How The Omnichannel May Fail

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It’s hardly news that several years of intense competition have left traditional bricks-and-mortar retailers reeling - in many developed economies, where consumers switch to online shopping for a growing proportion of their spend.

Here in the UK, once-iconic retailers such as House of Fraser and Debenham have been facing major troubles very recently. To blame - well, various factors ranging from poor asset management and increasing supply chain risks, to changing consumer tastes and expectations. But, high on everyone’s list is the rise of e-commerce and in fact what is known as multi-channel shopping.

For instance, the UK’s online grocery sector sales are expected to reach £13.5 million in 2019, according to Office for National Statistics, which contributes to 7.5% of all grocery retail sales. The sector also expect 8-10% annual increase in next five years, while bricks-and-mortar retailers these days count even tiny positive growth rates as a success.

Omni-channel retailing refers to ideally a seamless customer journey throughout multiple product search, selection, purchase, delivery, collection and return touchpoints. The consumer might find out about a product on social media, collect more information about it through a product/price comparison mobile app, buy it from a grocery shop website through a third-party payment method like paypal, and collect the item from a local shop, while they can simply switch to many available options at any stage of the above shopping journey.

In each case, the idea is for the retailer to present one seamless face to the consumer, with a brand, range, fulfilment and returns service. In fact, the customer does not care who provides the product information, handles the payment, makes the delivery, or manage the return. She just needs transparency, consistency and of course security.

The crucial element of such a system is data integration, where the product, payment, delivery and return data are visible and consistent throughout the omni-channel system, and changes and updates of the above data are synchronised across all channels.

With these features and expectations from an omni-channel system, any miscommunication or inconsistency may damage the customer experience. For example, when customer makes the purchase from retailer X, they don’t expect to receive various confusing messages from credit card company Y, or delivery company Z separately about their payment or delivery. They just want to deal with retailer X, and the rest is the retailer’s responsibility to manage and coordinate all other activities around that purchase.

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Our work in this area is critical to professionalising the supply chain profession and a  key area explored within the Leading Procurement Strategy Programme and Supply Chain Management Programme to enable effective skills for next generation professionals in these areas.

Blog produced by:  Dr Soroosh Saghiri, Senior Lecturer and Course Director of Leading Procurement Strategy Programme at Cranfield School of Management.

Read more:

Leading Procurement Strategy brochure

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