Some retail thinkers and writers do not like the term omni-channel, feeling it is just another over-used example of business jargon. I don’t like jargon any more than anyone else, but after having done a ton of research on the current and future state of retail (for my upcoming book), I haven’t been able to find a better term. So, I’m sticking with omni-channel for now — it’s as good a term as any other to describe how shoppers interact with brands and retailers in multiple ways, electronic and physical.
Omni-channel is generally used to refer to brands and retailers selling in multiple channels, online and offline, as we’re discussing here. A related term, multi-channel, while similar, is more often used to refer to marketing channels. Marketing messages are distributed through different media types — the web — social media, youtube, websites, and T.V. and print etc. So, messaging can be multi-channel, whereas shopping in all its different forms is considered omni-channel.
Here’s a (simplified) diagram of how omni-channel works:
Retailers, Brands and Private Labels
Retailers have always been brands; Nordstrom, Macy’s, Walmart, Sears. And retailers have always created private label brands for products, too — Sears created Kenmore, its appliance brand, back in 1913.
Fashion brands like Ralph Lauren, Michael Kors sell both through other retailers, like Macy’s and through their own branded shops, too.
This is equally true of e-commerce.
Amazon has won the war for the hearts and minds of consumers for most online categories. Now they’re extending this dominance to creating their own private labels versions of products alongside established brands.
AmazonBasics, initially created for categories like batteries has now expanded to over 1,500 products. From luggage to car floor mats and sports equipment. Their Amazon Essentials brand is for generic clothing like underwear.
They’ve also created stylish brands that you wouldn’t know are owned by Amazon. Goodthreads, and Buttoned Down for men’s clothing. Ella Moon, Lark and Ro, and Paris Sunday for women’s wear. Scout and Ro is for children’s clothing. And they have different labels for many other categories, from linens (Pike Street), shoes (Franklin and Freeman) to cosmetics (Beauty Bar), furniture (Strathwood) and tools (Denali). And many others — read more here: “AmazonBasics is moving well beyond the basics” at QZ.com
Again, this is not a new strategy for retailers. Large retailers have always used their reach and traffic to create store brands for best-selling product categories. But with Amazon’s reach and amazing depth of consumer buying data, it’s a singularly powerful tool in their hands.
Togetherness — Brands and Retailers Work Together
Outside of the strictly Amazon retail-sphere, retailer and product brands are working together to stay relevant in an omni-channel world, and engage their consumers.
Best Buy, hosts brand showrooms for its large suppliers like LG, Samsung and Microsoft, that are paid for and staffed partly by the brands. Through their price-matching to competitors, Best Buy has re-built trust with consumers that they don’t have to just use the store to research a product — they can confidently complete their purchase with Best Buy.
UPPAbaby, a manufacturer of baby strollers, helps bring foot traffic to their retail partners stores. For example, they periodically arrange for in-store technicians, to provide stroller tune-ups to consumers. And their brick & mortar retail partners receive new product releases first, with only older models being sold through Amazon.
Running gear maker Brooks, owned by Berkshire Hathaway, Inc. works with local retailers to combine the richness of an in-store experience with online efficiency.
“In April (2017), Brooks launched a website that lets stores order products they don’t have in stock -and then drop-ships them directly to customers’ homes. The system reduces the likelihood that a retailer will take the time to fit a customer with the perfect shoe, but then lose the sale to an online competitor.”
Rick Wilhelm, Vice President of Sales for Brooks said: “There’s no way local stores can carry all five colors of our best-selling shoes,” said Mr. Wilhelm. The new site gives them “the long tail of the web.”
Swedish company Thule, a maker of bike racks, cargo containers and luggage, is another example. The brand doesn’t sell retail on its website. Instead they use a software product by Kibo that directs the shopper to the nearest physical re-seller store that has that item. The software assigns the sale to the most convenient local merchant for the shopper, putting the consumer at the center of the equation. Much like Uber provides the nearest available ride to the user (from ‘7 Strategies to loosen Amazon’s Grip’ in The Wall Street Journal).
The future of brands, retailers and tech companies, both online and off, will see many creative collaborations and partnerships to compete and stay relevant in the age of Amazon. What these strategies will have in common is that they’ll work with increasing flexibility across multiple channels — they’ll be omni-channel.