Multichannel vs Omnichannel Retailing: What is the Difference?

In the world of retailing, ‘multichannel’ and ‘omnichannel’ are two buzzwords that have gained much prominence lately. For the uninitiated, they may mean the same thing. However retail professionals understand and appreciate the difference between multichannel vs. omnichannel retailing and know that they represent distinct approaches to retail strategy. 

Multichannel Retail and Omnichannel Retail have their share of similarities too and it is easy to get confused. In this article, we shall examine how both these strategies differ in crucial ways and which strategy to choose based on your unique situation and retail planning.

Omnichannel and Multichannel - Buzzwords in Retailing

Both multichannel and omnichannel have the term ‘channel’ at its core which is the medium through which a business or a brand communicates with its target audience and customers.

There are two different types of channels when it comes to omnichannel and multichannel - Marketing channels and Customer contact channels. Channels can act as the medium for both marketing and contact in many cases. This dual functionality of channels needs to be clear before understanding how multichannel and omnichannel retail operate.

The medium through which a business or brand promotes its products and grows awareness is the marketing channel. Customer contact channels are the channels through which a customer can get in touch with a business.

A company website, billboards, physical store, media advertisements and packaging are all marketing channels. Examples of customer contact channels include emails, phone calls and chats.

Now, let us understand multichannel retail strategy and omnichannel retail strategy separately and later compare and contrast the two.

What is Multichannel Retailing?

In a multichannel marketing strategy, a business or brand uses multiple channels to market, sell and interact with its customers and target audience. Multichannel retail strategy is a part of the multichannel marketing approach where the products are sold or listed on more than one channel. 

The most important aspect to understand is that these multiple channels may not be integrated with each other. Their focus is not on providing a seamless experience but on reaching as many audiences as possible through different channels which can include websites, physical stores, mobile apps, social media and so on. 

Characteristics

The core characteristics of a multichannel retail strategy are;

1. Channel silos

In Multichannel retailing, each channel is treated as a separate entity with its own strategy, pricing, promotion and inventory. The focus is on making the channels individually engaging and easy to use for its customers. 

2. Limited cross-channel integration

The integration between various channels in a multichannel strategy is limited. This leads to a lesser cohesive shopping experience as data and information are not seamlessly shared between channels.

3. Inconsistent customer experience

Due to inconsistencies in promotion, pricing and product information on different channels, it may not be a smooth transition for customers in between channels. It may sometimes result in a frustrating shopping journey for the customer. 

4. Focus on channel performance and quantity

The focus in the multichannel retail approach is on the individual performance of each channel. Their Key Performance Indicators such as social media engagement, online sales, sales traffic and so on are tracked separately. This may lead to competition and not collaboration between channels.

Multichannel Advantages vs. Disadvantages 

Some of the advantages of a multichannel retail strategy are;

• Offers multiple touchpoints for customer engagement

• Different target segments can be flexibly catered to

• The reach and visibility in multichannel is greater

• Acquiring new customers is easier

There are many disadvantages of the multichannel approach as well. These include;

• The integration between different channels is limited

• Customers may not have a very pleasant experience while shifting between channels due to inconsistencies in their approach.

• It is difficult to track and measure performance as the strategy of each channel differs

Multichannel Example

Walmart is a good example of a multichannel retail strategy. It has various channels such as its physical stores, online platform and its mobile application. 

While they do offer integration between their channels, customers often find a difference in the prices and product availability between their physical stores and online stores. 

What is Omnichannel Retailing?

An omnichannel retail marketing strategy is a customer-centric approach that integrates multiple channels and delivers a consistent brand experience across all its channels such as its physical store, apps and its website. 

The omnichannel retail strategy is to create a unified and seamless shopping experience for its customers by integrating all its channels. Since a consumer shifts between channels and devices throughout the day, this strategy ensures a seamless experience and that the customer does not get confused or lost while switching between channels.

The focus of this approach shifts from individual channels to a customer’s shopping experience.

Characteristics

An omnichannel retail strategy is characterised by the following;

1. Channel integration

The cornerstone of an omnichannel retail strategy is to integrate all its channels to provide a unified experience to its visitors and customers. When a customer visits any of these channels, they should encounter the same product information, promotions and pricing.

