We want to give our special thanks to Pablo Marcote & Ricard Codina, the two students who co-authored this post.

Sometimes, big isn’t big enough. For Amazon, the world’s most significant e-commerce player, the online world isn’t enough to contain its ambitions. 

Amazon physical stores are part of the company’s well-planned entry into the retail landscape. And like everything it has touched, Amazon has all the expertise and financial punch to change the brick and mortar sector. 

Shopping and Amazon are synonymous. But for a while now, it’s the company that’s been on a shopping spree. 

This shopping spree is different from Jeff Bezos’s post-divorce purchases of a yacht that comes with another yacht or a mansion with a 9-hole golf course. No, this is about the company and not the new bachelor on the scene.

From Whole Foods to PillPack to Ring to Zoox, the online behemoth has acquired companies to build its portfolio, enhance its technological capabilities, and fuel its retail growth. As a result, its strategy is different from other online or big-box retailers. 

What is Amazon’s physical store strategy?

The company has been rolling out Amazon physical stores to widen the horizon of its offerings in the retail sector. 

Amazon Go, Amazon Go Grocery, Amazon 4-Star, and Amazon Lockers are only some moves to disrupt the market and enhance offline shopping experiences. 

After redefining e-commerce, the company, it seems, is now about to redefine commerce as we know it. 

Amazon Books, the company’s first venture into the traditional retail sector, was launched in 2015. 

Starting in Seattle, it’s now present all across America. The Whole Foods acquisition followed suit. Then came Amazon Go, Amazon Go Grocery, and others. With Whole Foods, the company now has around 600 physical stores worldwide, divided as follows: 

The strategy is to be an omnichannel marketplace instead of a single-channel seller. 

After a testing phase opening Pop Up stores in 2018 following the acquisition of Whole Foods, Amazon has rolled out a complete physical strategy. However, the company is definitely not in the testing phase regarding its physical-store strategy. 

For those interested in knowing, for example, where Amazon Go or Amazon Fresh is available, Amazon stores are mainly located in the US. They can be found in the following Amazon physical store locator. Nevertheless, Amazon plans to expand overseas, with the UK as a testing ground before a full-scale deployment in Europe.

But why the shift? Why is Amazon expanding to formats and delivery modules that are not in natural alignment with its traditional strengths? What’s prompting this retail expansion?

Seven reasons why Amazon is jumping to brick & mortar retail

1. The future of retail is omnichannel

Even though all the talk about the surge in online sales, especially the tremendous spike witnessed during the pandemic, offline commerce isn’t going anywhere. 

That’s primarily because the offline shopper behavior of consumers is different from their online behavior. One is driven by experience while the other, by convenience. 

This means that there aren’t exclusive groups of shoppers. Instead, most people prefer both kinds of commerce. What they want is a blend – and best – of both online and offline buying experiences. 

E-commerce offers an exceptional choice of products, prices, and time-bound discounts that are difficult to find offline. In addition, Offline gives consumers a more immersive shopping experience that’s difficult to replicate online. 

The tactile and sensory experience of being in a physical store adds a level of engagement that e-commerce can never compete with.

Amazon knows this and doesn’t want to be seen as just an e-commerce marketplace. They want to be where the customers are. 

2. Gathering data on offline shopping behavior

Another reason for the launch and expansion of Amazon physical stores is the enormous data they give the online giant. But, unfortunately, while the company has the shopping data of millions of users, it doesn’t have much on offline shopping behavior.

The online shopping data, while significant, doesn’t tell much about the retail activities of consumers. This isn’t surprising as product search and discovery are different in both spaces. 

By focusing only on one, Amazon would be missing out on a completely different set of customer insights. 

The Whole Foods deal has to be seen in this context. 

This deal gave Amazon detailed data on consumers’ consumption and behavior patterns of a well-established retail brand. 

Importantly, it also allowed Amazon to club the benefits of in-store shopping with its Prime membership using refined consumer data. 

In that sense, Amazon wasn’t acquiring Whole Foods. It was acquiring its customers.

3. Offline retail offsets shipping costs

Just because they’re a behemoth doesn’t mean rising costs don’t hurt them. Amazon, just like its customers, is always looking to save more. And when your shipping costs are around $61 billion a year, you want to bring it down. 

With brick-and-mortar stores, customers would pick up their orders, significantly lowering the shipping costs. 

They would also offer easy and inexpensive returns as customers themselves would be bringing back the products. 

Also, whenever a customer arrives to either pick up or return a product, an Amazon physical store would be tempting not to check out. 

They might find the product they were looking for or a similar one. This, without having to visit another store or open the app and search through several pages. 

In other words, an Amazon physical store would double as a retail outlet and a pickup and return center. 

4. Rising online acquisition costs

Customer acquisition is expensive whether you’re an independent online brand or the largest marketplace out there. For example, Amazon has to spend significantly on digital marketing to acquire and retain its customers. 

And considering the competition and the choices a customer has, it’s a game they have to play repeatedly. As a result, the company has targeted millions of keywords and invested heavily in AdWords and SEO.

But with Amazon physical stores, there won’t be any need to spend to acquire customers repeatedly. Customers are loyal to their convenience or grocery stores and are unlikely to go out of their way to find a new one.

5. Physical store operations are ripe for disruption

If there’s one thing that Amazon’s famous for, it’s disrupting the models and markets it has entered. 

And everyone knows that physical stores aren’t exactly known for their efficiency or ease of use. Legacy retailers have some legacy issues. 

One could argue that nothing much has changed in the brick and mortar space over several decades. 

It’s the same old process of customers locating the products on the shelves, picking them up, heading to a counter, waiting for the cashier to be free, and then checking out. 

These are all friction points that Amazon hopes it will be able to solve with its technology. 

Automated checkouts, cashier-less technology, and even staff-less stores are just some solutions already part of the Amazon physical store experience. 

If those sound innovative, imagine the ability to pay with one’s palm! Now imagine that you can already do it at some Amazon physical stores. 

6. A significant share of retail is still offline

Despite the growth of e-commerce, many consumers still prefer their offline shopping experiences. 

Contrary to popular perception, online sales have been picking up. Still, they lag behind brick-and-mortar sales in most categories.

According to a PwC Total Retail Survey, 70% of consumers still prefer offline grocery shopping. 

While this may not be surprising, what’s notable is that even for clothing and footwear and health and beauty, the majority still would instead buy them from a retail outlet. 

So, since Amazon cannot comprehensively change customer behavior, it’s ready to expand its business model.

7. Growing the Amazon ecosystem

Amazon isn’t just the world’s biggest online marketplace. 

It’s also an ecosystem of products and services that include everything. From Echo to Alexa to Kindle to payment services to probably self-driving cars in the future. 

While the company encourages shoppers to seek its in-house solutions, a retail presence would speed up the process. 

Consumers would be more encouraged to buy a Kindle or Echo when they see both in action. Once they roll out the grocery shopping through Alexa, it will elevate their retail game to a whole new level. 

Importantly, all these are directed at growing Amazon’s Prime subscriber base. That membership would open up a world of omnichannel benefits to consumers. From shopping to entertainment, all enabled by voice commands. 

8 Amazon physical store models you should know about

How has the omnichannel play from the largest e-commerce player worked out so far? 

Here are the 9 Amazon physical stores through which the company hopes to revolutionize the retail landscape.

1. Amazon Go

Launched in 2018, Amazon Go relies on advanced machine learning to make shopping seamless for customers. For example, sensors on the shop shelves would inform the system what products a customer has picked up. 

The best way to understand the convenience provided by the Amazon Go Concept is to watch this video: 

The shopper doesn’t have to check out or approach any counter. Instead, they can head out of the store, and Amazon will automatically charge their accounts. This cashier-less technology is called Just Walk Out and will be explained further in the Amazon Fresh Store section.

This is an excellent example of breakthrough technology. And the company is using it to disrupt an industry notorious for its legacy inefficiencies.  

2. Amazon 4-Star 

Sometimes it helps to answer questions that no one has asked. 

Customers never asked for the highest-rated Amazon products to be available offline. 

But that’s precisely what the company did through Amazon 4-Star, which features four-star ratings or above products. These include books, devices, home products, and Echo, to name a few. 

Consider it Amazon’s version of a Greatest Hits album. 

3. Whole Foods

Whole Foods is perhaps the most high-profile acquisition (before the recent MGM purchase). It was Amazon’s most compelling move to enter the brick and mortar space. 

With Whole Foods, Amazon wasn’t just getting close to 500 stores. It also got access to consumers who don’t mind spending extra on organic and sustainable food products. 

4. Amazon Fresh Store

If Whole Foods is for more high-end and health-conscious customers, the Amazon Fresh store, previously known as Amazon Go Grocery, is targeted at those consumers who are used to shopping at Walmart or Target. The stores stock a wide variety of products beyond the healthy staples found at Whole Foods.

One of the main innovations implemented by Amazon in its physical stores focuses precisely on Amazon Fresh stores, with the new Just Walk Out shopping technology. Customers opting for the cashier-less technology can use Amazon One to scan their palms, use the QR code with their Amazon app, or insert a credit card linked to the Amazon account. The technology enables Amazon users to shop, pick up the desired items, skip the checkout process, and leave the store freely. 

Does this mean that only Amazon users can shop at these new stores? Absolutely not. Anyone can shop at Amazon Fresh, whether using Just Walk Out or the traditional checkout lines paying by cash or a credit card.

5. Amazon Bookstores

No one forgets their first love. And for Jeff Bezos and Amazon, it’s always been books. 

Launched in 2015, there are around 25 Amazon Bookstores in the US where customers can enjoy the tactile pleasures of touching and taking in that exquisite aroma that can only come from books.

6. Amazon Lockers

This is one of the finest ways in which Amazon is merging its online and offline brand experiences. 

Amazon Lockers can be found in grocery stores, malls, and apartments. After ordering, customers will get a unique code to open the locker and get their product. 

Whole Foods has Amazon Lockers which encourage customers to browse their products when they arrive to take their delivery. This is the kind of synergy that Amazon hopes to see across its Amazon physical stores and product portfolio.

7. Amazon Pop-Ups

These are Amazon’s take on casual pop-up stores. 

The intent is to make it easy for customers to quickly browse trending products unavailable in stores through interactive displays. Unfortunately, in 2019, Amazon decided to close all its pop-up stores, terminating the experiment. 

Nevertheless, later in 2020, Jeff Bezos communicated the strategic decision to reopen the pop-up tests to better understand the physical customer experience and leverage the new data gatherings.

8. Hair Salons

Yes, we, too, were surprised. But at its only location in London, customers can use augmented reality mirrors to know how a style or hair color would look on them. 

They will also be given Amazon Fire tablets to entertain themselves. But, of course, they can also buy any cosmetic or beauty product by merely scanning a QR code. 

We’re not saying it isn’t a riveting success, but the company doesn’t have plans to open more salons. 

Amazon physical stores are the next stage in the evolution of a company with unprecedented domination in one space. 

As they get popular, customers would also expect such tech-enabled services from legacy retailers. 

It will also emphasize the divide between traditional big-box outlets and a technology-first company like Amazon, precisely what the company wants through its brick-and-mortar stores. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Amazon Physical Stores: A Successful Game Changer in the Retail Sector? appeared first on Apocalypse Retail.

We want to give our special thanks to Faraz Kavehei & Johannes Bareis, the two students who co-authored this post.

Quick commerce or q-commerce is completely disrupting e-commerce and Retail. 

In this post, we’ll explain this model in a nutshell, introduce key players and analyze the advantages and challenges in the q-commerce industry.

What Is Quick Commerce or Q-Commerce?

Quick commerce, also known as Q-Commerce, is THE big new topic in the retail sector. Covid accelerated the rise of this new delivery model that addresses the consumer’s need for responsiveness and convenience. 

Q-commerce changes the entire shopping experience, from the initial spark of interest in a product to the delivery rider knocking on your door.  

Wait—you’re thinking—I thought online shopping was e-commerce, not q-commerce. 

And you’re not wrong. 

Q-commerce is a form of e-commerce, but the turnaround time between order and delivery is much shorter in quick commerce. For example, instead of waiting a couple of days for a product, customers receive their order within one hour, often in as little as 10 minutes. 

This is why q-commerce is also called the third generation of e-commerce. On-demand deliveries that are executed almost instantly will be the new benchmark.

Q-Commerce was not born during the pandemic. But the increase in online ordering during the pandemic created the perfect tailwind for q-commerce.

Multiple industries took a severe hit due to the pandemic; q-commerce was one of the few sectors of Retail that flourished when folks had to stay at home. And that change of habit is here to stay.

How Does Quick Commerce Work?

You are expecting a few friends but did not find the time to prepare. You can simply go to the q-delivery app of your choice and order snacks and maybe one or two bottles of wine. About 10 minutes later, a delivery rider will ring the bell of your door.

But how does the magic happen?

Most q-commerce pure players warehouses, so-called “dark stores” or “micro-fulfilment centers.” These dark stores enable workers to quickly pick and deliver the products they have in stock. 

Dark stores typically have over 1000 products ready for distribution. These “flash supermarkets” are often placed in strategic locations and act as urban fulfillment centers for a city district. 

Until now, it mostly sounds like a regular logistics company that moved a bit closer to the consumer. But Q-commerce players use technology to make their processes more efficient and agile. For example, they use data to understand which locations are better suited to establish dark stores. 

They develop specific Order Management Systems to route orders to the closest store to fulfill the order. Next, they match your order with the nearest rider to fulfill your order.

All within 30 minutes or less. 

The Quick Commerce business models

There are different q-commerce players all over the world.

All have some specificity, but these are the few common factors:

1. Delivery in less than an hour (10min delivery best-in-class)
2. Locally focused delivery from dark stores
3. A fleet of two-wheeled vehicles to move faster

Most q-commerce retailers are like supermarkets, so-called flash supermarkets.

They have everything from snacks to cosmetics to cleaning products. 

Some q-commerce pure players are, in fact, “supermarkets” that hold their inventory. Other q-commerce players work with legacy brick and mortar supermarkets. They are third-party providers that perform the delivery.

What Are the Advantages of Quick Commerce?

1. Speed, Speed, Speed

Speed is the most significant advantage of q-commerce.

The genesis of q-commerce came from the need for ultra-fast delivery in the food industry.

Q-commerce sellers generally don’t have physical locations where customers can walk in and buy things. Still, q-commerce retailers have a unique selling proposition (USP) that sets them apart from competitors. 

2. Brand loyalty

Q-commerce today is a commodity. 

There are many players, and customers can easily choose from which one to be served. 

But it is a winner-takes-all market. Not necessarily globally, but most likely in your district or city.

The one company that can meet customer demands quickly and efficiently will have the most repeat customers. 

Customers are more likely to make a repeat purchase from a company that has consistently met their needs.

3. Ultra-fast delivery with 24/7 operations 

Dark stores can operate 24/7, leaving no gaps between demand and delivery (given that the local laws permit 24/7 ops)

This makes q-commerce flourish in areas that have limited business hours for physical storefronts. 

One of the main benefits of Q-commerce is to order anything you need at any time of the day (or night). 

4. Tech-oriented inventory management

With AI and smart technology, q-commerce ensures that products are readily available for people in the area. 

Q-commerce software analyses demand trends to help re-shelf stocks based on demand. And even if a product is unavailable for a short period. Then, the app will simply stop promoting that particular product and steer the demand towards other products in stock.

5. It is super easy

Once you’ve tried q-commerce, you understand its ease.

Q-commerce apps generally have straightforward UX/UI. They are built to have super simple sign-in processes and make repeat purchases very easy. 

If you forget an item on your shopping trip and don’t want to return it, you can open an app and have someone bring it to you. 

You don’t have to take your sweatpants off and put jeans on again. 

What Are the Challenges of Quick Commerce?

1. Q-commerce is a commodity

The biggest challenge of quick commerce is staying on top. 

