It seems everyone in retail is talking about omnichannel these days. But what is it? Why do you need it? And how do you do it well?
We’ll answer these three critical questions in straightforward terms, with no jargon or hype. This will help you create an omnichannel strategy that’s right for your business.
What is omnichannel?
You’ll see omnichannel defined in many different ways. For example: “Omnichannel is enabling your customers to access your brand from any device, any time.” “It’s being able to switch between devices during the course of a transaction.” “Omnichannel is the seamless integration of online and offline.”
All of these are true.
Omnichannel is first and foremost an approach to interacting with your customers - or, more accurately, an approach to how your customers interact with you. It’s a technology-driven business methodology, but it’s not a technology in itself. You can’t “install” omnichannel or “purchase” it. It’s a way of thinking that may well change the way your whole business operates.
Omnichannel sets out to reconcile two conflicting problems:
Customers actually like going to stores... but it can be frustrating if the items they want aren’t in stock or they have to wait in line to make payment.
Online offers a wider range of products and doesn’t require customers to physically go anywhere... but it is often impersonal and can be frustrating when they have to wait for their goods to arrive or when items aren’t what they expected.
The best way - or, more accurately, the only way - to think about omnichannel is from the customer’s perspective.
What is the most convenient way for them to do whatever they want to do, right now?
Maybe they’re searching for a specific item, or looking for gift ideas. The could be about to make a purchase, or maybe they’re looking for reviews of something they’re considering buying, or comparing prices. Perhaps they’re trying to find out when their goods will be delivered, or they need advice. They could be at home, in the office, in your store, or taking a walk in the park. They could be using a phone, a tablet, or a laptop. Every customer, every situation, is unique.
The omnichannel philosophy is to ensure that whatever your customer’s situation, it’s easy for them to reach you and do what they want to do. Offer them as much flexibility and as many options as you can, and focus on their convenience.
Who's doing it right?
Starbucks: Buying online for in-store pickup
Customers order via an app, and pay via their phone. The app automatically detects their location and can recommend nearby stores, as well as remembering customer preferences. This reduces wait time in stores and builds customer loyalty: over 30% of all Starbucks sales are now done this way.
Crate and Barrel: Multi-device shopping
When people are planning a home make-over, it can be a slow process. Customers browse repeatedly over the course of weeks or months, using a variety of devices. Shopping cart and browsing data from the Crate and Barrel app and Web site is combined, making it easy for customers to pick up exactly where they left off. This has resulted in a 10% increase in revenue.
Why do you need it?
The reality is that you will probably find yourself forced into adopting the omnichannel approach - perhaps sooner than you think. Retail is changing, and it’s evolving faster than many people want to admit. Just two decades ago, all that mattered was to have a great store. Then, with the advent of Amazon, online retailing took off, and by 2010, any company without a Web site began to struggle. And now, with the rapid growth of e-commerce and m-commerce (which now accounts for over half of all online sales) it’s become essential for retailers to support even more diverse ways of doing business. E-commerce is growing almost 4x faster than in-store retail.
Your customers have already embraced the omnichannel world without even realizing it.
Shoppers these days expect to be able to pick up their phone or tablet any time, and instantly find whatever they’re looking for. They don’t think of online and offline, or web and mobile as separate things - to today's customers, they’re all just different ways to achieve the same thing. Their phone is a device for apps, web, social media, email, text, pictures, video, chat, and voice, and they expect all of those to be fully integrated. To many of them, your store isn’t necessarily a place to actually buy things: it’s a place to see and touch the goods before making a purchase decision.
If you’re not offering what your customers expect, don’t be surprised if they’re disappointed and go elsewhere. Customers are increasingly driven by convenience and quality of service, rather than loyalty to established brands. 80% of major retailers in the US and Europe say they have an omnichannel strategy, or expect to do it this year.
Those who don’t adopt omnichannel risk being left behind and losing customers to competitors who are being proactive.
