In the past few years, we’ve seen small businesses massively moving online. But a particularly big leap occurred due to the global pandemic that made offline businesses quickly adjust to the changing customer behavior. Social media, by the way, hugely contributed to this trend. Millions of companies have long and successfully used them as a means for marketing, brand recognition, and communication with customers. By providing businesses with easy-to-use and affordable ecommerce tools they helped establish online sales quickly and without additional investments. Thus, the influence of social media, which has long become an integral part of our daily life, has increased many times over. Actually, it’s just what Gary Vaynerchuk spoke about in one of his interviews, calling social media the new state of the internet.
However, it also created a kind of platform dependency for those businesses that relied on social media as their only source of online sales. The recent Facebook outage was an example of how things could go wrong at once, especially for businesses dependent on the platform for livelihood. A small error caused a six-hour outage of Facebook, Instagram and WhatsApp, which resulted in significant losses: from a couple of hundred to thousands of dollars in lost sales and marketing spending. No wonder there’s been so much fuss about it. But let us be honest, this could have happened to any platform or service that one might use for sales. The point is, once you rely on a single channel for your sales, you might be putting your business at risk.
I’ll risk playing Captain Obvious and say that diversifying sales channels can be a perfect answer to this challenge. And basically, two strategies that can be of great help here, namely multichannel and omnichannel retailing. So, let’s take a closer look at how they can help prevent platform dependency risks, what omnichannel strategy is, what to choose, and how to make the most of it.
What is Multichannel retail: different bags for your eggs
Now, there will be a little digression from multichannel retail if you don’t mind, as I want to talk about… eggs and baskets.
You might have definitely heard it many times and on many pretexts: do not put all eggs in one basket. I really like the expression, as it perfectly applies to the case of businesses with a single storefront.
And here you can be like: wait a minute! How is it connected with multichannel retail? Didn’t we already diversify when we went online in addition to our brick-and-mortar? And now, you say, it’s not enough.
Okay, you are right.
And you are not quite right.
The pandemic made you—just like many other small businesses—face an urgent need to reach your customers in a different way, other than in-person sales. As people’s buying habits transformed rapidly due to lockdown and all things COVID, going online as fast as possible was the only logical thing to do. Moreover, it became a matter of survival even for some big brands, not speaking about small retailers. Whether you used Facebook Shops or any other e-commerce platform, that was a brilliant way out.
But speaking in medical terms, that was a treatment for a symptom, not a remedy for the disease. What actually happened is that you just brought sales from a place that stopped working for you to another one, which was salvation in that particular moment. But the problem of sticking to one channel remained pretty much the same, though under disguise. Back to the eggs and baskets example, we took all our eggs from the old basket and put them into a new one. So still, after all the energy and resources invested into going online, you seem to end up with one basket and all the potential risks that come with it, again. So, there should be a second step. Here comes the multichannel retail solution.
What if we take several baskets, fill them with eggs, and go to meet our customers everywhere where they can be? And in case one basket drops, you still have plenty of eggs to sell. It is how multichannel retail works, simply put.
In a full version, multichannel retailing is a business strategy that involves selling your products (or services) through multiple channels, including online and offline. For example, you can sell through your brick-and-mortar and online stores, your business pages on Facebook and Instagram, and various marketplaces, such as Amazon, eBay, or Etsy. In addition, you can promote your special offers by email with an option to pay directly from inside the email. The understanding of multichannel retailing is pretty clear so far.
And it looks more like a success plan. Here are some reasons why it is effective to try multichannel retailing.
Multichannel retailing reason #1. No platform dependency
The lesson learned from the Facebook outage showed how nice it would be to have something to cover your back in case your sales channel gets out of reach. Facebook, by the way, promised not to charge for ads during the outage period. Still, it kind of left a bad taste in the mouth as sales were lost and some of the customers might never come back. So pretty obviously, in multichannel retail, the risk of losing customers due to service downtimes is eliminated.