All the q-commerce players have a similar model. It all comes down to the best inventory and the best execution.

The number of players existing today makes q-commerce a commodity. As a result, there are almost no switching barriers for customers.

This means that customers have plenty of choices to choose a provider. And it is just as easy to lose a customer as to gain one. 

2. Q-commerce customers have Zero tolerance for failure

The primary drawback of ultra-fast delivery is living up to the ultra-fast standard. 

It is a market where customers have zero tolerance for failure. 

They will only stay loyal if their customer experience is always great. 

A player that provides only “good” experiences loses its value and customers. 

This is a market that is built on customers that NEED ultra-fast delivery for whatever reason. Unfortunately, these types of customers are the hardest to please.

3. Q-commerce is an extremely risky business model 

With such customers, players have to constantly monitor efficiency across their supply chain. 

The entire industry is hinged on speed and accuracy for profitability. And as we said before, this is a winner-takes-all market. This means that players need to raise massive amounts of cash to establish operations quickly and win the market. 

And the entire business model is based on the availability of staff. Companies cannot scale and maintain their operations without enough riders and pickers available. 

Players like Getir, Gorillas, or Flink have provided their staff with employment contracts. Others are still relying on gig workers. However, most countries and cities have started regulating the gig economy, which will impact the business model. 

So, in the end, only one or two players will survive per area, and most players will burn through their cash. 

4. Convenience often comes at the cost of work conditions 

Delivery speed and convenience might come at the cost of agreeable work conditions. 

Of course, it’s fantastic to shop for a beer and some snacks at 3 AM on a Tuesday. But there’s someone out there who has to bring you the bag of chips. 

And as we said before, parts of the industry are based on the gig economy without full-time contracts or benefits. We’re not saying the gig economy is bad per se. But it has time and time again been proven to offer precarious work conditions.

But riders and pickers also have the freedom to decide where they want to work. Arguably, a job in a classical supermarket is also not more exciting. 

In most countries, quick commerce companies would make a strategic mistake to offer lousy working conditions. There is a significant labor shortage in the low-wage sector, and companies have difficulties filling positions.

The food delivery company Wolt offers a sign-on bonus for new riders. An Indeed study suggests that the number of job postings is skyrocketing (e.g., 88% increase in the Loading & Stocking sector).

Companies should not focus on improving margins by reducing labor costs. Instead, they should consider the opportunity costs when they cannot fill positions or have enough riders available.

5. The model might not work everywhere

Q-commerce is mostly available to urban consumers. 

The economics of the model is catered to densely populated areas in urban areas. As a rule of thumb, we could say that the sweet spot of the model is in areas with at least four-story buildings.

Some players serve more rural areas but with much longer delivery times. The economics of the model are different outside of the cities. 

Additionally, it might not work in every country equally well. Convenience and delivery business models work very well in countries with high inequality (Singapore or Hong Kong). It needs a population segment with high disposable incomes that looks for convenience. And a lower-income population segment that is willing to perform the gig work. 

It remains to be seen if the model also works in countries with small Gini-Coefficients, such as Nordic countries.

6. Q-commerce has a significant impact on local and small businesses 

Additionally, one of the main casualties of q-commerce is local and small businesses.

It took a global pandemic to get stores to come around to in-store or curbside pickup for online orders. 

Stores that are not adopting an omnichannel approach are being crushed. 

This is a good thing because most local stores had utterly failed to adapt to changes in customer behavior.

But q-commerce mainly sells items from big supermarkets or big sellers. The type of players who can afford their commissions.

Most local small businesses don’t have the volume or margins to become q-commerce sellers. So a lot of them will inevitably be crushed by q-commerce players. 

Is Quick Commerce Profitable?

Short answer: yes, at least in the long term. 

There’s a lot of opportunity in quick commerce when executed correctly.

A study from Deloitte revealed that 50% of shoppers spent more money to get what they needed quickly in the heat of the pandemic. Q-commerce players can capture this willingness-to-pay.

In the US, GoPuff is the first-mover. They operate their better warehouses with 40% gross margins and a 10% contribution margin. 

Of course, increased competition will put pressure on margins.

100% of GoPuff’s fulfillment centers became profitable after 18 months, and the best ones were even profitable after nine months. 

At the same time, classical supermarkets are much more capital-intense and need many years to break even.

Is Quick Commerce Sustainable?

It is hard to prove that q-commerce is more sustainable than traditional shopping. But a few things about it are encouraging.

Deliveries are usually performed with electric scooters or e-bikes. It would be more sustainable if customers would no longer have to get into their cars to drive to the supermarkets or shopping centers.

The way supermarkets work produces significant food waste. Q-commerce has the potential to reduce food waste big time. It has short turnaround times of products. Food can be stored more functional (e.g., dark and cold). It does not have to be displayed in a way that is appealing to customers (e.g., on a shelf with bright light)

Customers do not touch food, and q-commerce companies can also sell the “curved cucumbers” that would be neglected in a supermarket. 

Since q-commerce firms are more data-driven, they can better forecast demand. In turn, companies waste less food by ordering the right amount of non-durable products.

Food about to expire could be promoted or discounted on the app. If quick commerce players operate seven days a week, they would not have to deal with fresh food that could get rotten over the weekend. 

What is next for Quick Commerce?

Expansion of the product offering

Most players have started with grocery delivery. But their product portfolio will expand to other areas such as OTC (over-the-counter) pharmaceuticals. 

After all, we want to stay in bed when we are sick and don’t want to make our way to a pharmacy. Some do this already.

Beyond Groceries, Food, and convenience products

Quick commerce does not have to be limited to food delivery, groceries, OTC drugs, or other convenience articles. It could also solve that last-mile problem in the broader retail industry. 

Q-commerce players could also help brands deliver other items like fashion of consumer electronics. 

First, start-ups are already addressing this niche. For instance, Arive works with brands like Apple to deliver their products within 30min. The biggest challenge here is inventory. The products can be “flipped” with groceries within 2-3 days. With laptops or designer fashion brands, the warehouses would need to have a lot of expensive inventory. The products need to be readily available in many sizes, colors, or technical configurations.

Reshuffling of the marketing budgets of food companies

Food companies like Kraft Heinz spend a lot of money promoting their brand and products (let’s say a Bacon BBQ-Sauce) to a broad audience. 

The demand for their product by customers and their brand image helps them to engage in favorable terms with supermarket chains and retailers. 

But their marketing efforts (e.g., in the form of billboards or TV spots) have also targeted consumers that are highly unlikely to buy their Bacon BBQ-Sauce. 

Maybe because they are vegetarian or simply do not like BBQs. 

Quick commerce players can disrupt marketing in the food industry. Unlike brick-and-mortar supermarkets, they have very detailed information about the preferences and habits of individual customers. 

They can monetize that knowledge and address consumers in a much more targeted and effective way. 

Own Label products increase margins.

Quick commerce players will be offering their private-label products. They can do this because they have direct access to the customer. 

Instead of negotiating with giants like Unilever, Kraft Heinz, and alike, they can offer customers own-label products. This would increase their profit margins.

Who’s Who in Global Quick Commerce

Let’s look at the major quick commerce players currently on the market. 

The amount of money being poured into financing rounds for each player gives you a sense of how big the market could be. 

GoPuff

The GoPuff business model is considered the q-commerce role model. Based in the U.S., GoPuff brings food, alcohol, over-the-counter drugs, and more to consumers in multiple states. 

With micro-fulfillment centers, for a delivery fee of $1.95, shoppers have access to over 3,000 products within 30 minutes.

The company confirmed in July 2021 to have raised $1Bn to expand its global operations. GoPuff is consolidating the market and has acquired competitors such as Dija, Bandit, Liquor Barn, RideOS, Fancy, and BevMo.

Getir

Getir is a Turkish company that started with the speedy delivery of groceries and food from local restaurants. 

The company can also provide apparel, pet food, and sex health products within minutes. 

The Getir app has raised USD 550M in 2021 to expand to the US and other countries. The acquisitions of Moovand BLOK have accelerated Getir’s expansion. 

Weezy

Weezy is a U.K-based grocery delivery service that offers instant delivery within 15 minutes. 

It also highlights its stance as an anti-gig economy company, stating that its “riders are more than just riders.”

The company has “only” raised $25M in 2021

Cajoo

Cajoo is a prominent French q-commerce delivery service. 

Servicing ten areas in France when we wrote the article, the company specializes in grocery delivery. 

In late July 2021, Carrefour, France’s biggest retail company, acquired a minority stake in Cajoo. This investment is for an undisclosed amount. 

This investment will allow the Cajoo App to speed up its development. And it will also give Carrefour direct insight to ramp up its delivery operations.

Gorillas

Gorillas is a leading q-commerce start-up and the fastest German company in history to reach the unicorn valuation.

They started their brand to limit food waste by providing fresh food on demand. Their main offer is to deliver in ten minutes or less. 

The Gorillas app operates in the UK, Belgium, Denmark, France, Germany, the Netherlands, Spain, Italy, and New York City. 

The company has closed a $1B Series C round in October 2021 with the strategic investor Delivery Hero as the lead investor.

Flink

Flink is the second major player from Germany and operates in even more German cities than Gorillas. 

The company also expanded to France, Austria, the Netherlands, and Belgium.

Flink is backed by financial investors like Target Global and strategic investors with strong delivery experience such as DoorDash and Prosus.

The start-up has entered into exclusive cooperation with the retail giant REWE Group. 

Jokr

Jokr has had extremely rapid growth. 

It was founded by the Foodpanda founder Ralf Wenzel and other former Foodpanda and Rocket Internet employees who understand the food delivery market. 

They have expanded to dozens of cities in the US, Latin America, and Europe in a few months. 

The company has raised $170M in 2021 to expand its global operations. 

Glovo

Founded in Barcelona in 2015, Glovo is one of the “old” players in the q-commerce business. 

With Delivery Hero as their leading investor, Glovo has become a significant player for on-demand delivery in EMEA markets. 

With the rise of q-commerce, Glovo has been investing in its ultrafast delivery capabilities to compete in this market. 

They benefit from solid brand awareness and a robust presence in their current markets. So let’s see how they fare in the q-commerce business.

Rappi

Rappi is the Unicorn out of Colombia.

Same as Glovo, the company was a senior player in the delivery business founded in 2015. 

The company’s main activities come from on-demand delivery. 

They have risen to the top, establishing themselves as the dominant player in Latin America. They have become the most significant player in countries like Colombia, Brazil, or Mexico. 

In 2021, they launched a new Rappi Turbo feature, allowing for deliveries in ten minutes or less. This is the start of their q-commerce business.

Again, same as Glovo, they benefit from brand awareness and customer loyalty in their current markets. It will be exciting to see how they compete in the quick-commerce business. 

What will Amazon do in quick commerce?

The retail giant Amazon is currently standing on the sideline regarding quick commerce. For example, its fastest service Amazon Fresh needs about 2-3 hours of delivery time in major cities. 

Going forward, there are two possibilities for how Amazon will (re-)act. 

1. They will wait and acquire the leading quick commerce player
2. They will choose a different strategy (just-in-time instead of instant on-demand delivery)

Amazon could also decide not to become part of the quick commerce race. 

They are still way ahead regarding access to the customer and their household (think Smart fridges and Alexa). Amazon could bet on the convenience of automatic restocking. Your milk or guacamole could be delivered and restocked just in time before your current container is fully consumed. 

Conclusion:

There may be a lot of challenges ahead for Q-commerce. 

The market will consolidate, but several players might dominate in a specific city or area. 

So we do believe q-commerce is here to stay and will only grow in popularity. It educates consumers and changes consumer demands in the long run.

But we are thrilled to see who comes out on top in the long run.

If you know other players to include in this list, drop us an email, and we’ll add them. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Instant gratification: Has Quick Commerce or Q-Commerce changed the way we shop? appeared first on Apocalypse Retail.

Today, more and more established product brands bypass traditional distribution and take a shorter route to put their products directly in consumers’ hands. 

In particular, Consumer Product Goods (CPG) brands and Fast-Moving Consumer Goods brands are growing their share of direct-to-consumer sales. 

To explain this, one could argue it’s only about profitability, but as we’ll explain in this article, there’s much more to it.

Starting with detailed definitions of DTC, CPG, and FMCG, we’ll then dive in and explore why DTC is an excellent strategy for brands dealing with CPG or FMCG. 

By explaining this strategy, we’ll cover how the growth of direct to consumer is one of the root causes of the Retail Apocalypse.

What is Direct-to-Consumer, DTC or D2C? 

Direct-to-consumer is a retail strategy that brands can use to access consumers directly, without going through distributors. 

These distributors can be online or offline, but they will generally take a margin to sell the products in exchange for their services and access to consumers. 

In a direct-to-consumer business model, a brand will control the entire purchasing experience with the customer without any middlemen or distributors. 

Direct-to-consumer can also be referred to as DtC, DTC, or D2C.

What is the difference between DNVB and DTC?

You’re likely familiar with Peloton, Bonobos, Dollar Shave Club, or Casper. 

Who hasn’t thought about sampling the five pairs of glasses Warby Parker allows consumers to try before buying?

Whether you need designer glasses or a fresh razor to show up in your mailbox, these digital native vertical brands (DNVBs) offer textbook examples of how DTCs should operate. 

DNVBs are products of the digital age and, by definition, are DTCs. In other words, DNVBs are just direct-to-consumer companies born in the digital age. 

Here’s how a DNVB model starts:

• Born on the internet
• No initial brick-and-mortar storefront 
• Source products directly
• Sell products directly to consumers
• Uses technology to scale 

Unlike traditional retail businesses, DNVBs control everything about product distribution in a vertically integrated company. So, to sum it up, it’s Direct-to-Supplier and Direct-to-Consumer or D2SD2C if you like to shorten words.

Today, instead of solely describing a method, the term DTC defines a specific distribution channel. In this case, DNVBs are part of the DTC business, but they do not stand alone in the DTC space. 

More and more established brands are joining the DTC party!

What are Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG)? 

Let’s start with the basics: do you eat Oreos or Pringles? or have you purchased toothpaste, deodorant, or dog food? 

All of these are classic examples of consumer packaged goods (CPG), but only some are examples of fast-moving consumer goods (FMCG)

Overall, you could use the same term in retail, but if you want to get technical, the main difference is the purchase frequency. 

FMCGs are technically a subset of the CPG category. However, FMCGs are, by definition, consumer products that are purchased with a relatively high frequency as consumers use them every day. 

Great examples of FMCG are toothpaste, potato chips, or shampoo, which are products that consumers tend to repurchase frequently for daily consumption.

On the other hand, CPG includes a broader scope of products with a short shelf life but is not as fast as FMCGs. 

For most people, these two categories include the same types of products, and the only nuance is in how short is the shelf life.

CPGs and FMCGs include products consumers use every day and need to restock regularly, including the following categories:

• Food items
• Beverages
• Cleaning products
• Personal care items
• Over-the-counter drugs

From a retail standpoint, CPG and FMCG products have a few characteristics:

• High volume
• Short shelf life
• Low price per unit with low contribution margins per unit
• Low engagement and effort to choose the product
• High repurchase frequency

The Growth of Direct-to-Consumer Removes the Toll of Middlemen in Traditional Retail Distribution

In a nutshell, every CPG or FMCG goes through a similar process. 

These products go through multiple channels before consumers ever see them on a store shelf. 

Here’s what the CPG supply chain looks like:

1. Manufacturer
2. Importer
3. Distributor / Wholesaler
4. Retailer
5. Consumer

The path from the brand to the consumer reads like a long and winding road. 

Eventually, products will get to the consumer, but many middlemen are involved in the journey. 

Of course, you have to consider that every middleman in the process takes a cut of profits, reducing margins for brands. 

This is where direct-to-consumer increases margin by streamlining the entire process. 

When a brand moves away from the traditional third-party method of getting products to the marketplace, they eliminate all middlemen involved. 

