What is omnichannel?
Before we can discuss omnichannel, the latest buzzword in online commerce, we first need to define what omnichannel is.
As with all things Internet, this is not straightforward since omnichannel is not an official term… did anyone really understand what Web 2.0 was all about? And what about Big Data? For the sake of this paper we will define omnichannel as the ability for a consumer to interact with a company through multiple channels and experiences, such as their iPad, laptop, through social media or in-store, through the sales team or through customer services and receive the same user experience from each channel, and be able to hop from one channel to another seamlessly.
Omnichannel is a big step forward from last year’s buzzword - multichannel. With multichannel, retailers recognised the need to have an offering on different channels (iPad, mobile, laptop, etc), but these were not necessarily joined up and the user experience on each channel could be very different.
Omnichannel – just a flash in the pan?
We believe that omnichannel isn’t a flash in the pan. Many of our clients are organising themselves to tackle the challenges they face around creating an omni-channel experience. According to IDC’s 2014 Retail Insights published in January 2014, IDC’s number one trend was retailers’ focus on creating omnichannel solutions with 70% of the top EMEA retailers focussing on omnichannel solutions in 2014.
The big driver for omnichannel is of course the demands of the consumers themselves who, with technologies such as social media, smartphones and tablets, are increasingly demanding a joined up experience every time they interact with a company.
Retailers themselves also see potential profit in omnichannel. IDC’s research also shows that “omnichannel consumers” spend between 15%-30% more than their counterparts, meaning having good omnichannel solutions can really impact the retailer’s top line.
Interestingly, we searched LinkedIn for people with 'omnichannel' in their current job title in the UK and found just under 70 people compared with over 800 with “multichannel”. We predict this will change significantly over the next 12 months!
So - what does an omnichannel experience look like?
The omnichannel nirvana could look something like this:
Imagine a friend buys a new bike and mentions it on Facebook which you see on your smart phone. You think his bike is pretty cool and since you’re also looking for a new bike you click on the link and take a quick look at the retailer’s site.
At home, and with a bit more time to spare, you use your tablet to look deeper. When you go to the retailer’s site again you immediately see the bike you were looking at on your phone, without the need to log in or navigate to the specific product page. While on the retailer’s site, you also look at a few other bikes you're interested in.
Still unsure, a few days later, you go to your local bike store. Your phone links to the store’s network when you walk through the door notifying the sales assistant of the bikes you have been looking at. The sales assistant can then be prepared to talk to you, give advice and make the sale which is done there and then. You might then have the option of taking the bike home from the store or having it delivered to a place of your choosing at a preferred time. If you decide to have the bike delivered, you can track your order using any of your devices.
When the bike arrives, the local store phones to make sure you’re happy. After a few days you might have a couple of questions and decide to contact customer services. Without having to log-in or answer questions about account numbers, the support person instantly knows what you ordered and is able to answer all your questions. All this connectivity is down to the omnichannel experience.
Is anyone doing omnichannel at the moment?
Not really. Most analysts look at companies like Apple as one of the front-runners in omnichannel, and Burberry deliver the best omnichannel experience on the UK High Street according to omnichannel retailing.com
Needless to say, the need for omnichannel is consumer driven, especially with the now dominant position of tablet sales compared to PCs, and the every expanding reach of social networking.
The reason why no-one is really doing omnichannel well at the moment is because the challenge of doing it right is huge -
omnichannel by its very definition touches all parts of a company including marketing, IT, customer services, physical stores and online. This will need not only require significant investment in systems and process, but in some cases radical reorganisation within the retailers to force departments that have typically worked in silos to work together – an omnichannel strategy will never work for example, if the stores and online teams are fighting over who gets the revenue from a sale.
Again, by definition, the online only pure-play retailers will be able to move much quicker in implementing omnichannel solutions since they don’t have the overhead of the in-store experience to deal with, but even here some of the giants of the industry seem to be struggling.
What is the future of omnichannel?
We predict full omnichannel convergence will be a long journey with no end – new channels will continue to emerge which must be integrated into the customer experience and full omnichannel convergence will always be a vision rather than an attainable target.
In the short to medium term however, we are seeing very pragmatic approaches to omnichannel convergence from retailers. We have spoken to a large number of retailers, both small and large, and all seem to be following these steps:
- Identify an under-served channel, such as catering for smart phone users, integration of social networking, an in-store experience.
- Build the business case for creating a multichannel solution to the channel and prioritise the opportunities. Where multichannel in this instance means just focusing on that individual channel without worrying too much at this stage about integration with other customer experiences.
- Buy/build/create the multichannel solution, ensuring that it is as similar as possible to other the experience of other multichannel solutions and ensuring that the solution has the ability to be upgraded, i.e. it is future proof.
- Start joining these individual islands of multichannel solutions by linking up back-end systems and process and updating the customer experiences to ensure they are consistent across all channels.
This practical approach seems eminently right to us – the barriers to creating an omnichannel solution from scratch are enormous and this ad hoc approach will surely have the most success.
Jon Horden is chief executive of PrismaStar.