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Omnichannel vs. Multichannel: Key Differences Explained

Today’s customers expect a seamless brand experience — no matter where, when, or how they shop. From store aisle to online cart, they want their preferences and purchase history to follow them for one personalized, hiccup-free experience.

They’re not alone. An impressive 90% of retailers say omnichannel is a must. But an aggressive omnichannel strategy isn’t right for every brand. The cost and complexity can be out of reach for some, and a poorly executed plan can actually hurt your company’s value

Depending on your current growth phase, a multichannel approach may make more sense.In this article, we’ll take a closer look at the key differences between an omnichannel and multichannel retail strategy to help you make the choice for your business.

Omnichannel vs. Multichannel Retail

  • What Is Omnichannel Retail?
  • What Is Multichannel Retail?
  • Examples of Omnichannel vs. Multichannel Retail
  • Omnichannel vs. Multichannel Retail: Key Differences
  • Multichannel vs Omnichannel: Which Is Right for Your Business?

What Is Omnichannel Retail?

Omnichannel retail is a customer-centric strategy that unifies a brand’s sales channels with a streamlined message and brand experience. No matter which touchpoints a user interacts with, their data is shared across channels for optimal customer engagement.

Data, shopping carts, and purchase histories are synchronized across platforms and marketing channels. Inventory is synchronized and products ordered online can be picked up in-store and vice-versa.

The omnichannel experience can be unified across every available channel, including:

  • Physical stores, showrooms, and pop-up locations
  • Company websites and mobile apps
  • Social media channels
  • Targeted e-mails and click-through pages
  • Chatbots or AI search interfaces
  • SMS or WhatsApp message shopping
  • Branded storefronts at online marketplaces

A flagship element of an omnichannel strategy is that it equips the consumer to make informed buying decisions. Product recommendations and other personalized elements flow instantly across each interface. The experience is optimized and personalized to the consumer’s taste, via purchase history, demographic data, first- and third- party data, and more.

The Benefits of Omnichannel Retail

  • Deep personalization: Personalization across multiple channels helps you forge deeper connections with customers. As you gain shoppers’ trust, you become a go-to resource, helping guide future decisions and increase repeat purchases.
  • Increase brand loyalty: Omnichannel shopping is no longer a nice-to-have, it’s expected. By giving shoppers the flexibility and choice they want, you can position your brand for long-term customer loyalty.
  • Boost your revenue and profits: When customers feel valued, they spend more. Research has found that customers who use four or more channels may spend 9% more in-store.

The Drawbacks of Omnichannel Retail

  • Setup can be costly: Building an omnichannel infrastructure is no overnight endeavor. It can take significant investments in market research, high-tech solutions, and expert consultants to give your brand the best chance at success. These costs can initially cut into your margins and bring down profitability if sales volumes aren’t high enough.
  • Your message needs to be top-notch: Since omnichannel retail relies on open communication across channels, there’s a greater chance of inefficiencies and glitches. Tech issues can crop up, interrupting data sharing between channels, hindering user experience, and potentially frustrating your customers.
  • Increased security risks: With the perks of sharing data across channels comes the added responsibility of keeping security super tight. Data breaches not only break trust, but can be devastating if share prices drop or costly lawsuits arise.

What Is Multichannel Retail?

Multichannel retail refers to using multiple channels to sell your goods and share information about your brand online. Unlike omnichannel, these channels operate independently, meaning they are not integrated into one streamlined customer experience.

In a traditional multichannel setup, each sales avenue may have its own look and objective. For example, your website, Amazon store, Walmart shop, and brick-and-mortar locations could each have different goals, backend strategies, and even branding.

As e-commerce evolves, the look and feel of each channel in a multichannel strategy has become easier to streamline. However, because data isn’t automatically shared between channels, the customer journey remains disconnected.

The Benefits of Multichannel Retail

  • Attract new customers quickly: If you’re looking for a quick and relatively cost-effective way to gain customers and sales, multichannel retail can be a solid option. On some platforms, you can get set up in a matter of hours. 
  • Expand your brand reach: With each new channel, you can gain new data on your audience to further optimize your strategies and grow your sales across channels.
  • Get ahead of the competition: More products on more channels not only makes your brand more discoverable, it can also help put you on the radar with shoppers who regularly purchase from competitors.

