Omnichannel vs. Multichannel Retail: Which is Better for Your Business?

Brian Roizen / 13 min read

Omnipotent, omniscient, omnipresent… omnichannel.
Multiplication, multicellular, multivitamin… multichannel.
Based on word association alone, omnichannel retail sounds way cooler and more mysterious than multichannel retail. It’s also a little trendier these days. Everyone is talking about it. Or at least everyone who wants to get the most out of physical and online commerce should be talking about omnichannel versus multichannel retail.
But what is omnichannel retail? How is it different from multichannel retail? What do either look like in practice, and which one is better? The truth is that either strategy can work if executed properly. Both approaches have their merits, so it often boils down to how attainable, scalable and effective each strategy is for your particular business. We don’t have to declare one’s supremacy over the other, as long as we all agree that nobody is talking about single-channel selling anymore.

What is Omnichannel Retail?

Omnichannel retail is a form of integrated multichannel commerce that enables data synchronization between channels. Omnichannel retail typically refers to the practice of linking a store’s brick-and-mortar operations with its online business. It can be part of a larger commerce and marketing strategy that connects the various touchpoints of customer and brand interaction, and ensures that information is handed off between touchpoints.
An omnichannel strategy focuses on how multiple channels interact with each other and the customer. A successful omnichannel setup keeps customer data and product data synced across channels. The ultimate goal is to maximize convenience for the customer so that every interaction with a brand across different channels feels like it’s part of one seamless experience. Omnichannel retail is sometimes referred to as “seamless commerce” or “unified commerce.”

A complete omnichannel marketing strategy for a brand includes a two-way integration between online channels and a physical location, plus handoffs between online channels. A brick-and-mortar location should be able to share relevant and accurate data, such as available inventory, with an online channel. Likewise, an online channel should be able to pass important data to the brick-and-mortar location, like when a customer has placed an order for pickup.
Ideally, a customer can go from product discovery to purchase on any channel, including a physical store, online store, and even social media. There should also be additional opportunities for marketing and increased brand interaction whenever a customer takes action.
There’s more than one way of delivering an omnichannel experience, and the methods used are often different for every company based on the nature of the business and the clientele. Businesses have the opportunity to think outside the box and deliver an experience that a customer wouldn’t have while shopping on a single disconnected channel. New and improved options for customer engagement exist through the combined strengths of various channels.
Although “omni” means “all,” omnichannel retail is not necessarily about being everywhere all the time. An omnichannel strategy should center customers and meet them wherever they interact with the business, including physical locations and via desktop and mobile devices. Building a marketing strategy for a channel that customers don’t use would be ineffective.
Technology is often a limiting factor for executing an effective omnichannel strategy. Creating the proper integrations, collecting the right data and keeping it updated, and then building strategies around that data requires significant time and resources. Fortunately, there are more solutions today than ever before for providing a seamless commerce experience to customers, and businesses don’t have to build these solutions on their own.
In a study from Arlington Research, 49% of omnichannel merchants outsourced their omnichannel operations in some capacity during 2020, and more than 50% said that outsourcing their omnichannel operations was a priority for the future.

How Does Omnichannel Ecommerce Work?

Omnichannel retail encompasses numerous strategies and features, but in general, an omnichannel approach relies on data being collected and communicated across various channels so that customers’ experiences feel unified whenever and wherever they’re interacting with a brand. Sometimes, the integration between channels helps customers continue their journey where they left off, almost as if the brand “remembers” them.
Although omnichannel strategies have the potential to deliver a memorable experience, it’s also possible to create a negative impression for the customer with a solution that doesn’t work as intended. According to Microsoft, 58% of consumers state that they’ve stopped doing business with a brand due to a poor customer service experience. To improve customer retention, it’s vital to make sure that each step along the customer journey is consistently positive.
These are the basic steps for omnichannel retail:

1. Identify customer touchpoints and opportunities for improved interaction with the brand.

Adopting a customer-centric view of your brand helps you identify opportunities to deliver a more convenient or personalized experience for consumers. The point of purchase is only one touchpoint along the customer journey. Brands can create a positive and lasting impression before and after the sale, and increase brand loyalty. It’s also possible to add more touchpoints to the customer journey or redirect customers to a better option for continuing behaviors they’re already exhibiting.

2. Build a strategy around the customer experience.

Identify which processes need to be executed to deliver a quality experience from a customer experience point of view. Where are the pitfalls and potential cracks in the system? What is the brand’s goal for each touchpoint along the customer journey? How many touchpoints can branch off into new or repeated engagements with the customer?

