With an ever growing population of socially networked and digitally connected
customers, one of the priorities for many organizations is to create an omnichannel
strategy that provides real-time, consistent and personalized customer experiences
across all customer touch points. Omnichannel strategy has so far been primarily
addressed in the B2C or retail industry; nevertheless, its significance in B2B industries should not be underestimated. This article briefly discusses the opportunities, challenges, and best practices of omnichannel strategy in the B2C and B2B industries.
1. Michael Ling Page 1
Omnichannel customer experience
Table of Contents
1. Introduction .............................................................................................................................2
2. Background ..............................................................................................................................2
3. Opportunities...........................................................................................................................3
4. Challenges................................................................................................................................4
5. Best practices...........................................................................................................................5
6. Online to offline (O2O) ............................................................................................................6
7. Implications for B2B industries................................................................................................8
8. Conclusion................................................................................................................................9
2. Michael Ling Page 2
1. Introduction
With an ever growing population of socially networked and digitally connected
customers, one of the priorities for many organizations is to create an omnichannel
strategy that provides real-time, consistent and personalized customer experiences
across all customer touch points. Omnichannel strategy has so far been primarily
addressed in the B2C or retail industry; nevertheless, its significance in B2B industries
should not be underestimated. This article briefly discusses the opportunities,
challenges, and best practices of omnichannel strategy in the B2C and B2B industries.
2. Background
Omnichannel can be defined as “the evolution of multi-channel retailing, but is
concentrated more on a seamless approach to the consumer experience through all
available shopping channels, i.e. mobile internet devices, computers, brick-and-mortar,
television, radio, direct mail, catalog and so on” [1]. For example, Burberry uses RFID
(radio frequency identification) tags in their merchandise to trigger interactive videos
that “brings our digital world to life in a physical space” for its in-store customers [2]. A
typical example of omnichannel experience is one whereby a customer can browse a
product catalogue online, place and pay for the order via a mobile phone, choose to pick
up the good in a physical store or have it delivered to a location of convenience to the
customer, and have the option of returning the good back to a physical store in case the
customer is not satisfied with it. There are variations to the above example in terms of
customer events, choices and touch points; for example, customers opting to make an
online purchase after trying out a dress in a physical store, or customers asking for a
refund at a physical store for goods purchased online. Nevertheless, the principle of
offering a real-time, consistent, relevant, and personalized customer experience holds.
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3. Opportunities
By providing seamless customer-centric experiences across customer touch points,
omnichannel strategy is at the core of every customer strategy (B2C and B2B). It is the
capability of an organization to understand customer needs and to respond to these
needs precisely at the point of customer interaction that drives customer satisfaction,
loyalty and commitment, and ultimately, revenue in the business. In the article titled
“Competing in the age of omnichannel retailing” [3], the authors address the move in
retail towards a seamless “omnichannel retailing” experience for customers whereby
technology has blurred the distinction between physical and online stores. The B2C
industry commonly constitutes a combination of online retailers, brick-and-mortar
retailers, and retailers that have both online and physical stores. Marketplaces, such as
Amazon, eBay and Alibaba, provide more channel options to businesses selling their
merchandise via branded marketplaces, online stores, or a combination of both. By
choosing marketplaces as online channels, businesses can save substantial costs in
setting up online stores and also take advantage of the traffic in marketplaces. In the
US, about 24 percent of e-tail business transactions are conducted over marketplaces,
whereas over 90 percent of e-tail business transactions are conducted over
marketplaces, such as Tmall (Business-to-consumer) and Taobao (Consumer-to-
consumer) in China [4]. It is important for businesses to take into consideration the
local market environment and context when designing the framework and processes of
their omnichannel strategy. As a result, marketplaces should be taken into
consideration when considering opportunities for an omnichannel strategy in China. An
Omnichannel strategy typically entails best-in-class capabilities such as search,
navigation, product information retrieval and presentation, personalized
recommendations and integrated customer service; capturing customer demand in
every available channel that would otherwise be lost to competition; and enhancing
brand management and customer loyalty through integrations via social networks,
ratings and reviews. In addition, the real-time insights gained, such as purchase
behaviors and preferences of customers, can be used to enhance the overall business
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capability, beyond customer engagement, in areas such as products, inventory,
customer segmentation, pricing, marketing, supply chain, fulfillment and channels.
According to a 2012 study by Retail Systems Research, omnichannel strategy is
perceived to be important to an organization in the following aspects [5]:
Consistent customer experience across all channels
Inventory visibility across all channels
Fulfillment
Customer order visibility across all channels
Digital marketing (ecommerce, mobile, social media)
Pricing strategies
Loyalty management
4. Challenges
To provide omnichannel capability, organizations requires accurate, real-time data
analysis pertaining to multiple aspects of their business; ranging from inventory,
manufacturing, sales, pricing, marketing, supply chain, and information on the relevant
stakeholders in the ecosystem. Much of the capability and performance of the
omnichannel implementation depends on gathering and analyzing data to understand
and anticipate what customers’ needs, wants and preferences are. The success of the
omnichannel hinges heavily on a genuine understanding of the context in which each
customer interaction takes place and a capability to leverage the customer insights
gained in delivering a real-time personalized experience to customers. According to IDC,
the challenges of omnichannel are in the “complexity of adapting customer-facing
marketing, selling, and fulfillment strategies and tactics but runs much deeper,
entangled in data and IT structures that were built and augmented over many years” [6].
