8 Omnichannel Trends - Radial, Inc. · The transaction occurs completely via a dedicated app. The...

8 Omnichannel Trends for 2017 | 1

If you’re looking for omnichannel trends for 2017, look at what the big players did last year. At the end of 2016, two of the biggest giants in retail—Amazon and Walmart—battled once again on each other’s turf. Amazon announced plans to open Amazon Books, a brick-and-mortar bookstore, in Manhattan. Meanwhile, Walmart purchased ShoeBuy, an online footwear retailer.

The moves showed that omnichannel is increasingly the only way retailers can carry on doing business. It’s not enough for Amazon to sell just online; it needs to have a physical presence as well. Similarly, Walmart needs to have a strong presence online and on mobile. Though the retailer has been improving its Walmart.com presence for years, last year it bolstered its online presence with the $3-billion purchase of discounter Jet.com prior to the ShoeBuy acquisition.

Both retail giants are reacting to a trend in the marketplace in which consumers expect to interact with retailers via multiple touchpoints. A late 2016 study by AYTM Market Research, for instance, asked consumers where they planned to make their holiday purchases in 2016. It found respondents were just as likely to buy online as in-store. Research from Market Track found a similarly even split in purchasing behavior—52 percent of respondents said they would make most of their purchases at a brick-and-mortar location versus 45 percent who said they’d be doing it online.

As an added incentive, a study from Retail Systems Research revealed that 59 percent of US retailers said omnichannel customers were more profitable than single channel customers were. Clearly, omnichannel itself is a huge trend in retail; however, what are the omnichannel trends for 2017? Retail doesn’t exist in a vacuum. Most of the top trends are ones that are sweeping the business world in general, like instant messaging, artificial intelligence, voice control, Internet of Things (IoT), and personalization. One retail-specific trend that has been gathering momentum in recent years and will continue to do so this year, though, is ship-from-store. Let’s look at how these trends will affect retailers in 2017.


MessagingOmnichannel Trend 1

In media, the story of the second half of the 2010s is a shift from social media to instant messaging apps. Facebook has been ahead of this trend, acquiring WhatsApp in 2014 for a head-scratching $21.3 billion. Facebook also cannily spun off Messenger as a separate app that same year. Looking at the larger landscape, it isn’t hard to see Facebook’s reasoning: eMarketer predicts that by 2018, 2 billion people will be using messaging apps, a figure that dwarfs social networking.

For retailers, messaging is a new potential touchpoint. For a glimpse of how retailers can fully exploit messaging apps, look to China, a market that is generally seen as a year or two ahead of the US in maturation. In that market, WeChat is well established as a platform not just for messaging, but also for eCommerce as consumers employ it to do everything from hail a cab to buy take-out food and concert tickets. WeChat hosts over 10 million accounts used by businesses. The messaging-based communication frequently offers new ways to communicate. For instance, if you send a sad emoticon to Starbucks via WeChat, the brand will send back a song to go with your mood.

Though messaging-based commerce has yet to take off in the US, Facebook began taking the first steps last year by letting 1-800-Flowers.com and other retailers execute transactions via Messenger. (Since WhatsApp’s founders are against advertising on the platform, WhatsApp is off-limits for the moment.) Facebook isn’t the only outlet for such messages. Many retailers, including H&M, use Kik, a third-party messaging app. Other competitors include Viber and Line. A Kenshoo study in early 2017 found that consumers are amenable to getting messaging-based interactions from brands and find them less annoying than voice calls. The catch is consumers expect timely responses that make logical sense. Since many companies use bots to interact via messaging platforms (see next section), that’s often not the case. For retailers, there’s a lot riding on how they handle their customer interactions on messaging platforms. Unlike email, messaging offers a more fluid conversation and gives the appearance of an open dialogue. This opens the door for cross-selling, handling complaints, and soliciting other types of input that could provide retailers with valuable data.


Omnichannel Trend 2

There is probably no bigger trend in the business world right now than AI. Just as Big Data was a mantra for enterprises a few years ago, now businesses are feeling pressure to integrate AI into their operations as a cost-cutting tool and as a means to do everything from providing personalized communications to plugging inefficiencies in the supply chain.

AI is a huge subject that encompasses voice recognition and robotics, so it will influence retail on several fronts. Currently, the most salient use of AI is to power “bots” on messaging platforms. Since the strength of AI is its ability to focus on a narrow field of data amid a deluge of information, it can record and study customer interactions to inform future responses. If there’s a sudden spike in complaints about a particular product, for instance, AI systems can identify them and inform the retailer that the product is causing issues. A broader use of AI is to help figure out which inventory to promote in stores. Essentially, any situation in which humans make decisions can be outsourced to AI.

At current count, there are at least 45 companies focused on applying AI to retail, often to personalize communications with consumers.

Artificial Intelligence (AI)


Omnichannel Trend 3

Like AI, IoT is one of those tech trends that has been hyped for years to the point that some are convinced it’s another issue that’s discussed, but not implemented. The reality though is that IoT is slowly making inroads into retail. It’s been almost two years since Amazon introduced Dash, its push-button refill devices, which qualifies as IoT. Though Dash hasn’t been a hit along the lines of Echo, it sets a dangerous precedent for retailers since consumers are encouraged to hit the button to reorder via Amazon rather than visit a local store.

For many other retailers, IoT looms as a technology that could usher in features like electronic shelf labels with dynamic pricing and interactive digital signs. IoT can also be used to analyze foot traffic in stores and to inform store layouts.

There are other applications as well. For instance, BASF wine store in Germany uses digital shelves that let shoppers enter their taste preferences via tablets. The shelf then suggests a wine based on their taste preferences. This interaction likely would have occurred via the consumer’s smartphone. In this case, the retailer gets to take control of the interaction.

