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Integrating points of sale: from e-commerce to omnichannel

Custom software will be one of the key factors in making the transition to omnichannel

For a brick-and-mortar mall retailer in the Amazon era, Macy’s is faring exceptionally well: Its earnings per share in early 2014 were a full 19% higher than in early 2012. How does Macy’s do it? In large part, by having taken an early lead in developing omnichannel retail capabilities.

What is omnichannel?

Omnichannel retailing integrates the various modes of shopping, such as in-store and online, into one seamless experience, often by incorporating a number of available point of sale systems, essentially using technology capable of meeting the customer wherever they may be when they are ready to make the purchase. Macy’s first took up the omnichannel challenge in 2009. Over the five years since, it has enabled more than 500 of its stores to fulfill online orders, and it has upped investment in improving its website and mobile applications to make it easier for shoppers in its stores to access online guidance. It has also been training its sales associates to “think omnichannel” by selling customers merchandise that is not in the store and by embracing customers who are returning items.

“We are working to provide our customers with seamless experiences no matter how they choose to shop with us, and utilize the strengths of each channel to satisfy demand and service customers’ needs better,” said Karen Hoguet, Macy’s chief financial officer, in a media statement. This aptly describes omnichannel retailing in general — integrating multiple retail channels and providing as many points of sale as possible, for example by uniting a company’s e-commerce and physical stores into a seamless shopping experience.

How is omnichannel affecting retail and its software systems?

The omnichannel shift is by no means confined to Macy’s. It is part of a much larger evolution that has been gaining momentum over the years in commercial industries across the globe. Consider what shopping was like in the early 1900s. Back then, all transactions occurred in one single mode: The customer enters a store and buys a product. By the end of the century, alternatives had sprouted. A customer could order by phone, mail-order catalog, or of course, buy it online. Retail had become “multi-channel.”

At this point in the twenty-first century, forward-thinking retailers are making shopping once again a single mode, by linking all of the multiple channels together. A customer can use the Web to make better-informed purchases at the physical store, or order an item online and pick it up at the brick-and-mortar store to “try it before buying it.”

Benefits and challenges of omnichannel for retailers

The retailers benefit in this omni-channel model, too. The same software that enables a customer to order online and buy in-store, or to consult the company’s website while shopping in-store, also enables the business to track which customers are buying which merchandise and how and where they are buying them. This is intelligence that businesses can use to optimize their marketing and customer-service strategies across the board. Equipping the retail system with proper point of sale software all of a sudden becomes a strategic decision that can lead to better insight into customer behavior.

Most businesses are newcomers to this business model—surveys from the last 12 months find that fewer than half of retailers have adopted omnichannel systems, and only around 11% are fully omni-channel-enabled. Majority of retailers would be wise to make this new shift part of their own business models. Market surveys have found that, increasingly, those retailers who have not yet integrated their various sales channels are falling behind.

But companies don’t not have to be retail giants to afford the transition to omnichannel. If they lack the in-house technology resources to complete their transition, building custom software solutions with a help of a third party can be a cost-efficient alternative.

Brick-and-mortar’s ground is increasingly shaky, online retail is constantly shifting and morphing, and the business climate in general stands to grow only more competitive and unpredictable with time. The businesses that utilize all available tools and make them work together as one, through well-executed ominchannel strategies and systems, will be in better positions than most to navigate the marketplace ups and downs for years to come.