What is Omnichannel Commerce?

The e-commerce industry has grown exponentially over the last decade or two, and is now bigger and more accessible than ever before.

According to Statista, global revenue from the ecommerce market is projected to reach a whopping 6.9 trillion dollars sometime in 2024. By 2027, it's estimated that the number of consumers will reach 5.3 billion.

In such a dominant market, it's now more important than ever for brands to maximize their reach by providing accessible ecommerce to consumers, enabling greater discovery through a diversified, multi-platform approach.

What is Omnichannel Commerce?

"Omnichannel commerce" is a retail approach whereby a brand sells products or services across multiple channels in a way that provides a seamless and integrated shopping experience for consumers. For instance, a retailer may sell its products via an ecommerce store, in addition to a brick-and-mortar store, an online retail marketplace (i.e. Amazon), an app, or via IoT devices such as an Apple Watch. With omnichannel commerce, the goal is that consumers will experience a highly interconnected and seamless experience with the brand and their purchases, regardless of which channels through which they've shopped.

Omnichannel Commerce provides the most effective point of entry into the rich multi-platform nature of the modern consumer's day-to-day digital experience.

Today, consumers interact with the internet through a myriad of devices, which has enabled an "always-on" digital existence that travels with them wherever they go.

For digital retailers, this means a greater opportunity to connect and engage with consumers round-the-clock, providing more interconnected shopping experiences across channels and devices.

Examples of omnichannel commerce

“Omni” literally means “all”. And in this sense, omnichannel commerce can be thought of as the approach/solution to e-commerce that requires distribution and availability through multiple channels.

"Omni-": a combining form meaning "all", — dictionary.com

Traditionally, the term "e-commerce" conjures up thoughts of a webstore where users can purchase digital products, or physical items which are shipped to their address. As of today, the term ecommerce really takes on a different meaning, now simply referring solely to the act of exchanging goods or services for payment, anywhere on the web. There are so many ways for retailers to reach consumers using modern means of ecommerce. For retailers, this opens a boundless number of new avenues by which to serve end users, and has created vast new ecosystems, such as app stores and marketplaces.

Here are some examples of the channels by which retailers can sell products or services today, breaking the bounds of a traditional e-commerce "webshop":

• IoT: Sales through internet-connected devices, such as televisions, smart watches, or other appliances within the home or workplace.
• Ecommerce store: A typical "webshop" (powered by the likes of Shopify, Magento, or WooCommerce for example)
• Digital Marketplaces: Online marketplaces where retailers (or end users) can list products or services for sale to thousands or millions of potential purchasers.
• App stores (smartphones, tablets, computers, televisions): For entertainment and utility devices such as smartphones, tablets, PCs or TVs, app stores enable retailers to connect with digital consumers in a way like never before. App stores feature an array of different genres and app types, allowing consumers to download or purchase apps that accomplish their specific goals.
• In-app purchases: In-app purchases allow end users to access premium content, features or functionality, creating additional ecommerce opportunities for retailers, often with plug-and-play integration with the consumer's stored payment details directly on the device. In-app purchases reduce the barriers to purchase that may otherwise be experienced with more traditional forms of commerce.
• In-store displays: Through in-store displays, retailers are able to sell product directly to consumers in absence of human interaction (for better, or worse). On the plus side, this streamlines the commerce transaction. One such example are self-service kiosks and other interactive touchscreen displays, commonly deployed in stores where consumers are able to place an order for either immediate collection or subsequent delivery/pickup. These kinds of displays utilize a web-enabled application and a connection to the Internet in order to provide the interactive user experience with self-service payment at a physical location.
• Trade shows: At trade shows, interactive displays are an additional means by which retailers can provide web-enabled applications to facilitate ecommerce orders, aided by a physical sales and procurement process. A display could be as simple as a tablet (think iPad), or a more substantial standing touch-screen unit whereby consumers can interact with a retailer's tailored ecommerce offering, perhaps curated specifically for use at trade shows or specially enabled for in-person sales.

The premise of omnichannel commerce would dictate that all of these potential ecommerce experiences are in some way managed or connected to a central backend, database, and payment processor, which is responsible overall for the digital inventory and transactions being made through a variety of modalities. This architecture supports retailers to innovate faster by significantly reducing the maintenance requirements for various ecommerce channels. Instead, a centralized DXP (Digital Experience Platform), CMS (content management system), or some other unified administration architecture is responsible for delivery of the same data across a plethora channels.

Omnichannel commerce doesn't always involve a large number of distribution methods. It can be as simple as a single backend serving two distinct channels by which a retailer's ecommerce products are sold. For instance, a brand with both a website and mobile app may wish to sell product via both of these channels. By employing the use of a single backend architecture to service both the webstore and associated mobile app, the products are presented consistently and require minimal servicing in order to update and keep current. Orders and inventory can be tracked in a single place, and as such, fulfillment can occur centrally as well. This significantly simplifies operations and strengthens processes for retailers, by eliminating the challenges associated with maintaining multiple ecommerce channels.

