What is omni-channel retailing?
By definition, 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.
To be everywhere. That’s the dream … and it’s the promise of omni-channel retailing.
However, according to a recent survey, only 22% of North American retailers consider their omni-channel retailing efforts a top priority 2017.
While that’s a significant portion of retailers, let’s put this in context:
- In 2014, 26% of retailers claimed omni-channel was their number 3 priority.
- In 2015, 45% of retailers claimed omni-channel “retailing” as their number 2 priority.
- In 2016, 21% of retailers claimed omni-channel “efforts” were their number 5 priority.
- In 2017, 22% of retailers claimed omni-channel was their number 4 priority.
This fluctuation might mean that while retailers agree omni-channel is important, it’s not as high a priority as avenues that appear to have more tangible outcomes, like mobile, marketing or merchandising.
These channel’s true potential will always be squandered so long as they’re thought of as separate, non-integrated ways of selling to your market.
It’s not just about having a presence on multiple channels or giving your customer the option to shop in multiple places. Mobile, marketing, merchandising, fulfillment, marketplaces … all of it, needs to be taken into consideration if you’re going to be a robust omni-channel retailer.
To do that, let’s explore …
- What Is Omni-Channel Retailing?
- How Omni-Channel Shopping Can Be So Much More
- What’s the Opportunity in Omni-Channel Retailing?
- Why Is Omni-Channel Retailing So Valuable in Commerce?
- How to Create Omni-Channel Retailing Experiences
- What Omni-Channel Shopping Feels Like
- What’s Next for Omni-Channel Retailing?
What Is Omni-Channel Retailing?
With many definitions and spellings, it’s easy to get confused.
- Retailers with a physical and digital presence
- “Seamless and effortless, high-quality customer experiences that occur within and between contact channels.”
- The ability to deliver a consistent experience across offline and online channels, while factoring in the different devices that consumers are using to interact with your business.
The most fleshed out definition of omni-channel I’ve seen involves allowing in-store visitors to see products and deals on their mobile devices, ship purchases to stores, have in-store purchases shipped to their home, have stores process returns, and allow for exchanges in a physical retail location.
These definitions are sufficient... but none contain the gravity you’d expect a prefix like “omni” should carry. “The ability to sell online and offline” is significant. However, does it sound nearly as powerful next to words defined as “being everywhere” and “having unlimited knowledge?”
The reason these definitions of omni-channel sell themselves short is because the tooling itself has forced retailers to think small.
Consider this, in a recent study conducted by Periscope research, 78% of retailers admit their consumers do not have a unified brand experience. 45% of retailers also say that progress isn’t happening fast enough.
Their primary obstacles with delivering great omni-channel experiences cited were:
- Lack of internal organization (39%)
- Lack of customer analytics across channels (67%)
- Siloed organization (48%)
- Poor data quality (45%)
- Inability to identify customers across shopping trips (45%)
Each obstacle stems from management practices that were born and developed around tools built in a previous era of commerce.
How Omni-Channel Shopping Can be So Much More
Omni-channel as a philosophy is about providing consistent, yet unique and contextual brand experiences across multiple customer-aware touchpoints, including brick and mortar, marketplaces, web, mobile and social.
It’s about allowing consumers to purchase wherever they are while communicating in a way that is in tune with why they use a given channel and showing awareness of their individual stage in the customer lifecycle.
Using that definition as a guiding philosophy, a sample omni-channel customer experience might look something like this:
- A customer discovers and buys from your brand through Amazon.
- They receive a tailored-for-Amazon unboxing experience, with inserts that promote inventory not found on Amazon along with a discount, information about your loyalty program, your retail experiences (i.e store or popup) and a URL to a dedicated collection page on your site.
- The landing page triggers retargeting pixels for your Facebook shop, Buyable Pins, and Display remarketing ads promoting products that complement the original purchase.
- When the second purchase is made, the customer receives an email notifying them of a nearby retail storefront or event, the option to ship to store, and promotes the “refer-a-friend” program.
- Follow-up emails encourage the customer to check out new looks on Pinterest or tagging the company on Instagram and promote your loyalty program (if they haven’t joined) which adds bonus points for following on different social media channels.
- Before your next pop-up, loyal customers are sent a link to a private collection, are encouraged to buy from their phones, and are notified of an exclusive, members-only VIP lounge.
Even without getting specific about a company or product category, it’s easy to see how this basic omni-channel user journey uses information about one sales channel and invites them to participate in another they may not have been aware of.
What separates this from what many businesses are doing is inviting the buyer to take actions that feel native to additional channels, so the interaction isn’t forced or contrived.
When done well, buyers seamlessly transition from one channel to the next, blissfully falling deeper and deeper into the brand experience.
