The commerce landscape has evolved dramatically in the last 30 years. Consumers have shifted from shopping primarily in-store to now using a mix of online, mobile and brick-and-mortar channels. To keep up with consumer demand, brands and retailers are facing pressure to implement omnichannel commerce strategies.
Why focus on omnichannel? Because customers demand it.
Surveys consistently show that shoppers often start their purchase journeys on one channel and complete it in another. For example, in 2021, 43% of shoppers bought a product online and picked it up in a store. In 2023, that percentage jumped to 50%.
“As a result, the line between traditional brick-and-mortar and pure-play ecommerce retailers is blurring,” wrote Dr. Eva Ponce, the director of the MIT Omnichannel Distribution Strategies Lab at the MIT Center for Transportation & Logistics. “Both types of players are now omnichannel retailers in response to rising consumer demand for multiple buying channels.”
Brands looking to expand into new markets should embrace omnichannel as part of their go-to-market strategy. An omnichannel approach ensures that brands meet customers where they are. It also allows for more flexible inventory strategies which help maintain margin while improving customer experience.
In this article we’ll explore:
- Key Concepts and Benefits of Omnichannel Commerce
- A Closer Look at Omnichannel Delivery, Returns and Appeasement
- How to Create an Effective Omnichannel Strategy
- Breaking Down Operational Barriers to Success
- What to Look for in Omnichannel Solutions
Understanding Omnichannel Commerce: Key Concepts and Benefits
Omnichannel vs. Multichannel
Omnichannel is the approach to commerce that integrates many channels to create a seamless and unified shopping experience. It leverages data at every customer touchpoint and is the natural evolution of once siloed marketing, shopping and logistics strategies.
What’s the difference between multichannel and omnichannel? Omnichannel integrates all of a brand’s marketing, sales and logistics systems to give shoppers a unified experience. Multichannel, on the other hand, deploys separate marketing, promotion and customer experiences over separate channels.
Omnichannel puts the customers first; multichannel puts products or the brand first.
For example, in an omnichannel experience, a shopper can start a customer service inquiry on a brand’s social media channel. Then later, can continue the conversation via email without having to re-explain the issue. This kind of seamless experience is not a core feature of multichannel. Omnichannel provides a better customer experience because it is a cohesive experience.
In addition to customer service, an omnichannel approach to fulfilment and logistics creates a better experience for customers. Centralising inventory information enables brands to easily locate their products. Products may be in a warehouse, in-store or at a distribution centre. This visibility allows brands to fulfil orders from the location that is most efficient.
Omnichannel fulfilment also allows shoppers the flexibility to order online and pick up and return items to a physical location. For shoppers who would rather self-serve a return, omnichannel returns allows them to conduct an exchange online.
Benefits of Omnichannel Ecommerce
Integrating channels and creating a unified experience can be time and resource intensive. But the benefits of omnichannel ecommerce are well worth it for both the brand and the customer.
Increased customer loyalty
Customers who have an excellent experience are customers that come back. When brands reduce friction along the purchase journey, they reduce customer frustration. Creating a superior consumer experience is especially important when trying to win new customers in new markets.
More than 75% of global shoppers say customer experience is just as important as the product a brand offers. In addition, 63% of US customers say they would leave a brand after only one bad experience.
Prioritising omnichannel improves customer satisfaction and increases loyalty by removing friction across all touchpoints.
Increased sales
Along with increased loyalty, a well-executed omnichannel strategy improves sales and revenue. The brand builds trust with customers through seamless experiences and customers come back more often and spend more. What’s more, positive word of mouth generates more conversions.
Brand consistency is a key component to a superior customer experience and will result in more sales.
Improved customer insights
To compete in the global marketplace, brands must own their customer data regardless of where a customer makes a purchase. Data-driven decisions inform everything from marketing campaigns to personalised promotions and even product descriptions.
Omnichannel lets brands combine online customer data with point-of-sale data to deploy a seamless experience across its properties. And it also allows data to flow into a brand so the brand can better customise and personalise the customer experience.
