Marketing

The future of omnichannel and the special role of the point of sale – eCommerce magazine

For a retailer who still thinks traditionally in channels, an Internet order and a visit to the store are two pairs of boots. He either limits himself to one or the other business model, or he leads the two Distribution channels strictly separated as profit centers, as if there were only black and white: here the growing minority who can have everything brought home, there the shrinking majority who still go shopping. However, omnichannel is a viable concept for the future.

Omnichannel: Court suppliers of the royal couple customer

It quickly becomes clear that sales thinking, which is fixed on channels, has reached its zenith when you put yourself in the shoes of Anna and Otto normal consumers. Never before had they had such a wide range of shopping sources. You have the money, the purchasing power, the power. You pay, so buy them and let all merchants feel: the king and queen customer have by no means abdicated. At the most, they make themselves scarce among those who no longer pay homage to them, and fill forums on the Internet with their expressions of displeasure when they feel they are being served below standard.

Your highnesses are sophisticated, spontaneous, flexible, online-savvy and mobile. If they think they need a pair of shoes or a sweater, they expect nothing more, and nothing less, than getting the best product in their favorite color and size that they think is the fastest and most comfortable at the moment – of course with Billing using your preferred payment method. So they go shopping once, another time they order from the sofa. In the event of a complaint or an exchange, they do not want to be forwarded to them because of internal organizational issues, but want to be served competently and friendly by the first contact person. In short: the majesties appreciate providers who would have earned the title of “court supplier”.

Link systems for online retail and POS

Not every “multi-channel” retailer can achieve this level of service – if only because his IT should recognize that Queen Anna, who is trying out her web shop or app for the first time, is already a regular customer of his branch. Or the other way around. This succeeds when his systems for online trading and the point of sale (POS) are from a single source. However, as long as they are not interlinked, the retailer cannot combine the respective advantages of face-to-face and distance trading in a hybrid business model that gives him a competitive advantage over pure online shops or shops without a website.

Digitization reinforces omnichannel – and vice versa

Overall, retail is not one of the pioneers of digital change, but some companies have already made great strides along this path. For example, fashion manufacturer s.Oliver sells its range in its online shop, 360 of its own branches, 460 franchise stores and at 9,500 other points of sale from trading partners in Europe, Asia and Canada. The company has developed a digital store solution that combines the entire repertoire of omnichannel services. At the EHI Card Congress 2018, s.Oliver presented its concept:

  • Click & Collect: Internationally better known as BOPIS (Buy Online, Pick-up in Store), the fastest way to the product for customers who know exactly what they want
  • Click & Reserve: Have goods returned that are in stock according to inventory management without having to employ a seller
  • Instore order: Order online at the store if, for example, the garment in your favorite color is not in the right size
  • Ship from Store: Dispatch of an article ordered online directly from a branch
  • In-store returns: Exchange of an online bad buy in the store
  • Card payment: Directly from the seller via iPad

From an IT perspective, the inventory distributed across the country forms a single virtual warehouse from which everyone can make use of. In addition, the branch employees have the same access to customer data as the online shop. An integrated omnichannel merchandise management system offers great opportunities to improve service, increase customer loyalty and at the same time optimize warehousing, sales and contribution margins, especially for the clothing trade with its seasonal ranges, which are still scheduled well in advance.

No customer will be sent away with the information “Unfortunately, your size is sold out” as long as there is a remaining copy hanging on the clothes rack somewhere in the country. Apparent shopkeepers, who are still in demand elsewhere, no longer have to be sold with high discounts. For providers of high-quality goods, this can certainly be relevant to results.

OmnichannelSource: Computop

Omnichannel: Avoid futile trips to the branch

The extent to which such an IT project pays off directly or only via indirect effects naturally depends on the individual case. The growing system landscape often does not yet allow a transaction to be automatically assigned across the border between the channels, to bundle customer data in one place or to search for an article nationwide with a click of the mouse. However, it is not unlikely that in the future ad-hoc information about the local availability of any article will even be expected from a chain store as a matter of course – because consumers know that this is fundamentally possible. According to a study by the consultants of the management and management consultancy PwC, 43 percent of those under 30 already wish to do so.

Innovative retail companies such as the Karlsruhe drugstore chain dm are already getting their customers used to this transparency. This means that consumers can not only fill their shopping cart on the dm website either for parcel delivery or for collection at the branch, but also for every product, no matter how cheap, to check whether it is available in the desired number on site. The end customer actually has full access to the target inventory data of the shelf in real time and knows that he will not go to the store in vain. At most, only the inevitable loss can cause disappointment.

Customers are smart wherever they want

The most important argument that speaks for a symbiosis of offline and online trading is called Ropo. It is no coincidence that the two “O” are interchangeable, because the abbreviation can mean “Research Online, Purchase Offline” and “Research Offline, Purchase Online”. In practice there are both Ronpoff and Roffpon. Some customers come to the store, have already read all Amazon reviews and know the prices. The others are the so-called counseling thieves. They ask the sales staff holes in the stomach because they don’t trust online reviews and want to touch the goods, but order after the purchase decision in the cheapest webshop.

If all the shops were closed, something important would be missing for both of these different customer groups; Many online retailers too – not only because of the increased returns that would be inevitable if all non-binding interest in a product could only be served by ordering it. Every retail store and department store is also a showroom for the brand and an opportunity for immediate satisfaction.