Multichannel retailing reason #2. More engagement
Here is another thing to consider. People very rarely buy immediately, without research, when shopping online. They usually visit a plethora of places during their journey to purchase: from small online shops and Amazon stores to Instagram shoppable posts, product videos on Youtube, or even TikTok. Boom! Multichannel retailing. How likely is it that you reach them if your business is represented in only one of these places? It’s like a big tasty, juicy pie of which you get only a tiny, minuscule piece with your only Facebook store (and it hurts).
Multichannel retailing allows you to offer your customers various touchpoints to purchase your products or services and to engage with multiple audiences through several sales channels, thus widening your overall awareness and reach.
Multichannel retailing reason #3. More sales
This is pure math. Multichannel retailing gives you the possibility to grab more attention from your potential customers, meeting them at different stages of their journey. Moreover, you can profit from the power of marketplaces to have better visibility in search results. All these combined are more than likely to boost your sales.
The peculiarity of multichannel retail is that each channel works as a separate business. It may target a different audience and offer a different customer experience. Moreover, the stock may also vary from channel to channel.
However, this separation is a big drawback of multichannel retailing.
Having your sales channels siloed drastically complicates your business operation, which can include the management of separate inventories, customer bases, payment systems, and more.
From the customers’ point of view, their experience is not unified across channels. What does that mean? It’s great that they can find you online and buy the product they like from you or learn where your physical store is to go and buy there. However, situations may occur when a customer comes to your store only to find that the product they wish to purchase is only available online. And that is not the only downside of multichannel retailing.
Another example: a customer doesn’t want to wait for the delivery and would love to pick up their purchase in-store. And if you do not offer such a possibility with your multichannel retailing strategy, a customer may leave disappointed and never return.
Today, customers expect a smoother experience across all channels and various devices. So it’s logical to answer their needs correspondingly. And it is what omnichannel e-commerce does.
What is omnichannel retail: the power of integration
Oh, I hear you be like yeah, come on, give us more buzzwords, don’t stop. But give me a couple of minutes, and we’ll get to the point.
At first glance, multichannel and omnichannel retail have a lot in common. No wonder that people often confuse them or believe them to be the same thing. However, there is a difference.
What is omnichannel retailing?
Omnichannel retail is a more customer-centric strategy. It aims at providing a smoother, more consistent cross-channel (and cross-device) customer experience using integrated data from all the channels. Thus, the core attribute of omnichannel retail is integration. The omnichannel strategy helps ensure that your customers have consistent product information, can control their purchase orders, or have the same level of service across all your channels. Moreover, having a good omnichannel strategy and consolidated data from all your sales channels can provide you with invaluable means for enhancing your acquisition and engagement with customers and facilitating your business operations in the face of an increased number of sales channels.
So how does omnichannel retailing actually work?
Here is an example of customer experience with omnichannel retailing. A customer finds a product on your Facebook, and then they can get to your website to see more details about it—and you lead them directly to the product page (so that they won’t need to look for the product they liked again)—or to find out about your delivery or pick-up options. This looks like a great omnichannel strategy! The customers can also make an order online and then go to your physical store to pick it up, as they happened to be nearby, and a shop assistant can immediately find the order in the database and prepare it for pick-up. Moreover, with omnichannel retailing, you can keep this very customer’s purchasing history from all the channels so you can offer them similar or supplementing products or promote new arrivals and discounts.
Now let’s look at some of the biggest benefits of omnichannel retail for a business.
Omnichannel retailing ensures a higher level of customer satisfaction
With the omnichannel retail solution you can offer customers the experience that they expect can pay off positively. The freedom to choose and convenience in how they want to buy from you helps you gain more customer loyalty, improve customer retention, and as a result, get more sales. Omnichannel retail consumers have long proven to have a 30% higher lifetime value than those that buy from a single channel.
