The world is constantly changing, proving change is the only constant. Not too long ago, making a purchase meant physically visiting a store – a brick and mortar establishment. In due course, we shifted to online shopping platforms, thanks to the dawn of the internet age. In less than two decades, there are no dearth of options that enable purchasing, regardless of whether one needs stationery, a car, or even a house.
An omnichannel retail strategy has begun acquiring centre stage. Omni is derived from the Latin term omnis, which means ‘all’. Omnichannel, therefore, implies a multichannel approach to selling products while providing a seamless customer shopping experience irrespective of their purchase location – spanning brick-and-mortar stores, websites, apps, or social media. It is a customer-centric approach, one that even enables a customer to order a product online but collect from a physical store and vice versa. Just like shopping, the after sales services can also be availed online, offline, or as a combination of both; this really is omnichannel retailing in a nutshell.
Leaders in omnichannel retailing
A popular omnichannel retailer is Amazon. This tech conglomerate has been building a strong local connection with retailers and local distribution points. Combining it with programmes such as Fulfilled by Amazon, Prime membership, while also extending conveniences of delivery within one hour, same day or next day delivery (depending on the product and geographic location), users have never had it easier. Amazon’s AI-driven and personalised recommendations make it difficult for customers to abandon their carts.
Even four years ago, in 2017, a Harvard Business Review study comprising a sample size of 46,000 shoppers revealed a preference for multichannel shopping; 73% of respondents were in favour of multiple shopping channels.
In fact, 9 out of 10 customers prefer checking prices on Amazon before buying a product. Amazon has 2.4 million active sellers worldwide and another 1.3 million were added in 2020. It is safe to say that—with its tight servicing and local touchpoints—Amazon is leading omnichannel retailing.
Just like Amazon, Alibaba is also ruling with its ‘new retail’ policy. Started in 1999, Alibaba currently holds sway over 80% of China’s online market. The company’s traditional grocery supermarket, Hema Supermarkets, are so digitised that customers can add products from their phones by scanning QR codes, complete an order and receive delivery at home. They can even taste food products prior to buying with the ‘cook on the spot’ option that the supermarket extends. As a result, in 2018, Hema Supermarkets’ annual sales averaged over $42,522,500. Interestingly, this feat was accomplished in only one and a half years.
Global reactions to omnichannel retail
We use omnichannel retail more frequently than we realise. The likes of Amazon, Starbucks and Disney are famous brands implementing this strategy successfully. One finding highlights that companies that have better omnichannel customer engagement strategies retain, on average, 89% of their customers. The corresponding figure stands at only 33% for companies that have weak or no omnichannel retailing presence.
Category wise, 65% of customers showed a preference for making electronics purchases through a combination of online and offline channels. In case of apparel, the figure stood at 64%, and for appliances, at 58%. The figure was lowest for beauty and cosmetic products – registering only 39%.
In another finding by Accenture, 68% of millennials now demand the convenience of an omnichannel approach when shopping. Meanwhile, the large majority (84%) of baby boomers prefer to buy products from stores. These emerging shopping trends are not entirely on account of the pandemic. Even four years ago, in 2017, a Harvard Business Review study comprising a sample size of 46,000 shoppers revealed a preference for multichannel shopping; 73% of respondents were in favour of multiple shopping channels.
What the future holds
Omnichannel retailing is still a nascent idea. It needs to evolve and become an ecosystem to reach its full potential. The transition of single or multichannel to omnichannel is not only a result of people buying regular household stuff, but also their choice towards online purchasing of high involvement products such as automobiles or real estate.
Companies that have better omnichannel customer engagement strategies retain, on average, 89% of their customers.
An interesting example is CarMax, the largest used car retail company in the US. Using machine learning and big data, they generate 50 million car recommendations daily, and customers can filter from 45,000 options online. Even before visiting an actual dealer, 95% of customers research their preferred car options online before buying. Meanwhile, 60% of customers will have already decided on the brand, model and price range before setting foot in the physical premises of an auto dealership. Utilising such data enables the automobile sector to unlock its full potential by way of providing a better customer experience. The day is perhaps only around the corner when even home delivery of cars will become the norm!
The generation of vast data sets have been invaluable in gauging buying or purchase preferences. Given that omnichannel retailing is only beginning to make inroads, there is definite room for more state-of-the-art innovation in this sphere.
Amit is an entrepreneur, a business leader and a speaker. He is currently the CEO of OLX Autos. Since his graduation, Amit went on to build multiple internet e-commerce ventures in Asia, Africa and Europe. He is a regular contributor on topics related to leadership, entrepreneurship and economics. He is passionate about human evolution and is a psychology geek.