What is Omnichannel?
Omnichannel is a digital, cross-channel business model (strategy) for online retail. An omnichannel strategy provides various touchpoints without customers having to switch channels during the purchasing process: from billboards to QR codes, from websites to smartphone apps. Sales and communication channels merge seamlessly. Companies can not only see the interactions of a target group in a specific channel – all information is linked systematically and is accessible. And if potential customers want to get a feel for the product before purchasing, this strategy enables them to complete the purchase in a local store.
Omnichannel – Consumers and Channels in Focus
Customers have always been demanding, but these days, their high expectations mean companies regularly face new challenges. It is no longer sufficient to sell products only through one distribution channel. Now, customers want to be served in many different ways, based on their needs – offline and online. Ideally, this creates a consistently positive customer experience and increases user satisfaction. That is why multi- or cross-channel strategies go beyond merging different channels. They create smart, digital links (using information) between content, CRM, ERP and PIM, e-commerce and brick-and-mortar retail – and across all channels.
Existing and potential customers profit from additional services when various systems are integrated – and after all, customers are what online retail is all about.
Omnichannel: The Most Important Services
Returns management
Same price online/offline
Exchange items ordered online in the store*
Local shop navigation*
Information in online shop/platform on local availability at point of sale*
Set reminders
Contact options such as call centre and chat on website (advice, help)*
Reserve and collect*
Comprehensive product information available online*
Store locator*
Shipping notifications and tracking. The required personal data is forwarded to courier, express and parcel services (CEP service providers).
* Also known as e-commerce services
Additional Services
Free shipping and returns
Multichannel Sales Strategy
The multichannel approach focuses on several independent channels. A retailer can operate an online shop, market place and brick-and-mortar store in parallel. In terms of the underlying technology, however, these distribution channels are not linked.
Product information, product maintenance and information on customers is channel-specific. Usually, every distribution channel serves a distinct purpose. The disadvantage is that a different emphasis is placed on the distribution channels, which often leads to inconsistencies in product portfolio and pricing. Information is also not available to all distribution channels to the same degree, and the same applies to the purchasing process. The target group cannot switch between distribution options to complete a purchase.
Cross-channel Sales Strategy
The cross-channel strategy also uses several channels to sell products. As opposed to multi-channel retail, however, the different channels are connected. Usually, a cross-channel strategy links relevant information for product sales to the portfolio. This not only includes the physical point of sale and the online shop, but also a catalogue and leaflets (advertising material). Cross-channel requires a central database, warehouse, stock and customer database. Example: During the purchase process, customers can switch between channels, buy their product online and pick it up at the point of sale (click & collect or in-store pickup).
Differentiation from Omnichannel
Cross-channel and omnichannel are similar approaches. They only differ in information density and the variety of distribution channels offered. Cross-channel strategies usually focus on up to three channels, such as an online shop via smartphone, tablet and desktop computer plus brick-and-mortar retail. In omnichannel, there is a multitude of different channels that also serve communication (omnichannel marketing). This may include an online shop via smartphone, tablet and desktop computer, brick-and-mortar stores, a phone hotline, chat, email, print, internet search and internet advertising. What’s special here is that all information on the customer journey is linked across all channels.
Example of a customer journey:
Awareness: Customers see adverts on a social media channel (Twitter, Facebook, Instagram, YouTube).
Consideration: Customers research the product, for example, on the website of the manufacturer/provider.
Consideration: Customers research the product in price comparison portals/blogs (tests/reviews).
Consideration: Customers test the product in-store.
Purchase: Customers buy/order the product online.
Retention: Customers receive newsletters – for example, with discount codes for accessories.
Advocacy/fan: Customers share their experience on social media and blogs.
Sources: Afterbuy (german), Oracle
The Next Step: Unified Commerce / No-line Commerce
Retailers are currently forced to use a hodgepodge of different applications. From the resulting data silos, they collect a host of information on their touchpoints with customers. Unified commerce builds on the omnichannel strategy but uses one central backend for the flow of all information. Unlike the omnichannel strategy, unified commerce is based on fully integrated surrounding systems. Data sets and processes are available and can be combined across systems, and customers never notice a switch between channels – be it online or in a local store.
The technological integration of information leads to the channel-agnostic development of a seamless purchasing experience, which is also known as no-line commerce (or seamless commerce). There is no longer a distinction between the online and offline worlds. All sales channels are fully integrated and interactive. Stock levels, whether in warehouses, stores or at retailers around the world, are available in the purchasing process. The downside is that database or system component errors immediately affect the entire system.
Note: No-line commerce works well with a mobile-first approach. Smartphones are used for research, check-ins and communication. Users can then use them to pay for their purchases – be it in the store, at their computers via a linked browser (Apple Pay, Google Pay) or in an application. Customers automatically register a positive customer experience.
Advantages of No-line Commerce
For Retailers
Centralised stock levels, product information, sales channels and business processes
Information is stored and managed in one central location
Fast decision-making and purchasing processes
Standardised IT infrastructure
360° view of customers
Standardised company identity (internal/external)
For Consumers
Focus on customer experience: Ideally, customers don’t even notice which channel they are using
Availability across all locations
Sales channels merged into one platform
Returns accepted locally, online and globally
Individual recommendations and offers
Location-based services and mobile commerce merge
Editorial comment: Nowadays, successful retail is more than just about the sales channels used. To provide the most individualised user experience, companies need a deep understanding of user journeys, a clear grasp of user research (see also search engine optimisation, SEO) and a list of actual reasons to purchase.
The development and process of a purchase decision can be displayed in a cross-channel customer journey map. The advantage is that this map helps companies view their services from a customer perspective (persona) and understand customer relations better. That is why marketing and marketing activities must be considered in a commerce strategy.
Omnichannel and Information
The omnichannel strategy has caught on over the past few years. The various business models, as mentioned above, differ in their degree of integration. An advantage for vendors is that clever integration provides them with personalised and substantial information on their customer base, as well as groups of potential customers. Also, they can adjust services to customers’ needs, where necessary.
While it was once the task of multichannel sales to reach users in different channels, this is now the job of omnichannel marketing. This enables users to start their customer journey anywhere, regardless of the touchpoint. A seamless switch from one channel to the next is ensured.
Editorial comment: The focus is not on a specific channel, but on a person – across all channels. Relevant, personalised data is available to customers 24/7. However, to fulfil GDPR requirements, this requires customer consent.
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