Omnichannel: 5 Roadblocks to Avoid on the

Journey to Omnichannel Retail Success

FitForCommerce Whitepaper Series

November 2015

Written by:

Kathy Kimple and Nico du Plessis, FitForCommerce

Introduction
The most sophisticated retailers are enabling customers to convert on any channel. After all, shoppers
who buy in-store and online have a 30% higher lifetime value than those who shop using only one
channel1. In other words, omnichannel shoppers are the most valuable customers.
As retailers and brands rush to win the battle for wallet share and loyalty, omnichannel retail is in focus. In
this era, retailers must strive to be remarkable by combining physical stores, online, mobile, and social
into a seamless brand experience that encourages loyalty. But recent studies have found a gap between
consumer expectations and the omnichannel experiences that retailers and brands deliver.
Against that backdrop, this white paper outlines the following five pressing challenges:
1. Closing the gap between customer expectations and omnichannel retail execution
2. Engaging in a consistent, personalized way across channels
3. Focusing on customers instead of products
4. Mobilizing stores to serve omnichannel customers
5. Weaving omnichannel into the fabric of the retail organization
Read on for an exploration of how retailers and brands can overcome these challenges by embracing and
executing upon a cohesive omnichannel strategy.
Why Omnichannel Matters
+ Omni-channel shoppers shop more than those who shop exclusively online or exclusively in-store.2
+ Conversion rates at brick-and-mortar stores are higher than for online-only sites (20 percent vs. 4.8
percent).3

1Think

with Google, Omni-Channel Shoppers: An Emerging Retail Reality, March 2015

International, Get Ready for More Omni-Channel Retailing, March 10, 2015

2Colliers
3Ibid

5 Roadblocks to Achieving Omnichannel Success

1. Closing the gap between customer expectations and omnichannel retail
execution
Todays omnichannel, digitally savvy, always-on shoppers expect retailers to know their lifestyle and
preferences. After all, they understand that retailers and brands can and do capture data on everything
from how and when consumers prefer to shop to precisely what they purchase and what they view online.
In other words, shoppers know that retailers are able to formulate a fairly accurate idea of their interests
and motivators for purchase. As a result, they seek relationships, not just transactions. Yet even
omnichannel leaders fall short when it comes to satisfying consumer expectations for personalized,
relevant shopping experiences.

WHAT CUSTOMERS THINK

WHAT BRANDS THINK

ONLINE EXPERIENCES

69% of companies say they offer a superior

online experience.

but

51% of customers who left a company that

failed them blamed the exits on bad online
experiences.

UNDERSTANDING CUSTOMERS

81% of companies say they have or are

but only

close to having a holistic view of their

customers.

37% of consumers say they favorite retailer

understands them.

RELEVANT COMMUNICATIONS

47% of brands say they have a strong

capacity for providing relevant communication.

while
only

35% of consumers say communications from

their favorite brands are usually relevant.

How can retailers start to deliver on customer expectations and optimize the potential of a single
view of the customer?
Successfully implementing omnichannel and personalized shopping experiences require a single view of
the customer. Put simply, how customers buy and what is important to them is paramount. Organizations
must become truly customer-centric and leverage the information at their disposal to gain this
understanding of the omnichannel customer. In practical terms, this comes down to aggregating and
analyzing all customer-related data, including demographics, store sales history, ecommerce sales
history, responses to emails, browsing behavior, and search keywords, to name a few.

4Great Customer Experience Divide, IBM Infographic

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Today, in many cases, retailers and brands have abundant opportunities to know customers and interact
with them as markets of one. According to a recent study, 1/3 of retailers stated that between 25% and
75% of in-store sales are digitally influenced. In 2018, the share of retailers around the world who expect
75% of sales or more to be influenced by digital will double 5.
This development translates into a steady stream of valuable data about shoppers. Moreover, mobile
apps make it possible to spot where shoppers are at any given time and, with shopper buy-in, retailers
can be aware of real-time in-store behavior. Loyalty programs enable retailers to view customers historic
buying patterns. Combine these and retailers can approach shoppers in the moment either in stores or
online or via mobile apps with relevant and engaging offers.
That is just the tip of the iceberg. Retailers and brands can tap into data from website browsing, online
purchases, historical purchases, and back-end systems (such as ERP and CRM) that capture data
related to customer interactions. Pair this with a unique identifier such as an email address or mobile
phone number and the use of advanced technologies including Big Data Analytics. The end result?
The ability to better understand consumers and give them what they want, when they want it. In other
words, deliver on the long-promised goal of addressing consumers as individuals, not as a singular,
undifferentiated mass.

