Omnichannel Retailing: Sell more, spend less
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1 Omnichannel Retailing: Sell more, spend less
2 Contents Multichannel vs omnichannel Are you keeping up with customer expectations? 3 reasons to invest in your omnichannel experience a. Insightful marketing and sales b. Seamless customer experiences c. Unified store operations Conclusion
3 The omnichannel buyer s lifecycle: Shop About Press TOTAL $100 added added $50 PAY EMMA BU Y BU Y Shop 1 For her birthday, Emma gets a $100 gift card for her favorite local clothing retailer. 2 She visits the store s website and spends half the gift card on two shirts. 4 5 She walks to the store, makes the return and spends the rest of her gift card on accessories. A week later, Emma receives a personalised coupon on her mobile phone for a matching. What makes Emma s experience stand out? Did anyone tell her she could only use her gift card on the website, or refuse the return because it was bought online? Did the store forget all about her immediately after her purchase, or consider her an in-store customer exclusively? No! Everything was wonderfully seamless at all touch points, attentive and geared specifically to her needs and preferences. Emma s experience is what we call omnichannel. 3 After they re delivered, she decides to keep the green one but return the orange one.
4 Are you keeping up with customer expectations? You ve probably heard: it s the age of the customer. Empowered, data-driven customers are forcing companies to become customer-obsessed to succeed. Analysts are telling us that traditional competitive strengths things like product quality and distribution systems are taking a back seat to a company s ability to engage with and serve customers. Retailers like Amazon that were born online have set the bar high. As a result, consumers have become accustomed to seamless transactions that answer all of their needs and customise their experience. And when they don t get what they want, they vote with their feet. The new omnichannel customer Multichannel versus omnichannel Omnichannel retailing goes far beyond multichannel. Multichannel simply means you sell to and communicate with customers through multiple channels, but with little integration among online, mobile and in-store experiences, devices and systems. For the first time in retail history, customers are asking to do things that many merchants cannot support. Modern consumers want to buy online but pick up (or return) at the store. They want to browse product information on their laptop or smartphone, get coupons or discount codes, even make a purchase on their mobile phone while in a store. New consumers are naturally combining channels as they browse, research and buy. And believe it or not, early omnichannel adopters are supporting all of these desires and reaping the benefits. Many say that omnichannel is multichannel done right. Omnichannel means providing a seamless experience as you sell to, communicate and interact with customers through integrated online, mobile and in-store experiences, devices and systems. Omnichannel relies on a true integration of all channels, not just an ad hoc cobbling together of different systems. But once channels are truly integrated, the potential for retail success is much greater than the sum of all channels. 1 Richard Garneau. The Age of the Customer. Forrester Research, September 2014.
5 The mobile moment The omnichannel opportunity Mobile is the biggest disruptive technology in commerce right now. Smartphone owners are active consumers, with mobile s share of global online purchases growing to 40% by % of smartphone users make a mobile purchase every month 3 82% consult their phones on purchases they re about to make in a store 4 33% have switched intended brands due to information received during a purchase decision 25% showroom, or shop in-store for an item they later buy online 73% of mobile searchers later make the purchase in a physical store; 16% on the phone 5 There are as many strategies as customer types, from traditionalists to exploiters to those who seek great buying experiences or lowest prices 6. As the customer journey is no longer direct, retailers must be ready for this new world. Omnichannel strategies prepare retailers to engage with and benefit from these many new types of consumer. Why are so many retailers behind? Some are limited by technology. Others, mindset. Either way, restrictions on buying behaviour can seriously discourage purchasing. The real winners are the retailers that are actively lowering or removing barriers to purchase by understanding and delivering an omnichannel experience. By combining bricks and clicks, many stores are seeing their customer value and total sales rise: Macy s moved quickly to unite organisational silos when it discovered its omni-channel customers are eight times more valuable than customers who shop through one channel alone. 8 By integrating online and in-store channels, millennial fashion retailer Rebecca Minkoff saw a six to seven times increase in its ready-to-wear sales in less than six months. 9 Retail giant Target discovered that 98% of its customers shop digitally, 75% starting their experience on a mobile device. Target has declared mobile its new front door. 7 By combining bricks and clicks, many stores are seeing their customer value and total sales rise. 2 Criteo. State of Mobile Commerce: Growing like a weed. Q Omni-channel retail: A Deloitte Point of View. 4 Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct Aimia. Showrooming and the rise of the mobile-assisted shopper. Sept Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct Think with Google. Macy s reorganizes for omni-channel success. Aug Think with Google. Rebecca Minkoff empowers millennial shoppers. Aug 2015.
