Whether it’s retail or marketing, B2B or B2C, omnichannel has been a dominant topic of conversation among sellers for years. Omnichannel is something of a catchall term that speaks to the demands and diverse browsing preferences of customers today.
It’s easy to recognize the importance of omnichannel, but delivering on the promise of omnichannel is far easier said than done. Companies have learned this firsthand — nearly half of sellers have lost at least $1 million due to the challenges around enabling omnichannel, according to 1WorldSync. However, those that can provide smooth, painless experiences that cross multiple channels will reap the rewards of a growing and loyal customer base for the long term.
We’ll walk through more than a dozen common omnichannel challenges, along with solutions for each one.
What Are Omnichannel Challenges?
Omnichannel refers to connecting a number of different sales channels or mediums for a consistent experience no matter where a prospect or customer is engaging with your business. The goal is to allow them to engage or buy from you in whatever way they prefer.
In a retail setting, this could mean ordering an item online, then picking it up two hours later at a nearby store. As another example, a shopper visits one of your stores and the item they want is out of stock, so an associate places an order online from the retail floor and it arrives at their home five days later. In marketing, omnichannel means reaching prospects and customers through a variety of different channels like social media, email, digital ads, events, and direct mail. The message must be tailored for each channel and person based on where they are in the buyer’s journey.
The idea of reaching prospective customers through different mediums is hardly new. Long before the internet, some retailers sold through mail-order catalogs, by phone, and in stores. Two decades ago, companies might use both digital display ads and billboards to reach their audience and allow customers to buy products and online. But these “multichannel” offerings are distinct from omnichannel in that these different channels operated independently. The real change with omnichannel is putting the customer, rather than the product, at the center of the business.
To create painless omnichannel experiences requires linking inventory, logistics, and distribution across all of these channels. There are many moving pieces and connection points where things can go wrong, which creates a long list of omnichannel challenges. The potential of omnichannel is enticing, but many have run into unexpected problems and failed in their effort to modernize.
- Omnichannel retail and marketing have become the standard as customers come to expect personalized and ultra-convenient experiences.
- Supporting omnichannel is a tall order because, done right, it requires careful coordination of marketing, inventory, and distribution, as well as constant access to the latest information.
- Marketing challenges center on attribution issues, lack of personalized content, incomplete data, and channel conflict. Sellers face issues with inventory visibility, comprehensive and accurate data, and operational efficiency.
- Tackling these challenges starts with a well-thought-out strategy that can then guide investments in technology and people.
Omnichannel Challenges Explained
Conquering omnichannel challenges first requires a well-designed strategy with clear goals and an incremental path for getting there. Taking on everything in one broad sweep is generally a recipe for failure. From there, you need to identify the technology and integrations requires to make these goals a reality. Only if these systems can speak to each other can an online order be fulfilled and shipped by a store employee, for example. Systems must also update in real-time to provide the experience customers seek.
Customers increasingly expect targeted messages and personalized experiences because some companies can provide this, so they come to expect the same from others. This puts retailers with varying levels of resources and technological maturity in a difficult spot. But that doesn’t change the fact that customers’ patience for clunky and inconvenient cross-channel experiences is waning.
The stakes are high for omnichannel. It’s well-known that it’s much cheaper to retain a customer than acquire a new one, and overcoming omnichannel challenges will drive retention. A study by OmniSend showed customers that engage with a brand across at least three separate channels purchase 2 ½ times more frequently and spend more per order. The right message in the right place at the right moment, or the ability to start a transaction on a desktop and complete it on a smartphone, is indeed a powerful thing.
As customers come to expect exceptional omnichannel experiences, those that fall short will lose business to competitors to a degree that may threaten the company’s future.
Departments That Benefit From Omnichannel Approach
As we’ve noted, omnichannel is a term relevant to numerous industries, types of businesses, and departments within those businesses. Effective omnichannel experiences can give a boost to numerous functions, including:
The internet has reinvented marketing because there are so many ways to reach customers online. Using data to understand where a visitor is in the customer journey can help you hit that person with a message that will inspire them to take action and drive conversions.
