Integrating Omni Channel Design in Retail

Pankaj More, CIO, Walmart India | Monday, 29 August 2016, 11:42 IST

Technology has revolutionized retail business globally as witnessed in last few years. Today’s empowered customers can make choices any time anywhere using their smartphones, supported by an ecosystem of apps, online commerce and marketplaces. The network effect of digital platforms has created an opportunity for traditional brick and mortar businesses to architect themselves into omni-channel businesses.

Before we get into the principles around architecting an omni-channel business it is important to understand how business models have evolved over time with digital technologies. Traditional business models have been linear in nature, by selling products/services upstream and being consumed by customers downstream. Increasing connectedness between social and business users assisted by digital platform enabled ecosystems has led to linear business models being challenged on scale, speed and responsiveness. The competitive advantage of business has shifted from owning physical resources to creating or being part of ecosystems that enable aggregation of resources and value creation through overlapping needs of customers and retailers. Value being experienced by customers has shifted from experiencing the outcome of a business process to being part of interactions. The opportunity for businesses to become omni-channel is to be more connected with their customers, employees and suppliers and harnessing those interactions to generate real time value generating experiences.

Creating an omni-channel retail business is not just about having an online presence, but having the capability to design and optimize value exchange across merchants, operators, logistics, supply chain, suppliers and customers, in ways that helps address their needs and allows them to make smart decisions.

Architecting for Omni-channel Experience
We live in a networked world where there are multiple channels and experiences through which customer’s journey could be traced. That calls for all functional areas like merchandising, operators, supply chain, logistics and supply chain to come together in an interactive ecosystem like architecture that allows responsiveness and decision making with speed.

Inherent challenge of legacy architectures is that they operate based on a fixed process with limited to nil ability for a feedback loop at each functional area thereby limiting speed and increasing cost of value delivery to the customer. 

Transforming into omni-channel requires architecting existing technology stack into service oriented framework, where every interaction is designed from point of view of customer. The key is to understand what touch points impact a customer’s journey and invest in integrating those touch points together. Once integrated a continuous flow of data across these touch points allows for highly personalized experiences for the customer leading to stickiness and compounding network effect.

The next most important piece of omni-channel architecture is data. Data forms the backbone of all interactions and decision making across employees, customers and suppliers. Data is monetizable provided you can get insights that help create opportunity for more sales, higher margins, inventory management, better understanding of customer behavior, personalization and many more. The availability of data with relevant insights allows for a balanced optimization between demand and supply and enables the ecosystem to behave like plug n play architecture.

Another key foundation piece for omni-channel is improving productivity. Decision making based on algorithms with ability to alert or predict around key metrics can be a big enabler in impacting a customer’s journey. While algorithms could be written for any area, their impact on operational areas like supply chain, logistics, inventory, pricing, warehouse management are felt the highest. Effective algorithms not only enable responsiveness and decision making, but in conjunction with data based insights, assist in creating impactful user journeys as the business scales. 

Finally, what binds all of the above is a strong and proactive communication framework that moves beyond the traditional email system. With social media the ability of users / customers and retailers to engage at various points of retail experience has become possible. A communication framework allows customers to interact with a business at various points of experience, encourages employees towards specific actions, and drives better transparency and accountability thereby creating a successful community of customers, employees and suppliers. 

The key is to understand that in an omni-channel world, both physical and digital need to move together. The challenge is to bring behavior design of physical and digital world together in ways that create the right network effect by developing frictionless user journeys and business optimization through use of data insights leading to a community like effect delivering value, scale, speed and responsiveness. Always focusing on customer and their needs helps to increase repeatability of value creation.