{"id":73847,"date":"2024-05-16T01:41:35","date_gmt":"2024-05-15T23:41:35","guid":{"rendered":"https:\/\/intellias.com\/?post_type=blog&p=73847"},"modified":"2024-07-11T13:51:09","modified_gmt":"2024-07-11T11:51:09","slug":"technology-behind-unified-commerce-approach-why-and-how","status":"publish","type":"blog","link":"https:\/\/intellias.com\/unified-commerce-linchpin-of-retail-longevity\/","title":{"rendered":"Unified commerce: The Linchpin of Retail Longevity"},"content":{"rendered":"

Shopping has become an ambient experience. Phone, tablet, a casual in-store visit, click-and-collect order \u2014 the number of touchpoints between retailers and consumers grows at breakneck speed.<\/p>\n

That should be a good thing because more engagement channels mean more sales and higher revenue.<\/p>\n

Yes and no.<\/p>\n

Omnichannel shoppers can spend 1.5X more<\/a> on groceries than in-store only shoppers, but they also spread their dollars to up to twice as many retailers.<\/p>\n

Rising costs of living, paired with a never-before-seen abundance of product and choice accessibility, make consumers more selective with how, when, and where they shop. We browse and research when in-store. Purchase online and return in-store, only to grab another item on the go.<\/p>\n

At every step of this circular offline to online and vice versa journey, consumers expect to receive delightful, personalized experiences. Or else they\u2019ll take their money elsewhere.<\/p>\n

To survive and thrive in this multi-touch, experience-led environment, retailers need a unified commerce strategy.<\/p>\n

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What is unified commerce (and what it\u2019s not)?<\/h2>\n

Unified commerce is a tech-led strategy for integrating multiple sales channels (in-store, web, mobile, and social) into a single platform to create homogenous customer experiences across every touchpoint.<\/p>\n

In this context, a unified commerce experience is less about giving shoppers more channels to engage with and more about ensuring consistency in brand interactions and sales experiences.<\/p>\n

In a unified setup, customers get the ability to effortlessly switch between channels, payment, and delivery methods. While the retailer maintains a 360-degree view of their identity and can offer personalized service wherever and whenever they need it.<\/p>\n

Simply put, unified commerce fills in the gaps in data visibility, process execution, and technology that stand in the way of delivering better customer experiences.<\/strong><\/p>\n

Retailer processes are spread across multiple disjoint systems (POS, inventory management, RAMA, ERP, and so on), which don\u2019t \u201cspeak\u201d with each other. And neither do the teams working at the front and in the back of different locations and in charge of multiple digital channels.<\/p>\n

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76% of customers expect consistent interactions across departments, yet 54% say it generally feels like sales, service, and marketing teams don\u2019t share information.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t Salesforce<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

For shoppers, this type of informational asymmetry translates into poor online and in-store experiences: frequent product stock-outs, no personalized promotions, poor assistance in-store, and other mild unpleasantries that prevent conversions.<\/p>\n

For retailers, a lack of end-to-end visibility and process execution means higher operating costs, higher customer acquisition costs, declining sales figures, and low workforce performance.<\/p>\n

The end goal of every unified commerce strategy is to bring together all aspects of brand marketing, merchandising, promotion, inventory management, and payment experiences under a single, data-driven platform that powers all retail operations.<\/p>\n

Omnichannel vs unified commerce: The evolution paradigm<\/h3>\n

\"The<\/p>\n

To frame the discussion about why unified commerce is the next evolutionary step in retail,<\/p>\n

let\u2019s pedal back to the past for a moment.<\/p>\n

Modern retail has been booming for over a hundred years. Though the premises stayed largely the same \u2014 exchanging goods for money \u2014 the process of how we shop evolved a lot.<\/p>\n

In the early 20th century, department stores emerged in big metropolises. The concept of \u201cthe customer is always right\u201d<\/em> became popular and retailers rushed to bedazzle shoppers with art-deco interiors, gourmet restaurants, and an army of knowledgeable floor-walking assistants.<\/p>\n

