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The Omni-channel Retail Strategy for the Digital Age

Editor's Note: Take a look at our featured best practice, Retail Strategy: IT Cost Management (22-slide PowerPoint presentation). Weak consumer spending; saturated markets; increased consumers demands for service and lower prices; and intense competition has put significant strain on Retail bottom lines and growth avenues. Such low margins force the Retailers to save costs across the operations, including IT, which is vital [read more]

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ipad-tablet-technology-touchThere is no question that the Retail industry has been experiencing disruptive change.

Traditional retailers can no longer survive in a Digital Age dominated by e-commerce.   Even traditional physical stores having an e-commerce presence is not enough, with the rapid growth of Mobile and Social Media.

As technologies and accessibility continue to improve, the 21st century shopper has become more demanding than ever–they want to be able to shop anywhere, at anytime.  Furthermore, the shopping experience across disparate channels must be seamless.

The diagram below illustrates the evolution of the retail experience.


We are now entering the age of Omni-channel Retailing.   Customers now demand information about stock levels, delivery times, and shipping options, regardless of where within the retailer’s network they are situated.

The challenge is to find a seamless solution for both the Customer Experience and internal processes.  This implies an integrated backend across the channels, particularly when it comes to customer data.

For companies to effectively meet customer demands in the Omni-channel Retailing world, they should focus and prioritize their efforts and resources on 3 critical areas:


Omni-channel Marketing

Omni-channel Marketing changes the way we do business.  It allows for a more interactive and personalized brand experience.

Omni-channel Marketing goes beyond siloed behavior.  It reaches customers through all possible touch points and channels.

It is important for our company to decide on a Marketing Strategy specific to our business and offerings.  This is to make sure that marketing goes through the right channels for a specific customer group.

Today, customers are spending more time on Social Media networks and the Internet.  Traditional marketing, such as print and television commercials, is decreasing in favor of Online Marketing.

There are 4 core channels that fall under the umbrella of Online Marketing:

  • Search Engine Optimization (SEO)
    SEO is considered organic marketing and consists of optimizing website content to achieve a higher ranking in search engine results by finding the right keywords.
  • Social Media Marketing
    A good example to look at is Facebook.  Facebook is the primary media, because it is easy to target specific customer groups through their advertising platform.
  • Search Engine Advertising (SEA)
    SEA is a driving force for e-commerce organizations.  This is purchased Online Marketing, such as keywords, Google shopping and pay-per-click.
  • Targeted Email Campaigns
    These represent a cost effective way to reach new and existing customers with personalized content.  These campaigns also represent among the highest in ROI.

As a caveat, while the urge to try something new is encouraging, business must know which channel is most effective (i.e. best ROI) in reaching out to the changing market.

Mobile Payment

The explosion of the e-commerce market has resulted in significant development when it comes to online payment solutions.

Multiple payment solutions have existed within the e-commerce market for awhile.  Recently, mobile payment has been driving sales across the various channels.

Online customers expect multiple payment options.  They demand convenient and customer-oriented payment solutions that can process transactions securely.  This challenges our company to offer the right mix of payment solutions.

A number of innovative payment solutions have emerged in the marketplace.   Enhancements in technologies, more user-friendly software, and a high smartphone penetration rate have overcome challenges regarding security, trust, and ease of use.

There are 5 key trends that have emerged in response to the demands of the Omni-channel Customer:

  • Use of e-payments to facilitate quick and easy payments
  • Managing parts of the payments processing in-house
  • Cost-effective payment solutions
  • Cloud-enabled payments
  • Secured payment solutions

Likewise, key opportunities were opened to optimize the payment portfolio, which include:

  • Negotiate credit terms with the payment solution providers to bring down costs
  • Implement multiple payment solutions to increase flexibility for customers
  • Evaluate how we can make payment options a revenue driver
  • Review our current spend on payment solutions and evaluate profitability of establishing our own invoicing solution.

Omni-channel Supply Chain

The Supply Chain is the backbone of e-commerce operations. Its design is of critical importance.  After all, the setup and execution of the Supply Chain drives Customer Experience.

Traditionally, Supply Chain Management (SCM) has been a key enabler to profitability and long term success.  SCM can be defined as the management of the flow of goods of services, from the movement of the raw materials till the final product is received by the end consumer.

With the rise of the Omni-channel Supply Chain, there are more and more variations and thus complexity in how the final product is received by the consumer.  Omni-channel fulfillment must break down the barriers between the various channels to meet the increased complexity of orders across various channels.

A well-functioning Supply Chain can achieve internal efficiencies, speed up deliveries, and reduce costs.

Today, the Omni-channel Customers of the 21st century demand even more than previous generations.  They expect products delivered whenever and wherever they wish.   For our company to be competitive, we need to re-think order fulfillment and logistics operations to meet the demands of the Omni-channel Customer.  This includes a number delivery and return strategies that retailers now have at their disposal:

  • Dropshipping
  • Click-and-collect
  • Reserve-and-collect
  • Delivery lockers
  • Same day delivery

Each of the Delivery and Return Strategies are distinctly different in terms of application and logistical requirement.  Our company must know which strategy can be operationally effective and optimal to our business model. Regardless what strategy our company takes, what is important is we get to drive excellent customer satisfaction.

An up-to-date Order Management System (OMS) must back up our business to be able to offer all delivery options to our customers.  See the visual below for a depiction of the core components of an OMS.


Are you a management consultant?  You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

Interested in gaining a more in-depth understanding on Omni-channel Retail Strategy?  You can learn more and download an editable PowerPoint about Omni-channel Retail Strategy here on the Flevy documents marketplace.  This presentation discusses these 3 focus areas in detail, including key trends, next steps, and relevant benchmarks.

44-slide PowerPoint presentation
The e-commerce market continues to grow exponentially. More consumers are opting for the convenience of online shopping. This trend has been accelerated by COVID-19. The future of e-commerce is Omni-channel Retailing. A single channel is no longer enough. The challenge is to find a seamless [read more]

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About David Tang

David Tang is an entrepreneur and management consultant. His current focus is Flevy, the marketplace for business best practices (e.g. frameworks & methodologies, presentation templates, financial models). Prior to Flevy, David worked as a management consultant for 8 years. His consulting experience spans corporate strategy, marketing, operations, change management, and IT; both domestic and international (EMEA + APAC). Industries served include Media & Entertainment, Telecommunications, Consumer Products/Retail, High-Tech, Life Sciences, and Business Services. You can connect with David here on LinkedIn.

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