In today’s Competitive E-commerce market, consumers have high expectations for their shopping experience. They expect it to be fully personalized, quick, responsive, and location-agnostic. And businesses that offer such a seamless customer experience end up being successful.
Now in a discussion about shopping experiences, it’s hard not to mention the terms “omnichannel” and “multichannel.” After all, they are two powerful retail strategies that revolve around offering a consistent shopping experience across various channels. Even though these two terms are often used interchangeably by most people, they operate on different principles and serve divergent purposes.
In this post, we will explore the differences between Omnichannel and Multichannel strategies including their benefits, working, and popular examples.
It is a retail business model where you sell products through more than one channel. The channels could be digital like a website, marketplaces, or physical like a brick-and-mortar store.
However, these channels are not integrated with each other. In other words, even though every individual channel supports the main business, data synchronization across channels is minimal or nonexistent. This also means your customers need to visit that specific channel to assimilate key information like availability and price.
For the sake of simplicity and to better understand this concept, let us consider a hypothetical situation where you plan to sell on your own website and through a marketplace. These are the main steps involved in setting up a multichannel retail strategy for these two channels –
First and foremost, create your products on the E-commerce platform which is managing your website. Enrich it by adding multiple images, detailed product descriptions, prices, stock availability, and variations if any. Let us consider this as your primary database and the main source of truth for your inventory.
The data format supported by the E-commerce platform might not be supported by the marketplace. This means you cannot export the data from your primary repository to the marketplace easily or there cannot be a two-way synchronization between the two platforms. So you need to import the raw product data from your primary database, optimize it to suit the marketplace’s data format, and then finally export it to the marketplace’s database.
Your primary database will be automatically updated in case a user places an order directly from your website. However, if the user places the order on the marketplace, you must first receive the order, match it to the correct product on your primary database (whose stock gets updated), ship the product, and share the tracking information back to the marketplace. Put simply, there is no seamless integration between the two platforms. As you start selling in more and more channels, you will find fulfilling orders extremely time-consuming and costly due to non-synchronized data.
Despite the lack of integration between different channels, there are certain advantages offered by a multichannel retail strategy over a single-channel strategy. They are –
By adopting a multichannel retail strategy, you not only reach a wider customer base but also be able to target different customer segments and demographics.
For instance, using an E-commerce website or app, you can attract Gen Z and tech-savvy customers who enjoy the convenience of online shopping. On the other hand, by having a physical store, you can attract the older generation who prefer the tactile experience of shopping in-store and seeking personalized assistance.
As you can see, you are essentially tapping into new markets and attracting different sets of customers who prefer specific channels. This broader reach automatically translates to more sales opportunities and revenue for your business.
When you have a presence across multiple channels, you automatically increase the visibility of your brand. Potential customers are more likely to recognize and remember your brand when they encounter it in different touchpoints, such as physical stores, marketplaces, and E-commerce websites.
This recognition, in turn, will instill a sense of familiarity among these prospects, making them more comfortable and reassured while considering a purchase from your brand.
Also, having a presence in multiple channels gives you an opportunity to reinforce your brand messaging and USP on different platforms.
Multi-channel retail offers more opportunities to gather information about your customers. You not only have the possibility to collect more information but also the ability to use them more effectively.
For instance, imagine you are selling in-store only. A shopper who visits your store might not be too keen to provide a lot of information about them. And also, there is only so much information that a sales rep can collect from a customer.
However, if you have an online store as well, you will be able to easily collect key information about the customer such as their mobile number, email address, preferred products, etc. You can use this information to share personalized discounts and offers that they can redeem in either of the two channels.
Omnichannel retail is a retail model where you sell across multiple channels that are closely integrated. There is seamless data synchronization between different channels, ensuring that the customer has the same information irrespective of the touchpoint they use to access your store. More importantly, a successful omnichannel retail ensures that your customers’ interactions across different channels feel like it’s part of one seamless channel.
The whole concept of omnichannel retail revolves around data communication between different channels. On that basic note, let us understand the different steps involved in omnichannel retail:
Start by identifying the ideal channels through which your customers can purchase from you. Stepping into your customers’ shoes will help you identify the most convenient touchpoints for them to interact with your brand.
