Creating Space for Omnichannel Retail by Big Brands
Often the relationship between brick-and-mortar retailers and eCommerce merchants is described as adversarial, even combative. For years, articles, blogs, and other opinion pieces have proposed that the rise in eCommerce was the death knell for the traditional shopping experience and physical stores. There didn’t seem to be room for the idea that multi- or omnichannel retail was possible.
Such predictions are understandable, with Amazon claiming approximately 45% of the retail market growth in 2016. However, brick-and-mortar survives, and even thrives in certain industries and locations. The lesson learned by many retailers, on both sides of the equation, is that these two channels for shopping can be complementary.
In fact, examples of the reciprocal nature of eCommerce and in-store shopping are everywhere. Keep reading for a look at how influential eCommerce companies have made important strides towards a physical presence and the differing ways traditional retailers are taking their business online. We will also share some insight on how a growing eCommerce merchant can emulate the decisions of these bigger businesses when it comes to omnichannel retail.
Biggest Names Online Are Going Brick-and-Mortar Through Omnichannel Retail
The news of Amazon’s acquisition of Whole Foods has dominated eCommerce updates. From the companies’ competing corporate cultures to the predicted changes at Whole Foods, the deal has been thoroughly discussed, including the implications of an online giant like Amazon moving into a physical space and taking strides towards omnichannel retail.
Amazon’s interest in Whole Foods is multifaceted, as we discussed back when the acquisition was announced. It gives the eCommerce company a stable stance in brick-and-mortar retail that was lacking in its AmazonFresh Pickup locations. Also, Whole Foods can offer Amazon an abundance of customer data in the grocery industry, which is of particular interest to the company. Lastly, Whole Foods has an entire line of private label products that now belong to Amazon.
While Amazon has been making the most headlines, other eCommerce companies have stepped into omnichannel retail as well. One of the most notable is Chinese influencer Alibaba. When it comes to the Chinese market, Alibaba dominates eCommerce. It is essentially the overseas equivalent of Amazon, except its homegrown market is two billion people. Suffice it to say that Alibaba is an eCommerce giant, valued at $392 billion, and its move towards omnichannel retail is a big deal.
“Similar to Amazon’s $13.7 billion acquisition of Whole Foods, Alibaba believes a foothold in traditional retail is the path to future growth.” – Forbes
Over past months, Alibaba has made more than $8 billion in investments to physical retailers, grocery stores, and a luxury shopping mall. The extensive attention to brick-and-mortar shopping shows that Alibaba finds physical stores essential to its continued success. However, Alibaba recognizes that the future of brick-and-mortar retail looks very different than the traditional shopping experience and, through omnichannel retail, can offer a whole new shopping experience in China.
When a Traditional Department Store Turns to Omnichannel Retail
Nordstrom announced its latest concept on Monday. It is a brick-and-mortar location that doesn’t actually sell any clothing. While this seems confusing, given that Nordstrom is a traditional department store, the move is another example of how big retailers are trying to gain traction in online shopping.
Shoppers come to the physical store to browse available merchandise and try on clothing, shoes, and accessories. Instead of leaving the store with selected items, they are ordered from another Nordstrom location or warehouse, and then shipped to the customer by overnight delivery or regular mail. It highlights omnichannel retail well, providing a tangible experience backed by eCommerce fulfillment. While the concept is controversial in the world of retail, as seen by Nordstrom’s sliding stock price after the announcement, it actually tackles several of the issues faced by brick-and-mortar.
First, brick-and-mortar retailers are suffering in part due to the rising cost of real estate and rent. Additionally, these physical locations have massive expenses related to upkeep, maintenance, and cleaning of the properties. Store spaces have become exceptional in size, in an effort to meet customer requests and demands of the past, but that space is more burden than benefit now.
Traditional retailers still offer benefits to many customers that are still impossible through eCommerce, such as the sensory experience of shopping. Whether it is smelling a perfume, seeing how a dress hangs when not on a mannequin, or touching the leather of a purse, these experiences matter for shoppers trying to decide on a purchase. As with Nordstrom’s latest venture, stores want to ensure that their omnichannel retail enhances and showcases these benefits.
Continued Crossover with an Omnichannel Retail Presence
If the acquisition of Whole Foods wasn’t enough evidence of Amazon’s interest in omnichannel retail and an offline presence, then its partnerships paint the full picture. For example, the recent partnership with traditional retailer Kohl’s. Like other major department stores and big box retailers, Kohl’s was built on the success of Sears’ move from catalog sales to brick-and-mortar retail.
Tough competition from Target and Wal-Mart are direct strains on Kohl’s stores across the United States, and eCommerce adds another complicated competitor to the mix. Amazon offers a unique omnichannel retail opportunity for Khol’s. Starting in October, select Kohl’s stores will have Amazon products, including reading devices, smart home appliances, and other items for sale in physical locations.
It provides an opportunity for customers to try the product in a more robust and thorough fashion before purchase than what can be offered online. This partnership will bring Amazon customers into Kohl’s, who might pick up other items. Also, Amazon staff members will demonstrate products and be present in-store to answer customer questions, which places no burden on Kohl’s in terms of training and gives Amazon the opportunity to maintain control over its own customer experience.
Applying the Big Brand Omnichannel Retail Experience
The take away from how bigger companies are investing in omnichannel retail and crossover from online to offline is that there is a massive benefit to seeing traditional shopping as an opportunity, as well as competition. When an eCommerce business looks to expand via offline sales channels, it increases availability and visibility to potential customers.
Also, if the example of bigger business is anything to go by, looking for partnerships and crossover with traditional retailers is beneficial for both companies. For another example, an online jewelry designer might want to sell via a web store and Etsy, but the placement of the jewelry in boutiques local to the designer allows for another sales channel, without the complications of opening a physical store.
For retailers that are looking at the climbing percentage of eCommerce sales with agony, there are hopeful insights. It could be time to start building an online store or finding a current eCommerce company that needs distribution or pickup opportunities from your location. Perhaps it is simply time to step up your online presence via digital marketing and social media content. Either way, trends tell us that it is essential to get your business online in some manner.
Looking to take your eCommerce presence to the next level or find new sales channels for your business? The team at 1Digital Agency is invested in helping brands of all sizes and locations find out how digital marketing and eCommerce can serve them. Visit us online today.
- Dan Kogan
- September 14, 2017