Integrating Omnichannel Retail: Looking Beyond Your Four Walls to Stay Ahead of the Curve

By Peter Zaballos — May 27, 2015

As far as consumers are concerned, the way you do anything is the way you do everything. And how you go about delivering the total shopping experience consumers demand is more visible now than ever before. That’s why leading retailers, suppliers, manufacturers and 3PLs are transforming their businesses by joining the omnichannel revolution. Their goal? To create the seamless shopping experience today’s consumers expect.
 
Whether they’re in stores, online, responding to emails, viewing promotions on mobile devices or all of the above, consumers truly are defining the shopping experience, and they want real service, not lip service. That means:
 

• Robust product information
• Accurate inventory information
• Competitive prices
• Social validation
• Convenient fulfillment
• Effortless returns

 
Meeting these needs doesn’t have to be enormously complex or expensive. Many retailers are creating a unified, comprehensive, customer-centric process by merging their systems and aligning their front- and back-office functions. But the leading retailers aren’t stopping there. They’re partnering with their suppliers and other trading partners to reinvent retail from the ground up.
 

Omnichannel retail: The possibilities—and aisles—are endless

Industry experts and consumers agree: Retail has changed more in the past decade than over the last century. Here are three reasons:
 

• E-commerce. Not long ago, consumers did nearly all their shopping in stores, which is where retailers put their inventory. Then, in the mid-2000s, as e-commerce gained traction, retailers moved their inventory to their warehouses. Now, as channels continue to merge, those same retailers are filling orders differently: some have suppliers ship direct to retail stores for consumer pickup, others ship direct to consumer homes, and still others use a combination of these methods.

 

• Mobile. According to Enhancing the Retail Omnichannel Customer Experience, a study conducted by Forrester Consulting on behalf of SPS Commerce, one-fifth of all consumers use their mobile phones for shopping-related tasks while in physical stores. Of that group, nearly 50% rely on their in-store mobile experiences to drive their purchase decisions; they compare prices, look up product and warranty information, read customer reviews, search for coupons and more. And now, with digital payment services such as Apple Pay, those same consumers are using their mobile phones to pay for their purchases.

 

• Internet-of-Things. The emerging category of wearable devices is already having an impact, and with the highly anticipated introduction of the Apple Watch later this year, that impact is expected to explode. Not only will wearables open a new channel, they will open new opportunities for targeted promotions, behavior tracking and customer service. They will also open up opportunities for more retailer and third-party apps.

 

Mastering the Amazon Effect

It’s a given that retailers want to compete with or emulate Amazon. But if the focus remains solely on Amazon, the key opportunity will be missed. The real “effect” to focus on is the powerful role digital shopping and exploration is having on retailing overall by enabling consumers to buy what they want, how they want, when they want, and to have all purchases delivered quickly to wherever they want. Now, with nearly limitless information available at the swipe of a finger or on their wrists—information that guides and informs purchasing decisions—consumers are demanding faster, better and less expensive shopping experiences.
 
As the Forrester Consulting research study makes clear, retailers must change their business processes and systems in order to support how consumers are shopping right now, which is 100% omnichannel. In fact, what we see in the market today is retailing’s adjustment to this. That’s why embracing digital shopping and exploration has become so important. It’s a way for retailers to move beyond the four walls of their physical stores.
 
It’s also a way to increase sales, which retailers can do by expanding product offerings on their websites and in their apps. When they choose suppliers willing to ship direct to consumers, they don’t even have to own the inventory or warehouse, package or ship it. What’s more, if those suppliers are willing to carry more products or an expanded product assortment, sales increase further, as they do when suppliers provide photos, videos, consumer reviews, warranty information, shipping details and other information.
 
The result is a win-win for both retailers and suppliers.
 
But how do retailers find and manage such suppliers? One way is via network-based supply chains, sometimes referred to as Retail Business Networks.
 
Just as social networks such as LinkedIn and Facebook have changed how individuals, brands and companies connect with one another, network-based supply chains are changing the way suppliers, vendors and 3PLs connect with one another. The cloud enables them to share information and integrate operations. It also enables them to capitalize on relationships in order to make the most of what’s happening right this minute, whether that’s a snowstorm, a hot new movie or a trending item on Pinterest.
 

3 Ways to incorporate Omnichannel 

How do you begin to incorporate omnichannel retail solutions in your separate-channel world? Here are three ways:
 
1: Capture robust product data.
Today’s consumers want detailed information in order to make well-informed purchase decisions. Some companies do a good job of providing this information, others don’t—but make no mistake, consumers no longer have patience for shopping experiences that lack sufficient product information.
 
You can see for yourself by shopping for Nike’s LeBron men’s basketball shoes. On Nike.com, you’ll find color photos, a detailed product description, a comprehensive list of benefits, dozens of consumer reviews and even a video of LeBron playing basketball wearing his signature shoes. Contrast that with amazon.com, where you’ll find far less information: a few photos, a list of bullets, no benefits and only a handful of reviews.
 
If you were a consumer, where would you shop—on a site that gave you complete item information or the one that made you fill in the blanks?
 
2: Make sure the data is accurate.
Consumers expect—and deserve—accurate product data. When they don’t get it, they take their business elsewhere. That’s exactly what one of my colleagues did recently when shopping for a refrigerator. She’d been to a national big box store and had seen a model she liked. A few days later, she went online to verify the model’s dimensions.
 
As you can imagine, dimensions are one of a refrigerator’s most important product attributes: the one you buy has to fit into a pre-determined space.
 
What did she find? That the refrigerator she was considering measured 1” x 1” x 1.” Her reaction: Either this is the world’s smallest refrigerator or the retailer didn’t get the dimensions right. No surprise, she took her business elsewhere.
 
This is just one example of why accurate data is so important. With it, you build trusted relationships. Without it, you lose customers. You also increase returns because when consumers don’t have access to complete and accurate product data, they often end up being disappointed with their purchases.
 
3: Figure out how to manage returns.
One of my SPS Commerce colleagues once placed an online order for 15 pairs of shoes—five different models in three sizes each. The retailer was happy—until my colleague returned all but one pair. As much as a third of all Internet sales are returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising: United Parcel Service expects returns to jump 15% this season.
 
In the past, most retailers directed consumers to send unwanted merchandise to a central returned-goods center. There, the item collected dust until someone decided to sell it at a discount or pack it up and send it back to the vendor. Today, forward-thinking retailers, suppliers and third-party logistics firms are developing an important competitive advantage by having consumers ship returns directly back the vendor. Instructions and mailing labels for doing so are often printed on packing slips; all consumers have to do is slap the label on the box and ship it off.
 
The retail world has changed. And it’s bound to continue changing as new technologies enable greater consumer control. But what won’t change is the position consumers hold in driving their own shopping experiences. The retailers who understand this are streamlining, integrating, synthesizing—and winning. Join them by embracing omnichannel today.