Rethink the omnichannel approach
Matthieu Du Payrat, Practice Manager POS, discusses the new challenges facing retail and how to meet them through the omnichannelal.
At the origins
The last 20 years have seen profound structural changes in the retail sector. With the convergence of technologies, it was the very notion of the point of sale (POS) that was called into question: in the 1990s, we went from a simple single-channel business (the physical store) to a multi-channel business, with the emergence of the first e-commerce sites. The 2000s saw the proliferation of mobile e-commerce applications (WAP, JAVA) that deployed a form of user ubiquity, but still unrelated to the point of sale.
It is the cross channel that redistributes the cards at the end of the 2000s, with an integration of the available channels within the consumer's journey to make it more fluid (e. g. the appearance of clic&collect type services). However, this first level of integration is not perfect and still shows its seams.
In the meantime, the consumer has become hyper-connected, enjoying continuous access to the web, which has profoundly changed his behavior and status: from a simple customer, he has also become an actor, better informed, more experienced in navigation, able to post opinions and above all demanding a richer experience, such as access to personalized and relevant digital content.
Finally, the omnichannel, which appeared 6-7 years, allows a seamless overall customer experience between the different contact points and sales channels, the objective being to break down silos within sales channels and integrate them into a global process.
For brands, the transition to omnichannel is therefore a necessary step but also a technological and functional challenge: It is a question of attracting the customer's attention and generating loyalty with a better shopping experience, but also improving lifetime value, i.e. the income generated by the customer throughout his life cycle, and reducing the risks of lost sales. Today, the customer is very active on social networks and can quickly spread a bad image following a disappointing shopping experience. It must be countered upstream by offering a personalized, transversal experience, which cultivates the idea, in the end, of a true unified commerce.
Digital technology makes it possible to rethink retail
Today, the synergy between digital and retail is no longer in question, since nearly 55% of sales are positively impacted by digital. A new element comes into play: the growing impact of digital sales in the stores themselves, which requires rethinking of all processes.
The user experience is now hybrid: today, a customer can easily make a withdrawal in store after an online reservation. There are two main types of paths:
E-reservation for products with lower value and high stock depth
Click'n’collect, more relevant for high value-added products, which often require a longer restocking period.
We have also noticed for some time the democratization of the ship from store, which allows to offer online a product available in store and absent in stock. All these are new ways for the customer to address a payment platform, hence the need for suppliers and brands to effectively question their own processes and ask themselves the right questions about the choice of architecture.
Ten years ago, the solutions were not yet mature, and the choice of architecture was quickly confronted with technological contingencies. Today, with the existing technologies, the question is becoming complex, because these are long-term choices. Among the questions that must be asked when setting up an architecture, these are essential:
Which customer promise should be kept? (delivery times, services offered...)
What volume dcan the architecture handle and in what type of temporality - real time or not (For example, the Chinese giant Ali Baba recently broke all records by processing 812 million orders in a day...)
What type of payment: it is necessary to think beforehand about the promise you want to have in terms of payment fidelity
What type of legal organization: what structure will drive web revenue, how will revenue be allocated between web and retail, how will inventory management be handled according to channels?
Logistics schemes: what are the transport schemes, delivery modes (cross border or not) etc...
Operational organization: Because omnichannel generates an increased convergence between retail and digital omnichannel, which then leads to common repositories and customers, processes must be rebuilt to be as efficient as possible.
Once these architectural questions have been asked, it is necessary to understand all the functional building blocks that will have to be deployed: either by using dedicated solutions or by relying on its E-Commerce solutions.
Today, there are 4 main types of architectures to differentiate:
a Centric Point of Sale (POS) architecture that can play a real ERP role, and that will manage all functions and repositories. A solution rich in terms of omnichannel functions, very oriented for operational staff and particularly adapted to finance & purchasing functions.
a Centric ERP architecture, designed for financial and purchasing functions, with a soft integration between e-commerce and retail. It is the ERP that directly manages the warehouse, with some integration between e-commerce and POS. A solution that integrates the history of a pre-existing channel, with omnichannel functions and rich financial functions. An effective solution for finance operational staff with a consolidated view of customers, stocks and orders in CEGID.
an architecture based on a strong POS and ERP system where all e-commerce orders are processed through the POS system, which manages orders, sales prices and global order management. An omniscient POS and a strong ERP that combine the advantages of the two previous solutions.
a modular best-of-breed architecture, based on modules dedicated to each function: a very rich architecture but also very expensive in terms of build. It is very modular and real-time, with an Order Management System (OMS) that is the conductor and controls the order processing.
Towards successful integration
Beyond the choice of architecture, you must never lose sight of the retailer's mantras confronted with the digitalization of his marketplaces: anticipate the target, be agile in a test & learn approach, manage complexity and transversal processes, promote collaboration. Here are the 4 detailed points to develop an effective omnichannel architecture:
Anticipate the target: define a long-term architecture that will ensure that current and future needs are properly addressed.
Test & Learn: it is also necessary to adopt a test & learn approach. Indeed, in an environment that is constantly innovating, it is necessary to regularly test the potential of new concepts.
Manage the complexity: the omnichannel involves transversal processes and many IT components. It is necessary to manage the coordination within each project, and the overall coordination of the different initiatives that you are carrying out in parallel.
Favor collaboration: we are working on projects that affect your entire organization, at the crossroads of digital and retail, business and IT. It is important to have clear and collaborative governance in place.
Many companies are facing this problem: a significant IS history, with many different ERP layers, can constitute a real problem. This requires being agile in thinking, adding a simplifying layer to interface ERPs and support all multi-channel topics. The aim is both to rationalize and aggregate stocks.
Faced with the multiplication of existing solutions, the role of the integrator is therefore essential, as it allows the customer to highlight his own failures and adapt his strategy in a reflective and non-linear way.