Within the supply chain, IoT can track inventory, predict equipment maintenance, and provide new avenues to communicate in-store to customers. Expect to see more such experimentation with IoT this year. Total business spending for IoT is projected to grow to $47 billion by 2020 compared to $8 billion in 2016, according to International Data Corp. Juniper Research adds that retailers in particular are expected to spend $2.5 billion on IoT technologies by 2020.

The Internet of Things (IoT)


Seamless CheckoutsOmnichannel Trend 4

Ever the innovator, Amazon closed 2016 by introducing Amazon Go, a grocery store in Seattle where customers can enter, pick items of the shelf and leave, all without ever interacting with a cashier. The transaction occurs completely via a dedicated app. The store, which will have as few as three human employees, uses machine learning and sensors to keep track of items that consumers grab.

Amazon’s not the only retailer pushing seamless checkouts. The Walmart-owned Sam’s Club also lets customers use a smartphone app, Scan & Go, to scan items in the store and then leave without having to hit the checkout counter. In the UK, retailer Tesco offers shoppers similar functionality.


Ship-From-StoreOmnichannel Trend 5

The idea of using a retail store to fulfill online orders has been gaining steam as retailers see almost immediate benefits. For instance, retail consultant Kurt Salmon claims that ship-from-store can prompt revenue boosts of 10–20 percent immediately by making more inventory available for sale. American Apparel has also seen its online sales climb 30 percent by using ship-from-store. Others, including Nordstrom, Men’s Wearhouse, and Lululemon have seen similar gains.

Ship-from-store does this by optimizing store inventory to fulfill online sales. Initiating ship-from-store requires retailers to retrain staff and provide them with new incentives. However, as retail leaders preach the benefits of ship-from-store and employees continue to witness the intense competition in retail, converting to ship-from-store will become easier.


Omnichannel Trend 6

With its Echo device now in more than four million households, Amazon has established a beachhead in consumers’ homes for its Alexa voice-controlled assistant. Like Dash, Alexa can be used to fulfill an order quickly that otherwise might have been executed at a local retail location. As consumers become more comfortable using Alexa, they will cut retailers out of the loop for questions like “Where can I find a large blue polo shirt?”

Alexa’s not the only voice-controlled assistant on the market. Apple’s Siri has been around since 2011 and it now vies with Google’s voice assistant, Facebook’s M, and Microsoft’s Cortana. So far, none have sought to integrate with retail as deeply as Alexa has. However, Google, Apple, and Microsoft all have plans to integrate with home automation, and Facebook’s M works with Messenger in the burgeoning messaging apps space. Looking ahead, it’s easy to see how consumers could use Siri to navigate retail stores or tell their dashboard-based assistant to “notify me when we get near a store that sells Adidas sneakers.”

Voice-Controlled Assistants


Omnichannel Trend 7

Lost amid its slew of announcements last year, Google enhanced its local inventory ads with a “search items at this store” feature. Using the search, consumers can employ Google Maps to help take a deep dive into local stores to see if their item is in stock. Macy’s, Ikea, and REI participated in the initial effort.

For example, a consumer could search a particular item, like “Free People Rock Denim Uptown Jean Shorts—Blue,” and see that it’s available at their local Macy’s, though there’s limited stock. While this opens up some monetization options for retailers, such businesses should be sure that the ads run when their stores are open and there is a good amount of inventory because driving to the store to find the item is suddenly out-of-stock is bad customer service.

Local Inventory Search


PersonalizationOmnichannel Trend 8

If there was one megatrend in omnichannel that informs all the others, it’s the continued attempt to connect consumers’ online and offline identities to present them with relevant offers and a seamless experience. As discussed, AI can aid this process by isolating, collecting, and analyzing data that is relevant to consumers and using it to upsell them, intervene before problems escalate, and anticipate their needs. Instant messaging and voice-controlled assistants provide a more personal touch. IoT, local inventory search, seamless checkouts, and ship-from-store all help to make the process of choosing and receiving items easier.

The key to managing these consumer interactions is to marry desktop and mobile data with in-store data. That can be a tricky task. Unless the consumer has logged on to an app and is using it in-store, the retailer must rely on probabilistic methods to connect the consumer’s in-store device with her desktop use at home. When that’s possible, the holy grail for retailers is to use the data to provide relevant offers (perhaps with in-store digital signage) and suggest companion purchases. Of course, there are privacy issues involved, but most probabilistic cross-device targeting is based on anonymized data. On the other hand, it’s unclear whether consumers will be creeped out by such specific information.

Taking a broad look at these omnichannel trends for 2017, the common denominator is technology. Going by the last few years, Amazon has been a bellwether for advances in new technologies. The company is sometimes a few years ahead of the market, as it was with drone delivery, but elsewhere retailers would be wise to pay close attention to what Amazon is paying close attention to. Walmart certainly is. Smart competitors will actively look for the inevitable gaps in Amazon’s and Walmart’s services and capitalize on them.

About Radial

Radial is the leader in omnichannel commerce technology and operations, enabling brands and retailers to profitably exceed retail customer expectations. Radial’s technical, powerful omnichannel solutions connect supply and demand through efficient fulfillment and transportation options, intelligent fraud, payments, and tax systems and personalized customer care services.

Hundreds of retailers and brands confidently partner with Radial to simplify their post-click commerce and improve their customer experiences. Radial brings flexibility and scalability to their supply chains and optimizes how, when and where orders go from desire to delivery. Learn how we work with you at www.radial.com. Or contact us:[email protected]

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