1. Manufacturer
2. Own Store (online or offline)
3. Consumer

As you can see, you’ll find no middlemen as products get to consumers directly from the manufacturer via the brand’s own store network.

Today’s Consumer is Ready for a Direct Relationship with Brands

DNVBs do many things right, but their obsession with the consumer’s experience is an area that established brands are looking at closely. 

Modern consumers have much broader access to brands thanks to online shopping and technology. 

The modern consumer is omnichannel in their behavior, meaning that they jump seamlessly from one channel to the other.

In this sense, the traditional retail experience is not enough to attract consumers and generate long-term retention.

Consumer values continue to evolve, along with their expectations. And today’s consumers value convenience and unique experiences more than anything.

So, to make them happy, brands should strive to reach consumers in every channel and offer them a unique experience to ensure repurchase. 

Customer studies, focus groups, and other types of market research cannot substitute for regular real-world consumer interactions.

In a more traditional retail distribution approach, CPG and FMCG brands have limited interactions with customers. Instead, it’s the retailer that develops a direct relationship with consumers through its distribution network. 

In other words, brands are removing the middlemen, the big box stores, the discount department stores, or the hypermarkets. 

By creating a direct relationship with consumers, brands get first-party high-value data to deliver value to each unique consumer. This is the foundation of a 360 view of the customer.

E-commerce is Paving the Way for the Growth of Direct to Consumer

We’re no longer living in the dawn of the digital age. 

Companies that haven’t embraced the power of digital channels are missing out on a new kind of relationship with consumers. 

It’s no longer about having an online presence. 

Having a website is not just about brand awareness and storytelling. Most brands realize that their websites are a powerful tool to build a direct relationship with their customers.

In this sense, brand websites are becoming their online store-fronts to interact and engage directly with their customers. In other words, brands are building an omnichannel engagement strategy.

Not only because brands have built their e-commerce stores, but also they have started selling through online marketplaces. 

Marketplace commissions are a fraction of the margins that traditional retailers take when selling to consumers. 

So brands can sell through online marketplaces and increase their profits, even if they don’t own the relationship with the customer.

In the old model, a brand company needed brick-and-mortar stores to reach consumers. The retailer, who played the gatekeeper, controlled what brands and products they allowed shoppers to buy. 

The physical store became the focal point, which meant the retailer, not the brand, owned everything about the consumer’s shopping experience. 

Through the help of e-commerce, brands are embracing the growth of Direct-to-consumer to control the entire narrative. 

Direct to Consumer is a Smart Move for CPG and FMCG Brands 

There is an undeniable advantage for any brand of cultivating a relationship with end-consumers. By focusing on gathering data from customer touchpoints, a brand can better understand its customers.

According to a study from Brandshop, 88% of consumers prefer buying directly from a brand if they are given the option. 

Consumers expect an engaging shopping experience when they buy from the brand’s online store and physical stores.  

But for CPG and FMCG, there is a strategic advantage to growing their D2C business. 

When they cut out the middlemen, they take away their tolls and increase their margins. 

Sourcing products directly from the manufacturer and selling them directly to consumers can significantly increase their margins. 

Those additional margins mean a CPG or FMCG brand can invest more in marketing than they could if they remained tied to regular retail distribution. 

These brands can increase their customer acquisition costs, as they have all the data they need to understand their customers and increase their lifetime value. 

In turn, a higher lifetime value pays for the increase in customer acquisition costs.  

It is no coincidence that CPG and FMCG brands are embracing the growth of direct to consumer. 

As we’ll see below, some of the most established global brands like L’Oréal, Adidas, Nike, Unilever, and Nestlé are investing massively to scale their D2C business. 

These brands alone expect to generate more than 50% of their revenues from DTC by 2025, if not sooner!

In summary, a DTC business model improves the following aspects for brands:

• Increase revenue
• Increase gross margins
• Minimizes the brands’ dependence on third parties
• Allows deeper relationships with consumers with higher lifetime value

That last point is what drives the success of digitally native vertical brands. 

The Growth of Direct to Consumer is Impacting Traditional Retail 

When a CPG brand moves to market directly to end consumers, there are many clear advantages. 

However, there are multiple casualties in the process. As you guessed, those casualties are the middlemen or traditional retail distributors. 

Traditional retailers are watching their entire business model crumble. 

More than 135 big retailers have filed for bankruptcy since 2015 in the great Retail Apocalypse. Of course, the impact of the Covid19 pandemic accelerated the end of traditional retail, but it’s not the root cause of the Retail Apocalypse. 

These companies built their entire business model upon being the point of distribution between brands and consumers. 

If consumers go right to the source and purchase directly from brands, it means they’re not buying from retailers anymore.

Here’s something else suggested by a 2018 study of DTC models—manufacturers no longer send their hottest new products through retail channels. Instead, they reserve those hot commodities for their direct-to-consumer channels. 

This is a process called selective distribution, in which brands keep the best products within their D2C channels. 

So, if traditional retailers want to survive the Retail Apocalypse, they must lose their dependency on branded products. 

They can either start their private labels and implement a direct-to-consumer approach. Or they can build stronger relationships with customers by offering better retail experiences so that customers continue to purchase from a distributor. 

We’ve discussed DNVBs as an example of D2C, but the growth of Direct to Consumer is everywhere in retail. 

Many established retail brands are investing massively to develop their DTC business. 

Five Examples of Established Brands Embracing the Growth of Direct to Consumer 

Established brands moving to DTC channels include both big and small players. As we’ve said before, embracing DTC channels is a brilliant move for brands.

Here are five established brands that are taking full advantage of the growth of direct to consumer business: 

L’Oréal 

L’Oréal is a global hair and skincare company with many top-of-mind brands. 

The company owns brands like its namesake brand L’Oréal Paris and some global brands like La Roche-Posay, The Body shop, Biotherm, Lancôme, or Garnier. 

L’Oréal is also dedicated to continued expansion in the DTC market. Currently, the brand offers consumers tools designed to help them customize makeup colors online. L’Oreal is also committing to market on Amazon due to the platform’s status as the beginning point for consumers to shop for cosmetics.

L’Oréal is massively investing in its e-commerce infrastructure. In a 2020 interview, former CDO Lubomira Rochet said the company went from zero to 25% of sales from e-commerce since 2010. 

The company has also set a very ambitious target to reach 50% of e-commerce sales by 2023. 

This is a really impressive share of sales to reach in such a short time.

Nike 

Everyone knows Nike. It’s the world’s largest sports brand and is not precisely a CPG brand, but it perfectly fits this list.

By the end of 2020, after a year in a global pandemic accelerating the retail apocalypse, Nike is thriving, and its share price hit an all-time high.

Over the last years, Nike has implemented a “Consumer Direct Offense” strategy, moving from third-party retailers to having a direct-to-consumer approach. 

Nike’s strategy is summed up in the following lines:

• Cut back on wholesale distribution and raise the bar for brand experience with wholesalers, which remained in the network. 
• Invest massively in content on digital channels
• Focus on community building with native Apps
• Deploy customization, data analytics, and logistics  

In 2020, Nike generated 35%, more than a third of its revenue, from DTC. This share is up from 15% back in 2010. Now that is a steep acceleration! 

Adidas 

The second-largest sports brand in the world refuses to be left behind by competitors such as Nike. 

Adidas has set up a strategy to generate half of its revenue from DTC by 2025. This threshold is no easy task, but the brand is investing massively to get there.

The brand has set its sights on doubling e-commerce sales and strengthening its data analytics and loyalty programs. Adidas also promises to refocus on women’s apparel and recently announced a new supportive activewear line designed for women.

Overall, the brand is trying to catch up with the DTC strategy implemented by its largest competitor.

Unilever 

Unilever is one of the world’s largest CPG producers within different categories, from food to cosmetics. 

Among the major brands from Unilever, they own Dove, Q-tips, Lipton, Tresemmé, Knorr, Maille, Hellmann’s, Magnum, or Ben & Jerry’s. 

In 2016, Unilever wowed the world with their $1 billion acquisition of DNVB Dollar Shave Club in the U.S. This acquisition marked a complete strategy of moving into the direct-to-consumer arena from razors to mustard. 

Speaking at a conference, Unilever’s former CMO stated that “Direct to consumer – whether that be content or direct-to-consumer sales – has changed significantly. The opportunity for a company like ours to serve consumers directly is very exciting.”

Nestlé

Along with Unilever, Neslé is one of the biggest CPG producers globally, from food to cosmetics. 

Nestlé owns some of the most influential brands like Nespresso, Nescafé, Gerber, Nesquik, Perrier, San Pellegrino, Nestea, Kitkat, or Purina. 

Nestlé has made two significant acquisitions in the last couple of years, signaling their intent to move into DTC, especially in e-commerce. 

With the acquisition of the U.S. meal delivery company Freshly in 2020, Nestlé moved to have a “better understanding of what and how people eat at home.” You value collecting data in a DTC strategy, considering that Neslé paid $950m for Freshly. 

Continuing in this move, in February 2021, Nestlé completed the acquisition of SimplyCook, a U.K. recipe kit company. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post The Growth of Direct To Consumer is One of the Root Causes of the Retail Apocalypse appeared first on Apocalypse Retail.

Every retailer, whether online or offline, must deploy an omnichannel strategy to unlock the full value of the omnichannel customer.

The goal of an omnichannel strategy is not simply having an online and a physical store. It is providing a unified and consistent experience across touchpoints in the customer journey to increase customer retention.

Over our last posts, we’ve covered in detail the five pillars of an Omnichannel Strategy, but we’ll do our best summary on this post. 

These are the Five Pillars of an Omnichannel Strategy

A bulletproof omnichannel strategy requires addressing the five pillars of Omnichannel Retail.

The five pillars of Omnichannel Retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

A company must understand its customers and their journeys deeply, which can only be achieved with a 360º view of the customer across all their company touchpoints.

Once the company has built this view of the customer, they can start deploying the following pillars. 

They can build an Omnichannel customer and content engagement strategy to offer excellent customer experience and scalable personalization.

Then, with an omnichannel fulfillment strategy, the company can offer fulfillment options to meet the customer when and where they want.

To complete this, with an omnichannel product offering strategy, a company builds trust with its customers. 

Finally, an omnichannel back-office structure ties everything together with the proper organization, systems, and structure for omnichannel retail.

After this recap, it is essential to understand that an omnichannel strategy implies a complete transformation of the company.

The Omnichannel Transformation Must Be Met At Every Level Of The Company

We’ve discussed the need to implement an omnichannel back office for companies that want to survive the retail apocalypse.

We’ve discussed a complete change in the culture, organization, technology, and KPIs. 

The final step is that a company must make sure that the transformation happens at every company level. 

From top to bottom, every single company employee must be aligned with the omnichannel vision and have the right processes, technology, and metrics to deploy it. 

The problem is that, according to research, most retailers fail to cover these last steps. As a result, they fail to implement the omnichannel back office, despite the management having the right vision.

As the poll among retail professionals suggests, most retail company CEOs and C-level have understood the need to implement an omnichannel strategy.

But only about half of professionals believe they have the right processes, technology, and metrics to implement the strategy.

Companies must understand that management and vision will only get them so far. 

If they don’t implement the proper omnichannel back office, they won’t lead the company towards a true omnichannel strategy.

Six Steps To Implement An Omnichannel Strategy in Retail

We have provided over a dozen posts explaining the need to implement an omnichannel strategy.

In each post, we have provided detailed guidelines covering the five pillars of an omnichannel strategy. 

When we advise companies on their omnichannel transformation, we find it very helpful to sum everything into six steps every company must follow. 

1. Build a deep understanding of your customer
2. Gather, unify and structure your data
3. Build a detailed map of your customer journeys
4. Build your own omnichannel roadmap
5. Establish OKRs aligned with your omnichannel roadmap
6. Continuous improvement

1. Build a Deep Understanding of Your Customer: A 360 View Of The Customer

Deeply understanding your customer is the foundation of an omnichannel strategy. 

A company must understand who their customers are, how they shop when they buy, and what channels they use?

In the end, they need to understand what is the number one reason why customers buy from them.

2. Gather, Unify and Structure Your Customer Data for Scalable Personalization

Companies must bring the total value of their first-party data. Therefore, they need to have a customer data-gathering strategy across channels. A loyalty program is handy for this.

On top of gathering customer data, they need to structure and unify all the data and connect it to the right content. 

The end goal is to provide relevant, meaningful interactions with customers at every step of the journey.

A Customer Data Platform, Data Management Platform, and Digital Asset Management solution are IT tools that can make the whole process scalable. 

3. Build a Detailed Map of Your Customer Journeys

Once the company clearly understands their customers and has analyzed the data, they can build detailed maps of their customer journeys.

Customer journeys identify behaviors and patterns that will improve the chances of a visitor becoming a shopper. Or a shopper becoming a regular customer.

A detailed map of the customer journeys helps provide the right interactions for customers. The company sends the right messages to move the customer closer to a transaction at every step of the trip.

For this, you must answer questions about your customers and the channels they use to engage with your company:

• What is the number one reason a customer buys from you instead of your competition?
• How do customers discover your brand?
• Ho do they research your producs or services?
• What channels or touchpoints do they use?
• How often do they make a purchase ?
• How much does it cost to acquire a customer, and how profitable are they?
• Would the recommend or refer you to their friends?

4. Build Your Own Omnichannel Roadmap

Every single company will have a unique omnichannel roadmap according to its context and resources.

They will need to assess which features they lack regarding customer engagement, fulfillment options, product offering, and BackOffice.

They can design a roadmap to tackle each of these features in terms of investment and the resources they require. 

To build the roadmap, we generally advise two things:

1. First, organize tasks on what can be done now, in twelve months or three years. Some tasks will require significant resources, so this helps companies focus on quick wins without skipping longer tasks.
2. Second, focus on existing customer pain points rather than providing new experiences. Before launching a shiny new experience, companies should focus resources on ensuring that existing channels provide a great experience. 

5. Establish OKRs Aligned with Your Omnichannel Roadmap

Management by Objectives and Key Results is one of the best methodologies to ensure that all teams are aligned.

Once you have designed your omnichannel roadmap, ensure that your entire organization is focused on deploying that roadmap and measuring the positive effects it generates. 

This methodology helps teams prioritize projects and focus on the right objectives. 

6. An Omnichannel Strategy Reuires Continuous Improvement

As you continuously gather data and analyze your customer behavior, you can constantly improve your omnichannel experience. 

An omnichannel strategy is not just something you deploy once and forget. It’s a process to continuously make changes in the customer journey according to the customer’s context.

With this process, companies can quickly identify changes in consumer behavior and adapt to them. In turn, they are providing the best possible customer experience.

Adding value to the customer experience is a continuous improvement process. If you don’t keep on improving your processes, your competitors will.

In today’s retail, this is the key to surviving the retail apocalypse.  

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Six Steps to Deploy an Omnichannel Strategy to Survive the Retail Apocalypse appeared first on Apocalypse Retail.

People often assume that an omnichannel strategy depends entirely on digital channels. But this completely misses the real value of the physical store in an omnichannel strategy.

As we said in one of our previous posts, Omnichannel is one of the most frequently used buzzwords in retail today.

But, the reality is that a true Omnichannel strategy for traditional retailers is not launching a website and selling online. Or, if you are a pure player, opening a physical store doesn’t make you an Omnichannel company.

Selling online or offline are just traits of a Multichannel strategy.

A Multichannel strategy is where a company meets the customers where they are, whether on their website, social media, email, or physical stores. 

The key difference with an Omnichannel strategy is the consistency of the customer experience. 

An Omnichannel strategy unifies a consistent customer journey across every single channel. 

Let’s cover again why all retailers need to implement an omnichannel strategy.

An Omnichannel Strategy is Needed to fill the Existing Friction of the Mobile Experience

A lot of e-commerce pure players can see exponential growth during the years. This has led some to believe they can be pure online players indefinitely.

But if we look closer at those e-commerce players that are a bit more “senior,” most have started opening physical stores.

