Omnichannel vs. multichannel 2024: What’s the difference and who is doing it?

Omnichannel is a buzz word that’s been around for years, but is still often confused with multi-channel when it comes to retail.

Definition: What is omnichannel?

Omnichannel is a strategy used in e-commerce, retail, and marketing that aims to deliver a consistent and reliable experience to customers across all channels.

As customers transition between different channels, their applications and data follow seamlessly, delivering a uniform experience from start to finish. For a retail e-commerce business, this translates into delivering a consistent shopping experience across all channels – including both physical and digital store fronts.

Most retailers are now multichannel, where they sell their products across more than one channel. Very few, however, are truly omnichannel.

How does omnichannel retail work?

Omnichannel retail works by integrating and synchronizing multiple channels to create a seamless and consistent customer experience, regardless of how or where a customer interacts with the brand. This is achieved by:

1. Integrating across all channels where the brand interacts with its customers: Whether it’s a physical store, an online website, social media platforms, mobile apps, or call centers, all these channels are integrated. The aim is to ensure that customers can move seamlessly between them without any disruption in their shopping experience.
2. Centralizing data management: This means that every interaction a customer has with the brand – whether they’re browsing the online store, buying in-store, or asking questions on social media – is recorded in a centralized system. This unified approach to data management allows for a more personalized shopping experience as the brand understands the customer’s preferences and history across all channels.
3. Real-time inventory management: An omnichannel retail approach requires real-time inventory visibility across all channels. This ensures that whether a customer is shopping online or in-store, they have accurate information about the product and its availability.
4. Offering flexible fulfillment and returns: Omnichannel retail often includes flexible options like buy-online-pick-up-in-store (BOPIS), ship-from-store, and easy cross-channel return options. This flexibility allows customers to choose the most convenient way to receive their purchases and return them if necessary.
5. Consistent customer service experience: An omnichannel retail experience is incomplete without a customer support that is streamlined across all channels. Whether a customer reaches out via email, phone, or social media, they expect to receive consistent and informed support.
6. Personalized customer interactions: By leveraging data from various channels, retailers can personalize interactions. For instance, if a customer adds an item to their online cart but doesn’t complete the purchase, they might receive a personalized email reminding them of the item, or see a targeted ad on social media.
7. Consistent brand experience: The brand’s visual identity, tone, messaging, and overall customer experience must be consistent across all channels. For example, if a promotion is offered in-store, it should also be accessible online and via the brand’s mobile app.

What is multichannel?

Multichannel is a strategy where a business provides customers with various sales channels to make purchases. This approach is often confused with omnichannel.

Key sales channels in multichannel retail typically include brick-and-mortar stores, online stores or e-commerce platforms, third-party marketplaces (e.g., Amazon), social media platforms (like Facebook Marketplace, TikTok, and Pinterest), and mobile applications to facilitate shopping on the go.

How does multichannel retail work?

Multichannel retail operates by providing customers with multiple, distinct channels through which they can make purchases – but these channels function independently of each other. It is characterized by:

1. Siloed sales channels: In multichannel retail, the business offers several sales channels, such as physical stores, an online website, mobile apps, social media platforms, and third-party marketplaces like Amazon or eBay. Each channel operates as a separate entity.
2. Independent operations: Each channel typically manages its own operations, including inventory, marketing, and customer service. For instance, the stock available in a physical store might be different from what’s offered online.
3. Fragmented customer interaction: Customers can choose their preferred shopping channel, but their experience is confined to that specific channel. Customer interaction and data are not shared across channels. For example, a customer who buys a product online will typically have to follow online processes for returns or customer support, separate from the in-store processes.
4. Separate marketing and promotions: With multichannel retail, marketing efforts are often channel-specific. A promotion running in a physical store might not be available online, and vice versa. Each channel may have its own marketing strategies and campaigns.
5. Inventory management: Each channel may have its own inventory management system. This can lead to disparities in stock levels and availability between channels.
6. Data collection and utilization: Data collected from each channel is often used independently to understand customer behavior and preferences within that specific channel, rather than being integrated to form a comprehensive customer profile.
7. Disconnected customer experience: In multichannel retail, customer experience is typically siloed per channel. If a customer interacts with the brand through one channel, that interaction doesn’t influence their experience on another channel. For example, a customer’s preferences available to personalize the online store does not translate to a personalized experience in the physical store.

Omnichannel vs multichannel

Although both multichannel and omnichannel involve selling across multiple physical and digital channels, the key difference is how the customer experience is joined up across those channels.

A traditional multichannel retailer may have a website and physical stores. These two channels are generally very siloed, and have very little interaction with one another.

Stores will have their own stock and will sell directly to customers, while the website will have its own stock. Items purchased in stores can only be returned in store, and sometimes online orders cannot be returned in-store. As a customer, your online interaction with the retailer is completely separated from your offline interaction. In essence, the online and offline channels are treated as separate businesses.

However, today’s consumers do not tend to see a brand in silos.

They are likely to have multiple touchpoints with a retailer and expect their customer journey between each touchpoint or channel should be seamless. I don’t see a retailer’s stores and website as different companies or silos, but often my experience across one channel is completely separated from another channel.

I want to be able to interact with the brand:

1. Online
2. Through social
3. On my mobile
4. Or in-store

…and I want each of these interactions to be unified.