By the mid-20th century, networks of retail chains sprawled across the continents, targeting a growing segment of middle-class buyers, who shop regularly for necessities and pleasure. Consumerism and conspicuous consumption flourished as global economies picked up speed.<\/p>\n

Once home computers became a thing in the 1990s, some savvy retailers thought: why rush people into stores when you can reach them from the comforts of their homes? Depending on whom you ask<\/a>, the first-ever eCommerce sale was made either by Dan Kohn \u2014 an amateur merchant who sold a music CD to his friend online \u2014 or by The Internet Shopping Network \u2014 an online website, selling computer equipment. Thus, began the era of multichannel retail.<\/p>\n

By 2000, global eCommerce revenues crossed the $286 billion<\/a> mark, with the US alone generating $10 billion<\/a> in online sales during Q4 2001.<\/p>\n

Onward, digital shopping saliently keeps eroding traditional retail. Mobile commerce (m-commerce) came to be as smartphones got bigger glossy screens. In 2015 alone global mobile commerce sales grew by 68%<\/a>, reaching $155 billion, with emerging markets in China, Eastern Europe, and LatAm showing the highest growth rates.<\/p>\n

Social media networks, seeing the surging interest in online shopping, quickly jumped onto the bandwagon. In 2016, Facebook launched Marketplace. Pinterest and Instagram shortly came through with their \u201cshoppable\u201d content formats. TikTok now has TikTok Shop. YouTube has Youtube Shopping.<\/p>\n

The Internet slowly evolved into one giant shopping mall and retailers rushed to capitalize on all the new opportunities available for targeting, nurturing, and selling to consumers.<\/p>\n

By 2015, the era of omnichannel commerce started to gain shape.<\/p>\n

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A 2017 study of 46,000 US customers found that only 7% were online-only shoppers and 20% were store-only shoppers. The majority (73%) were omnichannel customers.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t <\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Omnichannel commerce emerged as a multi-channel sales approach, where retailers<\/p>\n

expand their presence across channels to support more complex customer journeys.<\/p>\n

But in the pursuit of more channels, retailers inadvertently created an unhealthy dynamic of the digital channel(s) becoming a bolt-on to much older, brick-and-mortar-focused operations. Insufficient integration between channels posed inventory management and data synchronization challenges. Channel conflicts started to emerge within larger retail companies, with competition being even more intense with the outside world.<\/p>\n

Moreover, digital channels were growing more expensive to maintain and the promised ROI of \u201chigher sales volumes\u201d and \u201cstronger conversions\u201d failed to materialize.<\/p>\n

The great promise of omnichannel retailing for consumers was a smooth transition between digital and physical shopping. Yet, retailers couldn\u2019t figure out how to deliver it.<\/p>\n

A 2016 study<\/a> by McKinsey found that only 21% of retailers considered delivering \u201ca unified multichannel experience\u201d to their shoppers, whereas 79% were either \u201cstill figuring that out\u201d or \u201cgetting there\u201d.<\/p>\n

The top-three roadblocks to implementing omnichannel experiences were missing customer analytics capabilities across the channels (66%), siloed organization (48%), and poor data quality (45%).<\/p>\n

OK, but surely with all the titanic shifts in eCommerce (especially post-pandemic), matters got better?<\/p>\n

Not quite.<\/p>\n

Retailers still struggle to get omnichannel right. A 2021 study<\/a> by Forrester said that 85% of Canadian retailers still lack a seamless omnichannel experience. The reason? Inability to extract actionable insights from available customer data.<\/p>\n

The 2023 Omnichannel Retail Index<\/a> by OSF Digital, which benchmarks the performance of 115 leading U.S. global retailers, found that most companies scored an average of 60% across the adoption of best practices.<\/p>\n

\"The<\/p>\n

Source: OSF Digital \u2014 2023 Omnichannel Retail Index<\/a>.<\/em><\/p>\n

What\u2019s interesting is that some ratings have dropped compared to 2022, which means that retailers struggle to meet evolving customer expectations.<\/p>\n

