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The Omnichannel Retailer – Omni-2000 Research – EP001

This is an archived post from OrderDynamics, now Tecsys retail division.
The Omnichannel Retailer - Omni-2000 Research  - EP001 In the opening episode of The Omnichannel Retailer Podcast Charles Dimov and Carla van Deventer delve into the Omni-2000 research. Get new insights into this comprehensive research, find out some of the most significant findings and learn how this research impacts each and every retailer.

Transcript to the Podcast

The Omnichannel Retailer

Carla: Hi, and welcome to the very first episode of The Omnichannel Retailer. My name is Carla and I am Marketing Manager here at OrderDynamics. OrderDynamics is a Tecsys company and we develop the world's leading distributed order management system. The Omnichannel Retailer is a podcast that will look at the omnichannel retail industry every month. From research to trends to interviews with retail industry executives, we will have everything for you right here. Joining us today, I have my co-host and VP of Marketing at OrderDynamics, Charles Dimov. Charles has over 23 years of experience in Sales, Marketing and Business in various IT and Technology companies. He is an avid writer and a Retail Dive Brain Trust Contributor, and he brings his unique views to the retail industry. Hi Charles. Charles: Hi Carla. Thank you so much for that lovely introduction.

The Omni-2000 Research

Carla: Well, we are so happy to have you here today to discuss the Omni-2000 research with us. This research actually has had a lot of chatter already. I believe it's been in places like Business Insider, Multichannel Merchant, Retail Dive, just to name a few of like the 40 odd places it has been in. Charles: Yes, you're right. Actually, I am pretty pleased with the amount of traction it has got this year. So last year I don't think we saw quite as much traction. Last year would have been the first year we actually tried this type of research. And it honestly was a big experiment. I don't think I had seen anything like this in the market at all, anywhere. We tried it from the perspective of really looking at it from a customer's perspective and saying: Hey, does omnichannel actually really exist? So again, it was a lot of fun. And then this year, when we did the second edition, it gave us a little bit more interest because we had a lot of comparative capabilities. So again, this year when we launched the Omni-2000, we really had a lot of pickup in the market. It was so very pleasing to see that.

The Nitty Gritty

Carla: Well, that's great. So tell me a little bit more about how you actually did the research. You know, what did you do? Where did you look at? Charles: First of all, I guess the big plan here was to make this as robust as possible. And that means basically having a large sample size. So there is a lot of research in the market which might look at 50 or a 100 retailer and such. And those are good, I am not saying they are not good. But we said let's take a look at a broad a sample as we can. So last year we looked at over 1000 retailers and this year we kind of set a goal for ourselves to look at over 2000. This year the Global Research specifically looks at the US, at Canada. It looks at Australia. It looks at the UK market. It looks at Germany, Austria and France. Now last year, the only one that we didn't do this year replication is the Nordics area. Last year we actually included also Norway, Finland and Sweden, which is kind of interesting. And once again, all the results here seemed fairly consistent.

Your Biggest Takeaway

Carla: That is actually a number of different countries that you look at there, right? So tell me, what do you think was the biggest takeaway out of the research for you? Charles: One of the biggest takeaways? Well first of all, what we were looking for was to be able to say is omnichannel retailing really being used out in the market. And I think that was the big question. And so part of it actually came from back before we had actually done last year's, the Omni-1000. At that time, I had read some research. I think there were two different reports that were from some of the big analyst firms. And they came up with this research that said that over 60% of the US retailers and possibly in Canada as well were doing omnichannel.  And they were even more particular than that and they came out and said BOPIS. BOPIS is Buy Online, Pickup In-Store. And that was really interesting because again, as I thought at the time. It struck me as odd, simply from the perspective of when I try to shop and I'm always looking for this. I am looking for opportunities to do an online purchase or a pickup in store. So I can actually go through the experience and say that, yes these guys do it well, and these guys don't do it that well. So I have been looking for these opportunities. And the weird thing was that after reading these two reports that were in the 60% mark, I thought wow that is so strange. I must be living in a bubble. Or is it just that I am one of those few individuals that all my favorite retailers just don't do omnichannel? And that is what made me think that there is something odd happening here. Why is it that research says over 60% and meanwhile in my own personal life, I cannot find more than a small sampling, a handful maybe at most. That is what struck us onto that research. And then the biggest finding we had was, in fact, an advance market like the US, for example, a big shocker a big, big shocker. It's not anywhere close to 63%, the way the research I had read 2 years ago said. No, in fact, it is  27.5% for the US. Of US retailers, which have 10 or more stores as a chain and actually offering BOPIS. So in other words, as a consumer when I go to the website I can see that I can select that offer and I can go into the store and pick it up. And that was a big shocker. I mean heavens, we checked over the score, the rankings several times.  About three different times just to make sure that we were not off our rocker, and off on the numbers. And nope, it is absolutely consistent, it is very consistent with what we saw last year as well. So again, this is a very high confidence interval on this one and I'm sticking with it. Let's say that.