Today’s consumer will script their own journeys across the multiple channels and touchpoints, and every one of them matters. Forcing a customer to stick to a single channel or making them start at the beginning when switching channels creates friction and impacts the customer’s experience.

The key difference between multichannel and omnichannel is that omnichannel joins these touchpoints together so that, whatever journey the customer chooses to take, the experience is consistent and unified.

If it’s that obvious, why isn’t everyone doing it?

Although many retailers have elements of omnichannel within their business – BOPIS, click and collect, or reserve in store for example – very few have fully embraced or implemented it throughout their business.

Retailers like Office Shoes and Oasis have an endless aisle solution that allows users to make in-store purchases for items that are available online, but not available in the store, as well as making stock that is in store available on the web.

Other brands like Argos have been leaders in initiatives like click and collect. However, it is hard to find examples of retailers who have driven omnichannel throughout their entire business.

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Examples of omnichannel retail done right

So, who are some of the brands running successful omnichannel strategies?

1. Nike: Nike is a fantastic example of using omnichannel to drive more sales and improve CX. Using personalized suggestions and meshing with in-person retail, each step of the customer journey has been enhanced to optimize CX, with great results – they’ve seen digital revenue growth of 35%.
2. Disney: Disney began their epic journey by first building a community and content, then using that loyal community, they launched products appealing to the community while also selling via wholesale partnerships. Of course, all of that was a path to their current kingdom of success, including their own stores and Disney+.
3. Starbucks: Starbucks uses an omnichannel funnel to drive in net-new and increase loyalty over time. Their funnel works something like this:
   1. A new customer goes into a store after seeing an ad, getting a gift certificate, etc.
   2. They order and check out quickly, while taking in the full experience
   3. Their purchase likely signs them up for a newsletter – and the newsletter contains multiple coupons offering discounts for in-store purchases
   4. After using a couple of those coupons,  the customer is prompted to join their rewards program, which has even more discounts and makes checkouts even easier

Cost and ROI: Barrier and benefits of omnichannel

One of the biggest barriers to the implementation of omnichannel is the cost and complexity of doing so.

A retailer with a physical presence is likely to already have a legacy in store POS system that’s been highly customized for them. Their order management and ERP systems are likely to be very bespoke and highly integrated into their internal business systems.

The implementation of omnichannel across a business is likely to require significant investment in technology and business change. This technology will need to integrate right across the business and even replace some legacy systems. This takes a huge amount of vision and commitment by a business, and needs to be driven from the very top for it to be successful.

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Availability of suitable technology

Whilst there are a number of companies offering solutions that can help a retailer move towards omnichannel, there are very few technology solutions available that cover multiple significant areas of an omnichannel business.

There are many sophisticated POS solutions available, but how many also offer enterprise web or mobile capabilities? There are many enterprise e-commerce platforms available, but how many could replace a POS in-store?

Platforms are beginning to get up to speed with solutions which, when customized, can act as a POS for certain retailers. Demand and innovation is driving the technology forward, but there is still a long way to go.

Culture shock: Businesses must adapt to new ways of thinking

Another large barrier to the adoption of omnichannel commerce is the culture of a business. For a business to be successful in any kind of digital transformation, it needs to be driven from the board downwards. It requires almost every member of staff to embrace it and to adapt in their role.

One of the biggest cultural challenges a bricks and mortar retailer will face when implementing omnichannel is resistance from in-store staff.

In a multichannel world, store staff are likely to see the retailer’s digital business as competition. They’ll get commission from selling in-store, so they have little incentive to encourage customers to purchase online.

If you’re paid on commission for orders in-store, you’re much less likely to focus your attention on someone who you think will buy online, rather than someone who is likely to buy in-store.

Sales staff may even try to encourage the customer to purchase something that is available there and then – rather than what they actually want – which will ultimately be a to detriment to that customer’s experience.

The key to overcoming this cultural challenge is to ensure that your technology allows you to track and log in-store interactions with a customer who then continues to purchase online.

For high-ticket items such as furniture, a user may have multiple online and in-store interactions with multiple people within the retailer’s business. This may be in-store, online, on the telephone, or via live chat and probably a combination of many of them.

If all of the data can be tracked and joined together, it is possible to create an incentive scheme that rewards a member of staff for a sale, no matter where it is placed. There is no point in breaking down the barriers between channels for your customers when you staff still act in a siloed way.

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The future of omnichannel and multichannel

Whilst there are very few retailers who have yet to fully embrace omnichannel, the expectations and behavior of consumers should start to drive brands to invest in the technology and cultural change that is required to make it happen. Multichannel will introduce barriers to customers who want to script their own journey, and this will ultimately drive them towards the competition.

I expect to see more innovative and affordable technical solutions that allow brands to bridge the gap between the channels and allow consumers to script their own journeys with that brand:

• E-commerce platform providers will continue to innovate to provide in-store capabilities rather than simply online capabilities.
• Providers of in-store solutions will need to adapt to more fully integrate with other channels.
• This change is primarily driven by digital which is why providers of traditional in-store solutions probably have the most catching up to do.

Payment providers also have some work to do.

A few providers such as Adyen and Worldpay are beginning to provide omnichannel payment solutions, but I would expect to see further innovation within this area, specifically to seamlessly allow customers to make web purchases in-store, using chip and pin as well as other payment types, such as Android and ApplePay.