Customer Footfall Analysis
February 12, 2025
The Internal Rate of Return (IRR) is another very important metric that can be used to determine whether or not a company must invest its resources in a project. If the company does decide to invest its resources in all the projects then the IRR can help us understand what should be the priority of […]
We already know that primary financial markets are used by firms to raise funds from investors. This is done by issuing shares via an initial public offer, rights issue, or even using private placements. In each of these cases, the firm selling shares has to arrive at a market price at which they are willing […]
There are many investors who believed that dollar-cost averaging was not a good strategy and that it did not work well in the long run. However, they liked the averaging part of the strategy. This meant that they wanted a systematic plan to make investments at regular intervals. Also, they wanted to adjust their investments […]
The Bank of Japan has recently decided that it will cut its rate below the zero percent mark. Bank of Canada has also hinted that it may also join the Bank of Japan in this extreme step and drop its interest rates below zero as well. However, most average people in the world are dumbfounded […]
Scalable business models are the latest buzzword in entrepreneurial circles all across the world. Most new-age founders aspire to make their businesses more scalable. However, scalability has to be built into a business before it actually exists. It is for this reason, that the decision to scale or not becomes strategic and something that founders […]
In the previous article, we have explained the concept of omnichannel retailing. We have also seen how it is different from multichannel retailing and what are some of the benefits of using omnichannel retailing.
However, there are many critics who believe that omnichannel retailing is only good in theory. When it comes to real life, there are some serious issues which are associated with the application of this concept.
In this article, we will have a closer look at some of the common issues which are generally raised when the concept of omnichannel retailing is discussed.
Generally, retailers have a fixed business model. This means that they have pre-determined supply chain routes and predict demand based on consumer behaviour at each channel.
However, omnichannel retail allows customers to use difference channels flexibly. Hence, customers could order something online and then return it at a store if they do not like it. In such cases, the supply chain of the retailer can get disrupted. It can become challenging to keep track of the stock across various channels. Supply chains are forced to operate on an ad-hoc basis instead of being able to operate in a predetermined manner.
For purely online retailers, it could also mean increased expenditure on setting up physical stores to provide an omnichannel experience to their users. It is true that the customer experience as well as conversion rates do increase in omnichannel retail. However, it needs to be noted that the cost increases are much higher than the profits generated by these increased sales which make omnichannel retail unviable in many cases.
In case of omnichannel retail, the supply chain cannot be fixed. It needs to be agile and there is a likelihood that the same product may have to shipped more than once which could significantly reduce the retailer’s margins.
There are significant challenges and investments involved in mining this data and extracting meaningful information from the same. Hence, unless retailers have a large scale of operations, it become financially unviable to make such big investments.
However, when it comes to omnichannel retail, customers have the flexibility to use a different location for returning their goods. This creates chaos since the company has to design a reverse logistics system which can handle ad-hoc requests. Also, companies have to ensure that their stores have enough cash on hand so that they can cater to the refund requests which might come in apart from running their day-to-day operations.
From the above points, it is obvious that omnichannel retailing is riddled with many issues for now. This is the reason that most retailers have not started using it on a wide scale. However, these issues do not mean that this concept will not be widely used across the industry. It just means that there are still come challenges which are present.
Retailers will have to use their business acumen and technology to overcome some of the challenges posed by this model.
Your email address will not be published. Required fields are marked *