6 advantages and disadvantages of an omnichannel distribution strategy

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Kayla matthews

An omnichannel strategy is great for customer service, but it can be difficult to implement. Omnichannel requires a refined system that works across multiple channels, primarily in-store and online. No matter where the customer interacts with the business, the experience is the same.

This strategy should not be confused with multi-channel marketing, which only uses a few methods to engage the customer. Omnichannel marketing keeps everything in sync. For example, if a customer orders something online, they should be able to pick up that package in store without any problem.

Yet omnichannel is complicated. Here are three advantages and three disadvantages of omnichannel marketing.

Pro: Customers have better access to products

When a customer has the option to purchase a product anywhere, they will have a better experience with more than one option. In fact, 54% of shoppers say they’re more likely to do business with a brand that uses multiple channels to sell products.

Having a physical and online presence improves brand recognition and loyalty. Building customer loyalty is easier, cheaper and more effective than attracting new customers.

Disadvantage: More chains open the door to online competition

Competition with other stores or brands will always be an uphill battle. When you offer multiple sales channels, you have more competition. If customers like something in a showroom, they can pull out their phone and comparison store.

There aren’t a lot of ways around this problem except to get customers to choose you. Offering discounts to loyal customers or offering a certain percentage of discount for online purchases / in-store pickup could increase your number of buyers.

Pro: Customers are spending more time and money in your store

Being an omnichannel business is already an incentive for consumers to choose you. Offering your inventory across multiple channels can lead to increased web traffic, which could lead to more in-store sales. Shoppers who focus only on physical or online stores, not both, will still be drawn to the omnichannel offering. More incentives to buy in-store, online, or both can create more omnichannel buyers from your customer base.

Urban Outfitters is a prime example of a successful omnichannel strategy. Urban Outfitters’ omnichannel shoppers spent 3.5 times more money than their regular customers. However, the success can be largely due to their many stores. Having so many physical stores allows shoppers from almost anywhere to take full advantage of the company’s strategy.

Disadvantage: multiple channels result in lower margins

Omnichannel looks set to generate higher profit margins. However, each channel is chargeable. Storing, packing, and delivering inventory from multiple locations costs money.

One of these solutions concerns company vehicles. In 2016, sales of small work vans in the United States increased 8%, but sales of large vans rose 18% in a single quarter. Other companies have already looked for solutions to increase their margins. Adding extra storage space and faster delivery also help.

Pro: More flexibility saves time

An omnichannel distribution strategy means keeping track of everything across multiple platforms. If customers can pick up an online purchase at a store, they should be able to return that same product, even to a different location, too. Flexibility of options increases customer satisfaction and sales.

According to Accenture, 75% of B2B customers are more likely to make additional purchases from the same companies if their omnichannel strategy is working well. Additionally, 72% of B2B companies in the same survey said they value their omnichannel customers more, primarily because they quickly become loyal and are more easily satisfied.

Disadvantage: omnichannel relies on open communication

Open lines of communication are good for business, but it’s also complicated. If different systems do not communicate with each other, an omnichannel system will not work. The creation of a communication plan is vital, as is the establishment of an IT system common to all channels. While working through the issues can be stressful at first, the effort will be worth it as the process becomes easier with time and experience.

Starting an omnichannel system can be made easier with the right back office technology across all areas of the business. If each industry has a different focus and vision for the end product, then the organization will most likely fail. Keeping the expectations of omnichannel systems in making aligned business goals increases revenue and service continuity. Technologies such as automation and RFID can also keep communication flowing.

Omnichannel strategies are essential

Technology has had an impact on the way we shop. A business unable to merge online and offline platforms is less competitive. Moving forward may require an omnichannel distribution strategy. Preparation is crucial to making this potentially successful transition.

Author: Kayla matthews

Kayla matthews

Kayla Matthews, business productivity blogger and technical reporter, graduated in English and Technical Communications from the University of Shippensburg. As a seasoned writer, she is passionate about business technologies, business productivity and organizational improvement. Kayla is fully committed to writing compelling stories while communicating complex industry topics to large audiences. She’s written for sites like American Machinist, Freight Waves, Retail Insider, Electrical Contractor, and more. Matthews was named one of IBM’s THINK influencers in 2018. For more, visit ProductivityBytes or follow her on Twitter @KaylaEMatthews.

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