Omnichannel retail engagement is difficult but doable
4 min read . Updated: 15 Mar 2023, 10:00 PM IST
PremiumA consumer centric supply chain that spans channels is a big challenge to set up but also has major rewards
The retail industry has seen so much change in the last few years that it’s hard to keep up. To satisfy shifting customer demands, brands have moved to omnichannel retailing to serve buyers online and offline. According to IDC, omnichannel brands witness a 15–35% increase in average transaction size, a 5–10% increase in profitability, and a 30% higher lifetime value than single-channel sellers.
A buyer’s omnichannel journey can look like this. Say, Tara, aged 35, needs to buy food for her cat. A few years ago, she would have headed straight for the mall. Today, she starts shopping from her couch by chatting with her personal concierge at Heads Up For Tails (HUFT), a retailer she’s been buying cat-care essentials from. The concierge greets her by name and recommends items based on dietary preferences and restrictions. Tara rejects some products and toggles to the next tab to check reviews and prices, finds better offers for some of the items at another retailer, and orders them immediately. She orders two items from HUFT and opts for in-store pick- up because the items are available at her nearest local store.
Enabling such a seamless brand experience needs the synchronization of supply chain strategies, inventory transparency, technological infrastructure and marketing efforts. Adopting an omnichannel supply chain is challenging, but marketers that respond to the changing market scenario will stay competitive. Let’s take a closer look.
Inventory visibility: Decentralized inventory is key to an omnichannel approach. Most single-channel and multichannel models work in silos and have virtually no cross-channel inventory visibility. This impedes fulfilment when orders come in through various channels. To solve this problem, retailers need a warehouse management system that syncs with their sales platforms, makes stock levels transparent, and reduces the risk of accepting wrong orders.
Inventory accuracy: Most omnichannel retailers use physical stores as distribution centres for faster order fulfilment. While it solves the problem of speed, it lowers the inventory accuracy level. Warehouses have an 89-90% higher inventory accuracy rate than stores. An automated inventory management system, RFID tags, cycle counting, designated bins and pallets, and regular inventory audits are some of the ways to increase efficiency.
Speed of delivery: The speed of delivery is both a strength and a weakness for omnichannel companies. As mentioned, most physical stores double up as dark stores for omnichannel fulfilment, which means orders can actually be delivered within the same day or next. The problem is that most brick-and-mortar stores are not equipped for fulfilment. These are not large and shop employees are trained to sell, not fulfill, and they don’t have the technology to back up the complicated process. The solution is not as straightforward as we’d like. Firstly, retailers need to identify the segments where speed matters the most. The quick commerce sector needs rapid delivery along with health and pharma, and food and beverages. Next, retailers should invest in network expansion to get closer to their target audience, and, finally, rely on automated logistical solutions for increased speed and efficiency.
Ease of return: A truly consumer-centric omnichannel supply chain should focus on customer convenience above all. According to Ixtenso, 89% of customers consider the ease of return a considerable influence on their shopping preferences. Customers who buy products from your store online should be able to return or exchange them from the convenience of their homes, at drop-off centres, or at a physical store. Choice in how to return products goes a long way in building trust and boosting conversion rates. Investing in a good returns-management system can ensure seamless returns across channels. Customers can use a self-serve portal to choose their return method, share photos of items for assessment and provide feedback and return reasons.
Crack the omnichannel conundrum: The key to this lies in creating a consumer-centric supply chain where the demands of customers are met across channels. This can only happen if retailers have a deep understanding of consumer behaviour.
An omnichannel supply chain can’t exist in a vacuum. It must be complemented with a complete omnichannel-retail strategy that includes marketing, data synchronization, tracking of user intent and mapping of customer engagement. Next comes sorting out your network and supply chain ecosystem for leaner operations. Brands must rethink their distribution model because a faster delivery system means information should travel quickly across the entire value chain. If the relaying of information is not consistent throughout all segments, the end customer will suffer and so will your bottom line.
Brands like Nykaa, CaratLane, Pepperfry, and Lenskart have implemented omnichannel strategies to merge the offline and online shopping experience with augmented reality, guided selling, free try-at-home services and user communication at all touchpoints.
A future of hybrid experiences: Immersive retail experiences are the way ahead. Today’s customers move swiftly between online and offline platforms and expect brands to support smooth omnichannel journeys. Hybrid experiences offer greater opportunities for customer satisfaction. To stay ahead of the curve, retailers must not just reduce expenses, but solve problems of hyper-connectivity and last-mile reach.
Ankita Singh & Lokesh Kumar are, respectively, associate director, sales, North America and founding member, ClickPost
