What is Omnichannel?

Omnichannel isn't a buzzword from a decade ago.

Omnichannel is the foundation for successful retail now and in the future.

For all the uncertainty surrounding the industry these days, most retailers can agree on one thing: omnichannel is essential. An omnichannel strategy delivers a consistent customer experience across a retailers' sales channels and customer-facing touchpoints. Meaning omnichannel is indispensable now — and will become increasingly indispensable as physical and digital retail experiences blend and blossom.

But what exactly is omnichannel in retail? How does it work? And why is it so important?

This blog post unpacks omnichannel retail, shining a light on its benefits and unveiling opportunities retailers can take to take full advantage of it. Here's a detailed overview of omnichannel.

The definition of omnichannel retail

Omnichannel (also sometimes spelled "omni-channel") is a retail strategy to deliver a consistent brand experience across sales channels. Without an omnichannel strategy, your brick-and-mortar, eCommerce, social commerce and other channels risk misalignment. An omnichannel strategy ensures consistency from the customer perspective.

The core goal of omnichannel retail is to deliver a cohesive brand experience wherever a customer engages with your retail brand. Shoppers should be able to move from one channel and to another without feeling friction. Consumers today want convenience, flexibility and consistency.

Omnichannel delivers on those desires. When shoppers have the freedom to interact with a brand through multiple touchpoints, they can select the most convenient option for them at any given moment. Omnichannel experiences can help retailers gain trust, loyalty and sales.

The core components of omnichannel strategy

Integrated physical and digital channels

The rise of eCommerce made it crucial for retailers to bring their brick-and-mortar and eCommerce business units together. Each sales channel since has made that even more critical. By integrating physical and digital channels, omnichannel ensures shoppers move through their buying journey smoothly, wherever they shop with your brand.

Seamless brand experiences across channels

Shoppers expect consistency as they move across sales channels. An omnichannel experience is consistent at every customer-facing touchpoint, from your store to your website, and from mobile to social media. An effective omnichannel strategy enables shoppers to bounce between online and offline channels without betraying the brand promise.

Customer-centric commerce

According to McKinsey & Company, "omnichannel shoppers shop 1.7x more than single-channel shoppers." That's because omnichannel retail caters to the shopper. Whether its unified customer data, a robust loyalty program or personalization, a successful omnichannel strategy incentivizes shoppers to shop more — and on their own terms.

The history of omnichannel retail

Some retailers may take the omnichannel experience for granted today. But it wasn't very long ago when disjointed shopping journeys were the experience du jour.

Before the advent of omnichannel retail, each sales channel was on its own. This worked for retailers who only had one channel, be it brick-and-mortar stores or quarterly catalogs. It even worked well enough when retailers would supplement their core channel with small secondary ones.

But everything changed when eCommerce entered the picture.

Critical mistakes were common. Some retailers made eCommerce their core channel. Others pieced together online stores ad hoc. At some extremes, retailers would silo their brick-and-mortar and eCommerce units into separate corporate entities, complexities and all.

This clashed with consumer behavior. People want to browse online and buy in stores and vice versa. They expect the same experience whenever they shop with you. Shoppers don't see sales channels as separate entities; it's all your brand. Enter omnichannel.

IDC coined the word "omnichannel" in 2010. Explaining the concept to their audience, TotalRetail added context to IDC's insight:

The emergence of the omnichannel shopper demonstrates why multichannel retailing is evolving. As consumers become increasingly channel agnostic, retailers need to ensure content seamlessly follows consumers on their cross-channel journey — providing the right information and incentives to maximize the purchase decision-making process at each and every point. – TotalRetail, “The Omnichannel Shopper: Anytime, Anyplace, Anywhere,” December 2010

But while omnichannel retail emerged as a response to a changing landscape, retailers toyed with similar concepts as early as 2003. Best Buy believed a customer-centric retail experience across multiple channels would give them a competitive advantage over larger retailers.

Omnichannel in retail has been essential ever since.

Omnichannel vs. Multichannel

While it's fallen out of favor the last several years, you may come across the term, "multichannel." In fact, some may use "multichannel" and "omnichannel" interchangeably.

That is inaccurate.

Multichannel is a holdover from the early days of eCommerce when retailers spun up new sales channels ad hoc. While a retailer may have brick-and-mortars, online stores, etc., multichannel retailers operate each channel independently. Multichannel strategies are legacy strategies.

Omnichannel retail challenges

Omnichannel strategy is synonymous with modern shopper experiences. But omnichannel strategy alone comes at a cost.

With a sole focus on the customer brand experience, omnichannel overlooks the the technology, infrastructure and systems that makes them possible. You can take new channels live. You can make them look and feel connected. But are they really connected if the channels don't work together well? Are shopping journeys really seamless if shoppers can only browse between them? What about mixed carts and omnichannel returns?

Omnichannel retail can also be less flexible and agile than the market demands. The process of spinning up a new channel is inherently reactionary: you only know what channels the market wants after the market demands them. New channels are risky and expensive. Trying to predict what sales channels will work and timing it right can be poison for your ROI (see: Web3). Omnichannel alone weighs down adaptation.

