Omnichannel continues to be a buzzword in marketing. In this new digital age, every week seems to breed some new platform, some new technology. With each one that emerges, marketers are having to work out both if and how to use them within their existing collection of marketing tools. However, in conversations, articles and studies around omnichannel, there seems to be a strong bias towards what I describe as the frontend of omnichannel: the consumers’ path to purchase.
This bias does omnichannel a disservice, because its potential stretches far further into marketing’s value chains than those final links. Indeed, it might be in the backend of marketing that omnichannel will prove to be its most disruptive and transformative for businesses.
So what is Omnichannel?
Omnichannel is sometimes mixed up with what is called ‘multichannel’. A business that uses multiple marketing channels independently of one another is said to be using a multichannel marketing strategy. Omnichannel refers to the utilization of two or more channels in synergy with one another.
The different channels a business uses can be described as separate value chains. By its most inclusive definition, synergies are created when the values generated by the individual links of a single channel are identified, harnessed and applied to other links of a business’ value chains, creating a disproportionate benefit.
Click and Collect is a great example of omnichannel synergy. Most retailers have both online and physical stores, and these are considered two different channels. For a company like Walmart, a synergy is created through Click and Collect by uniting the values of these two channels, the accessibility and ubiquity of physical stores and the browsing efficiency of online stores, to create a more effective and economical purchasing process for their consumers than either channel could offer alone.
As the synergy is concentrated at the act of purchase, Click and Collect also happens to be an example of frontend omnichannel.
Frontend Omnichannel
Most of the attention is focused on omnichannel’s power to augment the consumer purchase experience. The role of digital in consumers’ paths to purchase is undeniable and it’s growing. At the hands of digital-born companies like Amazon, Uber, Spotify and Netflix, whole industries have been disrupted at the frontend. The value of mobile payments continues to surge, with 39 percent growth to $112bn in the US, and over 300 percent growth to $5.5tn in China in 2016 alone. Whilst the value of digital for marketing and advertising is a contentious topic subject to increasing skepticism, that there is value is undisputed. What is now being questioned, quite sensibly, is which platforms hold value, how much of it, and how best to unlock it. Whilst some digital organizations continue to have murky ROI’s for their clients’ brands, others, like BuzzFeed and Spotify and Amazon, maintain clearer propositions.
As digital is growing, it is also fragmenting. A Fluent survey found that some consumers are engaging with brands across ten or more channels, and that 47 percent of those who did were making purchases from their favorite retailer's website at least once a week, compared to just 21 percent for those who engage across one to four channels. With an increasing number of channels comes a complexity with how consumers use them, and the result is that the paths to purchase available to consumers become more varied and less predictable. Brands have responded with efforts to create seamless consumer experiences, ensuring their presence with consistent messaging and a clear ability to purchase at every touchpoint, working under the safe assumption that a consumer might make a decision to purchase at any time.
As channels become increasingly integrated at the front end, and the hype surrounding digital is subsiding into healthier realism and scrutiny, one thing has become clear: the most effective omnichannel marketing doesn’t lie in the extremes of purist digital or physical, but rather in a combination of the two. Digital-born giants like Amazon and eBay have recognized this
and they are now making a push into physical channels with experiments in brick and mortar stores such as Amazon’s IoT-powered supermarket, and pop-ups. The highest recent growth in retail has actually come from physical-first incumbents like Walmart, Target, and Macy’s, who are now going the other way and integrating their physical store properties with digital ones. Home Depot managed to top $1B in quarterly sales in 2015 alone.
A study in Harvard Business Review looked into this omnichannel middle ground in depth and a number of their results support this new belief. They found that conducting prior online research on the retailer’s own site or sites of other retailers led to 13 percent greater in-store spending among omnichannel shoppers, and that omnichannel customers spent an average of four percent more on every shopping occasion in the store, and 10 percent more online than single-channel customers. In fact, of the study participants, only seven percent were online-only shoppers and 20 percent were store-only shoppers. The remaining 73 percent used multiple channels during their shopping journey. It certainly lends credence to the idea that there is greater power and opportunity in physical and digital channels working together in tandem vs. separately in isolation.
One of the most notable success stories of blending physical and digital channels is Nike. Historically, retailers with physical stores have seen what is known as ‘show-rooming’- when consumers come into stores to look at items in person and then go online to purchase in hope of a better deal. Nike has not only embraced this consumer behavior, but recognized that it works both ways; that consumers also browse stock online and then come into stores to make their purchases. Products can be bought online and shipped to stores or bought in stores and shipped to a location of your choice. There are whole displays of samples above digital screens in their stores for products that can be customized and then only be bought online. They have created a seamless omnichannel ecosystem that allows Nike’s consumers to shop anywhere they like and have their products show up wherever they chose.
Beacons are another popular example of physical and digital channels working in synergy with one another at the frontend of marketing. Knomi, a high-end fashion content and e-commerce platform, utilizes beacon technology to great effect. Currently live in London, Knomi has more than 70 high end fashion retailers signed up to supply inventory to its app at this point — including FarFetch, Net-a-porter, Mr Porter and MatchesFashion. Allowing consumers to browse its partners’ inventory, Knomi points them in the direction of the physical stores that sells any items they’re interested in. Not only that, but with Bluetooth iBeacons installed in their partners’ boutiques, Knomi can send its users tailored push notifications for products and deals based on their preferences and browsing history of the platform’s inventory and the content curated from fashion bloggers and influencers when those users are nearby. It’s a popular new technology that’s gaining traction.
But, again, all of this is overwhelmingly focused on the purchase journey of consumers, and so little discussion is given to the power of omnichannel on the back-end of marketing.
Join us next week for the second part of our omnichannel blog, covering backend omnichannel as well as serval key brand examples. See you soon!
