Omni-Channel Retailing and Its Requirements in the Supply Chain


Bachelor Thesis, 2014
87 Pages, Grade: 1,1

Excerpt

Table of contents

Introduction

The Omni Channel retail strategy
The rise of hyperconnectivity
Developments in the global retail market
The Mono Channel phase
Benefits of online retailing
Benefits for retailers
Benefits for customers
The Multi Channel phase
Recent changes in the retail environment
Changing customer behavior and expectations
Changing shopping behavior
Increased expectations
Online-shopping improvements
Simplified shopping process
Faster shipment
Benefits of brick & mortar retail
Omni Channel retailing
Omni Channel initiatives
Store-based fulfillment of online orders
In-store pickup and return of online orders
Online shopping in-store
Mobile interaction in-store
Current status of Omni Channel retailing

Supply chain design innovations to enable Omni Channel retailing
The transparent supply chain
RFID Tagging
Omni Channel strategy support
Other benefits of RFID
Current status of RFID technology
Challenges
Information Technology Platforms
Order management
Inventory Management
Logistics innovations
Warehousing Management
Picking
Packing
E-commerce fulfillment from brick & mortar stores
E-commerce fulfillment with store inventory
The last mile(s)

Benefits of Omni Channel retailing
Higher sales and profitability
Less out-of-stock
Less markdowns
Broader product variety
Increased in-store traffic
Lower costs
Enhanced Productivity
Better insights
Business intelligence
E-clienteling platform
Meeting and exceeding customer expectations
Higher brand engagement

Challenges and difficulties of Omni Channel retailing
Omni Channel setup
Large investment
Increased complexity
Execution problems
True channel migration
Engaging employees
Negative side effects
Data privacy
Security threats

Success Strategies in Omni Channel Retail

Conclusion

Bibliography
Written sources
Images
Tables

Appendix
Enlarged copies of selected figures

Acknowledgements

First of all, I would like to express my sincerest gratitude to my thesis supervisor Professor Sharada Ravindran, who has been a source of encouragement, ongoing support, and guidance throughout the entire process.

Further, I want to thank all professors at IE University and the University of Southern California who I have had the honor to learn from. I have thoroughly enjoyed my undergraduate studies at both institutions and the time spent living and learning about business, life and myself.

Finally, I want to thank my family and friends who have always been by my side, especially during the last three months that were dedicated to writing this paper.

Abstract

An analysis of Omni Channel retailing with a focus on Supply Chain requirements

This thesis is a description of the state of the art of the Omni Channel retail strategy with a focus on the changes necessary in Supply Chain design.

Its purpose is to provide a comprehensive overview on Omni Channel retailing that can serve as a first source of information for companies thinking about adapting this strategy. There is no single external source that combines the description of Omni Channel retailing with details of how to implement this strategy yet, so this thesis makes it significantly easier for retailers to familiarize with the topic and get impulses for further research.

The introduction shows the developments that led to the strategic move, which eases understanding the concept and its purpose. The thesis finds that technological innovations, changing shopping behavior, increasing expectations, and intensifying online competition were the major drivers affecting this shift.

It continues to describe the common Omni Channel initiatives before it gets into more detail on what Supply Chain and logistics changes are necessary to support them.

First, it shows that the application of RFID technology and IT platforms creates an end-to- end transparent Supply Chain, which delivers the core capability to pursue this strategy: complete inventory visibility. Second, the solutions to improve fulfillment speed are presented. Both upgrades in order processing inside the warehouse and innovative last mile solutions are discussed in detail.

Describing the benefits of Omni Channel retailing, the paper shows that it perfectly meets the requirements of today’s retailers. Not only does the strategy improve profitability and productivity, it also helps them meet expectations, learn more about their customers and use this knowledge to sustainably compete in the market.

It also finds that there are significant challenges to overcome before reaping these benefits. Large investments and added complexity need to be faced during setup and a non-aligned organization and the inability to engage employees are major problems during execution.

