Everyone’s talking omnichannel retail lately, but according to Data Strategy Technology (DMN) content coordinator Perry Simpson, that topic is getting run into the ground. On a millennial 20/20 panel last year, retailers dished on their feelings about omnichannel retail, and the result was a resounding sigh of frustration.
Retailers recognize that they should be transitioning and evolving to adopt omnichannel marketing—22% of North American retailers consider omnichannel a top priority. Unfortunately, many feel it’s a nebulous concept they’re struggling to implement effectively.
That might explain why there’s been a sharp decline in those brands, making it a priority since 45% of retailers had made omnichannel a priority in 2015.
What Is Omnichannel Retail?
According to Shopify, “Omni-channel retailing—or omnichannel (meaning, all channels)—is a fully integrated approach to commerce that provides shoppers a unified experience across online and offline channels (e.g., touchpoints). True omni-channel shopping extends from brick-and-mortar locations to mobile-browsing, eCommerce marketplaces, onsite storefronts, social media, retargeting, and everything in between.
Omnichannel was born from a multi-channel retail landscape where retailers wanted to offer customers more ways to purchase products both online and offline. The biggest issue, as demand rose among customers, was how to create a seamless experience while maintaining accuracy and efficiency. This was nearly impossible for many brands.
More specifically, systems weren’t talking, there was a lack of inventory visibility, there were supply-demand gaps, and there was extreme difficulty in measuring and analyzing data from various channels. The aim of omnichannel is to integrate all those systems with a centralized approach to the customer experience, data, and marketing.
Why Are Brands Shifting to Omnichannel?
While multichannel and omnichannel bear a striking resemblance, these strategies are very distinct and have different approaches to retail:
- Multichannel retail means adopting as many channels as possible to engage customers, but those channels are managed individually.
- With omnichannel, there’s still reach into more channels for customer engagement, but all channels (and subsequent data) are shared.
Another key difference is that multichannel retail is done for the benefit of the retailer in order to sell more products, while omnichannel has customer centricity at the core of its model.
The switch or evolution to omnichannel is more of a need than a desire, and the customer-centric approach exists to cater to consumer shopping trends.
While the bulk of consumers (54%) still prefer to shop in a brick and mortar store, plenty of consumers prefer shopping either via desktop or a mobile device, based on a 2017 study shared by MarketingProfs.
Age does play a part in where they prefer to shop.
However, recent data shared by Harvard Business Review shows that a huge number of customers, about 73%, shop across multiple channels:
Because of this transition from one channel to another, and the level of engagement with brands on multiple channels, customers expect a seamless approach. They spend more when everything is “aces.”
According to McKinsey, the more channels a customer used, the more they spend. Customers who engaged a brand on four or more channels were found to spend 9% more in a store, on average, than customers who shopped through a single channel.
McKinsey’s data, resulting from a study of 46,000 consumers, lines up with a report from IDC Retail Insights which found that retailers with solid, seamless omnichannel strategies experienced up to a 35% lift in average order value and a 30% lift in CLV compared to single-channel shoppers.
Let me tack on one more report here, just to drive that home. A study from Aberdeen Group listed this data for companies who found success with omnichannel retail strategies:
- 9.5% increase in YoY revenue (single channel brands averaged 3.4%)
- 7.5% drop in cost per customer engagement (compared to 0.2% for single channel)
- A whopping 88% retention rate compared to just 33% for single channel brands (or those with weak omnichannel execution)
The benefits are there, but they require the sound execution of an omnichannel model.
Retailers struggling to make the change, or those seeing limited results from omnichannel efforts who want to keep up with consumer expectations, may look to four of these key causes for a failing omnichannel retail strategy:
Losing Focus on the Customer Experience
When brands try to go omnichannel, some put too much focus into the channels and let the focus slip in other areas. This is a backslide toward multichannel rather than evolving. One area that suffers? Customer engagement.
The trick to appearing omnipresent is looking at how channels overlap and how you can use that overlap to stay engaged with customers.
It’s not about using as many channels as possible to market and push products. It’s about looking at the channels where your customers pay attention (blogs, forums, communities likes Reddit, social channels, video), and then living and engaging in those overlaps. From a marketing perspective, that means using the right channels to engage and re-engage.
- Omnichannel done wrong: Blasting your products to your audience ad nauseam through search, social, and display.
- Omnichannel done right: Segmenting marketing to focus on engagement based on the buyer’s journey and appropriate channel, giving them space to engage your brand through a collection of targeted content—and ads—that provide real value.