Amazon and Alibaba, the world’s e-commerce juggernauts, have aggressively expanded offline. Even some Digital Native Vertical Brands (DNVB) have jumped offline in recent years. 

The reality is that even if online retail penetration is growing fast, the offline part of the market is still huge. 

As Jeff Bezos put it in a letter to Amazon shareholders back in 2019:

“Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores.”

Even if we consider that a quarter of global retail sales will be online by 2030, that still lets 75% of transactions offline. 

So what is slowing online retail penetration?

Mobile sales are lagging relative to traffic share.

Today, everyone and their mother has a smartphone. Both in developed countries and emerging markets, most adult consumers have a smartphone.

And they use those smartphones to go online to research and discover products or information. Or to chat or browse on social media.

As of 2020, mobile visitors represent almost two-thirds of global online traffic. But the problem is that it only represents 43% of global online transactions. 

There is a clear drop in transactions relative to traffic.

Mobile conversion is also lagging relative to other devices.

Image Source: Apocalypse Retail 2021. Why do Retail companies need to implement an Omnichannel Strategy? Bernstein E-commerce Outlook September 2020

The drop in transactions relative to traffic is essentially due to much lower conversion rates than other devices.

If we deep dive by device, mobile conversion rates are meager compared to other devices. And this trend has been sustained for almost a decade.

Let’s compare conversion rates between devices from 2013 to 2019. In both years, conversion rates are almost 3x lower than desktop and 2x lower than tablet conversion rates.

Indeed, smartphone conversion rates improved more during that period than the other devices. But mobile conversion rates remain way too low.

The reality is that most websites are not designed for mobile-first. 

Most websites are designed for a larger, easier-to-use desktop screen. And when users try to use it on mobile, it doesn’t respond in the same way.

The hard truth is that the mobile user experience is very hard to improve. At least to reach the same conversion rates as other devices. 

So there will continue to be friction in the mobile customer journey which affects almost two-thirds of all online visitors and rising.

But how does mobile fare compared to the physical experience? 

Customers still prefer in-store experience compared to mobile.

If the mobile experience is worse for purchase than other devices, the same can be said compared to physical stores. 

Mobile traffic has increased exponentially, but the shopping behavior still favors offline stores. 

Customers prefer to discover and shop for products in offline stores. Most product discovery is still offline, and customers will do most of the research on mobile devices.

In the end, even if mobile transactions are on the rise, most customers still prefer to shop offline. 

The reality is that the physical experience offers something unique.

The value of the physical store and why all retailers must implement an omnichannel strategy

The Physical Store has a Unique Value Proposition 

The most bullish e-commerce advocate will say that the physical store is dead. But when we started Apocalypse Retail, we were convinced this statement is wrong. 

We don’t mean to give false hope to traditional retailers. 

A lot, if not most, of legacy retailers, will perish in the Retail Apocalypse. But this doesn’t mean the end of brick-and-mortar Retail. Instead, it means the end of legacy brick-and-mortar Retail.

When analyzing online and offline retail customer journeys, it is clear that companies don’t have to choose between one or the other. 

Both have entirely different value propositions. 

The online experience offers convenience more than anything while the offline experience offers… the physical experience. 

The offline experience offers human interaction, touching, trying on, seeing, smelling a product. These are all real, value-added experiences that profoundly impact customers.

The physical store has a unique value proposition that is not going to disappear. 

The physical store must reinvent itself.

Most legacy retailers have been overconfident about the value of the physical store. And this has led them to keep using the same brick-and-mortar strategies that worked for the past 30 years. 

But by doing so, they have been ignoring a massive shift in consumer behavior. 

Consumers crave convenience more than anything. And the online experience is built to provide consumers with convenience. 

The physical experience, by definition, requires a physical effort. So the physical store will never be able to compete in terms of convenience.

To survive the Retail Apocalypse, the store must reinvent itself. The physical store must be built and designed on everything that won’t be able to be provided online. 

The unique value proposition from the store is its core strength. 

As we said before, physical stores offer human interaction, touching, trying on, seeing, smelling a product. Retailers that understand this will change the way they approach physical stores.

But unfortunately, legacy retailers still approach the physical experience as they’ve always done. They continue looking at the store as a point of sale measured in terms of Sales/m2.

This completely fails to understand that customers are not exclusive to single-channel journeys. Retailers try to cram as much stock as possible in stores to maximize profitability per m2. 

But a physical store is, above everything else, a customer touchpoint. And thus, it should be treated as a marketing channel. Marketing in the sense that it should be designed to attract visitors.

Whether the visitor completes the purchase online or offline is irrelevant. It should be a seamless customer journey. 

The physical store provides a showroom where the customer can get everything they can’t get online. The whole package to try, test, and experience the product.

The rest of the journey will always be more convenient online. So, stores must be built and designed to maximize the customer’s physical experience. 

Pure Players are Jumping Offline with a Different Approach to the Physical Store

As we said before, most e-commerce pure-players are jumping offline once they reach a certain point. 

Amazon, for example, has invested massively in its offline expansion. Not only the Whole Foods acquisition but opening multiple Amazon Go stores with connected carts.

But the approach to physical retail is completely entirely different from the one used by traditional retailers. 

Off-course, e-commerce players are looking to increase revenues when they jump offline. But this is only part of the offline strategy. 

The offline strategy from e-commerce players is built on two things:

1. The physical store is a data acquisition channel
2. The physical store is a marketing channel

1. The Physical Store as a Data Acquisition Channel

Amazon is one of the best examples of this strategy. 

Imagine you have one of the most powerful customer-data-gathering empires in the world. But this empire is built exclusively for online transactions.

As Jeff Bezos stated, Amazon only represents a fraction of the entire Retail market. And almost three-quarters of all retail transactions will still be done offline by 2030. 

So even if they perfected an online data-gathering platform, Amazon “only” has access to a small part of the customer journey. 

Now, imagine tracking a customer in your offline store with the same level of detail you can track them in an online store. 

Knowing which products they viewed, which ones they added or removed to their cart, when they entered or left, etc. And connect this offline data with the online data you already have of the same customer. 

The potential to have an accurate 360º view of the customer is limitless. 

This is the way a company can offer relevant, consistent content across channels. And increase their customer retention rates, revenues, and profitability in the long run.

This explains why Amazon is aggressively expanding offline and, as of 2021, the company already operates more than 600 physical stores in the US.

2. The Physical Store as a Marketing Channel 

E-commerce pure players much smaller than Amazon are also opening stores. 

DNVBs such as Casper, Bonobos, or Le Slip Français in France have opened physical stores. But they have centered the entire offline experience on everything that their online stores could not offer. 

The stores are designed as showrooms that offer a consistent value proposition to customers. 

In the same way that these brands have disrupted their consumer categories, they are doing the same thing for offline retail. 

For a DNVB, the physical store is, above all, a marketing channel. And they will treat it with the same data-driven approach that they use for every digital marketing channel. 

The end goal of physical stores is to acquire more potential customers and raise brand awareness.

If the visitor converts offline, it’s a win-win, but if the visitor at least gives their contact info, it’s also a win. 

They have just captured a lead. And they will use their deep understanding of the digital funnel to try and convert that lead into a customer. 

In the end, it’s all about making sure that the Lifetime Value (LTV) of the Customer is higher than its customer acquisition cost (CAC). 

If the CAC also includes the cost of a physical store, it’s because these brands are betting the LTV will also be higher. 

DNVBs have understood the fundamental truth about Omnichannel Retail: The value provided by a unified customer experience across channels is greater than the sum of its parts. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post The Real Value of the Physical Store in an Omnichannel Strategy appeared first on Apocalypse Retail.

It is the last of the five pillars that we’ve explained in our previous posts.

What are the Five Pillars of an Omnichannel Strategy?

To deploy a true Omnichannel strategy, a company needs to address the five pillars of Omnichannel Retail.

The five pillars of Omnichannel Retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

In our previous posts, we’ve covered the first four pillars extensively. 

A company must understand its customers and their journeys deeply. This can only be achieved with a 360º view of the customer across all their company touchpoints.

Once the company has built this view of the customer, they can start deploying the following pillars. 

They can build an Omnichannel customer and content engagement strategy. With it, they can offer the holy grail of customer experience: scalable personalization.

In parallel, the company can implement an omnichannel fulfillment strategy. With it, they can offer fulfillment options to meet the customer when and where they want.

Another pillar is to deploy an omnichannel pricing and product offering strategy. With this strategy, the company offers consistent prices and products to build trust with its customers. 

So no matter the channel, the customer knows the company is reliable and trustworthy. 

Finally, the company will have to ensure its entire back-office structure is ready for an Omnichannel strategy. This means deploying an omnichannel back-office structure for Finance, IT, and HR teams. 

This is the backbone that makes everything work together.

In this post, we’ll deep dive into what is an omnichannel backoffice and why it’s the final step to a proper omnichannel strategy. 

An Omnichannel Backoffice Requires a Complete Transformation of a Company

We have covered why companies need to deploy an omnichannel strategy to survive the Retail Apocalypse. However, to deploy it, a company must address the five pillars of an omnichannel strategy.

The last pillar, the omnichannel Backoffice, is the only pillar we haven’t addressed in detail yet.

We left this pillar for the end because it’s the pillar that ties everything together. Deploying an omnichannel backoffice means pushing a complete transformation of a company.

This transformation must impact the very core of the company. It must impact its Culture, Organization, Technology, and Reporting.

In other words, a company must implement its digital transformation at every level. 

An Omnichannel Backoffice Requires the Transformation of the Company’s Culture 

There is a significant human impact from digital transformation, which legacy retailers most heavily feel.

Companies that lived through the golden years of brick-and-mortar retail but are now struggling to cope with the changes in consumer behavior.

To transform a company’s culture, the company’s management must:

1. Upskill and train when possible
2. Hire new talent and skills when needed
3. Make sure cultural integration goes both ways
4. Adapt company policies
5. Invest in change management

So let’s look at these five steps in detail:

1. Upskill and train when possible

Companies fail when they try to put people in new roles that they don’t fully understand. Or they simply lack the technical skills required for the position.

Ideally, a company will invest in training its employees to learn new skills through a process that is called up-skilling or re-skilling.

The biggest benefit of upskilling is that it allows the company to internalize skills with existing resources. Very often, the financial cost of training will be cheaper than the cost of a new hire.

But companies need to understand when they can train and when they need to hire. 

The cost of training is not only the money invested in training; it is also the time invested.

Some skills in digital roles or IT can only be mastered through years of experience.

A company’s worst mistake is assuming that employees will be fully operational in new roles with some training. 

The company must then decide when they have the time to train and when they need to hire.  

2. Hire new talent and skills and follow their lead

A company that wants to implement its digital transformation will inevitably need to hire talent.

As we said before, some skills take too long to master.

And in today’s Retail Apocalypse, very few companies have the time to wait for training to yield its benefits.

But hiring talent is only part of the solution.

Many companies think that transformation happens only by hiring new people. But hiring people is useless if new hires are not given the resources and leeway to implement changes. 

For example, hiring a data scientist is useless if the company doesn’t have the resources to invest in IT solutions like a customer data platform. 

When hiring talent for their digital transformation, companies should follow the advice of Steve Jobs:

“It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”

Investing in new talent must be accompanied by a willingness to follow their lead. 

3. Make sure cultural integration goes both ways

It is paramount for companies and new hires to understand that cultural integration goes both ways.

The people currently in the company must understand the need for new hires. They must understand why these skills are needed and make sure to integrate them into the company.

At the same time, new hires also need to make an integration effort. They must make a significant pedagogical effort to explain their jobs and the need for some things to change. It is much easier to implement change when people fully understand the benefits. 

In both cases, new hires and existing employees must understand that digital transformation doesn’t happen in a day.

It takes significant effort and time to implement a digital transformation. But the process is much easier when it is a team effort. 

So companies need to nurture an environment where new hires and existing employees can work effectively.

4. Adapt company policies

Legacy companies tend to have legacy company policies.

Company policies can make it extremely difficult to hire new talent, especially for digitally native talent that is used to some perks.

The good thing is that the Covid19 pandemic has forced many companies to adapt to new ways of work, whether it’s remote work or simply the use of certain technologies in day-to-day conversations. 

The pandemic has profoundly disrupted company policies. But once things start to get to the “new normal,” companies need to make sure that their company policies align with the times.

5. Invest in change management

Change is hard. And if employees and managers are not prepared, it can be really, really hard. 

As human beings, we are programmed to dislike change. It makes us uncomfortable and generates tension to adapt to new behavior.

But change is also a source of opportunities. With proper implementation, we would argue that change can be one of the main growth drivers for the company and people’s careers. 

So companies need to embrace change.

But they must make sure it is not disruptive and that employees are ready to embrace it. 

A successful Change process cannot be achieved without clear and effective communication. 

Thus, companies need to implement the right tools for effective communication and train their managers to deploy a change strategy.

Managers need to have a clear vision and understanding of the change process. And they need to understand how it will impact its internal and external processes.

With it, they can deploy an effective communication strategy with the rest of the employees so that change is accepted and understood. 

An Omnichannel Backoffice Requires a Transformation of the Company’s Organization

A proper omnichannel strategy is impossible to achieve with an organization built for single or multichannel retail.

One of the most critical challenges to implementing an omnichannel company transformation is effective communication between teams. 

As we said before, it is paramount for managers to be appropriately trained to promote Change management and effective communication. 

But effective communication is not only vertical; it is also horizontal. 

The organization must be structured to break silos, promote project management methodologies, and put the customer first across the board. 

1. Break organizational silos and mindset

When companies are dealing with a single channel, it often makes sense to have vertical organizations. 

With a multichannel approach, companies can also keep their organizational silos by channel. 

But with an omnichannel approach, it is impossible to create a consistent customer experience without a transverse structure.

Marketing, Sales, IT, Customer Service, Logistic, and Finance teams must be aligned to provide the best possible customer experience.

In this sense, it is not only a matter of breaking the silo organization. It is also crucial to break the silo mindset.

Too often, teams work only to improve their direct impact KPIs, but they don’t care if it creates an issue down the line.

For example, suppose the sales team is only driven by revenues and gross margin. In that case, they will push products with a high chance to generate revenues and healthy gross margins.

But what happens if products are too fragile and break easily in e-commerce logistics? Or the quality of the product is terrible, and it generates a lot of customer service contacts?

In this case, the sales team must have an incentive to drive sales and gross margin. But they also need incentives to ensure the overall customer experience remains excellent.

This is where it is critical to implement transverse Objectives and Key Results (OKR). 

The OKR methodology is very efficient in putting different teams to work on common objectives. And drive specific KPI improvements that improve the overall customer experience.

In the end, an omnichannel approach requires teams to work together and put the customer first. 

2. Promote project management methodologies

There are plenty of project management methodologies. Whether it’s Agile, Scrum, Kanban, Lean, etc., companies have plenty of choices.

We are pretty much convinced that the OKR methodology is amazing to align transverse organizations. 

But regarding project management methodologies, we don’t have a specific one to recommend. Some are great for IT projects, and others are great for logistics projects.  

The crucial part is a structured approach to deliver small, iterative results to build a long-term project. And all stakeholders in the project must have a role to play. 

Legacy companies used to embark on projects that would take years to complete. And very often, the project is driven by a single team without effective communication with other teams.

With a digital transformation approach, companies must train their employees to understand and deploy project management methodologies. 

By doing so, they can cut costs and drive effective, meaningful change within the company. 

3. Customer experience prevails over company obstacles

Companies and managers need to understand that omnichannel transformation takes time. 

And a transformation of the organization is not done overnight.

The problem is that customers want an omnichannel experience now. And if the company isn’t ready to provide it, other companies will be ready.

So while the company is engaged in its transformation, it must ensure that the current organization is not hindering the customer experience.

This is one of the hardest things for retail managers to get right. Too often, existing flaws in the organization hurt the overall customer experience. 

