Retailers go Omni-channel
Retailers go Omni-channel

Thomas Varghese, Business Head - Textiles, Acrylic Fibre & Overseas Spinning, Aditya Birla Group believes Omni-Channel Retailing gives ample scope to grab many eyeballs through different channels. He shares his insight on the concept and how it can work well in Indian retail market. 

How appropriate is Omni-channel Retailing for Indian market?

Omni channel retailing which is defined as the mode of retailing that flawlessly integrates multiple channels giving seamless experience to the customers through all available channels is well suited the Indian customers in terms of their requirements and preferences. Studies have found Indian customers to be a smart shopper putting emphasis on both value and variety. A smartly crafted Omni-channel Retailing provides both these to the customers. Especially for the time constrained urban customers, Omni- channel Retailing provides a very strong value proposition. For example, a working woman today can browse through the Internet for a garment on her laptop, can share the selected merchandise with her friends on social media through mobile apps for their feedback, can order through a 24 hour call centre for a cash on delivery and in case want to change/ modify can go to the physical store and get merchandise exchanged.

Similarly from a retailer’s point of view also, in line with the high retail rental of stores, it makes sense to grab as many eyeballs as possible through as many channels as the incremental cost of reaching through other channels partially subsidizes the fixed cost of physical stores and inventory. However, the retailers need to be cognizant of the fact that customers are continuously adapting to multiple channels and move comfortably across channels to search for products, use social media and other forums to discuss and select the product of choice, search for the best prices and promotions get it reviewed through peers; and finally make a purchase.

So far who are the retailers have opted or are opting to this channel?

Interestingly a good number of Indian retailers have opted for this kind of retailing. It is quite encouraging to see the distribution across different categories of retailing. As of now we see this kind of retailing being implemented into the categories of apparel, electronics, footwear, fast food, gifts and accessories etc. It is still to take up seriously in Food & Grocery segments. Above data also point to a fact that Omni-channel Retailing is following the trend of organised retail pattern, currently it is higher in the categories which have higher organised retail penetration.

One example which is a very successful model is the Domino's Pizza. It has been able to give seamless customer experience across its multiple touch points. Today, whether one orders in the store, through the call centre, on the web or mobile app, the choice is similar across the channels and the mode of delivery and associated experiences are also similar. It also successfully transitioned its customers through all these touch points and had created right incentive for them to experience all these channels.

 

How tough it is to manage inventory in this kind of retailing?

One of the prime benefits of Omni-channel Retailing apart from having multiple touch points with customers is the better inventory utilisation. In fact one of the leading Indian Footwear retailers has used this effectively, to cater to customer fulfilment using the inventory from physical stores. In this model, if a customer orders online or in a physical store and if the item is not available in that store but in a different store in another city, it is sent by courier to the customer’s address. The customer can see where the product is available and how much time will it take to reach before ordering.

However in order to get this implemented efficiently, the backend system has to be integrated fully with the sales system and the online and offline inventory have to be synced regularly.  The complexity increases in the fast moving fashion segments if the connectivity of the stores is not good and data transfers are not regular, it can lead to fulfilment issues. Similarly post sales it is important that the system is integrated into the customer’s account to show her the order status and post sales feedback.

What are the advantages of Omni-channel Retailing for a retailer?

A retailer can avail better conversions, faster inventory turnover, better asset utilisation, lower per unit transaction cost and better marketing RoI

What are the challenges associated with it?

While there are many benefits of Omni-channel Retailing, the challenges are plenty and can act big inhibitors for successful implementation of this. Few of the most common challenges include:

·         Conflicts across channels because of channel cannibalisation  leading to sub optimal structures and strategies

·         Non synchronous data management across channels leading to poor fulfilment and inventory management.

·         Legacy systems  inhibiting flexibility and organisational constraint of investment  to overcome this

·         Most importantly, inconsistent customer shopping experience

·         Lack of customer retention due to customers being in trial mode

·         Creating cost-effective  supply chains and suitable delivery mechanisms

 Do you think one size fits all when it comes to Omni-channel Retailing?

While theoretically size is not a determinant for success in this model of retailing, but given the initial investment required to take the benefit of synergy and reduced common costs, this is more suited to retailers in highly organised retail penetrated categories and those operating in bigger cities. Also to take benefit of the network effects of offline channels, a bigger sized retailer definitely has an edge in this model.

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