Logistics are a critical component to executing omnichannel retail, even if customers never realize everything happening behind the scenes. Visibility into orders, inventory, and customers across channels allows you to give customers options without a sudden spike in costs. Solving the puzzle that is omnichannel logistics is especially important as sales grow and the business scales.
Once you have the logistics sorted out, customers can seamlessly move across channels. This helps them get the products they need, when they need them, via the method of their choice. That could include any combination of stores, ecommerce, mobile apps, online marketplaces, online chat, text, or phone. And when you support that, the results are clear: higher sales, increased customer loyalty, and a strong brand reputation.
Top 13 Omnichannel Challenges and How to Avoid Each One
Now that we’ve explained why omnichannel is worth the effort, let’s dig into some of the challenges. And don’t worry — we’ll include solutions for each to help you get on the right track.
Lack of Attribution
To understand how different campaigns and channels are performing, you must know the source of those leads. This requires detailed tracking capabilities so you can see where customers started their journey and where they are now. Did they first engage with you via email, a social media ad, paid search, organic search, or another channel? Many organizations lack the technology needed to paint an accurate and complete picture. Leads may all end up in a few big buckets, which isn’t very helpful.
Poor attribution can also be an issue for retailers, as there are many touchpoints that could influence a customer’s ultimate decision to buy. For example, a commission-based sales rep in a store won’t get credit for a sale if they answer the questions of a customer who, three days later, decides to buy that item online. Another customer might see an Instagram ad, then visit a store to purchase that item, but the store gets full credit for the purchase. These issues matter because these insights shape how you allocate the marketing budget and the sales these campaigns do or don’t drive.
Addressing this issue requires robust marketing technology that monitors any channel where your brand is active. These solutions must be able to track all kinds of marketing activity and not just the point of conversion. Look for marketing systems that can be integrated with point-of-sale (POS) and ecommerce platforms so data is easily accessible.
Connecting Online and Offline Data
One of the most common challenges when trying to unify multiple channels comes in integrating information from digital and non-digital channels. For a retailer, this could mean in-store (offline) and online sales data. A consulting group, on the other hand, may be struggling to track the effectiveness of both targeted online ads and its sponsorship of a local sports franchise. Generally, it’s easier to monitor the success of online marketing campaigns because there’s ample technology to track online channels.
One way to resolve this is with unique business codes or links for each offline channels so you can tie it back to the source once they start moving through your funnel. You can also ask customers where they first heard about your company to find out how offline channels are contributing. It can also help to take a broader view of company performance rather than always tracking the performance of channels individually. If interest in your services spike in the months after your team sponsorship starts, that campaign likely deserves significant credits. If a direct-to-consumer retailer sees a 30% lift in sales after opening its first brick-and-mortar stores, up from 10% increases the previous two years, those physical locations are likely making a difference. That’s true even if the metrics for stores themselves are underwhelming.
One-Size Fits All Content
Most customers expect personalized experiences — 71% of them, to be specific, per McKinsey. Another 76% feel frustrated when a business doesn’t provide that. A single message blasted to the masses across all your channels simply won’t get the job done. This personalization spans everything from marketing emails that highlight items actually relevant to that person to customer service agents knowing their recent purchase history with the company when they call in for assistance.
Tailored messaging will require some legwork from and additional resources for your marketing team. They must map out the buyer’s journey for your products and services in detail to understand what channels fit with each stage. But the reward is a more engaged audience that leads to more sales and true brand advocates.
The right marketing technology is again a key piece of the equation in solving this problem. That’s because marketing solutions help you understand where someone is in the buyer’s journey or marketing funnel and you can then create a message tailored to them. The message is much different for someone who just stumbled across your company versus someone who added an item to their cart but abandoned the purchase. Marketing automation software allows you to design workflows that automatically send certain messages based on triggers like viewing a certain web page or days since the last engagement. You can also test various messages to determine which most resonates with a specific audience.
