Implementing a Successful Omnichannel Retail Strategy

With the accelerated growth of e-commerce following the COVID-19 pandemic, companies are transitioning from a traditional single-channel retail model, in which stores relied solely on either offline or online sales, to an omnichannel retail model that aims to take advantage of both the online and offline customer experience. This, however, comes with new hurdles, according to experts.

The retail landscape is more cut-throat than ever, with success favoring an omnichannel approach, according to Salesforce. It is no longer enough for businesses to create a website and offer standard customer service: “Today’s businesses have to be exceptional just to remain competitive,” states a report from the company. An omnichannel strategy focuses on connecting all company touchpoints, from brick-and-mortar shops to website, mobile, email and social media platforms, enabling customers to move seamlessly between all channels while using the same information.

As digitalization expands across industries, customers expect a seamless omnichannel journey, personalized communication and an overall Amazon-like experience, even when dealing with SMEs, according to Salesforce. This can lead to higher sales, experts say. “Customers spend more when they feel they can choose their own way to get in touch with a company, without having to provide information several times. Customers want to know the service is available, even if they do not use it,” says Bernardo Bazua, Director of Omnichannel and Digital Strategy for Coppel. 

An omnichannel approach puts the customer first, while enabling the retailer to reach new market segments, increasing sales and boosting revenue. A joint study by Google, Ipsos MediaCT and Sterling Brands found that 75 percent of consumers are more likely to visit a store if they come across local retail information on the web. Companies’ operational efficiency can also increase with this approach because businesses only need to collect a customer’s data once and they can optimize stock levels and fulfill orders from anywhere.

Challenges to Proper Implementation

Omnichannel strategies require investment and clear roadmaps. Companies must design campaigns for websites, email and text marketing, social media and print advertising to expand the brand’s reach to several channels working at the same time. “Omnichannel retail also gives customers an instant and continuous stream of content that solidifies the experience the product offers and builds brand loyalty,” states Scalefocus. 

While the benefits this approach provides to customers and companies is clear, Scalefocus says creating a seamless omnichannel model for retail businesses entails certain challenges:

• Data synchronization. Mistakes, data loss and misinterpretation of customer trends, purchase interests and patterns are a possibility, given the multiple channels that are receiving data. Retailers must stick to a single e-commerce system that streamlines operations smoothly, advises Scalefocus.
• Channel integration. Although all channels should be monitored equally, sometimes greater attention is paid to one specific area, leading others to lag behind. When a channel lags behind, full integration becomes more difficult and retailers could miss orders.
• Lack of visibility. Inventory management and logistics operations are usually the biggest challenges for retailers, even with single-channel sales. An omnichannel strategy makes this even more difficult. Clear inventory visibility is crucial to offer products to a customer base. Retailers must have automated inventory management for real-time inventory data and tracking.
• Ineffective logistics. While same-day and next-day deliveries, in addition to all last-mile operations, already represent a challenge for logistics operators and e-commerce companies, reverse logistics adds difficulties for retailers. Having the ability to return an item and get a refund is important for customers; a simple return process, accessible from any channel and device, is critical to maintain customer satisfaction.

Logistics, in particular, represents one of the main challenges for e-commerce, from the first to last mile. While the e-commerce boom brought exponential growth to logistics firms, first-mile logistics, which involve picking, packing and shipping and moving products from a manufacturer or retailer’s warehouse to a holding center, has seen little innovation, with most companies still relying on human decision-making rather than data-driven analysis, says Ashish Punj, co-Founder and CEO of Pikkop.

Last-mile deliveries, on the other hand, have become increasingly complex, says Ingo Babrikowski, CEO of Estafeta: “The growth of e-commerce has heavily impacted the number of packages that have to be delivered per stop. If you deliver to a shop, you leave 10 or 15 boxes at one stop. However, now with e-commerce, these boxes go directly to the final customer and you have one box per stop. This impacts the environment, traffic and pollution.”

Once retailers have figured out their first and last-mile logistics strategies, they must also focus on reverse logistics to allow customers to return merchandise smoothly. “Returns were previously considered an optional part of the logistics process but brands are turning toward more customer-centric services,” says Benjamín Santa María, co-Founder and CEO of Reversso. Allowing clients to return unwanted merchandise is important to build a trust-based relationship with clients. When a brand makes this service available to potential consumers, it can foster a long-term relationship and add a larger lifetime value for both itself and for the customer, he added.

While becoming a successful omnichannel retailer is challenging, the benefits outweigh the necessary investments, as competition and disruptive trends continue to grow. “Our processes enable a better shopping experience for client satisfaction. The model will continue to focus on personalization and (customer) convenience,” says Roberto Villalobos, Country Manager of OLX Autos.