As the retail environment evolves at a rapid pace, the paper finally presents strategies for companies that have fully developed Omni Channel capabilities. These ensure that retailers can also compete once Omni Channel is the new normal.

Introduction

Omni Channel retailing is dealt with excessively in the retail industry these days. Big, influential retailers around the world announce Omni Channel initiatives frequently, dedicated retail conferences provide a place for experts to come together and exchange knowledge, industry blogs and magazines write about different aspects of it in every issue and consulting companies engage in the topic to position themselves for major projects.

While this shows that the topic is highly relevant for participants in the retail environment, it also indicates that it is a fairly recent development that has not yet been subject to a lot of thorough academic analysis. Therefore - while there is a lot of information on Omni Channel retailing available - knowledge is still highly fragmented and dispersed. Articles that look at the issue from a customer experience and service perspective do not cover the strategic relevance and reports that aim at describing fulfillment solutions do not mention the technology necessary to implement them. People interested in the field and companies that consider the pursuit of the strategy need to spend a lot of time and resources to find enough information to get a holistic picture of what Omni Channel retailing is and what it entails.

It is therefore the purpose of this thesis to provide a comprehensive overview on Omni Channel retailing that can serve as a first source of information for companies thinking about adapting this strategy and other interested parties and give impulses for further research.

In the course of this thesis the following structure will be used to cover all relevant aspects of the Omni Channel retail strategy:

Figure 1: Thesis structure

illustration not visible in this excerpt

The Omni Channel retail strategy

If one really wants to grasp the innovation dynamics currently transforming the retail industry and understand what Omni Channel retailing is and why it is so important, one needs to first understand the developments both outside and inside the industry that led to the rise of this new hot topic. Beyond the retail industry, the rise of hyperconnectivity plays a major part in the Omni Channel development, while changing customer behavior and expectations, and increased competition were the most important factors within.

Omni Channel retailing and the initiatives that retailers have launched to put the strategy into practice are a direct consequence of these developments, as will be seen in this chapter. While retailers’ Omni Channel efforts vary across industries and countries, in general, leading experts, retailers, and analysts consider Omni Channel the next revolution in retail.

The rise of hyperconnectivity

Technological innovations and developments have affected the way people communicate and interact with their environment across the globe in the last decades.

The spread of mobile phones and the growing reach of the Internet make people increasingly interconnected. According to a report of the World Economic Forum, “global mobile phone subscriptions are projected to soar from 5.6 billion Feature phones in 2012 to 7.6 billion by 2017, driven by the growth of the middle class in emerging markets, where only 39% of the population owned a mobile phone in 2012 (see Figure 2). Web-enabled smartphones, moreover, will comprise two-thirds of market shipments by 2017”[1], providing more and more people with an affordable connection to the Internet.

illustration not visible in this excerpt

Figure 2: Growth of mobile smartphone ownership

Not only do people tend to be more interconnected. As the Internet is entering a new phase of evolution, more sensors and intelligent chips get embedded into objects, which gives them the ability to communicate - increasingly without human interaction.[2] This development, commonly referred to as ‘The Internet of Things’, has the power to dramatically change business across all sectors and people’s daily lives alike.

This strong interconnectedness of people and objects is referred to as hyperconnectivity (everything is connected to everything) - a major driver of innovation in many industries such as home appliances (home automation), pharmaceuticals (end-to-end cold chain tracking), or mobility (seamless door-to-door travel planning).

For companies and people alike, hyperconnectivity provides great advantages. The information collected from the sensors and chips is creating a data deluge that companies can use to make faster and smarter decisions, and offer better-fitting products and services to customers, who increasingly seek more customized solutions.

Developments in the global retail market

Inside the retail industry, changes have also been enormous in the last 20 years. Retailers have had to adapt to changes in customer behavior and expectations to survive in this constantly changing environment.

