Retail Online and Offline – Why Omnichannel is just a hype

By 4 mayo, 2015 No Comments

The progressive crowd of Marketing gurus and Retail experts have long changed their vocabulary from former buzzwords like “Online Retail” or “Online – Offline” to the updated version of Multichannel or now Omnichannel. By painting the picture of an ever-vibrant, technology-oriented, interconnected human being that is hard to catch as a customer if you do not invest heavily in SEO, social network campaigns or sophisticated CRM apps, they often suggest that further diversification of marketing spend (and the corresponding budget increase) is the answer to survival.

It is mostly about logistical options, not channels

Looking at it from our simple perspective of the Shopsumer, it seems a lot less complex to us: the Shopsumer is primarily interested in a decent balance for his time and money budget whenever he thinks about acquiring a particular product or, more importantly in grocery, a series of products in a shopping act. Thanks to the vast offer of web-based shopping facilities, he now does have a choice regarding the underlying logistics of the purchase. However, the only fundamental choice he or she really needs to make is between immediate or not immediate: go to a store now to get the products on the spot or order them in whatever way and thus delay delivery into the future. The Shopsumer does not make this choice on the basis of a dedicated analysis of how different distribution channels work, all he seeks is a reliable supplier that meets his expectations for the given time and money budget he disposes of. It is not that he consciously jumps from one channel to another, because he takes an explicit decision in this context.

Shopsumer Time Money Budget curves













Graphic: Time-Money budget curves, Source: The Shopsumer Institute®

Choices only exist when they can be made

Any human being will just contemplate the options whenever they have some and the fact is, in the area of shopping, they now do have many. The only troublesome insight for the companies is that his attitude towards the different options might significantly vary from one shopping act to another, because the immediacy often plays a vital role in his decision-making. As pointed out in the graphic, a Shopsumer typically moves along a time-money budget curve with regards to one and the same category. The lower his true interest in a category, the lower the curve and vice versa. This model is consistent within one and the same shopping act, but not necessarily across multiple shopping acts.

EXAMPLE: if you go shopping and you particularly like female fashion items, you don’t mind spending more time in these departments or stores and are probably even willing to spend more on these items, so you are on a high time-money budget curve. But if you also want to buy kitchen paper rolls during the same shopping trip, you may go for the first choice you find in the first store you get to, so you are on a low time-money budget curve for this category. However, in a different situation, you may have run out of kitchen paper rolls and consider it requires urgent replenishment. It does not change your interest towards the category, but it may have triggered off a full shopping trip to a store, because the kitchen roll has become the key item for that particular trip and has to be bought immediately, leaving the Shopsumer with no other logistical choices.

The previous example illustrates that Shopsumers neither take their decisions on the basis of channels nor on the basis of categories, but on the pure situational circumstances. Only if these allow for a certain time span between purchase and delivery – mostly a minimum of 24 h until now – is the Shopsumer in a position to exert his freedom of choice to the full between the aforementioned logistical options, especially online shopping. But it will always depend on his very subjective sense of urgency or desire for immediate fulfilment.

Forget Omnichannel, rather learn what the Shopsumer thinks about your value proposition

The term Omnichannel somehow suggests that manufacturers and retail businesses can still “dominate” the Shopsumer in his decision-making process by investing big amounts in the numerous “modern” touchpoints, mainly in the digital stratosphere. But the truth is, they can’t. They can’t, because it would first of all imply establishing a true dialogue with each individual Shopsumer asking him about his future needs. And secondly, it would mean Shopsumers have to know and plan for their future needs, which, given the human nature, is extremely unlikely.

So it is mainly about understanding how important the different logistical options are for the majority of Shopsumers in your particular category as well as in other categories they may often buy together with yours. If they are truly important and make up a significant part of the overall value proposition, the Shopsumer surely is more willing to change his shopping habits and plan his shopping in a different manner. In essence, once you know the Shopsumer cares about his logistical options, all you really need to do is help him in the planning process, send him warnings when you think he may run out of stock, ask him how and when he consumes it etc. That is true Shopsumer engagement!

Shopping will be divided into two main Shopsumer journeys

The way we see it, with the time-money budget question in mind, shopping will be executed in two different modes in the future:

  1. Forecasting and planning mode for less interesting items / categories
  2. Browsing and indulgence mode for interesting items / categories 

In the first mode, Shopsumers will embrace facilitating apps, devices, software etc. to make them become more efficient in their planning of mostly regularly consumed items that do not require significant involvement on product and brand choice on their behalf and where pricing is relatively stable over a larger period. It is all about bundling the right product categories together and then find a convenient logistical option for purchase and delivery. Shopsumer engagement here must be created by companies through innovation, disruptive communication or radical promotion.  In the second mode, Shopsumers will be as irrational as they always have been, going wild in sales periods, not comparing offers of different suppliers or blindly trusting the salesman’s advice, etc. No need for creating excitement, because Shopsumers are already fully engaged in the respective categories and only need a little trigger here and there to come running towards you. The fundamental issue is understanding the structure of your overall Shopsumer portfolio between these two divides and then understanding what touchpoints you need to pick them up at.

Omnichannel are more possibilities for the Shopsumer, but make sure they do not become more cost centres for your company!