As the COVID-19 pandemic exerts unprecedented pressure on businesses, an omnichannel presence is emerging as a “must have” to protect sales in uncertain times. BCE has been monitoring changes in consumer purchasing behavior since the COVID-19 pandemic began, including what channels consumers are buying from in the altered environment.
Unsurprisingly, we are seeing a large swing away from in-store purchasing towards online channels, and a slight uptick in buying online for in-store pickup. Phone-based purchasing continues to maintain its low share of sales. This shift is particularly strong with categories that are generally less expensive (like footwear and casual apparel) than, say, home improvement purchases that are more of an investment.
While an omnichannel approach can help, it does not guarantee success – other factors are at play, such as a consumer’s personal finances, purchasing priorities, and the competitive landscape. In our June 2020 consumer purchasing survey, we found that product categories that had the biggest shift from in-store to alternative channels still lost about a third of their potential sales. This likely reflects continuing reluctance by some consumers to move their purchasing online, as well as general economic concerns. Nevertheless, developing a strong omnichannel presence is a way for businesses to actively attract and retain customers by providing them flexibility in where and how they buy.
The right channel mix differs by industry, size of the business, and other characteristics unique to each business. For some, an in-person component is necessary. For example, an automotive tire company that provides tire services cannot move fully online. At some point in the transaction, customers will need to hand their vehicles over for servicing. Our consumer survey supports this, finding that most consumers decided to complete their automotive tire purchases in May despite little movement from in-store to online channels. Conversely, other businesses naturally fit the mold of online shopping, like apparel. Even for those businesses, it may still be important to maintain an in-store presence that allows customers to experience the look and feel of products. The lack of substantial change in buying online for picking up at the store during COVID suggests that there is value to in-store interactions that cannot be replicated with curbside pickup.
Here are some factors you should consider in crafting your omnichannel strategy:
A physical retail channel needs to work hand-in-hand with the online experience. In our work, we’ve seen consumers that will check products out in a store, then follow up with an online order at home. Businesses can make this easier for their customers by allowing them to shop in person, then arrange the product to be delivered to their home from a store or warehouse (i.e., a “fulfill from store” approach). Customers looking for a specific size, model, or color that is out of stock in a store, and those seeking to buy items that are too large or bulky to conveniently take home would most appreciate this option. Using this model of in-store shopping with home delivery could even help facilitate stock management and make better use of expensive retail space.
By contrast, a well-designed online channel provides convenience and greater details on your product and company—product information and reviews to help a customer make their decision, transparency on manufacturing practices and materials, etc. The online channel can reach more consumers faster than a brick-and-mortar store. Regardless of your in-store footprint, the online channel allows you to play on a global scale. It allows your customers to buy when your brick-and-mortar channels are closed and can cut costs by enabling direct shipping from a warehouse to the customer and distributed order management systems. Finally, online channels offer an invaluable means of tracking consumer behavior. Customer insights gathered online (e.g., comparing click-through rates for different online marketing campaigns) can inform strategic sales and marketing decisions across all channels.
Simply setting up shop in any location doesn’t cut it. If you’re positioning as a premium brand, it might be worth paying more to secure a retail location in a high prestige, high traffic area where consumers already flock to buy high-end products. This can both bolster your brand’s premium status and help gain consumer mindshare. For other brands, it might make more sense to consider a pop-up store concept or partnering with big box retailers to sell your products in their stores.
The appropriate balance between direct and indirect channels also depends on each business’ unique makeup of industry, size, level of investment available, and customer purchasing profile. Where do your customers want to shop? What new channels might they be willing to try? If you are selling a differentiated product to consumers who will undertake heavy research by themselves before buying, prioritizing the direct web channel may be the better play. Otherwise, selling through a large eCommerce platform like Amazon may be worth the cut to your margin to expose more consumers to your offering than you would otherwise reach. If working with third parties, consider dedicating resources to work closely with your channel partners to manage pricing, promotions, and marketing. This can help you better control issues like knock-offs and uncoordinated pricing. The last thing you want is a partner undercutting your other channels and brand image by selling your product at a heavy discount.
Finally, timing is a critical element to watch as you craft your omnichannel strategy. What makes sense now is likely to evolve into something different in two years, five years, or ten years. Keeping your finger on the pulse of your customers’ preferences, and responding nimbly to successes and failures across channels is critical to achieving and maintaining the right channel mix for overall business success.