Omnichannel retailing provides a comprehensive view of your sales
Without an effective omnichannel retailing strategy, when your sales channels are in silos, you might be getting the wrong data on your customers and sales. It can result in not just missing revenue opportunities but also significant losses. Research by Gartner showed that businesses lose on average up to $15 million annually due to poor data quality. Meanwhile, an integrated view of your sales data—which is essential in the omnichannel retail strategy—gives you a more accurate picture of your sales, the efficiency of sales channels, the demand, and more. And making your business decisions based on the real view of your sales can help timely tweak your tactics to answer customer needs and manage your sales more efficiently.
Omnichannel retailing facilitates inventory management
Poor inventory management is one of the reasons for inventory distortion. (It means having corrupt data about your inventory, simply put.) And according to the IHL report, it accounts for $1.1 trillion of lost revenue opportunities annually worldwide. The omnichannel retail solution will be useful even here. Putting together all your inventory data helps to get better, more realistic figures of what you have in or out of stock and react correspondingly. This omnichannel retail strategy includes preventing shortages or overstocking, avoiding extra expenses, predicting demand, and offering better shipping options to your customers.
How to win at omnichannel retail: the best omnichannel retail strategies
So you see, if set up the right way, omnichannel e-commerce can be a win-win for you and your customers. So as a special treat, here are some helpful tips and tricks for winning at omnichannel retail.
Omnichannel retail tip #1. No rush, more research
No matter how tempting it is to embrace everything and become the omniest at once, do not forget that omnichannel retail is not a cheap thing. An increase in spending is still inevitable with the addition of each new channel. So it is better to make your omnichannel retail strategy a long-distance run rather than a sprint and start with some three-four sales channels. You will also need to carefully choose where you go and invest some time into research. Thus, you’ll ensure that using the omnichannel retail strategy you focus on those channels where your customers (and customers-to-be) spend more time. In addition, based on the user behavior typical for those channels, you’ll be able to provide customers with the experience that they are expecting.
Omnichannel retail tip #2. Make purchasing fast and convenient cross-channel (and cross-device)
So a customer decided to buy from you. Hurray? Not yet. Even with the omnichannel retail strategy you still can lose people at the final step. It’s the sad truth, but the rate of cart abandonment for online shopping in the US is more than 60% for desktop buyers and up to 80% for mobile. So, at least six out of your ten customers will turn their backs at the checkout.
To avoid shopping cart abandonment, you need to make the checkout process as convenient as possible across all your channels and devices that your customers might use to fulfill their purchasing. Be it on your Facebook page, an online store, or within an email promo, try to create an omnichannel retail strategy yourself and offer customers the same choice of payment options. And ensure they include the most popular options.
Omnichannel retail tip #3. Automate your integrations
Omnichannel retail is impossible without integrating all your business data into a single system. Be it inventory, payments, customer data – having a full picture and the ability to access the needed data on any of your touchpoints is an immense help in providing a smooth cross-channel experience to your customers and making life easier for you as a business with effective omnichannel retail strategies.
Needless to say that you don’t have to do it manually, as today, plenty of solutions help automate data integration. Moreover, the most popular CRMs, inventory management, payment, or accounting systems can link up together to help you integrate all the necessary data into a single system and ease your omnichannel retailing experience. All you need is to choose those that will create your perfect stack. Automating data integration will help ensure data accuracy, prevent data loss, and, which is quite obvious, save loads of your time. So you can make full use of your integrated data to improve your sales, customer experience, inventory, supply chain, or management of your finances. And now you can use your omnichannel retail strategy to the utmost!
So you see, the shift in customer behavior to more online purchasing occurred and—pandemic or not—it’s going to stay as not a trend but a new status quo in sales. Thus, e-commerce will only be evolving, and small retailers will have to adjust their business models to this evolution. Today, omnichannel retail seems to be the optimal way to adjust to the changing landscape. The omnichannel retail strategy helps you become less dependent on the platforms and services that you rely on for sales and prevent the risk of losing customers or revenue due to platform outages. It also offers customers a great experience while purchasing across your sales channels.
This article definitely does not embrace all the omnichannel commerce tips. We might get to more details about it in our future articles. So stay tuned!