Sign up for email newsletters from a few brands’ websites
  5. Search “[brand name] reviews” for some of your top contenders
  6. Finally, narrow down your options and make a purchase from the brand’s ecommerce site

There are countless ways that particular journey could have been diverted or reordered at any time — but the customer still expects a seamless experience. That’s one of the biggest challenges of omnichannel.

As this McKinsey article reinforces, “Since customer journeys aren’t simple and linear but a series of handoffs between traditional and digital channels that can vary significantly by customer type, an effective strategy requires an in-depth understanding of what customers truly want.”

4. Provide cross-channel customer support.

Today, consumers want to purchase where and how it’s most convenient — and the same goes for customer support. If you’re going to double down on having a presence on multiple channels, you need to make sure you can provide customer support whether they’re on their smartphone or sending you a message through Facebook Messenger. 

Providing support your customers can count on may help increase their lifetime value and solidify them as loyal customers.

5. Integrate your technology.

One of the most basic reasons to closely integrate as much of your tech stack as possible is your inventory. As you start selling on multiple channels, you’ll want a unified view in real time of every piece of inventory you have available. Similarly, you’ll want a single source of truth for product information, such as a PIM or comparable solution, so you don’t have to enter product information individually on every channel where you sell.

But the benefits go on. When your marketing and ecommerce efforts are closely tied together, you can aggregate your most important data to better assess performance and identify opportunities. Seamless hand-offs among channels are a huge boon for customer support as well. If your phone agent already knows about the email thread with a particular customer, they can pick right up where the email left off.

A recent McKinsey article identifies customer support as an area with huge potential to increase customer satisfaction, if executed well: “Advanced analytics and new technologies, such as predicting issues before the customer explains the reason for the call, allow first movers to create ‘wow moments.’”

6. Take advantage of automation.

Khe Hy teaches about a productivity concept around $10,000-per-hour work. The idea is to identify the work you do that has the highest leverage — what really moves the needle? What benefits compound over time? The more you can focus on those high-leverage activities, the more you’ll be able to drive your business forward. 

Repeatable processes that require little to no critical judgment are not $10,000-per-hour work — and that’s where automation comes in. 

But that’s not where automation stops. Here are a few more examples of how automation can give you more control over your business:

  • Use a chatbot to answer routine customer questions and concerns so support representatives can provide more focused attention to more complex issues. 
  • Prioritize a tech stack that supports seamless integrations, so you always have a real-time view of your business and make decisions based on aggregated data.
  • Set up behavioral triggers to deliver more personalized marketing across the customer journey, so prospective buyers are seeing the right messages at the right times.

7. Make testing a habit.

Testing isn’t a one-and-done activity relegated to the last few days prior to launch. Testing should be an ongoing, systematic process in your business — especially if you’re undertaking the complexity of an omnichannel journey.

Gathering data at every touch point will be critical to making the decisions that elevate your business. Make sure you have a platform and solutions partners that make it easy to aggregate all your data sources and glean insights.

Wrapping Up

Customers expect seamless omnichannel shopping experiences. So, today, retailers find themselves adapting to new consumer needs and behaviors and recalibrating their understanding of their target consumer.

Omnichannel strategy has to be holistic and comprehensive. It depends on a strong foundation, supported by the four pillars of sales channels, marketing and advertising, operations, and shipping and fulfillment.

“An omnichannel transformation is the only way for a company to address rising complexity, provide an excellent customer experience, and manage operations costs,” write analysts at McKinsey.

FAQs for Omnichannel Retail

Why is omnichannel important?

46% of retail executives plan to increase their investment in omnichannel retailing moving forward, compared to their plans prior to COVID-19. They know that the consumer behavior shift toward online buying in 2020 has made an omnichannel strategy more important than ever. As Andrew Lipsman wrote in a May 2020 report on Frictionless Commerce: “The timeless truths of retail are that consumers will always want better prices, selection and convenience. With the internet having already driven major progress on the first two customer needs, attention is now turning to convenience.”

Do I need an omnichannel commerce solution?

Your specific process for orchestrating your omnichannel strategy will be unique to your business because you’ll choose the sales and marketing channels that best align with your goals and objectives. Plus, your operations will vary based on your unique needs. You will want to integrate as much of your technology as possible. As you start selling on multiple channels, you’ll want a unified view in real time of every piece of inventory you have available. Similarly, you’ll want a single source of truth for product information, such as a PIM or comparable solution, so you don’t have to enter product information individually on every channel where you sell.

What are the four pillars of omnichannel commerce?

The four pillars of a holistic omnichannel commerce strategy are sales channels, marketing and advertising, operations, and shipping and fulfillment. All these functions need to work together seamlessly to provide the best possible omnichannel customer experience.

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How can omnichannel impact customer loyalty?

If you’re going to double down on having a presence on multiple channels, you need to make sure you can provide customer support whether they’re on their smartphone or sending you a message through Facebook Messenger. Providing support your customers can count on may help increase their lifetime value and solidify them as loyal customers.

How can an omnichannel strategy improve my operations?

One of the biggest barriers to strong omnichannel strategy is the added complexity of dealing with multi-channel inventory. Inventory visibility is arguably the biggest barrier to proper omnichannel inventory management. Without it, you can’t access data for accurate reporting or promise customers items will be back in stock on all platforms. And when you’re expanding to new channels, centralized inventory visibility can help you optimise your supply chain and never miss a beat between sales platforms.

What are some of the pitfalls merchants experience when working to launch an omnichannel strategy?

Some merchants try to do too much, too fast, and don’t do the required research to determine which channels to prioritize. Another common pitfall is optimizing for a multi-channel experience, not an omni one. Omnichannel experiences optimise for the whole journey, while a multi-channel approach simply optimises channel by channel.

What are some important omnichannel commerce metrics?

You’ll want to use sales data to determine if you’re making the best product assortment and sales channel decisions. You’ll also want to look at all your marketing and advertising data to see what messages and which channels resonate the most with your target audience.

What are some of the factors to consider when segmenting an audience?

Some of the factors by which some merchants segment their customers include: 

  • Income range
  • Geographic region
  • Generation (e.g., millennial, Gen X)
  • Online behavior
  • Values
  • Interactions with marketing campaigns

Once you’ve identified clear customer segments, you can dig deeper into how to position your offer to each one.

What are some examples of automation in omnichannel?

Chatbots can help answer routine customer questions and concerns so support representatives can provide more focused attention to more complex issues. A seamlessly integrated tech stack will enable a real-time view of your business, so you can make decisions based on aggregated data. And behavioral triggers can be implemented to deliver more personalized marketing across the customer journey, so prospective buyers are seeing the right messages at the right times.

Why is data important for your omnichannel strategy?

With such a sudden and drastic change in consumer behavior, some retailers may need to adjust their sales and marketing channel mix to optimise for the new reality. Understanding your data will help you identify where and how to focus your energy. Continuing to gather data at every touch point will be critical to making the decisions that elevate your business. Make sure you have a platform and solutions partners that make it easy to aggregate all your data sources and glean insights.

Which marketing and advertising channels should I consider?

Here are some of the most recommended digital marketing and advertising channels for retailers going forward:

VIEW LESS

Browse additional resources

Article
Omnichannel Retail Strategy: How to Meet Today’s Shoppers’ Needs with an Omnichannel Approach
Read Article
Blog
Multi-Channel Retailing and the Buyer’s Journey: Opportunities and Challenges
Read Article
Blog
The Definitive Guide to Selling on Amazon [2021 Edition]
Read Article
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Selling on Online Marketplaces: Best Platforms for Selling Your Products
Read Article