The Importance of Click and Collect

Carla: That is amazing that a country like the US, which you would expect to be so advanced in retail and they have less than 30% that is actually offering something like click and collect. Why do you think that though that Click and Collect is so important? Charles: By the way, I don't want to paint the picture that it's this way everywhere. So, the part that I didn't say, when we looked at it on a global scale, the US was probably the biggest shock. Honestly, I thought that it was going to be way higher than that. Now, on the other hand, there are very advanced retail markets which are advanced in omnichannel as well. So I would say the US is an advanced retail market but not so advanced in omnichannel. We tend to talk about it a lot more than we actually are doing it. Now what we did find was the UK is a great example of an advanced retailing market and they were actually very advanced in omnichannel as well. So in the UK BOPIS, what they call Click and Collect, there are 64.0% of retailers who are offering it. This is retailers with 10 or more stores in their chain. And again that was kind of interesting.

Click and Collect Importance

Carla: So why do you think it is so important to offer Click and Collect? Charles: I would say, I'm going to answer that in two ways. So one is, it's important to consumers. In fact, I wrote an article just not too long ago. There I said well why are consumers interested in this. What exactly does it give them that they couldn't get from just having it delivered to their home? So there are a number of reasons. So I kind of broke it down to three and I called it ICE. One of them was getting that immediate instant gratification. The second thing was just that sense of control that customers have when they go to a place and they know exactly when they are going to go pick it up. And the third part was the experience. That was both experiences of the product experience, touching and feeling and getting a sense of the size of what they want to purchase or they just purchased. And the service experience. Maybe I just bought a new drill and frankly, I'd like to take the opportunity to ask the guy at the Big Box DIY store. To be able to say well you've done this before, how do I drill this particular type of thing. So that type of services levels. So those three things. From a consumer perspective, there is still that physical, tangible thing.  It still exists and it really breaks down to those three components ICE now. Then if we take a look at it from a Retailer's perspective. That's equally important and that's because from the retail side we have seen study after study that basically is pointing out that when consumers come in even just to do a pickup in the store of the product that they've already purchased, they end up purchasing again or they purchase additional goods. Now, I think it was about a year ago that we actually collected a number of those studies. We kind of aggregated them. And I think the average came out to, the average of all the different research that said how much more do people pick up, came out to around 58.8%. Now subsequently, there were a couple of more studies. Interesting enough, our own, the Superconsumer research. We took a look and we asked consumers when you go in to just do a pickup are you likely to pick up extra goods or are going to purchase extra. And it turned out that it was about 37%, if I am not incorrect. 37% said yes, they are likely to buy more goods. Around 37% or 41%,  one of the two. And then I think the ICSC come out with their research and theirs was closer to 60%.  So again, we're talking about anywhere from 40 to maybe 60 even higher amount of people coming into the store just to pick up goods, are going to purchase something extra. That is fantastic news from a Retailer's perspective. Because what that means is basically, you are getting more goods turn inside your store. And of course, the most significant part is you are making extra sales. That person online, you know online is great, it is a wonderful way to save time and such and there is a lot of benefits to online. But the reality is most of the time when you are shopping online you are going in, or perhaps I am particular in that way, but I am going in, I am looking for a particular good. Maybe there is something peripheral that I may buy. And frankly, most of the time it is to get to that free shipping minimum threshold, but beyond that, I don't generally do a lot more browsing. You know I'll pick up maybe one extra item. That's the end of it. Whereas that is exactly where retailers can take advantage of omnichannel. Take advantage of that in-store pickup and encourage customers to do a little bit of extra shopping. That increases the basket number of items they are purchasing, that increases the basket value. That's all good for the retailer. Not to mention that they didn't have to pay for free shipping. Carla: Yes, that is something I actually just wanted to say. It takes care of the free shipping as well, right? Charles: Oh, yes for sure. You know, funny enough I was talking on another podcast and the interesting thing came up, saying yes, I think in the next couple of years, I believe that the new free shipping going to be in-store pickup.

