December 2nd, 2014 | 7 MIN READ

Omnichannel vs Multichannel and the Store of the Future

Written by author_profile_images Linda Bustos

Linda is an ecommerce industry analyst and consultant specializing in conversion optimization and digital transformation.

You can't attend an ecommerce conference without one or ten sessions on "omnichannel" on the agenda. Like big data, it's a buzzword that leaves many mystified, and a complex business issue that takes strategy and technology to do right.

As we approach 2015, how much "omnichannel" integration is table stakes to deliver a consistent customer experience, and what does it take to make it fly?

Multichannel vs Omnichannel

In the early days of ecommerce, traditional brick-and-mortar and catalog retailers added transactional websites, becoming “multichannel” retailers. For many, the online “channel” functioned as its own entity with its own systems, even with its own P&L competing against the retail division. Some even outsourced ecommerce – notably Target and Borders, who let Amazon run their online stores for years before taking control in-house. Regardless of the model, online and in-store customer experiences were completely separate.

In recent years, the “multichannel” concept has morphed into “omnichannel,” these buzzwords often used interchangeably – but they’re not exactly the same concept. If you want to get etymological, multi means “more than two” and omni means “every.” You can operate in as many “channels” as you want, but you’re not an omnichannel business unless there is an interconnectedness between every touchpoint from the perspective of the consumer.

Omnichannel isn't about pushing in-store customers to buy more online. There's a myth of the uber-profitable "multichannel customer" that splurges wherever you accept a credit card. It is about supporting the customer's shopping needs and preferences, with the online channel as much of a customer service tool as it is an option to purchase from.

According to this year’s Insights 2014 report by SapientNitro, 53% of consumers prefer shopping in-store vs other channels. 81% of these shoppers want to interact with their phones in-store, and 61% want to use “any device” (PC, smartphone or tablet) to help them shop.

Accenture found 73% of North American consumers have showroomed at least once in the last 6 months, and 49% think integrating stores with online and mobile touchpoints is where retailers need to improve the shopping experience most.

Today, having a website with transactional capabilities isn’t an option for retailers – it’s an expectation. And having a mobile-friendly site is now table-stakes too, not just as a complementary touchpoint to the ecommerce site, but as an in-store shopping aid.

The omnichannel expectation

Customers want to be able to pull up product information quickly and easily on their smartphones. They want endless-aisle capabilities to locate sold-out products in nearby stores or online. They want to reserve and collect, build wishlists on the Web and use wayfinding tools in-store. They want access to digital loyalty program information. Soon they’ll want to pay by phone in-store.

The Accenture study reports:

  • 88% of consumers would use mobile tools to gather loyalty points or take advantage of real-time promotions in-store
  • 82% would use endless-aisle features like ordering out-of-stock items for in-store or home delivery
  • 79% would use wayfinding tools to locate shopping list items
  • 77% would scan products as they’re added to a physical cart
  • 74% would access other customers’ ratings and reviews
  • 63% would be receptive to cross-sell/upsells based on scanned items in physical cart
  • 45% of shoppers want accounts that are “completely connected between purchases and loyalty points both online and in-store”
  • 61% would pay by phone at checkout

While there's a big difference between what people say they would use if offered vs. what they demand, customers don't know what they really expect until they feel the pain of an experience gap. When the website promised local stock availability, but was wrong. When the sale price online is not honored in-store. When the customer forgets to print out an emailed coupon. When the sales associates are all busy and you have a question about a product, and 15 minutes left on your lunch break.

As Intel's Darin Archer points out (detailing his own recent, less-than-stellar "omnichannel" experience) the customer doesn't think in terms of channels. When that zero-moment-of-truth hits, if your digital content and tools don't deliver to support that in-store experience, the customer feels the pain.

The omnichannel experience gap

Studying 73 omnichannel retailers, SapientNitro reports it’s digital-in-store experiences that separate the excellent retailers from the “also rans,” with cross-channel shopping technology table stakes among the leaders.

