When I come across “best practices,” a quote frequently attributed to Otto von Bismarck comes to mind, “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
In an age where both nimble, young companies and behemoths are trying to reposition themselves as omni-channel retailers, there are plenty of insights to draw from across the board. Young companies and startups are scrappy and can execute more quickly on their vision — but the larger companies have the resources to make large scale change happen rapidly once they get their feet on the ground.
These best practices and pieces of advice from all sorts of companies, as well as high points and mistakes, serve not as an instruction manual but as a set of sign posts.
10 best omnichannel retailers
Given its recent $310 million acquisition by Walmart, it might be easy to forget that Bonobos started off as an independent fashion company focused on men’s pants. Founded in 2007, Bonobos had a vision about how they could connect with their visitors and customers in a deeper way.
In 2012, Bonobos partnered with Nordstrom on an omnichannel marketing campaign to enable a whole new audience to discover them. As the New York Times reports, “Bonobos will get $16.4 million in cash and more than 100 stores to sell its clothes, while Nordstrom will get gain expertise on e-mail marketing and online branding.”
During this process, in addition to the cash infusion, selling more, gaining greater exposure, and building a deeper in-person brand experience with existing buyers and customers, Bonobos became a true omni-channel retailer and put together a playbook for opening their own retail operation.
And the rest is history. In 2015, Bonobos set up 17 “guideshops,” stores where visitors could browse and buy online, but could not take any products home. This kept inventory and operations simple, but still came with the benefits of touch — a barrier that so many people value, but most ecommerce companies haven’t broken through yet.
Image via The Huffington Post
This type of gradual evolution, and symbiotic education, has been replicated by many ecommerce pure-play brands.
Casper, for instance, just signed a distribution deal to appear in over 1,200 of Target’s stores, expanding well beyond their pop-up stores. And of course, sometimes, it goes beyond distribution — a few months ago, PetSmart bought Chewy for $3.35 billion to marry well established physical and ecommerce brands, who will no doubt, both amplify each other’s strengths.
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2. Warby Parker
Omni-channel data is an extremely valuable asset. It can make the difference between a successful expansion and a belly flop.
It’s your data. When setting up any new channel, you can look at data that your existing visitors and customers generated in order to figure out how to get started or expand. Here’s a simple tactic, for example…
As eMarketer reports, “Warby Parker uses the location of its online consumers to gauge potential opportunities for opening brick-and-mortar stores. (Over 75% of customers who buy at its stores have browsed and done research on the company’s website first, he said.)”
Keeping this data in mind when setting up your omni-channel infrastructure will make things smoother. And whether you want to call it a minimum viable product or a risky assumption test, make sure you find the lowest cost and time investment to experiment. This will be crucial to omni-channel success. “We are able to conceive an idea, test it and bring to market within two weeks,” Warby Parker co-CEO Neil Blumenthal says.
Image via PSFK
Similar to Bonobos, Warby Parker’s physical stores aren’t geared towards selling products. Instead, it “uses its physical stores to give customers something to do with those glasses — a comfortable sitting area and library.”
Despite the turns of the season, beauty supplier retailer Ulta held strong. This is correlated with their prioritization and investment in omnichannel retailing. Ulta understands that it’s not selling things in a bunch of places—but rather, that it’s all one experience for the visitor, buyer, and customer. This external singular experience is a reflection of their internal operations — matching efforts with a bunch of teams across their organization:
“The various teams within the Ulta organization are connected and constantly in communication. It’s one experience for the guest, no matter the department, whether it is a supply chain problem, inventory problem, merchandising problem,” said Jeff Hamm, senior director, e-commerce operations, at a Shop.org event. “And it’s that collaboration between teams that helps to get omni-channel projects green lighted, budgeted and executed.”
Similar to Warby Parker, Ulta also practices testing in small volumes, adding new products to its ecommerce site first before typically bringing them into stores two weeks later. This is because they noticed their customers webrooming, and checking the websites before buying products in store. Two weeks gives people enough time to learn about a new product, decide if they like, and make plans to go into the store.
Learn more: Omnichannel vs. multichannel
4. Stitch Fix
At the core of omni-channel is the ability to provide people with a seamless shopping experience. And of course, convenience and consistency are important, but so is excitement. This spark is why you can hook people back in with tactics like flash sales, but you can also bake excitement into your delivery and distribution…
Fashion retailer Stitch Fix works as their customers’ stylists to personalize recommendations. In fact, it goes a step further than most ecommerce websites — Stitch Fix’s algorithms selects the clothes its customers would like, and ships those items to them. Customers send back items they don’t like without any charge, as Stitch Fix offers free shipping both ways.