Omnichannel is about providing a shopping experience where customers want it, how they want it, and at
the speed they want it. Some refer to omnichannel as the notion of buying online and picking up in store
but its more than that: it encapsulates all the ways that shoppers can interact with and purchase from
retailers.

2. Engaging in a consistent, personalized way across all channels

When retailers truly view their customers as
individuals, they stop focusing on channels and
instead focus on how to deliver the ultimate
customer experience at every touch point, every
time. However, retailers cannot make this vision a
reality until they stop treating online stores and
physical stores as separate entities. When
marketing and messaging are not consistent or
personalized across channels, the shopping
experience is fragmented and suboptimal.
As mentioned previously, delivering a truly
personalized experience hinges upon marrying
what retailers know from online/mobile and instore behaviors. At the heart of this is recognizing
5

How Much Does Digital Influence In-Store Sales, Emarketer, August 2015

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that shoppers move interchangeably from channel to channel, choosing whatever is most convenient and
effective at a given moment. It is up to retailers to make that experience feel cohesive, ensuring that
messaging is consistent and personalized at every touch point for a one-to-one conversation. This
requires a single view of a customer and seamless coordination of interactions across all customer touch
points including promotions, stores, Web sites, call centers, advertisements, mobile applications and
social media interactions.
To gain that single view,
retailers must assimilate all
the data at hand, including
shoppers online behaviors
and browsing history, instore and online purchases,
inventory,
and
market
conditions, to name a few.
This data usually derives
from multiple sources and it
is therefore imperative to
ensure that systems are
fully integrated. More retailers are tapping into the power of advanced analytics to make sense of this big
data so they can deliver the personalized brand experiences customers expect.
With this unified data in hand, retailers and brands can personalize web and mobile shopping
experiences with content targeted to the individual shopper. And they can deliver personalized offers,
driving the shopper into the store, where a store associate greets the shopper and makes personal
suggestions. They can also deliver a personalized offer via email, text or mobile as the shopper is
entering the store. Macys and other retailers are doing just that through mobile apps that suggests items
and displays coupons and ads for products on the shelves or displays in front of shoppers. 6
Creating an exceptional omnichannel experience for customers
Kohls is employing mobile technology to personalize and enhance the in-store
experience. For example, using in-store beacon messaging, the company
provides shoppers with promotions as they browse through the store. At the
same time, through the retailers Yes2You Rewards program, shoppers can
earn points for purchases online and in-store, and use a mobile wallet integrated
into the app to track, redeem, and share points. By allowing customers to accrue
points through in-store and online purchases, Kohls aims to facilitate a
seamless, omnichannel experience.

StreetFight, Macys Expands Shopkick Beacons to Stores Across the Country, September 16, 2014

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Armed with this knowledge about the customer along with tablets or intelligent point of sale (POS)
systems that display shopper profiles sales associates can recommend fitting products, suggest
relevant cross-sells, and even save the sale if an item is out of stock.
Today, in many cases, retailers can tap into abundant opportunities to know who their customers
are and interact with them as markets of one:
+ Mobile computing apps make it possible for businesses to spot where shoppers are at any given time
with their permission, of course.
+ Loyalty programs enable retailers to view customers historic buying patterns.
+ Social media presents a great opportunity to understand what individuals are shopping for in stores and
online.
+ Location technology allows retailers to identify when a shopper, who has opted in, is about to or has
entered their stores, or where they are in the store.

