Just like traditional advertising and brick-and-mortar, returns on digital investments are often elusive and opaque. That has left marketers to blindly allocate budgets to trending areas (mobile advertising, social media, etc.) or underinvest and risk falling behind. E-commerce has been particularly difficult from a cost perspective, as pure play e-tailers earn just 77 cents for every dollar spent due to costly returns.
Omnichannel investments, however, are already proving to be a pathway to returns. Shoppers who return an item they bought online, exit the store with a basket size 107% of their original purchase. Most purchases brought into the store for a return are exchanged, and consumers pick up incremental items during the process. These behaviors are rarely seen in digital stores.
Investing in omnichannel is a no-brainer for brands that have recognized these potential gains. But how brands are investing in omnichannel is holding them back. Most brands think of omnichannel investments as an extension of their e-commerce business, evidenced by the number of e-commerce executives that have been funneled into omnichannel divisions. L2’s study of Linkedin finds that 41% of executives with omnichannel in their title held an e-commerce role in their previous position. Furthermore, these new hires and transfers rarely work out. Many senior omnichannel roles are restructured or dissolved in less than a year. an omnichannel division is not the solution, brands should adopt a holistic approach to omnichannel, advocating for a channel-agnostic approach across all divisions.
Stores – once disregarded as cost centers – have renewed importance in retailer strategies. They are not showrooms for Amazon as retailers once feared; they are points of distribution “warehouses” that provide an important touchpoint for consumers considering a purchase. Despite the fact the 64% of all in-store sales are influenced or touched by digital, the majority of consumers list the in-store experience as the most important factor in determining whether they will make a purchase. It looks like consumers are discovering products online, trying them on and inspecting them in-store, researching them on a mobile phone, and purchasing at the store or online. A successful omnichannel strategy drives consumers from click to bricks, and back again.
Omnichannel is not just a method for fledgling department stores to reinvent themselves and fight against Amazon, pure-play e-commerce retailers are realizing its importance and establishing a physical footprint. Online marketplace Farfetch acquired London boutique Browns in May 2015 to develop and test new retail and omnichannel strategies. Even the great white shark of retail cannot go forward without a retail component; Amazon has been rumored to be looking for a brick-and-mortar acquisition.
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