Let’s look at the definition
A multichannel business refers to a company that uses multiple channels to reach its customers. These channels could include brick-and-mortar stores, online marketplaces, social media, mobile applications, and email campaigns. However, each of these channels typically operates independently and may not be fully integrated, which can create a disjointed customer experience.
For example, a retailer may have a physical store, a website, and a mobile app, but these channels may not be fully integrated. This means that customers may not be able to use the same loyalty program or access the same promotions across all channels. In a multichannel business, each channel operates as a silo, with its own goals, metrics, and strategies.
An omnichannel business, on the other hand, offers a seamless and consistent experience across all channels. Customers can engage with the company through any channel, and the experience is integrated and personalized across all touchpoints. An omnichannel approach considers the customer’s journey as a whole, rather than focusing on each channel in isolation.
For example, an omnichannel retailer might allow customers to shop online, buy in-store, and return items through any channel. The customer’s loyalty points, purchase history, and preferences would be accessible across all channels, allowing for a personalized experience no matter how the customer chooses to engage with the company.
In summary, the key difference between a multichannel and an omnichannel business is that the former uses multiple channels but does not necessarily integrate them into a seamless experience, while the latter focuses on creating a unified customer experience across all channels.
An omnichannel approach tends to be more customer-centric, as it prioritizes the customer’s journey and preferences over individual channels or touchpoints. It also tends to require more advanced technology and data management capabilities to achieve a seamless experience across all channels.
Analysis of two business models representing each of the channel strategy
No. 1 A furniture company
This furniture company has a well established online business plus over 500 physical stores all owned by the company across major cities and towns in Australia.
No.2 A skincare company
This skin care company also have a well established online stores which represent about 30% of total revenue. However it doesn’t have any physical stores, rather it distributes its products through salon/clinics and major retailers such as Chemist Warehouse. A known challenge within the skincare company is that, their distribution partners constantly see its online store as a business threat and they don’t want to share their customer data with the skincare company.
It’s quite obvious that the franchise furniture business is better suited for an omnichannel strategy compared to the skincare company.
The franchise furniture business already has a strong physical store presence across major cities and towns in Australia, as well as an online store. This means that they have a great opportunity to integrate and synchronize their online and offline channels to provide a seamless and personalized customer experience. Customers can start their buying journey online and complete it in-store or vice versa. In addition, the company can leverage customer data from both online and offline channels to provide personalized recommendations and promotions to customers.
On the other hand, the skincare company does not own any physical stores and instead distributes their products to various salons and clinics, as well as through big retailers such as Chemist Warehouse. While they do have an online store, their limited physical store presence and distribution model may make it challenging to implement a true omnichannel strategy. They may need to rely on their partners to provide a consistent experience across all channels, which can be difficult to achieve.
An omnichannel approach relies heavily on the ability to integrate customer data from various channels and touchpoints to provide a personalized experience. Without access to customer data from their distribution partners, the skincare company may struggle to provide a consistent experience across all channels.
In this case, it may be more appropriate to classify their approach as a multichannel one. The skincare company can still benefit from having an online store and partnerships with salons/clinics and retailers, but they may need to focus on improving the individual experiences within each channel rather than integrating them into a seamless journey.
In contrast, the franchise furniture business, with its strong physical store presence, has more control over their channels and can use their online store to complement their offline stores. This allows them to collect customer data and integrate it across channels more easily, making it more appropriate for them to adopt an omnichannel approach.
Stop aiming for Omnichannel status when you’re a Multichannel
There are several risks that a multi-channel business may face when trying to become omnichannel:
- High Implementation Costs: Implementing an omnichannel strategy requires significant investment in technology, staff training, and integration of various systems. This can be a significant financial burden for a business, especially if they have to upgrade their existing systems to enable data sharing across channels.
- Complexity of Integration: Integrating various systems, data sources, and touchpoints to provide a seamless customer experience can be a complex and time-consuming process. This requires careful planning and coordination across multiple teams, departments, and partners.
- Resistance to Change: Adopting an omnichannel strategy may require changes in the way a business operates, including its organizational structure, processes, and culture. Resistance to change from employees or partners can be a significant obstacle to implementing an effective omnichannel strategy.
- Data Security and Privacy Concerns: Sharing customer data across channels can raise security and privacy concerns. A business must ensure that they have appropriate measures in place to protect customer data and comply with data protection regulations.
- Customer Expectations: Customers expect a seamless and personalized experience across all channels. If a business fails to deliver on these expectations, it can result in a negative customer experience, leading to a loss of customers and revenue.
In summary, becoming an omnichannel business requires significant investment in technology, people, and processes, and can pose several risks and challenges that need to be carefully managed.