July 09, 2015

So What Is The Right Definition?

Way back in 2001/2002, I was given this image by a print rep ... the image offered "proof" that multichannel marketing was the preferred strategy. I recall the print rep advocating that companies that did not merge paper & physical stores and the internet were essentially dead.

How did the "bonanza" work for you?

About five years ago, a major researcher proclaimed that multichannel was dead (thanks for demanding that everybody adopt a multichannel business for a decade prior), and was about to be replaced by something called "omnichannel".

Since then, the same arguments have been used - just rebranded. Everytime an e-commerce brand announces that a store is opening, it's listed as "proof" that omnichannel works (as opposed to the reality that maybe, just maybe, the e-commerce business is running out of digital growth opportunities). In other words, to some, omnichannel is the reinvention of the venn diagram above.

To others, omnichannel means "seamless commerce". This is a very reasonable interpretation. I can support making it easy for a customer to shop where she wants, how she wants. The challenge with this interpretation is that it is expensive to align all channels along the vision of this sect of the omnichannel community. Not only is it expensive, but this sect of the community often acknowledges that there won't be a sales gain, once the vision has been fulfilled. The problem, then, is that the in-brand employee must spend money but should not expect a return on investment. That's a good way for the in-brand employee to get fired.

There's another omnichannel community - this one argues that the customer touches a dozen digital channels before buying merchandise. In the customer acquisition phase, this is undoubtedly true. I've analyzed the data - repeatedly. The customer is visiting your site five times over seven days, is using Google & Facebook & Pinterest to comparison shop. In this sect, the omnichannel advocate argues that you must spend money on digital advertising, in an effort to capture the sale. In other words, you must spend digital dollars to prevent the customer from buying from somebody else. This is a tough argument as well, because when everybody spends digital dollars, sales grow at the rate of inflation, but ad dollars increase, meaning that only the digital omnichannel vendor community benefits.

Finally, there's a fourth omnichannel community - the "data" community. This sect argues that you use data to be "smarter". The data must be collected across silos, and must be collected in an aggregated form across the internet - meaning that those who aggregate data will get paid. This faction of the omnichannel community piggybacks on the "visiting a dozen digital channels before purchasing" faction, offering to reduce tolls within that community by increasing tolls within the data community.

Those are four of the leading interpretations of omnichannel. None is right, none is wrong. The only thing that is certain is that each sect wants your money. The only problem is that, outside of a few cases, you won't experience an increase in return on investment.

This is why Merchandise Productivity is so important. When you grow merchandise productivity by 10% (easily achievable), every one of the omnichannel factions listed above benefit. The vendor community should demand that you increase merchandise productivity - it's the easiest way for vendors to grow their business.

So what is omnichannel, anyway? Your thoughts?