For example, a company that wants to launch a specific discount campaign for customers. But due to legacy systems, they can’t give the same discount rules online and offline. So, they push for a channel-exclusive campaign, whether it’s online or offline. 

In this case, the marketing and IT teams should have worked around the company obstacle (legacy systems) to make a discount campaign deployed across all channels. 

The solution will not always be so obvious. But the main idea is that the customer experience should always prevail over company obstacles. 

If there is an obstacle, the organization must always have the proper communication and objectives to put the customer experience first. 

An Omnichannel Backoffice Requires a Transformation of the Company’s Technology Architecture

Move from a monolithic to a microservice tech architecture.

Everyone understands that there is no Digital Transformation without a technology change. 

When we say that a company must implement a technology change, we are not saying to change one or two systems. 

The company must implement a complete revamp of its technology stack, processes, and project methodologies.

In the 90s and early 2000s, most legacy companies built their entire technology stack around a single system. 

The monolithic tech architecture was built as a tool for a single-channel approach, particularly around physical stores. But with the rise of multichannel and now omnichannel retail, a monolithic tech architecture has become obsolete. 

Companies that failed to revamp their tech stack a decade ago with the rise of online retail are now rushing to update every system. But if not done correctly, a complete change in the technology stack can bankrupt a company.

What is monolithic tech architecture?

A monolithic tech architecture is essentially one single, multi-use technology platform that is closed to other technologies.

A company may use a few other tools on top of their monolithic platforms, but the monolith is generally the critical tech solution driving its organizational functionality.

In layman’s terms, this means that a single platform with different applications controls a company’s entire technology. 

These applications are tightly coupled and cover different needs of a company, from marketing to sales, customer service, finance, or even logistics.

All the company applications are built around four parts which are tightly bound together. 

In particular, all applications are built around:

• a single database which concentrates the company’s entire data in many data tables, and 
• a single data access layer that connects the database to the internal or external user interface. 

Given the amount of data and applications, tech monoliths tend to have huge codebases. Thus, making even the slightest change or adding a feature requires testing and verifying the entire platform. 

This makes small iterative tests incredibly difficult, which undercuts a company’s agility and scalability.  

What is microservices tech architecture?

A microservices tech architecture involves smaller independent applications that answer to specific business logic requirements.  

These microservices are generally connected via application integration (APIs). This allows them to be easily plugged or unplugged to the user interface or other microservices. 

This is the basis of a microservices architecture: it is an open tech architecture.

As these applications are smaller in scope and size, it is easier to improve and add features. Which, in turn, makes the entire tech process more scalable. 

Given the rapidly changing retail environment, a microservices tech architecture is best suited for companies that want to implement an omnichannel approach.

Six must-have IT solutions for omnichannel retail 

An omnichannel strategy requires a microservices tech stack. 

But there are specific IT solutions that a company must implement to sustain an omnichannel approach. 

To select the right solutions, a company must ensure that the tool answers a business requirement and is easily plugged into the rest of the tech stack.

IT solutions for Omnichannel Engagement:

Omnichannel Engagement is providing consistent engagement and interactions to customers across channels. 

The holy grail of omnichannel engagement is to send the right message, to the right customer, at the right time. In other words, make every interaction personal and relevant for customers. 

But to make the process scalable, a company will need specific tools to automate hundreds or thousands of interactions.  

1. CRM: 

Customer Relationship Management software allows a company to offer a unique and seamless experience. 

When properly integrated, a CRM can provide a complete picture of all customer interactions, whether pre-purchase or post-purchase. 

For pre-purchase interactions, a good CRM tool allows identifying, segmenting, and nurturing leads for potential customers. For post-purchase interactions, the tool enables increased customer engagement and retention, on top of providing better customer support. 

In an omnichannel approach, it is paramount for companies to deploy a unique CRM tool for every channel. By doing this, the company will gather invaluable data about customer interactions and behavior across channels.

2. CDP / DMP:

A Customer Data Platform and a Data Management Platform are complementary solutions to generate smarter, scalable customer communications.

A CDP integrates first-party data into a single platform and applies artificial intelligence to search for common customer behavior patterns. Doing so makes it easier for marketing and sales teams to segment and understand their existing customers.  

A DMP will enrich first-party data with third-party data to generate smarter customer communications. This third-party data can come via cookies or external databases with demographic, weather, or competitors’ data.

In the golden age of Cookie-web browsing, DMPs allowed for gathering data from third-party websites. This practice is slowly disappearing with data-privacy regulations, but DMPs can still enrich data with external databases.

For example, having accurate weather information can allow a company to send relevant communications to customers. A simple use case would be for a company that sells umbrellas to send communications when it’s raining in a particular city. As a result, the chances of conversion will be much higher. 

A CDP will have a broader scope across marketing, sales, and customer service teams. A DMP is more specific to advertising to improve media buying efficiency. 

3. DAM: 

Digital Asset Management software allows to store, share and organize digital assets efficiently. 

Digital assets are essentially digital content: photos, videos, music, documents, and other media. When these files contain rights to use them, they are considered an asset of the company.

A DAM is crucial to easily find and share digital content among teams, which increases productivity But a DAM can also automate workflows to make marketing campaigns easier to deploy

IT Solutions for Omnichannel Fulfillment:

Omnichannel fulfillment allows companies to provide the ultimate customer convenience: serving them when and where they want.

Customers seek convenience above everything, so companies need to deploy different delivery options to meet them across channels. 

To implement these delivery options and to preserve the customer experience, a company will need to implement the following IT solutions:

1. OMS:

An Order Management System allows the company to manage the order lifecycle. The OMS allows a company to accept orders and route them to the appropriate fulfillment center. 

With an OMS, a company can effectively manage multiple fulfillment centers with a unified view of the company stock.

In an omnichannel approach, an OMS is crucial to effectively handle store-pickup, ship-from-store, or ship-to-store fulfillment options. 

2. WMS:

A Warehouse management system allows a company to manage its inventory lifecycle efficiently. 

A WMS allows providing accurate real-time data about inventory movements. It also increases picking efficiency by assigning picking tasks and giving clear information on a product’s location. 

When connected with an OMS, a WMS can capture and relay real-time data about orders and inventory. The main benefit is to reduce stock-outs and order cancellations. 

In an omnichannel approach, a WMS is crucial for handling warehouse fulfillment, store-pickup, ship-from-store, or ship-to-store fulfillment options.

3. TMS: 

A Transport Management System allows companies to manage the transport lifecycle efficiently. 

A TMS assigns parcels to the right carriers to reduce shipping times and delivery costs. It also allows providing accurate real-time information to track and trace packages during transport.

When connected with an OMS and a WMS, a TMS can provide accurate and relevant updates to customers on each step of the order lifecycle to increase convenience. 

The customer knows exactly when and where they will receive their order, which is the basis for omnichannel fulfillment. 

An Omnichannel Backoffice Requires a Transformation of the Company’s Reporting and KPIs

Most legacy players have been in the retail business for decades. They have been successful and have optimized their sales and operations for decades.

The problem is that legacy retailers designed their KPIs and reporting structure for single-channel retail. It was specifically built to improve physical store sales and operations.

An Omnichannel Backoffice Requires An Omnichannel P&L

With the rise of e-commerce, legacy retailers started adding complexity to their reporting. 

Legacy retailers have often treated their online business as “another store” with an entirely separate P&L.

This separation is, in our opinion, one of the biggest obstacles to implementing a proper omnichannel strategy. 

By separating online and offline P&Ls, a company ignores that the value provided from a unified customer experience is greater than the sum of its parts. 

In the end, traditional accounting in retail fails to capture the total value of omnichannel retail. It will hinder implementing an omnichannel strategy as the management team will only see half of the picture.

Let’s take an example experienced by many legacy retailers.

The management team of a legacy retailer wants to jump in the e-commerce train and capture some growth. 

For this, the company invests in upgrading its technology stack, deploying a digital marketing strategy, implementing store pickup, and revamping its entire website. 

They treat it as a separate P&L, so physical store staff has zero incentive to promote the website’s launch. They even see the website as a competitor as any sale in their area is one less for them.

After significant investment and time, the online business takes off and starts generating revenues. But not nearly enough to cover all the spending. 

In parallel, physical store sales are increasing more than expected with more visitors than before. 

Overall, company managers start reconsidering their online business investment and overall growth stalls.

Sounds familiar?

The main problem with this approach is that it fails to consider that the customer behavior is not mono-channel anymore. 

The company is measuring all the investment against online revenues from home delivery. In some cases, they also include buy-online-pickup-in-store revenues. 

But they fail to consider the overall impact of a digital strategy on their physical store growth. 

After all, with a traditional accounting and reporting structure, how can they measure the positive impact from one channel to another?

Traditional accounting and reporting fail to consider the value of the ROPO effect. 

What is the ROPO effect?

ROPO stands for Research Online, Purchase Offline. 

ROPO is a consumer behavior where shoppers begin their journey online to gather all the information they need about a brand or product. Then, after they have gathered enough information, they go to a physical store to make a purchase.

Today, customers have all the information they need at the palm of their hands: on their smartphones. As a result, researching a brand or product has never been easier, and customers actively do it. 

If you consider the customer journey today, according to the Global Digital Review in 2021 nine out of ten customers visited an online store on any device before purchasing. 

Simply having an online presence is crucial to provide information to customers.

Of course, this number also includes online shoppers. But according to Shopify, 69% of consumers webroom, which is another term for the ROPO effect. 

But when analyzing the ROPO effect, companies must consider that the effect goes both ways.

In this sense, according to Shopify, almost half of consumers showroom. Showrooming happens when consumers visit a store to check out a product and then purchase it online.

Physical stores have value and help generate additional revenues for the online website as long as the staff has the right incentives. 

This means that the company must align KPIs and reporting to improve operations and incentivize cross-channel revenues. 

The teams in charge of the online store and offline stores must work together. And marketing campaigns must be designed and measured by an omnichannel approach.

How can the ROPO effect be measured?

By now, it should be clear that every single touchpoint in the customer journey adds value to the company’s bottom line. 

This statement is valid as long as those touchpoints are part of a unified positive customer experience. 

So to effectively measure the ROPO effect, a company needs to attribute revenues to the right channels. 

For online revenues, they can easily be tracked to the initial campaign or traffic source. The problem comes with offline visitors who didn’t log in to the website or even go to the company’s website.

For example, a shopper looking for a decoration store might research Google Maps and see nearby stores. Then, they will probably go to the store without even going to the store’s website. 

Tracking 100% of customers offline is impossible. 

But companies can get close enough by gathering the correct information from customers when they visit or purchase offline.

A company that can gather data about their offline visitors like an email or a phone number can build a clear view of the customer journey.

So companies must deploy a data-gathering strategy across channels. This strategy should be aligned with their loyalty programs as it’s the best way to offer incentives in exchange for customer data.

If used adequately, a loyalty program can generate tremendous growth in customer retention across channels. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post An Omnichannel Backoffice Completes a Bulletproof Omnichannel Strategy to Survive the Retail Apocalypse appeared first on Apocalypse Retail.

We are all impacted by merchandising and marketing techniques every day. 

When you go to the grocery store, you’ll probably have noticed the offers they have on products. These offers are strategically placed to encourage you to buy something. 

Online stores need to apply similar tactics on their websites. The goal is to boost their sales through eCommerce merchandising. 

Today’s consumer uses multiple devices and multiple channels on their customer journey. They jump from online to offline seamlessly for discovery, research, or to purchase a product.

But there are crucial differences in the way people shop online and in-store. And it is critical to understand these differences to offer the best possible omnichannel experience.

What Is Ecommerce Merchandising?

Any time we make a purchase online, we are buying from an eCommerce business. An eCommerce business is simply a business where the transaction is made online. 

E-commerce marketing is the process of attracting visitors to your website. But once visitors enter your website, you need to drive them down a purchase funnel. 

This second process is called eCommerce merchandising or E-merch. 

E-merch is the sum of processes to keep a customer interested in your website and push them to make a purchase. eCommerce merchandising aims to organize and structure your products or services offered. 

The goal is to make it as simple as possible for visitors to find what they want and become paying customers.

Why Is Ecommerce Merchandising Important? 

Online shopping is expected to reach 1 in 4 retail transactions by 2030. The growth of e-commerce is tremendous and will continue to grow by double-digit numbers over the next decade. 

But the reality is that online shopping still has a fair amount of friction in the customer journey. In particular in the mobile experience.

Most customers still love to get a sense of a product by touching it, feeling it, and trying it. They need this before deciding whether or not to make a purchase. 

Other aspects like the shipping fee or delivery times can discourage potential visitors. 

Ecommerce merchandising exists to fill the gaps from the lack of a physical experience. It can be a make or break for online businesses. And can have a significant impact on your omnichannel experience. 

It is what sets a company apart from others, especially when competition is higher than ever. 

Here are some examples of e-merchandising strategies that can help your business: 

• Displaying products in a way that draws in the attention of the customer 
• Having a search bar to allow customers to find products quickly
• Display filters for customers to find their best-suited products
• Promote particular products 

These are some of the strategies that we’ll explain further down in the article. 

But first, let’s deep dive into the most important differences between online and offline shopping behavior.

What are 9 Differences in Online vs. Offline Consumer Behavior?

Customers are omnichannel in their approach to the purchase journey, meaning they jump from one channel to another seamlessly.

But this doesn’t mean they behave exactly the same on every channel. So companies must understand the differences in consumer behavior between online and offline channels.

Here are the 9 key differences in consumer behavior between online and offline channels:

1. Effort
2. Entry and Exit Points
3. Audience 
4. Duration Of The Visit
5. Content Renewal
6. Product Availability
7. Visit Frequency
8. Conversion rates
9. Interaction

1. Effort: Traveling To The Store vs. One Click Away

When it comes to everything in life, we tend to prioritize convenience. We want to access the products we need quickly and from the comfort of our own homes. 

Convenience is where online shopping is preferable to visiting a physical store.

The things we need are simply a click away without us having to leave our homes and travel anywhere. There are times when traveling to the store implies too much effort, or you just don’t feel like doing it. 

Online shopping, on the other hand, is usually straightforward. If done correctly, it can be effortless.

2. Entry and Exit Points: One or Two vs. Multiple

There will typically be only one way in and one way out when shopping at a physical store. 

With an online store, however, this is entirely different. 

Customers can enter or leave your online store from any page they want. In other words, you have as many entries and exits as you have pages on your website. 

There are offline merchandising techniques with much better results for this reason. Techniques like placing products at entryways have much better conversion offline. 

If 100% of offline visitors enter through a single entry point, the chances of converting on that product are very high. 

Suppose that you use the same technique online by displaying the products on your homepage. But only about 30% of your visitors enter via your e-commerce homepage. 

In this case, the chances of converting on that product are much lower. This is what happens with e-commerce conversion rates.

3. Audience: Local vs. National or International 

Most of us won’t travel too far to visit a store. 

Physical stores will only attract customers located within a relatively small radius. People will move within 20-25 km from their home unless they look for something specific or niche. 

On the other hand, online stores can attract a national or even international customer base. 

So long as customers can have a product delivered to them without too much cost or wait, it doesn’t matter where the business is. 

Thus, e-commerce businesses have a much broader reach than physical store retail. 

4. Duration Of The Visit: 1 hour vs. 4 minutes

Browsing in a physical store is one of the perks of the physical experience. 

Some consumers love to see the products and touch them even if they are not making a purchase.

Customers like to visit a store because of the experience they get. The average consumer can spend around an hour or so in a physical store. 

But, online behavior is much shorter. As we said before, in the online experience, everything is one click away. 

The average visit time in an online shop is between 3 and 4 minutes so online stores need to grab the customers’ attention as fast as they can.

5. Content Renewal: Once a month vs. Once a Day

Merchandising helps businesses deploy their marketing strategy and messages in each channel. 

