Omnichannel Retail Is No Longer A Strategy, It’s The Business Model
UX Corner

Omnichannel Retail Is No Longer A Strategy, It’s The Business Model

Dan Rowinski • June 14, 2017

The philosophical distinction between business model and strategy could be the difference between survival and spiral for retailers.

The concept of omnichannel used to be about strategy and tactics for retailers. A new email campaign. What are we doing with social? How exactly does retargeting work? Omnichannel was something to add to an existing business to provide new levers for reaching and engaging customers to provide a sales lift or better retention. Ninety-two percent of consumers in North American shop on more than one channel, according to a survey of consumers by iVend Retail.

Over the past couple of years it has become clear that omnichannel is not an adjacent aspect to the retail and ecommerce industry. Omnichannel has become the business model.

This is a fundamental difference. The retailers that grasp omnichannel as a business model from a philosophical level will be the ones that succeed. Retailers that cling to the notion that omnichannel is somehow separate—and subservient to—physical retail locations will join the parade of their peers marching towards bankruptcy.

This Is The Way Consumers Shop

I was in an airport the other day with time to kill. I bopped into that ubiquitous headphone shop that is in every airport to check on some high-end wireless headphones (Bower & Wilkins P5 wireless). The clerks gave me a demo, I noted how much I liked them, but balked at the price. I figured I’d do more market research.

When I got home, I remembered that I had about $340 worth of Amazon gift cards. I checked out the headphones on Amazon.com—they were the same price as in store—and ordered them. While I was at it, I ordered some cat litter. Who wants to haul around a 40-pound box of sand when you can just have somebody bring it to your house?

When my headphones arrived, I set them up and put them on … and went to Whole Foods and Walgreens. Both store are literally next door to my apartment so it is more convenient to walk 100 yards than it is to order groceries via Instacart or some other delivery service.

I need some new sandals. I will probably go to the mall to find them to give myself options of shoe stores and try them on before I buy them.

Yesterday I opened an email from Volvo and had some fun on its website building the car of my dreams (the S90 in metallic black with all the fixings). I may not be buying that car any time soon, but the email got me into “considered purchase” state of mind. It was a good reminder.

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Responding to a tweet I saw on my phone from my local coffee shop, I went down the street and bought a sandwich.

What is the common denominator with all of these purchases?

In each case it was the most convenient method of shopping. I shopped on Amazon to do price and feature comparisons that I couldn’t do in a store. I opened an email and “built” a car because I am not going to annoy the auto dealer by taking a test drive of a car I’m not going to buy right now. I was reminded by my phone that I could get a sandwich at one of my local shops.

I didn’t even need to think about “how” I shopped at all of these places. Except for my “showrooming” of the headphones, I didn’t make a conscious effort to say, “OK, I am going to respond to this tweet or use my phone or open this email or go to the store.” I just did.

This is how consumers shop.

According to iVend Retail, one-third of consumers no longer think about the channels in which they shop, they just use what is most convenient for them. About 31.9% of people shop at the same store through multiple channels. The majority of people use both online and physical channels to gather information and make purchases, regardless if they buy from the physical location or through the online store.

Relevant Experiences Are The Goal

People know that retailers, websites, search engines and social media are keeping track on them. There is a tacit agreement between brands and consumers that the benefits of this data sharing should go both ways.

More than a third of consumers (66.4%) say that it very or somewhat important for retailers to have a total view of their behavior on all channels. And by collecting this data, consumers expect companies to give them access to information and deals to the products they are looking for.

The goal for consumers is the quest for relevancy. They want relevant experiences that meet their attitudes, needs and desires. They don’t necessarily want super creepy “personalization” from every brand they encounter. There is a balance that retailers need to strike between contextual/relevant … and being stalkers.

According to iVend Retailer, 68.3% of consumers find it acceptable to track consumer purchase history. Two-fifths of consumers (41%) are OK with retailers tracking what they browse online; 31% are fine with tracking how much they spend and 30.6% agree that its fine to track what they look at in store.

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What consumers don’t want are borderline invasions of privacy. Only 8% said it was acceptable for the retailer to collect their cellphone number and 15.9% think it’s tolerable to track their phone’s location.

When it comes to searching for relevant information and resources, consumers are split between online and physical locations. iVend Retailer notes that 47% of people are researching online once before purchasing it, mostly by desktop (54.6%) and smartphone (40.4%). When consumers are in store, more than a quarter (27.6%) will look on their smartphone for product information while another quarter (25.8%) will seek out a sales associate.

The Omnichannel Is Horizontal

The thought exercise for retailers today is to ask a simple question: if you were starting a business today, how would you set it up?

If the answer to that question is, “I’d set up a physical store and then add omnichannel verticals” then you’re already behind. Omnichannel is the business model, not just the strategy and tactics.

The storefront for retailers needs to be … everywhere. These channels need to work together as one, united experience for consumers. Shopping or looking up information online should fit well with the in-store experience, which should be married to the data collected via email, or social, mobile websites or apps. The goal is to sell product … it shouldn’t matter where or how that product is sold.

For anybody familiar with ecommerce and retail technology, this is a lot harder than it sounds. The biggest trend in retail in 2017 is not machine learning or personalization. It is updating the platform and backend so that this horizontal, seamless experience is possible for consumers. For big brands with legacy backends and reams of data, replatforming is a difficult, necessary task.

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