What Is Omnichannel Commerce? The Benefits and Ways to Build an Omnichannel Strategy for Retail

Briskstar

06 Dec, 2024

What is Omnichannel E-commerce?

Omnichannel e-commerce is a business model that focuses on providing customers with a consistent and seamless shopping experience across multiple touchpoints, both online and offline. The goal is to create a unified and integrated system where customers can move fluidly between channels, such as physical stores, e-commerce websites, mobile apps, social media, marketplaces, and customer service platforms, without losing track of their preferences, purchases, or interactions. This approach ensures that no matter where or how a customer interacts with a brand, their experience is cohesive, personalized, and convenient.

The core principle of omnichannel e-commerce is the integration of all channels so that they work together as a single, holistic experience. In an omnichannel strategy, the physical store, online store, mobile apps, social media accounts, email communications, and other touchpoints are all synchronized to provide customers with the same level of service, product availability, and personalized experiences.

Difference Between Omnichannel vs. Multichannel E-commerce

Both omnichannel and multichannel e-commerce refer to strategies that involve using multiple channels to sell products and interact with customers. However, while they share the goal of reaching customers through various touchpoints, they differ significantly in how they integrate and manage those channels. Below, we explore these differences in detail, highlighting the core aspects of each approach, their impact on customer experience, and how businesses can choose between the two strategies.

Omnichannel E-commerce

1. Integration

• Omnichannel e-commerce fully integrates all sales and communication channels into one cohesive strategy. This means that all customer touchpoints — such as physical stores, e-commerce websites, mobile apps, social media, customer support, and third-party platforms — work together seamlessly.
• The integration of these channels allows data to be shared across them, providing businesses with a unified view of customer behavior, purchases, preferences, and interactions.
• Customers can transition effortlessly between online and offline channels. For instance, a customer can browse products on a website, purchase the item in-store, and then return the product via the mobile app, all without any friction or disruption.

2. Customer Experience

• Customer experience in omnichannel e-commerce is unified and personalized. The customer is at the center of the strategy, and all channels are designed to support a smooth, consistent journey.
• Customers experience the same branding, messaging, and product offerings across all touchpoints. Their data is synchronized, ensuring that they can access their past purchases, wish lists, and preferences on any platform they use, providing a consistent experience.
• Personalization is a key feature in omnichannel. Based on customer behavior across all channels, businesses can deliver tailored content, promotions, product recommendations, and services. For example, a customer might receive an email with product recommendations based on previous online browsing or get a mobile notification about a sale on items they previously viewed in-store.

3. Example of Omnichannel in Action

• Imagine a customer who browses products online via a retailer’s website and adds them to their shopping cart. The customer then visits the physical store and tries on some of those products. When the customer returns home, they open the mobile app and complete their purchase, using a discount code they received via email. Finally, they choose to have the items delivered to their home, and the app provides them with real-time tracking updates.
• In this example, all the different touchpoints (online browsing, physical store interaction, mobile app, customer service) are integrated, making the experience seamless, personalized, and consistent.

Multichannel E-commerce

1. Integration

• Multichannel e-commerce refers to the use of multiple sales channels to reach customers, but these channels are not integrated. Each channel operates independently, and there is typically little or no connection between them.
• For instance, a retailer may have a physical store, an online website, a mobile app, and social media profiles, but each of these channels has its own distinct system, database, and customer engagement strategies. There is no central hub that integrates data across all these channels.
• Inventory, pricing, and promotions may differ across channels, which can lead to inconsistencies or confusion for customers.

2. Customer Experience

• The customer experience in multichannel e-commerce can vary significantly across channels. Because the channels are not connected, customers may face disjointed experiences, depending on how they interact with the brand.
• For example, a customer might have a pleasant shopping experience on a website but may encounter difficulties or a completely different interface on the mobile app or in-store.
• Personalization is limited in multichannel strategies. Since customer data is often siloed, brands are less able to offer personalized recommendations or targeted promotions based on the customer’s activity across different platforms.

3. Example of Multichannel in Action

• A customer might browse and add items to their cart on a retailer’s website. However, when they visit the physical store, the products in their cart may not be available in-store, and the store may have a different pricing strategy or product availability.
• If the customer then decides to open the retailer’s mobile app, they may not find any record of the products they previously browsed online or in-store, as the mobile app operates as a separate channel from the website and physical store.
• This experience is fragmented because each channel is not connected, which can lead to frustration and confusion for the customer.

Key Differences Between Omnichannel and Multichannel E-commerce

Business Benefits of Omnichannel E-commerce

Omnichannel e-commerce offers businesses a wealth of advantages that go beyond merely expanding the number of ways customers can shop. When implemented strategically, it helps enhance customer experience, increase sales, improve data-driven decision-making, and foster long-term brand loyalty. Below is an in-depth exploration of the key business benefits of adopting an omnichannel e-commerce strategy.

