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Omnichannel Retail Guide Chapter 4

Omnichannel challenges for retailers


Keeping up with fast changes is never easy in running a business. This is the reason why so many retailers are struggling with omnichannel. Being aware of omnichannel retailing challenges when shifting to omnichannel prevents you from unnecessary cost and effort (and cut down the suffering). Hence, the ultimate goal of this chapter is to educate you on the disadvantages of omnichannel and give you some tips to overcome them with as less pain as possible.

Technological barriers

Requiring a complete integration of all channels, an omnichannel strategy increases the complexity of managing operations and the supply chain. To satisfy customers’ expectations, retailers must have an advanced warehouse management system to track inventory in all repositories in real time. Besides, speedy delivery is also expected.

However, when a business transits to omnichannel, the previous technological infrastructure can’t ensure accurate inventory and order management across all channels, leading to a failure in omnichannel execution.

To deal with this omnichannel challenge, retailers need to prioritize improving their inventory management to have inventory visibility. Besides, order management also needs attention so that all orders are fulfilled.

Although the above issue can be solved with technology, it’s noteworthy that technological upgrades are costly. Hence, many retailers are hesitant to transit to omnichannel.

However, retailers can still execute omnichannel without a huge amount of capital.

They can execute an omnichannel pilot in a trial location to see whether this strategy fits their business before upscaling it.

Besides, in case of limited capital, optimizing inventory management is always the priority, before considering other components like order fulfillment, purchase management, or marketing.

Synchronization of data in the integration process

As mentioned above, the key of Omnichannel is the integration of these following things:

  • Sales channel
  • ERP
  • CRM
  • Social media
  • Market

Transiting to omnichannel leads to a huge data transformation.

In that situation, the challenge of omnichannel retailing is how to synchronize all the data across channels in a faultless way without losing any information. It is a must to help the system to perform smoothly with completely integrated information from multiple channels.

To deal with these disadvantages of omnichannel, a well-planned strategy is the ultimate solution.

We suggest below a strategy, enterprise data management (EDM) strategy. It targets to build the data-centric organization. EDM cohesively joins the key building blocks of data management into one holistic view.

enterprise data management
  • Data Quality Management – KPIs, data records rules, metrics, monitoring tools
  • Metadata Strategy – metadata types, data streams, business data dictionaries
  • Governance – roles, and responsibilities, change management processes, policies, and procedures
  • Data Analytics – dashboard, automated reporting, shaping
  • Data Architecture – data modeling, data storage, ETL tools (Extract, Transform, Load)
  • Architecture Technology – infrastructure and process systems, commodity hardware, large data platforms
  • Training/Education – users, data management, operations, customers, managers
  • Data operations – data lifecycle, data control

To simplify, it’s a strategy in which data is divided into categories including interconnected kinds of information.

When transforming data, people manage all data under each category, which makes it easy for the managerial level (such as store managers) to check whether the information is fully converted or partially missing.

If a data transformation is still beyond the retailers’ ability, they can contact some omnichannel solution provider companies.

There are experts who are experienced in managing databases in executing omnichannel, with privacy completely guaranteed will solve their omnichannel challenges fluently.

How to improve omnichannel customer experience

Retailers, who are struggling with omnichannel, know that customer loyalty is the key to business success.

Returning customers spend 67% more than new ones.

Moreover, it’s always cheaper to retain an existing consumer than to attract a new one.

However, is only satisfaction enough to keep a customer engaged with a company?

60–80% of customers who describe themselves as satisfied do not go back to the business due to a lack of connection.

It means that good products or services are not enough to turn a new customer into a long-term one without an engagement strategy. In this ever-changing market today, the first and foremost goal is to attract more long-haul partners, not the single-deal ones.

In the age of multi-channel, retailers adopted a lot of engagement strategies but used a single engagement platform. It means that all promotion campaigns were launched separately in each channel.

There were campaigns across channels but the number of them was insignificant with a relatively low level of integration of all channels.

When transiting from multi-channel retail to omnichannel retail, there are a lot of omnichannel retailing challenges that retail businesses need to handle.

In particular, a company must change its customer engagement programs since this business model requires a more complicated one.

Obviously, there’s no way a customer engagement strategy based on a single view from a channel can ensure the connection between a business with their omnishoppers.

To successfully nurture the engagement with customers and overcome this typical omnichannel retailing challenge during the omnichannel execution, combining online and offline channels is not enough for a born-multi-channel business.

Their first step is to determine the target omnishoppers and build a clearly mapped-out buyer journey based on the understanding of customer behavior across channels.

The next step is to design and deploy an appropriate strategy, starting with optimizing the omnichannel user experience together with consistent branding and omni-marketing.

Finally, an efficient measurement should be carried out to measure customer-centric KPIs such as customer lifetime value, customer profitability, and level of customer engagement.

Omnichannel retailers can also use some reward or redeem programs as incentives to make customers come back.

Struggling with channel conflicts

Usually, a multi-channel adopting business evolves from a single-channel origin, leading to a channel getting more focus than the others.

It can be a webstore or a brick-and-mortar store which is the very first sales channel.

In other words, one of the omnichannel retailing challenges is for all channels to be completely integrated and treated equally.

All sales channels, online or offline, are under the same control and distribution system.

This is also a headache for any eCommerce and/or sales manager to overcome in struggling with omnichannel retailing.

At the very first phase of omnichannel execution, the infrastructure development of a retail business often fails to meet the goals and customers’ demands. Consequently, channel conflicts arise when inventory becomes limited while goals are incompatible.

When attempting to minimize inventory, retailers must consider which channels should get priority of limited inventory, resulting in channel conflicts.

When prioritizing one or some channels, retailers may miss orders from the others resulting from a supply-demand gap, which is a “taboo” in the omnichannel culture.

Proactively addressing channel conflict is obviously a must for retailers when transiting to omnichannel.

By anticipating the customers’ demand, omnichannel retailers keep themselves always one step ahead of customers.

To predict the customers’ needs, retailers must be updated with real-time inventory data and measure the sales growth of each channel based on sales history.

Besides, to overcome omnichannel retailing challenges, retailers must constantly search for greater efficiencies, predict disruption and come up with solutions that generate savings and exploit more opportunities.

Moreover, technology is constantly developing, leading to technological omnichannel solutions that enable retailers to access the nearly exact prediction of supply needed.

With an advanced inventory management system, some technologies can automatically surmise customers’ demands based on inventory visibility and the sales history of each channel.

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Omnichannel Strategy for Retailers

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Omnichannel KPIs

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