Understanding the Difference Between Multichannel and Omnichannel
Written by Erin Hynes, Marketing Coordinator at Diff Agency.
The modern consumer will interact with your brand through a plethora of channels including online, mobile, social media, in store, at events, and more. Consumers want flexibility, speed, and to be informed shoppers. It’s therefore important to create a consistent and unified experience for your customers across all of your channels. This seamless experience is known as omnichannel marketing.
In the last few years “omnichannel” has become a retail buzz word. Most attribute the rise of omnichannel marketing to the rise of mobile phones and smartphone retail sales. When ecommerce first became popular, companies approached web shopping as an entity separate from their physical stores. This was the advent of multichannel marketing, which refers to a business’s ability to interact with potential customers through various channels.
But as ecommerce has become more dynamic, and shoppers have proven that there is still a desire to shop in physical stores, the importance of a seamless experience across a brand’s channels has become essential -- this is where omnichannel marketing comes in. But before diving into the specifics of omnichannel marketing, it’s important to understand the meaning of “multichannel.”
Multichannel retailing is defined by the use of two or more channels in isolation to engage with your customers. Most retailers today are multichannel - it refers to a business’s ability to interact with potential customers through various channels. Some channels might include a physical store, a website, a social media account, or a promotional event.
In multichannel marketing, a business's channels are siloed.
Although a business might have various channels, the channels are siloed with little interaction between them. For example, although a retail store may have an online store as well, because product stock is separated between the physical and online space, the two channels operate as separate entities. Therefore, a customer is not able to purchase online and return in store.
Omnichannel seeks to integrate the multichannel approach to marketing so that regardless of what channel a customer shops through, their experience will be seamless. Confusion between the difference of omnichannel and multichannel is often caused by the single fact that an omnichannel marketing approach utilizes multiple channels - in other words, omnichannel is always also multichannel. But, multichannel is not always omnichannel.
In omnichannel marketing, a business's channels are aligned for a seamless experience.
What distinguishes omnichannel from multichannel is the integration aspect. Rather than having specific goals for each marketing channel that a company uses, with omnichannel, a company will align their messaging goals, objectives, branding, and design across all channels and devices. This creates a seamless experience for a shopper as they flip between engaging with your business via their mobile phone, laptop, or in a physical store. The key is to ensure consistency and cohesiveness across all your business’s channels.
A working example (or two!)
American Eagle Outfitters (AEO) is an example of a company that has implemented omnichannel well. A shopper might browse the AEO website for jeans, carefully reading the reviews (photos included!) by other consumers. Finding a pair that they like, they read that the fit can run a bit small. So, through the website, the shopper reserves a pair in the nearest physical store so that they can try the jeans on before purchasing. When they visit the store, the jeans are ready for them. Satisfied with the fit, the shopper pays for their purchase with their mobile wallet (like Apple pay, or Google pay).
If AEO had not implemented omnichannel, and was operating multichannel instead, this example would function differently. The shopper would be able to browse jeans online, but the website would not allow for in-store reserving, nor would it display the amount of stock available in store. This presents a potential deterrent for the shopper: they may not wish to travel to a physical store without the assurance that the jeans they’d like to try will be available there in their size. A lack of product reviews integrated into the product display page can further deter a shopper. Because shoppers today have information at their fingertips, they rely heavily on the reviews of other consumers to guide their purchases. Finally, the omnichannel approach ensures the shopper can pay for the purchase in a multitude of ways.
The benefits of an omnichannel strategy aren’t always consumer-focused, they can have logistical benefits for the merchant as well. Diff’s work for Ministry of Supply included developing and integrating an outfit system app which allows customers to bundle inventory from both the ecommerce warehouse and the physical retail stores. While browsing online, inventory displayed includes items which are in store only, and not in the warehouse. Should a customer order an item that is only available in store, that order is sent directly to the store to be fulfilled, rather than the warehouse. Making inventory seamlessly available from multiple channels is an example of how omnichannel strategies can function in the back end through the use of integrations. This is not a customer-facing omnichannel experience, but it benefits the customer who is given more inventory to shop from.
