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Why building omnichannel capabilities are crucial for retail businesses

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With the onset of the pandemic, consumers needed a contactless way to shop. Today, they are hopping across multiple channels, while shopping brands and retailers are compelled to ensure that they offer a consistent experience across all touchpoints. The pandemic has accelerated the need for an Omnichannel marketing strategy across all brands and retail businesses as buying habits are now constantly evolving in the wake of the need for sanitization and the importance of no touch.

In an attempt to get a 360 degree view of how to build Omnichannel capabilities, India’s first Digital Transformation Strategy Summit, PHYGITS LIVE conducted a session title, Building Omnichannel Capabilities, on January 12, 2020. The session was powered by OMUNI (Arvind Internet). It was moderated by Mukul Bafana – CEO – Omuni. The panelists included:

  • Himanshu Chakrawarti – CEO, Unlimited
  • Namrata Chotrani – CEO, Khadims
  • Ranjan Sharma – CIO, Head of SCM, Captive E-commerce Business and QA, Bestseller

Omuni, powered by Arvind Internet is India’s leading Omnichannel retail enablement platform built by retail practitioners and industry insiders who understand the complexities of Omnichannel retail transformations, both technological and operational.

What Omnichannel Means For Brands & Retailers

Although Omnichannel has been a buzzword of modern retail for quite some time now, it still has the ambivalence of being open to many interpretations, stemming out of respective business requirements.

“Omnichannel can be very different for different people. For us, Omnichannel is a means of ensuring seamless customer experience across offline and online channels with regard to purchases and returns. So, whether our customers are shopping from one of our stores, through our website, or from an online marketplace, they should have a similar experience and our Omnichannel strategy helps us to ensure that. When a customer orders from our e-commerce store, our Omnichannel strategy helps us to improve customer experience in terms of time, our working capital efficiency and reduce logistics cost. At the same time, it also helps us to ensure that the exchanges and returns are as easy as buying,” explained Namrata Chotrani.

According to Himanshu Chakrawarti, Unlimited views Omnichannel from two sides – the demand and supply. “We are in the era of everyday commerce – we can’t determine where the customer should go. Especially after the pandemic, we don’t have the choice to leverage on only one format of retailing. So, on the demand side, we have to be available to fulfill customer demand wherever and whenever he wants. In the supply side in today’s integrated world, all the store networks need to be available, warehouses need to be technologically manned by modern tools and needs to include both marketplaces’ and own warehouses,” he stated.

“In the post COVID era, it is paramount for retail businesses to integrate all supply sides, including dark stores with the demand side. For us this is what our Omnichannel strategy helps us to ensure,” he added.

Bestseller, meanwhile, is working with a portfolio of brands, each with a different target segment and markets and its Omnichannel strategy chiefly focuses on improving inventory across all channels, ensuring uniform customer experience across all channels and elevating consumers’ digital journey overall.

“One of the most important aspects of fashion retailing is product trials. This is one aspect we are hoping to solve, however difficult it might prove to be. Moreover, returns are increasingly getting higher by the day. It’s not only enough to give the customer an easy buying and return/exchange experience. We need to ensure that his purchases are fruitful. Let’s say a customer buys a product online and after it reaches him, he realises that the color is vastly different from what he saw on his smart device. While return/exchange is easy, it was not a fruitful purchase for him – he might not be able to use the product for the intended occasion. Solving things like these are our vision of an Omnichannel strategy,” says Ranjan Sharma.

How COVID Changed the Omnichannel Playbook

The COVID-19 pandemic has not only accelerated the pace of Omnichannel adoption in all retail segments but also forced brands and retailers to fundamentally change their Omnichannel playbook. But do we have the infrastructure intact to take it forward?

“The pandemic has definitely accelerated our thought process about Omnichannel and e-commerce. But I am not sure if the infrastructure and the backend is as ready yet. There have been dialogues about social commerce, conversational commerce, vernacular voice assistance, etc., but has the backend been taken care of?” asks Namrata Chotrani.

According to Chotrani, the supply chain and the backend are still not as agile as they need to be for e-commerce. Also, many companies still stack the internal capabilities to execute an Omnichannel strategy.

