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Omni-Channel Retail Grows 5.6% Worldwide in 2018

This is an archived post from OrderDynamics, now Tecsys retail division.
Omni-Channel Retail Grows 5.6% Worldwide in 2018 This year’s omni-channel research was bigger than ever. It included over 2,000 retailers from seven different countries around the world. And, the results are that 37.6% of retailers in this group of seven, offer click & collect, or BOPIS services. BOPIS being buy online pickup in-store. Comparing the overall reports from one year to the next, there appears to be only a 0.6% improvement. But, look deeper by running a like-for-like analysis and we find that omni-channel retail grows at 5.6% year-over-year (YoY). For a very quick snapshot, check out the OrderDynamics Omni-2000 press release.

Direct Comparison: Omni-Channel Retail Grows?

If you compare executive summaries of the Omni-1000 research and Omni-2000 research, you see a 0.6% difference. So, why isn't this the answer? ‘Omni-channel retail grows 0.6% worldwide’. Simply put, the two reports are different. The Omni-2000 research did not include the Nordic countries Finland, Sweden, and Norway. On the other hand, it added France, Germany and Austria to the list. We felt this change provides a better representation of European retail. Given this change in geography, the direct comparison is indicative. However, it is not an ideal comparison. So we ran a like-for-like comparison, instead.

What is ‘Like-for-Like’ 

For an accurate comparison, we looked at the retailers that made it into in both reports. There are 774 retailers investigated across both years. Purely by coincidence, in the Omni-1000 research, 37.6% of the 774 offered click & collect retail sales. The coincidence being that 37.6% of the 2,026 Omni-2000 total global retailers offer the omnichannel experience. Then taking a look at the same group (774 retailers) in the Omni-2000 finds 43.2% offering omnichannel retail. Comparing these two like groups suggests that omni-channel retail has grown 5.6% over this past year. This is measured through the change in the click and collect shopping experience offered to consumers.

Changes in Active Inventory Visibility

Despite growing BOPIS adoption across online and offline retail, active inventory visibility dropped. Honestly, when first seeing this I thought this was a mistake. It seems inconceivable that retailers would take a step back on stock visibility. Yet, that is exactly what has happened. The chart below summarizes all the changes in the like-for-like comparisons. Focusing on inventory visibility, there is a 30.7% drop. Last year 69.3% of the 774 retailers showed basic inventory visibility. This year only 38.6% provided basic, active inventory visibility for their online retail stores.    

Could This be Right?

At first glance, a sense of fear struck. Poetic to realize this in October (the month of Halloween). So, the research team did a COMPLETE second check across all 2,026 retailers in the Omni-2000. Having completed that we even did a third check. The numbers are correct. The drop is significant, and accurate. Other research by D3 Supply’s found a similar declining trend. D3 Supply noted that from 2016 to 2017 inventory visibility decreased. It is an interesting trend to watch in the coming year.

Inventory Visibility and the Shopping Experience?

As such, it appears that retailers are pulling back their inventory visibility on digital channels. It is not a step in the right direction. This is a scaling back of the customer experience online. Shopping in a multi-channel model is more confusing than single channel shopping. Given this, you want to make this omni-channel experience as positive as possible. When a customer is shopping on multiple channels, they need to know an item is available. This is important before they switch channels – such as buying online and picking it up in-store. Without active visibility, the customer just doesn't know what to expect. It is unclear if the customer's online purchases will be ready quickly - because they are in-stock. Remember too, that if the customer does not clearly understand that your store has the item they way, they can easily switch to another retailer. Lost sale! Over the next year, it will be interesting to watch this area carefully. For a further discussion, refer to the Omni-2000 research, pages 31 and 32 comparison. As omni-channel retail grows so will the need for active inventory visibility. It will become a part of the holistic brand experience for shoppers.

Steady BORIS, Steady!

BORIS, buy online return in-store, experienced a mild improvement YoY (like-for-like). There was only a 0.9% improvement. Among multi-channel retailers, two thirds (63.0%) of the 774 retailers, offer the service. Across the broader Omni-2000 study, we found that 72.6% of omni-channel retailers offer BORIS to shoppers. This is great news for the customer experience and helps retailers. Shoppers prefer to return items in physical stores. Online shopping is great, but people still think online returns are a hassle. Various articles point to this conclusion. This was also the preference found in the Click & Collect Superconsumer research, of over 1,800 participants. Not only do customers prefer it, but when they are in-store they tend to buy more goods. Retail’s target market, the omni-channel Superconsumer, buys more goods on a BORIS trip 40% of the time. So, BORIS drives more sales. At the very least, as omni-channel retail grows, BORIS will help reduce the cost of returns. Of course, that is when free return shipping is included. This leads straight to the bottom line.

Do We Still Need Instructions? 

More and more retailers are putting their omni-channel strategy into practice. We have seen a growth of 5.6% in the like for like comparison. It is a steady and healthy pace. It also suggests that more customers know about it. Since 69.0% of shoppers have tried BOPIS, do we still need online store instructions? The answer is a resounding YES. Fortunately, most retailers already know this. Specific to regions where omni-channel is still new, instructions are important. The research shows that these touch points have been met. Last year, the Omni-1000 found 80.4% of BOPIS enabled retailers, included instructions or an FAQ. FAQ being a ‘frequently asked questions’ section of the online store. Currently, that figure is 91.3%. This is an 11.1% improvement across the 774 retailers. Omni-channel retailers have got it covered. Well done.

Omni-Channel Retail Grows 

Without a doubt, the like for like, YoY comparison shows growth. BOPIS (click & collect) adoption grew 5.6% over the past year. Not only is this positive for retailers who are making their business stronger, but it also helps consumers. It caters the shopping experience to what customers want. This year’s findings do show a concerning drop in active inventory visibility. This is both surprising, and alarming. As omni-channel competition heats up, this figure should reverse. Between two equal merchants, customers will gravitate to the online site that provides the wanted information. When choosing between store visits, active inventory visibility could be the deciding factor. Other comparisons are positive. Chains have improved their online instructions for click & collect. There is still room to improve on BORIS. But, it is notable that almost three-quarters of omnichannel merchants offer the service. Overall progress has been solid. As omni-channel retail grows, it will be exciting to see the progress in 2019. Author:   Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.    
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