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Omnichannel and multichannel in e-commerce – how do these two approaches differ?
- Last update: 01.09.2023
- Published: 31.03.2023
- Read in: 5 min
Multichannel and omnichannel are terms frequently encountered in discussions about expanding e-commerce sales. The former denotes the act of selling or interacting through various channels, while the latter signifies seamless harmony and unification across all utilised channels. Although they’re sometimes used interchangeably, it’s important to note that omnichannel and multichannel marketing are distinct approaches within the realm of online marketing and sales strategies.
In this article we will describe:
- What is the exact meaning of the terms “omnichannel” and “multichannel”?
- How do these two approaches work in practice?
- What benefits do businesses gain from employing omnichannel and multichannel strategies?
What does a multichannel marketing strategy entail and how does the approach work in practice?
A multichannel strategy, or multichannel marketing, revolves around maximising outreach and engagement by utilising a diverse range of channels to address both communication and sales.
These channels encompass social media platforms, conventional media outlets, and various digital avenues, encompassing methods like affiliates, influencer marketing, email campaigns, price comparison sites, marketplace platforms, and several other sales channels.
However, the concept of multichannel marketing doesn’t account for how communication is constructed across these channels. Within this framework, separate and uncoordinated teams might oversee communication across channels. This setup can result in disparities in messaging, differences in visual branding, and conflicting information, potentially impeding customers from forming a strong connection with the brand and causing a decline in brand trust.
The multichannel strategy also overlooks the suitability of a sales channel for the brand, adding to the complexity of establishing consistent and effective communication.
To illustrate, a luxury product would probably not fit well within sales channels associated with lower-quality or essential items.
An interesting example of this is the perceived decline in the prestige of the WITTCHEN brand. Its products were made available at an attractive price in every bricks and mortar store of the Lidl chain. While the actual impact and financial outcome were likely positive, as indicated by the repetition of this approach, it remains a compelling showcase of the potential risks linked to this strategy.
These limitations and potential risks associated with the multichannel strategy can be tackled by the omnichannel approach, which we will now delve into.
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What does an omnichannel strategy hold for the e-commerce sector?
Comparing an omnichannel strategy to a multichannel one is like comparing a square to a rectangle.
Just as not every square is a rectangle, not every multichannel business qualifies as fully omnichannel. Yet, those enterprises guided by omnichannel principles usually naturally incorporate multichannel marketing strategies as part of their approach.
In e-commerce, the idea of omnichannel means having consistent communication and the seamless integration of data across all channels. Omnichannel requires a holistic approach, from choosing the right channels and maintaining consistent communication and visual identity, to implementing data analysis procedures that encompass all available sources.
This method involves employing a top-down strategy to fully exploit the capabilities of each channel, while also managing the holistic brand perception and customer experience, encompassing elements like customer service throughout every sales stage. In line with the omnichannel strategy, the different channels are expected to complement one another, working together seamlessly to accomplish the company’s objectives effectively.
When should you choose multichannel vs. omnichannel for maximum benefits?
A multichannel strategy aims to access the widest audience, prioritising channel diversity and reach.
This approach is simpler, however, the growing trend is the adoption of the omnichannel strategy by companies.
Unlike the focus on broadening reach, the omnichannel approach centres around enhancing the customer experience. The central priorities are the customers themselves, their shopping journey, and their perception of the brand.
To illustrate —an e-commerce company currently using a multichannel strategy decides to transition to an omnichannel approach. During this shift, it might discontinue numerous channels if they don’t align with the strategy or provide value.
In line with the omnichannel approach, to prioritise channels that are well-coordinated and seamlessly integrated, rather than dispersing efforts on less promising ones.
In practice, this could translate to limiting activities on chosen social media platforms like Facebook or TikTok, while giving greater weight to email marketing. Similarly, collaborations with marketing agencies could be ceased if they generate visibility without delivering anticipated financial returns or fostering a sufficiently positive brand image. Obviously, such decisions are consistently informed by data-driven research and the strategy derived from it.
Is adopting the omnichannel approach always the best way forward in e-commerce?
Omnichannel is commonly referred to as a forward-oriented strategy that optimises the sales possibilities of e-commerce, however, it is justified in specific situations.
A notable example is seen in the global expansion of e-commerce, where time frequently holds significant importance. In this scenario, rapidly entering a specific market might outweigh the necessity of establishing an intricate, polished (and consequently expensive) communication approach.
In this context, a notably pivotal factor revolves around ensuring efficient logistical, legal, and tax processes, such as foreign VAT registration and settlement. Subsequently, with additional revenues gained from foreign markets, companies can allocate more attention to communication-related matters.
Nonetheless, it’s difficult to contest the successes achieved by prominent e-commerce giants, which successfully implement the omnichannel strategy and build long-term customer relationships, providing excellent shopping experiences regardless of the channel. If the company has the necessary resources, this approach usually demonstrates the highest effectiveness.