An Introduction to Omnichannel

In this feature, the Association of Retail and Consumer Professionals (ARC) presents a high-level overview of omnichannel, broadly defined as a unified approach to brick-and-mortar and e-commerce (online, social, etc.) shopping for consumers. This introductory story, which focuses on basic definitions and tips, is the first of numerous pieces planned on omnichannel, which will be a core pillar of our member content strategy in the year ahead.

Before we begin our FAQs, here are five omnichannel statistics you need to know, courtesy of our friends at firstmovr, an omni education and change management training solution provider and consultancy who presented at our 2024 Category Management Association Conference in Dallas:

Fast Fact No. 1: 36% of all retail sales in 2024 are projected to be e-commerce (source: Flywheel).
Fast Fact No. 2: 59% of all retail sales growth from 2021-2026 is projected to be e-commerce (source: Flywheel).
Fast Fact No. 3: 70% of sales will be digitally influenced in 2024: 30% direct, and 40% digitally influenced offline sales (source: Forrester).
Fast Fact No. 4: 51% of online U.S. shoppers start their search on Amazon, with Google (39%), Walmart.com (34%), YouTube (23%) and Facebook (21%) rounding out the top five (sources: Jungle Scout, Flywheel).
Fast Fact No. 5: 64% of Amazon clicks are on the first three search results (sources: Jungle Scout, Flywheel).

Omnichannel 101 – FAQS

Q: What are the primary models for omnichannel shopping?

A: There are four primary models of omnichannel-focused businesses, several of which lean partially or completely on e-commerce. These are:

Brick-and-mortar businesses. A majority of shopping trips remain visits to physical stores. However, it is increasingly common to see shoppers with smartphones in-hand during their visits, making a uniform omnichannel approach essential for businesses who have any sort of Web presence.
Hybrid model businesses. These are businesses with brick-and-mortar store locations as well as an e-commerce element, such as a website and/or social media sales. An obvious example is Walmart. Another is Amazon, which has its roots as a purely e-commerce-focused business but now also has physical stores throughout its empire. Alibaba, with its Hema grocery stores, also employs a hybrid model.
Pure-play e-commerce businesses. These are e-commerce-only businesses, with no physical locations.
Solution provider e-commerce businesses. These are third-party businesses who fulfill orders placed by consumers for goods such as groceries and meals. Leaders in this space include Instacart, UberEats, GoPuff, and DoorDash.

Q: What are the primary shopping methods within the e-commerce portion of omnichannel shopping?

A: In omnichannel order fulfillment, there two major methods:

Click-and-collect: Shoppers place orders online and pick up their goods in-store.
Delivery: Shoppers place orders online, with orders shipped to their homes.

Q: How do the four Ps (product, pricing, placement, and promotion) work in an omnichannel strategy?

A: One of the many advantages of an omnichannel strategy is that it is not confined by the physical space of a store. An online business could have all these elements:

A different product mix.
Unique pricing (think “web-only” specials, though this is a potential pain point if shoppers encounter different prices between in-store and online).
A different approach to placement, if the typical shopper browsing online visits the retailer for reasons distinct from brick-and-mortar trips.
More robust and tailored shopper promotion.

Q: What is website “taxonomy,” and why is it vital to success in an omnichannel strategy?

A: Think of taxonomy as a logical and optimized grouping of products on a website, with main categories that logically flow into subcategories. Take Kroger’s website for example. On the top of the home page, visitors can select from five categories, listed from left to right: Shop, Save, Pickup & Delivery, Services, Pharmacy & Health. A search bar is also prominent at the top.

Q: How does taxonomy relate to category definition and Category Decision Trees (CDTs)?

A: One of the key steps of the CMA’s CatMan 3.0 model, category definition is rooted in how consumers view the category, and categories will change depending upon brick-and-mortar or e-commerce shopping occasions. Products can be categorized, or grouped, via three common strategies to attract target shoppers:

Similar shopper items: grouping related products within a category.
Substitutable items: grouping related products regarded as interchangeable.
Total store effect: grouping multiple categories together to appeal to a shopper’s need state. This is more easily accomplished in e-commerce, given the lack of space constraints sometimes faced in a physical store setting.

