Top 4 Effects of Multichannel Ecommerce on Online Retail

The following blog was written by guest author Alex Borzo, a content contributor at Amber Engine, a software company passionate about eCommerce. The company’s fast and simple PIM software gets sellers, distributors and brands to market in weeks instead of months.

The conversations today about online retail include new concepts that would have sounded like a thing of fiction 30 years ago. Multichannel retail in general, though, isn’t all that new. For decades, businesses have combined physical store formats with catalog-based mail ordering, which also reached consumers through multiple channels.

Sears Catalog, anyone?

A newfangled notion of multichannel retailing has become of greater interest today, however, due to the possibility of an almost entirely online experience. “Multichannel,” in fact, has made room for “omnichannel,” which refers to companies operating through online channels as well as brick-and-mortar storefronts. These companies have been called “bricks and clicks,” or even “surf and turf.” Interestingly, they’re whittling down to a minority next to today’s online-only, multichannel brands.

Multichannel retailing in the broader sense still refers to any brand selling on more than one channel. Today, countless multichannel businesses have no physical presence. The most popular channels online include:

• Ecommerce websites
• Marketplaces like Amazon and AliExpress
• And social media

As with all things new, multichannel retailing has caused some debate in the context of what it’s done to retail in general. We can point to the COVID-19 pandemic as the main cause of the 2020 spike in ecommerce (with the same growth in sales seen in one quarter as we’d seen in the 10 years leading up to it, according to Amber Engine research). We cannot, however, say that the pandemic did anything more than accelerate an ecommerce trend that was already sweeping the globe.

The way consumers shop and interact with brands has changed forever. Brands and sellers have had to adapt as a result. The effects of multichannel ecommerce on retail range from anecdotal stories of one brand’s rise or fall to bigger trends (with accompanying challenges and opportunities) that everyone in business should know about.

It’s these trends we’re focusing on today. Keep reading to learn the top 4 effects of multichannel ecommerce and what it means for online retail.

1. Product comparisons and the shopping experience have changed

Customer convenience has never been so extreme. Anyone with a smartphone can skip the trip to the store for just about anything. Buying online means no more planning shopping excursions around the open hours of a store, and no time spent hunting for parking at the mall. It gives us a new definition of ease.

Naturally, convenience has some positive effects on retail sales. The multichannel shopper tends to spend more than the single-channel shopper, both due to the ease of purchase and the ongoing contact with sellers through communication channels like email and social media.

The benefits to the consumer go well past basic logistical conveniences, too. Multiple online channels mean the consumer can shop for products (or even the same product) across the web in search of the absolute best deal. It’s no longer about comparing prices of products on a shelf. Now, the consumer can bounce from one website to the next looking for the best price or terms on the product desired.

It’s in the ease of bouncing from site-to-site that consumer behavior has changed in another key way, too. Just like it’s hard to stay loyal to the diet and say “no” to that tub of ice cream in your freezer, it’s harder to gain an online shopper’s loyalty to any one brand or marketplace when it’s so easy to bounce to another site to compare. Consequently, it’s more important than ever that brands be present on multiple ecommerce marketplaces, bringing the new “multichannel” norm to meet today’s consumer expectations.

2. Greater frequency of purchase

Multichannel ecommerce is the approach to retail where the consumer is met at every touchpoint. Mobile phones in addition to social media, interactive TVs and other smart devices have been applied to retail for a more cohesive user experience.

Not only does this new way of selling help retailers follow consumer needs more fluidly, it also promotes more frequent purchases. Here’s how:

1. First, the consumer enjoys unprecedented convenience—there are no closing times, no errands to run, no need to lift more than a finger.
2. Then, the consumer receives ongoing communications from the brands and marketplaces where purchases have been made.
3. Combining convenience with communications, there’s more opportunity to buy—and more sales happen.

This is how multichannel online retail works when appropriately formatted. But, what does “appropriately formatted” mean? Formatting multichannel ecommerce first means choosing the right ecommerce platform and marketplaces (such as those eChannelHub integrates with), and then it means displaying your products optimally. By avoiding the pitfalls of poorly-managed product listings and taking your product data seriously, you not only reach the consumer but cut through the noise of your competition.

