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It’s hardly like the internet, ecommerce or even m-commerce are new things, yet the concept of omnichannel retail is grabbing business headlines. Donovan Jackson investigates and finds that omni really is all…
While you might think retailers have omnichannel sewn up, it seems that isn’t quite the case. Into the traditional mix of in-store and online shopping is thrown the emerging mobile channel, or m-commerce. There’s also telephone calls, emails, web chat and social media as options for customers to interact – and while most organisations will be active across all of these channels, that isn’t necessarily what omnichannel means. Instead, it refers to the ability to deliver a seamless and consistent customer experience regardless of the means of interaction.
And it’s not just retailers to which omnichannel applies. Companies of all kinds today have multiple ways of reaching their customers, and therefore must coordinate activity across those channels. That’s confirmed by Oliver Guy, retail industry director at Software AG. “Every company that has a transactional relationship with consumers should be looking at the different channels they use to interact with customers,” he said.
Alex Petraska First Software GM puts it simply when asked why omnichannel is a big deal. “Organisations want to provide a consistent user experience and require systems in place to facilitate that,” he said.
Alignment; necessary but not easy
Emarsys APAC MD Stuart Barker pegs the problem: “More often than not, retailers struggle when trying to align offline and online channels. [They] find it challenging to educate teams about offering a seamless proposition to customers regardless of whether they are interacting with a brand online or in store.”
Yet, added Barker, the same employees – as consumers in their own lives – make no distinction between the call centre and the local branch of the bank, or a website and the front desk of a hotel. “Subsequently, you can be certain they would not hesitate to return goods bought online in the local store of a retail chain. This consumer centric thinking however, stops when they are considering their own organisation. Business leaders must do everything they can to overcome this and ensure that customers get the same experience irrespective of channel.”
OpenText ANZ VP Mike Lord said that while some brands stand out, many just can’t keep up with the omnichannel challenge – and there is a cost to ‘failure’, too. “Lagging retailers estimate that they lose $65 million for every billion dollars in revenue, due to a lack of omnichannel readiness.”
It’s a customer thing
Lord added that demand for good omnichannel approaches is driven by customers and the way in which they expect goods and services to be delivered. “With the proliferation of the internet and mobile, customer demands have rapidly shifted. These days, we expect convenience and flexibility across channels – be it brick and mortar, catalogue, in-store kiosks, web, mobile, or social platforms. While we demand for information to be readily available at our fingertips and want to be able to make purchases on the move, we also desire the option of interacting with the product in person,” Lord points out.
We’re a demanding lot and an empowered one, too. “Customers are no longer confined by time and location; and more importantly, they won’t hesitate to walk away from businesses that fail to satisfy these demands.”
Say goodbye to choice
Steady on, customers, it’s not your choice that’s on the block, it is that of the retailer (and all businesses operating on competitive markets and across multiple channels). That’s the view of Software AG’s Guy. “Retailers face no choice but to go omnichannel – this is what customers are demanding and to retain those customers it is a necessity. On top of that, competition from pure-play online retailers is also making it more of a necessity,” he said.
Jolly easy to say, a lot less easy – or indeed jolly – to do. “The problem is that the infrastructure that exists within established retailers is focused on selling via a single channel: the store,” said Guy.
While that may seem remarkable for all the wrong reasons in the age of the internet and ubiquitous smartphones, ANZ shoppers are likely to see some truth in Guy’s words, just through personal experience. “This infrastructure is optimised for a single channel and covers processes and systems, as well as physical entities such as how warehouses are configured,” he added.
Omnichannel, on the other hand, is about allowing the customers the ability to undertake each of the major retail touch points – Select, Transact, Acquire, Return – via any channel, irrespective of the channel used for the previous step. “Consequently, a complete overhaul of the business is required,” said Guy and added that this is no mean feat. “Omnichannel transformations are huge undertakings. They started a few years ago in North America before moving to the UK and through the rest of Europe and then Asia Pacific.”
Big change, big challenges
Raghav Sibal, ANZ MD of Manhattan Associates said years of in-store under investment have driven a devaluation of the store experience, even as retailers are entering a new era of personalised customer service. “To achieve this new vision however, will require a significant process transformation and three essential pillars of information: complete visibility of customer orders, purchase history and preferences in one place; up to date product file, including shipping and location costs; and a single, real-time view of inventory, network-wide. [Only] with these three key components in place can retailers begin to explore other opportunities for differentiation and improving the customer experience,” he said.
In Petraska’s view, the Holy Grail for technology that supports omnichannel business is all information being driven from ‘a single point of truth’. “Once you have multiple business applications, you run the risk of information getting corrupted or mistakes being made that get replicated. And then you are front page news,” he says.
A single version of the truth doesn’t sound like anything particularly new; indeed, ERP vendors (and integration specialists) have been telling us for years that fragmented, siloed information is a stumbling block in delivering consistent experiences, particularly in those organisations where various departments handle the same customer in different ways.
There’s even more to it, and those who like neat measurable facts and figures could find this a tough nut to crack: “It is necessary to provide the same ‘tone’ across virtual [experiences] and reality.”
It’s a business transformation issue, said Guy, in which one of the major areas of stress is the margin erosion associated with less efficient processes. “Processes need to be as streamlined and automated as possible, avoiding human interaction and thus minimising costs and error rates associated with each order. Ultimately, the process for the customer needs to be as frictionless as possible.”
Everybody else is doing it…should we?
The proponents of omnichannel approaches to doing business are, perhaps unsurprisingly, pretty keen to push it as a panacea – but even panaceas have their limitations. Lord said that while omnichannel is suitable for all, “There is no one-size-fits-all approach to achieving it. Customer expectations are the primary driver for omnichannel commerce – and these demands vary from business to business.”
For his part, Petraska left ‘all’ for ‘most’ “Most businesses would recognise the need to implement an omnichannel environment; [however] the biggest obstacle will continue to be implementing technology to enable it, either through having to manage disjointed systems or continually adding bolt-ons rather than stepping back and evaluating requirements from a fresh perspective,” he said.
For every type of retailer, added Sibal, never has it been so important to build customer loyalty and ensure a positive experience. “Omnichannel isn’t about gaining customers. It is about retaining share and profitability. It is about, in the end, staying in business. With the need to adopt an omnichannel approach growing at the same time that the capabilities and knowledge gap between store staff and consumers is widening, the stakes are only getting higher – doing nothing is simply no longer an option,” he concluded.
In the omnichannel journey, returns are just as important as sales
So, you’re all set up for omnichannel interaction. But just what, how, when and why do customers choose and use any given channel? These are important questions which want answering, said Paul Winsor, market development director at Qlik. “By leveraging data you can ‘know’ and make sense out of complexity. With omnichannel, you want to know not just what customers are buying, but also everything about the interaction – how did the customer come to that decision?”
Being able to see that behaviour is useful – but not only in the direction one might imagine.
“Just as important as sales is the application of this sort of intelligence to returning products – what’s coming back into the supply chain and where?” he said.
It’s a good point, because how returns are handled can have a big impact on profitability – and in an omnichannel environment, something bought online and returned in-store can create very real headaches if the supply chains behind each channel are separate. “Customers don’t only want to buy on the most convenient channel for them. They also want to return on the most convenient one – and these are not necessarily the same.”