Other common challenges include: Customer expectations outpace the organization’s
capability to continually enhance customer experiences in the omnichannels; ensuring
sufficient inventory is available in the right locations; enabling personalized interactions
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with real-time data; developing seamless integrated business processes across channels;
ensuring consistent product information across channels; maintaining a single view of
customers across channels; understanding customer purchase behaviors and
preferences across channels; offering a global multi-site, multi-language and multi-
currency platform; and a scalable e-commerce platform to cope with the rapid growth
of customer interactions and transaction volume. In addition, it is necessary to institute
business change programs to put in place the appropriate organizational structures and
alignments for the omnichannel strategy; creating cross-functional business processes
that deliver integrated customer experiences, and overcoming technical and IT system
challenges and barriers. In the case of China, its cultural, regulatory, market and
technology characteristics have to be taken into account when constructing seamless
omnichannel customer experiences for Chinese customers; such as the customer
purchase behavior, the mobile and computer device usage patterns, the search engines
(Google search engine is not accessible in China), the social networking landscape and
sites (Facebook and Twitter are barred in China), the e-commerce landscape, and the IT
system and software vendors. For example, iBeacon [7], which designs simplified
payments and on-site offers, may be able to gain adoption in the West but it might be
difficult for iBeacon to gain traction in China, because the Chinese market is dominated
by Wechat (one of the largest social networking sites in China, similar to Twitter) and QR
codes in the retail sector. Therefore, for China as for any other country, an effective
omnichannel strategy should take the behavioral, societal, market and technological
factors of the local country into consideration.
5. Best practices
Best practices in omnichannel implementation deliver consistent shopping experiences
and build ongoing relationships with customers [8], such as the ability to engage and
connect intimately with customers via mobile and social channels, availability of
consistent product information and accurate up-to-the minute promotion deals across
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all channels, and the ability for customers to shop online and pick up the merchandise in
local stores. More importantly, the key to best practice is the provision of an intelligent
data and information platform that collects, manages and analyzes data across all
channels in order to send relevant and personalized messages to customers. In today’s
digital business environment, the best practices are enabled by the current state-of-art
technologies; for example, mobile technologies and applications that provide real-time
anywhere interactive experiences to customers; in-store applications that push
marketing and product recommendations to shoppers, location-based applications that
run on mobile devices sending relevant and contextual marketing and promotional
messages to shoppers in the vicinity; QR codes that provide product reviews, pricing and
coupons on products; mobile payment applications that are convenient and hassle-free;
e-commerce platform that is integrated with inventory and order management systems
across channels. Business analytics and predictive analytics must also be employed, in
conjunction with data warehousing, to deal with the enormous amount of real-time
data generated from social, mobile, local stores and other customer touch points.
6. Online to offline (O2O)
O2O (online to offline) mode can be considered as a subset of omnichannel strategy as
its emphasis is unidirectional – utilizing online channels to drive customers to offline
channels. It is primary deployed in the services sector to attract customers online but
then direct the consumption of those services to the offline channel. For example,
Groupon and Restaurant.com are O2O online sites providing discovery services for local
retail service providers, where customers can research restaurants in their local areas by
cuisine, price, reviews, and other criteria, and then make reservations online. Groupon
provides coupons for local services to customers who have signed up to receive offers or
promotions from stores, restaurants, pubs and other establishments in their local area.
In China, the market of O2O reached 98 billion RMB (or 10 percent of the B2C market) in
2012 and is projected to grow to 418 billion RMB (or 30 percent of the B2Cm market) in
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2015 [9, 10]. O2O has been deployed mainly in the “life-services” sector in China; i.e.