However, for those who do adopt the omnichannel approach, the rewards are clear: increased sales, increased customer loyalty, and reduced costs.
40% of customers who buy online and pick up in store will buy additional items when they collect their purchases.
Customers are 9.6x more likely to complete a large purchase if they can put it on hold and continue on a different devices at another time.
Customers who can pay a sales associate on the shop floor for a large purchase instead of going to a checkout are half as likely to have second thoughts after making a purchase decision.
Ship-from-store rather than central fulfilment of online orders allows customers to get their goods faster.
Allowing customers to view online inventory in-store reduces the need for physical display space.
Who's doing it right?
75% of their customers check out potential purchases on Web or app before coming into the store to inspect the physical product. In-store, REI provides free wi-fi and encourages customers to use their mobiles. With the REI app, they can scan barcodes that link to product reviews and more. If they decide not to make a purchase on the spot, they can easily return to items they’ve viewed and make an online purchase when it’s more convenient.
Timberland: Combining online and in-store
Timberland makes it easy for customers to find additional information about their products. They have large touch-screens, known as TouchWalls, throughout the store that display images, video and product specifications, as well as listing online inventory and options not on display in the store. They also provide tablets that respond to NFC tagged inventory and provide similar information as well as building up a profile of what a shopper is interested in. This allows Timberland to showcase a wider range of goods and personalize product offerings to individual customers.
How do you do it well?
Omnichannel is an incredible opportunity for innovation. Customers are looking for new, exciting, and above all unique experiences. They want even mundane purchases to be fun, easy, or both. They want special purchases to be memorable.
As a result, there’s no simple formula for how you should do omnichannel. It depends on your brand, your area of business, and how you want to present that to your customers. What works well for a fashion retailer won’t necessarily work for an auto parts supplier or a furniture store. However, there are seven fundamental principles you should always keep in mind.
1. Design for multiple devices and channels
There are many options available to your customer for doing business with you. (See sidebar) Your omnichannel strategy should include as many of them as possible. You need to understand how and when your customers like to use every one of those devices and channels, and then create a solution that plays to the strengths of each of them.
And remember that your customers aren’t all the same. Some will love their Amazon Echo or their Apple Watch. Some like to do everything via their iPad. Some love getting text messages, others will hate them. Some think of in-store shopping as a great way to spend an afternoons, while for others, it’s an experience they’ll go to great lengths to avoid. Omnichannel means finding ways to satisfy all of those customers.
2. Design mobile-first
Today’s users overwhelmingly use mobile devices in preference to laptops or desktops. Your online presence must reflect that. A Web site that looks amazing on a 22” screen may not be user-friendly on an iPhone or a Samsung with a 5” screen. Instead of trying to compress your site into a small screen, start by designing for mobile, and then look at how you can optimize it for computers.
As part of that design process, incorporate mobile capabilities as much as possible to enhance the mobile UX. This could include location-based info, use of the camera, integration with other apps, or mobile payment systems. Design your in-store customer experience around the assumption that every customer has a mobile device which they can use to access more information.
3. Design for integration
Don’t silo your data between online and offline, between app and web, or between individual stores. The same data should be available everywhere. For example, if you offer order tracking, ensure that customers can track their order via your web site, mobile web, and app. In addition, store staff and customer support via phone or online chat should be able to access the exact same information without having to redirect the customer to a different channel.
Make it easy to share information between users at all levels. Customers should be able to share products, wishlists or reviews with each other and with staff. Staff in one store should be able to check the inventory in another store and place an order or a hold on behalf of a customer.
4. Design for convenience
For every part of the process, start with the question “what would be the easiest way for a customer to do this?” Often, they will have a simple question that can be resolved in just a few seconds, so let them keep that interaction short and let them move on. Even better, aim to design processes that will remove the need to even ask those questions. Pro-active order tracking, the ability to filter search results via local store inventory, or remembering customer data cuts out questions like “where’s my stuff?”, “do you have that in stock?” or “is that available in my size?”
