Adapting to whatever is most relevant to customers is the key principle of omnichannel retailing and will be the mark of Australia’s top retailers in 2014, writes Mark Troselj.
As we rapidly approach the beginning of 2014, Australian retailers planning to be successful next year must take the omnichannel model seriously and adapt, especially as the online environment accounts for an increasing proportion of overall sales.
NetSuite recently sponsored a retail study by Frost & Sullivan, which indicated that online retail sales are expected to reach more than $18 billion in 2013 and are forecast to grow 39 percent to $25 billion by 2015 – including purchases by Australian consumers on local and overseas websites. With an estimated 33-50 percent of all online expenditure now going to overseas sites, traditional retailers in Australia need to get their omnichannel strategies right in 2014 that leverage all channels – social, phone, web and physical stores – to provide an engaging and rewarding brand experience to remain viable.
What makes achieving this difficult for many retailers is that customers expect to interact with brands through any channel, at any time, without sacrificing experience or service. Many Australian retailers are left flat-footed in the face of the omnichannel revolution, and their inflexible, outdated processes and systems are struggling to cope with the new paradigm. Meeting the demands of an omnichannel customer requires a commitment to four crucial principles: seamless commerce, order orchestration, new business models and future proofing.
Seamless commerce means that the customer must be empowered to transact across all touchpoints and channels; they want to browse and buy on their own schedules. Whether mobile, online, via a call centre or in-store, retailers must offer equally accurate and immediate access to products. The shopping experience should be built around the new reality that most consumers make their browsing and purchasing commitments online, often before they ever see the product in person. They are coming to the store to transact, and that means they must be able to quickly locate a nearby store with the products they choose, quickly locate the product and complete the transaction.
A truly seamless, omnichannel organisation can recognise its customers equally well through any channel, bringing relationship history and informed product recommendations to the table. Customers expect more than full shelves and competitive prices. They expect their chosen retailers to understand their purchases, have an accurate, up-to-date picture of preferred purchase methods and contact details, as well as to provide offers, order updates and shipping notifications to the device of the customer’s choice.
Order orchestration turns every warehouse, distribution centre and retail location into a component of a single, tightly integrated, enterprise-wide inventory. Offering online purchasing, but convenient in-store pickup, is just part of the equation. Store inventories can be used to reduce fulfillment time and costs, or to reduce overstock and avoid markdowns.
New business models are the new norm. Hybrid business models, such as acting as a link in a complex B2B2C chain or taking part in C2B and C2C transactions, offer exciting opportunities. Unfortunately, new channels, lines of business and innovative product offerings are too often rushed to market in silos, with little consideration of integrating with the rest of the business.
Digital services are increasingly relevant to Australian retailers of all shapes and sizes, and subscription-based fulfillment of both digital and physical product is a fast-growing opportunity. Retailers are even finding themselves turning into light manufacturers with the emergence of 3D printing kiosks. Customers will reward retailers who offer access to these innovative services, and have little reason to patronise those whose siloed approach guarantees disconnects between brand and buyer. Each of these new improvements should be developed in the spirit of omnichannel commerce, giving the customer the freedom to browse, buy, return and manage the relationship through any channel, at any time.
That is why future proofing is so vital. No one knows exactly what the next major trend for retail will be, or even what form it will take: a channel, touchpoint, device, business model or something even more foundation shaking. Too many retailers continue to operate on narrowly designed, purpose-built systems, which make it impossible to seamlessly embrace these emerging opportunities.
The Frost & Sullivan retail study indicated that a major challenge faced by many Australian retailers with a web presence, for example, is a lack of integration between their web front-end and back-end fulfillment systems. Only 24 percent of Australian retailers with a web presence currently have software that integrates web orders with their inventory management system. Without a unified software solution, retailers face difficulties in maintaining a consistent brand experience in areas such as customer support, pricing and promotions, as well as increased operational costs to run and maintain each channel.
Doing business the way customers demand it today is of primary importance. Future proofing requires agility, flexibility and scalability, not to mention the assurance that the technology behind each transaction will never grow stale. Those capabilities are found in cloud solutions, which also provide the architecture needed to break down data silos and provide a comprehensive view of products and customers, wherever they are and whenever your business needs the insights.
The ability to adapt to whatever is most relevant to the customer is the key principle of omnichannel retailing and will be a top characteristic of Australia’s top retailers in 2014.