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The Future of Retail: What is Omnichannel Retailing?

By Read Time: 8 min.

Across the retail industry, omnichannel retailing has become the standard for success. But what exactly does omnichannel mean, and how does it work to create a seamless customer experience?

With the explosion of e-commerce, consumer demand is reshaping the retail landscape and how customers expect to interact with sellers.

In the pre-internet days, a large retailer might have had a mail-order catalog as well as brick-and-mortar stores. If you bought a product through the catalog, you had to return it by mail; you couldn't just take it back to a store. The products carried in the catalogs often differed from what was carried in stores, and inventory seen in catalogs were rarely found in-store. For example, if you saw a sweater you liked in the catalog, you may not able to find it at your local retailer.

Today's consumers refuse to be siloed into using a single retail outlet. They expect to have full visibility into your inventory and make the decision to order a product for home delivery, buy it in the store, or order it for in-store pickup, all from their favorite mobile device. The customer is in charge, and they want to choose how they interact with your business. Companies will be better positioned to solve customer issues if they focus on engaging with the customer on their desired platform.

Retailing is undergoing a digital transformation as companies struggle to develop successful omnichannel and multi-channel strategies to compete in today's marketplace.

Hands holding a credit card next to a phone and a wallet about to make an online purchase

What's the Difference Between Omnichannel and Multi-Channel Retailing?

The terms omnichannel and multi-channel describe somewhat similar but different strategies for retailing. There are pros and cons to both, some of which depend on the existing operations in place.

What is Omnichannel retailing?

Omnichannel retailing describes a company in which there are few if any barriers between online and physical sales. The inventories and supply chains are managed as single entities, which allows retailers to respond to customer needs anywhere and anytime. The retailers and customers have information on product availability and location. The customer has the ability to look at a store's website and see if the product they want is in stock at a nearby site, or what the shipping time and cost will be. The customer can decide how they'll buy. The store could fulfill the order from a distribution center, the local store, or another location with the item in stock.

What is Multi-Channel retailing?

Multi-channel retailing operates channels in parallel. There's an inventory and supply chain for brick-and-mortar stores and a separate system for online sales. Depending on how things are set up internally, the channels may seem like independent businesses. Some older retail operations may have created their online sales systems in an ad hoc fashion as the internet came to life, so the systems were developed separately.

Today's customers don't care about internal structures. They want to interact with the retailer through the channel of their choosing and have the same level of customer experience. It's disappointing to find an item you like online and be unable to find it in store, and the store staff may not even know that the product exists.

The key difference between omnichannel and multi-channel is that omnichannel unites all customer touchpoints to deliver a seamless customer experience.

Implementing An Omnichannel Retail Strategy

With consumers expecting to browse, purchase and return goods across a variety of channels, the supply chain must support not only the retail store but also the shopping opportunities from the palm of the customer's hand. This capability requires real-time channel-agnostic visibility of inventory across the supply chain, offering the consumer a single view as they move between channels.

Woman using a laptop to complete an order with omnichannel network connection icons displayed in the forefront

This can be easier said than done, especially if the online channel has been bolted on to existing channels over the years. One of the biggest challenges is the lack of inventory visibility. For some companies, this is a big problem for a single channel, let alone across all channels. Without real-time visibility, customers and managers don't know what products they have to offer or where they're located.

An omnichannel strategy provides an end-to-end agile supply chain that supports online growth that typically has lower margins while also maintaining retail sales revenues.

Today's supply chain processes are too segmented, broken into pieces that don't provide synergy for the entire process. A lack of automation means real-time data is not available and manual processing of products and information drives up costs.

Don't Forget About Reverse Logistics

As companies grow their omnichannel and multi-channel sales, reverse logistics will be a key component for success. After all, returns are a major factor in online sales. Customers expect to be able to return items where and when it's convenient for them, not for the company. If they order a product online and pick it up in the store, they may want to send it back via parcel pickup rather than take it back to the store. Or if they opt for home delivery, they may want to drop it off at a nearby retail location.

Many e-commerce companies encourage returns for apparel and footwear, for example, so the reverse flow of products is vitally important. Retailers must be able to return items and capture any value through restocking or liquidation in a cost-effective manner. Reverse logistics must become its own discipline with management oversight and investment to succeed. For many large e-commerce merchants, the answer is creating a separate supply chain with the same level of visibility as the outbound process.

How Can You Create A Seamless Customer Experience With Omnichannel Retailing?

The key to success in omnichannel retailing is to focus on the customer experience first. Most retail supply chains were built to deliver goods to stores. But now the supply chain may be the first and only interaction between your company and the customer.

Companies need to have a greater focus on the mobile experience first. This would include responsive websites, image-oriented design and easy-to-use interfaces like ordering buttons and chatbots.

Woman with curly hair looking at her mobile phone

Some retailers offer an endless-aisle approach so that customers can make in-store purchases for items that are not available in store, as well as providing additional products from the store online. Others offer click-and-collect options provide the convenience of online buying, but the customer picks up the item in store, saving on shipping costs.

Use a 3PL to Support Omnichannel Success

A 3PL can help you collaborate with value chain partners to enable seamless data visibility and develop actionable insights to help you succeed in fulfillment. An omnichannel approach can't be an afterthought. It must be a top-down cultural transformation led by internal champions aided by 3PL partners. The strategy must begin with understanding the customers and what they truly value. For example, the speed of shipping may not be as important as predictability. So a company could waste resources improving shipping time when what customers really value is knowing when the shipment will arrive.

Keep in mind it's not an effort to make retailers transform into online-only shops. Supporting the mix is key: research shows customers who shop online and in-store spend twice as much as those who only buy in the store.

As the portion of shopping conducted online continues to grow, it's imperative for companies to adopt an omnichannel mindset. Few companies can implement an omnichannel solution on their own. But if you do it right, your distribution and fulfillment operations can become a clear competitive advantage.

Utilize the expertise of an experienced 3PL with the technology and experience to help eliminate silos and develop a single comprehensive view of your supply chain. Warehouse Anywhere has over 10,000 decentralized warehouses in the United States. With a decentralized, forward-deployed inventory, we can cost-effectively support “pick up in store” and home delivery options by shrinking the last mile. Our mobile and web applications allow for complete visibility and control, providing you with 100% inventory accuracy. You'll know how much inventory you have and where it's located at a glance. You can keep inventory lean while still providing a high level of customer service.

For more information on transitioning to an omnichannel approach, talk to the experts at Warehouse Anywhere about the latest technology and strategies. Contact us today to get started.

About the Author

Steve Syverson | Warehouse Anywhere

Steve Syverson

Steve Syverson is a critical inventory logistics expert who works with omni-channel retailers to optimize e-commerce fulfillment strategies across multiple platforms and marketplaces.

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