Find out the pitfalls and potential cracks in each of those channels. More importantly, ensure that the goals of each of those touchpoints align with your overall business goals. And yes, you can always branch off into new channels as you grow your customer base.
Typical channels include – physical stores, E-commerce websites, mobile apps, marketplaces, and social media marketing channels like Facebook and Instagram.
Develop a comprehensive plan that encompasses all touchpoints and outlines how you will engage with customers at each touchpoint and at what stage of their journey. The goal of this step is to align your sales, marketing, and customer service efforts across channels to create a unified and consistent brand experience for customers. Your strategy could focus on synchronized promotions, personalized customer support, and so on.
The next step is to have a clear understanding of your inventory. Centralize your inventory data and ensure it is synchronized across all your identified selling channels. The goal of this step is to provide accurate product information to customers irrespective of how they reach you. Information could include product availability, pricing, and delivery options. Include your sales, operations, and logistics teams while planning your inventory so that every team’s concerns related to inventory management are addressed.
Once you have selected the channels and created an omnichannel strategy, the next step is to integrate them to allow high-quality data to flow across them in real-time. The key here is “real-time”. The integration has to be achieved in such a way that when a customer interacts on one channel, their actions and preferences should be reflected immediately across all other channels.
This will enable you to offer personalized recommendations, consistent pricing, accurate inventory visibility, and a unified shopping cart across channels. You will need the right tech stack and APIs connecting different systems to achieve a successful integration between channels.
Collecting data in your omnichannel retail model enables you to identify where customers are in their customer journey in a particular channel, how engaged they are, and what you can do to further nurture the relationship. Implement robust analytics tools and systems to capture, organize, and analyze this data effectively. The insights gained from data analysis will help you refine your omnichannel strategy and drive business growth.
Since omnichannel retail also revolves around multiple channels, it offers all the benefits offered by multi-channel retail. Apart from that, here are some additional advantages offered by it –
Omnichannel retail optimizes your operations, resulting in increased efficiency and productivity. For instance, by integrating different channels, you get a holistic view of inventory and orders, enabling you to accurately track product availability, avoid stockouts, and fulfill customer orders more efficiently.
Additionally, you can implement techniques like ship-from-store and click-and-collect by utilizing your brick-and-mortar stores as fulfillment centers. This will improve order fulfillment speed and reduce shipping costs.
In omnichannel retail, customers can easily switch between channels, view their shopping history, and have access to their saved preferences and payment information on any channel, making the overall process more convenient.
Also, omnichannel retail enables you to provide personalized recommendations to customers based on their preferences across different channels. This again enhances convenience by presenting customers with relevant products, offers, and discounts, saving them time and effort in finding items that align with their interests and preferences.
Despite the advantages offered by the omnichannel strategy, not many businesses in India have embraced it. This means, if you embrace omnichannel retail, you will have a huge competitive advantage over others.
After all, in this competitive retail landscape, it takes more than a good discount to convince customers to choose you over your competitors. By adopting omnichannel retail, you are effectively showcasing your brand’s commitment to meeting customer expectations and keeping your operations customer-centric.
In omnichannel retail, you need not maintain separate inventory for each channel; you have a centralized inventory pool that you can access from any medium. It enables you to allocate inventory more dynamically based on demand and channel performance.
For instance, if the online channel consistently generates higher conversion rates compared to physical stores, you can allocate more inventory to the online store. Such dynamic allocation helps reduce excess inventory storage and improve overall inventory turnover.
From the information conveyed so far in this blog, you would have deduced that omnichannel strategy is an extension of a multichannel strategy as both use multiple channels to reach customers. However, the similarities end there. There are certain key differences between the two when it comes to purpose, execution, and user experience. Here are they –
In the case of multichannel retail, the focus is always on the product. The goal is to ensure that your product is available everywhere so that it follows your customers. On the other hand, the focus of omnichannel commerce is the customer. Its primary goal is to grab the attention of the customer using a variety of channels so that they will ultimately purchase from you.