3. Connect systems and people to pass data back-and-forth.

Good data holds everything together, and it often requires the right tech stack to preserve high-quality data across different platforms. For example, a retailer that wants to use local inventory ads to show which products are currently available for curbside pickup needs to accurately track in-store inventory, send the inventory values in a product feed to the ad channel, and continue to update the inventory values as they change.
In this example, it’s also important to create a process that keeps the physical store associates informed of new orders, and have someone on hand who knows how to resolve any issues that may occur.

4. Execute the strategy.

This can be a multi-step process depending on what the goal is, and what part of the customer journey is being targeted. For example, an in-store purchase might present an opportunity for directing a customer to a loyalty program or creating an account to receive additional promotions. In an omnichannel approach, a customer profile is accessible in the store and on mobile and desktop devices, while customer service representatives on social media channels should also be able to help with account issues.

5. Collect and measure additional data.

In a completely unified omnichannel setup, every customer action triggers an additional action from the brand. Collecting data allows brands to identify where customers are in the customer journey, gauge interest, and decide which action to take next to nurture the relationship.
As networks like Google and tech companies like Apple respond to concerns about consumer privacy, the ways that consumer data is tracked are changing. The decline of third-party cookies means that first-party data is even more valuable. First-party data is typically collected when users choose to provide additional data about themselves.
Although it may take some creativity to entice potential customers to share more information, customers who do so are already interested in deepening their relationship with your brand, and are more valuable in the long term compared to consumers who aren’t really looking to engage further.

What is Multichannel Retail?

Multichannel retail is the practice of selling or listing products on more than one channel. The channels can be digital, physical or a combination of both. A business can sell products on its website, a brick-and-mortar location and through different platforms or marketplaces.

Multichannel selling enables a business to reach more customers on different channels with the same product catalog. It’s important to note that merchants can of course reserve specific inventory for different channels, and even customize and optimize different product titles, images and other product attributes for different channels. A multichannel retail model can be part of a multichannel marketing approach that utilizes email, social media, the company website, and other channels to reach customers.
Multichannel retail maximizes exposure for a brand and gives consumers more choices about where to purchase products, but it is not an integrated experience like an omnichannel model. All omnichannel retail must be multichannel by design, but not all multichannel retail is omnichannel. In multichannel retail, the customer’s experiences on any given channel are siloed, or happening in relative isolation from each other. Although each sales channel supports the main business, data synchronization across channels is minimal or nonexistent.
Some challenges in multichannel retail include keeping operations scalable, meeting requirements for expanding to additional channels and delivering a consistent experience across all channels. A multichannel approach is generally less complex than an omnichannel approach, but still requires diligence and the proper investment to make it manageable and keep customers happy.
For example, in a poorly-managed multichannel experience, a customer might get two different impressions of the brand on two different channels. In the worst case scenario, customer service, branding, promotions and even product availability is inconsistent or inaccurate depending on where the customer is shopping.
Automating as many manual processes as possible can help a business improve efficiency and reduce human error. Fortunately, many technology partners today assist businesses with product optimization and listing, order fulfillment and have experienced customer service and support teams that make it easy to expand to more channels.
In most cases, a successful multichannel retail model allows brands to increase their sales volume wherever possible, but does little in the way of creating a personalized customer experience. However, retailers who want to provide a solid omnichannel experience first need to streamline their multichannel approach, since omnichannel retail relies on the integration of multiple channels.

How Does Multichannel Retail Work?

Multichannel retail is all about making products available to shoppers. When we talk about multichannel, we’re usually referring to a mix of ecommerce sites or online shopping destinations that brands use to reach more customers. This includes ads on search engines, social media, direct sales on a marketplace, and a company’s own website. According to a report from Omnisend, a multichannel approach has a 90% higher customer retention rate than a single-channel approach.
A multichannel approach is built on a foundation of product data. Many companies choose to use ecommerce platforms for organizing their inventory and product data. Modern ecommerce platforms have many direct integrations, tools, and partnerships for helping a business solidify and streamline its online presence.
These are the basic steps for a multichannel retail approach:

1. Product data is housed on an ecommerce platform or a merchant’s website.

Before product data is syndicated anywhere, it needs to exist. Merchants can upload all the product data they have, including multiple images, descriptions, UPCs, variations like different colors and sizes, prices and stock availability. This product data repository is the source of truth for all the other places that the merchant plans to distribute their product data.

