Omni-Channel Retail: A Term So Confusing, Even Those Doing it Best Don’t Know What it Means

Originally published by: Ecommerce | Experts in Online Retail on 2012-05-31 16:25:26 by Sally McKenzie

In the late 1990’s, I remember attending an e-commerce trade show and laughing with a group of colleagues about rapid rise of the term “CRM”. It was on the tip of everyone’s tongue in the conference sessions, and the exhibit hall was full of solution providers, most of them new, claiming to have the perfect, easy to implement system to give us all instant access to customer intimacy. A few years later, “Web 2.0” became what “CRM” had been; a nebulous term thrown about at trade shows and on blog posts that no one really understood.

CEOs asked their e-commerce directors “are we doing Web 2.0?” as if it were something one could buy and install or a box that could be checked off of a to-do list. Fortunately, the term Web 2.0 went away and we never had to face the task of defining it clearly or, God forbid, dealing with a Web 3.0 or beyond. Yet, here we are again. The term ‘omni -channel retail’ dominates the headlines of trade news stories and the business sections of high profile publications. When I ask my clients and my colleagues what that term means to them, we usually laugh and admit that we can’t really describe it very well. Plus, I have yet to meet someone who likes the term or thinks it serves a valuable purpose. An Internet Retailer article last week quoted Jamie Nordstrom as saying “I’m not sure what ‘omni-channel’ means”.

Nordstrom, arguably a leader in both investment and execution of integrated retail, lauded by some as a shining example of ‘omni-channel’ have themselves tossed the term aside. That ought to tell us something. I first recall hearing the ‘omni-channel’ term about 3 years ago, when mobile shopping was just appearing on the horizon. The phenomenon of customers bringing the web into the physical store via their smartphones created a new customer behavior that many retailers weren’t prepared for. This was more than a cross-channel shopper….so what should we call them? Since then, ‘omni-channel’ has been used with increasing frequency, though unfortunately without much further clarity.

Here’s a quick summary of the conversations I’ve had over the last couple of weeks on the topic:

Retailers use the terms multi-channel, cross-channel and ‘omni-channel’ interchangeably, but probably mean different things when they say them. When you break it down, the most confusion comes between the terms ‘cross channel’ and (like it or not) ‘omni-channel’. While I’m no fan of the ‘omni-channel’ label, at the heart it represents a very real phenomenon: cross-channel capabilities are rapidly advancing and retailers are more deeply integrating their channels to enable new levels of customer convenience and delight. We need to call it something, even If it’s not ‘omni-channel’. For now, I’m thinking about it this way:

Multi-channel: Generally speaking, most agree that any retailer that operates more than one channel (stores, e-commerce, catalog, mobile commerce, etc.) is by default multi-channel. But, being multi-channel doesn’t mean that the experience of shopping across those channels is coordinated or cohesive to the customer. Companies in the early stages of coordinating the experience usually focus on the things close to the surface, such aligning customer facing promotional events, pricing and messaging for brand consistency. But, they may not embark on the heavy operational lifting or systems integration required to offer a seamless experience for those customers using more than one channel.

Cross-channel: Historically, this term has described the capabilities that allow customers to interact and transact with a brand across multiple channels, for example, researching an item online and buying in a store, buying an item on line and picking it up in a store or buying an item online and returning to a store. These cross-channel conveniences have become commonplace for many multi-channel retailers, but they don’t necessarily require the level of operational and data integration that’s starting to evolve. For example, all of the scenarios described here can be done without integrating customer data, inventory or product content. They take some process work and training, but they can be done without going too far under the hood. So, while they are great conveniences for the customer and may be executed well enough, there’s a whole new level of integrated customer experience that isn’t being realized. From an organizational perspective, the channels still exist as, well, channels, with mostly separated staffs, goals and strategies. This makes execution and measurement of cross channel programs difficult, and few companies do cross-channel well or without significant challenges.

Omni-channel: Most of the people using this term are using it reluctantly, either because they don’t like the way it sounds or, more importantly, because the term doesn’t adequately express the customer centricity of what they’re trying to do. Suffice to say, for some, ‘omni-channel’ is considered a next generation or “advanced” version of cross-channel. Here, customer data, inventory, product data, content and operations are integrated to operate as “one”, with the customer in the center. The customer is able to interact and transact across touch points (note the word touch points here, not channels) interchangeably and simultaneously. For most retailers, this is a highly aspirational state, but it’s where the leaders are headed. Examples of ‘omni-channel’ in action might mean customers having access to inventory availability regardless of the store or warehouse where it resides, or an order being fulfilled from whichever location is the fastest, most economical or convenient to the customer. It might mean customers and sales associates having access to the same rich set of product information and content regardless of whether they are looking at a cell phone screen, a tablet , a computer, a cash register, an in store kiosk or a digital sign. It might mean that marketing messages are personalized, tailored and delivered to a customer based on location, purchase or browse history and device, with service at each touch point that takes this critical data into account. Culturally and organizationally, achieving success will take huge leaps not only in IT, but just as critically, in culture, organizational structure, planning and measurement. Channel barriers will need to be broken down with more cross-functional morphing across teams to deliver the desired customer experiences. Strategic plans, budgets and goals must be centralized, with focus on key financial and customer metrics company-wide. Easy to say. Very hard to do.

Clearly the aspirational state described as ‘omni-channel’ is a step up from how we’ve thought about cross-channel in the past. It’s understandable that we’re confused and frustrated by the term. E-commerce is still a young industry (and yes, I know that there are many of you out there who believe that ‘e-commerce’ is itself an outdated term). As we grow up, as customer expectations evolve, it’s only natural to need a vocabulary to describe what we’re doing and experiencing. If we ditch the term ‘omni-channel’ (and personally, I’d be all for it), hopefully we can all agree on what to call it before we move on to the next stage of our evolution (and the inevitable new and confusing buzz terms that that will bring).

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Omni-Channel Retail: A Term So Confusing, Even Those Doing it Best Don’t Know What it Means