Top Factors Hindering Omnichannel Strategy

As we discovered recently in the results of our fifth annual retail industry survey, the reports of omnichannel’s death has been greatly exaggerated. By polling more than 500 retail companies, conducted in partnership with Retail Systems Research (RSR), SPS Commerce learned that omnichannel retail isn’t going away, it’s just becoming the norm – the expected and the assumed. Consumers take it as a given that an online retailer will be able to fulfill their needs and as a result omnichannel strategy is folded into processes as just a part of doing business to satisfy the customer.

What’s holding back omnichannel strategy

That’s great for the companies that are already succeeding with their omnichannel strategy (about 35 percent of the organizations we surveyed), but for those that are behind the ball, the reasons for lagging are myriad.  For the past three years, we’ve asked respondents throughout the retail industry to tell us what’s hindering their omnichannel strategy. The most frequent answer this year, about 40 percent of respondents, remains the same as it always has: other priorities.

This has been a consistent source of befuddlement to us: Consumers already know that with the internet, they can get pretty much whatever they want, delivered to where they want it, when they want it to be there. To be successful in this new world where modern retail finds itself, omnichannel should be a priority to capture those customers before they float off to another retailer. As the evolution of technology accelerates, those who put their omnichannel strategy on hold risk falling further and further behind.

The burden of legacy systems

The next most frequent answer to the question of what’s hindering omnichannel strategy is more understandable, and that’s legacy systems and technology. Part of having a successful omnichannel strategy is gaining full visibility into the supply chain and collaborating with trading partners, and legacy systems hinder that ability. Older technology is much more prone to allowing information silos that stymy visibility (about 18 percent of respondents reported information and process silos hindering their omnichannel efforts).

It can take time to figure out what is needed in a system and find the right one to fit the needs, whether it’s installing a new system on site, outsourcing to a third party or a hybrid of the two. Many mid-market level retailers and suppliers are hesitant to make such new investments if they’re holding their own, in part because they may be unsure which decisions are the right ones – they don’t want to lose ground. Consumer pressures will spur them to make a move soon, but the ones who make the decision now have a better chance of maintaining and reclaiming market share.

Budget woes will only get worse

Which brings me to money, the third biggest factor hindering omnichannel strategy and execution. Many companies said they simply don’t have the budget. The heading for this section says it all, though – without proper investment in omnichannel strategies, the odds of losing market share increase.

When customers can’t find what they want on an e-commerce site, they will go someplace else to find it. That’s true if they were going to buy one thing or ten things. If a site doesn’t have one of the items that the customer wants, they aren’t just going to get a few items on their list and then get the missing product from someplace else. Unless free shipping is offered, that would mean the consumer would pay for shipping twice, one for each order. Instead, they’re going to take their entire order someplace else who can fulfill it all. The retailer won’t just be losing out on the one item that wasn’t in stock, they’ll lose out on the whole shopping cart.

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Source: RSR Research, January 2017

There are a variety of reasons causing companies to be behind in their omnichannel strategy. However, serving customers should be a priority, though, and these days consumers expect an omnichannel experience for every e-commerce site they visit. Many e-commerce sites don’t live up to consumer expectations. So much so that 55 percent of shopping searches now originate at Amazon.com.

Fewer and fewer people even do a Google search for what they want because so many are finding exactly what they want and the experience they expect at Amazon. There is simply no need to go anywhere else. It will take a strong retail strategy to compete with that, and it will only become possible when retailers, suppliers and 3PLs take omnichannel as seriously as consumers do.

This post originally appeared on the SPS Commerce blog. 

Brian Ruud

Manager, Integration Center of Excellence at SPS Commerce
Brian Ruud is currently the Manager of the Integration Center of Excellence at SPS Commerce. Brian graduated with his MBA from Hamline University in 2011 and has been in a management role at SPS Commerce for 5 years. Brian's area of expertise lies within retail, specifically EDI, fulfillment, onboarding/testing, change management and compliance. Brian's team is responsible for providing guidance, direction and education for all change management events that impact SPS integrated customers (Suppliers, Retailers, and 3PL Providers).

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