Omnichannel retail in the eCommerce world

Omnichannel Commerce

Earlier in 2015, the NRF released its list of Top 100 retailers. The article opens with a very interesting line.

It’s no longer bricks-and-mortar versus e-commerce — omnichannel is the path to success.

There is growing convergence between online and offline commerce. It is beginning to make sense to both sides that consumers just want to buy and while convenience and variety (the online advantage) are important, so is experience and consultation (the offline edge). The proven success of omni-channel for the retail stores is well documented – Macy’sBest Buy and Inditex have successfully (or are planning to) improved their bottom-lines by embracing a tighter integration of their online and offline retail experiences. This success is limited to the offline-first retailers – those who started as offline retailers and had a consistent offline shopping experience across stores.

Let us turn our attention to India where a different story is unfolding. Similar to it’s leapfrog to mobile (+internet) technology where it skipped broadband and desktops, eCommerce rose sharply before organized retail stores were part of an everyday Indian life. A KPMG 2015 report pegs the organized retail market share in India at 8% (~$42B) of the total retail industry, while China and US are at 20% and 85% respectively. The Indian eCommerce industry closed 2015 at $16B. The hypothesis of the eCommerce industry annihilating Indian retail has not necessarily turned out true and both continue to thrive as consumerism in India wins. In this hot pursuit, omni-channel is an attractive strategy for both sides, online and offline retail, to increase market share by leveraging the unorganized sector – a whopping 92% of the overall market.

For the offline retailers, building an omni-channel strategy is now standardized – build a top notch eCommerce website, integrate delivery/pickup/inventory with stores and bring customer intelligence to both store sales and eCommerce algorithms. The journey for the eCommerce companies, however, is non-trivial with no demonstrable peer success. Here are some of the things eCommerce companies can do to deploy their omnichannel strategy.

Store-to-Web Capabilities

The archetype omnichannel customer looks for convenience and cost. In India, cost trumps convenience – that usually ends up a customer looking for the best deal. A store-to-web capability aims at better tracking purchases discovered in stores and completed on the web. This is a problem for offline retailers who view this as a business leak. Building a capability to track and integrate the web purchases with the offline partner allows eCommerce companies to deliver great value to their partner network, while still enabling the omnichannel experience for the customer.

Omnichannel Payments

Allowing customers to pay through any channel whether they are in a store or online. Offline commerce has been limited by a POS device for the longest time. In recent years, while the POS device has evolved (think Square, et. al.), customer experiences have stayed the same.Apple’s launch of Apple Pay for the Web, is a step towards a great omnichannel payment experience for the customer. eCommerce companies, with their capabilities of designing beautiful payment experiences can deliver the same for offline purchases.

The Partner’s Network

While offline retailers have an advantage of their branded stores, eCommerce companies neither have this capability nor an expertise in running their own stores. Some eCommerce segments, like groceries, pharmaceuticals and food ordering work through a network of hyperlocal retail stores. eCommerce companies can think of India’s large unorganized retail segment as their offline partners. Segments like furniture and high-end electronics can leverage the offline long-tail retail as both a sales and service channel. eCommerce companies are often perceived as stiff competitors to offline retails. In order to build an effective offline partner network, eCommerce companies need to change this perception and deliver compelling value propositions to the retailers.

If you follow the Indian eCommerce space, Omnichannel (and hyperlocal) has become a buzzword companies use liberally. We are yet to see an eCommerce company implementing an omnichannel strategy and succeeding. Hopefully, that will change sometime soon.

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