September 28, 2020

What is omnichannel?

The last couple of years, it has almost been impossible to avoid the term “omnichannel”. Implementing an omnichannel way of thinking is an emerging tendency within retail but what does it exactly entail? It is challenging to seek a clear definition of the term “omnichannel” because it is still relatively new.

Written by Peter Møller
Retail e-Commerce
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With this blog post, however, we will try to come up with in-depth answers to questions like: What is omnichannel? And how to create a successful omnichannel strategy?


Much more than a buzzword 

The concept of omnichannel is not just a modern buzzword - it marks a significant shift within sales and marketing. Today, customers can interact with businesses through different channels - in physical stores, on webshops, through mobile apps, catalogs, or on social media. They can also access these channels from different devices, such as via a computer or a mobile phone. With a presence on various channels and devices, it is possible to improve the customer experience and reach a broader range of potential customers.


The focal point is to coordinate processes and technologies across channels to provide the customer with a consistent, seamless, and relatable customer experience.


Your different channels must cooperate; otherwise, it can create problems with supply chains, and it can be challenging to develop a consistent and relatable customer experience. An omnichannel mindset sheds light on this issue. The focal point is to coordinate processes and technologies across channels to provide the customer with a consistent, seamless, and relatable customer experience.



From single channel to omnichannel

Hopefully, you have now gained an understanding of what the focal point in an omnichannel mindset is and why it can be valuable to implement as a business model. To obtain a deeper understanding of omnichannel, however, it may be relevant to turn back time a bit and look at the journey from single channel to multi channel, from multi channel to cross channel and from cross channel to omnichannel.


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Single channel

Before the Internet was a fundamental part of every customer's daily life, most retailers only sold their goods through a single channel - the physical store. With the advent of the Internet, many have expanded their presence, but the single channel business model still exists. Single channel means that you only sell your products through one channel. It can be either a physical store, a webshop, or something completely different.


Multi channel 

Briefly explained multi channel means that you sell your goods on more than one channel (e.g., in a physical store and on a webshop), but your channels do not work together. Instead, they are divided into silos and handled as two or more different businesses. For example, if you have a physical store and a webshop, these will each have their inventory, management, business idea, marketing strategy, etc. It will not be possible for your customers to use a gift card across your channels or return a product purchased at your webshop in your physical store.


Cross channel

Just like with a multi channel business model, you are present on several channels with a cross channel business model - the difference is that your channels are connected and not divided into silos. Cross channel can be seen as a nuanced version of multi channel, which is more centered around the customer. Your various channels are coordinated so that they complement each other, and you can offer your customers a more consistent experience when they shop with you. A product purchased at your webshop can be returned in your physical store, and a gift card can be used across your channels. You can also send your customers coupons via email that they can redeem in your physical store. 



Omnichannel is perceived as a further development of the cross channel. The aim is that your customer's shopping journey, across your channels, work even more smoothly. They must be offered an even more seamless and relatable shopping experience - no matter which channel they choose to shop on. With a cross channel business model, your channels are connected. With an omnichannel business model, they are integrated. This is reflected in the fact that information your customers have entered on one channel can be transferred to other channels - both physical and digital. For example, your customer can create a profile on your webshop that will also be available on a mobile device application, and which they may also be able to access from a screen in your physical store.


When you integrate your various channels, you only need to maintain data in one place, and that is, in addition to streamlining your time, associated with several benefits. You get more valid data, and you ensure that your customers experience consistency in prices and stock across your channels. That way, your business becomes more reliable, and your customers more loyal.


With an omnichannel business model, you can also offer your customers Click & Collect. With Click & Collect, your customers can order items on your website and get it delivered to your physical store. This does not only mean that you meet your customers' wishes and needs - but you also ensure an opportunity to achieve additional sales. A survey conducted by the e-Commerce portal InternetRetailing shows that around 60-75% of all Click & Collect customers end up putting extra items in the basket when they visit your physical store to pick up a preordered product.


Many retailers have caught sight of the concept of loyalty clubs' where their customers can get discounts, special offers, exclusive content, event invitations, etc. The idea of ​​tying your customers closer to your business is undoubtedly useful, but it requires an integration of your channels and thus presupposes that you implement an omnichannel business model.



Where are we going? Unified commerce


Unified commerce is a further development of omnichannel, which briefly explained is a total solution that allows you to execute on your omnichannel business model.


Although your sales channels with an omnichannel business model are integrated, your knowledge of your customer's current situation may be limited due to a lack of homogeneous and updated data. Therefore, you may end up sending your customers offers that are not relevant to them at that time, which may give them an impersonal experience.


To create the coherence required by an omnichannel business model, things must be seen in a bigger perspective, and the idea of ​​channels must be ditched. Instead, the focus should be on your customer's experience with your overall business. However, it is easier said than done. You may be forced to work in channels if you lack the necessary solutions and integrations to create coherence between your systems, data, etc.


Unified commerce is a further development of omnichannel, which briefly explained is a total solution that allows you to execute on your omnichannel business model. Your database is integrated and exchanged directly between your channels. Thus, you achieve an overall picture of your customer that gives you insight into your customer's needs and desires here-and-now. With this knowledge, you can tailor personalized offers to your customers, and give them a personalized service when shopping in your physical store. That way, you can increase your chances of both upselling and additional sales


An example of a Danish retail company that has had great success in implementing an omnichannel business model and using unified commerce to execute this is Matas. In a presentation for FDIH, Customer, Insights and Omnichannel Manager, Stefan Kirkedal, says that Matas has access to data from 1.5 million people through their members club Club Matas. With access to this data, they can create a unique experience for their customers no matter what channel they are shopping on. According to Stefan Kirkedal, the number of omnichannel customers has grown, and they also shop more. Today, omnichannel customers are an increasing share of Matas' revenue.


In addition to Matas, Bog & Idé has been successful in implementing an omnichannel business model. For Bog & Idé, Click and Collect has proved to be valuable. According to Impact, 65% of Bog & Idé's online orders are picked up in their physical stores. Even though their industry, in general, is having a hard time, they have experienced growth in 2018 - two years after they implemented their omnichannel strategy. Like Matas, Bog & Idé also uses data to get the most value out of their omnichannel business model. Impact writes that Bog & Idé's physical stores with the tool Raptor  use real-time data from their webshop to gain insight into which books their customers buy. With that knowledge, they can strategically place popular books visibly in their stores.


Earlier this year, føtex launched their loyalty application føtex Plus, where they provide personalized offers and discounts to users of the app. This is another example of a retail company that has created a successful omnichannel business by focusing on the value of the data they receive from their customers.


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Do you consider implementing an omnichannel mindset in your business, but are unsure whether it is a valuable investment? Read our blog post, where we list some competitive advantages that omnichannel in retail has.

Have you decided to implement an omnichannel mindset in your business, but are unsure how to get started? It may be a good idea to begin by formulating a clear and distinct strategy for your omnichannel business model. Read our blog post, where we review some concrete suggestions on how you can create a successful omnichannel strategy for your business.


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Author Peter Møller

Peter Møller has + 30 years of experience with IT solutions, and he is a specialist within retail and e-Commerce. He helps some of Denmark's and the Nordic region's largest retail chains to run an optimal business. Reach out to Peter | Peter Møller, Director, Sales & Marketing | +45 25 50 56 31 |

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