How to Serve Customers Better, Making Omni-channel Retailing Profitable

Customer expectations are dictating changes in how they shop from companies, whether you are a retailer, wholesaler or manufacturer. In turn, retail companies are responding with new strategies to present advertising offers, make the sale, and serve the customer. In addition to shopping in-store, customer orders can come from e-Commerce sites, call centers, in-store kiosks, tablets, smart phones, laptops, etc. The order fulfillment options include shipping customer orders to stores for customer pick-up, shipping orders from stores or fulfillment centers, and drop shipping to customer homes. Providing a convenient shopping experience for an increasingly time-starved customer may be the difference between making a sale or a customer giving the sale to a competitor.

These forms of omni-channel shopping are not for all customers. However, for the increasingly technologically savvy customer – who often is your younger shopper – it is essential. There are major retailers that now have as much as 9% of total company sales coming from this form of retailing.

It's also important to take a holistic view of customer shopping. A holistic view means recognizing that the synergy that occurs between the channels will mean higher sales in total than if you treat them as separate channels and don't optimize customer service across them.

Technology is certainly key to providing these omni-channel services, but the bigger issue is how to re-conceptualize your retail model to stay connected with browsing shoppers and customers, and how you make the sale. Here are some tactics retailers and direct marketers are using:

• Connecting with customers that are "pre-shopping" will give your merchants and marketers ideas of what they are looking for 
• Keeping customer bases up-to-date on the latest offers, no matter where the customer is 
• Using location history to promote in-store and cyber special events 
• Increasing lifetime value by suggesting complementary products 
• Reducing cart abandonment with offers and communication 
• Nurturing loyal customers with special offers

Key Factors in Maximizing Omni-channel Shopping

1. Practical, easy shopping is about convenience. It's about providing customers the options which allow them to shop when they want and from where they want. Online convenience begins with an easy-to-navigate, online shopping experience from websites and mobile devices. In shopping studies we do, this is still a major issue with many companies.
2. Being in-stock when the customer orders. For many retailers these customer facing approaches mean they have to make inventory availability accessible. Systems have to reserve inventory to customer orders, whether it be for pick-up at the store, fulfillment from stores or DC's, or drop shipping from vendors to customer's homes and businesses.
3. Merchandising your website. Are you offering the same product as in store? Some retailers offer extended sizes, product line extensions, and web exclusive product lines not available in stores.
4. Building the infrastructure. Great technology is one thing but having the people, systems and facilities in place to deliver the product is at the heart of making the sale. As an example, a high percentage of orders resulting from e-commerce, catalog and call center sources are small orders of three items or less. The processes and methods used to pick and ship these small orders in DCs has to be very efficient. These are different systems and methods from what retailers use to crossdock inbound product and replenish store stocks. Call centers and order management systems also have a role in this new infrastructure. 
5. Changes to store operations. We often hear from store managers, "These shopping methods often give the omni-channel customers the best selling merchandise." We also hear that we are using store personnel to fulfill orders and instead of being on the sales floor. Again, we have to adopt a holistic view of customer sales. Retailers have to make decisions about taking back returns at the store level that were fulfilled by another channel. 
6. Shipping & handling. Omni-channel often means we have to get the order to the customer. We all know there is no such thing as "free shipping." Historically, many direct businesses offset some of their product picking and shipping costs by charging shipping and handling fees. Shipping and handling costs are a major percent of the retail order value. Customers are savvy and they don't want to pay excessive shipping costs. Amazon's Prime and competitor ShopRunner have created marketing approaches and low cost shipping that puts pressure on all other retailers and direct companies.

We expect that in-store retailing will be the predominant form of shopping for a long time to come. However, omni-channel strategies need to be addressed by all retailers today. The technologies and new forms of omni-channel marketing and fulfillment cannot be adapted successfully overnight. The customers and the competition are driving the way customers shop.