Mint ST - - CORPORATE - Re­spond to this col­umn at feed­

Omni-chan­nel is eas­ily the most dis­cussed topic in all re­tail con­fer­ences over the past years. Un­der­pin­ning all the dis­cus­sions are two con­sis­tent themes—a) lack of clar­ity about what omni-chan­nel re­ally means, and b) a strong be­lief that it is the right thing to do for every­one. The term omni-chan­nel is in­creas­ingly get­ting used al­most in­ter­change­ably with dig­i­tal, in­di­cat­ing that a dig­i­tal play nec­es­sar­ily means an omni-chan­nel play. We sug­gest re­tail­ers take a deep breath. Omni-chan­nel, while a pri­or­ity on the hori­zon, is not im­per­a­tive for every­one.

The case for omni-chan­nel is built on the un­der­ly­ing premise that most, if not all, con­sumers like to have mul­ti­ple touch­points —both on­line and off­line—in their pur­chase jour­neys. To un­der­stand the cur­rent re­al­ity, we stud­ied the path­ways fol­lowed by a sam­ple of ac­tive in­ter­net users in ur­ban In­dia for over a month. The study showed that the ex­tent of in­ter­play be­tween on­line and off­line is sig­nif­i­cantly over-imag­ined. Only 5% of trans­ac­tions across all cat­e­gories had both on­line and off­line touch­points, 78% of the trans­ac­tions were purely off­line, whereas 17% of trans­ac­tions were com­pleted purely on­line. These statistics are quite con­trary to the com­monly be­lieved path­way in the dig­i­tal world i.e. con­sumers visit the stores to touch/ see the prod­uct and come back to or­der on­line in or­der to get bet­ter prices.

As we looked deeper, three in­ter­est­ing find­ings emerged. First, there are large vari­a­tions across cat­e­gories—mak­ing it crit­i­cal to de-av­er­age and dis­ag­gre­gate. There are cat­e­gories like sta­ples, fresh food that are dom­i­nated by pure off­line path­ways.

Given the smaller ticket size and high pur­chase fre­quency, on­line-off­line in­ter­play for these cat­e­gories is lim­ited to 1-2% of all trans­ac­tions. Then there are cat­e­gories like mo­bile phones, large ap­pli­ances where mixed path­ways (with both on­line and off­line touch­points) are dom­i­nant—largely driven by higher ticket sizes and need to touch and feel the prod­uct. On­line-off­line in­ter­play here hap­pens in as high as 40-50% of all trans­ac­tions. And lastly, there are cat­e­gories like ho­tels, air­line tick­ets that are quite ma­ture in on­line adop­tion and are dom­i­nated by end-toend on­line path­ways. On­line-off­line in­ter­play here hap­pens in about 10% of trans­ac­tions.

Sec­ond, the path­ways also vary across con­sumer seg­ments. For the same cat­e­gory, con­sumers across gen­der, age, city type demon­strate very dif­fer­ent be­hav­iour. For ex­am­ple, al­most half of all mo­bile trans­ac­tions in metro and Tier-1 cities are com­pletely on­line. As against that, only one in five of mo­bile phone trans­ac­tions in Tier-2 and -3 towns are end to end on­line. Tier-2 and -3 city cus­tomers are much more likely to re­search both on­line and off­line along their path­way—as high as two-thirds of their mo­bile phone trans­ac­tions have both on­line and off­line touch­points.

Third, in cat­e­gories where mixed path­ways are sig­nif­i­cant, the role of chan­nels is dif­fer­ent. Au­to­mo­bile, for ex­am­ple, is a cat­e­gory where the re­search process has dras­ti­cally moved on­line. 43% of new buy­ers de­cide their car model even be­fore their first visit to a deal­er­ship. Con­sumers are, there­fore, look­ing for much more brand/ prod­uct in­for­ma­tion on­line, whereas the visit to deal­er­ships is much more about pa­per work/deal clo­sure, etc.

These find­ings present a case for com­pa­nies who are look­ing to be ahead on the curve and build an omni-chan­nel play to pause and ask them­selves the fol­low­ing ques­tions:

•Have we re­ally fixed the in­di­vid­ual chan­nels be­fore at­tempt­ing to go omni-chan­nel? There is a lot to be done in fix­ing the ba­sics—get­ting the in­di­vid­ual chan­nels right be­fore at­tempt­ing to in­te­grate them seam­lessly. That seems more valu­able from the con­sumer’s per­spec­tive and sim­pler to ex­e­cute from the firm’s per­spec­tive.

•Are we de­sign­ing to fol­low the con­sumer path­way rel­e­vant to our cat­e­gory and tar­get con­sumer seg­ment? In­stead of blindly adopt­ing omni-chan­nel be­cause it seems like the next big thing to do, com­pa­nies need to pause and ask how im­por­tant it re­ally is for their con­sumers and cat­e­gory. There is no de­bat­ing that it will hap­pen—the ques­tion is when and how much.

•Are we align­ing our chan­nels closely with the role they play in con­sumer path­way? In the fu­ture, chan­nels will play dif­fer­ent roles from what they play cur­rently. In case of au­to­mo­biles, for ex­am­ple, a lot of brand build­ing ef­fort needs to move on­line, whereas the fo­cus in the deal­er­ships may be more around de­liv­er­ing a su­pe­rior cus­tomer ser­vice ex­pe­ri­ence.

Com­pa­nies need to of­fer con­sumers a va­ri­ety of chan­nels. It is crit­i­cal to fix them in­di­vid­u­ally be­fore em­bark­ing on the path to in­te­grate them. At­tempt­ing to cre­ate a utopian seam­less cus­tomer ex­pe­ri­ence with­out un­der­stand­ing the ac­tual con­sumer path­ways might not be re­ally the ‘next’ big thing for you. As they say “the best prepa­ra­tion for to­mor­row is do­ing your best to­day!”

Ab­heek Singhi is a se­nior part­ner and leads the con­sumer goods and re­tail prac­tice in Asia Pa­cific for the Bos­ton Con­sult­ing Group (BCG). Kanika Sanghi is prin­ci­pal at BCG. All views are per­sonal.


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