Omnichannel: combine pull marketing and push marketing

E-commerce is by nature the predestined platform for pull marketing, while store chains make push marketing easier. Unlike the classic retailer, who can buy a special item, hang a poster in the shop window and place a palette clearly in the entrance area, an online shop operator usually remains invisible with his range until a prospective buyer starts a search in his browser.

Apart from spam and intrusive banner advertising, the supply does not awaken the demand, but the demand must first manifest itself – be it through a simple internet search that triggers targeting via cookies – so that the offer can even spill onto the user interface. Therefore, the art of omnichannel is actually to merge two conflicting business philosophies, the older and more common of which are on the defensive.

No offer without consumer demand

The basic rule that consumers take the initiative online is still not easily accepted by die-hard salespeople. But already at the end of the 1990s, myworld.de, the web branch of the German department store chain Karstadt, failed terrificly because of the wrong assumption that the regular customers from the offline business would bookmark the page in order to regularly push the articles there browse – while Amazon’s consistent customer focus has taken markets across the western world.

The fact that the Seattle giant was able to take away more and more market share from department stores and specialist dealers is often attributed to its aggressive pricing policy and convenient delivery. But Amazon grew up with books, even in the German-speaking countries, although in Germany and Austria there is still a fixed price. The original recipe for success was the integrated search engine in combination with automated recommendation marketing. The free text input field has always been the linchpin of the business model; the push offers draped around them were always just accessories.

Thanks to this trick, the company also recognizes demand for unlisted products. This gives it an informational advantage and therefore a competitive advantage over stationary dealers whose buyers who are targeted for sales never find out what they could have sold if it had been in the range.

Payment processing from a single source

So if you really want to stay in business sustainably, it would be wise to be present wherever your clientele wishes and to be careful about what they want. The magic word from the consultant and designer language is called user experience (UX). It stands for a user-focused design of products, websites and also business processes. For a positive user experience in retail, it is crucial that customers can easily find the right thing and pay for it easily, but on the other hand get their money back easily if they have not quite got the right thing.

Especially with the latter, there is often a crunch in the omnichannel, even if the ranges are harmonized. The payment methods offered at the POS and on the web are traditionally channel-specific. The smallest problem in this regard is that a customer who paid for a sweater in cash in the shop has to provide her IBAN when exchanging in the online shop in order to be refunded the difference. Conversely, it becomes more difficult because the selection of payment options at check-out is regularly larger than at the terminal at the checkout.

Credit notes for a credit card payment, for example, must be booked on the same card. And of course the contract partner must be identical in both channels – a topic for retail chains with many sub-companies. Anyone who uses the system of another Payment Service Provider (PSP) to bill at the checkout will find it difficult to get a general overview of their business.

Well secured data also at the POS

You can prevent such problems by settling payment and data with a service provider who understands omnichannel solutions, i.e. offers e-commerce, m-commerce and POS from a single source and operates as globally as possible. In the past, it was imperative to conclude separate contracts with local service providers in each country, which led to a smorgasbord of different terminals, software solutions and file formats. Modern POS systems can be used worldwide.

This now guarantees true omnichannel reporting, i.e. the consolidated evaluation of all sales and transactions, wherever they occur. The Payment Service Provider (PSP) enables accounting to access standardized settlement files worldwide. In this way, she can automatically assign each incoming payment to the respective order (reconciliation).

When new markets are added, everything still runs through the same central access point. The payment data from all regions thus become a valuable component of a big data strategy: They help to recognize how customer behavior differs from country to country, or how it can be influenced in a test market.

To ensure that customer and card data remain protected during this extensive integration, the retailer should use at the POS terminals that support the P2PE security standard of Visa and Mastercard. The abbreviation stands for point-to-point encryption or line or point-to-point encryption. The payment data is heavily encrypted directly on the POS terminal. Only the payment service provider can decrypt the data. Since real data is neither displayed nor saved, it cannot be stolen. Therefore, retailers who choose P2PE are almost completely exempt from the complex certification of their IT system landscape according to the Payment Card Industry Data Security Standard (PCI DSS).

The dealer as a brand for omnichannel

In terms of the user experience, implementing everything that King Otto and Queen Anna expect from a court supplier can certainly mean reinventing yourself as a company for the omnichannel world of tomorrow. In this case, the term “channel” has little to do with the route of the goods to the customer, but stands for one of more and more routes from the customer to the product.

Whether augmented or virtual reality glasses, which can be used to look at a piece of furniture directly at the intended location, or whether the order on call, like “Alexa”, will be used, will no longer be a question. A court supplier will be able to do everything that is expected of him. He differs from an interchangeable sales partner in that he does not define himself through the brands that he carries in the program, but makes himself the brand. To understand this very early on is the recipe for success of Amazon founder Jeff Bezos. Learning from him is certainly not wrong. (sg)

Computop Gladis
Ralf Gladis is CEO of Computop. (Photo: Sonja Och)

About the author: Ralf Gladis is co-founder and managing director of the international payment service provider Computop. He is also a non-executive director of Computop Inc, New York. Developed before the company was founded Ralf Gladis Database solutions and written books and contributions for well-known IT publishers. In 1993 he founded the first company with his fellow student Frank Arnoldt and in 1997 he started e-commerce with the founding of Computop. Today, the company offers over 15,000 merchants worldwide payment processing and fraud prevention, and processes $ 31 billion a year in transactions.
Rals Gladis is the author of the specialist book published by Hanser in 2020 Cards, accounts and channels: How we will order and pay in the future.

Also read: Interlink online and offline trade: With one click to the customer