2. Product data is formatted and syndicated to external channels.

Because different channels have different data requirements, integrations and policies, the merchant’s product data cannot be exported as-is to any channel on the web. Having the right technology solutions makes this process considerably easier, especially for companies that have a high SKU count in their catalogs.
Product listing partners import the raw product data to a centralized platform, optimize the product listings to improve performance on every targeted channel and then create product feed exports to those channels using existing integrations. The product feed is continually refreshed with the most up-to-date information available about the products, such as availability, new products or price changes.
Companies can do all of this themselves, but they need to invest a significant amount of time and money for in-house development, channel expertise and continued maintenance of their data feeds.

3. Businesses that sell products on marketplaces need to manage incoming orders from multiple channels.

To fulfill orders from a marketplace, a business must receive the order, match the ordered item to the correct product, ship it and return tracking information to the marketplace so that the customer is notified. As more marketplace channels are added to the mix, fulfilling orders becomes time-consuming, so finding ways to automate the process allows a company to significantly streamline their multichannel operations.
Product listing partners take order data from a marketplace and insert it into a merchant’s ecommerce platform as if the order was placed from the merchant’s website. Once the order is processed and fulfilled by the merchant as usual, the listing partner reports the order tracking information back to the website.

Omnichannel vs Multichannel Differences

Although an omnichannel strategy is built on a multichannel foundation, there are key differences in the customer experience, goals and execution.

1. Omnichannel is more customer focused, and multichannel is more product focused.

An omnichannel strategy relies on identifying all of the touchpoints between a customer and a brand, and finding ways to capitalize on those moments to increase convenience for the customer or enhance the customer’s connection to the brand. In a multichannel strategy, businesses try to put products in front of as many valuable customers as possible, but the emphasis is primarily on increasing their online presence, not on deepening the customer experience.

2. Omnichannel retail links channels directly so that they work together, and multichannel does not integrate channels with each other.

Omnichannel retail typically refers to the way brick-and-mortar stores and a business’ online operations work in tandem. Multichannel retail refers to a business with physical storefronts and online stores, but the operations are siloed into separate channels of the overall business rather than integrated.
Multichannel marketing uses a variety of channels to send a customer the same content or unrelated content, while omnichannel marketing builds upon interactions on other channels in order to advance the customer journey at any touchpoint.

3. An omnichannel approach creates new customer experiences, while a multichannel approach limits the customer’s experience to the capabilities of individual channels.

Leveraging different channel capabilities together enables brands to create new and memorable customer experiences that consumers wouldn’t normally get through a single channel.
A multichannel approach helps customers find products they want and lets them make purchases on channels they’re already comfortable with—such as Amazon—but the customer’s brand exposure is limited to that site. The brand can employ additional marketing tactics to incorporate its Amazon business into a holistic omnichannel strategy.

Omnichannel vs Multichannel Examples

There are numerous ways to execute an omnichannel or multichannel retail strategy. Both are built on a foundation of well-organized product data, but an omnichannel approach includes marketing efforts that are more personalized, or require data synchronization that is more complex than a siloed multichannel setup.
Check out the following examples to see how businesses leverage these models.

1. Omnichannel: Online product data is displayed in a physical store.

Brick-and-mortar stores can use in-store kiosks to display online inventory that doesn’t fit on shelves, or isn’t currently available at their location, such as luxury models of a product. Retailers might also showcase a popular product as a floor model to help customers get a sense of the product and imagine it in their homes, but then choose to make the product available through an online order with in-store pickup or home delivery as fulfillment options.
Omnichannel retailers can also feature product reviews on the shelves or on display stands. Displaying reviews can be as simple as showing the star rating and the total number of reviews, or as detailed as showcasing a full write-up from a customer. By linking the review display to an online source, the information is kept current as new reviews are added.
This feature is effective because it delivers an experience that customers already seek out on their own, thus maximizing convenience for them. According to a study from RetailMeNot, more than two-thirds of in-store customers prefer to look up customer reviews for products or services on their smartphones before approaching a store associate. Accounting for this behavior allows the retailer to improve the customer experience while also reducing opportunities for the customer to get sidetracked on other websites.

2. Omnichannel: Click-and-collect options combine the ease of online shopping with in-store availability.

Click-and-collect refers to a customers’ ability to shop online and collect their purchased items from a local store. For example, buy-online-pickup-in-store, commonly referred to as BOPIS, enables customers to visit the website of a nearby brick-and-mortar location, see which products are in stock, make a purchase online, and pick up the order from the store within a few hours. BOPIS surged in popularity during the pandemic but should retain its popularity due to the increased convenience it provides.
Curbside pickup is another popular model of click-and-collect that allows customers to make purchases in the same manner as BOPIS. The only difference is instead of entering the store to collect the order, the customers wait in their vehicles and an associate brings the product to the parking lot or a space designated for curbside pickup.