In a broader ecosystem, a retailer may also sell product via third-party vendor marketplaces (Amazon, Google Shopping, Instagram Shopping, etc), partner websites, multiple app stores (Apple App Store, Google Play Store) and through a web-based product configurator. As distribution channels increase, so do the associated maintenance requirements, and the relevance and currency of product data and curated collections becomes all-the-more important.

This is where omnichannel commerce comes in as a solution to the maintenance and operations of a multi-channel ecosystem.

Omnichannel as a Business Strategy for Commerce

As a business strategy, Omnichannel Commerce simply refers to the approach of connecting and continuing retail experiences across a variety of digital channels.

Today, consumers lack attention due to the bountiful notifications and competing retailers vying for their attention. In the current digital age, it's more imperative than ever for retailers to establish and differentiate themselves against a barrage of competition that will only continue to grow.

This is where Omnichannel Commerce comes in, as a potential strategic approach to continually engage both prospective consumers and established customers, regardless of their current device or shopping modality.

An omnichannel approach offers provides retailers the opportunity to develop stronger bonds with their audience, through the provision of endless touchpoints by which end-users can interact and engage with a brand.

Omnichannel as a Technical Strategy

From a technological point-of-view, omnichannel strategies to commerce can be implemented in a number of ways. At Cocoon, we like to continue strategic omnichannel implementations directly into the software that we write, giving life to this approach directly from the code-level.

Any time a retailer is considering overhauling their internal systems, an opportunity for further digital transformation presents itself. We find this to be a key element to successfully achieving an omnichannel approach to commerce, in that technological implementations at the software or application level boast significant benefits when implemented omni-first.

How does this look?

Well, similarly to an omnichannel strategy whereby there is continuation of the customer experience for the end-user, an omnichannel technological implementation provides continuity of the software architecture and development in such a way that administrative processes are unified, centralized, and capable of delivering a succinct and efficient management experience for an organization, and both its marketing and fulfillment teams.

Why use or implement omnichannel commerce?

• Less maintenance: With an omnichannel setup for commerce, products, promotions and other supporting content should, typically, reside in a single unified system. As such, maintenance obligations are significantly reduced when compared to maintaining a multitude of separate commerce modalities and outlets. The goal of omnichannel is to serve a retailers' consumers from a single, overarching commerce management system. This architecture does-away with the challenges of lengthy, expensive, and challenging maintenance across a monolithic software combination.
• Collect more data across multiple touchpoints: As consumers engage with a retailer via a number of touchpoints, the potential for data collection becomes exponentially stronger than the isolated touchpoints that would exist in a single or multi-channel solution. This is not only the case in terms of aggregate data, but rather the specific behavior and preferences of individual users who may engage with the retailer across a multitude of touchpoints and distribution channels. As any seasoned retailer knows, understanding the user behavior is a key component to the successful execution of the wider sales strategy. Through a deeper understanding of the behavior of your specific audience, it becomes significantly easier to target and tailor experiences with the goal of improving outcomes and optimizing sales.
• Smoother operations: Contrary to how it may sound, omnichannel commerce implementations can in fact lead to smoother internal operations and reduced labour in terms of managing products and the overall commerce ecosystem for a retailer. This is because, if implemented right, omnichannel solutions will involve a centralized system capable of integration with the multi-faceted modality reach of such an approach. In theory, this can lead to a reduction in time spent administering products and other commerce management activity, freeing up time and resources.
• Centralized system: Streamline commerce management (administration, transactions & POS, inventory, fulfilment, customer experience): With a dedicated omnichannel commerce management system geared toward fulfillment of a brands' goals, management of data can be effectively streamlined and foster more efficient workflows. Implementing the ability to manage further components of your organization's commerce ecosystem, such as its POS, transaction management, inventory and fulfillment management, as well as customer experience, poises retailers to best take advantage of modern technological systems to exploit potential gains in efficiency.
• Engage and reach more customers: An omnichannel approach to commerce provides an incredibly attractive, while feasible opportunity, to increase aggregate traffic and sales through the process of serving prospective consumers through a variety of channels. In addition to this, engagement levels of existing consumers will often substantially increase due to the ability of a brand to continue the retail experience through a number of easily-accessible channels. The higher the number of interactive touchpoints a brand is able to capitalize upon, the more efficient it is to stay connected with consumers in a variety of contexts and on-the-go.
• Modern implementation, future-ready: From an architecture and development point of view, successful Omnichannel Commerce implementations are future-ready due to their utilization of modern tech stacks and their data-first approach. And from a strategic viewpoint, omnichannel is fast-becoming the recognized approach for successful web-enabled commerce implementations by disruptive retailers.

Omnichannel Commerce, Headless Commerce, and Composable Commerce

Omnichannel Commerce as an approach essentially involves the centralization of commerce for a merchant. Often this will include product management, collections and promotions, customer experience, and fulfillment. Moreover, direct integration of the centralized system with various distribution channels (automatically updating product listings on Amazon, Google Shopping, an ecommerce store, and mobile app simultaneously from a unified backend) aims to create a seamless commerce management experience for the retailer and its operational procedures.

