Omnichannel is Not Enough
Originally published in Total Retail.
Every modern retailer and brand knows an omnichannel strategy is needed in order to thrive in today’s commerce landscape. The term has passed m-commerce, social commerce and even multichannel in popularity. And from my vantage point, the approach is valid: meet the customer at the places where they want to be met.
However, risk arises when companies focus too much on the “channel” part of the strategy and not on the implications of “omni.” This can result in a retailer obtaining an in-store strategy, a desktop strategy, a mobile strategy and a social strategy, but still not create any differentiated, sustainable value for the brand or its customers. It risks checking all the boxes, ensuring that every channel is covered, yet misses opportunities to innovate and jump past competitors. Furthermore, an approach that overfocuses on channels can cause overinvestment in channels that may not warrant the focus.
In short, an omnichannel strategy can go sideways if it focuses on channels rather than on consumers and their needs.
It makes more sense to start with the needs of the consumer and work backwards. Consumers don’t care about channels; they don’t think about channels. Consumers have problems, needs and desires. They care about solving problems, obtaining value and having a delightful, efficient experience. It’s true that an omnichannel approach can solve consumer problems, but there are often unintended constraints applied to solutions developed within that approach.
“Channel” presumes a known sales channel — e.g., in-store, web, mobile, etc. If we broaden the solution space beyond known channels, we free ourselves to consider the problem the consumer has in the first place — i.e., the reason they’re shopping and trying to buy something — and focus on new ways to solve that problem. Why do they want to buy something? What’s the problem they’re trying to solve? How can we help them better solve that problem?
This consumer-first approach forces retailers to consider the context of the consumer when the problem arises. That is, it forces us to consider where and when a consumer is and how they become aware of a need to buy something. We call the development of commerce experiences to solve consumer needs “contextual commerce.”
What Is Contextual Commerce?
Contextual commerce is the design, development and delivery of solutions that solve consumer problems by enabling them to efficiently and intuitively purchase a product or service at the point and place where the need arises. This approach brings value to the consumer and doesn’t necessarily require them to go to a channel.
Though newly defined, past examples of contextual commerce are some of the most innovative developments of digital commerce:
- iTunes allows consumers to purchase music while listening to music.
- Kindle e-readers allow consumers to buy books from a book.
- Amazon Dash buttons allow consumers to order laundry detergent from the laundry room when they run out.
- Uber enables consumers to order transportation whenever they need.
- Video on-demand services (e.g., Xfinity) allow viewers to purchase movies as they watch TV.
Arguably, channel strategies alone wouldn’t have yielded these innovations. Furthermore, the proliferation of connected devices, Wi-Fi connectivity, web services and instant delivery services enables even broader innovation for a contextual commerce approach:
- Can fast-moving consumer goods companies provide replenishment opportunities within the kitchen, laundry or bathroom?
- Can pet food brands automate point-of-sale to be in-home at the point when it’s realized that you’re almost out of pet food?
- Can we enable a consumer to do an intuitive search for “gluten free” in a grocery store?
- Can we help a consumer get the ingredients needed for dinner delivered during their commute?
- Would it make more sense to simply ask my refrigerator for more milk?
Contextual commerce approaches each of these situations by starting with the consumer problem, not the channel. This is the fundamental nuance/innovation that contextual commerce brings to an omnichannel strategy. It forces brands and retailers to truly consider what value they provide to consumers, and frees them to solve those problems without the constraints of a specific channel.
For brands and retailers, contextual commerce creates value in several ways. It encourages innovation by forcing a focus on consumer need; it pushes differentiation from competitors because, by definition, the solution doesn’t have to fit within the constraints and specifications of a channel; and it encourages more efficient use of capital and resources because contextual commerce solutions are viewed as new business ideas and can’t use the crutch of “this is our X channel strategy.”
To summarize, an omnichannel strategy is necessary; I’m certainly not arguing against omnichannel. However, it’s not enough. The solution set must be enlarged to enable consumer needs to be understood and solved. Brands may find that some contextually relevant commerce solutions deserve more investment — and yield greater value — than a me-too channel strategy.