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Why Multichannel Shopping is Crucial for Retail

By Ben Kruger

eCommerce is the future of retail. There’s no arguing that. But what about good old brick and mortar?

After all, despite the COVID-19 pandemic, brick and mortar accounted for 90% of retail sales in the fourth quarter of 2017. Furthermore, there’s a reason why online giants like Warby Parker, Bonobos, Glossier, Madison Reed and, of course, Amazon are suddenly opening stores, even as everyone else seems to be closing them.

What do they know that the others don’t? Just how important brick and mortar continues to be, even (and perhaps especially) as eCommerce explodes.

What is Multichannel Shopping?

Multichannel shopping, sometimes referred to as multichannel retailing, is when consumers have the option to shop across multiple marketing channels. So, a customer may visit your brick-and-mortar store to make a purchase one day, and then order products from your online store another day.

Although “multichannel” can refer to a mixture of online-only and offline-only channels, retailers usually use it to describe customers that shop both online and offline. This distinction is important to note since customers that shop online and offline bring special benefits to retailers.

 

How Does Multichannel Shopping Benefit Retailers?

Among the many reasons (and there are many) that brick and mortar continues to remain a critical part of retail, the most important comes down to revenue.

Sure, you can thrive as an online-only retailer, but time and again the data reveals that combining brick and mortar with eCommerce is like adding fuel to the fire. In fact, it can even be the difference between “success” and “powerhouse.” Let’s take a closer look.

1. Enhanced Revenue

Consider Warby Parker, who within a year of opening its first brick and mortar stores averaged $3,000 per square foot annually, more than practically every retailer other than Apple, according to The Atlantic.

And Warby Parker isn’t an outlier. We see the same thing time and again among small and large retailers alike.

More specifically, based on a few comparison analyses Bluecore has conducted for retailers, we’ve found that customers who purchase both online and offline are significantly more valuable than those who buy on only one channel. And that value comes in the form of engagement, customer loyalty and revenue.

comparison-of-single-channel-and-multi-channel-shoppers

The data says it all: Multichannel shoppers are likely to spend nearly 500% more over their lifetime and engage with brands over email more than single channel shoppers.

2. Increased Loyalty

In our research, we’ve also found multichannel shoppers are twice as likely to be repeat buyers compared to offline-only shoppers, and three times as likely to be repeat buyers compared to online-only shoppers.

One hypothesis for why this occurs is that customers find it more convenient when they can buy on their own terms. For example, a customer may buy products from Glossier’s brick-and-mortar stores when they simply can’t wait for it to ship, and shop online when convenience outweighs urgency. If they didn’t have the option to choose online or offline, they may try to purchase a similar product from a competitor that allows them to shop on their own terms.

Challenges of Multichannel Retailing

While multichannel shoppers are more valuable than single-channel shoppers, it’s not easy to create a seamless cross-channel shopping experience. Let’s look at two of the most challenging aspects of multichannel retailing: inventory coordination and brand consistency.

Inventory coordination

Keeping track of inventory is a challenge for even single-channel retailers. Online retailers need to forecast how quickly their products will sell, keep track of products that have been sold or shipped, and keep track of returns, for example. Offline retailers have similar challenges, but they also must account for shrinkage and a higher chance of human error. Retailers that operate both online and offline need to account for both – and ensure that the numbers sync up.

Poor inventory coordination can result in promoting products that are no longer in stock, disruptions in order fulfillment, or holding too many items in your store or warehouse. Because of this, retailers need to ensure their current inventory management system is not only working as intended but also seamlessly integrates with existing retail marketing solutions.

Providing a consistent brand experience

Chances are that your eCommerce and brick-and-mortar stores are managed by different teams. This can lead to a serious lack of coordination on promotional initiatives. Even if these teams are properly integrated, it can be challenging for them to curate a consistent experience for online and offline customers.

Since a consistent brand image is important to building loyalty, it’s crucial to ensure customers receive the same experience online and offline. Otherwise, they’ll continue to prefer one channel or another.

What To Do About It: 5 Ways To Increase Your Share Of Multichannel Shoppers

If multichannel shoppers will engage with your brand more, buy more often and spend up to 500% more over their lifetime, then converting more of your customers into multichannel shoppers should be a no-brainer for any retailer that has a large enough brick and mortar footprint.

So how do you do it? First, you need to incorporate your offline purchase data into your eCommerce marketing efforts. From there, try starting with these five tactics:

1. Use replenishment and post-purchase triggers to drive online-only buyers to a store

If you already have a personalized replenishment trigger that reminds customers to re-stock based on their own unique buying cadence, you have a powerful opportunity to take that reminder one step further by offering a small incentive to get customers to make their next purchase at their nearest store. And the same goes for post-purchase triggers.

For example, you might offer a small discount for buying online and picking up in-store or award more loyalty points for an in-store purchase. Such offers incentivize your customers to go to a store (even if they do buy online), which can lead to awareness at the very least. In the best-case scenario, it leads to them making additional purchases while there.

2. Consistently personalize your digital messages

While aligning all of your cross-channel messages can be tricky in today’s environment, that consistency is paramount to success. And it’s even more important when you’re tailoring messages to individual customers (or even smaller groups of customers).

To keep your messages consistent, try building targeted audience segments for online-only, offline-only and multichannel shoppers that you can push to any number of marketing channels, including email, social, display and even your site. Once you have those audiences built, you can then dynamically serve tailored messages to each group. For example, show a buy online/pick up in store offer to online-only shoppers and a free or discounted shipping offer to offline-only shoppers.

3. Identify which products customers usually purchase offline and promote them to interested shoppers differently

Evaluate your offline purchase data to determine if there are any specific products and/or categories that customers are more likely to purchase offline than online. Then use that knowledge to create different communication strategies for customers that engage with those products.

For products that tend to get purchased in store most often, tailor your trigger emails so that they include information on where the recipient’s closest store is located and feature specific messaging about coming in to touch and feel the product selection and talk to expert store associates before making a decision.

4. Advertise in store services and events

You can also use store-location purchase data to personalize your emails with messages about special in-store services and upcoming events at a given customer’s store.

To take this one step further, try using predictive models to gauge customers’ potential interest in specific products and/or categories, that way you can tailor the services and events you promote based on both location and products of interest.

5. Take advantage of lookalike modeling

Can you determine which of your single channel shoppers are most likely to become multichannel shoppers? With advanced lookalike modeling you can.

Specifically, this modeling should allow you to identify the segments of your customer base that exhibit behaviors similar to those who are already multichannel shoppers. Once you identify these customers, you can then create personalized streams that target them with incentives to shop in-store (for online-only shoppers) or online (for offline-only shoppers).

Multichannel Shoppers Are the Difference Between Retail Success and Retail Powerhouse

Increasing engagement, loyalty and customer lifetime value sit among the top goals for every retailer, and it turns out one of the best ways to achieve these goals is to convert more customers into multichannel shoppers.

And opportunities abound for growth in this area given that multichannel shoppers comprise well below a quarter of most retailers’ customer base. Whether you need to bring online shoppers offline or vice versa, the time to take action is now because we’re entering an entirely new era of retail.

ben kruger headshot

Ben Kruger

As the Senior Manager of Data & Insights, Ben helps retailers maximize their value of the Bluecore platform by identifying trends and opportunities within their datasets.

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