In an offline store, changing the store layout to adapt to marketing messages requires significant effort. Most retailers will only change the layout every 4 to 8 weeks because of this. Since visits are less frequent, it is not crucial to change the layout faster. 

Regarding online, customers have a shorter attention span and more frequent visits. For this reason, it is recommended for e-commerce websites to change messages and content every day. If not possible, at least every week. 

To change the content, an online store only needs to upload pictures or content. The most intense part is content creation, but the technical process is very easy.

Visit frequency has an impact on the need for updated content. 

Customers will be less inclined to visit physical stores regularly whereas e-commerce businesses can entice them with constantly updated content and layout. 

In every online visit, the customer should always see something new.

6. Product Availability: Getting the product immediately vs. Waiting

One of the benefits of shopping in a physical store is that you can get your hands on the product you want immediately. 

No matter how fast shipping is online, it’s simply impossible to offer the same service. Even with q-commerce (quick commerce), you still have to wait around 10 minutes.

Some consumers no longer have the patience to wait for things they want. 

Whenever you buy something online, there’s always a risk it won’t come on time or that delivery will take a long time which makes immediacy a considerable benefit from offline stores. 

7. Visit Frequency: 3-4 times per year vs. 3-4 times per month

As we discussed before, visit frequency is very different online than offline. 

Customers will visit physical stores less often than they will online stores. 

This difference is due to two main reasons: 

• Time and effort to visit the store 
• Content and merchandising are not renewed fast enough for customers to make a trip worthwhile 

The difference can be significant. 

Customers might visit an online store the same number of times a month as they would visit a physical store in a year. Around 3 or 4 times. If your marketing plan is strong, the online visit frequency can even be higher than this.

Today it is effortless to check a store from your mobile whether it’s from an organic search, email, ad, or simply a direct visit. 

The effort difference just makes visit frequency much higher online.

8. Conversion rates: 50% vs 2-3%  

Every single difference in behavior that we highlighted until now has a massive impact on conversion rates. 

The effort, entry/exit points, visit duration, and immediacy increases offline conversion rates. 

A customer that makes the effort of going to a store is much more likely to make a purchase. 

On the other hand, an online store addresses a much larger audience, with multiple entry/exit points and shorter visit duration. 

In these conditions, it is much more challenging to convert a visitor into a paying customer.

Offline stores conversion rates are around 50%, compared to 2-3% for online stores. 

An offline store has 15x to 25x higher chances to convert a visitor into a customer. But its reach is much lower than an online store.

9. Interaction: Human vs. User Interface / Chatbot

In physical stores, there will almost always be store assistants on hand to help. Store associates or sales reps are there to help you find things you need or give you advice about products.

At the very least, there will be someone waiting to welcome you into the store. When you need assistance, you will usually be able to find someone to help you relatively quickly. 

The help is then immediately and is there within the store operating hours. 

Human interaction is something much more challenging to get online. 

The closest thing is talking to customer service, but it doesn’t have the same “human” feeling. And it is rarely available during the 24/7 online store operating hours.

On top of a phone number, online stores can also provide live chat features on their website. But for phone or live chat to be successful, it needs to be immediate communication. 

The problem is that this can be very costly, and not many retailers can afford to do it properly.

What is Omnichannel Merchandising? 

Omnichannel merchandising is a way of bridging the gap between online and offline customer journeys. 

Most of us like to spend some of our time online and enjoy going to the store. 

Omnichannel merch creates a unified experience across all touchpoints in a customer journey. Customers can jump seamlessly from a channel to another. In other words, customers are omnichannel in their behavior. 

With an omnichannel merchandising strategy, a company helps customers move from one channel to another without friction. The main goal of omnichannel merch is to remove any frictions from the customer journey. 

Some essential features of omnichannel merchandising are:

• A great mobile responsive website 
• High quality and detailed product content
• Consistent product offers and discount across channels
• Delivery or pickup options according to the customer needs
• Unified loyalty rewards across channels

11 Ways Retailers Can Adapt To E-Commerce Merchandising

Most companies already have a multichannel strategy with functioning online and offline stores. Here’s a complete rundown of e-commerce merchandising best practices.

1. Change Content And Deals Daily

Customers are looking for deals and products to be changing all the time. 

As part of your e-commerce marketing strategy, it is essential to keep images fresh and update your deals regularly. Daily if possible. 

This ensures customers always have something new to see. In addition, it encourages more frequent visits, which increases the chances of a purchase.

2. Ecommerce Merhandising Requires a Powerful Internal Search Engine

Most people think of Google when you use the words “Search Engine.” 

Improving your website to rank higher on Google is very important and is taken care of by SEO, which means search engine optimization. 

But in e-merch, the internal Search Engine is equally or more important as an e-commerce store can have hundreds or thousands of items available in its catalog. 

Because online customers are lazy and impatient, they must be able to easily search for products and quickly find them.

A customer that is looking for a specific product is much more likely to complete the purchase so every retailer should make it a priority to have a robust and reliable internal search engine.

3. Ecommerce Merhandising requires Mobile-First Design

Mobile traffic now exceeds desktop traffic as everybody and their mother has a smartphone.

And m-commerce or mobile commerce is rising quickly which is unsurprising as people like to shop while they are on the go, from the couch, or even from bed. 

Online stores must ensure their websites are mobile-friendly, in particular, the product page and checkout funnel. 

The best way to do this is to design your user experience and campaigns first for mobile. In terms of UX and design, it is much easier to go from mobile to desktop than vice-versa.

4. Ecommerce Merhandising implies to Make Contact Easy

Customers trust companies that make it easy to contact them. 

It is very frustrating to have to do a deep search around a website looking for contact information. 

Make customer contact as easy as possible. This will generate more contacts but will also help you solve more customer doubts or issues.

5. Promote Product Discovery with cross-sell and up-selling

A homepage is a great place to highlight the products you want your customers to engage with and see first. 

These products must be relevant to the customer to provide a maximum chance of conversion. But when an online store has hundreds or thousands of products in its catalog, it is difficult to show them all. 

An online store can promote product discovery with collections. Collections are great to cross-sell or up-sell products.

Cross-selling is offering similar products to customers. For example, showing the same product from another brand. 

Up-selling is offering complementary products to a product. For example, showing a belt to a person that added a pair of pants to its cart. 

The idea is to show the customer similar and relevant products that they can discover. 

Well-placed products will grab the customer’s attention which can be on the homepage or a product page. 

You can make the process scalable with automation, whether similar to previous purchases or previously seen products. 

The most crucial part is that product collections must be relevant to the customer.

6. Personalization At Scale is a powerful tool of ecommerce merhandising

Personalization and customization are essential to e-commerce merchandising. 

Customers want to feel valued, and few things make a customer feel more valued than having a personal experience.

An online store can do this by gathering and analyzing data on its customers. 

For example, you can make relevant recommendations with data on what products a customer saw or purchased. Or, with data about the date of birth, you can send a relevant message to a customer on their birthday.

Online stores must use data to understand what their customers like or dislike. By doing so, they gather insights on their shopping habits to create a more personalized shopping experience.

7. Use Social Proofing And User-Generated Content

User-generated content or UGC is all content that comes from users. For example, it can be a consumer review of products or stores, but it can also be photos or videos with products.

The main objective of UGC is to provide social proof to other customers to build trust with a company. 

According to research, 79% of customers will trust an online review as much as they would a friend’s feedback so social proof must be nurtured and displayed as often as possible. 

If the reviews are negative, at the very least, you have valuable insights to improve your processes.

8. Be Clear About Delivery Lead Times and Cost to improve your Ecommerce Merhandising

The most frustrating thing about online shopping can be waiting times for delivery.

Research shows that 19% of people said that they abandon their cart at checkout because delivery is too slow. 

The best thing you can do is be open and honest about how long the products will deliver rather than overpromising on delivery. And when it comes to delivery it is also essential to be honest about delivery costs. 

According to research,  53% of online shoppers will abandon their carts because of unexpected extra costs. 

9. Use Product Bundling to reinforce your Ecommerce Merhandising

Product bundling is suggesting complementary products as a pack of items sold together. 

Product bundles are great to increase the average basket size. More often than not, they also help increase profitability as they reduce fixed costs per unit economics. 

There must be a perceivable value for the customer. For this reason, bundles should be cheaper together than the sum of products if bought separately.  

10. Marketing Automation To Increase Repurchase

Automating your marketing can help to increase the number of customers who will become returning customers. 

Marketing automation is easier than ever today. There are plenty of solutions to help automate your marketing strategy.

Automation will help you increase your customer retention rate. With the proper automation workflows, you can send relevant messages to existing customers. 

Building a customer database can take a while, but it is one of the best investments a retailer can make. It allows unleashing the full power of marketing automation. 

11. Detailed and Quality Product Pages is the Holy Grail of Ecommerce Merhandising

It cannot be overstated how important it is for a website to have a nice look and feel. In particular regarding Product Pages. 

Quality and detailed content on product pages are crucial to increase conversion. They help customers reduce the need to touch and feel a product.

Retailers must invest in high-quality images of products. And they must work on detailed product descriptions with relevant use cases. If the budget allows, some products should also have video content. 

The product page content is your online sales pitch so you need to ensure it contains all the valuable information that a customer needs to know about a product.

How to Improve Your E-Commerce Merchandising Strategy? 

E-commerce merchandising involves learning how to adapt to an ever-changing environment. 

Online stores must do everything they can to compensate for the lack of physical experience. This is the true objective of E-merchandising.

But E-merch must be a continuously evolving process. It needs to be up to date with changes in technology and omnichannel customer behavior. 

Some essential features of omnichannel merchandising are:

1. Daily change in content
2. A powerful internal search engine
3. A great mobile responsive website
4. Easy contact for customers
5. Product discover with cross-sell or up-sell
6. Personalize the experience
7. Use Social Proofing
8. Clear delivery time and costs
9. Product bundling
10. Marketing automation 
11. High quality and detailed product content

Overall, retailers need to work harder when going online than in their offline stores to keep online customers engaged. 

But those that achieve it will set their business apart from the crowd!

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post The Ultimate Guide to Ecommerce Merchandising: Adapting your Website for an Omnichannel Customer appeared first on Apocalypse Retail.

Today, customers have complete control of when, where, how, and from whom they want to buy products. 

The rise of digital channels has given unprecedented power to customers. This power shift has increased competition for retailers. It has forced them to adopt a strategy that fully satisfies customers at their convenience. 

That is where omnichannel fulfillment comes in.

To consider implementing an omnichannel strategy, a company must address five key pillars. 

The five pillars of omnichannel retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

Once you have built a 360 view of your customers and you started deploying an omnichannel customer engagement strategy, you can deploy an omnichannel fulfillment strategy. 

What Is Omnichannel Fulfillment?

Omnichannel fulfillment is an order fulfillment process executed across multiple channels. At its core, this process ensures a consistent experience across all channels. 

Omnichannel fulfillment makes all products and services available in every channel. So whether it’s online or offline, products are available in the most convenient channel for customers. 

In other words, in omnichannel fulfillment, a customer can buy and get a product no matter where they are or what channel they are using. 

Having all products available across channels is similar to a multichannel fulfillment strategy. 

Multichannel fulfillment is fulfilling orders from multiple channels. Whether online or offline, in multichannel fulfillment, a customer can choose from various delivery options. 

The critical difference is that omnichannel fulfillment ensures a consistent customer experience across fulfillment options.

Omnichannel fulfillment is adapting the delivery process and options to the customer’s behavior, ultimately making the whole experience convenient and efficient.

All channels and delivery options are interconnected in an omnichannel fulfillment strategy. 

They are synchronized to gather a maximum amount of data and provide an equal value to the customer.

What are the five primary options of Omnichannel Fulfilment?

To understand how omnichannel fulfillment works, let’s first understand the options it can take. 

There are five primary options of omnichannel fulfillment:

1. Store pick-up
2. Warehouse delivery 
3. Ship-from-store 
4. Ship-to-store 
5. Endless aisle

Let’s dive into each of them in detail.

1. Omnichannel Fulfillment: Store Pickup 

The most common form of omnichannel fulfillment option is store pick-up. This method includes different options such as E-reservation or Click and Collect.

What is E-reservation?

E-reservation is the delivery option where an item is reserved online and picked up in the store. The actual payment and transaction happen at the store. 

The main convenience is that the customer ensures the item is in stock before going to the store.

What is Click and Collect?

Click and collect is where the item is reserved and paid online and picked up in the store. 

This method is often referred to by the acronyms BOPIS or BOPUS for Buy Online, Pickup In-Store. It can also be written Click & Collect or C&C. 

The main convenience is to ensure a fast, efficient process without really needing to enter the store. 

What is store pick-up or Buy Online, Pickup In-Store?

Whether it’s E-reservation or Click And Collect, most retailers are deploying store-pickup. It is the preferred option by brick-and-mortar retailers that want to be omnichannel retailers. 

In a survey in 2020 by Forrester, 87% of retailers planned to implement buy-online-pickup-in-store before 2022. 

Retailers prefer this method because it allows them to leverage their physical footprint. In addition, this option will enable them to drive traffic to their stores from their digital channels. 

There is no doubt that the physical store still carries significant value for customers. Touching, feeling, and smelling a product can highly increase the chances of purchasing that product. 

What do retailers need to implement omnichannel store pick-up? 

By implementing BOPIS, retailers know they can drive traffic to the store. Most of the time, they generate additional sales when the customer is in the store.

But in-store pick-up can also be a form of multichannel fulfillment. 

So omnichannel store-pickup requires two additional efforts from the retailer:

1. All products and services must be available online and offline. 
2. Product content must have consistent quality across channels. 
3. High inventory accuracy
4. Transform stores into fulfillment centers

1. Full availability of all products and services online and offline:

Very often, retailers have different inventory for physical or online stores. In turn, they offer products that are exclusive to a single channel. Or are simply available in a single store.

For example, a retailer that has certain products published on its website that can be purchased online. Or that can’t be delivered at home. Or that can’t be found at the store. 

This negatively impacts the customer experience and generates frustration among potential buyers.

2. Quality product content across channels

Regarding product content, the logic is very similar. 

Omnichannel store pick-up requires that product content must be consistent across channels. When customers are at the physical store, they can touch, feel, and see a product’s details. 

The online experience must match the physical store experience.

In other words, omnichannel store pick-up requires having online product pages with:

• Quality pictures
• Detailed descriptions and specs
• If possible, videos or tutorials for the product

3. High inventory accuracy across channels 

Store pick-up has tons of benefits for retailers. But, when considered in an omnichannel strategy, it carries some operational complexity. 

For starters, retailers need to have high inventory accuracy. This is crucial to avoid disappointments for customers due to stock out.

Inventory accuracy goes hand-in-hand with the full availability of products across channels. 

It is one of the biggest challenges for retailers, as real-time and reliable stock count is not easy. And a fundamental principle of working capital is to reduce the days of inventory rotation as much as possible.

4. Transform stores into fulfillment centers to control hidden costs

Like inventory, retailers need to have a higher cost efficiency to make omnichannel store pick-up work. 

In-store pick-up has loads of hidden costs of order fulfillment from the stores. A physical store has significant differences from a fulfillment center. 

The time to pick and prepare an order in a store is higher than at a specialized fulfillment center. This makes the traditional store less efficient for omnichannel store pick-up. 

Retailers who want to implement omnichannel in-store pick-up must rethink the role of the store. 

The store must be transformed into a fulfillment center with a showroom. This way, customers can still get the full value of the physical experience, and retailers can offer omnichannel store pick-up. 

2. Omnichannel Fulfillment: Warehouse fulfillment: 

Warehouse fulfillment is shipping products from a warehouse to the customer’s place of choice. 

That’s as easy as it gets.

What is omnichannel warehouse fulfillment?

From an omnichannel standpoint, warehouse fulfillment adds more value. The primary value is that all products are available for delivery at the customer’s convenience. 

No matter where the customer is located or when they want a product, they can order and receive it. 

