Major challenges and building blocks for adopting omni-channel retailing strategy

Although Omni-Channel execution is undeniably a top priority for retailers, they are still striving hard to address several underlying issues hindering the effective delivery of Omni-Channel experiences. Brands are finding it increasingly difficult to move away from channel-specific silos, and consolidate all customer- and merchandise-related data into centralized locations. Three major challenges retailers face today are: Customer Silos, Legacy System Silos and Organizational Silos.

  1. Customer Silos: Customer silos and lack of holistic visibility into customer database across channels make it difficult for retailers to understand and analyse customer data to offer contextual messaging and personalized experience. Being customer-centric is critical in today’s marketplace. Thereby, requiring retailers to know their customers and interact seamlessly with them across touch points based on their preferences.

However, the siloed and non-integrated customer data results in multiple copies of customer profiles, thus limiting retailers’ ability to understand customer behaviour and purchase patterns and offer context-based consistent customer experience.

  1. Legacy System Silos: The silos within the legacy IT systems make it significantly challenging and complex to manage inventories across channels. Lack of clear visibility into inventory reduces inventory accuracy, frequently resulting in out-of-stock scenarios in one channel and surplus inventory in another channel. This not only negatively impacts inventory-to-sales ratio but also results in increased inventory costs.

These challenges limit the ability of retailers to identify, track, and manage inventory, ensure order fulfilment of their customers, and optimize supply chain across channels.

  1. Organizational Silos: One of the primary challenges in adopting Omni-Channel strategy is siloed organizational teams working independently for e-Commerce and store channels in an organization. This makes it difficult to optimize cross-channel inventories, enhance operational efficiencies, and integrate multiple channels of businesses. According to a survey conducted by The Economist Intelligence Unit, 27% of retail executives responded that organizational silos restrict their ability to offer seamless customer experience2.

The siloed teams not only limit collaboration, but also make it difficult to enable process innovation which is imperative for adopting Omni-Channel strategy.

The Building Blocks for adopting omni-channel retailing strategy

The omni-channel consumer expects consistent brand experience across channels and easy access to information at any given point of time. Technologies such as retail store analytics, beacons, and store fulfilment programs are rapidly transforming how retail stores operate and engage with customers. Therefore, retailers’ ability to leverage advanced technology is central to creating a compelling experience and delighting its shoppers.

It is imperative that retailers are equipped in numerous ways to connect with shoppers in real time. The following digital strategies are must-haves for the retailers who are looking to set the ball rolling for Omni-Channel retailing and staying ahead of the curve.

  1. Seamless, consistent, and personalized experience across channels

With customers increasingly getting used to shopping across various touch points, they expect consistent experience across channels such as store, online, and mobiles. The only way retailers can reach out to customers is by blurring lines between online and physical stores. According to a survey by Forbes, 44% of respondents prefer to buy online and collect in-store in the US3. To keep up with evolving customer expectations, even the leading online retailers such as Amazon and eBay are partnering with retailers to offer “click-and-collect” services.

The key to engaging customers and gaining loyalty is to understand and enhance their experience continuously across channels. This requires integration of various data streams such as transaction history, website interactions, social conversations, and others, to enable data analysis and insight generation into customer behaviour. Leveraging customer analytics and location-based marketing is the key to offer personalized, relevant, timely messaging, and consistent in-store and online experiences. Location-based marketing is rapidly becoming mainstream, empowering marketers to connect with their customers with contextual messages, in the right place at the right time-thereby, enabling retailers to discover the potential of precise digital marketing strategies. This technology helps take advantage of geo-fencing that allows retailers to track the shoppers’ location, and offer compelling, highly-relevant deals to enhance footfalls to the store. Combining location with customer-buying behaviour and profile, social interaction, and shopping habits can go a long way in enabling retailers to offer relevant and focused deals, and enhance engagement and brand image. According to a Forbes article, location-based services revenue is estimated to reach $43.3 billion by 2019, a growth of about $12.2 billion from 2014.4

Another important strategy to entice customers and ensure stickiness is deploying omni-channel loyalty. Unlike conventional loyalty programs, this requires optimizing cross-channel marketing to drive cumulative loyalty outcomes. In order to be successful, retailers need to run ongoing campaigns that interact with and engage the customers across touch points. The key lies in ensuring non-intrusive, intuitive, personalized, and engaging deals offered in real time across customers’ preferred channels.

  1. Single view of the customer across channels

Putting the customer at the heart of the business is crucial for retailers to offer seamless, personalized, and consistent experience across channels. To provide Omni-Channel experience, brands need to have a 360 degree view of their shoppers’ attributes, wants, and desires, across multiple channels. A holistic visibility into preferences, purchase history, shopping habits, and demographics can empower retailers to design and create consistent and unique retail experience for their consumers.

  1. Inventory visibility across channels

Integrated inventory visibility is another critical factor in providing Omni-Channel experience. Cross-channel supply chain optimization reduces the possibility of out-of-stock situations. To adapt to the evolving market dynamics, retailers need to respond to the customer demands and standardize their inventory across channels. This can be done by deploying technology solutions that can provide comprehensive visibility into the inventory, allocate and replenish forecast inventory and plan order, and ensure fulfilment effectively across channels.

  1. Optimized cross-channel order management

In-store pickup of online purchases is increasingly becoming popular amongst shoppers. This gives them the convenience of shopping online without having to pay high shipping cost or waiting for the product to be delivered. In fact, buy online and pick up in-store. Buy Online Pick-up in-Store (BOPS) is one such strategy which is a win-win for both consumers and retailers alike. Shoppers have the convenience to pick up their purchase from a store of their choice as per their schedule, whereas for brick-and-mortar retailers, this strategy provides a significant competitive edge over pure-play online retailers.

  1. Seamless order fulfilment

Earlier, supply chain was considered to be a cost centre built only to deliver goods to stores. However, in an Omni-Channel marketplace, the supply chain has taken a centre stage and is one of the key factors that contribute to the shoppers’ experience. According to a Forrester report, 71% of Omni-Channel customers expect to view in-store inventory online, while 50% of them wish to BOPS. If the order fulfilment across any channel goes wrong, it can lead to consumer dissatisfaction and attrition. It is therefore critical to ensure seamless order fulfilment across channels. Retailers need to have complete visibility into order management to ensure on-time store pickup and deliveries. Comprehensive visibility can also help retailers optimize route planning for home deliveries and 3rd-party delivery locations.

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Omprakash Subbarao
Omprakash Subbarao is Senior Vice President – Strategy & Digital at Sonata Software. He holds an M Tech degree from IISc and an MBA from IIM Bangalore and has over 25 years’ experience in the industry managing multiple responsibilities. Prior to joining Sonata, he has held leadership positions in organisations like Yahoo, KPMG and Accenture. He has worked in key international markets such as USA, Europe, Japan, China and Australia. He is often invited to speak at national and international seminars.