The Mono Channel phase

Before 1995, the Internet was not open for commercial transactions. People who wanted to buy something visited brick & mortar stores or ordered from a catalogue. In that year, however, the US National Science Foundation lifted the strict prohibitions and opened up the Internet for retail. In the same year, Amazon, today’s biggest online retailer, and Ebay, a leading consumer-to-consumer platform, were launched. Over the next couple of years, e- commerce spread around the world with online retailers entering the market e.g. in the UK (Sellerdeck; 1996) Japan (Rakuten Ichiba; 1997), and China (Alibaba.com; 1999).

Before and during these early years of e-commerce, most retailers pursued a Mono Channel retail strategy, selling goods via one channel only (either physical or digital).

Online marketplaces soon gained popularity with customers and - conquering one product category after the retail market.

Benefits of online retailing

The reasons for the success of online retailing lie in the benefits it brings for both retailers and customers.

Benefits for retailers

Digital retailers are able to provide people with cheaper prices, a much wider product range, and the convenience of shopping anywhere with an Internet connection, anytime, which increases their potential market enormously. In addition, they can leverage the online presence to easily track customer shopping behavior.

Lower costs: Not building up a physical presence saves costs. Instead of renting expensive retail space in a highly frequented area, online shops can set up distribution centers and warehouses at locations where the rent is cheap and the infrastructure connection is good. Some smaller online shops are even run out of a private garage.

Unlimited space for products and information: In addition, due to the cheap floor space and much larger warehouse capacity, a product range that is beyond anything a customer could find in a brick & mortar store can be offered online, which makes online retailing much more attractive. Also, as space on a website is unlimited, detailed information, pictures and customer reviews can be provided to help customers make a purchasing decision without seeing the actual good beforehand.

Further reach: Thirdly, customers can be reached regardless of their location as long as they have access to the Internet, which strongly enlarges the online shop’s customer base and potential sales.

Tracking of shopping behavior: The use of the Internet as a “shopping space” also allows retailers to track customer behavior on websites via cookies to increase store performance. Understanding the way customers navigate through the websites, how much time is spent in one place, and what hyperlinks are clicked on, retailers can design the website to perfectly meet customer needs, decrease abandoned shopping baskets and boost sales.

Benefitsfor customers

Online retailing not only benefits the retailers. Customers, too, have reasons to prefer online shopping to visiting a physical store, especially along the lines of time, money, and information.

Less time-consuming: Online shopping spares consumers the time of driving to a store, locating a product and standing in line to try something on or to pay for their shopping.

Waiting in line is one of the most painful in-store experiences. According to an article in the New York Times, “Americans spend roughly 37 billion hours each year waiting in line. The dominant cost of waiting is an emotional one: stress, boredom, that nagging sensation that one’s life is slipping away.”[3] For brick & mortar retailers, this has a very negative effect: a national survey conducted by Great Clips (an American hair salon franchise) found that 63% of customers who had to wait more than 15 minutes say it shows bad customer service and a lack of respect for their time. 52% say they would take their business elsewhere.[4] People who shop online do not have to wait in line and can make their purchases much more relaxed and time-efficient.

Lower costs: As mentioned in the previous subchapter, online retailers often offer a product at cheaper prices than their physical competitors. This also benefits customers and their wallets. Prices did not only become lower due to online retailers, though. The Internet made it much simpler for people to sell and buy used items peer-to-peer on online marketplaces such as Ebay, which extended the lifespan and lowered demand for new products.

More product information: The detailed product descriptions and peer reviews on websites such as Amazon provide customers with more and unbiased information. In the store, information on product features is often limited and biased due to the motivation of staff to sell items that are available in the store.