The Drawbacks of Multichannel Retail

  • Learning new channels can be tricky: What works for one e-commerce marketplace might not work for another. You’ll need to learn the different rules, tactics, and fee structures to make your store successful on each platform.
  • Greater complexity: While it’s not as complicated as an omnichannel strategy, more sales channels still means more complexity. To protect the customer experience, you’ll need a strong plan for managing your new multichannel retail operations.
  • Inventory can be a challenge: Since your sales channels aren’t connected, you’ll need to spend extra time on inventory management — or invest in streamlined tools to monitor your inventory levels and fulfillment. Without the right systems in place, you could find yourself out of stock on one channel and overstocked on another.

Examples of Omnichannel vs. Multichannel Retail

Appliance brands like Cuisinart, Instant Pot, and SharkNinja make great examples of strong multichannel retail strategies. These brands are wherever the customer might want them, whether they’re browsing the aisles of Target or Best Buy, scrolling through social media, searching Amazon or Walmart.com, or going to a DTC site.

On the one hand, you’ve made it that much easier for customers to come into contact with — and purchase — your product. On the other hand, you lose some consistency and control over their overall experience of your brand. Your customers might find different prices, delivery times, or have less pleasant customer interactions depending on the channel.

For brilliant omnichannel strategy, look to brands like Apple and Lululemon, who have mastered the art of knowing the ins and outs of customer history and preference.

At Apple, the online and in-store experiences are seamlessly integrated. Buying a product and picking it up or having it serviced in-store are as simple as a few clicks. Apple also collects a wealth of customer data, making it easier for store associates to personalize interactions and view past purchases.

Lululemon maintains easily accessible virtual records of customers’ in-store and online purchases. Even if a user has never interacted with Lululemon’s app or website in the past, they can go online, download the app, or look at a store employee’s tablet and see exactly what’s in their virtual “closet” of past in-store purchases. The customer doesn’t need to remember their favorite size, cut, length, color, or fabric.

Omnichannel vs. Multichannel Retail: Key Differences

Multichannel RetailOmnichannel Retail
CostsStartup costs are only as high as each new channel you add. You can add incrementally, investing in one new channel at a time.Overhead costs on tech and staffing can be significant, and many come all at once.
Time to LaunchNew channels such as marketplaces, social media stores, and Shopify website integrations can be added quickly.A documented omnichannel strategy can take months to develop. It may also require the help of external experts and technical tools.
InventoryCustomer data is available from all channels, but silos and lack of inventory automation can lead to poor customer experience or fulfillment issues.Customer data and inventory levels across all channels are seamlessly integrated, accessible from every access point, and updated in real-time.
Customer Acquisition and RetentionAdding channels immediately increases visibility and can help you reach new customers.Strength of engagement leads to higher brand loyalty, customer retention, and conversion rates.
Cohesiveness vs. ExperimentationCan experiment with different techniques from channel to channel, and see what works best.Requires one deeply cohesive vision for your brand.

Multichannel vs Omnichannel: Which Is Right for Your Business?

Both omnichannel and multichannel strategies come with advantages and disadvantages. 

The approach you choose will depend on your brand’s budget, market share, resources, product portfolio, and more. Here are some key questions to consider to help you make the right choice for your business.

What are your customer goals?

Are you looking to widen your overall customer base? Or is customer loyalty and retention higher up on your agenda?

To gain visibility and attract more customers, a multichannel approach can be faster and more effective. However, an effective omnichannel strategy can help you retain up to 89% of your shoppers and drive more value over time.

How much time can you invest?

Either option will require a time commitment. Assess how many hours you and your team can realistically dedicate to handling the transition and managing more channels long-term.

Don’t forget to think about how you’ll cope during peak seasons and major shopping events, like Black Friday Cyber Monday (BFCM).

What’s your budget?

Whether you go omnichannel or multichannel, you’re going to need some budget set aside to get set up and cover additional expenses such as subscriptions, marketing, and administration costs until you start seeing increased sales and ROI.

The initial overhead of adopting an omnichannel strategy may mean significant investments in your infrastructure and tech stack, including hiring additional expertise to manage them.

The “Right” Way to Grow

Whether you’re expanding to exciting new channels or totally overhauling the way your customers interact with your brand, the only “right” choice is the one that helps you grow your business the way you want.

To succeed with a multichannel or omnichannel retail strategy, you’ll need a thorough understanding of the commitments, costs, and resources involved. From additional inventory to tech investments, or even opening your first physical store, you’ll also need consistent capital to drive growth.

Once you’ve chosen the right strategy for your business, flexible funding can help you make it happen. For more growth strategy insights, check out our resources library. Or learn more about how SellersFi’s full suite of e-commerce finance solutions can support you as you scale.

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