Streamlined Operations
Omnichannel ecommerce fulfilment, logistics and reverse logistics can be a cost-savings for brands. When orders are fulfiled from stores and picked up from stores, brands gain efficiencies and customers get their orders quickly. If a customer elects to return an item in-store, the brand has an additional opportunity to capture more business.
But to streamline operations, companies must align and integrate inventory systems. Siloed inventory management tools hamstring brands and operational efficiency. By integrating systems, brands have more accurate data and can serve the customer while strategically distributing product.
Contributes to Sustainability Measures
Ecommerce is a resource-intensive industry. And today’s shoppers are demanding that offline and online retailers do more to reduce their global footprints.
Omnichannel commerce can help brands demonstrate their commitment to sustainable commerce. Delivering orders to customers around the globe is carbon intensive. Implementing omnichannel – specifically omnichannel logistics and reverse logistics – can help reduce carbon footprints.
If a customer can walk to a store to retrieve an order, there are fewer emissions from last-mile delivery vehicles. Similarly, store employees can process returns from multiple customers if necessary. The store can then ship those returns back to the distribution centre in bulk. Instead of receiving multiple return packages from multiple customers in a market, brands can receive one package containing multiple products.
Designing a Robust Omnichannel Strategy
Implementing a successful omnichannel strategy in new markets requires cross-organizational cooperation and a singular focus on serving and delighting customers.
“To succeed in implementing an omnichannel strategy, it must be aligned with the company’s corporate and supply chain strategies,” wrote Ponce.
To begin, brands need to make sure they have a strong, localised online presence. This includes deploying a responsive website, mobile app and social media platforms. In designing these properties, brands should create local versions and local omnichannel marketing strategies. Global consumers can quickly spot a copy-paste approach or machine-translated sites and will walk away.
Brands should also prioritise online and offline integration. That is, brands need solutions that break down digital and analogue silos.
“Integrating these channels means using the same existing facilities (for example, stores and distribution centres ) to prepare online and offline orders, or adding new facilities (for example, online distribution centres) to the network and managing the entire network as part of the same supply chain,” wrote Ponce.
In addition to integrating digital and physical experiences, brands should integrate and centralise their inventory management and order fulfilment solutions. Similar to integrating offline and online systems, brands can fulfill orders quickly by ensuring accurate inventory accounting in all locations.
In today’s market, shoppers are demanding shorter delivery times. Brands can meet that demand with centralised inventory management. A centralised system allows brands to fulfil orders with the stock that is closest to the customer for faster delivery. Whether the product is in a store, warehouse or other facility, brands can optimise shipping times and better serve customers.
A Closer Look at Checkout and Post-Purchase Omnichannel Operations and Logistics
Unifying the digital and physical experiences has the most positive customer impact during the checkout and post-purchase journey. Giving customers options for delivery, returns and appeasement is key for creating a customer-centric experience.
Delivery and Fulfilment
Order fulfilment and delivery can be challenging for global brands. They must meet the customer expectations for delivery times and charges. But they must do so without eating into the margin or even taking a loss on the order.
Omnichannel fulfilment serves two purposes. It lets customers have control and flexibility about when and how they receive their orders. At the same time, it gives a brand the opportunity to create logistics efficiencies, cut costs and reduce its environmental footprint.
- Click and collect
Click and collect, also called buy-online-pick up-in store (BOPIS), allows shoppers to make an online purchase and pick up their order from a store instead of waiting for delivery. Not only does this mean faster fulfilment for customers, it also gets shoppers into the retail location and increases the chance that the shopper will purchase additional items while retrieving their online order.
- Ship from anywhere
More than simply ship from store (SFS), ship from anywhere lets brands fulfil orders from the warehouse or retail location that makes the most logistic sense. In some instances, the local retailer is best suited to fulfil an order. In other cases, filling orders from a regional hub is the best option. Integrating digital and physical inventory positions gives brands the flexibility to maximise logistics resources.