Issues around data availability, tech constraints, and siloed retail systems are known constraints. But the ever-evolving retail landscape throws new challenges to the mix: logistics issues, rising inflation, labor shortages, and increasing supply-side costs.<\/p>\n

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CIOs are facing increased pressure to deliver digital dividends here and now<\/strong>. They must focus on technological innovations with proven ROI potential to engrain the future digital vision in different parts of the enterprise.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t Four Components of Successful Retail Transformations eBook <\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Unified commerce emerged as this strategic shift in focus from deploying more channels to ensuring that they work best in unison. It\u2019s a cultural and technological merger of previously disparate processes into one data-driven operational ecosystem.<\/p>\n

Key differences between omnichannel vs unified commerce<\/h2>\n

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\n\n\n\n\n\n\n\n\n\n
<\/td>\nOmnichannel commerce<\/th>\nUnified commerce<\/th>\n<\/tr>\n<\/thead>\n
Approach<\/strong><\/td>\nMulti-channel availability, achieved with surface-level integrations.<\/td>\nConsolidation of all channels into an integrated operating system.<\/td>\n<\/tr>\n
Data visibility<\/strong><\/td>\nFragmented and siloed between teams, channels, and markets.<\/td>\nComplete view of the business available to every division.<\/td>\n<\/tr>\n
Integration<\/strong><\/td>\nChannels operate largely independently, with ad-hoc data exchange processes in place.<\/td>\nFull integration of all channels and business systems through a shared data exchange platform.<\/td>\n<\/tr>\n
Customer experiences<\/strong><\/td>\nStronger emphasis on channel-specific optimization with seamless transitions being a secondary focus area.<\/td>\nStronger emphasis on personalization and consistency of customer experiences across all channels.<\/td>\n<\/tr>\n
Scalability<\/strong><\/td>\nDeployment of new channels requires extra integration efforts.<\/td>\nDeployment of new channels and touchpoints can happen at faster speeds.<\/td>\n<\/tr>\n
Tech infrastructure<\/strong><\/td>\nA portfolio of often disjoint business systems for different channels and functions.<\/td>\nA platform of loosely-coupled, yet fully integrated software modules.<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

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Three pillars of unified commerce strategy<\/h2>\n

In today\u2019s setup, we have retailers with multi-market branches, spanning continents, and ever-growing tech portfolios of \u201csolutions\u201d for this or that.<\/p>\n

On the other hand, there are shoppers for whom it\u2019s the quality and convenience of brand interactions that matter\u2014not how or where they are delivered.<\/p>\n

The goal of a unified commerce strategy is to fill in the experience lacunas left by earlier omnichannel efforts to enable seamless, bilateral passages between online and offline channels.<\/p>\n

In this way, unified commerce promotes a more holistic approach to organizing retail processes and tech architecture for supporting them.<\/p>\n

Unified front- and backend\u200b operations<\/h3>\n

Consistent experience between in-store and digital channels is one of the key components of unified commerce delivery. Frontline employees are as knowledgeable as online help resources. Products can be purchased off-the-shelf, ordered for delivery, or programmed for in-store pickup.<\/p>\n

Uniformity is what modern shoppers expect. Among US B2B customers, 80% say that they will search for another supplier if the \u201cability to purchase from any channel\u201d<\/em> or \u201cconsistent experiences across channels\u201d<\/em> are not present.<\/p>\n

\"<\/p>\n

Source: McKinsey \u2014 B2B sales: Omnichannel everywhere, every time<\/a>.<\/em><\/p>\n

Haphazard adoption of digital channels and lack of alignment between front-end experiences (e.g., customer service, assortment selection, promotions), and backend processes (e.g., inventory management, pricing strategy, delivery management) prevent retailers from delivering on that want.<\/p>\n

Let\u2019s picture Janine, an average shopper, looking to buy new cleaning supplies for her business.<\/strong><\/p>\n

