Omnichannel Retailing and its Benefits
The past few years have witnessed the rise of online retail. As a result, there has been a persistent debate about whether or not brick-and-mortar stores have outlived their utility. There are many critics who believe that this may not be the case. Even though online retail has significant advantages, it still lags behind traditional brick and mortar retail in several ways. As a result, many critics believe that trying to choose between the two is futile. Instead, futuristic retailers must try to create a business model which allows them to build on the advantages of both types of models.
There are two ways in which retail businesses can combine online and offline models.
One such business model is called multi-channel retailing whereas the other is called omni-channel retailing. In this article, we will have a look at what omni-channel retailing is and will also understand how it benefits retailers
What is Omnichannel Retailing?
Omnichannel is one of the buzzwords which is regularly being used in retail marketing literature nowadays. But what does it mean exactly? An omnichannel business model is when a retailer has more than one channel for interacting with customers. This means that they may have a website, an application as well as a retail store.
However, merely having multiple channels does not mean that the retailer is involved in omnichannel retailing. Omnichannel retailing means that the retailer provides a consistent experience to their customers regardless of which channel is being used.
If the retailer does have multiple channels but the price, quality or any other aspect of the experience varies amongst channels, then the retailer is said to be involved in multichannel retailing and not in omnichannel retailing. In such cases, the customer can choose the experience they want by deciding upon the channel that they want to use.
However, in omnichannel retailing, the retailers make the choice of channel redundant as they provide the same quality and user experience across all channels.
When retailers use omnichannel retailing, they provide the same information about the product via all channels. This means that the customer has the possibility to pick up a product in the store, order it from the store or have it delivered directly to their home. Payment methods, return policies and other such components of the buying experience must be identical across all channels when it comes to omnichannel retail.
Benefits of Omnichannel Retailing
Omnichannel retailing is a relatively new concept in the retail industry. Retailers are still in the exploratory phase and hence are still discovering some of the benefits related to omnichannel retailing. The commonly reported benefits have been mentioned below:
- Higher Customer Satisfaction: The first and foremost benefit of omnichannel retailing is that customers generally report a significantly high customer satisfaction. This is because omnichannel retailing establishes trust in the brand.
Customers are now confident that they will receive the same deal regardless of the channel which they use. As a result, they are no longer required to verify the details by visiting different channels. This saves them the time as well as the hassle which is commonly associated with the purchasing process. As a result, the customer satisfaction score is significantly higher. This higher score leads to higher loyalty and higher customer lifetime value in the long run.
- Increased Conversions: It is also important to realize that omnichannel generally leads to higher sales and higher conversion rates. This is because of the fact that retailers generally have QR codes in their retail stores which allow customers to check the price of the product from their website.
Some retailers also try to enable comparison with other websites. However, omnichannel retailing tries to keep the customer with the retailer during the decision-making process.
Generally, customers abandon the decision-making process midway and go to another website or retailer which leads to lost sales. Omnichannel retailing helps retailers close a higher number of sales on the spot with very little cart abandonment.
- Effective Business Organization: Omnichannel retailing allows retailers to be able to better organize their business. In the absence of omnichannel retailing, many retailers are forced to have redundant business departments.
For instance, retailers have an online marketing department and an offline marketing department which may not communicate with each other effectively. Omnichannel retailing enables retailers to merge various departments and hence organize themselves in a lean manner.
- Data Collection and Analysis: Data is the new gold as far as retail business is concerned. Omnichannel retailing allows retailers to collect data about their customers from a wide variety of sources. This data can then be analyses in order to come up with personalized offers for such users.
Retailers are investing heavily in big data and data mining technologies. However, their ability to utilize these technologies is heavily dependent upon their ability to obtain data. Since omnichannel retailing allows retailers to obtain extensive data about their customers, it is preferred by many retailers.
It is clear that omnichannel retailing is the next logical step for retailing. It is also highly likely that omnichannel retailing will proliferate the overall retail business to a large extent. Hence, it is also important to be aware of the disadvantages of this model of retailing which will be discussed in the next article.
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