Evolution of Omnichannel

By Bobbi Leach, CEO clockicon 4 minute read

FuturePay Evolution of Omnichannel

 

While there is some disagreement as to what truly marks the beginning of omnichannel retailing, it appears that the oldest roots stretch back as far as 2003, when Best Buy made the decision to put “customer centricity” at the heart of their business.

 

The Beginning

 

2003 was an interesting time for Best Buy. They were struggling to compete with Walmart, but at the same time were seeing their online sales grow to be the equivalent of a sizable store. At that point Best Buy decided that because they couldn’t compete with Walmart on price, they would compete on customer experience – and they would achieve this by putting customers at the center of the cross-channel shopping experience. Essentially, Best Buy’s goal was to provide consumers with all the components they would want in the purchasing process and then let shoppers assemble their own path to purchase, be it online, in-store, or both. And thus omnichannel retailing was born.

 

It didn’t take long for online to grow to an undeniably important channel for all retailers, representing around 3-5% of total sales by 2007.

 

And Then Came Mobile

 

With the in-store and online channels well-established, the next big milestone in omnichannel retailing was the emergence of mobile commerce. While some experts will point to the introduction of the iPhone in 2007 as the start of omnichannel retailing, mobile commerce didn’t really take hold until 2011. In fact, the first step towards mobile becoming a channel for everyday commerce was when Amazon released their price checking app, which let shoppers search for products online or scan barcodes in-store and compare them to Amazon’s prices.

 

While many retailers were angry with the app, saying that it wasn’t fair or that it put their store at a disadvantage, consumers were more than happy to incorporate mobile into their shopping routine in order to help them find the best value. And mobile has progressed into arguably the most important channel in an omnichannel strategy. Today, being an omnichannel retailer means leveraging data from smartphones and other mobile devices to better understand customers and enhance personalization.

 

From Idea to Execution

 

Fast forward a couple years to 2013, when retailers went from talking about omnichannel to actively pursuing it. Suddenly omnichannel went from a pie in the sky idea to a corporate strategy and we started to see the introduction of VPs of Omnichannel working with large budgets.

 

One of the first challenges the VP’s of Omnichannel had to face was breaking down the silos that separated the retail and digital arms of a business. In the early days many businesses had a fairly strict separation between their retail and digital employees – sometime they were even in different office buildings. But customers don’t look at online and offline channels as separated from one another, but rather as parts of a whole, and retailers need to share that perspective.

 

One thing that retailers quickly realized is that having a single view of customers and unifying data across channels is much easier said than done. Take social media for instance, if you made heavy investment to consolidate data from Facebook with other channels, it’s a little disheartening to see your customers move to Instagram, Snapchat, or whatever other social media is the flavor of the day. What this shows is that having a single view of customers is a constantly evolving process.

 

But if it’s a constant evolution, then where is the forefront of that evolution of omnichannel today?

 

Omnichannel in 2016

 

Interestingly, one of the frontiers of omnichannel today doesn’t have to with customer channels but rather supply chains. One advantage of in-store shopping that online was previously unable to compete on was speed of delivery. Even overnight shipping isn’t good enough if you need a product within a few hours. As a result, a number of retailers have recently started working to provide shoppers with “instant” delivery methods – and likewise, a number of companies specializing in alternative methods of instant delivery have recently started up. From Amazon Prime, to bike couriers, to crowdsourced package delivery, to buy online and pickup in-store, these same-day delivery methods are starting to strip physical stores of their competitive advantage in fulfillment speed over online channels.

 

This latest evolution is omnichannel entering the big leagues. Where it once might have been enough to simply have a website, mobile site, and Facebook page that have consistent cross-channel branding, today being a truly omnichannel retailer requires incorporating an omnichannel perspective throughout the entire consumer path. Naturally, this has some challenges.

 

Take for example how omnichannel retailing is impacting demand levels across channels. The consumers’ path to purchase can involve social media, an email, and an in-store conversation before they ultimately make an online purchase. This leaves retailers with the challenge of predicting which channels will be used for which products, while knowing that demand that starts in-store may end up online – and vice versa.

 

As you can perhaps imagine, this is a challenge from the perspective of inventory management and merchandising.

 

The Next Evolution of Omnichannel

 

The future leaders of omnichannel retailing will be companies that can synchronize data from various channels into a holistic and comprehensive picture of the customer buying process, and then leverage that data to provide customers with incremental value by improving the shopping experience. With so many channels retailers have more data than they know what to do with, and so the issue is not collecting data but rather being able to translate that data into useful and actionable insights. Every two days we create as much data as we did up to 2003 (that’s from the start of mankind up to 2003). But data is meaningless by itself. What does a Facebook ‘Like’ mean in the context of the bigger picture? It’s impossible to know without proper synchronization and analysis of data across channels. The winners of omnichannel will be those that can use data to predict shopper behaviors and personalize their experiences based on previous interactions.

 

While it’s difficult to say what omnichannel will look like next, there is one thing we can all agree on: the evolution isn’t over.

