Omni-channel Retailing

Omni-channel retailing is a strategic approach that integrates various methods of customer engagement—such as online shopping, in-store experiences, and even mail-order services—into a cohesive customer experience. This approach contrasts with multi-channel retailing, where different channels may offer varying information and promotions. Companies adopting an omni-channel strategy aim for consistency across platforms, ensuring that customers receive the same information and service regardless of how they interact with the brand. This integration is vital in creating trust and convenience for consumers, who increasingly expect seamless transitions between online and offline shopping.

The omni-channel model is utilized across diverse industries beyond retail, including finance, healthcare, and entertainment, reflecting a broader trend in customer service and engagement. Successful implementation often requires significant investment in technology, employee training, and restructuring of communications networks to maintain unified customer touchpoints. However, it presents challenges, such as the need to safeguard customer data privacy and manage logistics effectively. While many large companies have embraced omni-channel retailing to enhance customer satisfaction and loyalty, smaller businesses may struggle with the demands of this model due to limited resources. Overall, omni-channel retailing is reshaping customer expectations and operational strategies, promoting a more interconnected and accessible shopping experience.

Published in: 2021

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Subject Terms

Omni-channel Retailing

Abstract

Omni-channel retailing is used to describe the streamlining of customer experiences, including in-person and online marketing, customer service, sales, and delivery. Omni-channel retailing is continually evolving as new platforms for marketing and sales emerge. Omni-channel retailing has many benefits for both customers and companies. However, this retailing strategy also produces risks for companies that must be concerned with breaching information privacy, disruption in delivery, and immediately meeting consumer demands.

Overview

Contemporary omni-channel retailing refers to the integration of online, in person, and sometimes mail-order sales and marketing. When a retailing plan indicates "omni-channel" the designers are indicating that they plan to integrate the ways that they will engage customers. This is opposed to a "multi-channel" method, which also engages customers, but does so in a less streamlined way. For example, a clothing retailer that uses a multi-channel method might advertise a sale to customers in different ways and at different rates, such as having a 20 percent off sale in a store, but a 40 percent off sale online. Using an omni-channel approach, the same clothing retailer would offer a sale at a consistent rate, such as 20 percent off in all of its settings, both online and in the store.

The goal of an omni-channel retailing method is to ensure that customers can always be in touch with a company and receive the same information from a company across a diversity of platforms. While omni-channel retailing most commonly refers to the sale of goods, the term is also applied to the work of customer service, education, entertainment, finance, information systems, new media, government, and health care. In each of these markets and fields, omni-channel retailing is used to provide the most comfortable and direct pathway for customers to access information, goods, and services.

The use of so many different platforms has created a blending of different technologies and access points. Historically, many of these services and offices operated separately within a company or organization. Now consumers are expecting to approach a company in the same way across many different platforms (Verhoef, Kannan & Inman, 2015). This has required many companies to restructure their offices, ensuring that marketing campaigns, sales, product development, and customer service are all working together to produce the same messages, campaigns, and services. Oftentimes this integration of company offices and employees requires new training, hiring of new employees, and integration of new technology, each of which requires significant investment from the company.

Beyond the company office space, integration required for omni-channel retailing includes combining traditional stores, mailings, catalogues, television advertisements, and billboards. Companies must also revise their communication networks to adapting to new methods of communication, such as text messages, new media platforms, e-mails, and other electronic targeted marketing campaigns. Each of these methods of engaging customers are called touchpoints.

What is important in the development and combination of all of these platforms is that the information provided to the customer at each touchpoint remains constant. No matter how a customer looks for information, he or she should receive the same information. This does not, however, mean that customers cannot be rewarded for interacting with a company through specific media. For example, a company could run a special rate or reward for customers who utilize an application or print an e-mail. This would still be considered omni-channel retailing because customers would be made aware of this special promotion across different platforms.

Some of the largest American companies, such as Amazon, Walmart, and Facebook have begun utilizing omni-channel retailing. In the case of Amazon, the integration of omni-channel is evident when a consumer sees the same page—including information, styling, and log on screens—regardless of the platform used to access the company's webpage. This information might be formatted differently to display on either a desktop or a mobile screen, but customers who have become accustomed with omni-channel retailing will trust that the information is the same regardless of which of their devices they are looking at. Because the information provided to customers is the same, customers can easily engage in research shopping about specific products.

Research shopping can happen in two ways, customers might look at products in person and then buy online. Or they might first look online and then buy in person. This second process is called webrooming because the customer is using the internet as a showroom for possible purchases.