Echoing similar sentiments, Himanshu Chakrawarti opined that the entire playbook has changed after COVID. “Although we call it an accelerated pace of adoption, in my opinion, the entire thing has changed. The tables have turned, and the power has now been transferred into the hands of the customer. It’s the customer who owns the planning and execution today – in a very DIY manner. The new normal is very different and we command new skill sets through the entire fashion retail value chain. So, the quicker we accept that this is a new journey altogether, the sooner we will be able to navigate through it,” he added.

Physical Stores of the Future

With the rapid shift to digital after the pandemic retailers were posed with a slew of challenges. As stores were shut, there were challenges like operationalizing digital, working with vendors, etc. And with the impact of the pandemic expected to last for years, retailers and shoppers will be adjusting to changes long after COVID-19 has been contained. At the same time, the role of stores is rapidly graduating from being just shopping experience destinations – physical retail stores of the future are expected to play a multi-fold role.

“Stores are changing fundamentally, and we have seen a big shift happening lately. The biggest shift is that we don’t have the customer in stores, still we are servicing them for a product that they would have bought somewhere else, on some channel, at the SLA at the time which you are supposed to deliver. Stores are not geared up for this aspect of the supply chain for now,” said Ranjan Sharma.

Traditionally, stores were equipped to handle more customers through their buying journey and help them decide on a product and complete that journey in terms of selling the product. Stores were seldom equipped with back stores that could potentially aid them with warehousing activities in terms of picking, packing, and shipping. Neither did stores have the capability of ensuring the right quality check before shipping out a product. Hence, after the shift brought by the pandemic, most stores were struggling to keep up with the new normal.

“Earlier, we started only with endless isle orders that were coming to the store. This was a very minuscule number that we had to fulfill. Now, especially with our own online store orders falling in, the numbers are going through the roof. Then there are the orders from the online marketplaces and partner orders. The biggest challenge is coping with their packing instructions, logistics mandates, etc. So, stores have now transformed into fulfillment centers,” Sharma added.

Rationalization of Digital Channels

COVID-19 has also accelerated channel rationalization across the world in the online world. “In the physical world, we were all accustomed with each of our channels and the returns that they promised us – be they EBOs, MBOs, trade channels, distributors, whole sellers, etc. In the online world, it is for the first time that we are witnessing the rationalization of channels happening much faster than it used to pre-COVID. Now we have a fair idea about what marketplaces, our own online stores, etc., do for us,” stated Mukul Bafana.

Himanshu Chakrawarti believes that the entire eco-system of platforms buying from brands is inefficient and will eventually be phased out. “It is an inefficient one because we are going through an inefficient mechanism of finding appointments in their system going through their whole peak load balancing, excess inventory, etc. Other than the Supplier Management By Objectives (SMBO) model, the rest of the outright and S-O-R models are very inefficient and will be phased out in the near future,” he stated.

This essentially means that the drop shipping model will gain ground in the years to come. “So basically, we need to work on making it a drop ship model. And in this model I am including both stores, dark stores and warehouses. So, we are working towards building capacities in this line,” he added.

He also said that another big change is customer acquisition that is now predominantly digital first and this has posed a big problem for retailers and brands. “Earlier, customer acquisition was largely non-digital – customers used to come from either traditional media or people discovering us in malls and high streets. Now that it’s digital first, we need to ensure that we land them on great experiential pages. So, customers are going to experience us first in our digital stores, and we need to invest in technology to ensure that we give them a great experience,” Chakrawarti explained.

The primary goal of most businesses today is to be present in all channels and make sales. But it takes efforts from all these channel partners to make it a win-win model. “We want to be in all channels where we can make profit. But as discussed, a lot of the models in practice by online channel partners are not the most commercially viable models. Brands and retailers need to work on various aspects of successful cataloging, effective marketing getting noticed, to be able to differentiate competition, etc., to be visible in marketplaces. At the same time, marketplaces will have to evolve on their Omnichannel front – there’s still a lot that has to be done,” stated Chotrani.

Going Ahead

Ranjan Sharma revealed that for most brands and retailers, Omnichannel is impacting the currencies and merchandise. In an industry like fashion that is synonymous with unsold inventory, the challenges are to improve sales through inventory returns, move inventory faster through the entire supply chain.

Moreover, there has to be a paradigm shift in terms of change in mindset. Every stakeholder of the entire retail chain needs to change with the times to be able to offer a seamless experience to consumers across channels.

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