3. Focusing on customers instead of products

Why do so many retailers fail in their efforts to execute on a customer-centric strategy? In too many
cases, they are largely focused on selling products instead of on delivering experiences that address the
true shopper need or buying intent. To deliver a true and fulfilling omnichannel experience, retailers and
brands must think beyond their products.
Essential traits of omnichannel retail
+ Consistent and positive shopper experience across all touch points and interactions
+ Single version of the truth about each shopper
+ Flexible, responsive and personalized interactions via all touch points
A proven way to satisfy todays consumer expectations is by providing online communities where likeminded shoppers can seek and share advice on products, and immerse themselves in a unique brand
experience.

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Take the example of Performance

Bicycle. This leading retailer of cycling
products
wanted
to
harness
its
employees cycling knowledge to attract
and inspire customers to buy. To do so, it
created an interactive learning center
seamlessly linked to its ecommerce site
enabling knowledgeable employees to
share their tips, tricks and expertise with
customers and visitors. The learning
center attracted a 300% traffic increase
by its fourth month online, and drives
sales by boosting conversions up to 20% 7.

Similarly, Moosejaw Mountaineering one of the leading outdoor-adventure

retailers in the U.S. embedded rich community features into its online
commerce experience to create an engaged customer community. In the process, it is reinventing the way
people shop for outdoor, surf, skate and snowboard apparel and equipment. Just as importantly, it is
positively impacting its business results.
More retailers are also tapping into the power of user-generated content to connect with consumers in
new ways. Consider the example of Steve Madden, a successful footwear and accessories company.
With its site relaunch in 2014, the retailer brought the social activities of its young customers front and
center. The site pulls in images from Facebook, Instagram, and Twitter tagged with SteveMadden and
features them on the homepage. Shoppers are also encouraged to upload their own photos showing how
they incorporate Steve Maddens footwear and accessories into their wardrobe.

Performance Bicycle Pumps Up Customer Base, IBM 2014

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4. Mobilizing stores to serve omnichannel customers

Retailers truly striving to be customer-centric must reconsider the role of their physical stores and sales
associates. The approach to both needs to be redesigned from the ground up to support this age of
context, immediacy, personalization, and information. The experience throughout the entire shopping
journey needs to be executed as a seamless and singular process where the in-store experience is a
natural extension of digital and vice versa. The concept known as endless aisle is one way of
addressing this: retailers place tablet kiosks at the end of aisles so consumers can conduct research and
purchase products much as they would via their computers or mobile devices. In other words, consumers
can access and order from the full catalog of available products, even those that are not currently in the
store.
Enabling a seamless, omnichannel experience also extends to shopper interactions with store associates
and customer service both online and in person. In fact, shoppers expect store associates to be
knowledgeable and informed. This means associates must be able to sell and assist in store and use
online tools and selling technology. For example, store associates must know how to place an order and
ship it to the customer if an item is out of stock in the store. And they must know how to check the online
order status for a customer in the store.
Imagine sales staff adding to revenue by placing an order for store pickup or delivery to the consumers
house rather than simply saying Sorry, we dont have that size in stock. By doing so, they save the sale.
Considering that 37% of shoppers purchase additional items when they are picking up other items in
stores, a sales associate with an accurate view of each shopper can deliver additional conversions. Not
only does this immediately boost the top line, it helps retailers decrease markdowns on unsold inventory,
both of which lead to higher profits.
Executing on this requires the aggregation of multi-channel data, the use of advanced analytics, and
equipping store staff with tools/technology that informs them of each shopper. It also mandates that
retailers break down channel and department silos,
align goals across channels, and encourage and
incentivize employees to deliver on the omnichannel
promise.
Similarly, giving shoppers visibility into inventory can
go a long way. Customers expect to be able to view
inventory availability in store on the web
site. Additionally they expect that inventory number
to be accurate. The retailers challenge is how to
display inventory and allow for unit inaccuracy,
shrink, and sales that day.
Its also imperative to adopt new fulfillment methods
and commerce approaches, including buy-onlinepick-up-in-store (BOPIS), ship from store, buyonline-return-to-store, and save the sale, to name a
few. Even if an item is not available from the store,