In other words, the warehouse can fulfill an order at the time and place desired by the customer.

The warehouse carries the reception, storage, picking, and packaging of orders. Once the order is prepared, it ships it to ensure delivery when and where the customer requested. 

This type of delivery is the basis of e-commerce.

Omnichannel warehouse fulfillment provides the ultimate customer convenience.

Omnichannel warehouse fulfillment implies the order can be fulfilled at speed and place the customer wants it. 

A customer can need a product in less than two hours or might not mind waiting a few days for delivery. The important part is that they must have all options. 

On top of this omnichannel warehouse, fulfillment allows shipping orders placed from a physical store. 

Suppose a store doesn’t have an item in stock. The customer can make an order from the store and have it delivered to their house. 

Omnichannel warehouse fulfillment is highly cost-efficient.

Omnichannel warehouse fulfillment provides higher inventory management efficiency. In this case, long-tail products can be stored at a central location and have better inventory management. 

A central warehouse will always have better unit economics in storage, picking, and packaging costs than a store. 

This form of fulfillment has another benefit of increasing higher profitability per m2. This is one of the most important KPIs for traditional retail. 

Stores can serve as showrooms where the customer can touch and feel the product before making a purchase. 

Once they are ready to purchase, the product can be delivered from the warehouse if it’s not in store.

Speed is vital to make omnichannel warehouse fulfillment work.

The main drawback of omnichannel warehouse fulfillment is the delivery speed for an item. 

For some items, customers are willing to wait a couple of days for delivery. But for other items, they want to have the product immediately when making the purchase. 

This immediacy is impossible to achieve for all items on a national level from a central warehouse. 

Retailers must have a deep understanding of the customer’s needs and wants. They must identify which items need to be in-store and which can be fulfilled from a central warehouse.

In-house or external (3PL) warehouse fulfillment

Regarding warehouse fulfillment, there are two main options for retailers. 

They can have a standalone warehouse where they set up and have complete control of the entire process. Or they can use a third-party logistics provider (3PL). 

Outsourcing logistics can offer benefits depending on the volume and seasonality of orders. For some retailers, 3PL is generally more efficient in costs-per-order. And it provides a lot more flexibility in high seasonal markets.

But having in-house logistics allows complete control. And full control is critical to provide the best possible customer experience. 

3. Omnichannel Fulfillment: Ship-from-store

What is omnichannel ship-from-store?

Ship-from-store is a mix between store pick-up and warehouse fulfillment. Ship-from-store is where the physical store doubles as a proximity fulfillment center. 

From an omnichannel perspective, ship-from-store has the same requirements as store pick-up and warehouse fulfillment. It requires consistent product content, high inventory accuracy, and full product availability. 

For many retailers, their store network is one of their most important assets. They can leverage this footprint by converting physical stores into fulfillment centers. In turn, they can fulfill proximity orders, whether online or offline. 

Shipping orders from stores has considerable benefits in terms of delivery lead times. When the store works as a fulfillment center, it can ensure same-day delivery for orders within its proximity. 

Ship-from-store also has value in terms of inventory efficiency. Shipping items from stores increases transactions and provides higher stock rotation. 

Omnichannel ship-from-store requires an Order Management System.

The main drawback of ship-from-store fulfillment is the operational complexity. In this sense, managing multiple stocks in stores to fulfill an order requires a unified view of stocks.

But most traditional retailers have legacy systems that are unable to handle these requirements. And they generally struggle with inventory accuracy within stores. 

This can only be achieved with an Order Management System (OMS). An OMS provides a unified and accurate view of stocks between stores to define which store will fulfill an order. 

Retailers must fix these issues before trying omnichannel ship-from-store. 

4. Omnichannel Fulfillment: Ship-to-Store

What is omnichannel ship-to-store?

Omnichannel ship-to-store fulfillment is the next logical evolution of retail fulfillment. In particular, after having implemented in-store pick-up and warehouse fulfillment. 

Ship-to-store fulfillment is when the physical store becomes a delivery destination for orders. 

This method is used for products not in stock at the store to ensure a proper, omnichannel view of the retailers’ product offers. 

Ship-to-store allows the store to double as a pick-up place to receive orders if the product is not in store. 

Depending on the physical footprint, ship-to-store also provides convenience for the customer. Especially for those customers that are not always home and want a place to pick up items. 

Four steps to implement omnichannel ship-to-store

To properly implement omnichannel ship-to-store, Retailers must tackle certain complexities.

1. They must be able to track online and physically store orders once they get to the store. 
2. Omnichannel ship-to-store requires notifications for customers to know when their order is ready for pick-up. 
3. Once the customer is in the store, the pick-up experience must be as easy as possible.
4. Finally, the retailer must mark an order as picked up and start a return process if the customer requests it. 

Ship-to-store fulfillment ties all options together for maximum convenience.

Once ship-to-store and ship-from-store options are deployed, a retailer can implement store-to-store fulfillment. This unifies all point-of-sale inventory to address stock-outs and improve customer experience. 

The biggest drawback about ship-to-store is the additional delivery cost it carries with no immediacy for the customer. 

One could argue that ship-to-store has the inefficiencies of warehouse fulfillment, coupled with the inefficiencies of in-store pick-up. 

Retailers must work to tackle these inefficiencies to offer ship-to-store. Mainly to ensure a consistent experience for customers.

5. Omnichannel Fulfillment: Endless Aisle

Endless-aisle is a concept where a retailer extends its catalog offer with products that are not in stock. The endless-aisle can be internal or external, depending on who stocks the items.

What is an internal endless aisle?

An internal endless aisle occurs when a retailer has stores of different sizes. In this case, some products are only available at the biggest stores or a central warehouse. 

Retailers can leverage internal endless-aisle to make products available in all of their stores. The customer can purchase a product from a smaller store, even if that product is not available in the smaller store.

What is an external endless aisle? 

External endless-aisle is where retailers leverage products outside of their catalog offer. This can be very efficient for long-tail products from suppliers. 

It gives the retailer the flexibility to offer these products without carrying the risk of stock themselves. 

External endless-aisle is very similar to dropshipping. The supplier would be fulfilling the order in the name of the retailer that sold the order. 

What are the pros and cons of endless aisle fulfillment?

Endless aisle is attractive in inventory management and working capital management as the retailer doesn’t need to carry the stock before it makes the sale of the product. 

The biggest drawback of the endless aisle comes from the operational complexity it implies for retailers. 

In today’s customer experience standards, a customer doesn’t care who shipped the order. The customer expects the company they are buying from to ensure that everything works perfectly.

Therefore, retailers need to make sure to have the right processes for endless aisle:

• make sure that suppliers are fast and reliable for a consistent fulfillment experience
• have the right systems to track and follow up on orders from an omnichannel perspective. 

If they do not implement these steps, an endless aisle can become an operational nightmare. 

What Are The Benefits Of Providing Omnichannel Fulfillment?

Omnichannel fulfillment comes with an increase in convenience and a long-term reduction in costs. Here are the most common benefits of omnichannel fulfillment:

1. Better Customer Experience

As mentioned previously, omnichannel fulfillment keeps customers happy. Convenience is the key ingredient to get a happy customer.

Enabling an omnichannel fulfillment strategy to mix delivery options highly increases convenience. 

Omnichannel fulfillment enables faster delivery and provides options to meet customers’ needs. Every step of the delivery process for each option is designed to provide a great customer experience. 

Omnichannel fulfillment processes the order on time, picks up the goods correctly, and ships the items timely. There is no better way to increase customer satisfaction and retention.

2. Higher cost-efficiency in the long term

Omnichannel fulfillment requires some solutions that can be costly, to begin with. But in the long run, it is the most cost-efficient process to manage multiple sales channels.

In an omnichannel fulfillment view, the company maximizes stock rotation. 

The main objective is to reduce idle time for products and have the right quantity of products at the right place and at the right time. 

This can only be achieved by having a single, unified view of inventory across channels. This strategy maximizes order accuracy, reducing the costs of mistakes and returns.

3. Better Data and Reporting

An omnichannel fulfillment strategy requires a detailed view of a company’s supply chain.

The company must be able to track and measure the performance of each link of the supply chain. From the time to manufacture an item to the time it is received in-store to the delivery lead time. 

The entire supply chain is integrated to collect and gather data. This data allows companies to build detailed reporting to maximize the entire supply chain efficiency.

4. Increased brand awareness and word-of-mouth

An omnichannel fulfillment strategy puts the customer first. 

Customers understand that you care about their needs and are making an effort to provide them with convenience. Thus improving the chances of them having a great experience. 

In other words, an experience worth talking about with their friends.

With an omnichannel fulfillment strategy, a company caters to the customer’s needs. They don’t see customers as buyers, but they see them as fans. 

Fans that will help them attract more fans. And thus, lower acquisition costs and increased brand awareness.

5. Higher revenue and customer lifetime value

Higher brand awareness and word-of-mouth translate directly to higher revenue. But an omnichannel fulfillment strategy also has an underlying benefit to bring more revenue. 

The simple fact a company uses multiple channels mechanically increases the sources of revenue. 

Making products accessible through different channels increases customer reach and hence, increases revenue. 

This premise is true for both multichannel and omnichannel strategies. The single most important premise about omnichannel retail is as follows:

The overall value of a unified experience is larger than the sum of the value from combined channels. 

This added value to the customer experience is what promotes loyalty from customers and customer lifetime value. 

How are fulfillment strategies changing with COVID?

COVID has had a radical impact on consumer behavior as a considerable portion of customers have tried online ordering.

From a logistics perspective, warehouse workers have had to practice social distancing. And businesses have had to struggle to efficiently manage inventory. 

The growth of e-commerce penetration of the total retail market in 2020 has advanced the expected roadmap by two years globally. 

The global e-commerce share of retail reached 10.5% in 2020 when it was supposed to get to that figure in 2022 in pre-covid forecasts.

So, e-commerce is on the rise, but how about omnichannel fulfillment options? 

Covid19 pushed a profound acceleration to implement omnichannel delivery options. According to a survey from Forrester among retailers:

• 89% of retailers plan to implement Buy online, pickup in-store by 2023 
• 81% of retailers plan to implement Endless Aisle by 2023 
• 79% of retailers plan to implement Ship-from-store by 2023
• 73% of retailers plan to implement Ship-to-store by 2023

In summary, customer requirements are accelerating the transformation of fulfillment options. The pandemic has only made those requirements more pressing.

Thankfully, a majority of retailers are meeting customer requirements by implementing delivery options.

What are the difficulties of implementing an omnichannel fulfillment strategy?

If not deployed correctly, omnichannel fulfillment can break a company. 

There is no denying that implementing an omnichannel strategy requires time and resources. Resources in Capex, technical skills, systems, and software.

All this, with increased and transparent communication between teams.

An omnichannel fulfillment strategy has many long-term benefits, but not all companies are willing to invest. 

These are the biggest obstacles to implement an omnichannel fulfillment strategy:

1. Change in culture

Most traditional companies have had success with a single channel approach for several decades. This legacy generates overconfidence in the “old ways” and mistrust in the “new ways.” 

A significant culture change needs to be carried out in legacy retailers to shift towards an omnichannel vision. 

Most retailers’ senior leadership understands the need to implement an omnichannel strategy. Still, they have struggled to implement a change in culture to deploy an omnichannel vision. 

In many cases, there is a lack of resources or skills required to change a culture. 

Implementing an omnichannel strategy requires hiring new skills. Hiring new skills must be paired with upskilling existing employees. 

These new skills or hires need to be integrated and accepted within the company. And the company, as a whole, needs to create a new culture that integrates both new and existing roles.

2. Change in the organization

A company organization can be a major roadblock to implement an omnichannel fulfillment strategy.

Integrating new skills requires reviewing existing organizations. Retailers need to move from a classic “silo” organization to a transverse organization.

Omnichannel is a transverse strategy that needs to be integrated within all teams. All teams, including Marketing, Sales, HR, Supply chain, Finance, and IT, must work together. 

The big mistake retailers make implementing an omnichannel strategy is to have it driven by a single team. Very often, it’s the IT or Marketing teams. 

For an omnichannel strategy to flourish within a company, all teams must be aligned. And the organization must be designed to allow transverse projects to prosper.

3. Ressources and Capex

Implementing an omnichannel fulfillment strategy is in no way a quick and easy task.

For a legacy retailer, it is probably an even harder task.

The required technology to support an omnichannel strategy means revamping an entire systems architecture. It implies going from a monolithic system’s structure to a more agile microservice systems structure. 

Retailers need to invest in these solutions, and they also need to hire skills to implement these kinds of projects. 

On top of this, implementing fulfillment centers can be costly. Whether it’s within physical stores or a central warehouse, a fulfillment center requires Capex. 

Setting up a fulfillment center that can handle an omnichannel strategy can be expensive.

Retailers can be put back when considering the investments they need to make. But the reality is they won’t survive the retail apocalypse if they don’t do them. 

Of course, they need to make sure implementing this strategy doesn’t bankrupt the company. They can create a roadmap of omnichannel features to add in terms of cost/time to implement. 

It is paramount to understand that an omnichannel strategy doesn’t get implemented quickly.

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Omnichannel Fulfillment is How Brands Provide the Ultimate Customer Convenience appeared first on Apocalypse Retail.

An omnichannel retail strategy requires a consistent customer experience across touchpoints. This is easier said than done. 

To consider implementing an omnichannel strategy, a company must address five key pillars. 

The five pillars of omnichannel retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

Once you have built a 360 view of your customers, you can start deploying an Omnichannel customer engagement strategy. 

With this post, you’ll understand what is omnichannel customer engagement, and how it can help your company increase the lifetime value of your customers.

What is Omnichannel Customer Engagement?

Omnichannel customer engagement means a unified and consistent message across touchpoints. It means providing relevant content and experiences at every touchpoint in the customer journey. 

This implies that all touchpoints of the customer journey are interconnected and unified. 

A unified journey requires that all teams are connected. For example, marketing, sales, supply, and IT teams must be connected to provide consistency across touchpoints.

Today, customers have multiple channels to engage with the brand. And they use all channels available at their disposal. 

One could say that today’s customers are omnichannel in their behavior.

Before visiting a store, customers like to do online research before purchasing. Some customers even want to call the brand while they’re doing their research online. 

As a result, it becomes a challenge for companies to have consistent content and information across channels. 

That’s where the omnichannel customer engagement concept comes into play. Omnichannel engagement means providing relevant content and experiences at every touchpoint in the customer journey.

In other words, it is engaging with the right message, to the right customer, at the right time. 

Omnichannel Customer Engagement requires a Customer Data Platform

To provide omnichannel customer engagement, you need to build an interconnected path to purchase. It means connecting all systems, channels, and technologies to gather data in a central location. 

This is the basis of a Customer Data Platform or CDP. 

In layman’s terms, a CDP is a data repository centralizing all sources of customer data. A CDP allows connecting data gathered in stores, websites, or digital channels to build a complete customer profile. 

An omnichannel strategy allows customers to interact with a brand regardless of what channel they prefer.

It doesn’t matter if the customer visits the physical store, the website, or the Instagram profile. However, they should be able to perform, get the same experience and have a continuous path to purchase. 

An omnichannel engagement allows customers to pick up where they left off regardless of the platform. This is impossible to do if a company cannot identify the customer across different channels. That is where a CDP brings value. 

But a CDP is not a magical tool. 

A CDP is useless if a brand doesn’t provide value in exchange for the customer’s data. 

To provide value, a company needs to have the right content at the right time. This can only be achieved by having a 360º view of the content.

What is a 360º view of the content?

A multichannel content strategy pushes content and information to touchpoints. On the other hand, an omnichannel content strategy provides a unified content experience across all customer interactions. 

Multichannel engagement will generally provide different content for social media or newsletters. For example, a company can have videos and tutorials available on its website. But this content is not used or can’t be used in their stores. 

This disconnect happens for two main reasons: First, because teams involved in different channels don’t communicate properly, and second, because the company doesn’t have the systems to unify its cross-channel content strategy. 