An example of webrooming is that customers shopping at Walmart can search for a product online, check to see if it is in stock, and then make a purchase over their phone or in the store. Because Walmart uses omni-channel retailing, these customers can expect that they will be buying the same product at the same price, regardless of the method used to make the purchase. This level of integration allows customers to feel secure in their purchasing decisions, they know that the price which they view today online is the same as in the store. This knowledge results in more frequent purchasing decisions. For example, previously a consumer may have felt that it was necessary to shop around at several different stores to find the best price, however omni-channel retailing makes customers feel more confident that they have found the best price.

The integrated platforms called for in omni-channel retailing continues to assist customers even after they have made a purchase. For example, omni-channel retailing enables customer service representatives to respond quickly to complaints, customer requests, or other types of customer service. This also saves companies money, because with an integrated, omni-channel platform, companies are able to have large customer service centers that can access customer information regardless of the platform the customer used. This means that a customer service center staff member can access sales records for a customer regardless of where the purchase was made, the platform that was used to make the purchase, or the way that the customer has contacted the customer service center. For many large companies, this means that consumers can make contact over the phone, via e-mail, or through an online chat platform. Regardless of the platform used, the customer is assured that they will receive the same information and service. This improves customer relationships with a company and encourages the customer to continue using the company in the future.

Omni-channel retailing allows customers to view a streamlined company. For some companies, this can create a problem. Customers have come to expect that regardless of how they engage with a company, they are engaging with the same group of people, with the same access to information. For example, a customer will expect that the customer service representative knows about her past purchase, calls, and requests. Ensuring that customer service representatives can access this information requires that the company maintain such records and make those records available to employees on a consistent basis. While this places an additional burden on companies seeking to provide good customer service, it also provides an opportunity because those same companies can keep records about the preferred ways to contact customers and then use those contact methods for future outreach.

Customer records allow a company to provide superior service. However, the provision of that service requires that many pieces of personal information be available to employees at all times. This might include purchasing habits, personal preferences, family data, home addresses, and banking information. Some consumers feel that making this information available is acceptable because it allows the company to provide superior service. However, other consumers may feel that the company has violated their trust by making so much information available. News or rumors of data breaches, such as the distribution of customer credit card numbers or personal addresses only serve to heighten this fear. As such, companies must weigh the advantages and disadvantages of omni-channel retailing against other customer expectations such as data privacy.

Further Insights

Many companies have developed from brick-and-mortar stores to online platforms. However others have emerged as online platforms and then transitioned to include a few brick-and-mortar stores. This change in development surprised many analysts, but from the omni-channel retailing perspective, it makes sense. For example, Amazon first developed as a online retailer, and only recently established brick-and-mortar stores in large cities. These brick-and-mortar stores fuse seamlessly with online platforms and are designed to provide a smooth transition for customers. This is accomplished by offering more locations and types of experiences for customers to gain information and access to their products. In this way, Amazon is demonstrating some of the strengths of omni-channel retailing.

One of these advantages is the "availability effect," a term used to describe the way that by using multiple platforms, companies are able to sell their products more directly to consumers, and make the return of those products easier for consumers (Pauwels, Leeflang, Teerling & Huizingh, 2015). Some of the companies that have been most successful now use a hybrid brick-and-motor and online approach. For example, these companies might encourage customers to buy online and then pick up their product in a store (Bell, Gallino & Moreno, 2014).

Online pre-ordering for in-store pickup is especially common in situations where the consumer wants to ensure the freshness of delivery or where leaving unattended packages on consumer's porch is undesirable. This works especially well for grocery stores that require a guarantee of freshness. Other companies have arranged for customers to collect their packages from lockers or other third party stores, such as convenience stores. This allows customers to buy online and have delivery near, but not at, their home. The advantages of this form of delivery can include increased privacy for consumers and alleviating customers from the fear that their packages might be stolen.

Issues

Omni-channel retailing is spreading fast due to the demands and expectations of customers. The ability of customers to reach some companies across a diversity of platforms has produced an expectation that all companies can be accessed across all platforms. This expectation affects service providers, as well as the operations, delivery, and sourcing that are used by companies (Peltola, Vainio & Nieminen, 2015). While some companies have easily met these expectations, not all have made such a smooth transition. Some companies are only reachable through specific platforms because they have not upgraded to new systems, or do not see the value in being consistently accessible.

Others, particularly small companies, cannot afford to be accessible at all times. For example, a family run business may not have the time, employees, or inclination, to be able to respond to e-mails, social media feeds, and phone calls on a 24-hour basis. Problems can arise, however, if customers turn to other companies in an attempt to find better service or products. This can create an unfortunate scenario where a company cannot afford to utilize omni-channel retailing, but also risks going out of business because they are not using omni-channel retailing.

