Tag Archives: Amazon

Revenge of the Brick and Mortar Stores: Omni-Channel Retailing

In this ever evolving world of supply chain every new initiative offers the promise of a better tomorrow. The only problem is that this tomorrow comes a tad too soon and quickly drops out of public memory. Terms like XML, CPFR and other such hyped initiatives have become so commonplace that they are now relegated to the supply chain history text books. One such term that is currently making waves alongside the elephants (Hadoop) and monsters (Big Data) is the Omni-Channel Retailing. Haven’t heard of it yet? Kind of rings a bell but the meaning doesn’t quite cut it? Yes i had that same feel as well when i heard the term for the first time. Omni-channel retailing is the next step in the evolution of multi-channel retailing. It refers to providing the consumer a seamless experience across all available channels.


But why this omni-channel retailing for the regular consumer? Is this a real thing or just another ethereal concept that consultants spew to make companies invest in new technology? What has changed? The answer is you have changed. The way you have shopped has changed. The way you decide what to buy has changed. The way companies influence your purchase decisions have changed. And chances are, that you are COMPLETELY unaware of this. Time to look into the mirror and find a new “You” – the omni-channel consumer. And for you, companies have to adapt and move towards Omni-Channel retailing. The omni-channel consumer wants a seamless and continuous shopping experience, not a fragmented one. According to the paper “Beyond the Checkout Cart” from MIT, 80% of the consumers check prices online. The sales value proceeding from online influence has touched the trillion mark as well – $1.1 trillion store sales were influenced by the web.

omnichannel retailing

A few years back, brick and mortar stores were seriously threatened by the rise of ecommerce websites like Amazon.com and others. One such store was Best Buy, one of the world’s largest electronic retailers. They lost $1.2 billion during 2012 and their competitor Circuit City had filed for bankruptcy four years back. Best Buy was facing an acute problem called “showrooming” – the practice of examining merchandise in a traditional brick and mortar retail store without purchasing it, but then shopping online to find a lower price for the same item. Online stores often offer lower prices than their brick and mortar counterparts, because they do not have the same overhead cost. Admit it, you have done that quite a few times as well, haven’t you? Coming back to Best Buy, this huge losses caused quite a stir with the then CEO resigning. Its new CEO Hubert Joly came in late 2012, cut a few corners, sold off his European business and decided to pursue this strategy called omni-channel retailing.

Omnichannel strategy focused by Best buy targeted at reaching the customer wherever they are – store, online, mobile. They added this option called “Store pickup” – customers liked to pay online but preferred to pick up the product from the store. This small tweak enabled it to convert its weakness – the store – into a strength. Customers who never had such an option before were given the freedom to get exactly what they want. It turned its stores into distribution centers. The customers started experiencing a seamless shopping experience that is rarely offered by other major stores.

What does this mean to us? The major drawback of ecommerce websites was that they didn’t allow customers to touch and feel the products. Through omni-channel retailing, the brick and mortar stores are getting back into the game offering this crucial piece that was missing in the puzzle. While the Walmarts will forever be dwarfed by the Amazons in the virtual world, they still have more meat and muscle in the real world to offer and will be able to hit the online giants at places where they defend. Walmart even allows customers to pick the stuff from the store thereby saving on shipping fees. Whatever virtual experiences come your way, they simply cannot match the ones provided in-store. Only Oculus Rift can change that.


Postal Service as a distribution system


This morning, i read an article in the newspaper as to how Amazon is starting a pilot project with India Post to test its Cash on Delivery model. I found the idea to partner with the indian postal service simply amazing. Not only is the idea intuitive in nature, but also seems like common sense – why did no one think of this before? India Inc has been ruing the lack of proper supply chain infrastructure and here you have a distribution network that spans to the remotest villages possible.

What other avenues can the postal service be used for?

1. ITC could extend its e-choupal network to places hitherto new boundaries by franchising it to India Post

2. The Postal service infrastructure, if improved a bit, can be used as an effective first response to natural disasters

3. MNCs looking forward to enter the FMCG arena can tie up with India Post to tap their distribution system

What other avenues do you think the Indian postal service can be used for?