Multichannel vs. omnichannel ecommerce: Understanding the differences...

The traditional retail business has been evolving quickly in the last few years and has gradually been moving towards the digital realm, especially after COVID-19. Some brands have been able to keep up with the evolution and undergo digital transformation processes, while some others have been left out.

Technology played a huge role in this evolution by changing people’s consumption habits and preferences around the world. In turn, traditional retail brands were forced to open new sales channels to cope with their customers’ needs: creating proprietary ecommerce websites, setting up their own marketplaces, integrating into third-party marketplaces like Amazon, implementing conversational commerce via messaging apps, as well as social selling via social media platforms — and plenty of others. In a nutshell, from what used to be a single sales channel, there is now an explosion of channels. 

With so many new sales channels, businesses had to consider not just kickstarting them, but also managing them afterward. And when it comes to channel management, an omnichannel approach is nowadays the go-to strategy for brands and retailers. 

To understand why, we’ll deep dive below into the correct terminology for sales channels, omnichannel retail and also multichannel operations, highlighting similarities and differences and setting the record straight.

What is a sales channel?

According to the Gartner Glossary,a sales channel is how a business goes to the market to sell its product.

Traditional sales channels involved physical spaces (the so-called brick-and-mortar stores) until the early 2000s when ecommerce began to grow exponentially. From that point onward, sales channels have become more diverse and moved from the physical to the digital world.

The pandemic just made digitalization more necessary than ever when people had to resort to online shopping, therefore accelerating previous trends. According to this eMarketer article, ecommerce grew more than 30% in 2020 just in the US and the positive trend has continued ever since, with projections for a 120% increase on the global ecommerce market between 2019 and 2025, according to Statista. 

These new digital sales channels represented a challenge for businesses that had to design and put in place new strategies to attract new customers while retaining existing ones.

Enter multichannel ecommerce — what is it?

Multichannel ecommerce is a strategy that allows your customers to buy your product through multiple channels. These channels usually include physical stores, online stores, mobile applications and digital marketplaces (such as Amazon or Alibaba).

Customers will often do some research about your product online and then decide what channel they want to buy it from. For example, a customer may go to your website to check the features and price of your product, but then decide to visit a physical store to make sure it’s the right color or size.

By adopting multichannel ecommerce, you give your customers the power of choice so they can jump from one channel to another that fits their needs. Nowadays, customers expect that sort of flexibility. 

But multichannel ecommerce has some downsides too. For instance:

• Individual sales channels are usually not connected, so the experience tends to be different between them and there’s no cohesive customer journey;
• Some management systems are channel-specific, so it requires a lot of effort to make them “talk” to each other;
• Each channel keeps its own inventory, which makes logistics and planning absolute nightmares.

As you can see, multichannel ecommerce offers variety, but lacks operability. So what to do?

Omnichannel ecommerce as the solution 

Omnichannel ecommerce puts customer experience in the center of your operation. It takes the best from a multichannel strategy and leverages technology to deliver a consistent and seamless experience to your customers while simplifying your operation.

How does this benefit your business?

To highlight just some of the advantages:

1. Your omnichannel customers can now research your product on their laptops, buy on their mobile phones and pick orders up in-store. They can even start a cart in one medium, leave it hanging for a couple of days and place the order for it in another environment — all this while providing a consistent shopping experience at every touchpoint;
2. You keep your brand message and look-and-feel consistent across channels;
3. Your management systems are interconnected and the same information flows between them, adding enhanced operability and bringing actionable business insights;
4. The same inventory is shared by all channels, which improves demand planning and optimizes your logistics, with options like pick-up in store, ship-from-store and ship-to-store now at your disposal.

Drawing the line

As you can see, both multichannel and omnichannel sound very similar, but there are some key differences. To make it simple, multichannel is about choice and convenience, while omnichannel is about experience and integration. 

You decide what your business needs — and the better you want your experience to be, the greater the associated budget — but remember that customers desire to have a personalized experience and to interact with your brand as if it were a single channel (“the brand channel”) with numerous interconnected touchpoints. And that’s, bottomline, the omnichannel experience. Ready to go omnichannel? Then get in touch with our digital commerce experts.

Written by Omar Trejo

Omar is a business administrator with a deep interest in ecommerce and digital transformation. He has a solid background in the tech industry and currently helps LATAM customers get the most out of the VTEX platform.