The rise of omni-channel

The rise of omni-channel

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Underneath this seeming chaos, data analysis reveals clear trends that drive industry activity. E-commerce is the new “traditional” channel and the future of retail is omnichannel.
1. E-commerce penetration has been steadily increasing for consumer electronics, computers and apparel and accessories. Despite the fact that 30 percent of all store closures are from these categories, they account for nearly a third ($150bn) of total e-commerce sales. The store closures are of those retailers who don’t add value in customer experience, such as RadioShack or Payless. Brands with great in-store customer experience like Apple or Ulta are thriving. Our analysis also indicates a few product categories where e-commerce penetration is low are poised to break out. These include categories such as Cosmetics and Personal Care, Healthcare (Vitamins and Nutraceuticals), Groceries and FMCG consumer goods. In these categories, e-commerce sales are less than 10 percent of total retail sales. But their growth rates are on a constant increase:
Cosmetics has had a consistent e-commerce sales growth of 15 percent to 20 percent over the past few years. Groceries and FMCG are just taking off, growing at over 25 percent YOY in 2017

2. Customer behavior has undergone a rapid and a possibly permanent shift. Most customer journeys are digital-first. Some 81 percent of US consumers begin their product search online. Product discovery (over 90 percent by some estimates) begins on search engines. Almost a quarter of online shoppers (23 percent) are influenced by social media recommendations, advertisements and reviews. For any retailer, building an engaging digital relationship with customers is essential. This needs to translate to an equally-engaging and seamless in-store experience.
3. Amazon accounts for nearly 40 percent of US e-commerce sales and is uniquely positioned to both drive as well as capitalize on changes in consumer behavior. The Amazon marketplace is a great sales channel for any retailer who wants to go online. While there are at least 100,000 sellers making more than $100,000 in revenue on Amazon, it is highly standardized and is perfect for products and categories with high e-commerce penetration. Businesses wanting to create a distinct brand and customer connect may need to do it outside the Amazon ecosystem.


4. Consumers’ expectation of speedy delivery is driven by offerings like Amazon’s Prime shipping. The top three factors that influence where US consumers shop are price, shipping cost and speed, and discount offers. Amazon offers a combination of all the three.

However, many businesses and brands continue to prioritize packaging and customer experience over speed. Blending online and in-store shopping with services such as Click and Collect, Buy Online Return in Store (BORIS) are helping omnichannel retailers manage fulfillment. Logistics companies are experimenting with delivery models, collaboration networks and focusing on supply chain visibility via technology. The motive behind this is to become agile enough for customizing supply chains.

The Outlook

In the coming decade, omnichannel retailers and third-party fulfillment companies will deploy technology-led innovations to enhance customer experience. We expect increased focus on in-store experience with the use of digital technologies and augmented reality to personalize consumer journeys. In the logistics function, advanced predictive algorithms will lead to increased supply chain visibility, localized inventory will be managed via smaller, even mobile, fulfillment hubs, and technological advances in drones and driverless vehicles will influence last-mile delivery

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