1. Improved Customer Experience

Consistency Across Channels

One of the most powerful benefits of omnichannel e-commerce is the consistency it provides to customers across all touchpoints. Whether a customer interacts with a brand in a physical store, on a website, via a mobile app, or through social media, they experience the same high-quality service, product selection, and messaging. This consistent brand experience creates a sense of reliability for customers, allowing them to interact with a brand with confidence, no matter which channel they choose.

Personalization

Omnichannel strategies allow businesses to track and analyze customer behavior across all touchpoints. With this data, businesses can personalize the customer journey to meet the specific needs and preferences of each individual. Personalized recommendations, targeted promotions, and customized content can be delivered based on previous purchases, browsing behavior, and engagement across channels. A customer may get personalized recommendations through an app, tailored product suggestions in an email, or even a discount on items they’ve shown interest in, all based on data gathered from their interactions across channels.

Seamless Integration

A key element of omnichannel e-commerce is ensuring that customers can move smoothly between online and offline touchpoints. For example, a customer might browse products on their mobile phone, purchase them online, and choose in-store pickup. Or they might begin a transaction online, then return an item in-store or receive post-purchase support through a live chat or call center. This level of flexibility and seamlessness makes customers feel that their needs are always met, regardless of the channel they are using.

2. Increased Customer Retention

Loyalty Through Multiple Interactions

Research shows that customers who interact with a brand on multiple channels are more likely to return and make repeat purchases. When a business provides a consistent and personalized experience across channels, customers are more likely to build an emotional connection with the brand. This cross-channel engagement not only increases the frequency of purchases but also fosters deeper loyalty. The more ways a customer can engage with a brand, the more likely they are to stick with it over time.

Convenience Drives Repeat Purchases

The convenience of being able to shop, track orders, and communicate with customer service across different platforms also enhances customer satisfaction. For example, a customer might choose to make purchases on their laptop, then opt for delivery to their home or a pickup location. The ability to shop whenever and wherever is a significant factor in customer retention.

Reward Programs Across Channels

Many omnichannel brands also extend loyalty programs across various channels, meaning customers earn rewards regardless of where they make a purchase. This consistency in rewards programs strengthens customer relationships, encouraging continued interactions and purchases.

3. Better Data Insights

Holistic View of Customer Behavior

One of the most valuable aspects of omnichannel e-commerce is the ability to collect and analyze comprehensive customer data from all touchpoints. By tracking a customer’s journey across multiple channels, businesses gain a 360-degree view of the customer, which helps in understanding their preferences, pain points, and purchasing habits. This data is critical for making informed decisions about product development, marketing strategies, inventory management, and customer service.

Targeted Marketing and Personalization

With access to detailed customer data, businesses can create highly targeted marketing campaigns that are personalized for individual customers based on their behavior. For example, if a customer frequently purchases a particular type of product, they may receive an email or app notification about related products or special discounts on items they’ve previously viewed. This personalized marketing is not only more relevant to the customer, but it also increases the likelihood of conversions.

Data-Driven Decisions

Having a single, unified system for tracking customer interactions across all channels allows businesses to make better decisions regarding pricing, promotions, and inventory management. For example, if a product is popular in one channel but not another, businesses can use this insight to reallocate resources, adjust marketing campaigns, or improve the overall product experience to align with customer preferences.

4. Higher Sales and Revenue

More Shopping Opportunities

Omnichannel e-commerce enables businesses to reach customers through a variety of platforms, which naturally expands sales opportunities. Customers are no longer confined to one platform to make their purchases. They can choose from a physical store, website, mobile app development, or social media to complete a transaction. This multiple touchpoint strategy increases the likelihood that a customer will make a purchase, simply because they have more ways to shop.

Cross-Channel Upselling and Cross-Selling

Omnichannel e-commerce offers businesses the ability to use upselling and cross-selling strategies across channels. For instance, if a customer buys a product on the website, the brand can recommend accessories or complementary products via email or app notifications. Similarly, when customers visit a physical store, they may see related products that increase the total value of their purchase. This integration of upselling and cross-selling boosts the overall revenue per customer.

Convenient Shopping Options Increase Sales

The flexibility to shop via multiple channels increases customer convenience, which often leads to higher conversion rates. Buy Online, Pick Up In Store (BOPIS) and Buy Online, Return In-Store (BORIS) options, for example, appeal to customers who may not want to wait for delivery but prefer the ease of ordering online. This flexibility often converts to increased sales because customers can choose the most convenient way to complete their purchase.

