Omnichannel vs Multichannel Retailing: The Ultimate Guide

In omnichannel vs multichannel retailing, the clear winner is omnichannel retail because it is an approach that integrates the customer experience across all sales and marketing channels from ecommerce, in-store and mobile apps to social media, email, and loyalty marketing. Multichannel retailing allows customers to purchase goods and services in many ways without integration.

Omnichannel vs Multichannel Retailing: How It Works

In omnichannel vs multichannel retailing, an omnichannel approach allows for the integration of everything your business needs. From your marketing efforts, cross-training staff—all of these things help deliver a seamless customer experience. The difference between the two is that multichannel retailing offers many of the same sales channels, but none of it is connected.

Omnichannel offers the same shopping methods for customers as multichannel, except they are all integrated

Omnichannel Retailing

Omnichannel retail is an overall business strategy that delivers a seamless experience from the customer’s perspective. Every way a buyer interacts with a company—online, in-store, mobile app, email—their user experience (UX) connects.

Selling products on multiple channels doesn’t create an omnichannel experience. To do that, your sales channels, payment methods, and other aspects of your business must connect so that no matter how your buyer interacts with your company, it’s seamless to them.

To deliver this seamless UX, sellers tie sales and marketing activities in a central data hub, shift to a customer-centric approach in all areas, and employ analytics at all levels. Omnichannel retail is considered to be very customer-centric.

To demonstrate, let’s say you run a natural foods specialty store and you sell through your brick-and-mortar retail store, ecommerce shop, on Amazon, and via a mobile app. You also market to customers using a weekly email newsletter, through printed coupons in the mail, and a loyalty program.

You’re an omnichannel retailer if each of these methods integrate together. For example, your customers place an order online and pick it up in-store, customers can log into their mobile app to view past in-store purchases, and their loyalty points update no matter where they purchase. All of their sales and marketing engagement points are interconnected. This creates a seamless customer experience that is the heart of an omnichannel strategy.

Multichannel Retailing

Multichannel selling is selling products using multiple sales channels. If you sell on just one website, you’re not a multichannel seller. However, if you sell on your website, a mobile-enabled site, a Facebook Shop, and Amazon, you’re a multichannel seller. Multichannel selling is reaching buyers on two or more sales channels, and these can be connected or not. This also means that omnichannel is a method of multichannel retailing.

Multichannel retailing can make the sales process a little harder for your customers. For example, if your customer orders online, they have to wait for the item to be shipped to their home. If this was an omnichannel retailer, they could order online and pick it up right away in the store, which is a strategy called buy online, pick up in-store (BOPIS).

Omnichannel vs Multichannel Retailing: Which is Best?

When you compare omnichannel vs multichannel retailing, you’ll find that omnichannel has its benefits and is preferred for many situations. However, that’s not to say that it’s always the right choice. Multichannel retailing allows sales to occur on any of your sales channels without paying for integration. Omnichannel has added costs, such as when an employee has to locate an item ordered online, notify the customer their order is ready for pick up, and then handle the transaction when the customer retrieves their order. These added costs reduce profit margins.

Omnichannel selling is best for:

• Local businesses with ecommerce stores: When a customer makes a purchase online, you can offer them the ability to pick it up in-store, or have it shipped to their home.
• Businesses with a loyalty program: If a business has a loyalty program, it should integrate so that points get redeemed whether online or in-store.
• Companies with email newsletters: Categorize customers easily based on order history. These categories can receive offers tailored to purchase behavior, which will increase the likelihood of a conversion.
• Products with large profit margins: Shipping to the store, only to then pay an employee to pick the order for pickup or to ship it back out to the customer increases fulfillment costs, which eats into profits. An omnichannel approach needs higher profit margins to have this make sense.

