Posted by: karisyd | November 25, 2013

Models for Omnichannel retail

As a keen observer of the Australian digital commerce space it strikes me that many of the issues and conversations that make headlines today, have been discussed in Europe about a decade ago.

A case in point is omnichannel retailing. Sure, it was called multichanneling at the time and it didn’t include the mobile channel (or not seriously, remember WAP?).

So, I went back to my old slide sets and discovered some useful slides that I had used with my colleague Carsten Totz in 2001 in a course on e-commerce at Muenster University. With some tweaking and updating they allowed me to create the following framework with models for implementing omnichannel strategies, which represent different stages of maturity.

omnichannel-models

Model 1: Channel choice

Under this model the retailer provides new online and mobile channels as largely separate offerings in addition to traditional store (or catalogue-based) retail.

While customers might use the channels interchangeably for information, under this model pricing and transactional aspects are managed independently. Some retailers also opt to set up separate entities that use their own branding.

Such strategies are often implemented in reaction to fears of cannibalization or push back from local franchisees, when the centre tries to implement an online strategy.

Model 2: Channel coordination

This model is more complex but also more customer-oriented, as the retailer allows customers to carry out different steps in the transaction process in different channels.

This allows “channel hopping”, whereby customers can buy online and pickup in the store, or use the store to try and buy, while the merchandise is delivered home.

channel-hopping

Implementing such a strategy requires treating the online channel as an integral component of the retail strategy and data integration between the channels, which can be time-consuming and expensive depending on the nature of legacy systems.

Model 3: Channel blending

Channel blending aims to truly integrate channels. In fact, this model moves away from traditional “channel thinking”. It promotes rethinking the retail experience from the customer perspective. What might be treated as channels today will become components in an integrated customer retail experience design in the future.

The potential for this kind of innovation can be seen in Apple’s retail offering. Its online shop and iTunes-based fulfillment process are integral parts of the customer’s in-store experience.

The Apple Store App allows scanning of in-store items, which not only allows customers to see detailed information on a product, but also to pay and leave the store by presenting the receipt on the phone screen at the store exit.

Rethinking the role of mobile and online offerings opens up a creative space for retail innovation. In the future, traditional retail spaces might morph into showrooms for organizing product experiences, rather than being oriented – process and layout-wise – around the transaction process.

As a first step, mobile apps could be used to create in-store wish lists, share experiences with friends, organise lay-by and pay, while gradually allowing blended experiences, for instance, through avatar-based consultations or augmented reality solutions.

Omnichanneling in Australia is still in its infancy. This can best be seen by our large department stores recently reporting on the progress in creating their online offerings. While this provides stepping stones in creating a channel coordination model, the current status quo is years away from resembling a blended model.

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Responses

  1. […] order to appreciate the full potential of omnichanneling it is helpful to distinguish three models of increasing complexity. These models can equally be seen as maturity stages in implementing […]


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