PYMNTS.com OmniReadi Index™ Q4 2016
From curbside pickup to mobile checkout, omnicommerce is something that merchants are trying to get right. But it’s not just about adding the latest widgets and gadgets – it’s about meeting customers where they are and exceeding their expectations.
This installment of the OmniReadi Index measures how effectively merchants are performing across various channels: their brick-and-mortar stores, websites and mobile apps. The Index asks these questions:
- How consistent are services and policies from brick-and-mortar to website and mobile?
- What’s the quality of service?
- What’s the added value of these channels? Or do they actually detract from the shopping experience?
The OmniReadi Index sampled 101 of the largest 500 retailers in the country to learn more. Here’s what it found.
- The omnireadiness score is finally rising again. Over the course of 2015, omnireadiness grew at a frenzied pace. Since then, growth has slowed and the index score dipped from Q4 2015 to Q2 2016. However, this quarter the score increased.
- The gap between the most omnireadi merchants and the least omnireadi merchants decreased in Q4 2016. The bulk of the growth was among the lowest performers, which might be a sign that the gap between the top and the bottom is finally narrowing.
- The top performers seem to have hit a peak. They are making infinitesimal improvements but still can’t crack the 90-to-100-point bracket of the Index.
- This quarter, the bulk of improvements were made by the lowest performers. This reverses the earlier trend of a widening gap between the most omnireadi and the least omnireadi retailers.
- Purchase History and Guarantee/Refund were features found in all top 10 merchants.
- Sporting Goods retailers continue to lead the pack.
Viewpoint: Keeping omnichannel from becoming your worst enemy
Meeting shoppers across any channel at any point in their shopping journey is important, but that doesn’t make omnicommerce any easier. If fact, just because a merchant is omnichannel doesn’t necessarily mean it's doing omni well.
Tobias Hartmann, president of Radial, says that for merchants struggling with execution, omnichannel can be a significant challenge. “There’s no doubt that omnichannel is a great volume driver and differentiator, but it can become your worst enemy if it’s not executed well,” Hartmann adds. “Now that everybody has adopted to it, consumers actually feel the difference and are getting very savvy about who is in a position to execute well and live up to the consumer experience and who’s not.”
Hartmann shares four major insights Radial observed as retailers prepared their omnichannel offerings for 2016’s holiday season.
Omnichannel off to new heights
The omnichannel formula for success, Hartmann explains, comes down to bringing together infrastructure and assets, combining that with technology and being able to scale that with a data-driven approach. This holiday season, Radial observed some key trends related to omnicommerce and retail, including a 30 percent increase in store-fulfilled volume year over year.
Though there is slightly less growth on ship-from-store volume, there is tremendous growth of in-store pickup, and Radial recorded an increase of more than 46 percent in volume and 91 percent in dollars. “That tells you a lot about what’s happening out there. It tells you that retailers are getting more sophisticated with supply chain management, which means they’re getting better at inventory allocation and synchronized store operations,” Hartmann adds.
The latest data shows that mature players have about 60 to 70 percent of their total eCommerce sales generated and fulfilled through the store network, which is a combination of ship-from-store, ship-through-store, buy-online-pick-up-in-store or drop-ship services.
Personalization and regionalization take off
Part of what Hartmann calls the logical evolution of omnichannel is that retailers are pushing for better consumer experiences by localizing their effort. According to Radial, there’s been a 45 percent higher volume year over year through regional networks and distributed inventory allocation. Hartmann says that more of Radial’s customers and clients are pursuing a dual-hub strategy or multinode fulfillment system strategy.
Omnichannel has transformed the way both merchants and consumers view the brick-and-mortar experience. Physical stores are no longer just a place to purchase products. They now also serve as fulfillment centers and distribution hubs that serve omnichannel consumers.
Merchants have also seen 21 percent more personalized orders year over year, which Hartmann says includes embroidery services, personalized gift wrapping, custom packaging and personalized notes.
Fraud isn’t getting better
It’s no surprise that as retailers execute more sophisticated omnichannel strategies, fraudsters are ready to launch even more sophisticated attacks on their systems. Radial recorded a 30.5 percent jump in fraud attacks year over year, which is why Hartmann says retailers today need even more data to help combat the increasing threat that cybercriminals pose. He confirms that despite the growing number of attacks, Radial was able to approve 99.84 percent of demand orders throughout its network of merchant clients.
Customer service changes
“Choice and chat are key,” Hartmann notes. Millennials in particular don’t want to speak to an agent when they need customer service. In fact, they don’t really want to speak at all. Hartmann says that Millennials prefer to access the information they need by pushing buttons through their own command and control, which has a significant impact on how merchants interact with their consumers. As a result, a 35 to 40 percent increase in chat volume, depending on retail verticals, has been observed.
One new and interesting offering to which retailers are moving is Visual IVR. It's an interactive support platform that guides customers through a web-based support experience that they can access on their mobile phones. Hartmann says there is a higher solution rate with offerings such as these because customers can receive help while they’re doing other things.
Learn more about the current state of omnireadiness by downloading a complete copy of the Q4 2016 OmniReadi Index here.