Omnichannel Strategy and Management

This is a review of the Omnichannel Strategy and Management course offered by Dartmouth on edX. The course divides retail strategy for omnichannel businesses into four parts:

Background

The omnichannel world is a seamless world that spans online and brick-and-mortar marketplaces. A customer could enter a conversion funnel through a digital channel or a physical store. After that, a customer moves between the two conversion funnels. Finally, a customer could complete or abandon the sale. This movement should drive retailers to leverage the synergies in the phygital world. Omnichannel strategy derives value from the digital and the analog world synergies.

This course does not focus on the retention/loyalty part of marketing strategy. However, it builds a good foundation for creating a retention strategy in the future.

The Course

Omnichannel Customers

This section introduces conjoint analysis. This tool assesses tradeoffs between the digital and the analog world. The assessment can help a retailer understand where to excel. Excelling in the right parts of the conversion funnel generates the highest customer satisfaction. Designing solutions for specific customer segments can increase the number of happy customers.

Omnichannel customers generate an immense amount of data. This big data presents unique challenges and opportunities for retailers. One of the biggest challenges marketers face is attribution. The complex customer journeys make it hard to link the outcome with the marketing spend.

The following opportunities could be helpful:

• Using loyalty cards to relate digital and analog customer data
• Investing in technology to provide accurate inventory availability information to online customers
• Using likes on social media for forecasting

Omnichannel Fulfilment

This section discusses potential supply chain goals. Is the goal to be responsive? Is it cost efficiency? Is it to provide more variety? Is it availability? A supply chain’s goal to a large extent depends on the nature of the demand. If product demand is uncertain, the supply chain needs to adjust to the changes — for example, high fashion products. Omnichannel increases demand uncertainty which pushes supply chains to be more responsive. And designing effective distribution networks and inventory management solutions makes supply chains adaptive.

The section examines cost and value drivers for designing distribution networks. One learns the impact shipping structures (like, drop shipping) has on inventory management.

Two academic studies discovered that:

• Increase in sales is directly proportional to the increase in delivery speed.
• Sales percentage can be estimated based on how shipping information is presented to customers.

A retailer can use numbers from these studies and create a quantitative model. The model can help test and optimize distribution networks.

Omnichannel Journeys

The section focuses on how information gets to a customer and how a customer gets a product. We learn to appraise a retailer’s omnichannel journey using an information-fulfillment matrix framework. We understand the synergies of an online and a brick-and-mortar conversion funnel. We learn to categorize information into digital and non-digital attributes. This helps design fulfillment flows that use the perks of both the digital and the analog world.

Since more information is shifting online, retailers offer different ordering and fulfillment options. For example:

• Buy Online Pick-up in Store (BOPS)
• Research Online Purchase Offline (ROPO)
• Ship-To-Store (STS)

These alternatives meet different customer desires like convenience, larger assortment, immediate gratification, etc. Online retailers transfer non-digital information to customers by giving them home try-on options — for example, Stitch Fix.

Supporting Omnichannel Strategy

To support an omnichannel strategy, retailers should unfetter their fundamental processes. Processes like forecasting, inventory, assortment, and pricing across both online and offline channels.

Legacy structures pose the biggest challenge to retailers on this omnichannel transformation. Some options to overcome this challenge are:

• Build a labor strategy that focuses on productivity, not on reducing costs.
• Measure performance by running pilots, A/B tests, experimentation, etc.
• Use natural experiments like cart abandonment rate before launching a full-scale implementation.

Conclusion

For me, watching the videos of this course felt like flipping through the pages of a good book — a short, sweet, and easy to read book; one that gives you a good overview of the topic, and then, leaves you with a desire to look for more information elsewhere.