Multichannel retailing is best for:

• Businesses where costs matter most: If costs are the most important thing to a business, sticking with a multichannel approach means no integration expenses.
• Companies with custom POS systems: The complexity of integrating well-established, customized POS systems with other channels can come at an enormous expense that outweighs the return on investment (ROI).
• Commissionable sales reps: When a customer makes a purchase in-store, sales representatives often get a commission for it. Without technology to track in-store interactions, it’s not entirely fair to the sales reps for a customer to go make the purchase online.

There’s no doubt that many retailers are moving in an omnichannel direction. However, it might not make sense for your budget.

Multichannel vs Omnichannel Retailing Costs

There are many costs to consider when setting up multichannel and omnichannel. However, you can get started with less than $30 with BigCommerce account. After you’ve set up your ecommerce platform, you’ll need to store inventory. In addition to that, you’ll have payment processing fees and seller fees.

The costs of omnichannel selling include:

• Software: BigCommerce is a popular omnichannel program that starts at $29.95 per month and goes up to $299.95 per month. Other software might include an email marketing provider like ConvertKit, which starts at $29 per month.
• Seller fees and storage: When selling on an ecommerce platform like Amazon, businesses pay seller fees. Amazon seller fees start at 99 cents per item sold and go up to $137.32 per unit for warehouse storage.
• Payment processing fees: Most payment processors charge a fee of 2.9% plus 30 cents of each transaction made. Payment processors include companies like Stripe and PayPal. There may be volume discounts if you process many transactions per year—typically more than $1 million in sales.

The costs associated with omnichannel selling vary based on which integrations you’re making and the volume of transactions you make. You’ll need to determine if cost or customer convenience is the most important factor, and from there you’ll have an idea of the upfront and ongoing costs associated with omnichannel selling.

Omnichannel Providers

Providers of omnichannel retail make it easy to integrate each sales and marketing avenue for your business seamlessly. This omnichannel experience is often done using software but can also include hardware such as POS systems. We’ve found that software provides an easier cloud experience for businesses and customers alike.

1. BigCommerce

BigCommerce is an ecommerce platform that allows you to manage all aspects of omnichannel selling easily so that you can drive more customers to make purchases. BigCommerce is right for businesses who prefer POS integrations such as Square and ShopKeep. Features include segmentation, search engine optimization (SEO), and web hosting. You can get started with a 15-day free trial.

2. Shopify

Shopify is an easy-to-use ecommerce platform that offers built-in marketing. Build your ecommerce site, track and ship orders, sell in-person and on social media, and customize your website with Shopify. With its built-in marketing, it’s an excellent option for businesses looking for an all-in-one provider. It offers a free 14-day trial.

3. Webgility

Webgility offers ecommerce bookkeeping, accounting, inventory sync, and shipping. It’s a great option for businesses that use QuickBooks or NetSuite. Multichannel pricing starts at $249 per month. Get started with a 15-day free trial.

Omnichannel vs Multichannel Retailing Features

An omnichannel retail experience presents a unified look and experience to customers, whereas a multichannel approach has single sales channels. A multichannel retail experience on one channel can look completely different than another for a customer. To deliver a connected UX, connect as many engagement channels as possible under one roof. The easiest way to start is by connecting your prime engagement points, which are your sales channels. Along with sales channels, other marketing methods can be integrated into an omnichannel experience, such as customer loyalty programs, email marketing, interactive video ads, and retargeting ad campaigns.

Email Marketing

Email marketing should be a key part of any online marketing program. Top ecommerce platforms let you deliver the omnichannel experience by integrating your sales data with top email systems or even built-in mobile-friendly email marketing like you get with Square POS.

Connecting your email list to buyer history lets you target emails to customers who have previously purchased certain products or similar items. Using purchase history to target marketing efforts is omnichannel thinking in action and leads to far more sales conversions than a one-size-fits-all approach.

Similar to omnichannel retail, email marketing strategies in a multichannel retail experience allow businesses to see which pages a customer visits, which links they click, and how they engage with each email. However, it’s not integrated within every channel.