Once a category is defined, a Category Decision Tree can be created, with the goal of segmenting the category, identifying the hierarchy of shopper needs, and mapping how shoppers internally organize the category as they determine whether to buy. These essential exercises should be reflected in a website taxonomy.

For a closer look at these fundamentals, CMA members are encouraged to review Course 104: Category Definition and Segmentation, in the ARC Training Library.

Q: What are some other basic blocking-and-tackling elements for e-commerce selling? A: For starters, web pages must be optimized for mobile purchasing.

According to Capital One data, 57% of all e-commerce purchases are via mobile, with this rate expected to reach 63% by 2028. Once a proper taxonomy is established, it comes down to having complete, accurate and compelling product pages designed to covert sales. A primary mission of these pages? Educate the consumer on key uses for the product, right and then there. Keep them on the page and away from searching elsewhere.

Other elements that are must-haves are streamlined payment options, with numerous options for consumers. There must also be clarity about shipping rates and delivery dates. Customer ratings and reviews are also essential.

Q: How do companies handle e-commerce category management and shopper insights vs. brick-and-mortar category management and shopper insights?

A: It is common to see e-commerce carved out from brick-and-mortar category management and shopper insights. In CMA/SIMA’s most recent Team Benchmark Survey at the end of 2022, 62% of retailers had a dedicated e-commerce team. The survey, which polled 80 retailers, found that 25% of respondents had specific employees in category management and shopper insights teams dedicated to e-commerce.

Future content in our omnichannel series will dive deeper on the challenges presented by having separation in brick-and-mortar and e-commerce functions in an increasingly omnichannel world.

Looking Forward

“Omnichannel 101” is merely the first light switch flipped on a topic the Association of Retail and Consumer Professionals – the Category Management Association, Shopper Insights Management Association, and Space Planning Community — endeavors to illuminate for members and other readers over the next year.

Here is what you can expect for the balance of 2024 for omnichannel-focused content:

Later in September, we will take a detailed look at the retailer implications of omnichannel shopping (incremental costs, logistics, warehousing, picking, delivery, competitive landscape, etc.).
In October, we will focus on data sources in the omnichannel world, including an overview of sources used and the integration of brick and mortar and e-commerce for data harmonization.
In November, our focus shifts to authoring omnichannel category reviews, with an emphasis on best practices and how to expand standard brick-and-mortar reviews to incorporate e-commerce.
To wrap up 2024, we’ll dive into the space implications of omnichannel, and how a redefinition of space is more important than ever.
An early preview of 2025 omnichannel content is coming soon, and you can be sure the topic is one you’ll see addressed at our upcoming annual conference this February in San Antonio.

In addition to content, our training team continues to reimagine and update existing omnichannel-focused courses to reflect the changing times. The CMA’s Resource Library also features a range of e-commerce/omnichannel-focused thought leadership.

Industry practitioners wanting to brush up on omnichannel are also encouraged to look no further than firstmovr, which distinguishes itself with its cutting-edge omni content and its laser focus on ensuring retailers and suppliers seize the vast opportunity presented by the successful merging of brick-and-mortar and e-commerce strategies. ARC will be partnering with firstmovr on a variety of content and learnings in the months ahead; in short, it has never been a better time to think about CMA membership if you haven’t done so already.

Many of you reading this grew up shopping brick-and-mortar stores, and let’s be clear: a world without physical stores isn’t one we envision. However, the onset of omnichannel shopping will cause us to consider and reimagine the purpose and layout of the brick-and-mortar physical space within the context of the shopper journey.

The key is, how do retailers and suppliers succeed with a foot in both worlds? That’s the topic we’re going to drill down on, again and again, across the ARC family of associations. We look forward to you joining us for the ride, because it’s one all of us are on together, whether we know it or not.