As they evolve from buyer to loyal customer, your brand’s communications also deepen to accurately reflect where they are in the customer journey.
What’s the Opportunity in Omni-Channel Retailing?
McKinsey Research and Harvard Business Review recently collaborated with a retailer who operates hundreds of stores across the U.S to learn just how valuable omni-channel retail customers really are.
The study included 46,000 customers who were asked about every aspect of their shopping journey during a 14-month period between June 2015 to August 2016, focusing on which channels they used and why.
For the sake of the study, “channel” was defined as any interactive touchpoint with the retailer, including websites, mobile applications, interactive catalogs, and in-store tablets, among others.
The study found that of the participants:
- Only 7% were online only
- 20% were store-only shoppers
- 73% used multiple channels
“Not only did [omni-channel retail customers] use smartphone apps to compare prices or download a coupon, but they were also avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet.”
The study also found omni-channel retail customers spent an average of 4% more on every shopping occasion in-store, and 10% more online than single-channel customers.
Perhaps unsurprisingly, the research showed the more channels a customer used, the more they would spend.
“Customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.”
This research echoes a report by IDC Retail Insights which found retailers using omni-channel marketing strategies saw a 15-35% increase in average transaction size, along with a 5-10% increase in loyal customers’ profitability, and 30% higher lifetime value than those who shop using only one channel.
This is also reflective of the broader shift in how consumer’s shopping habits, particularly in younger shoppers.
Similarly, Aberdeen Group found that companies with omni-channel engagement strategies enjoy an:
- Average 9.5% year-over-year increase in annual revenue, compared with 3.4%
- Average 7.5% year-over-year decrease in cost per customer contact, compared with 0.2%
- 89% retention rate of their customers vs 33% for companies with weak omni-channel customer engagement
It all seems like a brand marketer’s dream, but it gets even more lucrative when you examine on and offline shopping behaviors ...
Why Is Omni-Channel Retailing So Valuable in Commerce?
It stems from the fact that we live in an age of constant connectivity.
According to Nielsen’s Total Audience Report, Americans spend an average of 10 hours and 39 minutes of their day in front of a screen.
That’s over 330 hours a month consuming a sea of media on a variety of devices.
Just like McKinsey’s research mentioned earlier, Nielsen’s research shows the more devices a person owns, the more time they spend consuming media.
The trouble is, by marketer’s own admission, that media is overwhelmingly focused on acquiring new customers, meaning the majority of their communication strategies are focused on “getting” the customer’s attention, rather than doing anything to deepen or strengthen the relationship once they have it.
The reason the omni-channel customer is so valuable then is because the true omni-channel business attempts to cut through that noise by:
- Being anywhere their target customer might need or want their products
- Using everything they know about the target customer to deliver as relevant an experience as possible, allowing them to build a deeper relationship and foster brand loyalty.
There’s a lot more to these points we’ll unpack in just a moment, but what it distills down to for the business is to build a sense of familiarity within a target market and provide consumers an anchor point and a sense of consistency in an otherwise overwhelming media landscape.
How to Create Omni-Channel Retailing Experience
The next question is: If screens are everywhere, where are people looking when they discover new brands?
Obviously, you can’t really be everywhere, so the next best thing is to build the illusion of being everywhere. We do this by creating a network of concentrated and overlapping outlets for advertising, public relations and SEO efforts.
To do this, we’ll focus on three major areas:
- Online “discovery” touchpoints
- Geographic locations
- Devices being used
Want help developing your own omni-channel retailing experience?
With a dedicated Merchant Success Manager and ecommerce’s largest ecosystem of Technology Partners, Agencies, and apps, Shopify Plus brings the future of commerce into the present.
Where People Discover New Brands
The first step to construct this illusion of omnipresence is to increase your visibility in the places people discover new brands.
Global Web Index’s 2013 survey reveals that the primary ways people discover brands are through press and blog coverage, online/offline friends, search and advertising — a healthy mix of active and passive forms of brand discovery.
Where many brand marketers might look at those survey results and ask, “How can I reach the most people on X,Y,Z channel” the omni-channel marketer looks and asks, “How do these channels overlap?”
That’s the trick to appearing omnipresent.
It’s not just about reaching the most people possible through individual channels - it’s about understanding where your target market is paying attention — be it blog, online news, Youtube channels, Instagram influencers, podcasts, or TV shows — and inserting your brand at the intersections of those media properties.
By remaining in their peripheral vision with a consistently great offer on channels they already trust, you’ll build a credible sense of familiarity.
This, however, is just the first step in appearing omnipresent.
How Visitors Get Familiar With Your Brand Without Being Pushy
Where the true familiarity building, lies is in how you retarget your brand and products after people from these overlapping audiences visit your website.
