Omnichannel

Understanding Omnichannel Commerce: Comparison to Multichannel Retail, Challenges and Market Trends

Written by the Amazon Team
This article is part of a series educating sellers about the basics of e-commerce.

Omnichannel commerce, otherwise known as omnichannel retail, is a sales approach that involves selling over multiple channels. It focuses on creating a consistent, seamless shopping experience for consumers through the use of integrated systems (e.g. inventory management and operating systems) and a strong understanding of the customer’s needs and experiences.

Through this article, we will share more about omnichannel commerce, its challenges, differences from multichannel retail, as well as trends and tips for businesses.

Single channel vs multichannel vs omnichannel

Single channel vs multichannel vs omnichannel

Single-channel commerce

What it is:
Single-channel commerce involves selling products via a single channel. This can be in the form of a brick-and-mortar store or an online website.

What it means for sellers:
This approach is often much simpler to implement compared to a multichannel or omnichannel strategy. The trade-off, however, may include limited sales and reach.

Multichannel commerce

What it is:
Multichannel commerce is the sale of products via multiple channels with each channel operating separately from one another.

For example, a business’ physical outlets may have a separate inventory from its online store. As such, returns on products bought in-store must be made at the physical outlet while those purchased online must be mailed back.

What it means for sellers:
Operating in both the online and offline sphere can give sellers a stronger brand presence and allow customers to find the brand more easily. However, the lack of interaction between channels can create an inconsistent and inconvenient experience for customers.

Omnichannel commerce

What it is:
Like multichannel commerce, omnichannel retail involves selling goods via more than 1 channel, such as through the web, a physical store and a mobile app.

This method, however, is more integrated and customer-driven, as an emphasis is placed on understanding the customer and their purchase journey. This includes understanding that their needs, preferences and experiences form the basis for each action taken. Furthermore, operations and systems are coordinated across all channels to create a seamless shopping experience that adds value to the customer.

What it means for sellers:
Implementing a successful omnichannel strategy typically requires more time, technological expertise and monetary investment. In exchange, it can bring greater sales, a stronger brand presence and customer loyalty.

The omnichannel experience: Amazon Go

Amazon Go* is all about convenience and efficiency. Customers can enter the store with their Amazon mobile app, grab any product they need and walk right out. The Just Walk Out Technology will make the deduction from their account and send the full receipt when they leave the store.

Additionally, customers can return any products bought and fulfilled by Amazon at any Go store. This is a prime example of the omnichannel strategy as it integrates our brand’s physical, mobile and online shopping channels seamlessly to create an easy and fuss-free experience for customers.

*Only available in selected cities in the United States (US).

Advantages of omnichannel commerce

Improved customer experience

Omnichannel commerce focuses on creating a seamless experience between various touchpoints in the customer journey. This includes integrating backend systems and communication channels and creating a consistent brand message across different platforms, which may translate to a more enjoyable shopping experience.

Amazon Advertising: Provide a consistent brand message for your customers

By using a single, integrated solution like Amazon Advertising, you can ensure a consistent brand message across all channels to grow consideration for your brand and showcase your brand and product portfolio.

Create a more personalized experience

Aside from improving the overall customer experience, the omnichannel strategy also allows businesses to create more personalized interactions with shoppers.

As businesses gather data about customers through the different channels, they are able to find ways to tailor content and offers in ways that may appeal to customers. They can also better engage customers both online and in-stores.

For example, based on data gathered from both online and physical stores, a brand may find that customers who purchase product A also tend to purchase product B. Subsequently, the brand may decide to offer bundle promotions for these 2 products to better appeal to customers.

Increased sales and traffic

By providing easy access to information about a product and enabling purchases through various channels, your business can potentially increase both sales and traffic to your physical and online store.

Greater customer loyalty

Omnichannel commerce can encourage greater customer loyalty if implemented successfully as customers enjoy a positive experience with the brand. They may also be more likely to share about the brand with their friends and family.

Did you know?

Amazon Prime US has seen a yearly renewal rate of approximately 90% since 2016. As customer retention is crucial in the success of e-commerce businesses in the long term, Amazon can be a great channel for you to expand your business!

