Omnichannel vs Multichannel: The Key Differences in Ecommerce Retail

What is multichannel retail?

Multichannel retail is defined by the use of two or more sales channels within siloed customer experiences. In a siloed experience, each channel functions using separate technology, data, processes, and staff, despite being part of the same organization.

Some find it helpful to think of multichannel ecommerce as a wheel. The hub of the wheel is your product or service. The spokes represent different channels reaching the outer rim of the wheel (i.e., your customers). Each spoke or channel represents a separate and independent opportunity to complete a sales transaction.

A traditional multichannel retailer may sell online as well as in a physical store. These two channel categories work in isolation and have little integration or interaction with one another. However, they both provide ways to engage with customers, as well as flexibility in targeting different customer segments. 

Multichannel examples in retail

• A brand’s physical store having its own stock and selling that merchandise directly to the customer while its website has separate inventory and sells the associated stock only through digital channels.
• Customers who buy items in-store can only return those items in-store. And customers who buy online may not be able to return online orders in-store.

The multichannel approach focuses on an in-store customer experience that’s entirely separate from the online experience. In essence, these sales channels operate like two independent businesses.

What is omnichannel retail?

Comparatively, omnichannel commerce is an approach that provides the customer with an integrated and unified customer experience across each sales channel. The goal of omnichannel ecommerce is to allow customers to enjoy the same purchase experience wherever they are — rather than treating channels as independent silos.

This approach accounts for the fact that many consumers tend to switch from desktop to mobile to in-person shopping. It allows consumers to choose their customer journey across all channels and touchpoints, each being equal in importance to the overall customer experience.

Omnichannel examples in retail

• A physical store’s sales associate using a mobile app to assist an in-store customer by checking inventory on an item that isn’t available in- store and placing an online order to have the product or service delivered to the customer’s home.
• A brand offering a loyalty program whereby customers can earn points and redeem rewards no matter where or how they shop.

As you can see, omnichannel marketing efforts prioritize the customer. Its objective is to offer customers tailored messaging and a smooth, cohesive experience across all channels. The ultimate goal is to help customers access information effortlessly through various connected channels.

The key difference between omnichannel and multichannel

The differences between omnichannel vs multichannel comes down to how unified or disconnected the customer experience is between your sales channels. The unity or disconnect can come in the form of different checkout processes or inventory availability between online and in-store experiences. 

Pros and cons of omnichannel and multichannel

Omnichannel vs multichannel retail has advantages and disadvantages. And while we’ll demonstrate our preference for one approach in the following sections, you should choose the style that works best for your business.

Multichannel retail gives your business wider reach and greater control while lowering risk. Selling products on multiple channels — in person, via email, through a marketplace — means you can reach more customers.

If you have a range of products that suit diverse audiences, this approach gives you greater control over your presence on each channel. Likewise, diversifying sales channels can mitigate the risk of one platform underperforming.

The omnichannel approach, by comparison, is more complex, often more expensive, and takes longer to implement than multichannel retail. Omnichannel commerce requires more coordination and logistics to seamlessly manage sales and returns across channels.

This approach comes with higher costs, too. However, omnichannel retail offers something multichannel cannot: a fantastic customer experience. 

Multichannel vs omnichannel and the customer experience

Both omnichannel and multichannel strategies involve selling products and services on more than one physical and digital channel. The significant difference between the two is how sellers unify the customer experience across those channels.

Which is right for your business? Today’s consumers do not dissociate their in-store and online experiences from a brand. They expect the same level of service, the same branding, and the same convenience whether they visit a pop-up, order online, or shop through an Amazon storefront.

Customers today expect to have multiple touchpoints with a retailer, and they demand that their experience from each touchpoint or channel be seamless.

Plus, omnichannel commerce leads to higher sales. A study by BI Intelligence found that shoppers who engaged with a company on multiple cohesive channels made a purchase more often.

This customer-centric approach provides businesses with holistic customer journey data that sellers can later use to improve marketing, customer service, and product development. 

How to adopt omnichannel ecommerce strategies

Many businesses offer elements of omnichannel retail, such as the ability to buy online and pick up in-store. However, only a few brands have fully embraced or implemented omnichannel strategies holistically.

1. Understand your customer

Transitioning from multichannel to omnichannel requires a deep understanding of your customer and their path to purchase. What channels do your customers use to interact with your business? What are their expectations when they interact with you on each channel? How can you personalize their experiences?

Some brands use secret shoppers to collect this data, asking for feedback at every step of the shopping process. You can collect this data yourself by stepping into the mindset of the customer and trying to replicate their experience via email, social media, and text message.

2. Invest in the right technology

In order to truly implement omnichannel strategies across a business, an organization must embrace operational changes and understand how to combine technology and ecommerce.

For a tech stack to be effective, sellers must implement it across the entire business and possibly even replace some legacy systems. And apart from omnichannel marketing technologies, sellers should also consider their inventory, POS, and data operations.

• Inventory management: Without constant inventory updates across channels, brands risk marketing out-of-stock products. Integrating technology that handles multichannel inventory sync and manages the same — or all — items across channels in real time is vital.
• Point-of-sale system (POS): Choose a POS that makes it easy to connect in-person and online sales to your accounting platform via automation. When a customer places an order in one channel, an automation solution updates the rest. Shopify sellers may find it most effective to use a Shopify-QuickBooks integration while business owners who sell on a marketplace may prefer a Square-QuickBooks integration.
• Omnichannel data: An effective omnichannel strategy relies on the consolidation of data from multiple ecommerce platforms, including POS systems, sales channels, CRMs, etc. This approach provides insights into how sellers are delivering the omnichannel experience and offers a comprehensive view into profitability.

3. Provide the right training

Train your employees on how to provide a seamless customer experience across all channels. Just as customers don’t always differentiate between sales channels, neither will they differentiate between job titles.

Some customers will expect a sales representative to be able to assist with a customer service question, for example. So your employees need to be well-rounded. Show them how to use your tech stack and how to interact with customers in a way that’s consistent with your brand.

4. Track your KPIs

It's important to measure the results of your omnichannel efforts so that you can see what's working and what's not. You can use ecommerce metrics such as customer satisfaction, sales, and return on investment to track your progress.

Drill down on specific metrics for each platform so you can see where customers are getting stuck or migrating. And use data to understand how customers are interacting with your brand across all channels.

If you find that many people are using Facebook for customer service, for instance, you may want to dedicate more of your team’s time to answering questions in that marketing channel.