Shipping and delivery has also become an issue for companies that are using omni-channel retailing to reach many more customers from a diversity of locations. While these companies may be happy to have more customers, they may be unaccustomed to managing the warehousing, packaging, delivery, and customer care necessary for this transition (Hubner, Wollenburgh & Holzapfel, 2016). Problematically, customers will hold small companies accountable for problems that occur along this supply chain, even when problems are not actually the company's fault. For example, if a small company is delivering products through a third-party shipping company, they must be prepared to provide the customer services necessary to deal with upset customers if the delivery is late, arrives damaged, or is stolen en route, even if those issues are not the fault of the small company.

Meeting these challenges and making the necessary changes to achieve omni-channel retailing requires additional training and technology for the company's employees (Cook, 2014). In some cases, the company needs to hire new employees to meet these challenges. While the growth of customer service is usually a positive event, in some cases, such as this, it may put additional financial pressure on small companies.

Companies that successfully use omni-channel retailing experience many benefits, though they are also prone to some difficulties. For example, because their information and products are available across the world, companies are now reaching more consumers than they can service. Retailers must sometimes explain to disappointed customers why some products are available in one country but not another. Consumers also now have the ability to find and compare similar products and similar prices from around the world (Fulgoin, 2014). This ability might result in consumers being more willing to purchase generic products. Further, customers might take advantage of a sale offered in one country but deliverable to consumers around the world. These challenges do at times disrupt the smoothness that omni-channel retailing tries to achieve. Yet, for many companies the advantages of omni-channel retailing outweigh the disadvantages.

Terms & Concepts

Availability Effect: Opening or maintaining storefronts in addition to an online retail presence produces the perception of the availability of products. Consumers are gratified to be able to access products immediately in a store, instead of waiting for delivery, and also appreciate the ability to return unwanted products to a store, even if they were purchased online.

Customer Touchpoints: The moments and ways in which a customer engages with a company. One example of a customer touchpoint is a chat feature embedded into a sales webpage.

Data Privacy: Controlling the ways that information is made available to employees and secondary parties. Customers trust companies with many pieces of information, much of it private. These customers expect that the company will safeguard their information and not share it with other companies or allow it to be stolen. When this information is shared without the customer's consent it can lead to feelings of ill-will or even lawsuits between the customer and company.

Multi-channel Retailing: The use of a diversity of methods, ranging from online platforms, television advertisements, catalogues, and traditional stores, to reach and market to consumers. This method differs from omni-channel retailing in that it is not as streamlined. This means that customers might encounter different information or availability depending on the platform that they use to access company information and sales.

Research Shopping: The process through which a consumer searches for products on one channel (such as on a company webpage) and then purchases the product on another channel, such as in a store.

Webrooming: A term that makes comparisons to showrooms. Instead of visiting a showroom to see and examine new products, consumers now go online to research and view new products. Then, they purchase the product off line, usually in a traditional, brick-and-mortar store. Webrooming is a form of research shopping.

Bibliography

Bell, D. R., Gallino, S., & Moreno, A. (2014). How to win in an omnichannel world. MIT Sloan Management Review, 56(1), 45. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=98547065&site=ehost-live

Cook, G. (2014). Customer experience in the omni-channel world and the challenges and opportunities this presents. Journal of Direct, Data and Digital Marketing Practice, 15(4), 262–266.

Fulgoni, G. M. (2014). "Omni-channel" retail insights and the consumer's path-to-purchase. Journal of Advertising Research, 54(4), 377–380. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=100070419&site=ehost-live

Hübner, A., Wollenburg, J., & Holzapfel, A. (2016). Retail logistics in the transition from multi-channel to omni-channel. International Journal of Physical Distribution & Logistics Management, 46(6/7), 562–583. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=116154114&site=ehost-live

Peltola, S., Vainio, H., & Nieminen, M. (2015, August). Key factors in developing omnichannel customer experience with Finnish retailers. In International conference on hci in business (pp. 335–346). Cham: Springer.

Pauwels, K., Leeflang, P. S., Teerling, M. L., & Huizingh, K. E. (2011). Does online information drive offline revenues?: Only for specific products and consumer segments! Journal of Retailing, 87(1), 1–17. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=59457663&site=ehost-live

Verhoef, P. C., Kannan, P. K., & Inman, J. J. (2015). From multi-channel retailing to omni-channel retailing: Introduction to the special issue on multi-channel retailing. Journal of Retailing, 91(2), 174–181. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=102637373&site=ehost-live

Omni-channel Retailing

On this Page

Subject Terms

Omni-channel Retailing

Abstract

Overview

Further Insights

Issues

Terms & Concepts

Bibliography

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