While you might not have an idea where to start building an algorithm or set up a data team (Stitch Fix has a team of 75), you can start with the data and behavior you have, and build hypotheses and models around that. For example, even though the Stitch Fix team is starting to design their own clothes, their model is relatively straightforward…
“We have this model about why people choose clothes,” says Eric Colson, Stitch Fix’s chief algorithm officer and head of the company’s 75-person data team in an interview with Fast Co.Design. “The reality is two reasons. One is the innate desire to fit in–you do want to look like everyone else. That’s how trends happen. People dress the same and want to fit in. We also have this innate desire for individualism. Our algorithms are geared to both.”
Image via Stitch Fix
Algorithm aside, can you imagine how your customers would appreciate that — shopping literally from the comfort of their own homes, combined with the instant gratification of keeping certain products? It’s similar to what Frank & Oak does with their Style Plan.
For merchants already with brick-and-mortar stores, don’t forget to integrate technology with them. That could be as simple as arming each employee with an iPad, so they can search much more quickly and comprehensively, and be of greater service to customers.
For example, for outdoors retailer REI, “75% of their customers visit their website or mobile app to check out items before making an in-store purchase. REI understood that mobile offered a great marketing opportunity. The co-op decided to equip their sales associates with mobile devices to help customers with their purchasing decisions, and provide free in-store Wi-Fi for customers to access information as they shop.”
REI is just one of many omnichannel examples — according to e-tailing and eMarketer, 60% of brick and mortar stores use tablets to enhance the customer experience.
This addition is similar to Ulta’s perspective on omni-channel — it’s all one experience. When visitors get more familiar with the website in store, or vice versa, they get more immersed into your business and brand.
6. Crate & Barrel
Showrooming and webrooming are just words that mark how people like to shop these days. There’s no point working against these natural tendencies.
“We see people buy furniture online. We introduced buy online and pick up in store and buy online and ship to store [without any shipping fee]. We are trying to use that to drive store traffic. When they come in, we give them bounce-back coupons,” said Michael Relich, COO of home furnishings and furniture retailer Crate and Barrel.
“They use our stores as a showroom first and can see an extended assortment online. We actually see a lot of transactions start in one channel and finish in another. Brick and mortar is good for us.”
But this powerful omni-channel showrooming and webrooming loop can be thrown off if you’re not careful…
Because there are so many different channels, each with different completion and conversion rates, it’s easy to overlook the influence each channel has on each transaction.
“Retailers need to align incentives around omni-channel. Too often, stores are given credit for stores sales and ecom is incentivized on ecom sales, which lead to less of a seamless experience. Consumers don’t care about how you are organized. You got to make it seamless,” said Relich.
Similarly, Williams-Sonoma EVP Patrick Connolly says (as paraphrased by L2 Inc), “employees are rewarded for online purchases they initiate, and returns are appropriated to the right channels to avoid penalizing them for returns of online merchandise. The channel-agnostic philosophy has roots at the enterprise, since stores were encouraged to distribute catalogues without fear of cannibalizing their segment.”
The typical ecommerce experience just can’t win everyone over. Some people want to buy now. Some people don’t want to pay for shipping. Some people will swear by their in-store experiences — checking the fit on their clothes, how heavy each article of clothing might be, and how it looks not in a photo but on them. Understandable, right?
This is why clothing retailer Zumiez set up their infrastructure to enable flexible purchases. Their point-of-sale platform enables people to purchase from all channels — and visitors can reserve/buy online and pick up in-store same day (near-instant gratification without dramatic shipping costs), ship from any store to any location, and order online from the store.
Image via CrowdTwist
They also built a distributed order management system, warehouse management system, customer service system, and in-store fulfillment application in just six months. This is reminiscent of Jasper CEO Jon Marsella’s advice about product information management systems, “Don’t spend too much, don’t overthink it, don’t look for a total timeline end-to-end that’s anything longer than three months, with the roadmap of a year out in front of you.”
Similarly, Walmart announced that they would work with their retail workers for delivery. As always, in business, it’s important to consider every single asset and to leverage them into your advantage.
