Consumer Experience Takes The Center Stage With The Rising Adoption Of Omnichannel
The concept of omnichannel retail was prominent even prior to the pandemic but it was largely about ‘Endless Aisle’.
The COVID-19 crisis and the subsequent closure of physical stores upended the way people shop, with more and more consumers making their purchases online. The pandemic-induced shift towards digital shopping has provided a major impetus to India’s e-commerce industry. The recent report by Bain & Company and Flipkart stated that India’s e-retail market recorded a 25% growth in FY21 despite the pandemic-induced lockdown and contraction in GDP. The report projects that India’s e-retail market is expected to grow to $120–140 billion by FY26, increasing at approximately 25%–30% per annum over the next five years. While online commerce in India was on an upward growth trajectory even before the pandemic struck, the last 18 months have proved to be a tipping point for the industry.
E-commerce’s sudden growth spurt has inevitably brought forward questions around the future of retail. Will online shopping replace physical stores completely? Should retailers only focus on their online presence? Will an online-only strategy be sufficient in the post-COVID world? The simple answer to these questions will be No. While there’s no doubt that retail is undergoing a digital transformation, traditional brick-and-mortar stores still hold great value to consumers, not just in India but in developed markets like the US as well. The overall e-commerce sales constitute around 7-8% of overall retail in India and even in developed markets like the United States, the share of e-commerce is around 18-20% of overall retail.
Despite the rapid digital transformation, offline shopping will continue to be a big part of retail. That being said, having an offline-only strategy will not just cost opportunities for companies, but rather put their very survival at risk. Retail brands will have to go hybrid and be available across multiple offline and online touchpoints to reach out to the masses. The retail industry will continue to move towards the ‘phygital’ world where both online and offline channels will complement each other, ensuring customers get a seamless shopping experience. The shift to omnichannel retail stems from the fact that consumers have always been omnichannel. It's been observed that a large number of consumers are known to do their research online before making the purchase offline, or checked out the product first in a physical store and then ordered it online to avail better discounts or easy delivery.
The omnichannel wave has swept the entire retail industry – digital-first brands are now focussing on strengthening their offline footprint, whereas previously offline-only brands, which includes large FMCG conglomerates, have been embarking on an aggressive e-commerce journey. For both, the idea is the same – offering customers the best of both worlds. Consumers are getting used to the convenience of online shopping coupled with the ‘touch-and-feel’ experience of offline shopping. As the line between e-commerce and offline commerce gets increasingly blurred, the core of omnichannel remains the same – giving customers the freedom to buy whatever they want, whenever they want, and wherever they want.
Interestingly, the concept of omnichannel retail was prominent even prior to the pandemic but it was largely about ‘Endless Aisle’. The endless aisle means that in-store customers can browse brands' products virtually and have them shipped to the store or their home. It was generally used in case of any particular product or size unavailability. However, the pandemic has accelerated omnichannel adoptions and also enhanced its use cases.
Companies are now integrating all their warehouses and stores on a single platform and ensuring that consumers get faster delivery from the nearest store or warehouse. The concept of ``Ship from store”, allows companies to leverage their stores’ inventory and deliver products at a much faster pace and reduce logistics costs.
It’s not just the brands, online marketplaces are now investing heavily in building omnichannel capabilities to meet heightened customer demand, provide a wider product portfolio, and enhance the shopping experience for their customers. These e-commerce marketplaces are even collaborating with brands to list their store catalogue (which is typically fresh season stock) and also enable them to “ship from store”. It's a win-win situation for both marketplace and brands and better product availability and great service for the end consumers. Companies are adopting a highly strategic approach towards omnichannel expansion to drive maximum output. While some companies are leveraging their underperforming stores for processing online orders, others are leveraging their presence in Tier-II and Tier-III cities and using brand stores as local warehouses to ensure faster product delivery.
Omnichannel retail keeps customers at the center and this makes it so relevant to the ever-evolving retail landscape of today. This explains why marketplaces and brands are working together to ensure 1-2 day deliveries, with ‘the ship from store’ model witnessing a surge in adoption. According to Unicommerce, around 20-25% of omnichannel orders are being shipped from stores and around 55-60% of omnichannel orders originate on brand websites. In the coming years, all leading retail brands are likely to leverage all retail touchpoints and warehouses across the country to fulfill online consumer demand.
The growing push towards omnichannel has entailed that brands put more focus on their supply chain and logistics system. A digital supply chain that is seamlessly connected with all the physical networks has become the need of the hour – so that brands can manage their orders across various sales channels, marketplaces, and the company website, and have a centralized view of the inventory of both offline and online stores. Advanced features such as automated inventory updates, seamless offline and online stores integration, dynamic order allocation, return management, etc. are further supplementing the omnichannel efforts of brands, enabling them to reduce their order fulfillment time, optimize logistics costs and improve customer satisfaction. The incorporation of deep tech into the supply chain has also facilitated access to a treasure trove of customer data for better insights into their buying patterns, frequency of purchases, and demand forecasting. This has not only enabled brands to offer a more personalized shopping experience to their customers but has also helped them reduce supply chain wastage by preventing inventory overstocking.
It is evident that omnichannel is the future of retail and it will be crucial for companies who want to be defined as customer-first brands. The adoption of omnichannel requires a deep understanding of both; online and offline retail world. Therefore we are witnessing the increasing adoption of omnichannel by mature e-commerce segments like fashion & accessories and electronics, with relatively lower presence in other categories. As other segments including Personal Care, Beauty and Wellness (PCB&W), and FMCG & Healthcare (F&H) gain prominence in the e-commerce world, we will these industries also adopt omnichannel in a big way, and eventually these companies may start shipping e-commerce orders through local distributors or nearby retail stores.
With technology spurring innovations, the retail industry will continue to evolve at a breakneck pace and it will be interesting to see what the future holds for brands, both small and large. One thing is certain; customers will be at the center of this revolution, and companies will eventually have to adapt to the changing retail world.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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