Shopping anywhere: In his acclaimed book ‘The Death of Distance’, journalist Frances Cairncross describes how the Internet has eliminated the importance of physical proximity for communication.[5] For shopping, in many ways the same applies. People can now shop the goods and services they want from any point with an Internet connection; this could be at home in front of the TV, waiting for a coffee at Starbucks or while browsing the display of a competitor’s store - anywhere the customer wants at any time of the day.

The Multi Channel phase

The phenomenon just mentioned - people browsing items offline before purchasing them online (mostly due to a cheaper price) - is called showrooming and is one of the biggest challenges that retailers have had to face since the rise of e-commerce. This (and the fact that online retail was gaining popularity among wide parts of the population) made retailers fear that they would not be able to compete successfully in the long term. Many therefore decided to change their retail strategy and move toward offering their products in both physical and digital stores. This marked the start of the Multi Channel retail strategy era.

Online retail slowed for a while due to the dotcom bust in 2000, due to which many online retailers failed. An often-mentioned example is online grocer Webvan that ran out of cash after investing billions of dollars to set up the business. The benefits of selling and buying online have persisted, however, and the industry has since been able to recover. Today, online shopping is at a new popularity high. In 2012, global B2C e-commerce sales topped $1 trillion for the first time.[6] In the US, digital commerce grew by 11% between 2012 and 2013 to be worth $370 billion, already making up 11% of all retail purchases there (excluding the grocery category).[7] Due to retailers pursuing a Multi Channel strategy, this growth is not only captured by online-only retailers but also partially by physical retailers that have launched an e-commerce website to make their products available online.

Recent changes in the retail environment

However, while Multi Channel retailing proved to be the right strategy at the time, the competitive environment in the retail space has since continued to intensify.

Changing customer behavior and expectations

While retailers tended to dominate the way people shopped in the past, the power has recently shifted to the customers. Today, with multiple retailers offering the same goods and the availability of abundant information online, customers have the power to decide where they want to make their purchase. Their shopping behavior has changed and expectations of a good retail experience have increased. Retailers therefore need to understand the changing needs and wants of customers and adapt accordingly to keep being able to compete in the market.

Changing shopping behavior

The online sales figures and growth rates already show the importance of e-commerce for the future of retail, but they still underrepresent the effect of the Internet on people’s shopping behavior. For example, they do not reflect the fact that customers use their smartphones to help them in the shopping process, and then proceed to buy offline in a brick & mortar store.

According to Google’s Mobile In-Store Research, Smartphone users use their devices at multiple stages of the shopping process for multiple purposes.

Across all industries, an average of 71% of smartphone owners use their phone for pre­shopping activities such as determining store locations and opening hours, and finding more detailed product information.

Inside the store, the smartphone usage depends on the industry (see Figure 3). On average, 84% access to information across brands and retailers, often making them more knowledgeable than in-store staff.

Second, the most common mobile shopping activity inside the store across all industries is comparing prices[8]. The showrooming effect could therefore not be diminished sufficiently through the pursuit of a Multi Channel retail strategy. Brick & mortar retailers - even if they have an online store - still lose sales to online-only stores because they cannot compete on price.

Increased expectations

In addition to the changes in behavior, today’s consumers have increasingly high expectations regarding their retail experience. They want better service, higher value, more choices, and better promotions[9] - an overall better shopping experience.

Flexibility demands: When shopping goods at a retailer that has both a physical and digital presence, customers expect flexibility. They want to be able to return items they purchased online in the brick & mortar counterparts, for example. This, according to a study commissioned by UPS Pulse, is considered the most important factor when choosing a retailer for 62% of consumers when shopping online.[10] However, Multi Channel retailers usually have entirely different IT systems supporting offline and online sales, which makes it prohibitively complicated to offer such a service. Customers also demand flexibility in other aspects such as fulfillment. They want to have the option of picking up their online orders in­store or having the items they liked in-store shipped to their homes. As channels are managed independently in a Multi Channel retail store, both channels are not seamlessly integrated and no real-time data is shared between them, which inhibits retailers from meeting their customers needs and wants.

