The way consumers search and shop for products, has changed dramatically in the recent times. With the increasing use of mobile, tablets, social media and technological advances in analytics, artificial intelligence, cloud platforms – the gap between online and offline retailing has reduced, disrupting the entire landscape of retail industry. This is an example of just one industry, however we can easily spot such disruptions happening in other industries also; where businesses are all fighting ferociously for a fixed pie.
The modern consumer empowered with latest technological advances has gained great negotiation power. In order to capture and retain their market share, businesses are compelled to maximize the value they deliver to these customers. Providing excellent customer experience is the strongest differentiating factor and value lever towards this regard. This can only be achieved by putting customers at the helm of all the use cases and business models and fundamentally redesigning those models from the way they are currently running.
Extending further, the example of retail industry – Mutichannel retailing which separately offers products in several different online and/or offline channels is giving way to a more inclusive omnichannel retailing, which aims to offer customer experiences that are integrated across different channels and touch-points.
Let us look at a couple of distinguishing aspects of multichannel and omnichannel –
|1||Focuses on co-ordination between channels.||Focuses on synergies among channels, in such a way that the customer experience across channels and the performance over channels is optimized.|
|2||Ownership and management distributed among Individual channels separately.||There is a combined overarching ownership and management, that cuts through all the channels together.|
|3||Analytics tracking is done more at individual channel level, with regular KPIs.||Analytics tracking is complex, with an aim to Understanding, managing and evaluating consumer behavior across channels and touchpoints. Combining the online and offline is equally pressing to craft a true omnichannel experience.|
|4||Evaluation of each channel separately by evaluating their individual effectiveness in customer acquisition, retention, and brand development. The revenue is considered as a summation of revenues from individual channels (calculated separately), assuming that individual channels are operating in isolation from each other.
Revenue = Σ (Visits × Conversion Rate × Average Order Value)
|Evaluation of each channel synergistically by evaluating their effectiveness in customer acquisition, retention, and development as a whole. The revenue is considered in a complex formula, where summation of revenues from individual channels is not enough, taking into consideration internal channel wise cannibalization as well as impacts form external (competitive) factors.
Revenue = Σ (Visits × Conversion Rate × Average Order Value) ± Inter Channels Cannibalization Factors ± External Factors
True omnichannel retail demands an in-depth knowledge about the type of products and decision processes used by customers. Which forms the basis to tailor-made strategies for different customer segments. In an attempt to adopt omnichannel as a strategy, recent times have seen many physical retailers moving online e.g.Macy’s and Target. Even pure online players are trying to grow offline, as shown by the examples of online retailers opening physical stores (e.g. Amazon buying WholeFoods or Zalando adding outlets and pop-up stores to their online offers).