The terms “omnichannel” and “multichannel” occur quite often in today’s distribution – and marketing-related discussions. At first glance, these two terms can be confused and even used interchangeably, because both of them refer to managing the retail processes across several channels.
However, if we dig deeper, we can see that there is actually a huge difference between multichannel and omnichannel commerce and marketing. In this post, we are going to explain these two terms and analyze the differentiators.
What is a multichannel distributor?
A multichannel business is one that has several retailing channels to sell and distribute products and services. Even before eCommerce, distributors were selling and promoting their products through at least two or three channels, such as:
- Physical stores/showrooms
- Paper catalogs that were sent via the mail
- Telephone, by which consumers could place orders from catalogs
Now, eCommerce has brought us more channels and forms of distribution, such as:
- Online stores with extensive product content
- Social media
- Third-party online marketplaces
- Comparison shopping websites
- Mobile apps
Here are the key features that differentiate multichannel commerce from omnichannel commerce:
- Very little interaction between the channels – Each sales channel operates individually and independently from the other channels, though all of them are united by one brand.
- Different income per channel – Multichannel distributors consider each channel as a separate source of income, with hardly any option to integrate them with the other available channels. Sometimes different channels can even have different stock.
Such lack of interaction results in different customer experiences per each channel. However, eCommerce optimization is always worth working toward, even if your website isn’t your primary channel yet.
What is an omnichannel distributor?
Unlike with multichannel distributors, the business strategies of omnichannel commerce are aimed at tight integration of all available sales channels with the purpose of delivering a comprehensive and stellar customer experience.
The omnichannel model is a customer-centric model, which allows the customer to switch between the channels in a quick, smart, and convenient way. Here is an example of an omnichannel commerce use case:
- In the morning, a contractor looks through the brand’s items by using a mobile app on his smartphone and adds some of the items to his wish list.
- In the afternoon, the contractor visits a physical showroom or front counter to take a look at the items. While there, he may also want to compare prices in the mobile app and at the physical location.
- In the evening, the contractor finally makes a purchasing decision. He goes to the eCommerce website of the brand, logs into his account, places the wish-listed items into the shopping cart, and makes an online purchase.
During this journey, the customer expects consistent interaction between all of these channels in order to stay engaged. The better experience he has, the more likely he is to convert to a buyer. And, the more channels that customer uses, the more value he will bring to the distributor.
That is how omnichannel commerce works, and this interaction is the key difference between omnichannel and multichannel.
Omnichannel vs. multichannel marketing
For multichannel distributors, marketing can be a complex process because it requires separate activities and effort for each channel. Often, salespeople are reluctant to engage customers with the other channels because they will lose their commission on sales not placed face-to-face (or over the phone). Therefore, a lot of time and effort is spent engaging customers across different channels.
Here are some other differences between omnichannel and multichannel marketing:
- Channels vs. consumers – The main purpose of the multichannel approach is to promote the brand across the maximum possible number of channels. To engage their buyers, companies that utilize the multichannel strategy are adopting two or more channels, such as social media and email. On the contrary, the omnichannel approach interconnects each channel so the brand engages with the buyers as a whole. Omnichannel marketing focuses on establishing long-term relationships between the buyers and the brand.
- Consistency vs. engagement – Omnichannel businesses place a great emphasis on consistent brand image. Therefore, they do their best to make sure buyers receive the same experience through each and every channel.
Omnichannel vs. multichannel distribution challenges
Some distributors can deliver an omnichannel experience to their customers, but not to the full extent. A Statista report shows that omnichannel efforts are not a top priority for companies in North America. Some of these companies want to switch from a multichannel to omnichannel approach, but it seems like a complete system overhaul.
Why else is it so challenging to switch from multichannel to omnichannel? There are several reasons:
- Cultural challenges – As we have already mentioned, the in-store staff is resistant to change and can even see other channels of the same business as competitors. To solve this issue, business owners have to ensure that their technology can track in-store interactions with a customer who then continues to purchase online. If it is possible to track and integrate all data, it is also possible to create a reward scheme for staff members regardless of the channel. Besides, the business owners can educate their staff on the difference between omnichannel and multichannel commerce.
- High costs – Implementation of an omnichannel experience requires significant investment in technology. Many businesses rely on highly customized ERP and POS systems that cannot integrate with other systems. As a result, they must implement a totally new system that will provide the necessary integration.
- Lack of suitable technologies – Even if a company is ready to switch from multichannel to omnichannel commerce, it is quite difficult to find a system that will cover all business needs. Demand and innovation are driving the technology forward, but there is still a long way to go.
So, now that you know what you know, which do you prefer from a customer perspective? How about from a business perspective? Please tell us what you think in the comments section.