Measuring the Wrong KPIs
The wrong KPIs can mean failure for just about any project, including an omnichannel one. Selecting the right indicators of success, however, can be difficult. There can be overarching KPIs like profit margins or revenue by category, as well as KPIs around different steps in the buyer’s journey. Measuring the wrong metrics could indicate something is working when it isn’t, or vice versa, and leave you with the wrong directives. Many fail to choose customer-centric metrics that ensure you’re meeting their expectations.
Selecting the right KPIs requires thinking critically about what would truly indicate success for different components of your omnichannel efforts. This requires collaborating with others across your organization who can provide their own perspectives. Categorize your KPIs into groups like top-of-funnel marketing, order volume/revenue by channel, inventory and fulfillment, customer satisfaction, and customer loyalty.
Of course, you also need a way to automatically and accurately track these metrics. For that you need both back- and front-end systems that record and report on data in real-time. Finding the best KPIs to measure omnichannel performance and then having a simple way to track them greatly increases your chance of success.
No Inventory Visibility
To make omnichannel work, you must know stock levels across all locations — stores, warehouses, 3PLs, and the like. Without that information, many aspects of omnichannel become impossible. If you don’t know what you have where, you can’t offer customers attractive alternatives via other channels and will inevitably lose sales to competitors. And if information doesn’t update immediately, a retailer may promise something to a customer that is no longer available.
The key to better inventory visibility is an inventory management system with the ability to track stock levels across numerous locations that updates as transactions happen. Inventory should also be shared across channels within certain parameters, as that will prevent inventory waste and unnecessarily high carrying costs. Shared inventory allows you to save sales and reduce costs because you can ship from the most cost-efficient location. Ultimately, inventory visibility helps set the right expectations with customers.
Lack of In-transit Inventory Visibility
Knowing what’s sitting in stores and warehouses is an important first step, but after that you need to figure out what products will soon be in your possession. In-transit inventory includes any items that are currently en route to you, though they could be days, weeks, or months away, depending on the shipping method. It’s a lot more challenging to get this information than that for goods already on-hand. However, in-transit inventory data is essential because it can help keep customers informed.
Gaining detailed visibility into in-transit inventory requires exchanging data and regular communication with suppliers. Ideally, your systems are integrated with those of the supplier so you can automatically receive information on your outstanding purchase orders. But that’s a lofty goal for many distributors and retailers, so recognize the value of first inventory and procurement software here. it will show what you have on order from which suppliers and expected delivery dates for each. Some systems allow you to set up alerts for delays or other issues.
This in-transit data informs your purchases and also helps you keep customers updated. If a customer wants an order on backorder, for instance, you can give them an accurate idea of when it will be available and how they can get it.
Siloed Supply Chain Processes
As the last few years revealed, supply chains are extremely complex networks that depend on many pieces falling into place exactly as planned. Each of those supply chain nodes must be connected to execute omnichannel, from purchasing to inventory tracking to order management through fulfillment and delivery. There must be transparency and consistent processes across all the locations in your network, including those that are outsourced. Siloes within your supply chain ultimately hurt the customer experience.
To knock down these siloes, you first need a clear plan on how things work now and what changes need to be made to improve them. Then you can start to look for the right supply chain planning and execution systems that can bring all these processes and data together. It’s much easier to address this problem when all parties use the same system, rather than each department having their own system and processes that’s walled off from others. Look for technology that can also integrate with fulfillment partners’ and suppliers’ technology.
Poor Order Fulfillment Processes
Order fulfillment becomes complicated when a single store or warehouse fulfills multiple types of orders. For example, a single warehouse may stage large wholesale orders on pallets and also package hundreds of much smaller orders for consumers in the same day. Employees in a store backroom must juggle replenishing shelves and fulfilling online orders for nearby customers.
A warehouse management system (WMS) can be a game-changer for warehouse productivity well. It can prioritize orders and show employees the most efficient pick path, guiding them through receiving, picking, and packing step-by-step. All of that helps your organization get orders out the door faster in the face of ever-increasing consumer expectations.