 

P.S. Enjoy this post? You’ll love Why Showrooming Works: Improving the Omnichannel Customer Experience and Playing Catch Up: Optimizing a Physical Store with Ecommerce Insights

By Bobbi Leach, CEO clockicon 4 minute read

FuturePay Evolution of Omnichannel

 

While there is some disagreement as to what truly marks the beginning of omnichannel retailing, it appears that the oldest roots stretch back as far as 2003, when Best Buy made the decision to put “customer centricity” at the heart of their business.

 

The Beginning

 

2003 was an interesting time for Best Buy. They were struggling to compete with Walmart, but at the same time were seeing their online sales grow to be the equivalent of a sizable store. At that point Best Buy decided that because they couldn’t compete with Walmart on price, they would compete on customer experience – and they would achieve this by putting customers at the center of the cross-channel shopping experience. Essentially, Best Buy’s goal was to provide consumers with all the components they would want in the purchasing process and then let shoppers assemble their own path to purchase, be it online, in-store, or both. And thus omnichannel retailing was born.

 

It didn’t take long for online to grow to an undeniably important channel for all retailers, representing around 3-5% of total sales by 2007.

 

And Then Came Mobile

 

With the in-store and online channels well-established, the next big milestone in omnichannel retailing was the emergence of mobile commerce. While some experts will point to the introduction of the iPhone in 2007 as the start of omnichannel retailing, mobile commerce didn’t really take hold until 2011. In fact, the first step towards mobile becoming a channel for everyday commerce was when Amazon released their price checking app, which let shoppers search for products online or scan barcodes in-store and compare them to Amazon’s prices.

 

While many retailers were angry with the app, saying that it wasn’t fair or that it put their store at a disadvantage, consumers were more than happy to incorporate mobile into their shopping routine in order to help them find the best value. And mobile has progressed into arguably the most important channel in an omnichannel strategy. Today, being an omnichannel retailer means leveraging data from smartphones and other mobile devices to better understand customers and enhance personalization.

 

From Idea to Execution

 

Fast forward a couple years to 2013, when retailers went from talking about omnichannel to actively pursuing it. Suddenly omnichannel went from a pie in the sky idea to a corporate strategy and we started to see the introduction of VPs of Omnichannel working with large budgets.

 

One of the first challenges the VP’s of Omnichannel had to face was breaking down the silos that separated the retail and digital arms of a business. In the early days many businesses had a fairly strict separation between their retail and digital employees – sometime they were even in different office buildings. But customers don’t look at online and offline channels as separated from one another, but rather as parts of a whole, and retailers need to share that perspective.

 

One thing that retailers quickly realized is that having a single view of customers and unifying data across channels is much easier said than done. Take social media for instance, if you made heavy investment to consolidate data from Facebook with other channels, it’s a little disheartening to see your customers move to Instagram, Snapchat, or whatever other social media is the flavor of the day. What this shows is that having a single view of customers is a constantly evolving process.

 

But if it’s a constant evolution, then where is the forefront of that evolution of omnichannel today?

 

Omnichannel in 2016

 

Interestingly, one of the frontiers of omnichannel today doesn’t have to with customer channels but rather supply chains. One advantage of in-store shopping that online was previously unable to compete on was speed of delivery. Even overnight shipping isn’t good enough if you need a product within a few hours. As a result, a number of retailers have recently started working to provide shoppers with “instant” delivery methods – and likewise, a number of companies specializing in alternative methods of instant delivery have recently started up. From Amazon Prime, to bike couriers, to crowdsourced package delivery, to buy online and pickup in-store, these same-day delivery methods are starting to strip physical stores of their competitive advantage in fulfillment speed over online channels.

 

This latest evolution is omnichannel entering the big leagues. Where it once might have been enough to simply have a website, mobile site, and Facebook page that have consistent cross-channel branding, today being a truly omnichannel retailer requires incorporating an omnichannel perspective throughout the entire consumer path. Naturally, this has some challenges.

 

Take for example how omnichannel retailing is impacting demand levels across channels. The consumers’ path to purchase can involve social media, an email, and an in-store conversation before they ultimately make an online purchase. This leaves retailers with the challenge of predicting which channels will be used for which products, while knowing that demand that starts in-store may end up online – and vice versa.

 

As you can perhaps imagine, this is a challenge from the perspective of inventory management and merchandising.

 

The Next Evolution of Omnichannel

 

The future leaders of omnichannel retailing will be companies that can synchronize data from various channels into a holistic and comprehensive picture of the customer buying process, and then leverage that data to provide customers with incremental value by improving the shopping experience. With so many channels retailers have more data than they know what to do with, and so the issue is not collecting data but rather being able to translate that data into useful and actionable insights. Every two days we create as much data as we did up to 2003 (that’s from the start of mankind up to 2003). But data is meaningless by itself. What does a Facebook ‘Like’ mean in the context of the bigger picture? It’s impossible to know without proper synchronization and analysis of data across channels. The winners of omnichannel will be those that can use data to predict shopper behaviors and personalize their experiences based on previous interactions.

 

While it’s difficult to say what omnichannel will look like next, there is one thing we can all agree on: the evolution isn’t over.

 

P.S. Enjoy this post? You’ll love Why Showrooming Works: Improving the Omnichannel Customer Experience and Playing Catch Up: Optimizing a Physical Store with Ecommerce Insights