However, despite the efforts to bring digital in-store, most are point solutions that aren’t integrated with the ecommerce system. Of the retailers in SapientNitro’s study, the majority offered Web wishlists, but only 12 synced lists across mobile devices. Target was the only retailer to sync shopping lists across multiple devices, supports in-store retrieval (and printing) through digital kiosks, and offers in-store mobile wayfinding tools to guide customers to where shopping list contents are located on the floor.

Closing the omnichannel experience gap

What distinguishes the omnichannel customer experience from the multichannel customer experience is the true integration between channels on the back end. This shift requires an urgent rethink of the digital tools marketers use:

  • How will you reimagine the shopping experience through digital experiences that bring a brand and product to life?
  • How will you provide new engaging, content-rich experiences are much more personalized for the shopper?
  • How will you adapt for the mobile users who consume rich content almost anywhere?
  • What tools are you using to manage and approve finalized (marketing-ready) product information and content that can be syndicated to channel partners (such as online resellers) and used internally?
  • Do you have a consistent library for product specifications, images, prices and other supporting information?
  • Do you have a single view of your customer across all your channels?
  • Are you able to support in-store pickup processes and ship-from-store options that help “save the sale”?

Darin Archer offers retailers these suggestions on becoming more omnichannel apt:

Order History

While it is unlikely anytime soon retailers will be able to standardize on one purchase system, each system can have their order history exposed as an aggregation service that can be accessed by the customer support applications the call center reps use, store associates log into, and the mobile app. This would make it so that across any touch point, all orders, regardless of channel would be visible.

Customer Service Call Centers

Many retailers have their online and physical store businesses divided across different executives that own separate operations by channel. With this comes different call centers that use different tools to get their job done. If you can’t consolidate these operations or tools, then minimally make sure that the tools have access to a customer’s order history across channels and have return/exchange processes outlined such that the handoff is smooth or preferably enables the first responder to resolve the problem.

In-store System

Store associates that have to support customers walking in and on the phone, need to have complete visibility into all purchases regardless of channel, and better yet, they should be able to see the customer’s loyalty value so that they maximize the experience for those customers that we all know can be the larger percentage of our revenue.

To truly achieve omnichannel Nirvana, these services and sources of data need to be connected across transactional touchpoints -- they can’t operate as point solutions.

The store of the future requires Platform-as-a-Store

Forrester analyst Adam Silverman states in his recent report Predictions 2015: The Digital Store Platform Will Support The Retail Store Of The Future:

eBusiness leaders who seek to rapidly deploy new digital store capabilities will require the agility to swap out modular components to create a retail store "ecosystem of value." In order to achieve this state, the store must act as a platform, connecting functionality together with a common set of data.

Silverman likens the emergence of the digital store platform to the growth of ecommerce as a point solution to a commerce suite. Getting to “platform-as-a-store” requires ebusiness and IT teams to establish an API framework that can connect the various technologies with the centralized commerce system, which he predicts will “act as the hub for the store platform.”

Retailers will realize greater value by connecting enterprise and point systems together to enable the digital store to operate in real time. For instance, in the case of task management, omnichannel store fulfillment orders that require pick and pack tasks will now be inserted into modern task management tools, allowing associates to perform omnichannel tasks side by side with traditional store tasks such as restocking shelves. The linkage between systems can also enable highly personalized experiences by integrating into customer relationship management (CRM) systems and content management systems (CMSes).

How Elastic Path enables the Retail Store of the Future

Elastic Path provides enterprise-wide access to commerce functionality and data via our universal API framework. In addition to powering web and mobile experiences, our catalog, merchandising, personalization, subscription and order services are also used to augment other retail applications, including point of sale, beacon, and omnichannel fulfillment systems. With our deep focus on integration and a consistent customer experience, Elastic Path is the only commerce solution specifically designed to be the hub for tomorrow's retail ecosystems.

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