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shoppers will be pleased when presented with a choice, such as shipping from another store. Or shipping
from a store when they are shopping online.
The upside of taking an order online and shipping items from stores is the ability to lower in-stock
inventory, decrease shipping costs and offer customers faster shipping. But achieving this goal requires
solid planning and mapping stores to the online warehouse, which is only possible when leveraging fully
integrated systems that offer cross-channel capabilities. For example, if a California-based customer
orders online, it may be better that the retailer fulfill the order from store inventory in California than from a
warehouse in Kansas. Order Management technology can help companies make intelligent fulfillment
decisions and orchestrate orders across channels to better serve customers, optimize the use of
inventory, and reduce fulfillment costs for higher profits.

Previously inventory planning and replenishment were siloed: the sale began and ended in store (or
online). Now the lines are blurred: the sale might start online but inventory might come from a physical
store.
It goes without saying that an effective omnichannel environment is built upon integrated departments and
channels, with measurements and compensation that are aligned to support an omnichannel strategy and
approach. Along those lines, retailers must design and monetize store associate and store management
incentives. Store associates need to be incentivized to place an online order rather than simply tell the
shopper an item is out of stock. That said, rather than focusing on who gets credit for the sale if a store
manager points a shopper to a store that has the item in stock, retailers should consider whats best for
their customers.
Retailers must also develop new tools for tracking service online and in store to get a sense of the
customer experience and satisfaction. Consider that when shipping from ecommerce-controlled
warehouse, retailers closely monitor SLAs for first-in-first-out and other key activities and metrics.
Retailers need to monitor how they are handling new processes (such as ship-from-store) to ensure
stores are maintaining the same service levels and delivering a consistent, quality customer experience.
This includes understanding how stores are performing in terms of placing and fulfilling orders. Imagine
that store A fulfills 100 orders a week for ship-from-store and Store B only fulfills 85 of its 100 orders a
week. By monitoring, the retailer can figure out why store A is performing better than store B. Is it because
of management or technology or process? Only the right data and analysis tools can help pinpoint the
cause.
All of these changes require buy-in and leadership from the retail executive team. This team has to set
the tone and expectation on service and training, focusing on all aspects of sales along with all customer
touch points and their interconnectedness. And it all hinges upon omnichannel being woven into the fabric
of the retail organization.

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5. Weaving omnichannel into the fabric of the retail organization

Retailers rely on a plethora of technologies and processes to enable omnichannel. However, often, these
systems and processes including those used to power inventory, call center, payment processing,
ecommerce, POS, ERP, and email are siloed. As a result, it is impossible to deliver a truly satisfying
customer experience.
In the midst of this evolution, retailers cannot afford to relax when it comes to omnichannel
transformational activities because technologies that were cutting-edge last year are now considered
table stakes.
Instead of cobbling together systems and relying on ad hoc processes, retailers need to adopt a holistic
approach to omnichannel operations. Regardless of where, when or how a shopper decides to purchase,
retail systems and processes should enable a smooth experience and transaction. In other words, these
systems and processes must be integrated so retailers can truly support a channel-agnostic order and
experience.
Retailers need to develop new techniques and processes for understanding, planning and
replenishment in this new omnichannel world. These include:
+ Intelligently initiating the best possible omnichannel fulfillment decision at the moment of the sale in the
most profitable manner
+ Planning for and managing inventory and ensuring its in the right place at right time
+ Clearly communicating the details of multiple shipments when fulfilling a single order
+ Tracking performance when shipping from store, just as when shipping from a centralized warehouse

It is counterproductive for retailers to invest hundreds of thousands of dollars in technology that will be
outdated in a year or two (for example, kiosks with card readers). Instead, they must scale their
investments and protect against obsolescence. That requires the ability to determine what bleeding-edge
technology has staying power when it comes to omnichannel. To date that has included technologies for
mobile POS, mobile wallet, omnichannel distributed order management, mobile store associate apps (for
example, clienteling and save the sale) and line busting. At FitForCommerce, we help many retailers
select technology partners and often recommend finding a partner with a track record of being cutting
edge and delivering commerce innovation, rather than work with point solution provider with limited R&D
budget.

