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Omnichannel vs Multichannel – 3 Important Differences

omnichannel vs multichannel

June 10, 2022

There are a lot of terms that are casually tossed around in the ecommerce world without a clear understanding of what they mean. “Omnichannel” and “multichannel” are two such terms. Let’s take a few minutes to understand these concepts and their implications within your business.

This information applies to any business which sells “things”, by which I generally mean something other than a service. What kind of thing matters less – it could be a physical good, tickets to an event, a subscription, or countless other things. Some of these concepts may apply across industries, including to services, but for purposes of discussion, we’re talking about a hypothetical brand, manufacturer, retailer, or distributor. And in particular, one who has more than one distribution channel.

Before we get into the details of omnichannel vs multichannel in today’s commerce landscape, let’s level set on what we mean in the first place when we talk about channels.

What are Channels?

In the e-commerce world, distribution channels (frequently just shortened to “channels”) are the places where a customer can purchase your product. The most common, and perhaps the easiest to understand, is a physical retail store. Customers can come in, browse the shelves, and make a purchase. Other common channels include an ecommerce store (either one they own – B2C, or through a marketplace – B2B2C). Channels also include traditional selling methods like a catalog, a call center, or in-person selling.

Some companies also sell through distributors, who then sell to smaller retailers. Other companies may sell only to other businesses, in which case their primary channel is likely to be a business-to-business (B2B) marketplace. Increasingly, brands and manufacturers selling goods for the general public are selling directly to consumers (D2C) through their own website(s).

There’s a lot to think about, and hopefully it’s clear how quickly this becomes a complex puzzle requiring strategy and careful oversight to make sure the proverbial ball is not dropped!

What is Multichannel commerce?

Multi-channel simply means the selling of goods and services through multiple channels. As we discussed, these channels can include brick-and-mortar stores, online stores, catalogs, television shopping channels, and more. But importantly, the key characteristic of multichannel is that each channel is treated as a separate “entity”, generally with its own marketing and sales strategies, and frequently with its own messaging, pricing, and inventory.

These channels also frequently, but not always, represent a different customer, or at least a different customer “persona”. Multiple distribution channels help a company to expand its reach, and to broaden their opportunities to get their products to customers. So naturally, that means making adjustments within each of those channel strategies in order to best sell to the target customers shopping in each of those environments.

E-commerce is worthy of a special mention here – not only is it frequently the second channel — that is, the new channel which makes an enterprise “multi” in the first place — but it is a multi-faceted, challenging, resource-intensive, and fiercely competitive arena in which there are no doubt countless customers, but often countless competitors as well.

What is Omnichannel?

Omnichannel is a concept which has been around for a while, but has only recently gained prominence in the ecommerce world. Omnichannel means that there is a single strategy which encompasses all channels, and that the goal is to provide a consistent experience for the customer, no matter how or where they are interacting with the company.

This means that the company strives for a consistent message, branding, and customer experience, no matter what channel the customer is using. It also means that the company uses customer data to provide a personalized experience, and that there is a single view of inventory, no matter where the customer is shopping.

In practice, this means that a customer should be able to start shopping on one channel (say, a mobile app), and then continue that shopping experience on another channel (like a website), without losing their place, and without having to start over. Or, if they are in a physical store, they should be able to easily find out whether an item is in stock at another location, and have it shipped to them.

Omnichannel also means that customers should be able to easily return an item, no matter where it was purchased. And, customer service should be consistent, no matter how or where the customer is interacting with the company.

The goal of an omnichannel strategy is to provide a seamless, consistent, and personalized experience for the customer, no matter how or where they are interacting with the company.

A Distinction with a Difference

When comparing omnichannel vs multichannel, the terms are often used interchangeably, but there are some very important distinctions between the two.

  • Multichannel means that there are multiple channels, but each channel is treated as a separate entity and strategy, and a focus on distribution.
  • Omnichannel, on the other hand, means that there are multiple channels, but they are driven by a single strategy which encompasses all channels, with a focus on customer journey.

Omnichannel is multichannel, by definition, but with an extremely important distinction – a focus on consistent delivery of a cross-channel customer experience. When done effectively, omnichannel has the potential to greatly improve customer retention and loyalty, as well as to increase customer lifetime value.

Think Big – The Advantages of Omnichannel

Omnichannel provides a number of advantages for businesses, including:

  • A Seamless Customer Experience: As we discussed, the goal of omnichannel is to provide a seamless, consistent, and personalized experience for the customer, no matter how or where they are interacting with the company. This is accomplished by using customer data to provide a personalized experience, and by having a single view of inventory, no matter where the customer is shopping.
  • Increased Customer Loyalty and Retention: A seamless, consistent, and personalized customer experience leads to increased customer loyalty and retention. Customers who have a positive experience are more likely to continue doing business with a company, and to recommend that company to others.
  • Increased Sales: Increased customer loyalty and retention leads to increased sales. Multiple studies have found that omnichannel customers spend more on average than single-channel customers.
  • Increased Customer Lifetime Value: Increased sales leads to increased customer lifetime value due to all the positives mentioned above. Generally speaking, customers demand a great experience, whether in a single channel, a multichannel environment, or when crossing between channels. The promise of a great experience allows sellers to charge a premium for their goods and services – the very definition of brand loyalty.

The Costs of Omnichannel

Comparing omnichannel vs multichannel, obviously omnichannel comes with additional costs that can’t be overlooked. Implementing an omnichannel strategy requires a significant investment of time, money, and resources. Furthermore, it requires a high level of coordination and cooperation between all departments and all channels.

In order to be successful, an omnichannel strategy must be carefully planned and executed. It is not a strategy that can be implemented overnight, or on a shoestring budget.

PIM and Omnichannel

Product Information Management (PIM) is a critical component of any omnichannel strategy for brands, manufacturers, retailers, and distributors. In order to provide a consistent, personalized experience for the customer, businesses must have a laser focus on how content plays into the cross-channel customer journey. Consistency is key, as is an understanding for how customers are shopping, and when they may jump from channel to channel.

A key benefit of PIM is that the PIM system becomes a single source of truth. This means that all channels are drawing from the same data, and that the data is accurate and up-to-date. This is critical, as it ensures that the customer experience is consistent, no matter how or where they are interacting with the company.

Looking Ahead

The trend in ecommerce is towards omnichannel. Customers expect a seamless, consistent, and personalized experience, no matter how or where they are interacting with a company. In order to meet these expectations, businesses must carefully plan and execute an omnichannel strategy.

What could the next few years bring when it comes to omnichannel vs multichannel, and how can you set yourself apart? Of course nobody knows for sure, but we expect to see data, analytics, machine learning, and artificial intelligence playing a bigger and bigger role. It’s clear that customer experience is the differentiating factor, and that an investment in creating an outstanding experience across all touchpoints in the customer journey is the best bet, regardless of the evolving landscape of the surrounding technologies.

Additionally, new channels, such as the metaverse, are massive new opportunities for companies willing to take the plunge and be an early adopter. This and other exciting developments will be wide open to sellers who have taken the time to strategize for future growth in these new and exciting markets!

Omnichannel vs Multichannel – Wrapping Up

Firms looking to build legions of loyal customers should consider carefully the challenges and opportunities posed by an omnichannel strategy. If and when they do it right, the rewards can be significant. In considering an omnichannel vs multichannel strategy, it’s critical that you take the customer journey into account.

No matter what, your content, and your strategy, are of critical importance. We would advise all our readers to start thinking about omnichannel today, if you aren’t already… we assure you, your customers are!

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