Customer Loyalty Programs

Starbucks’s loyalty program delivers rewards points and reloadable payments across whatever media the customer prefers: physical cards or mobile app. Another example is Kohl’s Cash, which provides rewards redeemable on clothing and other Kohl’s merchandise. Now, small businesses can tap the power of fully integrated loyalty programs using POS systems with built-in loyalty programs like Square Loyalty.

Like Starbucks’s industry-leading program, even small business loyalty perks can be tracked online, via a mobile device and in-store, to deliver a complete omnichannel experience. The success of your rewards program is tracked in your backend dashboard.

A multichannel loyalty program example is providing customers with a physical coupon at checkout for their next in-store visit. They can’t use this coupon online or over the phone and must present the physical coupon during their next purchase.

Square Loyalty tracks every element of loyalty program usage in the Square dashboard

Interactive Video Ads

Engagement is key when it comes to omnichannel marketing and cutting-edge groups like PK4 Media brings an interactive omnichannel experience to everyday video. Its TruEngage platform supports various omnichannel marketing methods, including interactive video ads designed to engage the viewer. Their technology requires users to either engage with the brand for an average of six seconds or complete an action to skip the ad.

Interactive online video ads drive campaigns for many large brands but can also be tailored to fit small budgets and local businesses. Videos done with a cellphone can get made into an ad by a freelancer for less than $100.

Multichannel video ads can also be interactive and full of analytics to measure. These measurements include how much of the video a user watches and whether or not a user clicks on the link in the ad.

To skip this ad created by PK4, you need to interact with it first

Retargeting Ad Campaigns

A retargeting ad campaign is when a visitor comes to your website and later sees an ad for the product or website no matter where they’re at on the internet. These ads can be found browsing Google or even while on social media networks. This is done through cookies placed on a user’s computer when visiting a site.

Retargeting ads keep whatever potential buyers viewed on your website front and center as they visit others. Some highly effective retargeting ads offer buy-it-now coupons or a free gift to increase instant engagement and conversions.

Multichannel marketing typically involves a more manual approach for retargeting. A company can take its list of people who have clicked a link in their email and then upload this list to run an ad on social media.

Customer Service

Cross-training staff helps deliver an omnichannel experience to customers. Store clerks and anyone servicing customers need to understand all the ways customers connect with the company. A customer may connect through Amazon first, then find your website or store. Having quick access to weekly email specials, knowing how the mobile app works and being able to look up items and shopper buying history is a start. Familiarity with all sales channels and marketing engagement points allows service staff to assist customers every step of the way.

Multichannel customer service doesn’t allow phone agents to view conversations customers have had through email or vice-versa. Each channel maintains its own communication, which can frustrate customers.

Order Fulfillment

Warehouse staff plays a significant role in customer experience. Each shipped order is a key customer engagement point and is often the only physical contact you’ll ever have with a customer. Whether your shipment is fancy or plain, it must be tidy, accurate, and deliver the brand experience. Even if that just means adding coupon inserts, it should be done with care. There are many ways you can craft a branded packaging experience, even on a tiny budget.

Multichannel fulfillment involves separate shipping processes for orders coming in via email, phone, and through an ecommerce store. It can add more time and costs, particularly in situations where it makes sense to combine an order to ship it. With multichannel fulfillment, each area doesn’t necessarily know when an order gets placed through a different channel.

Elizabeth de Moraes holds a custom-made box for her Video Glam Cam Kit in the celebrity gifting suite at the Emmys

Analytics

Understanding how and where customer engagement points become sales is the backbone of a successful omnichannel strategy. Your data needs to deliver more than just basic sales information. A total picture that tracks the many routes, or engagement funnels, that customers take to complete a sale is essential. The best ways a small business can get this information are Google Analytics and your sales system.

In Google Analytics, be sure to use audience segmentation for deep channel insights. Basic audience segments that everyone should be tracking include new vs returning, mobile vs desktop, and source channel segments.

As with everything else omnichannel, your reporting system needs to track all of your omnichannel sales and other engagement points under one roof. An added plus is a system that also lets you track engagement from marketing email campaigns, mobile apps, and social channels, such as those found in BigCommerce.

