Omni-channel Consumer Shopping Behavior: Implications for Companies
The internet subscription in the world reached four billion in 2019 and with improved connectivity and increased penetration of mobile phones, consumers have many opportunities for seamless online shopping and payments methods. More young consumers from emerging markets have embraced S-commerce than developed countries, part of the reason for this geographic difference is the demographic dividend in emerging markets. Companies are creating new products or services in response to competition and emerging opportunities. However, these new product developments cost a lot and produce little additional value, bring profit margins down for companies. Most consumer companies recognize that the core problem lies in the supply chain. That is why omnichannel has become such an important buzzword in the industry. But while lot more companies are striving to create an omnichannel experience, few have succeeded.
The omnichannel consumer buying behavior is a modern approach to commerce that focuses on designing a cohesive user experience for customers at every touchpoint. In the shopping process, the customers tend to switch channels back and forth during the decision-making stages, or even during a single stage as per their convenience. This is an evolution that occurred for the simultaneous use of interconnected channels, touchpoints, platforms, and devices. The two types of omnichannel journeys are “Showrooming” where a consumer acquires information inside traditional brick-and-mortar in-store or other offline setting to purchase the product online and the “Webrooming” where shoppers conduct online research about products and their reviews before buying them from brick and mortar in-store. According to McKinsey research the fastest growth of all is in omnichannel retailing—where retailers let customers buy something online and then pick it up in store, for example, or have it delivered from their local store. This sector is growing between 40 and 70 percent a year. Customers tend to order more when they buy online—up to four times as much as when they buy from a single-channel retailer. And when customers collect online orders in stores, they often make additional purchases while they are there.
The five key aspects to design Omni-Channel strategy for companies are as follows:
The first one is a “deep understanding of customer preferences, habits, and lifestyles” and that takes real work. Companies need to gather detailed, holistic insights into their consumer shopping behavior and the underlying drivers. For being truly customer centric, companies need to understand how they can help their customers in shopping. To do that, they need to collect insights for each target customer segment (B2B and B2C) category, at each stage of the purchasing funnel and they need to understand that the things that encourage customer to buy a product one time are not always the same things that drive customer loyalty.
The second is the “collaboration of different functions” within the organization. The companies are suggested to make business decisions that drive value for the whole company, and not just for individual pieces within the organization, a company needs to look at its business and operations from an integrated perspective. All the important stakeholders need to be part of this journey.
The thirds aspect is “network of supply chains” that companies must decide how the products should flow from the manufacturer to the customers. Companies also need to decide which parts of the supply chain they should own and run themselves, where it makes sense to cocreate and where to outsource. For this right segmentation of the customers, optimizing lead time, positioning inventory close to the market for faster deliver direct to the consumers (DC) are required. One size does not fit all for the supply chain in an omnichannel market.
The fourth aspect is “disruptive technology”. The new technologies like the internet of things, virtual reality, augmented reality, and 3D printing can drive foot traffic to create new brand experiences or even establish a virtual storefront. Many in commerce, from beauty brands to retailers that sell home furnishings to travel agents that design vacation packages, are experimenting with these new technologies to enable consumers to visualize or experience what they are about to purchase. These new technologies are giving way to a new reality for commerce, which in the near term will most likely be driven by enterprise applications with greater consumer-driven usage occurring five years ahead from now. Disruptive technologies will help companies to operate in mature markets by increasing efficiency, speed, and flexibility.
The fifth is “agility and flexibility” in the fast-changing environment, companies need to be quick and flexible during the implementation of the new segmented omni-channel. They need to change their approach and mind-set, and this requires an iterative approach, with frequent, rapid changes and adjustments. This can be done through implementing in smaller pieces, pilot studies and experiments, and changing the mindset of the organization.
Companies that have spent the past many years trimming their operations to become more efficient must now have to rethink and innovate faster for better serving their omnichannel customers. Those companies that want to stay relevant and thrive must keep investing effectively in understanding their consumers buying behaviors and it is thus crucial for them to rethink how to adapt their supply chain processes to win in today’s omnichannel environment.
Whether your company is ready for transition from a push to a pull model of innovation-collaborative product innovation?
The author is Dr. Anupam Narula, Professor of Marketing at Amity University, Uttar Pradesh (AUUP), Noida Campus