When you design your business processes, give your customers multiple ways to do everything, and allow them to choose whatever is easiest for them. Offer them multiple ways to get their goods. Give them several payment options. Give them the choice to pay at a conventional checkout, use a self-checkout, or pay a sales associate.
5. Assume every process could be fragmented
Customers don’t necessarily browse and buy in one single step, for a variety of reasons. The browsing process could be spread out over numerous sessions, including store visits, mobile searches, or desktop searches. The purchase decision could be separated from the actual payment. Allow customers to stop what they’re doing, and then pick it up again later via a different device or channel.
There’s not always a single ideal process. Some customers may browse in-store then purchase online; others will browse online then purchase in-store. Ensure that you allow for every option.
6. Communicate often, and respect your customers’ preferences
You have many ways to communicate with your customers. Make sure you’re using them effectively to keep them informed of whatever they want to know, especially during the fulfilment process. If they abandon a purchase, reach out and encourage them to come back. Let them select how they want to hear from you: text, in-app notifications, or email, and let them feel that they’re in control of the messaging.
7. Plan for continual change.
New omnichannel techniques are evolving all the time, and customers expect you to keep up with the times. Keep an eye on what your competitors are doing, and be prepared to keep upgrading every aspect of your business. Today, for example, smart speakers are still new and fairly rare, and AR is just a curio. But by 2020, according to Gartner, 30% of searches will be done without a screen, and 100m people will use AR for shopping. That’s just two years away - so start planning now!
Ask yourself, how do your customers expect to...
... reach you?
- Mobile Web
- Other social media
- Online chat
- Smart watch
- Smart speaker (Alexa)
... pay you?
- Credit/debit card
- Android/Apple Pay
- Mobile wallet
... get their purchases?
- Buy in-store and take it home
- Buy in-store and have it delivered
- Buy online and have it shipped
- Buy online and collect in-store
Are you enabling all of these options? If not, don't be surprised if your customers go somewhere else.
Doing omnichannel well is rarely cheap or easy. It may involve a radical reappraisal of everything you’re doing, and it will require many different parts of your business to work in harmony. It may involve making changes to any part of your organization, from in-store signage to back-end data storage systems, and that can lead to some uncomfortable conversations. You need to look at every interaction you have with your customers, online and in-store, and ask:
“Is this the best way of doing it, or is it the way we’ve always done it?”
“Is this what my customers really want, or is it the only choice we’re giving them?”
“Is there a way to make them happier, and how can technology help make that happen?”
Your investment in omnichannel isn’t just an investment in new technology. You’re investing in creating a new way of thinking about doing business that will carry you forward into the next decade and beyond.
Who's doing it right?
Neiman Marcus: Personalization and smart tech
AI-driven marketing remembers what individual customers want. It will remember a customer’s size, so that when they search, it will prioritize items in their size that are in stock nearby. Neiman Marcus has also been experimenting with machine vision. If a customer sees an item they like, they can take a photo of it, and submit it to their Snap.Find.Shop tool. This identifies similar items, and allows the customer to immediately purchase them online. In-store, their Memory Mirror creates 360° videos of customers trying on clothes and uploads them to the customer’s phone. They can then review the videos later before making an online purchase.
Oasis: Focus on customer service
Omnichannel isn’t just for customers. It’s for your staff as well. Oasis sales associates carry iPads that provide information on every product they carry. They also act as mobile POS systems, which cuts out waiting in line to pay and also creates a great sense of customer service. If the customer wants an item that isn’t in stock, the sales associate can check inventory in other stores, or place an online order on the spot and have it shipped direct to their home. In addition, their free Collect+ service makes it easy to return goods through a network of over 5500 partner locations, including 24-hour convenience stores and grocery stores, instead of requiring customers to bring them back to an Oasis store or mail them at a post office.
(Data for this article sourced from 2018 Business Intelligence Future of Retail report)