Other Aspects of Retail

Carla: Yes, and that absolutely makes sense. So, I actually wanted to mention to our listeners out there. All the research reports that Charles has mentioned, the Omni-2000 as well as the Superconsumer research is actually available for download at the OrderDynamics site. So it is OrderDynamics.com/resources, and you can find it all there. So Charles, jumping right back in. You've spoken about Click and Collect, about BOPIS. What else did the research look at? Is there any other aspect of retail? Charles: Yes, there were quite a few different things that we looked at in the research. So to give you a scope,  I think this year we collected somewhere around 81,000. It was 81,000 or 84,000 data points. Which is just crazy. But I think one of the other big ah-ha's that came from it, which again I was surprised, and I was a little bit nervous because at first I really didn't believe it. And we ended up again doing a triple check on this. We literally went through all 2000 retailers, not just two checks but three checks to verify was is actually happening, was real or not. And one of the weird things that we observed was inventory visibility. So last year, I think we said somewhere around 67 - 68% of retailers might have been the omnichannel retailers, were offering inventory visibility. Not saying necessary good inventory visibility, I'm just saying some form of inventory visibility. When I went on to the site I could select my pair of pants or trousers and in which case, my size is 30 by 34. It is a little bit odd, perhaps I am a bit taller than the average guy or something. In which case, what I am looking for I won't find in most places. So for me, I want to know that the retailer actually has this. Because I don't want to wait for 3 weeks before I get my shipment or the goods. So I'm looking for this and I think a lot of consumers are doing exactly that. Today they kind of expected it. When I'm doing my research, I want to know whether you know, whatever the retailer is. There's one on my way to work, excellent, I can drop in, just pick up the pair that I want cause they have one in my size. I already know they fit because I shopped there before you. Excellent, have you got it yes or no, in that particular store. And last year again, we saw somewhere around 67-68%, somewhere in that range had inventory visibility that they were showing online. Now it could have been as simple as saying yes, it's in stock and it could have been as granular as saying it's in stock in that particular store and there are two units left. Frankly, that's great. Because what that does, is that entices the consumer to say there is only two left of exactly my size and that fit and what I really like. I better get it now before somebody else goes in snatches it up. So that encourages that sense of urgency as a good thing. So again, last year, pretty high numbers. Not bad, really I would say you still have a lot of room for improvement. This year, what we saw was a major drop. It was like a 30 point drop between the two studies. So this year we were more in the 30s range of retailers offering inventory visibility. Now, why is that so significant? It's a bit concerning. Again, we already know that all shoppers do their research online. Whether it's on your mobile phone or whether it is on the Google Echo device or whether it is online on a big screen. They are doing the research online. Which means if I, as the consumer, go to a website for a retailer and I don't see the information. Or if I say they oh, yeah, they have exactly the shade I want, they have the size I want, that's wonderful, but I don't know if they actually have it in inventory. And then I flip over to the next screen because it is really easy when I am surfing online to go from one retailer to another retailer. The challenge is if the next retailer has inventory visibility, and I say they have exactly my size, and they have the shade I was looking for and they have two in inventory that is close to my home. Frankly, why wouldn't I go with them? Yes, there could be a price difference and they may actually sway me but in essence, all things being equal, I will gravitate to the one where I have more certainty. Carla: Yes, absolutely. Charles: So again, when I looked over the results in the study this year, that was the biggest shocker. And I thought this is really not the right direction for the industry to be going in. So, at the same time, I would say that's an opportunity for a lot of retailers. Because you know that most of your competitors are probably not offering this, so this is something you can take advantage of.

Social and Mobile

Carla: So you kind of mentioned a little bit about how shoppers do their research on different spaces and there has been a lot of changes in social and on mobile. You know Instagram adding their in-app checkout, Google moving to Mobile first indexing. What do you think will be some of the differences that you will see next year in the social and mobile side? Charles: Yes, that is a really good question, Carla. Next year? Let me comment in terms of what we are seeing already. This year, in fact, I think it was this week or just the end of last week there was some really big progress that has taken place with Instagram. So, Instagram just recently kind of announced that they have made it way easier for someone using Instagram to purchase on their Instagram account. So, you don't have to leave Instagram anymore. That was kind of neat, because this year, it just happens to be that in the Omni-2000 study we did look at that. How many retailers in the world, of the 2000 we looked at, are on Instagram, first of all. And this was a pretty big number, somewhere around 80% or so. Great, it is wonderful that retailers really gravitated that way. Consumers are there, you might as well be there as well. So that whole phenomenon is happening. But when we started taking a look at how many of them have in Instagram, you know shoppable stuff that they can buy or that they sell right there, that is where they were pretty deficient. So, I think globally on average it came out to around 17%. There were a couple of standouts. So I will pull that out. I know that Instagram is very, very popular in the UK market. Or rather amongst consumers at least. I think that 14% of retailers offer it Instagram purchases. The US actually was pretty advanced in that, well let not me not say it like that exactly. They were the most advanced of the countries we looked at, in terms of being able to shop on Instagram. So, I think it was around 20% of retailers who had an Instagram account was offering in Instagram shopping. Again, the interesting new development is Instagram now has made some great strides to make it really easy to be able to purchase right in Instagram. So that is going to be a real change of sorts. In other words, you know, I expect, if I was to hypothesize, saying what we will probably find next year when we redo the whole study and take a look at it, I think we will see a lot more Instagram growth. I think that would just skyrocket. Being realistic, I think probably it will come in at 40%. So again, if you are in retail and you are not there, this is your opportunity. Jump in on it fast, because I truly believe that the first movers, the only movers will reap the biggest awards. And that is kind of what we are seeing in omnichannel all together. Those that are in the 27 - 30% of the retailers that are doing omnichannel, that have BOPIS capabilities or Click and Collect, they are the ones that... Well, the big gap is overall we came out at 37% of retailers have got in-store pickup capability or Click and Collect. Then on the other hand when you look at the consumers, more than 60%-70% of consumers know about it, like it and use it. So once again, huge gap there and I will say the early movers are the ones that will reap the biggest rewards.