Challenges of omnichannel commerce

Lack of systems and data integration

As omnichannel commerce requires channels to work closely with one another, having shared data and integrated systems such as inventory and order management software are critical. However, many businesses may lack the infrastructure needed to incorporate these systems and data.

Lack of customer understanding

The omnichannel strategy is a customer-oriented approach. Hence, understanding the customer and their purchase journey is one of the most important steps in the implementation.

Yet, some businesses may embark on this omnichannel journey without a comprehensive understanding of the customer and their needs. This can potentially lead to inefficient processes or technologies that fail to add value. As such, they may quickly become obsolete which may result in unnecessary time or monetary investments.

For example, a business may invest in a mobile app to allow customers to shop on their smartphones. However, it does not allow in-store pickups or returns as the inventory system of both channels are not integrated. As a result, some customers may view this as a gap in service and abandon the app over time.

Unclear omnichannel strategy

As more companies begin to adopt an omnichannel approach, some businesses may rush to follow suit without establishing a clear and comprehensive long-term strategy. This can result in goals and priorities that differ from their main focus, ineffective investments and a lack of resources.

For example, a smaller, niche business may attempt to follow the industry leader’s omnichannel strategy without evaluating if their team has the resources to achieve this or if the investment is appealing to their customers. They may also benchmark their efforts against competitors rather than looking at customer satisfaction. This competitor-driven strategy can lead to investments that exceed the business’ budget and fail to meet customers' needs.

Trend #1: Artificial intelligence-enabled chatbots are gaining popularity

Chatbots fuelled by artificial intelligence (AI) are becoming more popular among businesses as they are able to mimic an actual customer service staff. This can help free employees to manage more complex enquiries.

This technology offers a valuable advantage to omnichannel businesses as it is able to promote greater consistency in response to enquiries regardless of the channel customers are using. This can help to create a smooth, integrated experience that businesses strive to achieve.

The drawback to this is that chatbots may not be able to handle complex customer queries. Thus, it is important for employees to have chat records to follow up with customers if necessary – also contributing to a seamless omnichannel retail integration.

Trend #2: Cross-device interactions are becoming more common

Cross-device interactions refer to the use of multiple devices to complete a particular task. For example, customers may use their smartphones to quickly search for more details about a product before using their laptops to purchase it.

This trend requires businesses to evaluate how they can create a more integrated and value-added experience across the different channels such as mobile apps and the web.

Amazon cross-device shopping baskets

To cater to customers’ preference for cross-device shopping, Amazon has enabled cross-device shopping baskets, where their mobile cart is synchronized with the cart on the desktop or laptop when logged in.

This allows customers to continue their purchasing journey easily regardless of the device used.

Trend #3: Businesses are finding innovative ways to connect online and offline touchpoints

In a bid to differentiate themselves from competitors, businesses are finding more unique ways to connect their online and offline touchpoints. For example, a brand may place QR codes below each product in their physical store to allow shoppers to view customer reviews and product descriptions with their mobile app.

Tips for growing your omnichannel business

If you are keen to grow an effective omnichannel business, here are some tips that can help you get started!
Tips for growing an omnichannel business

Understand your customer

Omnichannel commerce is a customer-driven approach. Therefore, having a comprehensive understanding of your customer is the first step towards the adoption of this strategy.

You can gather insights by
  • experiencing the purchasing journey first-hand (i.e. browse and purchase a product from your own website),
  • reaching out to shoppers through surveys and focus groups,
  • speaking to the relevant departments that are involved in the shopping experience (i.e. marketing, IT, customer service staff)
Once you have gained sufficient insights into your customer, you can map out the purchasing journey and identify touchpoints where you can better guide their interactions with your brand.

Getting to know the Amazon consumer

If you are interested in selling on Amazon, you can check out this helpful resource to learn more about our customers and their characteristics!

Integrate your systems

To create a smooth shopping experience, it is crucial that your operating systems such as your inventory management and order tracking systems are integrated. This allows customers to shop online and pick up their orders or make returns in-store. Employees may also be able to place orders for items that are out of stock in-store for customers to receive at home.