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Best Buy: Transforming its business by embracing omnichannel best practices

Though Best Buy runs 23 distribution centers in the United States, most are
dedicated to feeding stores, not fulfilling online orders. As a result, only distribution
centers set up for online fulfillment and with an item in stock could serve a customer
who wanted to buy the item online. To compensate for this shortcoming, Best Buy
implemented a ship-from-store initiative with store employees in its 1000-plus retail
stores packing and shipping online orders. This has opened up store inventory to the
online channel and significantly reduced shipping times.8

As retailers spearhead their omnichannel approach, they must answer the followingquestions:

Are our stores and call centers properly outfitted with the hardware / devices needed to support
omnichannel?

Can we offer the convenience of accessing an order via any channel throughout the entire
shopping lifecycle?

Are we providing a consistent experience i.e. pricing, availability, notifications, etc. to

customers regardless of channels?

Do we service customers with flexible fulfillment scenarios across all channels?

Can we access near real-time inventory availability?

Is payment processing for stores and online synced?

Can sales associates see order status and place orders for out-of-stock items?

Can employees whether in the call center or in the store access a single view of the customer
across channels?

Do our processes, technology and training enable our store associates to easily cross-sell when
customers pick up orders in the store?

Can employees serving any location whether a physical store, the ecommerce store, or the call
center easily support customers?

Can we seamlessly orchestrate fulfillment and delivery of complex orders from multiple channels?

Business Insider, Best Buy has dramatically turned its business around in the last three years, August 31, 2015

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Conclusion
Todays empowered consumers want to shop anywhere, anytimeand they expect nothing less than a
seamless experience with all their needs accommodated as they shift among mobile, digital and physical
channels. They want the freedom and choice of online shopping, balanced with the comfort and
immediacy of a physical store. They want to research and select items from their armchair, check out
offers when theyre on the move and then try out products in the store.
The challenge for retailers is to integrate people, processes and technology to present a single storefront
to the world and address the entire journey with the consumers convenience in mind. Achieving this
fine balance requires full visibility into inventory, efficient management of the supply chain and a solid
grasp of customer data. It also requires putting the right technology and processes into store associates
hands.
Retailers need to rethink their approach and seek to leverage an open, scalable and agile omnichannel
commerce platform and a solution partner with proven track record for delivering innovation to the
commerce market. Without a doubt, its a logistical challenge. But when retailers digital and physical
environments work together seamlessly to enable an optimal shopping experience, they reap rewards in
the form of customer loyalty.

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This white paper is made possible by the support of IBM:

IBM provides retailers and other direct to consumer organizations omni-channel commerce
solutions for a unified approach to managing evolving digital and physical channels. With IBM
Commerce, organizations can deliver a seamless and differentiated brand experience across all
digital and physical channels of customer interaction. In addition, brands can build intelligent
fulfillment processes, guide shoppers through the process of configuring complex products and
services, and determine prices, promotions and markdowns to maximize sales across channels.
Learn more: www.ibm.com/b2c-commerce

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FitForCommerce
40 Highland Ave
Short Hills, NJ 07078
973.379.7399 phone
973.404.8855 fax
[email protected]
www.fitforcommerce.com

FitForCommerce is a leading consulting firm, helping ecommerce and

multichannel retailers and manufacturers grow their online retail operations.
Our consultants bring decades of practical, hands-on experience to guide
merchants in defining ecommerce strategy, selecting the right technologies,
and building online marketing, merchandising and best-in-class website
experiences all using a rigorous ecommerce Diligence process and a
vast knowledge base built on our work with hundreds of leading retailers.

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Copyright 2016 All rights reserved. FitForCommerce, the FitForCommerce logo, and all other FitForCommerce products and
services are trademarks of FitForCommerce. All other trademarks are the property of their respective owners .

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