Reduce, Reuse, Recycle: Omnichannel without Breaking the Bank

The retail world is slowly but surely transitioning to omnichannel, but at this point only a handful of retailers are getting it right. Unsurprisingly, those retailers are the ones that can afford to make enormous investments into their systems, dumping millions of dollars into restructuring systems, processes and teams.  And these retailers are seeing results; Macy’s, Nordstrom’s, and Best Buy have been leading their peers in both sales growth and share price, in large part due to their omnichannel efforts. But many smaller retailers are left wondering how they can incorporate an omnichannel approach into their business model without million-dollar budgets.

So how can retailers develop a seamless omnichannel approach without breaking the bank? Before beginning the transition into omnichannel, retailers must clearly identify goals for their new approach. Customers want the freedom to shop online, on their phones and in store with a similar experience. They also want to fulfil and return orders in any way they want and pay the lowest price they can. On the other hand, retailers want to save money, streamline their supply chain, and ultimately maximize their ROI. It takes a truly integrated model in order for both the customer and the retailer to be satisfied.

Developing an omnichannel model that meets the objectives of both the retailer and the customer is possible for budget-conscious retailers if they follow three simple guidelines: reduce, reuse and recycle.

Reduce

An effective way to reduce costs is to cut where you can. Managing large, non-selling facilities like Distribution Centers (DCs) can be a major pain point for retailers. They are expensive, and often retailers spend exponentially more than they need to when they ship from a remote DC instead of a local store. For example, if a customer in California orders a product, it makes much more sense to ship from a local store rather than from a DC across the country. Ship-from-store models help retailers streamline their supply chain and save money on shipping products across the country.

Additionally, statistics show that when given the choice, many consumers would prefer to pick up their purchase rather than have it sent to them. By offering in-store pickup, retailers can cut their direct to consumer shipment costs by up to 30% within two years – and avoid increasing (or potentially  decrease) the number of DC’s they operate.

Reuse

For some retailers, the transition into omnichannel means a massive system overhaul. Hundreds of thousands—if not millions—of dollars can be spent by big retailers on everything from merging store and online inventory systems to re-platforming their online stores. Many see investing in brand new ERP systems as cost effective in the long run, but for those that don’t want to start from scratch, there are other options. Finding solutions that can integrate into existing systems and that leverage standing hardware and e-commerce software is a much more cost-effective way to beef up your omnichannel capabilities. So remember, you don’t have to invest millions to set up an omnichannel system. Partner up with solution providers that can handle the technical work at a reasonable cost in order to save time and money.

Recycle

Retailers trying to integrate omnichannel solutions without breaking the bank should be consciously aware of their customers’ preferences, especially if it’s in their best interest as well. Given that fifty-seven percent of customers say they pick up their purchases in store in order to simplify the return process, budget-conscious retailers would do well to offer in-store returns. Online consumers who buy a shirt in five sizes with full intent to return the four that don’t fit see the free return shipping paid by the retailer as a cost of doing business with them. Unfortunately for retailers, those four shirts are an unrecoverable cost. An in-store return, however, is a potential new sale. Enabling customers to transition easily between online and in-store shopping can mean major gains for retailers, since customers will likely make incremental purchases and retailers won’t have to eat the cost of shipping returns.

Developing an omnichannel approach sounds daunting, but budget-conscious retailers shouldn’t get bogged down in the hype. Omnichannel retail doesn’t have to cost millions and retailers don’t have start from scratch to keep up with consumer demands. By integrating outside solutions into existing systems and cutting unnecessary costs, retailers can live and breathe omnichannel without breaking the bank.

Contributed by Gregg Aamoth, co-founder of POPcodes, a cloud-based retail redemption solution that bridges the gap between the virtual and physical shopping experience.  POPcodes enables omnichannel retailers to quickly give consumers a seamless and secure way to buy online and pick up in store. Prior to launching POPcodes Gregg spent more than 20 years in retail and financial systems leadership, including 10 years as vice president of customer marketing systems and privacy officer for Macy’s Inc.