6 3 reasons to invest in your omnichannel experience It s coming: the omnichannel revolution. As an independent small or medium-sized retailer, what can you do now to prepare? The way we see it, there are three big opportunities: 1. Insightful marketing and sales 2. Seamless customer experiences 3. Unified store operations 1. Insightful marketing and sales Modern retailers have many ways of engaging with customers to market and sell: your physical store, your branded website, phone, mobile apps, social media, printed mail-outs, catalogues, and more. So many, in fact, that it can get confusing. In an omnichannel world, retailers can unite data from every transaction and interaction on any channel into a unique individual file for each customer. Customer records can include previous in-store and online purchases, deliveries made, coupons used, gift cards purchased, comments on social media, phone interactions anything and everything that can be used for a better understanding of the customer. The more data points you have on each customer, the more complete your view, letting you: Recognise customers through a unique identifier, whether you are engaging with them in your store, through a mobile device or online. Personalise outreach to customers through more informed engagement on all marketing and sales channels. Knowing your customers end-to-end behaviour helps you focus your web presence and SEO to ensure specific products appear online when customers are looking for them. Personalised outreach also helps you retain customers for life. Increase transaction sizes through personalised offers and up-sell / cross-sell opportunities in your store, on your website and via mobile, using the online sales technique of If you liked that, you re going to love this. Measure the effectiveness and ROI of marketing efforts across channels, fine-tuning your strategy and focusing energy on the activities and channels with the best results.
7 2. Seamless customer experiences Today s customers are demanding both relevance and immediacy. According to marketlive, 50% of shoppers expect promotions based on past purchases, browsing behaviour and preferences, and 55% expect consistency across screens and in-store. 10 An omnichannel experience gives customers stronger brand recognition across all marketing channels and a consistent and complementary experience through every touchpoint. In-store According to a Google study: 87% of shoppers webroom, or browse online before a store visit 79% browse during a visit 35% browse after a visit. 11 Switching between online and store is now a natural part of the shopping experience. When customers can move seamlessly from online to store to mobile and back, the buying continuum is unbroken. If you re a small shop just starting to think about creating a website with ecommerce capabilities, it s the perfect time to think about an omnichannel experience for your customers. Online experience Your online experience should be easy and intuitive from the start. Through your ecommerce site customised to your brand, customers should be able to easily search products, view photos, enter coupon codes, read related reviews and blogs, and purchase with minimal clicks. And because ecommerce lets you offer 24-7 commerce globally, your system should help you take advantage of that international market by supporting the multiple languages, currencies and ecommerce requirements of your target countries. Cross channel opportunities A recent poll found that one in eight U.S. internet user finds the option to shop online for in-store pickup appealing, and more than half had done click & collect in the past year. 12 Many people find this a compelling option that: Lets them make purchases at a convenient time Saves shipping costs and inconvenient delivery times Lets customers handle the product before taking it home. Another big demand today is the ability to return to the store what was bought online. This is handy for customers who want to create an in-store experience at home by buying multiple options online, trying them at home and returning those not wanted. Finally, ensuring gift cards can be used in whole or in part across all purchasing platforms keeps customer satisfaction (and sales!) high. 10 marketlive ebook: One-to-one holiday selling. 11 Google/Ipsos/Sterling Brand. Digital Impact on In-Store Shopping: Research Debunks Common Myths. October emarketer. Why Retailers Should Offer Buy Online, Pick Up In-Store. June 8, 2015.
