(This post was originally published on August 6, 2012. We’ve updated it for accuracy and completeness.)
To be a successful multichannel retailer, your strategy should be well thought out and planned for. It’s important that you thoroughly review your system’s capabilities. You will have to manage item, inventory, sales and customer information between your eCommerce, point of sale, accounting/ERP, and other systems that may be used in your multichannel environment.
And even though a multichannel strategy has many facets to it, simple business practices can help better ensure your strategy will be successful.
The Challenges of Multichannel
The purpose of multichannel selling is to profitably sell more stuff to more people. This usually requires you to expand your business across multiple channels, both online and offline. You want to sell where your customers are.
However, as you add more channels, you also take on more systems and data to manage. To be efficient at multichannel operations, merchants must have a deep knowledge of what your systems are capable of. You must plan how you will address updating items, syncing inventory levels, fulfilling sales orders, and tracking customers across multiple sales channels.
5 Business Practices that Make or Break Your Multichannel Strategy
Multichannel selling can get complex (and messy) quickly. Here are five important business practices that will make or break the success of your multichannel strategy.
1. Failure to Plan
The planning stage is easily the most important aspect of your multichannel strategy. A great idea executed with little thought behind it can turn out to be disastrous. It could end up costing your business money instead of making you money.
You must plan what channels you sell on, what systems you’ll use, and how you’ll have those systems work together. To help you better understand all those moving parts, see this article about the 5 things you must consider for a multichannel selling strategy. It walks you through the basics of multichannel selling.
2. Underestimating Manual Efforts
In a multichannel strategy, you’re working with many systems that house similar information, such as item information, inventory, customers, etc. You must share this information among all your systems.
For example, you will want to track a customer’s order history whether they buy in-store or online. If an item is bought on your webstore, your Amazon account should reflect the decrease in inventory. Product information must be shared from your POS or ERP to your online sales channels.
First-time multichannel retailers often rely on manual data entry to ensure data makes it from system to another. However, they usually underestimate the time and cost of doing it the way.
Manual data entry, such as hand keying online orders into your POS or ERP, can take hours every day. You also make your business more prone to typing mistakes that can result in lost orders, ticked off customers, or out of stocks.
The need to eliminate manual data entry is one of the most prominent reasons merchants seek solutions for multichannel integration. Integration automates data processing, speeds up order processing, and eliminates many of those costly mistakes.
When planning for multichannel, consider the importance of an integration solution.
3. Underestimating Supplier Relationships
Developing good relationships is a key to success when working in a multichannel world, especially when it comes to suppliers. It is up to you to convince suppliers to provide you with the information you need to ultimately sell more of their products. Convincing suppliers to provide you with electronic data can go a long way in helping you reduce data entry.
But know that the road won’t be easy, especially if you’re a small customer.
Suppliers want to make use of replicable processes they can use with you and other customers like you. Be sure to have a discussion with your supplier about your multichannel strategy and what you need from your supplier to make it successful, such as an item feed, inventory feed, ability to accept purchase orders, order tracking, etc.
You may find that your supplier has a variety of ways they can exchange information with you or nothing at all. Good to know up front either way, right?
4. Execute the Basics
We cannot stress this enough. Keeping meticulous records, whether you do so in Excel, your accounting system, or some other application, you need to execute the basics such as:
- Always issuing a purchase order for inventory you purchase and special orders. (You’d be shocked at how many retailers don’t do this!)
- Always recording inventory you receive, and checking against the purchase order. Yep, suppliers do make mistakes and if you’ve promised back-ordered product to customers you better make sure you get it to them pronto.
- Always check the invoice against the original PO to make sure what you were charged and what you received are correct.
Perform these basic tasks well to set yourself up for success. An overwhelming number of businesses choose to overlook the most basic functions, costing them in the long run. This includes reviewing invoices, purchase orders, ensuring orders were charged and received correctly, and more.
5. Making Customer Experience the Focus
Your customer experience should always be the focal point of your multichannel strategy. When you make a decision, always consider the effect it will have on your customers.
Customer experience is king in retail. Merchants with the best customer experience will win more customers who make repeat purchases. No longer is price and product quality the only top competitive edges.
Customers are in control. They know they have options to buy from. They can more easily decide who consistently exceeds their steep expectations.
For example, would your customer rather you sync your inventory levels once a day or in real-time? You don’t want to be the merchant who has to let a customer know that you can’t ship their order because you didn’t actually have an item in stock that they bought.
Always keep customer experience in mind when thinking about the impact of your multichannel strategy.
What to Do Next
These business practices can make or break the success of your multichannel strategy. If you’re a first-time multichannel seller, you should take these into consideration.
Developing a multichannel strategy takes time and investment in the right areas. Check out our Multichannel Implementer’s Guide to learn more about picking the best eCommerce, POS, and ERP systems for your multichannel business.