Omnichannel commerce can also come with other challenges:

Data integration and synchronization

Ensuring that customer data, inventory, and sales information are synchronized across all channels can be complex and requires robust systems and processes.

Channel conflict

Balancing the interests of physical stores and online channels can be challenging, as they often compete for and enterprise's resources and your customers' attention.

Logistics and fulfillment complexity

Managing inventory, order routing, and fulfillment across multiple channels can be operationally complex, unpredictable and vulnerable.

The role of omnichannel in retail today

Retail would be fraught with friction if it weren't for omnichannel. It merged the brick-and-mortar and eCommerce brand experiences, bridging the existing with the emerging.

The omnichannel retail spirit is as strong as ever. But the landscape has shifted drastically since omnichannel strategy swept the industry.

Technology and shopping journeys have become more complex. Digital channels have fragmented from one online store to seemingly infinite new options. The rise of mobile and the Cloud took TotalRetail's declaration of "anytime, anyplace, anywhere" to a whole other level. More than a decade out from the advent of omnichannel, and shoppers have more options than ever to engage with retail brands.

This has ratcheted up the complexity for retailers. More channels mean more processes, more labor, more variables and more risk. And as consumer behaviors evolved alongside sales channels, so did demands.

It's no longer enough to have a consistent brand experience. Today, you must have a holistic total retail experience. Omnichannel aligned sales channels. Now retailers must align the touchpoints between the channels and behind the scenes. In other words, retailers must unify the experience and the enterprise.

Omnichannel laid the foundation. The next step is to build on it.

Unified Commerce fulfills the vision of omnichannel

Omnichannel is table stakes. To win today, retailers need to look to Unified Commerce.

Unified Commerce grew out of omnichannel. It extends the value of the omnichannel experience beyond customers' commercial brand interactions, integrating every touchpoint and back-of-house element to imbue the entire retail experience with the same seamlessness shoppers now expect.

With Unified Commerce, you make the benefits of omnichannel strategy universal, overcome its limitations and unlock the ability to adapt, differentiate and outcompete your market.

Omnichannel Commerce vs. Unified Commerce

Omnichannel commerce creates a cohesive customer experience across all sales channels. However, it does not factor in technology, infrastructure and back-end systems. Omnichannel-enabled organizations that have yet to take the next step into Unified Commerce often struggle with siloed data and operations, inefficient processes and expensive or inefficient tech stacks.

Unified Commerce is the evolution of omnichannel. In addition to aligning sales channels, Unified Commerce also merges a retailer's systems, products, interactions and data to simplify and elevate the entire retail experience, for customers and enterprises alike. But most important of all, it gives retailers the flexibility to adapt now and in the future.

What are the advantages of Unified Commerce?

Unified Commerce integrates a retailer's back-end systems with their sales channels to create a complete shopping experience where processes run faster and more efficiently, channels become more profitable and capable, and organizations become more agile and resilient.

Whether it's Curbside Pickup or Buy-Online-Return-in-Store (BORIS), cross-channel order fulfillment services have come to be expected. And as retail experiences and expectations continue to evolve, the list of in-demand services will only continue to grow.

Unified Commerce enables retailers to offer these in-demand services, and more, without disrupting operations or requiring significant investment in supplemental software. Unified Commerce gives retailers the flexibility and latitude to meet each of the wide range of experiences customers want now — and adapt as customer behaviors continue to shift.

Unified Commerce integrates the experience and enterprise to benefit the retailer holistically:

• Keep pace with customer and market dynamics without requiring additional technology, evaluating new vendors, creating custom integrations, conducting large-scale testing and rollouts or accruing associated costs.
• Create relevant and agile experiences that help retailers differentiate, encourage brand loyalty and meet customer expectations — no matter what those expectations are, or how they will change over time.
• Reach optimal operational efficiency. Unified Commerce not only streamlines your current systems but opens the door to new and innovative opportunities for time- and cost-saving operational optimization.
• Innovate and iterate rapidly. The combination of unified channels and systems with agile microservices helps retailers test concepts quickly and with minimal downside, while making it easy to scale successful innovations.
• Access a single point of truth in real time. Cloud-enabled Unified Commerce solutions give retailers near real-time access to key data across the organization, and puts the right data in the hands of the right people at the right time.

The benefits are meaningful: retail executives report that Unified Commerce drives 'large or significant impact' in overall profitability (73%), cross-channel customer experience (68%), inventory management (66%) and employee experience (60%).

Deliver a differentiated omnichannel experience with Aptos Unified Commerce

Aptos is the leader in Unified Commerce. With almost 250 million customers engaged worldwide, Aptos has been at the forefront of customer-centric retail innovation for more than 40 years.

Leading retailers look to Aptos to guide them through retail's constant evolution. We were at the cutting edge of omnichannel. We've led the pack throughout its evolution. And with more than 100,000 stores unified in 65 countries, Aptos remains in front as it evolves again.