She\u2019s busy and wants to get all the wares she needs from one place. When she checks with the first retailer, no product stock information isn\u2019t available online. She doesn\u2019t want to waste time on a pointless in-store trip.<\/p>\n

The second retailer says she can order all of the selected goods for click-and-collect on the product page, but during checkout, several products in her basket aren\u2019t available at the selected store.<\/p>\n

Frustrated, Janine goes with her third contender. Their prices are higher, but the website immediately tells her which products she can pick up in a nearby store on the next day. For the remaining items on her list, the app offers to place an in-store delivery within two days.<\/p>\n

When Jamie arrives to pick up her consolidated order, she chats up with the store assistant, who suggests a couple more goods for her business (using the order information) and Jamie buys those recommendations on the spot.<\/p>\n

One in three<\/a> consumers says they will shop again with a brand if they had a good experience, even if there are cheaper or more convenient options. Moreover, consumers are ready to pay up to 16%<\/a> in price premiums for better customer service.<\/p>\n

To deliver better CX, the customer front end and the retailer back end need to be technologically aligned. In other words, the backend systems must be designed to support desired customer experiences, rather than just exist to power standard operating procedures.<\/p>\n

Customer experience alignment on the technology level<\/h4>\n

 <\/p>\n

\n\n\n\n\n\n\n\n\n\n\n
<\/td>\nFront-end (Customer)<\/th>\nBack-end (Retailer)<\/th>\n<\/tr>\n<\/thead>\n
Merchandising<\/strong><\/td>\nGood product selection, personalized recommendations; ability to easily locate preferred goods.<\/td>\nLocalized product assortment per branch, optimized product selection by channels, analytics-driven up-sells\/cross-sells.<\/td>\n<\/tr>\n
Inventory<\/strong><\/td>\nOption to verify product stock online\/in-store, timely re-stock updated, alternative ordering options (\u201cendless aisle\u201d)<\/td>\nUnified inventory management system, demand-driven stock planning, timely re-stocks, driven by real-time sales data.<\/td>\n<\/tr>\n
Labor<\/strong><\/td>\nCompetent assistance is available in-store and online. Tailored advisory, based on preferences, past purchase history, and loyalty status.<\/td>\nCRM system offers a 360-degree view of the customer, integrated with customer service tools and in-store customer\/employee devices.<\/td>\n<\/tr>\n
Pricing<\/strong><\/td>\nFair, competitive prices. Relevant sales offers and promotions.<\/td>\nDynamic pricing software with advanced sales forecasting and price optimization capabilities.<\/td>\n<\/tr>\n
Scalability<\/strong><\/td>\nDeployment of new channels requires extra integration efforts.<\/td>\nDeployment of new channels and touchpoints can happen at faster speeds.<\/td>\n<\/tr>\n
Fulfillment<\/strong><\/td>\nWide selection of delivery methods. Efficient order pick-up experience.<\/td>\nIntegrations with multiple 3PL and logistics partners; data-driven in-store fulfillment hub.<\/td>\n<\/tr>\n
Returns<\/strong><\/td>\nEasy, channel-agnostic return experience. Fast refunds.<\/td>\nStrong reverse logistics function, and instant payment processing.<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

 <\/p>\n

Experience-led\u200b<\/h3>\n

In a typical retail landscape information circulates in silos. For example, order information is stored separately from the data about the customer who placed it. Because different retail teams lack visibility into data they cannot deliver seamless, consistent experiences that modern shoppers desire. Moreover, data disparity creates operational issues.<\/p>\n

Let\u2019s take deadstock \u2014 a pervasive industry issue. Everyone knows why it accumulates (over-supply, poor merchandising practices, subpar demand predictions, etc). But far fewer retailers know how to combat it effectively.<\/p>\n

Why? Because they struggle to understand what their customer bases want on market-, channel-, and even -store levels.<\/p>\n

Unified commerce solutions tackle the visibility problem in two ways:<\/p>\n