Why do retailers fail in setting up their omni-channel shopping processes

consumer behavior line in omni-channel environment

Omni-channel has been ballooning out for the past several years. Retailers are opening up web stores and online retailers are spreading offline, offering store pickups, self service kiosks, and variety of other multi-channel shopping tool and environment combinations. Despite all these innovative practices, many retailers still get it wrong. Here’s why!

Where do retailers go wrong in setting up their omni-channel processes?

Jason Goldberg makes a very interesting point – moving your business to omni-channel model “requires two critical components – visible inventory and attribution”.

Omni-channel presumes the ability to see all current inventory and access it from any channel. Yet a surprisingly high percentage of retailers still don’t have an enterprise view of inventory. And many of those that do still fight a confidence battle with store staff. Store personnel are accustomed to the computer counting items that have just sold or are piled outside the dressing room; if it says nine, they expect to find five. Many veteran sales associates with this history don’t want to show customers inventory that might not actually be there… Customers increasingly expect to shop the retailer’s entire inventory, and know exactly how fast items will get to them.

The second piece of integration is attribution. At every omni-channel meeting, it’s the unspoken tension in the room. I estimate that half of all retailers still don’t have functional attribution models.

But why does attribution matter so much?

Why does revenue attribution matter?

Imagine a scenario where shopper Q saw an add on social media, went to your web store, bought it online but came to pick it up in the store (let’s say, the staff had the item ready), who gets the credit for revenue? Or where goes the credit if shopper Q passed by the store several days ago, picked up a flyer at the door and then made a purchase online?

See the chart below from Google/Ipsos. It’s from 2012 but the numbers are still relevant.

customer journey to purchase in omni-channel world
Customer’s journey to purchase in omni-channel world

Why is attribution not that simple?

Although revenue attribution seems to be a pretty basic metric, I must remind the example of shopper Q. Attributing the revenue to one of the channels is a challenge. There are a few common tactics and their shortcomings:

  1. Google Adwords/Bing Ads ROAS calculation. The method uses conversion tracking using tags. See this link to learn more. This method associates conversion to the last adword clicked
  2. Goal completion based conversion tracking. Here conversion is associated to the last click before the visit.

The downside with both methods is that they fail in an omni-channel environment where the user’s experience spans several devices and channels. Consumer behavior today is like a snarled ball of yarn!

I like the analogy that Lisa Shepherd uses – she calls it the Pinball Machine. Based on her observations, “The days of the predictable sales funnel are over. The purchasing journey isn’t a straight line any more. Buyers ping back and forth between stages, jump back to an earlier stage, go straight to purchase, or end up not buying at all.” Consumers behavior has changed significantly over the past couple years and that distorted the funnel model making revenue attribution a heavy analytical task. Tracing this new chaotic pattern requires considerable focus and is often left unattended.

Analytical Revenue attribution is key

The good news is there IS an alternative. The methodology we follow is drawn from market mix modeling, statistical signal processing and artificial intelligence methods. It is quick, cheap and is offered in an on-demand platform. To learn more, how you could improve your ROAS, click the green button below.

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Feature photo by David Swayze, Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)

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