Keep in mind as you’re shipping your experiments that real people — visitors, buyers, and customers — will be seeing them and shopping. Make it easy for them to purchase. Trying an experimental product or a channel shouldn’t be any different from them purchasing at a more standard one.
While optimizing each channel is important for business performance, for the visitor it’s never been about the channel — it’s about the experience. James Nordstrom, President of Nordstrom Stores, says to Diginomica, “We don’t think the customer is loyal to channels. We don’t hear customers talk about channels very much. Customers value experiences, and so the more successful we’re at in creating a great shopping experience, no matter how they’re choosing to shop, I think the better our business will be. And so we’re talking about mobile and the things we’re doing there.”
As Nectarom highlights, “Nordstrom has made it possible to buy items from Instagram and find items based on Pinterest favorites. Instagram has been a modeling platform for retail items. However, a grievance shoppers have, is the inability to locate and buy the items presented on Nordstrom’s Instagram account. The retailer’s Instagram account now features a link which directs customers to Like2Buy, a platform that makes Instagram shopping easy. All of the items available for sale from the retailer’s feed are displayed as an elegant grid of photos. Shoppers can then scroll and “like” items, which are curated into a personal wishlist or shopping cart.”
This type of omni-channel ordering is made possible by a strong backbone. The Wall Street Journal reports that Nordstrom spent millions of dollars the company invested in technology in recent years has gone toward tools that would help manage inventory. Investing in your product product information management (PIM) not only loosens up cashflow, but also reduces costs and gets products out the door faster, improving business performance.
Image via GigaOM
And of course, not to be forgotten is Nordstrom’s display experiment in 2013, in which they organized their store by displaying products according to popularity on Pinterest.
Visitors might treat every channel as one experience — but they sure don’t behave the same way in each one. So while you must make them fit into one cohesive whole for the visitors, you also have to make sure you understand each one’s function.
For example, do people webroom or showroom more for your business? Which channels generate awareness, which ones influence purchases, and which ones do people actually buy upon? What about at peak buying season?
Staples noticed that customers shop earlier than ever on Black Friday, so “by offering mobile deals starting at 11 p.m. the night before, we’re providing them the opportunity to shop when they want to, and will continue the deals when our stores open at 5 a.m. the next morning,” says Prat Vemana, director of mobile and Staples’ Cambridge, MA-based Velocity Lab to Retail Dive.
And even with the exclusive deals and knowing how people behave as an aggregate at each channel, the next level is knowing each customer as an individual.
Image via Prat Vemana, YouTube
Staples Chief Digital Officer Faisal Masud says that despite being a loyal Nordstrom customer, “I continue to see random emails from them about products that I don’t really buy or ever plan to buy–although they know my size, they know the brands I buy, what I buy, and how much I buy.” Setting up the infrastructure to understand this not only requires the data from your ecommerce stores, but also in-store technology (see point #5).
It’s easy to get lost in the day-to-day fires and operations of things. We all know that even just maintaining a company can be a tall task through tough months and quarters. Yet treading water is no way to live…
Instead, in addition to setting clear channels of communication for your organization’s leaders (see point #3), set aside resources to create a team whose specialty is bringing together and accelerating omni-channel experiences. Footwear retailer DSW calls this team their Transformation Team, whose mission is to usher omni-channel into their organization, which previously had no technology support from within.
"Once we have a project that is cross-functional with major impacts, we use the Transformation Team to help transform the entire process," DSW SVP and CIO Ashlee Aldridge says. In addition to that initial catalyst work, each quarter the Transformation Team ensures the analytics are meeting business objectives and determines whether DSW can move on to their next project.
Image via Agile Academy
While your organization may or may not be playing catch up like DSW was (it sank $10 million into omni-channel initiatives in 2015), you’ll still need to innovate in order to make sure you’re keeping up with customer expectations and behavior.
Omnichannel Retailer Conclusions
Ten retailers, ten manifestations of the common trends and strategic patterns (webrooming and showrooming, testing small and moving quickly, and creating a singular experience). When moving forward in your own transition in omni-channel, keep these bigger picture goals as your north star to make sure you’re moving in the right direction.
And remember, while a lot of this change requires new technology to execute, the most difficult parts of it will require new methods of thinking, new organizational structures, and new ways of collaboration.
Will your team be up to the challenge?