The first reason is hard to solve but is achievable by aligning objectives and implementing the proper organization. 

The second reason is much harder to do without the proper IT solutions.

Omnichannel Customer Engagement requires a Digital Asset Management Solution. 

Unifying cross-channel content can be daunting in the age of digital marketing. Tons and tons of content are produced for different digital channels. 

As online customers have a shorter attention span, companies need to produce a lot of content. They will produce content for search engines, social media, newsletters, blogs, or websites.

But only a few companies connect content between channels. 

This happens because they don’t have a detailed and central view of all the content they produce.

This is where Digital Asset Management (DAM) solutions bring value. Sort of like a digital content library. 

Having a content library allows retailers to adequately and efficiently reuse content. 

In addition, a DAM enables companies to store, classify and segment their content in the same way they segment their customers.

What are the eight layers of segmentation to have a 360º view of the content?

Implementing a DAM is useless without the proper content segmentation. Here are the most important content segmentations you can use: 

1. Product content

One of the most critical pieces of content a retailer needs to work on is the product content. 

Product content can be divided into different categories:

• Semantic content: This is the product-page description and written content to help educate customers about a product.
• Visual and video content: Photos and video content built around a product to provide additional information to customers. 
• Technical content: technical description that can help categorize products by color, size, gender, specs, etc. 

Detailed product content helps build trust with customers and increases conversion. Offline conversion, but especially online conversion. 

For omnichannel retailers, having this content accessible in all channels helps increase revenues. For example, a store associate can get detailed product information to help a store customer.

2. Content Campaign

Content campaign segmentation helps companies track content used by campaigns. This is very helpful to identify which content works best for which campaign and at what stage of the funnel. 

For example, a detailed how-to guide might work well for top-of-the-funnel campaigns. In addition, this content can help raise awareness or interest in your products from customers. 

Understanding which content works best for which campaign will yield higher conversions.

3. Content Semantics

Content semantics includes every written content related to the product, on top of product-page content. So, for example, it includes full-text product how-to guides, blog posts, transcripts, or reviews.

Content semantics is an essential part of Search Engine Optimization (SEO). Using the right keywords can significantly differentiate organic traffic and page views for a website.

4. Content Performance

Content performance is a view of the KPIs used to define whether specific content is working. 

KPIs can be impressions or engagement for social media. But it can also be add-to-cart or conversion for product pages or simply the views for a video. 

Content segmentation by performance allows companies to adapt and improve their content strategy. However, same as with content campaigns, it is essential to identify if the content is working.

5. Content Components

Image Source: Apocalypse Retail 2021. What is Omnichannel customer engagement?

The key for content repurposing at scale is to make it easy to find. Therefore, it is critical to have a clear view of the components of each content to find content quickly.

For visual content, for example, having the components of a picture makes it easy to find and reuse. If the image displays people, having the number of people, their age, gender, or actions makes content easier to find and reuse.

6. Content Emotion

Like content components, you can also segment content by the range of emotions it displays. 

Having a description of the sentiments, tones, or feelings generated is key for content repurposing. 

Imagine you want to set up a campaign displaying kids laughing at a birthday or Christmas party.  You could shoot new pictures or reuse a photo from a previous campaign of kids playing outside. 

Having an organized content view can mean significant savings on content generation.

7. Content Composition

The content composition is used to categorize and segment visual content. Composition aspects include shot type, shutter speed, or filters. 

This information is helpful to use the right content for each type of campaign. This, in turn, will help you address the right audiences for each type of content.

8. Content Technical features

Content technical features are the final, more boring step of generating the content. Still, if not done correctly, it can screw up a campaign. 

Technical features include the file type, resolution, pixel size, weight, or length. Again, having a clear view of content by technical features provides huge boosts in productivity. 

It is easier for marketing or sales teams to find and choose the right content for the right channel. 

Having a 360º view of customers and content allows scalable personalization: the full value of Omnichannel Customer engagement

Scalable personalization allows providing a personalized experience to thousands of customers. Having a clear view of customers and content allows building a personalized journey for each customer.

The idea is to provide a personal experience throughout multiple touchpoints in the customer journey. And to numerous customers at the same time. 

A company will deploy an omnichannel strategy assuming that it adds extra value to the customer than a multichannel approach. 

In other words, the value provided by a unified customer experience across channels is greater than the sum of its parts. 

Omnichannel aims to build a better connection with customers than your competitors. And there is no better connection than a personal connection.

When a company can build a 360º view of their customers and integrate it with the 360º of their content, it is ready for scalable personalization. 

They will achieve a level of personalization that ensures long-lasting connections with customers. The challenge is to make the process scalable to reach thousands or millions of customers with a personalized approach. 

Here is where automation and the right IT solutions are paramount. A Customer Data Platform and a Digital Asset Manager are some of these solutions. 

A company needs both to build a scalable and personalized connection with all customers. These tools must be complemented with the right Customer Relationship Management (CRM) tool. 

A CRM tool will allow you to reach customers and send them all the content you want.

Omnichannel customer engagement: How to set up a scalable personalization strategy?

Here are all the steps to set up a scalable personalization strategy:

1. Define your buyer personas or ideal customer

Identify who your ideal customer is:

• What are their demographics? Age, Gender
• What is their family situation?
• What are their socioeconomic indicators?
• Where do they live?
• What are their interests?
• What are their habits outside of shopping?

2. Identify the customer journey

Identify what channels your customers typically use in their shopping experience:

• How do they discover you?
• How do they search for your products?
• Which touchpoints do they prefer to use?
• How often do they purchase?
• How profitable are they?
• What is the #1 reason they buy from you?
• Would they recommend you to their friends?

3. Segment your audience by levels

Segmentation your audience from simple to more complex and targeted audiences

• Demographic segmentation
• Socioeconomic segmentation
• Interest-based segmentation
• Behavior and Intent segmentation

4. Create and repurpose content

Implement a content strategy to create content and organize it by each level of segmentation seen before. Once content has been created and organized, you can either make more content or repurpose existing content. 

Not all customers are in every channel, which makes it easier to repurpose content without appearing repetitive.

5. Set-up automation workflows to provide personalized messages

Make sure always to identify the target customer for every campaign. 

Once you have a clear view of your audience and an organized view of your content, you can make the most out of automation. 

A great CRM tool will allow you to set up automation workflows with the following objectives:

• Lead generation: welcome process, content downloads, requests for proposals, add-to-cart.
• Lead nurturing: Lead qualification, lead scoring, interest targeting, or behavioral targeting
• Engagement: Onboarding campaigns, newsletters, reminders, birthdays or special events, seasonal offers, rewards, cart abandonment, re-activation messages
• Retention: Order notifications, immediate or delayed cross-selling or upselling, loyalty program and tips, referral program, feedback requests, customer reviews, etc.

What Are The Benefits Of Omnichannel Customer Engagement? 

Companies enjoy a variety of benefits by employing an omnichannel customer engagement strategy. 

Here are some of the main advantages that come with using an omnichannel customer engagement strategy. 

1. Serve Customers when and where they prefer

Image Source: Apocalypse Retail 2021. What is Omnichannel customer engagement?

An omnichannel strategy allows companies to serve customers on their preferred platform. 

The modern consumer craves convenience more than anything so brands have to cater and be present on whatever channel their consumers prefer. 

The thing is that today’s customers use multiple channels at the same time. So serving customers when and where they prefer is the way to provide them with a great shopping experience. 

An omnichannel experience will improve conversion rates and customer loyalty.

2. Gather better data and get the most out of it

Data is a precious resource and can help improve decision-making significantly.  That’s where implementing an omnichannel retail strategy excels.

All channels give access to different layers of customer data. But using an omnichannel customer engagement strategy allows connecting the data from all channels. 

It becomes easier to access all data because it’s unified in a customer data platform. 

From there, brands can analyze the data and assess which channels provide them with the most revenue. As a result, they can gain critical customer insights even when there isn’t any actual purchase. 

Using the data, brands can optimize their conversion rates.

3. Provide A Better Shopping Experience 

Customers will gravitate towards brands that provide them with the best shopping experience. 

An omnichannel engagement strategy provides customers with the best experience possible. This is a personalized shopping experience. 

Having a personalized approach and interacting seamlessly across are unique benefits. These benefits go a long way with customers. 

A better shopping experience, of course, helps improve customer retention and revenues.

4. Improve Customer Service 

Providing great customer service is a challenge in itself, even if you have a single channel. Now doing it at scale and in every single channel seems like a daunting challenge.

The truth is that very few companies can provide excellent customer service in every channel. 

An omnichannel engagement strategy helps provide better customer service. 

It provides multiple channels for customers and makes it easier to engage with a company. And it ensures the experience is consistent, no matter the channel chosen by the customer. 

On top of this, customer service employees will have all the data they need to provide a great experience. 

A customer service rep would know if/what/when/where a customer bought from the company. And also if the customer had previous interactions in other channels. 

All this data will allow the customer service rep to improve their answer time.

Great customer service will always yield positive returns for the company. According to Hubspot, 73% of customers stay loyal to brands because of friendly customer service reps.

And, according to the same study, 50% of customers increase their purchasing after a positive customer service experience.

What are the challenges when deploying an omnichannel customer engagement strategy?

Employing an omnichannel customer engagement strategy will provide a lot of benefits. 

However, the road to omnichannel engagement is not an easy one to take. It is long, hard, and costly if the company is not prepared correctly.

Below are the two most important challenges a company will face:

1. Unstructured data and metrics are a challenge for Omnichannel Customer Engagement

Omnichannel customer engagement at scale depends on massive volumes of data. Data is what allows the organization to provide customers with a personalized experience. 

Companies must ensure they’re gathering and structuring data in a place accessible to any team that needs the data. This place is generally a Customer Data Platform or CDP. 

But implementing a CDP is a challenge as each touchpoint has different systems and ways to gather data. 

And, very often, different channels mean different teams in charge of operations. Which in turn means different metrics and unstructured data. 

In an omnichannel approach, all teams need access to the correct data to gain insights, even if it isn’t native to their channel. 

This requires the right systems, data visualization tools, and training.

2. Lack Of Technical Skills And Resources are a challenge for Omnichannel Customer Engagement

Even if a company’s leadership understands the importance of data, they don’t always have the right skills or resources to use it. 

Omnichannel customer engagement requires specific technical skills and resources. 

Not all companies have these skills in-house, nor have the time or money to pay for them. As a result, companies have to hire specialists or train existing employees to learn new technologies. 

If they hire specialists, they need to ensure they are correctly integrated and have the right tools to work with. And training existing employees has its limits, especially with non-digitally native employees. 

These are some of the challenges that come with omnichannel customer engagement. However, the benefits definitely outweigh the challenges. 

Conclusion 

An omnichannel customer engagement strategy is essential for any modern retailer as customers are now more demanding than ever before. They expect brands to offer a seamless experience across multiple channels.

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post A Guide to Omnichannel Customer Engagement: What is it and How to Implement it? appeared first on Apocalypse Retail.

An improved purchasing experience resets the expectation level on all purchasing experiences. This is the hard truth of 21st century retail, and especially after the impact of the Covid19 pandemic on retail.

It is true whether you buy from an e-commerce pure-player, from your local store, or a big Retailer. So whether you are a small retail store or a growing e-commerce player, all companies are playing by the same rules.

But not all companies have the same budgets, so it can appear daunting to enter the Retail market when there are many established players.

Traditional retailers only provide an average or good customer experience.

The reality is that today, most Retail customer experiences are only rated “OK.” Only a few are rated as “Good,” and none are “Excellent.” 

This is one of the reasons to explain the Retail Apocalypse with traditional brick-and-mortar retailers closing stores and filing for bankruptcy.

When you, as a customer, experience something new and refreshing, what do you do? You will automatically compare all your following experiences to that particular refreshing experience.

This customer behavior is nothing new in retail. Customers have always been attracted to over-the-top experiences. This is what made brands like Disney or Starbucks so famous during the 80s and 90s.

Still, for digital customers, expectations are higher and higher every day. And these expectations are higher on every single channel that customers use. 

This is where many Retailers struggle to provide great experiences for their customers. 

We’re not saying good or OK experiences in every channel. We are referring to GREAT experiences in every channel. 

You know which experiences we are talking about, no? 

We are talking about those experiences that generate a “wow-effect” on customers, and they want to share with their friends.

How to compete with a big retailer: Anyone can enter the Retail Market, but not everyone can provide a great experience.

In today’s Retail, almost anyone can launch an online Retail (e-commerce) business. There are no coding skills required anymore. 

You don’t even really need loads of cash to start. You just need to have time and curiosity.

But it might seem daunting to enter a market to compete with huge companies with big budgets. So how to compete with a big Retailer, whether online or offline? 

The answer is simple: provide a better experience than them.

This is something that students and startup founders often think it’s very difficult. They get understandably worried by the cash aspect of competition.

The reality is the bigger the company, the slower they are. This lack of speed comes from inefficient structures and organizations. These inefficiencies make it incredibly difficult for a big company to provide great experiences. 

Or at least not on a consistent level across all their channels.

For big retailers with stores, most of the great experiences for customers come from the physical touch-point.  In particular, from that store employee who went the extra mile. 

This is often the result of a specific human interaction rather than a consistent process across a store network.

Retailers invest massively in training their store employees to provide outstanding customer experiences. This investment can provide excellent results if done correctly. Still, it’s costly to do at scale, and it is a long-term game. 

This is the reason that makes “wow experiences” scarce among big Retailers. The capacity to provide extraordinary experiences is where a smaller player has an edge. 

Digital native companies are often born with an exceptionally accurate view of their customers. From the start, these companies implement tools to track and analyze customer behavior. 

With these tools, small companies create more meaningful connections with customers. 

Which leads to a higher rate of “wow experiences.”

Providing great experiences implies a deep understanding of your customer base.

We’ve seen success stories of companies that go from zero to millions in a few years. Companies that start from scratch and have hyper-growth through different growth hacking techniques. 

Growth hacking became a buzzword for entrepreneurs looking to grow quickly. But at the heart of growth hacking, there is an unavoidable step if you want to succeed. 

You need to have a deep understanding of your customer or a 360 view of the customer. 

It’s not just their demographics like age and location. You have to understand their journey, interests, pain points, intentions, context, etc. 

Small, focused companies tend to provide consistent customer engagement across channels. They actively aim to provide that “wow effect” during different journey steps. 

DNVBs don’t focus on having customers; they focus on having fans. So they make an effort to provide a great experience.

This effort implies a deep understanding of their customer base across all channels. This is where most big companies fail to bridge the gap across channels.

Most of the time, retail managers want to provide consistent engagement. Still, they rarely do it because of outdated systems or complicated internal processes. 

This is why big companies offer a better experience in a single channel. In their organizations, big retailers often separate the online from the offline revenue. 

This leads to a different experience by channel, almost always benefiting the offline experience. This happens because resources are allocated to the channel that brings the most revenue.

By doing this, Retailers focus on having generous loyalty programs or training store employees, often forgetting to make all these investments in every channel. The problem is that today the lines get blurred between online and offline Retail. 

The customer behavior today is omnichannel. The customer jumps seamlessly from one channel to the other depending on their context and needs.

And the purchasing experience is constantly improved by smaller, more agile companies.

This means big retailers have to do much more work than they used to provide a great experience. But big retailers are not used to this much effort to make a sale.

For almost three decades, asymmetric information benefited Retailers against customers. But today, customers have a smartphone in their pocket. So they turned the tables on who controls the information.

This means that today, customers have complete control of when, where, how, and whom they want to buy from. 

So whether you are a small or big player in Retail, you have to put in the work to offer a great experience. This is the real answer on how to compete with a big retailer.

This means generating long-standing impressions on your customers and providing a consistent experience across channels.

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post How to compete with a big Retailer? Short answer: provide a better experience! appeared first on Apocalypse Retail.