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What is Omnichannel Retail Strategy for Ecommerce Companies?

Aug 6, 2020 12:44 PM 5 min read
Editorial

According to a report by the Indian Brand Equity Foundation, the Indian e-commerce market is expected to overtake the US, becoming the second-largest in the world by 2034. It is expected to have a size of $200bn by 2026. A similar study by Indian Brand Equity Foundation on the Indian retail industry suggests a consumer expenditure rise to $3,600bn by 2020.

The ever-expanding retail and e-commerce markets have further led to tough competition and a few impressive disruptors. This includes Adidas’ experiential marketing, Pepperfry’s consolidation of the unorganised online furniture market, and Amazon’s trademark Prime Delivery, to name a few.

But why these three? These companies share a strong belief in customer retention, creating brand loyalty, a strong customer engagement system and robust brand communication.

While the companies cited above may seem less different in their philosophies now, they achieve better margins owing to their complex marketing strategies – "Omnichannel" forming the core of their ever-expanding businesses. 

What is an Omnichannel?

Put simply, an Omnichannel is an integrated network of the separate touchpoints in a business ("Touchpoints" refer to the different channels used for engagement with the consumer like website, e-mail, text message etc). All said touchpoints have access to the business-customer conversation, which can be used to create a better customer experience. It aims to provide the customer with a seamless experience, irrespective of the channel used for engagement.

Mutlichannel vs Omnichannel

The figure above depicts how different touchpoints in a business communicate separately with the customer in a Multichannel environment while in the case of Omnichannel, all of those touchpoints are aware of the customer engagement at all levels, resulting in a better experience.

How exactly can this elevated experience be created using an Omnichannel?

Taking precedence from the Marketing funnel, we see now how an Omnichannel approach not only accelerates the buying process but also results in more conversions:

Let's look at an example.

Person A receives an advertisement of their favourite shoe brand (Brand X) in their inbox. They proceed to look up the shoe brand’s website and now have a particular product in mind. Subconsciously taking note of this, they move on with their day. After office hours while heading home, they come across the shoe store with the sale sign on it and find that the particular shoe they wanted to buy was sold out or not available at the store.

Person B receives a similar advertisement by Brand Y, but instead of simply taking a subconscious note, they can add the product to a virtual cart, it being a feature of the shoe brand’s website this time. Assuming they simply move on with their day without buying, they now will regularly receive updates on the price of the shoe, other attractive deals, store locations near them where they can try out shoes, and more. After leaving their office for the day, they receive a text when driving close to a shoe store location. They proceed to buy the shoe online and choose the ‘self-pickup’ option. On arriving at the store, their shoes are packed and ready to take away, along with a representative ready with some other pairs and accessories, tuned to the pair they just bought.

The second is an ideal implementation of Omnichannel. It is seen that simply by sharing knowledge between platforms of the same business – e-mail clicks, e-commerce, geopositioning (and related technologies) and offline stores - the buying experience changes for the better. This not only helps sign up new customers, but also builds brand loyalty.

Speaking of which...

 

The Brand Loyalty Angle

According to Gartner Group, more than 80% of a company’s future revenue will come from 20% of its existing customers.

This proves that the entire exercise of creating brand loyalty to be extremely useful. By providing better customer experience, focusing on customer centricity and combining these with technology, Omnichannel can provide a more loyal customer base than traditional single or multichannel engagement.

 

The Cost of Omnichannel-ing

As in any other business decision, the switch to Omnichanel strategies requires proper assessment of the need for the same. This may include an evaluation from the customer side – consumer requirements, trends in shopping and channel flexibility of consumers. An assessment from the company side may include the cost of switching, the value addition and the proposition of each new channel to be introduced. The decision to switch, as with all decisions, has to be justified both qualitatively and quantitatively.

The added costs may include dedicated employees for the ‘pick-up’ feature (the alternative would be to have some sales staff on ‘pick-up’ duty occasionally), the building and maintenance of an e-commerce platform or at least a to-go order platform, and an investment in location-based services. The companies considering a switch should also take into account the possibility of a prospective customer never showing up to pick their order. This is incurred in the form of restocking costs to the company and increases complexity in warehousing.

 

What Does the Future Hold for Omnichannel Marketing?

Omnichannel marketing is increasingly becoming the go-to tool for companies considering better engagement with prospective customers and switching to a customer-centric experience.

With the ever-developing technology landscape, an individual is bound to use more than one ‘connected device’ in a day. This is coupled with all different modes of communication that individuals may use and this presents the companies of today with both an opportunity and a challenge: What is the best way to cater to the needs of a prospective consumer?

By reaching out to consumers using all channels used by them, by sharing knowledge and data between those channels, and by capitalising on the inherent synergy between the modern communication channels, more and more companies can move towards better customer experience, resulting in better sales.

FIN.

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