With rising consumer demand across multiple platforms and marketplaces, many brands have discovered how tricky product data, in particular, can be. Their existing processes can’t keep up, and even when more people are hired to help, that ends up meaning more gaps in communication and more errors and inconsistencies in the data. With greater customer purchase frequency comes great responsibility, and multichannel ecommerce requires the tools that can point the right subsets of enriched data to the right places. This is where PIM software has become a hub of multichannel ecommerce strategy.

Greater purchase frequency will have another long-lasting effect on multichannel ecommerce, too: better data to continue honing in on your best messaging and marketing. The more consumers continue to buy, the better lit the pathway to more purchases will be.

3. Marketplace loyalists vs. brand loyalists

There was a girl who always went to Dahl’s Grocery. She went there because her parents went there before her. She would crave the same French onion soup at the deli counter, and she would always look forward to the mornings when her mother returned from Dahl’s with their characteristic doughnuts.

The girl was 10 years old before she realized that “Dahl” was a surname, and that the store clearly belonged to someone of said name. In her mind, “Dahl’s” had simply been synonymous with “groceries.”

This kind of brand loyalty grows fainter every day. The in-store experience doesn’t exist like it used to, meaning retailers have fewer opportunities to develop the relationships they had with consumers in the past.

Even shoppers who prefer one ecommerce marketplace over another are not as loyal to those marketplaces as they were to brands or brick-and-mortar stores. Customer loyalty continues to be an essential asset for online vendors, but obtaining that loyalty is a new challenge in the fast-changing world of multichannel ecommerce.

In a recent study published in AIS Educator Journal, Dr. David Gefen confirmed that online customer loyalty to an online vendor, brand or marketplace does increase with the perception of better service. However, what used to be five categories of service quality collapse to only three when delivered online:

1. Tangibles (i.e., the product received)
2. Responsiveness and reliability
3. Empathy

These three elements are what online sellers and brands have to leverage to increase customer loyalty. Trust is still the biggest piece of this puzzle, and most trust with online purchases comes from accurately-promoted products. To build customer loyalty with online shoppers, start with your product data.

Do consumers know exactly what they’re going to receive?

Do you give them enough clear and engaging information to make an informed purchase?

Is your product data organized optimally for each channel you sell on?

In the absence of brand loyalty like we used to see, consumers are starting to naturally segment themselves by purchase channel, making for a new ilk of soft-loyalty for specific ecommerce marketplaces. This is another reason why it’s so essential for brands and sellers to take on a multichannel approach—depending on the consumers they’re trying to reach, different avatar profiles will be hanging out on different purchase platforms.

For example, according to a BigCommerce survey of nearly 3,000 consumers, Generation Z spends between two and three TIMES more time shopping on social channels than any other customer. Only 9.6% of those Gen-Z-ers, however, shop on Facebook. They prefer Snapchat and Instagram. Facebook is still a great place to connect with Millennials, however, among whom 31.4% say they frequently shop there.

In the absence of old-school brand loyalty, this new look at consumer expectations coupled with a careful selection of the right channels for your target audience will mean your best shot at customer loyalty.

4. New intermediaries

One of the biggest effects of multichannel ecommerce on retail has been the shift in intermediaries. The use of the internet by manufacturers has given those companies a direct distribution line to consumers, which in recent research has been called disintermediation. This shift has been good for the consumer as well as sellers by lowering the bar of access for a brand to sell its products.

At the same time, this direct-to-consumer approach has not meant that brands are working without intermediaries altogether. Instead, today’s new intermediaries like Google and Facebook have emerged to perform new functions in the supply chain. They don’t take a cut of the profit like in the traditional retail model, but they do make major bucks on the ads that companies run to get sales. Thanks to the nature of these tech giants, the data today’s intermediaries have been able to collect is extraordinary. It’s that same data, too, that has allowed brands to take the direct-to-consumer standard to a new, hyper-personalized level never imagined before.

Effects and long-term impact of multichannel ecommerce

The effects of multichannel ecommerce on retail stretch far and wide, and they will continue to take shape and surprise us. After a couple decades of millennials in the spotlight as consumers, these long-term changes in retail will manifest themselves more clearly in Generation Z purchases, and therein we can expect even more behavioral shifts.

Ecommerce isn’t going anywhere, and the need for brands to be on multiple ecommerce channels won’t change anytime soon, either. To reach all the consumers you’re targeting, a strong brand personality and social media presence will complement your selection of marketplaces for a lasting multichannel approach.

What footprint will your brand leave in multichannel ecommerce?