Technology support: As customers have changed their behavior to shop and now make extensive use of technology in the process, they also expect retailers to accommodate. They want to be able to easily access digital information inside the store and use the latest technologies for product research and payment.

Not accommodating the new customer shopping behavior and expectations, Multi Channel retailers are losing ground to online-only players in a crowded retail environment.

Online-shopping improvements

The changes on the customer side already show that Multi Channel retailing is not enough anymore to satisfy customers. In addition, the situation is worsened as retailers also have to deal with more capable competition. Online-only retailers keep coming up with new innovations to improve their daily business and move closer to the customer, making online shopping faster, and more convenient than ever.

Simplified shopping process

In the last couple of years, online retailers have worked on improving the shopping experience and the resulting conversion rates on their websites. Using web analytics software to learn more about their customers’ behavior on the website and removing the barriers that kept people from making a purchase, they were able to greatly simplify the shopping process.

As early as 1997, Amazon filed a patent on its 1-Click technique that allows customers to buy items with a single click. Information necessary for checkout such as the shipping address and payment information is entered beforehand and saved to make shopping as simple as a single click.[11]

Faster shipment

Offering a free two-day shipping policy for ‘Prime’ members, Amazon created a way for customers paying an annual subscription fee to have no additional costs when wanting to receive their orders faster. Furthermore, they and other Internet companies such as eBay[12] and Google[13] are already investing in same-day delivery, getting goods to people within a couple of hours of purchase, further eliminating the need to buy goods in physical stores. In comparison, Multi Channel retailers have standard lead times of 5 - 7 business days for national orders in countries like the US, UK, and Germany and most have minimum purchase requirements to qualify for free shipping. The e-commerce giant Amazon aims at changing the rules of the game even further, though. While drone deliveries might not become a reality in the near future, Amazon is already able to offer Sunday delivery in dense regions of the US in collaboration with the US Postal Service. Same-day shipping 7 days of the week - a nightmare for brick & mortar retailers who are already not able to keep up the pace.[14]

Benefits of brick & mortar retail

While online shopping offers large advantages and continues to grow in double digits, there are still important reasons why people go shopping in brick & mortar stores. Physical stores are able to deliver a stronger experience, customers can be attended personally, and returning items is more convenient.

Stronger customer experience: A main advantage that brick & mortar stores have is the customer experience they are able to provide. Brands can communicate their values much better in a physical store where they can completely control the environment and deliver a much stronger experience. Buying luxury and strongly branded items is therefore still mainly happening offline.

More social: Shopping offline is still much more social than shopping online. The visit to a mall or a weekend stroll through a shopping arcade with friends and family is a popular pastime for many. In addition, it exposes people to new products, and invites them to make impulsive purchases.

More information dimensions: While customers can find a lot of information online, ultimately, the decisions made inside a store are based on a richer sensory experience. There, customers can physically touch and feel the goods and - in the case of apparel and shoes - try them on and see if they fit before making a purchase. In case of questions regarding a product, customers can approach knowledgeable store staff that can explain features in detail, advise the customer and recommend alternative or complimentary items.

Easier returns: Also, returning goods purchased in stores tends to be much easier. Items do not have to be boxed and shipped to return; they can just be brought back to the store with the original receipt.

Instant gratification: Another reason why people still shop in brick & mortar stores is ‘instant gratification’. When buying something in a store, customers can immediately take the product with them and receive the reward in exchange for their money. However, as online retailers work on shortening delivery times to a few hours, this is a fading advantage.

Both online and brick-and-mortar stores offer advantages to retailers and customers. Clearly, the most effective strategy to follow is an integrated channel that seamlessly combines the best of all the retail channels available. This led to the natural evolution of Omni Channel retailing.

illustration not visible in this excerpt

Omni Channel retailing

Physical retailers still have strong advantages but dealing with online-only retailers such as Amazon (global), ebay (global), flipkart (India), taobao (China) etc. is a big challenge, as increased transparency and abundant price and product information make customers more informed.

