Consumer and Retail
Retail: Winning customers through Unified Commerce
30 Jan 2018
E-commerce players are going offline. And, offline players are coming online. Brands with long resilient brand equities in the offline world have realized the power of the online distribution channel. What started as ‘Omnichannel’ is now paving way for ‘Unified Commerce’.
"We define Unified Commerce as ‘conducting commerce in a manner where the customer experience, offerings, fulfillment, and after-sales service are unified without any distinction of the channel, point of sale or medium of sale’. So, everything, be it the website, mobile app, store POS, customer care ticketing system and even the aftermarket/service network draw from the same profile and transaction record of the customers."
Five components are core to creating a Unified Commerce system:
- 1. Combining the online and offline channels in terms of interfaces
- 2. Shared ‘shopping cart’ across channels
- 3. Integration of customer’s past buying patterns with future purchases – ‘single source of truth’
- 4. Enhanced product delivery (same day, click and collect, drop returns at any store, alterations at home for store purchases, etc)
- 5. Centralized order and inventory management
However, several brands and retailers find it incredibly difficult to cover the whole distance (and instead are inching towards this). From our experience, there are five key challenges that we have helped clients address which make this path relatively clearer (though there are no shortcuts in terms of time and effort):
- Investments in Legacy applications: Most consumer businesses have POS machines, billing software, store ordering system, website integrated with its own SQL database in the backend, CRM system that integrates with a store loyalty card, among many other systems. These often don’t talk to each other and in fact, even simple things like POS terminals and billing registers have had a lot of investment in them. Throwing that investment away in favor of cloud-based billing and CRM solution that operates through a mobile phone does not come easy.
- Front-end store mindset and behavior re-alignment: The front-end store managers, sales executives, feet-on-street account managers, and product promoters have never seen online as a friend. In fact, the online channel cannibalizes its sales. Serving an online customer increases their costs if a return has to be handled. Giving a demo of a home theater system in the store or deploying a design consultant to spend time with a ‘customer who will probably make the purchase online’ would look like bad decisions. Because the incentives and KPIs continue to be misaligned in the Omnichannel World. Consider another example: if a formal shirt brand cannot tell the customer what size they ordered last time as a gift, they will probably lose the sale.
- Under-investment in technology in offline channels: Even for the same brand, offline stores traditionally did not see same kind of technology in the stores as their online interfaces. For example, a furniture brand had a 3D virtual reality app to help visualize furniture in the drawing-room setting but the offline stores did not even have a digital product catalog. It is only natural then that the customers gravitate to online in the hope of finding better variety, price offers and even return policies.
- Varying Supply chain needs from the ‘Omnichannel’ world: Receiving an order online, fulfilling it centrally and managing returns/exchanges feels very different than stocking fast fashion in the ‘limited’ store space in a locality. Since a decade back in the US and a few years back in developing economies, brands took note of this seriously and set up different units to manage the ‘offline’ channel. The same silos today are coming in the way of unifying these channels as the online channel has scaled and customers are expecting the same service across all channels of the same brand.
- Fear of elevating customer expectations: Believe it or not, but sub-consciously, some brands and discount retailers are resisting the change on the ground. Elevating customer expectations about a shoe being delivered home the same evening (if the size is not available in the store) is a thought that some store managers consider as unwarranted pampering. Alteration of a suit (bought online) in a store is perceived as a distraction especially if the store franchisee owner has to bear the cost of the alteration.
But the reality is that the consumers are evolving. The sooner the brands and franchisee partners and front-end managers reconcile to this reality and jump to this bandwagon, the higher chance they have of winning new customers and preventing churn to other brands. Those who wake up late will also have to re-orient themselves to this, albeit after some permanent loss of very loyal customers.
Authored by (at the time of writing):
Madhur Singhal, Leader, Consumer and Retail Practice
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