ASSIGNMENT 2
MKT 404: Retail Management
Multi-Channel Retailing
By Nilanjana Kuthari
(1910110256)
What is Multi-Channel Retailing?
Multichannel retail is a business strategy that utilizes different distribution channels to sell
merchandise. It helps businesses connect with consumers online and in-person through
channels such as brick-and-mortar stores, e-commerce, online marketplaces, and social
media. Physical storefronts, online stores or ecommerce platforms like Shopify, third-party
marketplaces like Amazon, social media platforms like Facebook Marketplace and Pinterest,
and mobile applications for purchasing on the move are the most prevalent types of sales
channels.
The Evolution of Multi-Channel Retailing
This standard definition has changed significantly in recent years. As the ecommerce
business expands, so do the opportunities for selling online. Nowadays, "multi" might be
better characterized as "myriad." Consider the huge rise of ecommerce marketplaces as an
example. Until recently, most sellers interested in multichannel commerce would begin by
listing things on Amazon. The corporation may experiment with email marketing or
sponsored search advertisements, as well as foray into eBay.
Today, however, the same seller must select from over 100 marketplaces, dozens of critical
promotion alternatives, and multiple methods of delivery. Similar scenarios have played out
throughout online shopping engines, mobile applications, and even social media, all of which
have grown to meet customers' wants to explore and buy at any time and from any device,
regardless of what else they are doing. Shoppers now expect to get precisely what they want,
when they want it. This implies that multichannel commerce is no longer merely making
products accessible for purchase through more than one channel.
Types of Multi-Channel Retailing
D2C E- Social Media
Brick & Mortar
Commerce Channels
Telephone Online
Catalogs
Orders Marketplaces
1. Brick & Mortar:
Traditional retail has traditionally occurred in a physical or brick-and-mortar shop location
run by the company. The brick-and-mortar approach allows businesses to sell products or
services in person and interact with clients in person.
Pop-up stores have also grown in popularity among digitally native merchants that want to
engage with clients in person but aren't ready to commit to a permanent presence. These
temporary venues are a low-risk approach for firms to test the viability of a physical location.
Historically, physical storefronts served as the primary distribution mechanism for
businesses. Nowadays, it is uncommon to find a company that operates solely through brick-
and-mortar channels.
2. Direct-to-Consumer E-Commerce
The late-1990s dot-com bubble promoted the hybrid retail method known as clicks-and-
mortar, in which firms sell directly to consumers both in-store and online.
A direct-to-consumer (DTC) strategy allows firms to sell directly to customers rather than
through third-party merchants or distributors. DTC can be accomplished online using your
company's website or a mobile app.
3. Social Media Channels
When social media first became popular in the early 2000s, businesses flocked to the
platforms to engage with customers and advertise their products. Paid social media
advertising has become normal practice for most e-commerce enterprises by the mid-2010s.
Some social media platforms even enable in-app purchases, allowing customers to make
purchases without leaving the platform. Instagram users, for example, may buy things from
businesses without leaving the Instagram app.
4. Telephone Orders
When a consumer telephones and places a product purchase over the phone, this is referred to
as a telephone order. Throughout the 1980s, when paid programming dominated late-night
television, telephone orders were common. Infomercials and other on-air advertisements
typically invite viewers to order a product by dialing a toll-free number.
While telephone ordering may appear to be obsolete, it is nevertheless a crucial aspect of
modern multichannel retail. If a consumer has trouble ordering online, they can simply phone
or text instead. Customers may also call brick-and-mortar establishments to reserve things for
later collection.
5. Catalog
Prior to the internet, mail-order catalogues enabled businesses to contact customers in both
rural and metropolitan regions. Customers might browse a catalogue and then send back their
money and product selection.
While the internet has made mail-order catalogues less frequent, direct mail is not extinct.
Many companies continue to send out product catalogues to consumers in order to introduce
new items or features.
6. Online Marketplaces
Online marketplaces like Amazon, eBay, Etsy, Rakuten, and even Walmart largely offer
items from third-party suppliers in order to provide customers with a consolidated purchasing
experience.
Because of the huge variety of items and services accessible, online marketplaces have
proven to be popular among modern customers.
Difference Between Multi-Channel & Omichannel Retailing
The goal of omnichannel retail marketing is to provide customers with a consistent shopping
experience across all sales channels. Cross-training of employees is required to guarantee that
the customer experience is integrated from digital interactions to in-store correspondences.
