Keeping Pace in a Seamless Marketplace
In just the last few years, consumer expectations for seamless omnichannel experiences have grown and become much more sophisticated.
A number of common omnichannel services are now viewed as standard for any business with both an online and a physical store presence, such as checking/reserving store inventory online, an intuitive app that mirrors the online and in-store experiences, and “buy online pickup in store” (BOPIS) fulfillment options. Failing to meet these basic consumer “gates” can be a non-starter for many consumers and, in some cases, will drive them to a competitor.
Beyond these basic services, consumers are now looking for the next generation of omnichannel experiences that will provide completely seamless movement across channels and a customized brand interaction tailored to their individual needs and preferences. Consumers don’t care about omnichannel; to them, each channel is a channel to me that gives consumer goods companies the opportunity to connect with me in the way that I want through individualized and delighting brand interactions.
Growing complexity
Successfully building the complex, cross-business network of capabilities needed to enable these types of experiences is a daunting challenge for most organizations. In fact, despite all the attention that has been placed on the growing importance of omnichannel capabilities, a surprising number of companies still struggle to provide even basic services.
And it’s not going to get any easier: The next generation of seamless, cross-channel consumer interactions is already here and it's driving even greater complexity — services like cross-channel carts, location and channel-based offerings, targeted product releases, and detailed cross-channel interaction history that informs every experience.
Building these capabilities means defining detailed requirements across an expansive web of activities that are managed across many different functions and business units. Companies must then collaboratively design solutions that effectively meet those requirements while also building sufficient agility to quickly support future services — and then deploy those solutions with a clear understanding of the dependencies across each individual initiative. The margin of error is small, and success requires a maestro-like performance across the organization.
Consider the deployment of BOPIS as an option for consumers. Many companies have done so with a collection of focused improvements: extending inventory visibility and ordering to stores, layering on more frequent store runs or drop-shipping, and training employees, as examples. While all these improvements certainly enable the ability to offer this type of order fulfillment, they miss the broader network opportunities and can potentially have a negative impact on margin.
To truly maximize the consumer experience, companies should also consider improvement in a number of other areas, including consumer satisfaction measurement, store layout, backroom operations, network design, assortment planning, inventory allocation, targeted in-store offers, and much more. Without matching changes across the organization to create a holistic system that works in concert, companies are likely to miss the majority of potential benefits from omnichannel capabilities.
Building the foundation for omnichannel
One major driver of continued challenges for so many companies is a lack of attention on a set of foundational activities that are crucial to these complex omnichannel programs. These foundational pieces are always present, but they're often treated as secondary to the urgent focus on building something — and building it fast.
Omnichannel vision: The specific omnichannel capabilities to be developed and deployed by a company are directly dependent on its objectives and how they support the overall business strategy. A company looking to leverage new channels to drive traffic to its retail doors will have different priorities than a company facing a drastic shift in consumer purchases to online. Defining a clear vision helps set a direction for the organization, provides employees with a foundation for evaluating decisions and how they align to the business objectives, and gives them clarity about their roles in the company's future.
Organizational design: Many companies tend to be reactive rather than proactive when it comes to the organizational design of their omnichannel activities. This includes decisions like whether to operate the activities separately or integrate them, whether to build or buy capabilities, having functional or BU ownership, and defining the cross-functional governance model. These types of decisions have dramatic and long-lasting implications and can be very difficult to undo later on.
Portfolio management: Leading omnichannel companies have established a portfolio view of their initiatives and have defined a degree of central governance over how they're funded, managed and executed. By maintaining a comprehensive view of end-to-end omnichannel capabilities, they proactively identify where new initiatives will impact or define new requirements across the business. This organizational visibility also helps prioritize initiatives, maximizing the return on investment and aligning the deployed capabilities to what consumers want.
Companies that focus on these and other important foundational elements of an omnichannel network are far more likely to build capabilities that are reinforcing and maximize the return on investment. Building a strong foundation makes companies more agile and responsive, letting them quickly capitalize on new trends and shifts in the marketplace faster than competitors. These capabilities will be critical to compete in a continually evolving marketplace that shows no signs of slowing down anytime soon.
About the author
Ken Chalmers is a senior manager in strategic transformation at EY Advisory Services focusing on the consumer products & retail industry. He has worked with global Fortune 500 companies to design and deploy leading omnichannel capabilities and related organizational design considerations and is a leader for EY’s omnichannel services.