I try to make life easy for myself. That is why I avoid project involving multichannel. Fact is, that I know very very little about multichannel, but just from a logical perspective it doesn’t make any sense to me.
This is how I define multichannel: Selling products through more than one channel. E.g. having both a online shop and a physical shop.
I write this blog post because I all the time hear ecom experts recommend multichannel for God and everybody.
I only believe in pure play e-commerce. Because succes with ecommerce is all about focus, and focus is lost when more channels are added to the business mode. E.g. Let’s say that you are skilled in making a selling shop window in a physical shop. That don’t make you an expert in web design.
My issues with multichannel:
- Selling online and though a physical store is two completely different business models. There are almost no synergies. From purchasing, logistic, customer service, marketing, HR, this is two completely different business model. I don’t see one function that would be the same. Purchasing? No, you would have different products in your online store (larger selection/long tail) than in you physical shop.
- The reason that brick and mortar chains enter E-commerce, is not to create value for their customers, but just because E-commerce is growing faster, and they want a piece of the cake. They enter because E-commerce is a hot buzz word, not because they have some special skills in creating value in e-commerce.
- The largest issues is the different skill set that you need, when running a Pureplay ecomemrce shop or a physical store. Online you have to be good at SEO, usability, SEM, webdevelopment, Logistic, Remote customer service and national marketing. Offline you have to be good at face-to-face customer service, store management, local marketing. The required skills that you need for both models, is accounting and other adminitrative function, but they are not any larger synegies tham between any two random companies.
- I don’t know about any multichannel company that succeeded for real. E.g. IKEA stopped their online business, and ask your self if you believe you will be better in Multichannel business than IKEA? The other problem it that you can not see any financials, that shows what part in a multichannel company that are profitable. I believe Ecommerce is about making profit, and that I believe is hard with multichannel.
With two completely different business models the strategy becomes really difficult, because you can not make the perfect strategy for either of the business models. The perfect business plan for the worlds best pureplay ecommerce company will be very different from the business plan for the worlds best retail chain. It is like sitting down between two chairs. #Fail
What advantages are there for Multichannel? This is what is often agued.
- “Your customer expect you to be online”. So true and I think brick and mortar should offer there products online, but they will not be profitable or competitive to the pure players. And as a pureplay e-commerce person, this will not be a argument for me.
- “it create trust to have a real shop” – Yes, but there is million other methods that will give you more trust easier, like e.g. customer reviews.
- “You can sell more if you open a store” – You can only sell to the people who live close by you store, with is like few compared to online.
- “The customer can pick up his product right away” – True, but one of the main advantages of e-commerce is that you can have all you products in one central storage, and thereby save a lot of cost. Having your complete assortment in every single physical store sounds expensive. Beside that I have seen more examples where a multichannel store have storage and shop in the same (ala Ikea). That makes the physical shop look ugly and makes the packing less efficient. = Goodbye to efficient business model.
- “you have synergies from customers knowing you brand” – Yes, but I believe the synergy almost always will be smaller than all the cost in time and money it takes to start up a new channel.
That was the advantages. All the other disadvantages, you can have the consultants explain to you, that is what they get their money for. (
Maybe some old catalog firms will be able to evolve into E-commerce, since that almost is the same business model. There might be a lot of synergies (but if they did not do that already, it might be to late.)