Target recently launched an omnichannel marketing campaign in which Pinterest elements
were integrated into their app. Customers just take images of any item on their phones, and
the Target app displays similar things for sale.
Omnichannel selling revolves around the client to provide a seamless experience.
Multichannel retailing, on the other hand, uses multiple distribution channels to revolve
around your product. Businesses understand that customers don’t interact with brands on just
one channel and use multichannel marketing strategies to create more buying options.
Imagine you encounter a social media ad for a winter parka. You first scroll through the
post’s comments to see what other customers are saying about it, then click on the ad so you
can read the full product description on the company website. Finally, you do a quick search
to see if the parka is sold through other retailers to compare pricing and available colour
options. This is multichannel retailing at work.
Advantages of Multi-Channel Retailing
Customer Flexibility Wider Audience
Customer Data Social Proof
1. Customer Flexibility
Modern consumers are often tech-savvy and prefer quick and easy buying experiences.
Consumers desire more purchasing alternatives and flexibility. Multichannel retail gives your
customers more options for shopping and purchasing your products. Convenience simply
cannot be quantified.
2. Wider Choice
This is a straightforward point: the more outlets you utilize to market your brand, the more
individuals you will reach. Multichannel retailing raises brand exposure among a wider range
of customers and demographics.
3. Customer Data
Third-party retailers and online marketplaces enable you to access more customers and gain a
deeper understanding of their purchasing patterns and decisions. These sales channels
frequently provide sellers with thorough statistics and data streams that organisations may use
to evaluate client behaviour away from their website.
Customers may, for example, visit your site to investigate a certain product before making a
purchase through another channel. Customer data gathered from other channels will reveal
where customers prefer to shop, and which products perform best on each platform.
4. Social Proof
For modern businesses, social proof is priceless. Consumers can learn about other people's
purchasing experiences by reading online reviews and social media chatter.
Social proof, which is based on the concept of social influence, asserts that people are more
prone to mimic the acts of others. This means that customers are more inclined to buy items
that have received rave evaluations and feedback.
If you've ever purchased something based on a review or testimonial, you've been swayed by
social proof.
Challenges of Multi-Channel Retailing
Pricing Logistics
Attribution &
Data
1. Pricing
Product price might frequently differ between sales channels. This might result in people
flocking to one channel to buy things at a lower price, resulting in a reduced net profit
margin.
Shipping costs, for example, may be greater when items are purchased on your DTC e-
commerce site rather than a big online marketplace such as Amazon. You may also discover
pricing disparities as a result of discounts and promotions offered by merchants such as
Rakuten.
2. Logistics
Multichannel commerce has the potential to drive exponential corporate development. This
success, however, may be fleeting if your company is unable to handle the logistics required.
Businesses must invest in the technologies required to automate order fulfilment, arrange
items, and dispatch them. Any goods that is offered for purchase must be inventoried at
physical stores, warehouses, or third-party sellers. To maintain consistency and accuracy,
retailers must manage product information across all sales channels.
3. Attribution & Data
With a retail management system, it is critical to continually monitor and analyze data from
all sales channels. This will assist you in attributing sales and ensuring popular goods remain
in stock for other stores and online marketplaces. It will also reveal unpopular products,
allowing you to delete or reduce inventory amounts.
Keep in mind that data analysis might take time. When experimenting with multiple
distribution channels, you must also commit to updating and adjusting your plan on a
frequent basis depending on your findings.
Case Study: Apple
Apple's multi-channel approach includes both online and offline sales channels, including as
third-party marketplaces like Amazon, eBay, and other country-specific platforms, as well as
hundreds of Apple retail locations and other electronics-based retail outlets. Customers can
purchase an Apple product through any of these outlets. However, in most circumstances,
people prefer to conduct their research through one channel and then purchase through
another. Some consumers, for example, like to employ a practice known as webrooming, in
which they conduct their research on Apple's official website, then use the website to identify
a shop near them, and lastly buy a product from one of the retail locations. All of these
methods together significantly increase Apple's sales.
References
https://www.zoho.com/inventory/guides/multi-channel-retailing.html
https://www.shipbob.com/blog/multichannel-retailing/#evolution
https://www.g2.com/articles/what-is-multichannel-retail