Speed of Delivery
One area where sellers often fall short of customer expectations is speed. Amazon Prime’s free two-day shipping reset the bar for other businesses. The challenge comes not just in getting orders to customers quickly, but doing so at a reasonable cost, which is very hard to pull off.
While most orders need to be delivered relatively quickly, some will always be on a tighter timeline than others, so addressing this problem starts with figuring out what should be sent out first. You don’t want to spend more on faster shipping to deliver an order two days earlier than promised.
A shipping solution that shows all potential options in one place — like shipping from a store, a 3PL, or several different owned warehouses — is also essential. Beyond that, look for order management systems can automatically route orders to the most cost-effective fulfillment location.
This is a broad category, but manual processes at any stage in any of the areas associated with omnichannel retail or marketing can make it unfeasible. For example, using spreadsheets or even paper to track inventory will quickly prove unsustainable. Pulling orders from your ecommerce system and reentering them into your POS system for in-store pickup will become too time-consuming and error-prone. Uploading every email exchanged with a customer into your CRM will reduce productivity and may result in incomplete information. These are just a few of many examples that show how manual work gets in the way of omnichannel.
Omnichannel requires automating as many aspects of your supply chain, marketing, and customer communication as possible. Technology is obviously central to automation, including for things like purchase orders, inventory tracking, inventory allocation, customer communication (like order status updates and marketing emails), returns processing, and ad targeting. Realize that automation will prevent errors and free up more of employees’ valuable time so they can make more meaningful contributions.
Imagine the same product is available on a business’s own website and that of a large retailer, but it’s 20% cheaper on the latter’s site. This highlights the challenge of keeping product-related information consistent across the many channels where an item may be listed for sale. Channel conflicts can also arise from two or three channels competing for the same inventory. What if you over-allocated inventory to third-party marketplaces but didn’t reserve enough for your stores? These are all newfound yet critical issues.
To prevent these conflicts, companies must forecast demand by channel instead of only projecting their overall needs. This requires up-to-date, segmented data on sales by channel that show how each is trending to use as the basis for forecasts. You should also leave room for flexibility so you can pull inventory designated for one channel to another as needs shift. Finally, set up clear rules about how you will prioritize stock when in a pinch, like reserving it to your most profitable channel or biggest customers.
The best way to keep product information consistent is to keep with all inventory information in a single system. Integrations then enable you to push the latest information out to your various channels.
Inefficient Return Logistics
As ecommerce accounts for a growing percentage of total retail sales, returns have become a much greater source of concern. Goods purchased online are returned at a rate two to three times that of products bought in-store, yet merchants also face pressure to offer free returns. That means returns, if not handled efficiently, can pull down profitability in a big way. Returns processing is often highly manual and companies struggle to support returns through multiple channels (like buy online, return in store), even as that becomes the expectation.
Businesses need clearly defined returns processes to rein in returns. That means a quick receiving and inspection process when a return arrives at a warehouse or store and clear next steps based on its condition. Should it be immediately put it into available inventory, refurbished, sold to a liquidator, or thrown away? In addition, the more you can process returned items at the point of return versus sending them elsewhere, the better.
Although there are reverse logistics-specific solutions, certain inventory management systems have features to help with this. And giving customers the option to return purchases anywhere requires tightly linked systems because you need sales information from all channels in one place.
Choosing the Wrong Third-Party Logistics Provider
Many modern retailers depend on 3PLs to fulfill and ship some or all of their orders, so they have a major impact on the customer experience and their level of service is synonymous with your brand. That’s made outsourced logistics providers a fast-expanding market, and some are better equipped to serve your business than others. Some even have specialties like cold chain or high-value products. The wrong 3PL provider, however, will add to all of the challenges covered here rather than helping to resolve them.