The Aberdeen study revealed that retailers with the strongest omnichannel model retain three times the customers of those with weak omnichannel efforts, so one of the biggest disconnects is clear.
Retailers expanding their reach to every conceivable channel are reaching customers, but they’re not engaging customers. In the battle to be “everywhere,” those brands have left their customers, and the customer experience, behind.
Poor Mobile Experience
There is still a significant gap between the number of people actively using mobile and smart devices and consumers who use those devices for shopping.
It’s not for a lack of interest.
According to Business Insider, American consumers spend the bulk of their internet time (59%) on mobile devices, but only 15% of their time on mobile is spent shopping.
Likewise, mobile conversion rates are more than 50% lower on mobile compared to desktop.
There’s a wealth of conversion issues that could impact mobile users, but it really boils down to a poor mobile experience. No matter how strong your customer experience is, or how well-integrated your other channels, if you’re not catering to mobile users, then you’re sabotaging your omnichannel strategy.
Thankfully, there are ways to test this, including:
- Check page load times. A 1-second delay in load time can reduce conversions by as much as 7%.
- Review your site navigation and user experience with a 3rd-party platform like usertesting.com.
- Try to purchase your top 10 to 20 products on a mobile device and ask a group of people to do the same. Pay attention to the experience, including how easy it is to find products and to check out. (Make sure you try it on different devices.)
- Check mobile-friendliness with Google’s Mobile-Friendly Test in its search console.
Integrating the mobile and the desktop experience is important, with technology like persistent shopping carts and better mobile experiences to close that gap.
Another area where retailers are struggling is integration. Without centralized data and a focused strategy where channels work together and are centrally managed, you’re working more in the multichannel model than omnichannel.
When those marketing channels aren’t connected, you have a broken branding experience that can shake customer confidence and leave them all feeling disconnected from a brand.
This is relatively easy to solve by uniting branding experiences across all the customer touchpoints, such as email, social, mobile, in-store, and other digital and physical engagement points.
However, that requires breaking away from the traditional siloed efforts typically seen in multichannel, where channel managers have conflicting goals and manage their channels differently.
This is where channel managers need to connect and work together under a single leader, with centralized data that encourages cross-channel growth. At the very least, when you have multiple channel managers, there should be cross-silo goals developed specifically to support an omnichannel model.
The last point of integration causing struggles in omnichannel success is the integration of online and offline sales, where inventory, data, and customers are concerned. Trying to manage multiple distribution systems with inventory transparency is nothing short of a nightmare when goals are incompatible between channel managers, and each silo is wrestling for priority of inventory and fulfillment.
In the end, it’s the customer who suffers because of integration issues and channel conflict.
With centralized data (enterprise data management) and the right software resources, your team can leverage the right data to anticipate things like customer demand, so your omnichannel team can stay ahead of disruptions and minimize channel conflict.
One study from PwC found over 40% of respondents cited software integration and incompatibility as the leading causes of omnichannel struggles. Specifically, 21% pointed to issues with aging legacy software, while 20% struggled with software that was difficult to integrate.
From customer experience to order processing, engagement, inventory control, data tracking, and more, you need reliable software that can integrate. Incompatible software is a symptom of choosing expensive, inflexible, 3rd-party tools designed for specific tasks.
Success in omnichannel means switching to modern solutions that make it easy to share information and allow for collaboration across all channels and information systems.
Not Utilizing the Right Channels for Your Business
Businesses stuck in the multichannel model, pushing to cover every channel possible for maximum sales, will find the least success with trying to evolve toward omnichannel retail.
Retailers must recognize no two businesses are the same. Among all the differences are different audience segments that engage and purchase from you in their own ways. That means identifying the right omnichannel avenues unique to your business and your audience.
It’s nothing but a waste of resources and budget to invest time in a channel like Quora, Reddit, or even Twitter if your customers aren’t active there. While you split your attention between various marketing channels, you’re taking away from the customer experience where your audience actually lives.
The same goes for product fulfillment; if you want to use a marketplace like Amazon as part of your omnichannel model, you don’t need to be on every marketplace, like Walmart and eBay, to be successful.
The most successful brands in omnichannel retail have evolved their multichannel strategies so that they’re not only working from centralized data, but their channels are no longer siloed. Their success, and their popularity, come from the ability to deliver memorable, delightful, and, most importantly, consistent experiences across all devices, platforms, and media that are relevant to their business and their customer.
As larger brands maneuver to improve the omnichannel experience, the single-channel and disjointed multichannel model will quickly become obsolete. Consumer expectations are evolving, and you’ll have to evolve with them to stay relevant.