2. Seamless customer experience

Customer-centric approach is the key to an omnichannel strategy. The goal is to maximise customer experience so that every interaction across channels feels like a unified experience for the customer. 

3. Convenience 

Providing enhanced convenience is of paramount importance in omnichannel retail strategy. A customer can pick up on one channel where they left on another. 

For instance, a consumer can express an interest in a product on the business website, choose to buy it from the online marketplace and get it picked up from the physical store without having to repeat the steps.

4. Focus on quality of interaction

The focus of the omnichannel retail strategy is on the quality of the interaction of a customer rather than the quantity of customers reached. 

Omnichannel Advantages vs. Disadvantages 

The advantages that an omnichannel retail strategy offers include;

• A much-enriched customer experience leading to customer satisfaction and loyalty

• Lesser card abandonment rates with much higher chances of purchase

• A better collection of data and analysis of customer tastes and preferences

• Better sales and revenue as a result of a unified approach 

• Easier retail supply chain management

No strategy is without its disadvantages. The disadvantages of this approach are;

• A complex implementation and management

• Technology investment and upgradation costs are higher

• Business restructuring may be necessary

Omnichannel Example

This approach can be understood with the example of Apple Inc. It operates both online and physical stores. It also sells through third-party marketplaces such as Amazon, eBay and other country-specific platforms. 

Customers can pick any channel to purchase an Apple product. They can research on one channel while buying on the other. For example, they can do their research on its website, then use their mobile to find a retail store near them and then finally buy the product online.

The entire experience will be consistent and cohesive in terms of product pricing, availability and information. 

Multichannel vs. Omnichannel Retailing: Key Differences 

As we now have a clear understanding of multichannel and omnichannel retailing, let us differentiate between the two based on key factors. 

1. Engagement vs. Experience

The multichannel approach is focused on enriching customer engagement by providing them with as much information as possible about the product at multiple touchpoints. The aim is to help customers find products they want and let them purchase at channels they are comfortable with.

The omnichannel approach on the other hand focuses on providing a seamless and consistent experience to the customer by leveraging different channel capabilities. 

2. Channel-centric vs. Customer-centric

Another key difference is the focus of the multichannel retail strategy on channels. By using a maximum number of channels the aim is to promote a brand and provide the consumer more choices to engage with the business. 

The focus of the omnichannel retail strategy is on customers by providing them with an optimal experience as they switch between channels. The objective is to reduce friction between different channels and provide a cohesive journey to the customers.

3. Quantity vs. Quality

This is another pivotal difference between multichannel and omnichannel. The multichannel retail strategy is centred around increasing the quantity of channels and hence increasing the reach. 

This strategy allows the customers to choose how they want to engage with the business. However, they will have to start from the beginning if they switch to other channels as the channels are not integrated.

Omnichannel retail distinguishes itself based on the quality of support offered. A customer may move from one channel to another without having to start over as the channels are integrated.

Multichannel vs. Omnichannel Retail Strategy - How to Choose

Here are some parameters on the basis of which you can make an informed decision on which retail strategy to pursue.

Retail objectives

Based on the retail objectives of your business, you can choose which strategy to follow. For instance, if you are looking to offer a seamless shopping experience to your customers, omnichannel should be your choice. If your objective is to drive sales growth through multiple channels, a multichannel retail strategy is more suitable for you.

Customer base

An understanding of your target customers is also an important factor which will help you to decide. Factors such as customer behaviour, tastes and preferences, demographics and so on need to be considered as well. A younger customer base is more likely to prefer omnichannel while mature customers are more likely to be attracted by multichannel strategy.

Resources

The choice of multichannel vs. omnichannel retailing is also dependent on the availability of resources such as financial, technological and human. Omnichannel strategy often requires substantial investment, a higher level of staff expertise and technological sophistication. If resources pose a challenge, multichannel is a better choice.

Organisation Structure 

Omnichannel retail strategy requires a more flexible organisation structure compared to multichannel retail strategy. So your current organisation structure and whether you are willing to change to suit it to the retail strategy of your choice is also an important decision. 

Key Takeaways

Both multichannel and omnichannel retail strategies have their share of advantages, disadvantages, challenges and opportunities.

So, understanding the difference between multichannel vs. omnichannel retailing is crucial before choosing the retail strategy that aligns with your business objectives and future aspirations.