The One Thing You Should Remember

Carla: Yes, and that makes absolute sense. So we have spoken about a lot of different things, Click and Collect, Inventory Visibility, Mobile and Social in retail. If there is only one thing that you want people to remember from this talk, what is it out of the Omni-2000 research? Charles: What is it if there is one thing? Carla: Only one thing? Charles: The one thing, frankly is not going to be a shocker. It's that omnichannel is here. I think that BOPIS and Click and Collect are the most obvious forms of omnichannel. And frankly, my hope out of these studies has been to say here is a real view of the market. It's not an executive that claims they are doing this stuff. It is not research based on someone's opinion about whether they think they remember buying it this way from that particular retailer. This is actual hard-core real stuff. In other words, you could actually purchase this way through these 2000 retailers. And I'm hopeful that this is kind of a bit of a wake-up call for a lot of the industry. To say, as an industry we seem to think we are there. We are not. We are absolutely not there. I think as an industry we've got a lot of room to grow. I think a lot of retailers also need to absorb this, really let it sink in. To say we really have got to get on the ball here. Consumers are expecting this and we are not there. Specifically, right now when we are going through this tumultuous time. The whole industry is really at angst that Amazon is eating a lot of retailers' lunch. Things are going online, there are so many publications out there that are calling out the retail apocalypse. Well, I don't believe in the apocalypse. I think it is a transformational time. But at the same time, yes, it is transformational, and now's the time to actually change. Make that progress, invest in the right technologies to make this possible. Of course, we sell order management systems. That's the core of omnichannel, it just doesn't work without one. And I encourage retailers to pick up a copy. Read it for yourself. Compare your notes, in terms of what are you doing internally and be serious about it. Don't just take an executive view and say, yes, of course, we are doing this. When you go into it, it is not an ego thing. It is about looking at your customer, can your customer do that today? If they go online, could they do a pickup in store? Or not? And that is a real serious question. So I would say that this is the most important thing, it is a wake-up call. We are not there yet, ok, there is a lot of people in the UK that will argue with me, but for the rest of the world, we are not there yet. And we have plenty of room to grow. And I think the early adopters are really going to be the winners.

MCM eCommerce Operation Summit

Carla: So, Charles I believe you are actually chatting about this research live in April in Columbus, Ohio at the Operations Summit? Charles: Yes, I am actually. Thank you for bringing that up. I am really excited about that as well. So today, I spoke about this from a rather global perspective, all the countries. In Columbus, at the retail summit, in fact, what we are going to be talking about is, really diving into the US. Because that is a mostly US event, and most of the people there will be from the US. And we are going to dive into the US numbers, Omnichannel by the Numbers is what it is called. So if anyone out there hears this and is at the actual event, come up, introduce yourself, I love meeting people in person. If you are a LinkedIn connection, or on Twitter or listening to this podcast. All good and I would love to meet you in person. Carla: Perfect, so just to confirm, that is the MCM eCommerce Operation Summit and it is happening in Columbus, Ohio, from the 9 - 11 April. So if you haven't booked your spot yet, go online, do so and you will get to see Charles live at the event. So firstly, I just want to say thanks to Charles for joining us today and chatting with us about the Omni-2000. Charles: Good, and thank you, Carla, delighted to be here. Carla: Thank you so much. And I also wanted to say thank you to our listeners for listening to us today. Just a reminder the Omni-2000 reports are available under the resource section on the OrderDynamics website. So go online, get your copy, have a read through. This has been the Omnichannel Retailer, the podcast that delves into the omnichannel retail world every month. So make sure to look out for our next instalment coming out at the end of April. Until then, goodbye. Authors:  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.   Carla van Deventer is part of the OrderDynamics Marketing team. Her background in corporate communication and events helps her navigate the ever-changing retail tech world.
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