A Definition of Omni-Channel Retail: What Is Channel Migration And Why Does It Matter?

March 18, 2015

Our partner PFSWeb shared some staggering statistics about omni-channel: only 34% of major multi-channel retailers currently utilize cross-channel inventory visibility, just 8% of major retailers offer a fully synchronized customer care experience between their online and offline channels and only 3% of major retailers stated that their online and offline analytics were fully integrated.

The growth of omni-channel retail

eBay published a report that found 95 percent of consumers frequently or occasionally shop a retailer’s website and store. This study was based on a questionnaire amongst 500 shoppers. While people say they want omni-channel experiences, in reality a much smaller percentage of consumers are shopping across more than one channel in any given year. AgilOne looked at the actual behavior of 10.9 million consumers and found that in 2014 only 12.2% of repeat shoppers (who bought from the same company more than once that year) bought both in the store and online. That number is rising though and it was only 11.7% in 2013. Screen Shot 2015-02-06 at 4.29.28 PM (2)

What are omni-channel experiences?

In our definition of omni-channel, customers are interacting or transacting with your brand using more than one channel. The word omni-channel implies that wherever the customer interacts or transacts with you, you maintain a single view of that customer and you provide the customer with a consistent experience. Let’s look at the difference between omni-channel interactions and omni-channel transactions.

Omni-channel interactions

Most customers interact with your marketing through more than one channel: they visit your website, read your email, encounter your online ads, engage on social media, over the phone, in your stores and they may receive a postcard or catalogue from you. As soon as you use more than one channel for your marketing, you are an omni-channel retailer.

Omni-channel transactions

Sometimes customers don’t just interact with you on multiple channels, they also transact on multiple channels. They buy from you in more than one place – and this doesn’t necessarily have to involve a physical store. You can transact with customers through your wholesale or retail partners, as well as on your company website. Perhaps you sell on Amazon as well as on your own website. Perhaps you have a call center in addition to physical stores. In all those cases, you are engaging in omni-channel retail.

The value of omni-channel retail

If you cannot tie transactions from multiple channels to the same physical person, it is impossible to identify your most valuable customers – and your clusters and other segments are going to be incorrect. In fact, we found that without an omni-channel view you will be unable to identify 70% of your most valuable (top decile) customers!

The value of omni-channel interactions

If you don’t maintain a single view of the customer and provide a consistent experience, customers will be disappointed. An example of what not to do is sending customers a personalized email with “shoes in just your size” and then leading them to a generic website. This is worse than not providing personalization at all – because it sets an expectation that isn’t met.

The value of omni-channel transactions

Here too it is critical to maintain a single view of the customer throughout. If you launch an abandoned cart campaign to customers who already completed their purchase over the phone – these customers will be upset: “do you mean that if I had waited, I could have gotten the item cheaper?”

What is channel migration and why does it matter?

Channel migration is the concept of customers starting out on one channel, but – over their lifetime – migrating to another channel (completely or partially). We analyzed the shopping behavior of 10.9 million consumers to understand channel migration and found that:

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Of all shoppers acquired online (who made their first purchase online), 28% over their lifetime migrated to also buy in the store.

Of all customers who were acquired in the store (who made their first purchase in a store), 22% migrated to also (or only) shop online over their lifetime.

Those are large numbers! It means that if you cannot provide a unified experience across store and online – almost half of your customers will be disappointed over their lifetime.

To learn more about bridging the gap between ecommerce and stores, attend our upcoming webinar on the topic: Bridging the Gap Between Offline and Online - March 26th at 10am PST.