Would you like to know more about how diff’s work for Ministry of Supply helped boost revenue through their ecommerce channel? Read the full case study, here.
Considerations for implementing omnichannel:
- Omnichannel marketing is complex, especially for businesses that have an already established physical presence. For example, an established store will have a legacy in store POS system, an order management system, and ERP system. In most cases these systems have been customized to service the business, and integrated into their internal business systems. Implementing omnichannel requires an overhaul of all of these systems because they will need to be integrated to support an omnichannel strategy.
- With this complexity, comes cost. An omnichannel strategy in many cases requires investment in technology, and overhaul of already existing technology. For example, when shifting to omnichannel, businesses may need to adopt a cloud-based inventory management software so that stock can be easily and accurately tracked across multiple sales channels.
- Omnichannel strategies continuously evolve. It’s important to stay on top of the latest technologies and channels so that your omnichannel strategy can grow to accommodate new trends and platforms. For example, in March 2019, Instagram introduced “Instagram checkout” which allows users to make purchases directly through the app. For merchants, this new feature represented a new channel that had the potential to be added to the merchant’s omnichannel strategy.
How to start moving towards omnichannel
Initiating a shift to an omnichannel strategy can be overwhelming. The best approach is to ease into it, take your time, and do you research. Here are three essential considerations to start with. By addressing these, you’ll lay the groundwork for a successful omnichannel strategy.
Understand your customers
The omnichannel approach to marketing is customer-centric, and so the first step to implementing omnichannel is to get to know your customers. And the best way to do this is through research. Rather than make assumptions about your customers, you’ll want to use data, discovery sessions, and competitor audits to develop shopper personas which represent the needs and habits of your customers. Remember to focus on long-term relationships instead of short terms sales. By researching your customers, you can develop an omnichannel strategy that caters to your shoppers unique needs.
Consider your goals
As with any business decision, it’s crucial to structure your decisions around specific goals. So before implementing your shift to omnichannel marketing, you’ll want to ask two simple questions: Why are you introducing omnichannel to you business, and what do you aim to achieve with omnichannel marketing?
The key to goal-setting for an omnichannel strategy is to remember that your omnichannel strategy should be customer-centric. You want to focus on improving your customers’ experience shopping online and in your physical stores, because a positive experience for your customers is what will result not only in conversions, but in repeat business.
Once you have established concrete goals for your business’s shift to omnichannel, you can begin looking into the technology, infrastructure, resources, and partners that will be essential to supporting these goals.
Explore new processes
You’ll need to establish new processes that support your omnichannel strategy and goals. In many cases, this will mean embracing changes to your business’s organizational structure and technology. For example, the customer experience in an omnichannel model might be distributed across more than one department. You have a marketing team overseeing your social channels, whereas a digital team might be managing website chat channels. These teams need to be able to access a central CRM system, knowledge management systems and more so that the customer doesn’t need to repeat information - instead, the customer’s communications have been tracked in a central system so that your teams can offer a coherent experience.
Before you embark on your journey into omnichannel marketing, remember to keep in mind the two main differences between multichannel and omnichannel strategies:
Customer experience: How the customer’s experience is joined up across channels. With multichannel, the experiences are siloed, whereas with omnichannel, the customer experience is consistent across all channels.
Business systems: How business systems are implemented and integrated in support of omnichannel marketing. For example, with multichannel, a business might use different POS systems for their online and physical stores, whereas with omnichannel, this system would be integrated across all channels.
Understanding these key differences is a great starting point for thinking about how omnichannel, verus multichannel, might be the right direction for your brand. And if omnichannel is the right fit for you, there are many benefits to be had. Omnichannel marketing can result in better data collection and analysis, better customer segmentation and targeting, improved brand visibility, and an overall higher ROI.
At diff, we do in-depth research to figure out what omnichannel strategy will work best for your ecommerce store. If you have questions about ecommerce, let’s chat!