Navigating the Future of Omnichannel Retailing
In 2017 a report by Brightpearl; the ‘The State of Omnichannel’, revealed that an impressive 87% of retailers now agree that an omnichannel strategy is a critical business function. Omnichannel retailing helps to boost the lifetime value of customers, increase consumer spending and improve the buying experience. This fully integrated approach is proving popular with both retailers and shoppers.
Omnichannel shopping is now an accepted, and expected, retail concept, yet technology and innovation are seeing things evolve once more. Retailers are starting to look at ways to push the boundaries of omnichannel retail even further, and by doing this, they aim to create a fully integrated, omnichannel ecosystem for their customers to experience.
This ecosystem will make for a smoother and more seamless customer experience, which is crucial for shoppers, and an exciting prospect for the future of retail.
In order to visualise what a fully integrated and connected shopping experience may look like, and how businesses can utilize this approach, CardConnect has taken a closer look at the future of omnichannel retail, and what an ‘Omnichannel Ecosystem’ might look like.
What is omnichannel retail?
The advent of multichannel retail
For years and years, the only real option shoppers had when they wanted to purchase a product was to go to the retailer’s physical premises, known also as brick-and-mortar stores, and buy it in person. As online shopping became more popular and more accessible, a large number of retailers launched ecommerce sites in order to increase the number of shopping avenues available to their customers.
Having access to both digital and physical buying options was the beginning of multi-channel retail. In virtually all cases, the online and offline buying experience would be completely separate. Online orders would be purchased digitally and then fulfilled by post, while physical buying would be done in store. The advent of online shopping heralded the beginning of multi-channel retail and provided customers with improved choice and better buying options.
Taking multi-channel retail to an integrated next level
Omnichannel retail takes things one step further. Instead of providing a choice of services across various platforms, omnichannel retail gives customers a smooth and integrated experience throughout the entire buying process. Whether they’re browsing via a mobile device, using social media to interact with a business, or going into a physical premises to make a purchase, an omnichannel strategy ensures the entire experience is seamless.
An omnichannel approach allows customers to browse a brand’s products or services via a range of different devices, and through a variety of social media and ecommerce sites. If an omnichannel strategy is properly implemented, customers should find that they get a consistent experience when using any platform: social media, smartphone, or ecommerce site and when visiting a brick-and-mortar store in person.
All of these platforms should be fully integrated to ensure the customer receives the highest level of service, and that the products and overall approach of the company is an enjoyable and seamless process. Omnichannel retailing should optimise multiple sales channels at the same time in order to capitalize on the customer experience, bringing about a high level of integration between those channels to benefit consumers.
The current state of Omnichannel retail
What the statistics say about omnichannel retail
As you begin to look more closely at omnichannel retailing, you’ll discover a number of statistics that make a very compelling case for this integrated and optimized approach. For example, companies with effective omnichannel engagement strategies retain an average of 89% of their customers. This is compared to just 33% for businesses with weak or nonexistent integrated retail strategies.
Research from the Harvard Business Review revealed that the more channels a customer uses when making a purchase, the more valuable they’ll be to the retailer over their lifetime. On average, omnichannel shoppers spend 4% more on every shopping trip than their mono-channel counterparts.
Omnichannel retailing is a hugely valuable strategy for businesses. The offering of more shopping channels to a customer means they have multiple options to make a purchase and spend more money. Those who use four or more touchpoints to make their purchase spend an average of 9% more than single-channel shoppers. Overall, omnichannel shoppers could be worth up to 30% more to retailers over their lifetime, compared to customers who use just one channel to make their purchases.
Who uses omnichannel retail?
People of all ages use both online and offline channels when looking to purchase a product. While baby boomers prefer to use a more mono-channel approach to make their purchases, millennials are one of the groups most likely to take a broader approach to buying. In fact, around 68% of millennials now demand the convenience of an omnichannel approach during their shopping journey.
Baby boomers and Gen X aren’t adverse to online shopping, in fact Gen X spend 50% more time shopping online each week (six hours) than their older counterparts. However, the people in these age groups are more likely to head into a brick-and-mortar store to make their final purchase. A massive 84% of baby boomers prefer to buy products in person, due to their high level of expectations in customer service. These generations are also likely to use review sites and ecommerce sites to inform their opinion before making a final buying decision.
As most generations have already become accustomed to using a variety of platforms to research and purchase products, the move to a fully integrated omnichannel strategy will be a natural progression for people of all ages. This should give retailers an increased confidence when it comes to adopting an omnichannel approach.
The customer journey
Traditionally, the customer journey was short and simple. Once they had discovered a product and engaged with a brand, shoppers would place an order and make payment before collecting their item or having it delivered. These days however, the process is a little different. Customers now want more options at every stage of their buying journey.
In 2000, 66.2% of consumers used a total of two touch points when making a purchase and just 7.3% used four or more touch points, before making payment. In 2015, the number of people using between three and seven touchpoints had increased to 74%. A common omnichannel customer journey now involves browsing a company website, visiting their brick-and-mortar stores, and extensive product research via customer reviews, apps, and social media. This investigative process happens before any transaction is made.