To avoid choosing the wrong one, do thorough research and ask for references as you’re evaluating vendors. Do your best to get a sense of whether they have the expertise to improve the operational side of your business. Can they act as an operations consultant and technology provider for your organization? What metrics can they show around customer satisfaction with the companies that use them?
Important Omnichannel Software Solutions
Strong inventory management is foundational to omnichannel, and NetSuite Inventory Management can track stock down to the individual item level across numerous locations, something many entry-level inventory solutions cannot match. The inventory management solution also shows the status of every purchase, including when it’s in transit and anticipated delivery date.
The order management module pulls in orders from all channels and can automatically send orders to the ideal location based on shipping cost, distance, or other rules. It also has features to help with returns management. All of this data lays the groundwork for accurately forecasting sales by channel using your preferred channel with NetSuite Demand Planning. When it’s time to fulfill and ship orders, NetSuite Warehouse Management System (WMS) provide the direction your employees need to efficiently pick and pack orders and maintain optimal inventory levels.
Deliver an Omnichannel Experience With NetSuite
NetSuite’s cloud ERP system offers much of the functionality omnichannel businesses need to succeed. At the heart of that is a single platform for financials, supply chain management — including inventory management, order management, demand planning, and procurement — customers, and omnichannel commerce.
NetSuite CRM gives you a 360-degree view of the customer. It shows customer preferences, interactions, and order history, so you can deliver personalized support and relevant marketing messages. Again, since this is part of the NetSuite platform, information from other sources automatically populates customer records. NetSuite CRM can also launch and report on the performance of marketing campaigns.
Finally, NetSuite’s omnichannel commerce solutions cover ecommerce and POS so you can avoid third-party integrations to back-office systems. NetSuite SuiteCommerce supports both B2B and B2C ecommerce with user-friendly tools for changing and updating your site. NetSuite’s mobile POS, SuiteCommerce InStore, makes it easy to find the latest customer, order, and inventory information so store associates can place orders or process returns with a few taps.
With all of this data in one place, there are endless reporting capabilities to help you monitor the performance of your sales selling and messaging. Users can set up multiple dashboards with KPIs or automated reports to measure different parts of omnichannel operations. You can get as broad or narrow as necessary.
Omnichannel is not a trend sellers or marketers can ignore and wish away. It’s a fundamental shift in how customers expect to engage with companies, and those that don’t adapt will see their business fade away. The explosion of online retail has given prospective buyers a plethora of options, heightening table stakes more than ever before.
While much of making omnichannel happen depends on the right technology, don’t overlook the importance of first outlining a strategy. Review your operations to understand what you can reasonably offer customers. Evaluate new channels where it might make sense to start selling your product and how your supply chain can support them. Keep the customer experience at the center of every decision you make. And remember that conquering the many challenges of omnichannel can make your company’s future outlook much brighter.
Omnichannel Challenge FAQs
What are some disadvantages of the omnichannel model?
The primary disadvantage of omnichannel is the effort and investment required to make it work. For this reason, some companies have been slow to reimagine their business model and make the investments necessary to support customers as they float between channels. While it can be expensive to get an omnichannel initiative off the ground, there’s clear evidence that it increases revenue and repeat purchases. It also helps you keep up with competitors.
What is omnichannel conflict?
Omnichannel conflict refers to competition between your various sales channels. This could be multiple channels jockeying for the same, limited amount of inventory, or consistency in what you’re offering in different channels. For instance, does it make sense to invest less in selling on a third-party marketplace if margins are 20% higher when customers buy through your own website? Or how can you compensate sales reps for online purchases by their customers?
What is omnichannel distribution and what challenges does it present for supply chain managers?
Omnichannel distribution is the process of getting the right items to the right places in a timely manner, whether it’s a customer’s doorstep, a store, or a wholesale customer’s warehouse. This is an increasingly tall order as orders come in from various sales channels for all types of customers. It’s the job of supply chain managers to figure out what a company should order and how much to satisfy demand, and how that inventory should be spread across channels. This job has become all the more difficult as companies deal with frequent shortages and other supply chain problems.