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How to Win in an Omnichannel World

Retail customers are now “omnichannel” in their outlook and behavior — they use both online and offline retail channels readily. To thrive in this new environment, retailers of all types should reexamine their strategies for delivering information and products to customers.

Paula Cuneo, a teacher in Ashland, Massachusetts, ordered 10 pairs of corduroy pants in a range of sizes and colors from Gap Inc.’s website, and later returned seven of them, according to a 2013 Wall Street Journal article. Ms. Cuneo is, perhaps unwittingly, an exemplar of a key challenge in today’s omnichannel retail environment — an environment where customers shop through a variety of online and offline channels. The challenge omnichannel retailers face is this: How can retailers provide consumers with information (about what products best suit them) without incurring downside on product fulfillment (delivery of products)?

The omnichannel environment presents new challenges and opportunities for both information and product fulfillment. This is equally true for “traditional” retailers like the Gap, which began business with physical stores, and “new” retailers like New York-based eyeglasses brand Warby Parker, which started out by selling online. While all retailers need to effectively and efficiently manage fulfillment and information provision, there are important nuances to how this happens — depending on where and how the retailer got started and what kinds of improvement create the most leverage.

This article delivers a customer-focused framework showing how to win in the omni-channel environment through critical innovations in information delivery and product fulfillment. The framework emerged from our research with both traditional and nontraditional retailers. To thrive in the new environment, retailers of all stripes and origins need to deploy information and fulfillment strategies that reduce friction in every phase of the buying process. This means simultaneously providing, in a cost-effective and narrative-enhancing way, information that removes initial uncertainties and barriers to purchase — as well as fulfillment options that allow retailers to get their products to customers in the most convenient and cost-effective way.

Our research relies on detailed customer-behavior data (such as visits, purchases and returns) from omnichannel retailers. We then used these data to perform statistical tests of the impact of management interventions (such as website enhancements and showroom openings) on overall demand and fulfillment efficiency. (See “About the Research.”) We explain why the best way to navigate the omnichannel environment is to: (1) take a customer perspective and (2) view the activities of the company through the lens of the two core functions of information and fulfillment.

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