As we enter 2019, the research phase of the customer journey is especially important. Consumers will explore multiple online avenues, including social media networks, review sites and ecommerce sites before making a final decision. What’s more, 55% of shoppers will visit a brick-and-mortar store before making a purchase.
Future predictions: creating an omnichannel ecosystem
When retailers moved from multi-channel retail to a more integrated omnichannel approach, it founded a much smoother and more efficient shopping experience for their customers. The next stage of the journey is to evolve from omnichannel retail to a fully functioning omnichannel retail ecosystem.
An omnichannel ecosystem will allow retailers to use expansive networks of partners, vendors and digital services to provide shoppers with a completely seamless experience, giving their customers exactly what they want. This evolution in omnichannel retail will be driven by data mining. Using what’s known as ‘big data’, will provide companies with the information they need to successfully market their products and services, and to provide shoppers with the smooth, integrated experience they expect.
The importance of adopting an omnichannel ecosystem
Why companies should invest in omnichannel ecosystems
Omnichannel retail is a highly effective way of retaining customers and boosting the lifetime value of those customers. Adopting a fully integrated ecosystem will take the convenience and personalization of omnichannel retail even further, and the benefits that a business could gain from this approach are likely to be extremely high.
Research from the Harvard Business Review showed that the more touchpoints a customer uses, the more they end up spending. If businesses can keep customers within their ecosystem, seamlessly moving from touchpoint to touchpoint, then the customer’s overall expenditure is likely to be even higher.
The benefits of an omnichannel ecosystem
For consumers, the main benefits of an omnichannel retail ecosystem will be increased convenience and personalization. For businesses, it’s likely to be a boost in profits. As a result, omnichannel payment systems are becoming a focal point of interest for businesses worldwide.
When it comes to payment acceptance, an omnichannel approach ensures that customers have a variety of options available to them at the checkout. As well as using standard card payment methods, customers are becoming increasingly more expectant of options like PayPal, Apple Pay, Android Pay, and payment on collection when making a purchase. Businesses should ensure that all of these payment options are available to your customers across all platforms. This is crucial to the successful implementation an omnichannel ecosystem.
How to navigate the omnichannel ecosystem
Touchpoints of an omnichannel ecosystem
In an omnichannel ecosystem, all elements of the buying process are interconnected. Although a customer may begin by visiting your website, they may decide to continue shopping in-store, browsing via their mobile device, or using social media. In a true omnichannel ecosystem, even your call centres will need to be part of the retail web.
Interlaced around the customer journey are a large number of supporting elements. A choice of retail channels, integrated digital business tools, market research and effective fulfilment and payment options all help to create a comprehensive and seamless omnichannel ecosystem.
Factors to take into account when developing an omnichannel strategy
Although all omnichannel ecosystems will have the majority of services in common, each ecosystem will need to be uniquely tailored to suit the retailer implementing the strategy, and the customers they hope to serve. When designing an omnichannel strategy, it’s important to focus on the customer experience. The majority of consumers now expect a strong correlation between online and offline stores, meaning that your branding, your corporate image and your level of customer service should be the same across all platforms.
Ideally, you want the entire customer experience to be intuitive, effortless and seamless. In order to achieve this, you may need to invest in specialized IT support, or potentially look into redeveloping your ecommerce site. Using a system where customers need to login to your online store can be a good way to monitor unique shopping habits. This could also allow you to identify your customers more easily, so that when they get in touch either in-store or by phone, you have all of their information at hand, enabling you to personalize their experience.
While cost is likely to be a factor when creating your ecosystem, the highly proven increase in revenue from omnichannel retail will ensure that your business sees a return on investment.
Optimizing each channel in an omnichannel experience
Although you’ll need to look at your ecosystem as a whole to ensure that it to works smoothly and logically, it’s also important to optimize each step of the process individually. Optimizing your omnichannel approach will take time and research, but the rewards for both your business and the customer will be worth the investment. Look at the ways your customers currently interact with your company, talk and engage with your customers about how you could enhance their shopping experience, and which elements of omnichannel retail are most important to them. The data gained from this research should give you a good indication of where to focus your energies, and which aspects of optimization will bring you the biggest results.
If you’re intending to hire third parties to provide you with omnichannel services, it’s important to use businesses with experience in this area. Companies that understand what you’re trying to achieve will be far better positioned to provide you with the support you need as you build your integrated omnichannel ecosystem.
It is fast becoming the expected standard that customers are given at least some level of omnichannel availability when shopping, both online and in person. By working to create and implement a comprehensive strategy, you can begin to offer your customers an enhanced buying experience, and better informed, personalized interaction. Omnichannel retail is continually proving to be incredibly popular with consumers from all demographics, therefore your strategy, if properly implemented, should yield greater profits, enhanced customer loyalty and a future-proof online and offline presence.