Definition

omnichannel

Contributor(s): Karen Goulart and Jason Sparapani
This definition is part of our Essential Guide: The essential guide to supply chain management best practices

Omnichannel -- also spelled omni-channel -- is a multichannel approach to sales that seeks to provide customers with a seamless shopping experience, whether they're shopping online from a desktop or mobile device, by telephone, or in a brick-and-mortar store.

An omnichannel approach means there's integration between distribution, promotion and communication channels on the back end.

For example, a customer service representative interacting with a customer in a store can immediately reference the customer's previous purchases and preferences as easily as a customer service rep on the phone or a customer service webchat rep. Or the customer can use a desktop computer to check inventory by store on the company's website, buy the item later with a smartphone or tablet, and pick it up at a chosen location.

Omnichannel vs. multichannel

The prefix omni- is from the Latin omnis, meaning all or every. Multi- in multichannel means many. Though omnichannel suggests covering more channels, the omnichannel vs. multichannel distinction goes beyond number.

As a category of multichannel, omnichannel is built on multiple methods of promoting and distributing products, such as physical stores, websites and mobile apps, and allowing customers to reach out with problems or concerns by phone, email, webchat and social media, for example.

Omnichannel pushes past the operational tactics of multichannel into a business model that weaves those channels together and shares data between them, enabling customers to conduct business with companies however they want, whenever they want.

For example, if a customer who has started an interaction with a company on webchat submits information, such as an account number, then decides to end the chat and call customer service instead, that information can be transferred to an agent. A company with strictly multichannel capabilities can accommodate the customer on both channels, but because it lacks back-end systems integration, the customer would have to re-enter the information using an automated system, such as interactive voice response, or relay it to a live agent.

Faces of omnichannel

Omnichannel retailing combines physical and online commerce, or e-tailing. Consumer electronics retailer Best Buy bet on an omnichannel retailing strategy after losing $1.2 billion in sales in 2012. Showrooming customers would comparison shop by first going into stores, and then check prices online and buy elsewhere.

Best Buy revamped its outdated online shop, reducing the number of clicks it took to buy a product and adding an option to pick up an item bought online in a store. It also stopped operating stores and its online marketplace as separate entities, ensuring that inventories were shared.

To compete with online retailers like Amazon, Best Buy offered a price match guarantee and sped up product delivery. In May 2018, ZDNet attributed the retailer's 7.1% growth in sales -- its strongest since 2005 -- to its omnichannel strategy.


A look at the expansion of the omnichannel trend

A related omnichannel strain is omnichannel marketing -- delivering personalized brand messaging across diverse channels -- from email campaigns to social media to TV ads. A challenge for companies is figuring out which channels their customers use. Another is delivering a consistent experience across those channels.

Arts and crafts retailer Michaels Stores' omnichannel marketing initiative combined online blogging and videos with projects and in-store classes, as well as social media marketing about monthly craft projects to engage customers. The chain saw significant audience growth as a result.

Trends in omnichannel

Increasingly, consumers are toggling between online and offline to research and buy products and services. In a 2016 study, Deloitte found that digital experiences influence 56 cents of every dollar spent in physical stores.

The key to a seamless omnichannel experience is a modern supply chain -- one that extends delivery across mobile apps, websites, social media and stores. To get there, companies must break down silos between online and physical stores, as Best Buy did, and manage product responsibilities as one collective marketplace. They also need new technologies, including inventory management systems, and new ways of delivering products.

Chatbots are another omnichannel trend. These AI-enabled computer programs simulate human speech, can ask people questions and can respond to answers. In 2018, chatbots are being used to do tasks as straightforward as changing passwords and as complicated as determining the mood of someone calling customer service.

This was last updated in May 2018

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