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Why retailers need to embrace omni-channel?

April 23, 2014 CK Wong Category : , , , , , , , ,


Although there are already a number of retailers in Malaysia that have setup their e-commerce business, some retailers are still refraining themselves from e-commerce, quoting reasons like below:

We are worried that it will "eat up" our retail business

We don't have experts or manpower within the organization

We know better (and more confident) in opening retail outlets

It is more "tangible" to setup retail outlets

We are not ready to invest yet (or no budget allocated)

Let's wait and see first (observing first movers or competitors)

Even though the e-commerce penetration rate in Malaysia is going to reach only 1.4% (of overall retail) in year 2016, retailers need to understand that it is not just e-commerce, but they should start embracing omni-channel retailing which will benefit their retail business too.


What is omni-channel retailing?


What is omni-channel retailing?

According to Wikipedia:

Omni-Channel Retailing is the evolution of multi-channel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels, i.e. mobile internet devices, computers, brick-and-mortar, television, radio, direct mail, catalog and so on.

In short, it means that your customers could be coming from various channels and devices, and you need to be ready and facilitate the consumer experience.

Darren Fifield from eBay Enterprise has shared some interesting data in eTail Asia 2014 so we thought it will be helpful to summarize some of the key points here.


The omni-channel customer is connected


84% couldn't go a single day without their mobile device
Source: Time, Mobility Poll

76% have access to more than one digitally connected device
Source: eBay Enterprise Centre for Connected Commerce research

8-10am: 66% wake up with their phone
12-5pm: phone's peak
6-10pm: tablet's peak
Source: Nielsen

75% use their phones on the toilet

75% use their phones on the toilet
Source: Nielsen


The omni-channel customer is expecting more


81% expect retailers to be utilising technology to improve the in-store shopping experience
Source: eBay Enterprise Center for Connected Commerce research

66% of consumers expect retailers today to provide a good smartphone experience
75% of consumers expect retailers today to provide a good tablet experience
Source: comScore Device Essentials, January 2013, Europe

84% consumers believe that retailers should be doing more to better integrate their offline and online channels
Source: eBay Enterprise Center for Connected Commerce research


The omni-channel customer is changing the way they shop


Kate Spade and eBay cool retail concept

29% of US Internet users would buy everything online today if they could
Source: eBay Enterprise Center for Connected Commerce research

48% of all purchases in 2014 will be impacted by the web - either purchased online or researched online prior to buying in-store
Source: eBay Enterprise Center for Connected Commerce research


The omni-channel consumer is for EVERYONE


Yes, omni-channel is for everyone, not an isolated segment - it is every shopper, every potential customer of yours.

Your retail store is an asset, according to Darrel Rihby, "The Future of Shopping", Harvard Business Review:

If traditional retailers hope to survive, they must embrace omni-channel retailing and also transform the one big feature internet retailers lack - stores - from a liability into an asset.

Store may look different in the future, according to Sir Terry Leahy, Former CEO of Tesco:

People are changing constantly; companies move much more slowly. Retail used to be about bigger stores. But people are increasingly busy and don't have time to plan for the big shop and big store.


Omni-channel distribution - Getting the product to the customer


64% of consumers have made a purchase from a new retailer over their preferred retailer simply because they offered free shipping
Source: eBay Enterprise Center for Connected Commerce research

93% of consumers expect retailers to provide them with a choice between picking-up their order and having it delivered to them
Source: eBay Enterprise Center for Connected Commerce research

67% of consumers abandon baskets because of delivery issues
Source: Comscore, Royal Mail Survey

Omni-channel distribution methods

35% of online customers now use click and collect
18% of those customers also purchase additional items when collecting in-store
Source: Internet Retailer

Omni-channel programs can produce 2 to 20 percent in incremental store sales
Source: *eBay Enterprise internal client data


Which omni-channel initiatives should you prioritize?


The inevitable one is of course making the in-store inventory available online, but what about the rest?

Prioritizing omni-channel store integration

You can refer to the chart above to get an idea which omni-channel initiative you should prioritize, by considering incremental sales and relative ease of implementation.

1. Ship from store
2. Associate ordering in-store (via mobile devices or web)
3. Buy online, ship to store
4. Buy online, pick-up in-store

You might be wondering, how ship-from-store can produce incremental sales?

With ship-from-store you transform your retail stores into "virtual distribution centers" (rather than investing on additional distribution centers), less inventory are maintained in overall thus increase inventory turnover. Not to mention putting inventory closer to your customers (by zone) reduces shipping cost.

Let's imagine two scenario:

Scenario A: You have an order from Penang, but there is no stock available in your Penang store, so you get your KL store to ship it to this customer in Penang. Talking about minimizing missed sales opportunities.

Scenario B: You have an order from Penang, stock is available in your Penang but there is excessive stock in your KL store, so you get your KL store to ship it to this customer in Penang. Talking about losing a little on shipping cost but avoiding big markdown on excessive stocks.

Get the picture?

Associate ordering in-store on another hand is like having a virtual floor in your store, and you can imagine other possibilities of omni-channel initiatives increasing your revenue, both retail and online.

Turn your retail from a liability to an asset today!

Are you a retailer? Limited-time only FREE consultation on your e-commerce and omni-channel strategy, contact us today

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