So let’s talk about the visitors that come from these overlapping websites that don’t buy anything.
What message were they seeing? Why did they click? Something you said got their attention, but why wasn’t enough for them to pull out their credit card?
The truth is, 99% of people of people who add products to their cart don’t buy when they’re visiting a brand new website.
Intuitively, this makes sense, right?
Only having just been exposed to the brand, is it reasonable that most people won’t buy without additional context on the brand.
Unfortunately, 81% of merchants included in SeeWhy’s report disagreed and thought cart abandoners weren’t worth their time.
But notice how ¾ of the people had the intent to buy? If I had to guess, of the people who didn’t it’s because they were either retargeted poorly or not at all.
In an article about checkout abandonment, I shared Bryan Eisenberg’s research that found the three reasons people don’t fill out online forms boil down to:
- They fail to reduce fear.
- They fail to build trust and credibility.
- They fail to reinforce benefits.
While that was in reference to abandoned carts, applying the same rationale to top-of-funnel creative isn’t really a stretch.
After all, it’s not uncommon to see brands doing this and only this ad nauseam:
While this certainly can be effective, a better advertising experience is one that gives visitors breathing room to become familiar and enamored with your brand and tells a story using different ad formats (across multiple channels) about what it’s like to purchase from you.
What Omni-Channel Shopping Feels Like
I’m a sucker for menswear. I keep up with the latest trends and styles, and one day I see a review for this really stylish bag from this company Mission Workshop on hiConsumption.com, so I click the link to their product page, and check it out for myself.
Mission Workshop then starts their retargeting journey on Day 1, which focuses on the high-level benefits of their duffel bag, The Cadre 26.
Admittedly, when I browsed the site before, I didn’t pay attention to the bag’s name. In fact, I saw the $235 and left without seeing anything about the bag's durability, or guarantee. “Interesting,” I think, “I haven't seen an ad this useful in a long time.”
Later, while browsing Instagram on my phone, I’m exposed to this image which is more focused on the lifestyle behind the brand.
And this is what I see when I check Pinterest.
What’s great about this advertising experience is that on Day 1 it exposes me to more information about the brand and product throughout multiple touch points, without forcing me to visit the website again, and without feeling like Mission Workshop is trying to pressure me into a $235 purchase. (Though, I could buy natively on Facebook or Pinterest if I wanted to.)
Where these brand experiences get really deep however is as the days go by, the messaging evolves, and I’m exposed to new media formats, layers and offerings of the brand.
Now, this is where it gets hypothetical...
Day 2 of my advertising experience might include a video of the bag in action while I’m on Facebook.
And a pre-roll ad for a product review when I’m on YouTube watching one of my favorite fashion vloggers…
On Day 3, Mission Workshop might back off exclusively promoting the higher priced bag for a little bit, and instead, take a cue from Michael Kors and use Facebook’s new Product Collection Unit to highlight the other product categories they sell merchandise.
While browsing the web, I might see retargeting ads that feature the same products found in the featured collection area, creating consistency across channels, and helping me to become familiar with their total offering.
On Day 4, I may see an ad on Facebook prompting me to visit one of their local partners and try their products on in a store and call to schedule a consultation with one of their stylists.
A few days later I go to the store and have a great conversation with the stylist, happily spend more than I anticipated, and receive a personal email from the stylist with a great recommendation to come back for the upcoming Mission Workshop trunk show.
The stylist says I can only get an invitation if I’m registered on the Mission Workshop website, so I create an account. I come back for the trunk show, buy some accessories, and start a long relationship with Mission Workshop.
As the customer, I don’t see that the information about my journey, from first click to first purchase, is being added to a profile in a CRM, and being segmented and parsed out to tell me a story.
Nor do I care, really.
In 4 days and 8, touchpoints Mission Workshop could use every relevant channel I’d be interacting with to feed me so much relevant information about what it was like to buy from their brand, including:
- Their product mix
- Their guarantees
- Their reviews
- Where to test them out in person
It ought to be a steady release of non-intrusive information designed to give me everything I need to feel comfortable buying this bag from this company.
Not a single darkly lit video featuring close-up angles of the bag while raindrops hit it in slow-motion on every channel conceivable.
What’s Next for Omni-Channel Retailing?
Make no mistake, the pressure is on.
As behemoths like Amazon and Walmart become more focused on the discipline - and the philosophy behind omni-channel deepens - consumer expectations will change and we’ll never look back.
Five years from now, single-channel retail, marketing, and merchandising will be as obsolete as the video store or one hour photo is now, and we won’t give it a second thought. In the coming weeks, we’ll dive deeper into how all of this is possible; using analytics, retargeting, location data, device information and more to develop your omni-channel retail strategy to prepare for the future of commerce.