Guest Post: Omni-Channel: What it Means for SMBs
O.B. Rawls IV
Omni-channel. It’s likely one of the most overused ‘buzz words’ around shopping and payments in the past 5 years. In its most simplistic definition, omni-channel is, “a type of retail that integrates the different methods of shopping available to consumers (e.g., online, in a physical store, or by phone).” For retailers and merchants, it’s about the connectivity of systems and processes, a universal business management solution, but it’s also about the engagement with and experience delivered to consumers. For customers, it’s about experiencing a seamless and relevant shopping experience regardless of whether you’re buying (or returning), in-store, online, via a mobile device, or even via phone or mail order. Yes, MOTO still exists. In short, consumers want to buy what they want anytime, and in any manner, whenever they want.
Over the past 2 years, we’ve seen and heard a lot from Tier I ‘big box’ and Tier II retailers who were updating their systems and experiences to truly deliver an omni-channel experience. In 2012, I read an article about Best Buy and how they were working to, ‘Confront Omni-Channel Challenges.’ In the piece, Best Buy’s director of IT systems strategy noted, “We’re listening to the customer and the biggest thing they’re demanding is omni-channel solutions. They don’t want to enter their data in 20 different places. And they want us to know who they are, where they are and what they want. They want to be served the best possible way.” Insightful and a monumental challenge; one that Best Buy focused on for several years. Fast forward 4 years and Best Buy is one of the leaders in delivering an omni-channel experience. Mid-2016, Best Buy added a real-time in-app inventory filter that allowed customers to have reliable data at literally the palm of their hand. It led to more purchases, which is the ultimate retail goal. Best Buy is actively leveraging omni-channel to grow their business.
In terms of the retail experience, there’s no doubt that the shopping experience is moving online. Look at Amazon.com’s eCommerce and service sales over the past 10 years. In 2016, Amazon reported annual net revenue of $135.99 billion, up from $74.45 billion in 2013, and up from just $10.71 billion in 2006. And, general trends parallel Amazon’s growth. According to eMarketer, eCommerce sales are forecasted to grow by over 20% annually and eclipse $4 trillion by 2020. At that number, eCommerce would represent about 14.6% of total retail sales, up from about 9% today. In parallel, mCommerce spend, while still a very small portion of total retail (about 2 ½%), is also forecasted to grow at between 16 and 22% over the coming 4 years, reaching $242 Billion by the end of 2020, and representing 41% of all eCommerce and about 4.5% of total retail sales. What those statistics say to me is that the trends to omni-channel is here and it’s not going away.
But, it’s not all online. The expectation (and demand) is that all shopping options; whether it’s in-store from a PC or laptop or via a mobile phone need to be seamless, easy and connected! And, that expectation is extending beyond ‘big-box’ retails, which presents both an opportunity and a challenge for small and mid-sized businesses (SMBs). And, as the gentleman from Best Buy noted in his quote from 2012, customers expect the business to know who they are, what they like and where they are. That is becoming the new norm in customer expectation.
Attracting and retaining the connected consumer is a reality for SMBs. Competition is at its height, tech-savvy generations dominate the shopping personas and the time is now for SMBs to acknowledge the challenge and embrace the opportunities associated with the changing times. In order for SMBs to compete and win, omni-channel is key.
They need our help. Owners and managers of SMBs aren’t going to all of the sudden wake up think differently. And, while some are ahead of the curve, the vast majority are lagging behind. After all, 55% of SMBs still don’t even accept credit cards. Hard to believe, but true.
Whether you’re an ISO, an independent agent, a reseller or a technology developer, you need to focus on the opportunity in and around SMBs and helping them evolve their models to focus on omni-channel. Leveraging online, in-store and mobile technologies to give their customers what they want, a simplified, personalized and holistic shopping experience. With that said, we all know SMBs and one of, if not the key, is keeping it simple. The SMB owner may already be drinking from the fire hydrant just managing day-to-day operations so anything new needs to be simplified, easy to use (for both them and their staff) and a value they understand. It’s about solutions that match SMB needs, yet position them well for the future and today’s customer.
Bundled, all-in-one offerings (in-store, online and mobile with value added services like gift, loyalty, analytics, CRM, and reputation management) are key, but equally important is support. We cannot just ship a package to a SMB and expect them to do the installation, set-up and configuration on their own. If we do, we will fail, as, if they use it at all, it will be in its most basic function and it will defeat the purpose and delineate the value. For ISOs and independent agents, there’s an element of reseller that we must add to our offering to assist the SMB customer.
On the SMB side, we’re just at the starting line, but the race is beginning and those not getting out of the gate will surely be left behind. Our mindset must shift. We must help the SMBs and we must make it easy for them to expand their offerings, capitalizing on omni-channel and other value-based solutions to deliver a modern, and expected, shopping experience for their customer. When that happens, it’s a win-win-win for everyone involved. Remember, small businesses, can look, act and feel like Amazon with today’s technology.
It will also be interesting is to watch the continued movement around other new technologies like beacons and geo-fencing to see if and how they evolve, with which business and consumer types and under what circumstances. There’s no question the way they we shop and buy in the U.S. is changing and changing fast.
O.B. Rawls IV is CEO and President of iPayment, Inc.