Thanks to the digital age, the number of ways that brands can connect with customers has vastly expanded, and now includes social media, apps, and more. In fact, a study from Harvard Business Review reveals that 73 percent of shoppers now interact brands through multiple channels.

What does that mean for you? As a retailer, shoppers expect you to deliver an outstanding experience in every single one of these channels, and to optimize your performance across each to create long-term value.

 
Brands are rapidly evolving to embrace this new way of doing business, introducing both omni-channel and unified commerce to their retailing approach. But before omni-channel retailing and unified commerce can come into play, you must at least master the concept of multichannel retailing.

While multichannel and omni-channel do share one fundamental similarity — selling products via more than one channel — there are important differences that make them two distinct strategies.

The simplest way to describe these differences is this: multichannel retailing is selling products through numerous channels, each operating under its own infrastructure and often with a distinct customer experience. Omni-channel retailing also leverages numerous channels to sell products, but the user experience is the same across all of them, making it seamless to the shopper.

So what is unified commerce, and how is it different from either multichannel and omni-channel? As the final step in a brand’s evolution, unified commerce builds upon the omni-channel approach — a single customer experience — by essentially combining all channels into one. It lets the customer’s chosen channel act as the single conduit for their needs. “Rather than allowing your customers to move seamlessly across multiple channels, you give them the opportunity to stay within a single channel — one that incorporates all other channels and data.”

As the first step towards unified commerce, most businesses can successfully implement a multichannel strategy if they haven’t already. Multichannel retailers will generally have separate units and processes dedicated to each of their available channels. For instance, if you order from a big retailer’s website, your product will be part of a separate inventory than if you visited a brick-and-mortar location. You would also deal with a different customer service unit depending on the channel you patronize. For omni-channel and unified retailers, all of these functions are, as the term suggests, unified. Your customer just chooses how to purchase the product.

 

One of the earliest multichannel retailing examples comes from one of the most famous brands in the world. Starting in the late 19th century, Sears, Roebuck and Co. operated a powerhouse mail-order catalog business. It first offered watches and jewelry, and eventually expanded to a wide variety of general household goods. This catalog allowed Sears to gain a strong foothold in rural America, especially with citizens who had no ability to travel far from their homes to shop at a large general store that would stock those kinds of goods.

However, in the early- to mid-20th century, the American population started to trend in a more urban and suburban direction. Sears realized it had to find a way to reach these very different consumers, and launched several physical retail stores as a companion experience to the mail-order catalog. The company opened stores in suburban and urban locations, and by the 1950s had modified its strategy to focus heavily on new stores in suburban cities to take advantage of demographic shifts.

Contemporary retailers have a variety of both offline and digital outlets to take advantage of, each offering its own unique attributes and specific audience demographics.

In addition to selling directly through a company-owned website, retailers can list their products on third-party shopping platforms and social media outlets, which is one of the newest multichannel retail trends. These are often added to the mix alongside two of the oldest channels: a brick-and-mortar experience and a printed catalog.

When you engage in multichannel retailing and its successors, you uncover additional ways to sell your products. More importantly, you are adding value to the customer journey, and gifting your shoppers with the benefits and opportunities specific to these additional touchpoints.

For example, convenience is the single most important factor driving the ecommerce boom, and it should be a crucial concern when extending your reach into additional retail channels. One such channel is Instagram. With millions of potential and current customers on this site, retailers can tap into the platform’s built-in features — such as product stickers in their Stories — to reach shoppers right from the app.

You can also add value by customizing your pricing strategy to suit each individual channel, such as offering discounts through outlets where you may have lower overhead costs.

We also recommend considering the social part of the equation — when you connect with a buyer through social media, you can take advantage of a number of inherent opportunities to strengthen the relationship. A customer may prefer to buy directly on their preferred social media platform because they don’t have to enter their payment data into another, separate database, and they already have an established level of trust with the social media site. Additionally, you provide them with an easy way to leave customer reviews, thereby enhancing the experience for future buyers.

 

Multichannel retailing also gives you an opportunity to broaden the influence of your business and strengthen your brand perception among customers.

Retail companies that focus on a single channel limit the diversity of their audience to just the locations where they are present, putting demographic and socioeconomic factors at the focus. Meanwhile, practitioners of multichannel strategies gain access to a wide breadth of customers who may never have been in a position to know about their brand otherwise. Then, as they transition to omni-channel retailing, then unified commerce, these companies enjoy greater brand recognition as well as a reputation for increased customer satisfaction.

One of the most attractive benefits of these advanced retailing strategies is opening a new frontier for customer data collection and analysis. You can think about the data availability process in terms of layers. For example, the average in-store buying experience is the outermost layer. A customer walks in and buys a product with cash. You know very little about them, and unless they have a company account or credit card, you have few options for benefitting from any data associated with the transaction.

The next layer is a mail-order catalog, where you have the customer’s name, address, and possibly their phone number and email address. You can track which products they buy and use this information to tailor your marketing strategy.

This is followed by your company website, where you have the ability to collect massive amounts of detail about their browsing experience and purchasing journey. Even deeper than this is social media, which gives you access to their family and friend groups, their hobbies and entertainment preferences, and more data.

When you harness and analyze all these data streams, you can build better buyer persona profiles, anticipate your customers’ needs more effectively, and optimize your own processes across each channel.

Multichannel retailing strategies are teeming with opportunities for added value for brands and buyers alike, but they aren’t free from challenges and complications. One of the most prominent challenges facing multichannel retailers is inventory management. Since most multichannel retailers operate separate inventories for each, or at least for some of their outlets, the main issue many of these companies face is a lack of manpower and resources.

Effectively utilizing each of your inventory units requires you to scale your multichannel strategy with precision. You must be able to adapt your existing workflows and technological solutions to fit the needs and realities of each channel.

 

Research shows that while price is an important consideration that multichannel retail consumers use to determine the value of a brand, it’s only one of many factors. Retailers can take advantage of this by positioning certain products as value items while keeping other options at a higher price point. This should help drive ROI through that particular channel while still reinforcing the value proposition of the brand.

The more you expand your multichannel experience, the greater the risk of your costs spinning out of control. You have to vigilantly track your margins in each of your channels to ensure your resources are spent wisely.

Ultimately, the biggest challenge for multichannel retailers is to deliver a consistently excellent customer experience across all channels. With the multichannel approach, variables differ significantly from one platform to the next, and companies must be hyper-vigilant about tracking customer service data and quickly responding to lapses. A multichannel strategy may add complications to your operations, but when you do it successfully, your company benefits in three key ways. First, you will drive value for your buyers across many different touchpoints. Second, done right, you can provide sustainable new revenue streams that will deliver consistently high ROI. Finally, you set the foundation for graduating to omni-channel retailing and unified commerce.

Through multichannel retail, businesses capitalize on new ways to create amazing experiences for all sorts of customers to drive brand awareness, engagement, and loyalty. Increasingly, and more vehemently, customers are demanding better products and service. Fortunately, your business can leverage multichannel retailing to provide more personalized touchpoints wherever customers find your brand.

Learn more about how Commerce Cloud can help you embrace multichannel retail, omni-channel retail, and unified commerce.

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