products and services delivered through physical outlets entailing food, drinks, body
fitness, movies, arts and performance, hairdressing and travel. Companies and group
buying sites, such as Gaopeng (or Groupon China), MeiTuan and Dianping, set up
accounts in social media platforms, such as Wechat, which has over 500 million
subscribers, to establish brand loyalty, build relationships with the customers, and drive
businesses to the service outlets. For example, Lenovo uses its public accounts in
WeChat to send messages to customers about new products and promotions, allowing
customers to browse products at real stores and then to pay for the products using
WeChat. As social networking and mobile terminal technology continue to advance,
they exert significant influence on China’s O2O development. Nevertheless, there are
concerns raised about the feasibility of O2O because of the potential for conflicts with
channel partners. Channel conflict is a problem for brands that have a large network of
channel partners, such as distributors and specialty shops. For example, customers
purchasing goods at the brand’s website may want to pick up the goods at the local
shop which may happen to be a franchise not owned by the brand, and this franchise
may not be willing to cooperate because this is not its sale. In China, channel conflict is
a severe problem for brands implementing O2O initiatives because brands rely on a vast
network of channel partners to distribute their goods across China. Nevertheless, there
are a number of notable Chinese examples in O2O; for example the successful business
transformation of Suning, one of the largest electrical appliance chain store in China,
into an internet-driven omnichannel retail business that incorporates O2O. Another
example is Tmall, one of the largest B2C marketplace platforms. In the lead up to the
double eleven sale (which takes place on the eleventh of November every year), Tmall
teams up with over three hundred brands and thirty-thousand retail outlets in an O2O
initiative during the sale. Another example is Baidu, China’s most popular search
engine, which set up a strategic alliance with the Wanda Group, a commercial
properties group, and with Tencent, one of the largest social networking service
providers, to form an O2O joint venture.
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7. Implications for B2B industries
According to a Forrester’s report [11], B2B customers have gradually transitioned their
buying from offline channels into online and mobile channels, and B2B buyers are
displaying similar expectations as B2C shoppers, including: Superior customer
experiences via store locators and personalized product recommendations; cross-
channel capabilities such as purchasing products online or from a branch and then
having the products shipped directly to a selected location; fulfillment capabilities such
as next-day delivery, order tracking and tracing; inventory visibility in store or across
channels. B2B buyers expect an omnichannel experience where they can search for
product information, check account history, take delivery, and return and exchange
goods across all channels. With this in mind, B2B businesses can differentiate
themselves by offering omnichannel experiences to their B2B buyers in the industries
they serve. The best practices in B2B omnichannel operation include: an integrated
eCommerce platform with back-end systems, call center system, data analytics,
warehouse, shipping and fulfillment systems and social media applications; a unified
view of inventory across all channels; multiple versions of product catalogs and
individualized pricing for different brands and different countries. In the case of China,
about seventy percent of B2B eCommerce is dominated by marketplaces [12] such as
Alibaba (45 percent), Global Sources (9 percent), Mysteel (6 percent), HC360 (3
percent), and Made-in-China (3 percent). In China, most businesses rely on third-party
B2B marketplaces and some ad hoc combinations of CRM and order management
systems, rather than building their own eCommerce platforms. Like their overseas
counterparts, Chinese B2B businesses expect omnichannel experiences, similar to those
in the B2C markets, and have started building B2B omnichannels. For example, State
Grid and China Unicom, two of China’s largest state-owned enterprises, have built their
own B2B omnichannel platforms. Haier, a large consumer electronics manufacturer, has
built its B2B omnichannel marketplace by implementing a solution from hybris, an
eCommerce software vendor.
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8. Conclusion
Omnichannel provides businesses, B2B or B2C, with a much deeper, personalized
relationship with their customers. To compete successfully in a digital connected world
organizations are increasingly forced to adopt an omnichannel approach. Though there
are variations in terms of cultural, regulatory, market and technological factors between
the West and China, the trend towards omnichannel operation is universal across
countries. Evidence shows that China has already embraced omnichannel strategies in
its B2C industries and that China has recently started to adopt omnichannels in its B2B
industries.
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Note 1: Wikipedia. Retrieved Jan 8, 2014, from http://en.wikipedia.org/wiki/Omni-
channel_Retailing
Note 2: Miller, M. (2012). Burberry turns global flagship into living website ahead of
London fashion week. Brandchannel, September 14.
Note 3: Brynjolfsson, E., Hu, Y., & Rahman, M. (2013). Competing in the age of
omnichannel retailing. MIT Sloan Management Review, 54(4), 1-7.
Note 4: McKinsey Global Institute. (2013). China’s e-tail revolution: Online shopping as a
catalyst for growth.
Note 5: Retail Systems Research, June 2012.
Note 6: IDC. (2014), IDC Retail Insights: Retail IT Infrastructure Strategies, #R1243936.
Note 7: Evans, J. (2014). Apple and the omnichannel: 9 industries already using iBeacon.
Retrieved Jan 8, 2014, from http://www.computerworld.com/article/2476570/retail-
it/apple-and-the-omnichannel--9-industries-already-using-ibeacon.html
10. Michael Ling Page 10
Note 8: IDC. (2014), IDC Retail Insights: Retail IT Infrastructure Strategies, #R1243936
Note 9: iMedia Research. (2012). China O2O market research report.
Note 10: CECRC. (2013). China E-commerce market data monitoring report.
Note 11: Forrester Research. (2014). Building the B2B omni-channel commerce platform
of the future.
Note 12: McKinsey Global Institute. (2013). China’s e-tail revolution: Online shopping as
a catalyst for growth.