In omnichannel retail, the operations of different channels work in tandem. This means you will get a single view of the customers and products across all the channels. However, in multichannel retail, the operations of different channels are disconnected. As a result, you will get multiple views of customers and products.
The experience that customers face in multichannel retail is often disjointed and fragmented. There is a lack of consistency in branding, pricing, and even customer service. However, in omnichannel retail, customers get a seamless and integrated experience where they encounter consistent branding, messaging, and personalized interactions, resulting in a great customer experience.
Here are some popular brands that have embraced multichannel and omnichannel retail strategies –
Type: Omnichannel retail
Channels present: Website, mobile app, physical store, social media, and marketplaces like Amazon and Flipkart.
Lenskart is an Indian optical retail business with thousands of physical stores established across India. They also sell via a dedicated website, mobile app, and on marketplaces like Flipkart and Amazon. Lenskart is one of the few brands in India where customers can seamlessly transition between different channels and complete their purchase in their preferred one. For example, the customer can visit a store to try a product, place the order on their mobile app, and get the product delivered either at the store or at their doorsteps.
Type: Omnichannel retail
Channels present: Website, app, social media platforms, and physical store.
This jewelry brand has successfully adopted omnichannel retail by integrating its website, physical store, and mobile app. For instance, you can start your jewelry exploration online, browse the collections, and even customize your designs. Once you have made your selections, you have the option to visit the nearest physical store to view the chosen designs in person, get assistance, and finalize your purchases. The inventory is synchronized between the online and offline channels to ensure availability and consistency.
Type: Multichannel retail
Channels present: Website, app, social media platforms, and physical store.
Fabindia is another popular Indian brand that has become synonymous with ethnic wear and traditional handicrafts. They have a presence across multiple channels like a physical store, an E-commerce site, and a mobile app. Customers can place orders on any of these platforms but there is no direct integration between them. Nevertheless, their presence in multiple channels has increased their brand visibility and improved accessibility to their products.
Type: Multichannel retail
Channels present: Website, app, social media platforms, and physical store.
D-Mart, one of India’s largest supermarket chains, has effectively built a multichannel retail presence by combining its physical store network with online initiatives. With a strong focus on customer convenience, D-Mart has opened numerous physical stores across cities. Customers can visit these stores to access a wide range of products. In addition to physical stores, D-Mart has ventured into the online space by launching an online website and a mobile app where customers can conveniently browse products, place orders, and opt for home delivery
Both omnichannel and multichannel retail have their own positives and negatives. And the above examples are proof that retailers have achieved success irrespective of which model they chose. However, there are certain types of businesses that will face better success by picking one of these models. Let’s understand more about it.
If you are someone who would like to reach more customers quickly, multichannel retail is a great choice. All you have to do is list your products in as many channels as possible, advertise them, and start reaping the benefits in the form of increased sales and revenue.
It is also a great choice for those who want results without spending too much money and time building an elaborate omnichannel retail model. However, you might still need the right tech stack to establish and manage your multi-channel operations.
In short, you must pick multichannel retail if you have limited resources or your business is in the early stages of establishing a presence.
Since omnichannel retail has multichannel retail as its foundation, you must first have a streamlined and optimized approach toward your multichannel operations. Only then will you be able to successfully implement an omnichannel strategy.
Also, developing omnichannel retail is not easy, both in terms of investment and effort. You must pick this model only if your business has sufficient in-house resources and the right tech solutions to manage it.
In summary, you must pick omnichannel retail if you are an established business with adequate resources and already have a strong multi-channel presence.
While multichannel marketing is still important in expanding your brand’s reach, the benefits offered by an integrated and coordinated omnichannel strategy are profound. However, successfully implementing and managing them across multiple channels takes work and will demand a lot of time from you.
Alternatively, you can partner with ANS Commerce which is India’s leading E-commerce service provider offering end-to-end solutions to scale your business. ANS Commerce can successfully set up both multichannel and omnichannel retail for your brand so that you can stay competitive in the industry. To know more, book a demo now.