In response to this development, many retailers realized revisiting their strategy was necessary to take on the challenge of competing in this new technology-savvy, highly demanding environment. Instead of further ‘copying’ online-only retailers, leading retailers now focus on leveraging the main aspect that differentiates them from digital stores: the fact that they are present in both the physical and digital world.

By embracing the use of technology and allowing their customers to use the channel they prefer to use at any point of time during the shopping process, retailers are merging the physical and digital world and creating a seamless shopping experience for their customers, that offers the best of all channels: mobile: access relevant information on your smartphone on-the-go - web: shop a wide product range and have it conveniently delivered to your home store: great customer experience with rich sensory information

As this new strategic approach aims at integrating all retail channels, it is called Omni Channel retailing[15]. Products and services continue to be sold through multiple channels, but these are now served by integrated technology services, a single dataset, and are connected in real time. This allows customers to interact and transact across all channels and preferred

For most retailers, the key reason to pursue an Omni Channel retail strategy is to adapt to changes in the retail environment, differentiate themselves decisively from their competitors and make their brands more relevant to the customer with the ultimate goal of increasing sales and profitability.

Omni Channel initiatives

While the overall strategy and design by which retailers integrate their sales channels vary, there are several technology-enabled services common to most Omni Channel retailers, as described below.

Store-based fulfillment of online orders

In order to leverage their physical presence in digital transactions, retailers are starting to build the capabilities to fulfill online orders with inventory that is located inside the store.

Traditionally, many retailers shipped online orders from a remote distribution center in a strategic location to cover as much area as possible. By learning how to ship orders from physical stores, retailers effectively turn their brick & mortar stores into small distribution centers close to their customers. This leads to faster order fulfillment.

In-store pickup and return of online orders

Another step towards a better customer experience in retail is allowing customers to pick up and - if necessary - return online purchases in the brick & mortar counterpart.

A recent Forrester research states that in-store pickup of purchases emerged as a key capability that brick & mortar retailers must be able to provide if they expect to compete effectively against online-only retailers. Nearly half (47%) of the customers surveyed said they use in-store-pickup options to avoid online shipping costs, 25% so they can collect their orders on the day of purchase and 10% simply because they find it more convenient to pick items from a store than having them shipped to their home.[16]

John Lewis, a UK-based department store selling both offline and online, first introduced a click-and-collect service in 2008, which has since been successfully extended to its sister company Waitrose and is now available in 300 stores. In April 2012, John Lewis reported 25% of orders made through johnlewis.com were for click-and-collect, which shows the high attractiveness of the service.[17]

UK-based supermarket chain Tesco has also established a click-and-collect service aimed at increasing the convenience of shoppers who do not want to spend extensive time picking their shopping in the aisles. For a small fee of £2, customers can pick up their shopping at a designated collection point in the supermarket, which can be reached by car and can therefore also be used as a drive-thru[18]. In January 2014, the company also announced it would launch click-and-collect facilities at several London Underground stations to make the service even more convenient for its customers who get increasingly accustomed to shopping goods online[19] - following the great success Tesco South Korea has had introducing virtual supermarkets there in 2011[20].

Online shopping in-store

As seen before, many customers turn to their smartphones in-store to get additional information or compare prices. Retailers pursuing an Omni channel strategy therefore try to actively embrace this behavioral change by inviting customers to shop online - on terms that benefit the retailer.

A great example of how to allow customers to shop online in-store and use it to the company’s advantage comes from British apparel retailer Oasis. In 2011, the company introduced iPads across its stores to enable their customers to browse online, pay online and place orders online whilst in store. “Users have the option to try an item on in store, and then order it online and have it delivered, rather than having to queue at the till to pay.”[21] In addition, customers can purchase items in colors, sizes, and models that are not available in­store or approach one of the sales assistants, who are all equipped with an iPad as well, to receive help at the point of decision.

