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Omnichannel Commerce is everywhere.  Not only from the perspective of customers, but also in the press and media surrounding marketing and business.  Everyone seems to moving their business towards and Omnichannel model.  When trends like this become so powerful in the market, businesses should also consider if it might be the best strategy to not pursue an Omnichannel approach to your business model?  In particular, if you are already an online champion, there are obvious motivations to step into the physical world but when should you decide to not follow the crowd?

An Omnichannel Customer Experience is where the customer experiences the brand holistically  and not via separate channels within a company. There is a single view of the customer and the customer is serviced consistently across all channels. This is an evolution beyond multi-channel and cross-channel as those approaches are internally separated by silos and the customer has uncoordinated interaction when experiencing different channels.

In order to even consider a move to such a customer experience, the architecture of your business must be able to support the ambition.  This is perhaps the most obvious reason why a company would hesitate to jump in this direction.  An Omnichannel Architecture is the way the business is organised in order to deliver this uniform brand experience across all channels. The business architecture includes the brand and product strategies and how the organisation and processes are structured between and across departments.  The technical architecture are the principles applied in order to integrate the experience across the different platforms (physical store, website, ecommerce, social, mobile, point-of-sale, display advertising, mail, etc.).

There are countless examples of companies going from bricks to clicks, however less going the other way.  If you can think of a traditional retailer with a store-front then they have probably moved into the digital world, and most likely are considering a true Omnichannel approach to their customer experience.  To leave the customers, and your employees, stuck between the silos of your organisation doesn’t make anyone happy in the long term.  Omnichannel is obvious once you start to play online and offline at the same time.

A beautiful example of how a company has achieved this experience with their customers is the Dutch lingerie company Hunkemöller, which has been able to allow customers to interact with their company both online and offline, and have been able to improve loyalty with their Hunkemöller Club programme and mobile app.

On the flip side, companies like the Dutch online powerhouse CoolBlue have gone the other direction and added physical shops to their broad online offering.  In addition to pure brand building, the shops are for a personal experience for customers who want to speak directly with someone about their purchase or ensure a return is handled directly.

omni coolblue

There are other ways in which an online player can enter the physical store scene, some not involving the risk and investment of a permanent locations.  Shop-in-shops are increasingly common, where a brand essentially has a small footprint in another larger store.  These arrangements are made either as direct retail arrangements, where the larger store buys the inventory, or there are other arrangements where the online player rents the space for a fixed time.  The temporary stores and temporary markets are methods for smaller online players to test the waters and see if their customers appreciate a physical store experience.

In some ways, moving from digital to physical is easier than the other way.  A physical retailer will have a legacy of systems and organisations which are embedded to optimise the physical movement of goods.  For example, the back-end systems are less likely to handle large warehousing and individual stores from the same solution, which means inventory tracking is not accurate at a single source.  Moving from online to physical, however, can be more strait forward as the physical stores can be organised as mini-warehouses in the system and the majority of the effort will be on training the organisation and ensuring the new processes surrounding the stores are efficient.  For example, a decision will need to be made whether an online order will be able to see the inventory of the physical store, and if that store can hold the product for pick-up or ship to the customer.  For a true Omnichannel Experience, all these options should be available to the customer.

There are a variety of solutions which companies are able to select in order to manage the Omnichannel Experience.  From an enterprise solution like Oracle Retail with a history in physical that has grown to digital.  On the other side of the spectrum, there are native digital solutions like Demandware which are now also supporting physical channels.  There are emerging solutions, such as Sweebr which is a 100% online POS which is also an ecommerce platform.  If your smaller online store is already powered by WooCommerce on WordPress, there are plug-ins which create a POS for use in your physical store.

Specific issues to lookout for when moving from a pure digital experience to an Omnichannel Customer Experience with a physical presence are:

  • Customer: In addition to the marketing to your customer base about your physical store front, also try and make sure that the customer records (in your CRM or commerce system) are used for the physical store as well.  This will really help when you track customer lifetime value and invest in loyalty programmes.
  • Product: Already mentioned above, using a single system will help ensure an accurate inventory status is available for all products and all locations.  A challenge with this is when things are in process, for example a shirt may be in the physical store but in the hands of a customer in line to buy it, so stock logic needs to be set to ensure one or the other customer isn’t disappointed.  This works the other way as well, when a product is returned, it needs to be assessed if the product is able to be resold or if it needs to be removed from inventory in another way.  Theft and other shrinkage will also play havoc on your inventory numbers, as you might think you have a shirt in stock in the appropriate size, but it may have just walked out the door…
  • Pricing: Your customers are smart, and they will play with whatever approach you create.  It has been observed that Hunkemöller, mentioned above, does not have consistent pricing across all channels.  This is thought to be caused by their variable pricing based on geography, and their online store doesn’t take these into consideration.  In any case, your solution and approach should be able to have a clear and logical pricing strategy set against your products and locations.
  • Organisation: Perhaps the most challenging aspect of such a transformation will be the organisational impact of moving from a pure digital player to an Omni-channel experience.  It’s unlikely before that you will have had sales staff, and all the administration surrounding ensuring these front office people are creating the proper experience for your customers.  For more the strategy and design of customer experience management, see this previous article.

It is hard to determine if there are businesses which should never open a physical location.  Obvious reasons to hesitate are efficiencies and customer preferences.  If your business, like Amazon, is based on scale and cost efficiencies, it is not always obvious that they should open a store, however even they are!  As already stated above, if your business and technical architecture doesn’t support an Omnichannel approach, get that in order before you start adding new problems which you will need to unravel in the future.  Perhaps another reason to not enter the physical world is if your product is truly digital only, however even in this case there are times when a digital product like a mobile game needs to be present physically.  King Games, for example, had a huge booth at the Web Summit in Dublin recently, and like the Amazon store above, this seemed mostly for brand activation as opposed to actually selling product.

In conclusion, it will become increasingly easier for online companies to both expand online and take steps into the physical store arena.  It is extremely important for future growth to keep your business architecture as simple and manageable as possible, certainly ensuring customer, product, inventory and pricing data is coming from the single version of the truth.

chris cv pic black and white
Chris Parker specialises transforming organisations to embrace Customer Experience disciplines with a passionate focus on the role of technology. He is a member of the Customer Experience Professionals Association and the Global CX Panel of expert speakers and works with various affiliated organisations to create value for your business.