- Pick up
With this method, brands can ship to designated location that may or may not be a retail store but serves as a pick-up location. These locations can include lockers or convenience stores. This delivery mode has similar advantages for the brand and the customer. Pick up is an especially attractive omnichannel option for brands that do not yet have retail locations in a specific market.
Returns
When an order arrives and is not as the customer expected, brands need to offer fast and convenient ways for customers to send that merchandise back. Giving shoppers the return options that work best for them ensures higher satisfaction. But it’s not just the shopper that benefits from multiple return channel options. Brands can realise cost savings and efficiencies that protect the bottom line.
- Return to store
An integrated omnichannel solution allows customers who purchased online to return unwanted products to the brand’s local retail location. Brands benefit because they can either refund the purchase or offer an exchange in one place.
- Home collection
In some instances, customers may prefer to schedule a courier to pick up the unwanted item. This is especially desirable if the product is large or unwieldy or in certain geographic areas.
- Drop-off
Customers can pick up orders at non-branded retail locations, and brands can enable returns at lockers or convenience stores. It is convenient for the customer. And it streamlines return logistics as brands are already visiting the location. Therefore they can deliver and retrieve orders from a single location.
Appeasement
Returns don’t end when the merchandise goes back to the brands. Customers need to either receive a refund or need to exchange the item they did not want to keep. With the right omnichannel solutions, brands can enable fast, convenient appeasements that are cost-effective and customer centric.
- Online exchanges
Allowing customers to self-serve through online exchanges lets shoppers use their preferred channel. In addition, they can access more inventory than may be available in a retail location. The additional selection ensures that customers can access the exact replacement item they need.
- Online replacements
If an exact exchange is not possible, shoppers can replace the item they don’t want with a comparable product. Just like the original purchase, customers order the replacement online. This leaves both the brand and customer with a reliable paper trail. That protects the brand and builds trust with the customer.
Overcoming Operational Challenges
As with any strategic or operational shift, adopting omnichannel can be challenging. When implementing omnichannel – especially in international markets – brands are likely to run into logistics and localisation challenges.
International logistics are complex enough when they are siloed. They are even more complex when managing multiple channels. Brands must coordinate suppliers, shippers, customs and duties, last-mile transport, returns management and more.
Engaging a merchant of record is the best way that brands can overcome the challenges of digital and physical integration. Merchants of record assume legal responsibility for compliance and have established relationships with in-country vendors. This means brands can take advantage of existing relationships as well as economies of scale.
How to Choose the Right Omnichannel Partner
Brands with global online business channels should be selective when choosing partners and vendors to help implement omnichannel strategies. Brands with a DTC sales channel should select partners and vendors that will prioritise the customer journey and brand reputation.
Integrations
Brands should make sure that ecommerce partners and vendors can easily integrate with an existing tech stack. Integration is the heart of omnichannel so vendor solutions should add to and streamline capabilities.
Light touch integrations and composable architecture are the most efficient ways to enter a new market quickly.
Established Business Entity
Accepting customer payments both online and at the physical point of sale requires a business presence in the market. Having a local business entity means faster transaction times and higher payment acceptance rates.
Local Compliance
Regardless of channel, brands must comply with legal and tax regulations in each market. Vendors offering omnichannel solutions should be able to show how their omnichannel ecommerce solutions ensure that brands are compliant. Areas of compliance should include customer data security, privacy, tax and duties.
The Takeaway
Omnichannel commerce is key to brand growth – domestically and internationally. Every year, shoppers demand more from brands and retailers. They want more ways to discover new products, more ways to purchase those products and more ways to interact with brands.
Implementing an omnichannel commerce strategy requires market knowledge, logistics relationships, cultural competency, legal understanding and more.
It can take many years as well as significant internal investment to gather personnel and vendors and acquire the technology necessary to properly execute omnichannel. When speed to market matters and you refuse to compromise the customer experience, reach out to ESW.
We open brands to customers in more than 200 markets in a matter of weeks – not months or years. We design our omnichannel offerings to meet customer expectations from day one.
Our solutions are the expansion backbone of some of the world’s best-loved brands.
Contact us today to discuss your brand’s goals.