For Oasis, the investment greatly paid off. In the first week of the iPad ordering system opening, already 20% of store sales were made through the iPad each day, showing the high acceptance of customers of the new technology and shopping mode.[22] Another way to enable online shopping in-store for customers is to provide free Wi-Fi.

British book retailer Waterstones has had to adapt to the sharp competition from Amazon like most book vendors and decided to do so by entering into a partnership with them, selling the Amazon Kindle as the only e-reader chain-wide. In addition, they launched a large refurbishment plan worth ‘tens of millions of pounds’[23], which included the initiative to make free Wi-Fi available to its customers to boost its eBook sales.

In general, providing customers with the ability to shop online inside the store marks a strategic shift of brick & mortar retailers. They start using their physical presence as a showroom for selected items of their product range, where customers can physically touch and feel the items, try them, and engage with knowledgeable staff before ordering a product online.

Naturally, the support of shopping online inside the store leads to higher levels of e­commerce orders. As will be seen in the chapter ‘Supply Chain design innovations to enable Omni Channel retailing’ this is an important consequence of the strategy that retailers have to account for.

Mobile interaction in-store

Another Omni Channel initiative that is still in its early phase and connects mobile with brick & mortar is the provision of detailed product information for customers in-store via mobile.

In the past, customers mostly got their information on products by talking to sales associates in the store. Today, they can additionally inform themselves about products and related offers online, reading detailed product information on company and third-party websites, accessing reviews, and conducting price comparisons. With smartphones in their pockets, customer can also tap into this information while in-store. According to a research that was recently commissioned by swirl, an iBeacon marketing platform provider, 65% of shoppers actually prefer to learn about products and promotions from their smartphone rather than from a sales associate.

As more and more retailers focus on growing their Omni Channel footprint, engaging with customers through the mobile channel in-store receives more attention.

Smartphone manufacturer Apple recently proposed a first solution for in-store mobile interaction. In June 2013, the company announced it would add a feature called iBeacon to its smartphones that emits a low-power Bluetooth radio signal. This signal can be received by nearby physical ‘beacons’ (it has a range of up to 50 meters), which also work in indoor spaces like retail stores.[24] [25] “Beacons are a low-cost piece of hardware — small enough to attach to a wall or countertop — that use battery-friendly, low-energy Bluetooth connections to transmit messages or prompts directly to a smartphone or tablet”.[26]

Retailers can use this technology to understand the movement pattern of a shopper within a store and automatically send relevant messages, content, and discounts to smartphone users when they are near a beacon. When standing in front of the display of a summer dress, for example, images of complementary shoes and accessories with detailed material descriptions and video clippings of models wearing the outfit could be sent to the customer’s smartphone along with a 10% discount voucher. First retailers to have piloted such technology in-store include Timberland and Kenneth Cole.

Current status of Omni Channel retailing

The idea of providing customers with a seamless experience across channels is not a recent invention. As early as 1972, advertising agency Young & Rubicam unveiled its ‘The Whole Egg’ theory, the pioneer approach to integrated marketing at a time when sales were far less fragmented than they are now. Then, the theory drew a lot of criticism due to its doubtful potential value at the time. [27] Since then, customer expectations and the interaction of consumers with brands and retailers have dramatically changed, and retailers, technology providers, etc. take a second look at the idea for not just their marketing but their overall corporate strategy.

Within the past four years, the status of the Omni Channel retailing strategy has evolved dramatically. While pioneer retailers such as Macy’s in the US had already launched their first Omni Channel initiatives by 2010, the industry focus, reflected by the hot topics during the US retail industry’s biggest event: the Big Show of the National Retail Federation, just shifted from Multi Channel to Omni Channel in that year.[28] Since then, the industry has rapidly evolved. Leslie Hand, research director of IDC Retail Insights, declared 2013 the Omni Channel doing year, when retailers - including apparel retailers - are moving past interminable planning and undertaking Omni Channel initiatives, if they haven’t already.[29]

[...]