Expanding Market Reach

By having a presence on multiple channels, businesses can reach new customers who may prefer to shop on specific platforms. For instance, social media platforms like Instagram or Facebook have built-in e-commerce features that allow businesses to reach customers who are more likely to make purchases through these social platforms. Additionally, businesses can expand into new markets by leveraging e-commerce platforms and marketplaces to access wider audiences.

5. Brand Loyalty and Recognition

Stronger Brand Identity

Omnichannel e-commerce helps businesses create a cohesive brand image across all channels. A unified brand message and consistent design elements across both digital and physical touchpoints create a stronger brand identity that resonates with customers. When customers experience the same high level of service and the same brand tone, they are more likely to trust and value the brand, leading to stronger brand recognition and loyalty.

Emotional Connection

A consistent, personalized customer experience strengthens the emotional connection customers have with the brand. By being present where the customer is (whether it’s social media, in-store, or online), businesses can foster a deeper emotional bond with their customers. A customer who feels personally understood and appreciated is more likely to return to the brand and recommend it to others.

Increased Customer Advocacy

Brand loyalty often translates to customer advocacy. Loyal customers are more likely to spread the word about their positive experiences with a brand. This organic promotion boosts a brand’s credibility and attracts new customers. As the experience remains consistent across channels, customers continue to feel confident about their purchases and are more likely to share their experiences with others, further strengthening the brand’s reputation.

Common Business Challenges with Omnichannel E-commerce

While omnichannel e-commerce offers significant benefits such as improved customer experiences and increased sales opportunities, it also comes with its own set of challenges. These obstacles primarily stem from the complexities of integrating various sales channels, managing customer data, and ensuring smooth operations across both online and offline platforms. Let’s explore each of these common challenges in detail.

1. Integration of Systems

Technical Complexity

Integrating the various systems and technologies that power an omnichannel strategy is a complex and often resource-intensive task. A business must connect numerous platforms and technologies — including online stores, physical retail systems, Customer Relationship Management (CRM) systems, payment gateways, inventory management tools, and logistics systems — to ensure a seamless, unified experience for both customers and employees.

• Legacy Systems: Many businesses already use established software that may not be easily compatible with newer technologies or integration systems. For example, a physical retail store might rely on an older point-of-sale (POS) system, while an Ecommerce website development platform uses a modern cloud-based system. Integrating these two different systems can be both challenging and costly.
• Customization Needs: Companies often need to custom-build solutions or purchase third-party tools that facilitate integration. This requires significant technical expertise and can involve long development cycles, especially for businesses that don’t have in-house IT resources.
• Scalability: As a business grows, the integration must scale accordingly. Businesses must ensure their systems are flexible enough to handle increased data volumes, new channels, and more sophisticated customer interactions without experiencing downtime or service interruptions.

Investment in IT Infrastructure

The integration process demands a considerable upfront investment in IT infrastructure and technology. Smaller businesses or startups may struggle with these high costs, which can include software licenses, cloud services, technical support, and consultation fees. Larger organizations with more resources may be better equipped to invest in the required systems, but even they may face challenges in aligning all their existing tools to work in harmony.

2. Data Management

Consistency Across Multiple Channels

A major challenge in omnichannel e-commerce is maintaining consistent and accurate customer data across multiple platforms. Customers interact with a business in various ways — via websites, mobile apps, social media, in-store visits, and customer support channels. Each of these touchpoints generates vast amounts of customer data, including purchase history, browsing behavior, preferences, and personal details.

• Data Silos: Without proper integration, this data can become siloed across different systems, making it difficult to access a unified view of each customer. If the customer data isn’t consolidated, businesses may struggle to offer personalized experiences, as the data that drives personalization will be fragmented across channels.
• Real-Time Data Access: Omnichannel strategies require real-time access to data to deliver a personalized, seamless experience. If a customer makes a purchase on their phone, but the data isn’t updated on the website or in-store systems immediately, they may face inconsistencies such as receiving irrelevant product recommendations or being unaware of current promotions.
• Data Accuracy: Maintaining the accuracy of customer data is essential for making informed decisions. Out-of-date, incorrect, or incomplete customer profiles can lead to poor marketing decisions, missed sales opportunities, and a damaged customer experience.

Privacy and Security

As businesses collect more customer data across multiple channels, ensuring the privacy and security of that data becomes paramount. With growing concerns about data breaches and increasing government regulations (such as GDPR in Europe), businesses must implement strict protocols to protect customer information and ensure compliance with legal standards.

3. Inventory Management

Synchronizing Across Channels

Inventory management is one of the most significant challenges for businesses running an omnichannel strategy. Managing stock across multiple touchpoints (such as physical stores, online stores, and marketplaces) requires real-time visibility and synchronization to avoid problems like overselling or stockouts.

