Implementation of Omnichannel Strategy
In this post, implementation of an omnichannel strategy by the retailer is discussed in terms of changing channel strategy, advanced information technologies (IT), and the integration of data and business processes. In addition, the customer perspective of an omnichannel strategy is introduced. The surveyed retailer has implemented a formal omnichannel strategy, leads and organizes a number of activities to access consumers, and provides tailored solutions across all channels.
This retailer already operates an omnichannel strategy, by providing a range of services: Click and Collect, same day delivery, buy online, return offline, pay at door/pay with credit card; buy online, collect from the nearest petrol station; buy online, collect from a locker; and buy online, we bring to your office (a collaboration with some business centres in Istanbul). Moreover, the consumer can return products to a physical store or to online market personnel, as well as use the call centre for any complaints.
From Multichannel Strategy to Omnichannel Strategy Before introducing a formal omnichannel strategy, this retailer had a long experience of multichannel management. Therefore, the participants believed that it was impossible to implement an omnichannel strategy without previous multichannel management experience. The drivers for omnichannel strategy originate from the intense competition in the industry. The strategy is based on accessing consumers through various touchpoints along multiple integrated channels. The participants stated that the customers’ research to purchase journey could start in any channel(s), and end in any channel. Another aspect is that push notifications are used by marketing planners through touchpoints to encourage purchases.
An omnichannel approach enables consumers to find the desired products, check the availability of the product before purchase, and provides alternatives to the physical store for collection. In retailing, competition is not just among retailers, as manufacturers that supply retailers can also become competitors to retail channels. Recently, manufacturers have begun intensive TV campaigns to access consumers directly, operating an online store, and promising timely delivery. This also reaches those who are unable to access the manufacturers’ products in store. An omnichannel strategy has become crucial for the retailers’ survival in a changing market. The participants stated that when applying this innovative strategy, they are careful to standardize assortment and variety, prices, and promotional campaigns across channels. One participant stated that:
In online, whether the consumer visits the online store or mobile app, he/she wants to spend the minimum time with the minimum number of clicks. In Turkey, especially online, consumers don’t want to see any products that they don’t need. Online consumers are goal-oriented, and the goal is clear; using the internet to do grocery shopping as fast as possible. However, offline consumers often like to spend time in the stores and want to enjoy the physical contact with products as much as possible (E-commerce manager).
Such observations are based on regular analysis of their customer database, by tracking and tracing every individual transaction; however, this requires advanced IT and the integration of data.
Advanced IT Solutions and Data Integration Advanced IT and the integration of data are amongst the main enablers of implementation, because without this it is not possible to make decisions on channel strategies and channel alignment. With a large numbers of customers using a loyalty card, the retailer can obtain data that can be filtered and analysed for different purposes. The participants emphasized that their job is to analyse big data in retailing to reveal the channel preferences of the consumers, and offer promotions according to purchase history. The retailer can use a variety of communication channels, such as SMS (text messages), e-mail, MMS (multimedia messages), sales receipts, kiosks, social media, the mobile app, website, and direct mail. Participants stated, that based on the market basket analysis (i.e., data retrieved from loyalty cards), customized promotions are communicated to the consumer via their most frequently used channel, providing individualized offers based on preferences, favourites, most frequently purchased, and discounted products. The appropriate touchpoints to access each consumer is determined in line with the favoured response channel. For instance, the retailer sends discount/campaign notifications from various touchpoints and follows the response by tracing each transaction, in order to understand which channel(s) are used by the consumer.
During the discussion, it emerged that the performance of each marketing campaign was followed by social media experts within the marketing department. Campaigns for special days (e.g. Women’s day), were followed by the social media team using statistics from the talks, hashtags, and the number of mentions. The participants agreed that social media has an important role within an omnichannel strategy, and acts as a powerful touchpoint. When there are a large number of users, loyalty cards provide big data, including consumer demographics and shopping habits, which can be mined to reveal individual shopping habits and brand/product preferences.
With the mobile application, the consumer can find the nearest store, learn about the campaigns and savings, receive a personalised offering—“absolutely for me campaigns”—and purchase via a QR code scan of the product. The participants did not consider that these features cannibalized sales channels; rather, that they enable access to different customer segments. One participant, a customer relationship manager, emphasized the role of mobile apps in the physical stores. With the mobile applications, and IBeacon technology used between shelves, instant notifications are sent during store visits, based on past shopping history and the location of the customer in the store. With WhatsApp Corporate, it will be possible to order products through online chats, impacting existing touchpoints, and allowing more varied omnichannel management practices.
Integration of Business Processes Effectively designed and managed business processes are needed to enable the uninterrupted flow of goods, services, and information across the various retail channels. Therefore, certain business processes are by nature crucial for the implementation of an omnichannel strategy. In this regard the participants highlighted the role of procurement and delivery in grocery retailing. They agreed that there was no difference in the procurement models for physical and online store. Delivery options, on the other hand, are determined differently for the physical store, the online store, and omnichannel preferences. The retailer uses the same warehouses for all channels. The orders of online consumers are prepared in specific physical stores according to geographical segmentation. The physical stores receive orders from the retailer warehouses, and therefore support the operations and business processes of both online and offline consumers. The participants considered that pursuing an omnichannel strategy is especially suitable for grocery retailers, selling fast moving consumer goods. In grocery retailing, the profit margins are lower compared to other retail formats (e.g. fashion retailers); therefore, it is crucial to optimize logistics activities and supply chain processes. The participants expressed the views that their organization had advantages due to its in-house provision of IT solutions, with its own team to develop, for example, mobile applications and algorithms for the “absolutely for me campaigns”. The IT insourcing is considered to be one of the main enablers for effective omnichannel management and efficient logistics management.
Posted by digital media strategy blog