Offer personalized experiences

Designing an omnichannel experience for your customers can go beyond channel integration to offering personalized experiences. This means providing relevant product recommendations, sending customized content and advertisements and more. Such efforts can promote greater customer engagement and increase brand loyalty.

Did you know?

Selling on Amazon can help to address this concern as customers automatically receive personalized product recommendations through the ‘What other items do customers buy after viewing this item?’ and ‘Frequently bought together’ sections!

Provide integrated customer support

As an omnichannel business, it is imperative that a strong customer support system is available at multiple channels and touchpoints such as on your website, mobile app and social media platforms. This allows customers to get in touch with your brand wherever they are.

Additionally, the support offered should be consistent in tone and branding throughout the various channels for a smooth and integrated shopping experience.

Did you know?

As part of Fulfillment By Amazon (FBA), our team will help to manage all your customer enquiries, returns and refunds so you can focus on growing your business.

Test and improve your channels

Implementing a successful omnichannel strategy can be complicated. Hence, it requires testing to ensure that your brand is meeting the needs of your customers at the relevant touchpoints such as on your website, in stores or on your social media platforms.

Through the data gathered during tests, your team can make revisions and improvements to the strategy to achieve the right solution for your business.

Did you know?

As a brand owner on Amazon, you will have access to brand analytics that can help you understand customers’ buying and search patterns. This allows you to better optimize your strategy.

Why include Amazon as part of your omnichannel strategy?

If you are looking to expand your omnichannel business, here are some reasons why you should consider including Amazon as part of your growth strategy!

Established customer base

At Amazon, we have an established customer base of over 300 million users and 200 million Prime members globally. By selling on our website, you get to tap on our growing base of customers and kickstart your e-commerce journey more easily.

Ease of cross-border selling

By 2026, approximately 55% of online transactions in Singapore are predicted to come from cross-border commerce. Amazon can help you tap on this international market as we have a total of 20 stores worldwide.

If you are interested in selling internationally, get tips and advice from our Seller Roundtables!

Customer-centric culture

Rather than focusing on competitors, we adopt a customer-driven approach where earning and keeping our customers’ trust is our priority. We have introduced various technologies to create a holistic and exceptional shopping experience including Alexa for voice purchasing and Just Walk Out technology for a quick and convenient grocery run.

Brand analytics and data

We offer brand analytics to sellers who are brand owners to provide them with information and data relating to the sales and promotion of products. Through our search terms report, you can get access to information such as the popular search terms, their search frequency and the top products for each term.

The brand analytics feature offers valuable insights to empower brand owners to make informed, strategic decisions about their product portfolio and marketing/advertising activities.

Amazon answers FAQs on omnichannel commerce and retail

What is the difference between omnichannel and multichannel?
Both omnichannel and multichannel commerce involves selling on multiple platforms. However, the former revolves around the customer, and the channels work together to create a holistic shopping experience.

On the other hand, multichannel commerce revolves around the product, and the respective channels work separately from one another. For example, service staff may not have access to the chatbot’s chat history with a customer. As a result, the customer will have to repeat their enquiry again to the service staff via the phone, email or at a physical store.
Why is an omnichannel strategy important?
Adopting an omnichannel strategy can help your business stay relevant amidst stiff competition.

Furthermore, by creating a positive and holistic customer experience, businesses may enjoy increased sales and stronger brand loyalty.
What are some factors to consider before adopting an omnichannel strategy?
● Customer data
Having sufficient knowledge of your customer is paramount to creating an effective omnichannel strategy. Thus, it is important to consider if you have a comprehensive understanding of their needs, preferences and search and buying habits.

Systems
Before deciding whether to adopt an omnichannel approach, you may wish to evaluate the extent of your systems integration as it is crucial in creating a smooth customer experience.

● Resources
Adopting an omnichannel strategy typically requires significant investment and the right technological infrastructure. It can also be helpful to have a knowledgeable in-house IT team that can assist you with this strategic shift.

● Organizational culture
Having a customer-centric mindset is essential for businesses looking to adopt an omnichannel approach. Additionally, performance metrics and incentives should ideally be targeted towards improving customer experience and satisfaction over driving sales.

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