• Stockouts and Over-Selling: Without proper inventory synchronization, a business might accidentally sell an item that is out of stock in one channel or list an item as unavailable in another. This leads to customer dissatisfaction, lost sales, and a lack of trust in the brand.
• Inventory Visibility: Businesses must have a centralized inventory system that updates in real time as products are sold, returned, or moved between stores and warehouses. This centralized system ensures that the business can manage stock levels accurately across all channels and make informed decisions about replenishing products or shifting stock.
• Complex Logistics: For businesses with both online and physical stores, keeping track of inventory across various locations (such as warehouses, stores, and fulfillment centers) can be highly complex. A customer may order a product online, but it might be located at a different fulfillment center or store. Managing the logistics of getting the product to the customer on time requires careful coordination and planning.

Returns Management

Another challenge tied to inventory is managing returns. With omnichannel e-commerce, customers might purchase products online but return them in-store, or vice versa. This requires businesses to streamline their returns processes and update inventory levels accordingly to prevent issues related to inventory tracking and stockouts.

4. Customer Service Consistency

Providing Seamless Support Across Channels

Customer service consistency is another challenge in omnichannel e-commerce. Customers interact with brands through various touchpoints, such as social media, live chat, email, phone, and in-store assistance. To ensure a positive customer experience, businesses must provide consistent service across all these channels.

• Fragmented Communication Channels: If a customer reaches out on social media but is then directed to a different team when they call the customer service hotline, or if their issue isn’t tracked across channels, this creates a disjointed experience. Customers may feel frustrated by having to repeat themselves or wait for responses on different platforms.
• Centralized Customer Support Systems: To maintain consistency, businesses need a centralized customer support system where agents can view the customer’s complete history across channels. This would allow agents to offer personalized assistance, such as resolving an issue with an order, answering questions about product availability, or helping with returns — no matter where the interaction started.

Omnichannel Customer Support Teams

As businesses expand to include more customer support channels, they may face challenges in staffing and training customer service teams. Cross-training employees on how to handle customer inquiries across various touchpoints (social media, phone, chat, etc.) is important for ensuring a consistent experience. But it also requires significant investment in training and support infrastructure, which can be a burden for smaller businesses with limited resources.

5. Cost and Resource Allocation

Upfront and Ongoing Investment

Implementing an omnichannel strategy requires substantial investment in several areas. The most immediate costs include technology infrastructure (such as software for system integration, data management tools, and omnichannel platforms) and employee training. Businesses also need to consider ongoing maintenance costs for the software, as well as costs for upgrading systems to handle increased demand or technological changes.

• Technology Investments: Setting up the systems to handle omnichannel operations (like integrated CRM, POS systems, or ERP systems) can be very expensive. Businesses must also maintain a scalable cloud infrastructure that ensures the systems can handle growing volumes of customer data and transactions over time.
• Operational Costs: Beyond technology, there are operational costs related to staffing (such as hiring employees for customer service, warehouse management, or order fulfillment), marketing efforts (to promote multiple channels), and logistics (to manage the distribution of products to various locations).

Smaller Businesses’ Struggles

For small and medium-sized businesses (SMBs), implementing omnichannel strategies can be especially challenging due to budget constraints. They may lack the financial and technical resources to invest in sophisticated tools, integrate various systems, or scale their operations effectively. This may make it difficult for SMBs to compete with larger businesses that have the resources to handle omnichannel complexities at scale.

Conclusion

Omnichannel e-commerce is a customer-centric approach that integrates all available sales and communication channels into a single cohesive strategy. It creates a seamless shopping experience, ensuring customers can move fluidly between online, mobile, and offline platforms while maintaining a consistent, personalized experience. For businesses, implementing an omnichannel strategy allows them to reach customers at multiple touchpoints, enhance brand loyalty, and drive higher sales. However, it also requires significant investment in technology and infrastructure to ensure all systems are properly integrated.

Frequently Asked Questions

 What is the main difference between omnichannel and multichannel?

Omnichannel integrates all customer touchpoints for a seamless experience, while multichannel operates each channel separately without integration.

How does omnichannel e-commerce benefit my business?

It improves customer experience, increases sales, boosts retention, and provides valuable data insights for better decision-making.

Is omnichannel e-commerce suitable for small businesses?

While it can be more resource-intensive, small businesses can still benefit from simplified omnichannel strategies, such as offering online and in-store shopping options, especially as technology becomes more accessible.

What are some examples of omnichannel retail?

Examples include services like BOPIS (Buy Online, Pick Up In-Store), where customers can purchase online and pick up in-store, or brands that allow customers to order products online and return them in physical stores.

What technologies do I need to implement an omnichannel strategy?

Essential technologies include integrated point-of-sale (POS) systems, e-commerce platforms, CRM (Customer Relationship Management) software, inventory management tools, and data analytics platforms.