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[2] Chui, M. et al. 2010. The Internet of Things. McKinsey Quarterly, 2 pp. 1-9. Available at: http://www.mckinsey.com/insights/high_tech_telecoms_intemet/the_intemet_of_things [Accessed: 2 Mar 2014]

[3] Stone, A. (2012). Why Waiting Is Torture. [online] Available at: http://www.nytimes.com/2012/08/19/opinion/sunday/why-waiting-in-line-is-torture.html?smid=pl-share [Accessed 10 May. 2014].

[4] Greatclips.com, (2012). New Survey Reveals How Much Customers Hate to Wait. [online] Available at: http://www.greatclips.com/about-us/press-room/time-survey [Accessed 10 May. 2014].

[5] Cairncross, F. (1997). The death of distance. 1st ed. Boston, Mass.: Harvard Business School Press.

[6] Emarketer.com. 2012. Ecommerce Sales Topped $1 Trillion for First Time in 2012. [online] Available at: http://www.emarketer. com/Article/Ecommerce-Sales-Topped-1 -Trillion-First-Time-2012/1009649 [Accessed: 25 Mar 2014]

[7] Mulpuru, S. and Gill, M. (2013). US Online Retail Sales To Reach $370B By 2017; €191B in Europe. [online] Forbes. Available at: http://www.forbes.com/sites/forrester/2013/03/14/us-online-retail-sales-to-reach-370b-by- 2017-e191b-in-europe/ [Accessed 13 May. 2014].

[8] Google. 2013. Mobile In-Store Research: How in-store shoppers are using mobile devices. [report] Google Shopper Marketing Council. ^

[9] Chaindrive.com, (2014). Ten Tips for Retailers on Meeting Today's Customer Expectations. [online] Available at: http://chaindrive.com/tips-meeting-retail-customer-expectation.html [Accessed 16 May. 2014].

[10] UPS Pulse, (2013). 2013 UPS Pulse of the Online Shopper. A customer experience study. p.3.

[11] Arsenault, M. (2012). How Valuable is Amazon’s 1-Click Patent? It’s Worth Billions. [online] rejoiner. Available at: http://blog.rejoiner.com/2012/07/amazon-1click-patent/ [Accessed 17 May. 2014].

[12] ebay is a offering a service called ebay now - offering same-day delivery for $5 in populous areas in the US

[13] through a service called Google Shopping Express

[14] Baig, E. (2014). Amazon expands Sunday delivery to 15 more cities. [online] Available at: http://www.usatoday.com/story/tech/2014/05/08/amazon-expands-sunday-dehvery-service/8841561/ [Accessed 21 May. 2014].

[15] from latin omnis: total, all; also omnichannel, Omni-Channel, omni channel and even Cross Channel

[16] Forrester Consulting. 2014. Customer Desires vs. Retailer Capabilities: Minding The Omni-Channel Commerce Gap. [report] Forrester Consulting.

[17] Traynier, K., 2013. 5 omni-channel retail examples - Smart Insights Digital Marketing Advice. [online]

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[18] Fee as of April 17th, 2014

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Excerpt out of 87 pages

Details

Title
Omni-Channel Retailing and Its Requirements in the Supply Chain
College
IE Business School, Madrid
Course
Production & Supply Chain Management
Grade
1,1
Author
Year
2014
Pages
87
Catalog Number
V313045
ISBN (eBook)
9783668118492
ISBN (Book)
9783668118508
File size
3125 KB
Language
English
Tags
omni-channel, retailing, requirements, supply, chain
Quote paper
Carina Sauter (Author), 2014, Omni-Channel Retailing and Its Requirements in the Supply Chain, Munich, GRIN Verlag, https://www.grin.com/document/313045

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