Multichannel analytics show details for each channel, although you don’t know if a person starts their research through one channel and makes a purchase in another. It would take manual cross-referencing to see conversions across each channel, rather than being seamless integration.

Successful Omnichannel & Multichannel Retailing Strategies

Creating an effective omnichannel retail experience for your customers can take time and skills to implement. With the right strategy, a small business may see their profits and customer satisfaction increase with omnichannel retailing.

These companies have done a great job of implementing omnichannel retail strategies.

1. Sephora

Knowing your customer’s birthdate allows you to send them a birthday email with a discount or coupon code exclusively for their use. Sephora does this well—offering customers their choice between birthday gifts. Most of these birthday coupons stipulate it must get used during the month of their birthday.

Sephora uses an omnichannel approach because the customer takes this email to a store or makes the redemption online

2. Wynn

Several weeks before your arrival at Wynn in Las Vegas, you’ll receive a welcome email detailing what is going on during your stay and what the hotel’s policies are for check-in and check-out. They also give you an offer for a reduced suite upgrade.

After your Wynn stay, the link to view your upgrade offer disappears

3. M.A.C. Cosmetics

Whether you made a purchase online or in-store, view your M.A.C. Cosmetics purchase history from the website. This way, if you’re in the store, M.A.C. artists can view within seconds what your preferred shade of foundation is. At home, a click of a button allows you to reorder the same product.

While most are viewable online, if you make a M.A.C. Cosmetics purchase from an authorized retailer such as Ulta or from an airport kiosk, you can’t view those purchases

4. Fresh

While Fresh has retail stores, its online sales channel is completely separate. Any issues that arise with an order placed online have to be resolved online. Similarly, any issues with purchases made in-store will need resolved in-store.

Fresh uses a multichannel retail approach with both an online store and physical locations

5. Warby Parker

Warby Parker is a retailer selling prescription and nonprescription glasses and sunglasses. They have an online store as well as many local stores to purchase from. However, it doesn’t integrate, so they use a multichannel approach.

When you purchase online, your order will ship to your home with Warby Parker; you do not have an option to pick it up in-store

Pros & Cons of Omnichannel Retailing

There are many pros and cons of omnichannel selling to consider. If you’re looking for the chance of higher sales and better customer experience, omnichannel selling is a great choice. However, if cost is the biggest factor for your business, you may want to consider a single-channel retail experience for your customers.

Pros of Omnichannel Retailing

Pros of omnichannel retailing include:

• Better customer experience: A customer who makes a purchase online with the ability to return the product in-store can appreciate the flexibility offered by omnichannel retailers. They also get to use coupons and track loyalty programs across channels.
• Improved analytics: When buying behavior is tracked and integrated across all platforms, businesses can make decisions based on the data given.
• Chance for more sales: Past purchase behavior allows businesses to market products to customers that they’re more likely to buy. Online shopping statistics show that impulse purchases are more frequent, particularly when a customer shops online.

Cons of Omnichannel Retailing

Drawbacks of omnichannel retailing include:

• Cost prohibitive: Smaller businesses or those with tiny profit margins may find costs to be too expensive.
• Complex: When a purchase is made in-store, you want your inventory to reflect the sale. You may need to hire help if you’re not tech-savvy.
• Logistically challenging: With many channels comes the decision of where to profitably ship a product from. Each product’s weight and dimensions change the costs of shipping from a warehouse, from the store, or dropshipped from the supplier.

Bottom Line

Omnichannel vs multichannel retailing is very similar in that it allows you to make purchases and interact with a company in multiple ways. Multichannel retailing doesn’t integrate with each channel. However, an omnichannel experience does—track everything under one roof, cross-train staff, dissolve data barriers, and retrieve detailed analytics with each channel. This customer-focused approach isn’t reserved for enormous companies either. As long as a product has healthy profit margins, it has room for an omnichannel retail UX.