8 3. Unified store operations An omnichannel approach requires breaking down any existing silos in an organisation, whether between online and physical stores, among locations, or among functions like inventory and marketing. Doing this has both benefits and challenges. Integrating inventory As ecommerce has evolved, many established retailers have been saddled with separate online and in-store inventories. But unified inventory is probably the single most important aspect of the omnichannel experience where the rubber hits the road between customers and their purchases. With omnichannel, every store can be considered a warehouse: ample stock that is close to customers. By integrating your inventory systems, you can: Help customers buy what they want, when they want it Easily transfer products across locations and ship to customers Allow click and collect; or buy in-store, send to home Reduce out-of-stock notices, satisfy demand and increase sales Make work faster, easier and more satisfying for staff Access a single view of critical inventory data like stock turn, sell-through and weeks of supply. When all inventory is available and visible to customers and staff through any purchase channel, purchase barriers fall. To embrace omnichannel selling, new and established stores alike are benefiting from technology that treats inventory as one, regardless of location. Getting there might be challenging, but you will reap the rewards for years to come. How easy are returns for customers and sales associates? For successful omnichannel, your POS system and store mindset must make returning goods second nature. For best practices on managing your inventory for higher profits, read Lightspeed s Inventory Guide. Simple reporting To maintain the omnichannel experience for your customers, you ll need to keep an eye on your performance. Make sure you can access all of your sales and store data in one place and report on your progress regularly. Having a single view of all your data lets you analyse and communicate performance across physical and online stores, weeks of supply, inventory sell-through, profitability per channel and category, and many more critical success metrics. Read Lightspeed white papers Putting Your Data to Work and 12 Key Performance Indicators for Retail for more information on data and performance measures. Controlling costs An omnichannel strategy usually involves selling more online and transferring more stock among locations. This can ramp up shipping, returns and other fulfilment costs. 13 Keeping these costs under control as you move into a more unified, seamless and insightful retail experience will be important. Again, the keys to overcoming these challenges are both technology and mindset. Ask yourself: How easy is it to ship products among your stores or warehouses and to the customer? Think like an Amazon: Integrated inventory and a delivery system built on economies of scale are crucial. In 2013, the world s largest electronics retailer was bleeding revenue to pure online shops. 14 Customers were using Best Buy as a showroom to kick the tires of products they later bought more easily and at a lower price on Amazon.com. Best Buy had failed to embrace omnichannel early on and was burdened with an outdated website and disparate inventories. In 2014, Best Buy adopted a true omnichannel approach. Stores became an asset rather than a liability as they unified inventory across shops and warehouses, offered more competitive prices and started to market using their rich store of customer data. Omnichannel helped this retail Titanic steer clear of the iceberg and sail on to better fortunes. 13 JDA Software Group study, The Omni-Channel Fulfillment Imperative, April Fitzgerald, Michael. Best Buy Battles Back Online. Technology Review, November 20, 2013.
9 Conclusion About Lightspeed An end-to-end view of the customer; strong brand marketing; consistently great customer experiences; seamless inventory management systems: these are the elements and the promise of omnichannel retailing. You may not be there yet, but every step you take towards uniting your systems to provide a consistent customer experience will benefit you through higher profits. At Lightspeed, we build end-to-end commerce solutions that retailers can use to build, manage and grow their businesses by creating better shopping experiences. We do it by unifying point of sale, inventory management, ecommerce, customer management, and analytics across all channels, in-store and online. More than 34,000 businesses use Lightspeed s tools to sell over $12 billion a year. It s the age of the customer, as the analysts are fond of saying, only this time it s also the digital age and they re joined at the touch screen. You want the customers? You need to get them where they are, Start your free trial at LightspeedHQ.co.uk/omnichannel Questions? Call us on and where they are is everywhere. You d best be too. 15 Karen Goulart, Tech Target What are retailers thinking? 16 95% of retailers agree that the store and the digital experience must be brought together for a continuous, seamless experience. 77% believe their legacy electronic point-of-sale (EPOS) is preventing them from providing a consistent customer experience across channels. 94% say inventory insight across all channels is important. 95% say real-time visibility into customer activity across all channels is important. 15 Goulart, Karen. Don t be a digital underdog -- it s omnichannel or bust. TechTarget SearchCIO, November MarketWatch. Research Reveals Retailers Struggles To Unify Online And In-Store Experiences. Oct 21, 2015
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