Such centralized, custom systems will rely heavily on API integration as the principle method of integration; to ensure that each component of the wider ecosystem runs smoothly and with seamless interconnectivity of data. This kind of integration nods to the API-based approaches utilized in both Headless and Composable Commerce. With omnichannel commerce, any digital distribution methods will be integrated via API development, and as such is likely a best-fit use case for Headless and/or Composable Commerce for the architecture of any associated ecommerce store or webshop.

A headless or composable ecommerce build is potentially the first step in the adoption of a more modern, future-proof tech stack and system architecture for retailers, and can act as a key stepping-stone in the direction of omnichannel commerce.

How to achieve a winning tech implementation for an Omnichannel Commerce strategy

An omnichannel approach to commerce can prove to be a big-win for retailers; particularly those looking to further capitalize on multi-channel sales and distribution.

A successful omnichannel build is achieved through a solid, unified backend, ripe with integration and automated transfer/processing of data. For an omnichannel implementation to be successful, it's vital to architect the build from a data perspective, as this is the system's beating heart.

• Develop an omnichannel retail strategy, and identity the specific touchpoints by which consumers are most likely to appreciate interacting with your brand. This will vary greatly depending on the type of product/service, the applicable user personas that the brand intends to reach, and the accessibility of the touchpoints within the given market taking into account prospective and existing consumers.
• In terms of the software, start by architecting a solution that is capable of sufficiently integrating with the required touchpoints and in the right ways. Prototype thoroughly, accurately, and in the presence of both the software development team and other key stakeholders in order to identify all potential requirements (both functional and non-functional), implementation ideas, challenges, and desired outcomes.
• Build a unified database to house the data for products, promotions, customers, and potentially also inventory and fulfillment. The greater the unity of data, the more successful the technological component to the solution is to be.
• Develop an intuitive and highly-connected backend, integrating the required distribution channels in a way that lends itself to automation and pre-defined workflows. Maintaining a succinct omnichannel commerce strategy requires high-level planning and a sound software implementation—and as such—it's imperative that the system is able to communicate with as many touchpoints as possible, in order to effectively synchronize data, retrieve and process feedback from external sources, and deliver a unified customer experience via custom-built APIs.
• Test on an ongoing basis, receive continuous feedback from consumers through automated processes, and refine the technological implementation to best take advantage of the data. In retail, brands that listen are brands that succeed.

The future of omnichannel commerce

At Cocoon, we believe that omnichannel commerce strategies are likely to grow more popular with retailers over the next 5 to 10 years. The tech landscape in ecommerce is changing year-on-year, and more retailers than ever are taking advantage of digital implementations to reach users, engage consumers, and make sales. It's our belief that we're currently witnessing a shift from the outdated, legacy commerce strategies of yesteryear, as merchants become ever-more aware of the benefits of adopting new technologies and developing stronger digital strategies. The early 2000s was a world of self-hosted databases, HTML pages and PHP scripts. In stark contrast, ecommerce is today driven by the successful marriage of data architecture and the development of fluid, personalized consumer experiences.

Retail is only going to become more digital and web-enabled with time. It's vital that merchants position themselves to thrive in the digital world of hyper-personalization and interconnectivity. As technology further evolves, and particularly with the recent advances in artificial intelligence, there's never been a better time to adopt an omnichannel commerce strategy.

(Potential) barriers to achieving omnichannel commerce

As with any new technology implementation, there are potential barriers to execution. However, we've learnt from experience that these can be overcome with the correct level of planning and effective execution.

• Legacy systems: Perhaps the biggest barrier to achieving an omnichannel commerce implementation for a retailer is the use and dependency on current legacy systems. Most often, legacy systems will need to be completely redeveloped in order to achieve a solid new backend that achieves the desired end result. Oftentimes, it's easier and more cost-effective to build a replacement commerce management architecture from scratch, and to facilitate a migration workflow from the legacy system to the new. This has potential to be a long and arduous process when ill-planned. But with sufficient planning, prototyping, and sound execution, modern technologies have every capability of seamlessly replacing legacy tech stacks to accommodate for the intricate needs of a retailer's bespoke and complex commerce ecosystem.
• Budget: Cost is always a factor in large ecommerce builds, and the implementation and execution of a new omnichannel-enabled digital experience platform is no exception. Retailers should prepare for a significant investment, bearing in mind that this is a long-term and potentially highly rewarding technology and software architecture investment. Retailers employing an omnichannel strategy for the first time have the potential to see incredible results from the re-architecture of their stack to deliver hyper-personalized and fluid consumer experiences across multiple channels and devices. At the same time, this approach can future-proof legacy tech stacks by re-implementation using modern frameworks and libraries, and so could prove wildly successful in both the short and long-term.