Another model, buy-online-return-in-store, or BORIS, improves the online shopping experience because customers don’t have to worry about mailing a package back to the merchant if they need to return it. They can return their product to a brick-and-mortar location, receive a refund, and the store handles the return process from there. As an added benefit, customers may continue shopping once they’re in the store.

3. Multichannel: A brand sells products on its website, distributes them to retailers, advertises products on Google and Facebook, and lists additional products on Amazon.

This is a common multichannel approach that uses advertising, marketplaces, direct sales, and wholesale to reach as many customers as possible. Each of the channels are a different facet of the company’s business, with the main goal being sales on each platform.
For this model to succeed, it’s important to deliver a solid customer experience on each channel so that none of them become a liability to the business’ reputation.
Advertising can be expensive, so one challenge for the business is to optimize the product listing ads and campaigns in order to bring the most valuable customers to its website, where they become more familiar with the brand’s voice, look, and promotions. Another challenge is keeping the ads up-to-date so that customers can find what they’re looking for, and so that merchants can keep their advertising privileges. For example, merchants who create Google Shopping campaigns can have their Google Merchant Center accounts suspended if they violate Google’s policies.
Listing products on Amazon helps businesses reach customers who are already comfortable shopping on Amazon, but the challenges here are adhering to Amazon’s listing and fulfillment requirements, winning the buy box, paying commissions, and maintaining a positive seller rating to not lose selling privileges. The payoff is that Amazon has a massive audience of highly engaged online shoppers. Over 150 million people are Amazon Prime subscribers, and 20% of those Prime members shop on Amazon multiple times per week.
A business that has mastered multichannel retail is able to syndicate its product data on multiple advertising channels and marketplaces, streamline its order fulfillment process, and continue expanding in a scalable way.

When Should You Choose Omnichannel or Multichannel?

Retailers have proven success with omnichannel and multichannel strategies, so the key is choosing the right strategy and executing it effectively and consistently.

1. When should you choose omnichannel?

An omnichannel retail strategy relies on a strong multichannel backbone. If a business doesn’t have a streamlined and consistent approach to its multichannel operations, then customers will have a negative experience when they are the center of an omnichannel approach. For example, imagine a customer who purchases a product online, arrives at the store to pick it up, and is informed that the inventory displayed online was inaccurate and the order was cancelled (without notifying the customer). If the systems don’t work independently, they won’t work together.
Developing an omnichannel approach requires significant investment and continued maintenance. Businesses without sufficient in-house resources need to invest in the right tech solution. Because omnichannel seeks to create personalized customer experiences, the investment is higher than it would be for a multichannel setup, but the payoff is improved customer retention and brand loyalty due to increased customer engagement.

2. When should you choose multichannel?

Companies that want to reach more customers can find success listing products in more places. Before deciding which channels to advertise or sell on, it’s a good idea to do some research to determine if the products are accepted on the channel, if it would be profitable in light of different fees per channel, if there is a market for the products on a particular channel, and if the business is prepared to handle an increase in volume or operations without sacrificing quality.
Multichannel is a good option for businesses that don’t want to invest in a full omnichannel approach, but the right tech stack is still necessary to streamline their multichannel operations. Businesses that aren’t able to automate a significant portion of the work in a multichannel setup will become overwhelmed as they grow.

In Conclusion

An omnichannel retail strategy links brick-and-mortar locations with online channels to deliver an integrated multichannel experience for customers. The goal is to increase customer convenience and personalize the customer journey to spur greater engagement and customer retention.
An omnichannel strategy centers the customer and ensures that each touchpoint provides an opportunity for consumers to purchase products, reach customer service, receive useful information, and save time. To achieve this, customer data and product data must be synced across channels, which requires an investment in the right technology.
Retailers have the ability to blend features of online and physical stores to deliver a convenient and memorable customer experience. Offers like BOPIS and in-store product reviews, as well as loyalty programs that are accessible on mobile, desktop, or in-store, can make the shopping experience feel seamless.
A multichannel retail strategy uses multiple channels to put a brand’s products in front of as many valuable shoppers as possible. There is minimal integration between channels, so the product data on each channel should be synced with the central data source to ensure that product listings are consistently up-to-date. This still requires an investment in the right technology to make expansion manageable and scalable, and ensure that the channels don’t become a liability to the brand’s overall reputation.
Both omnichannel and multichannel approaches offer the potential for increased customer satisfaction compared to the single channel approach, but they are more complex as well. With the proper planning and the right technology, moving beyond a single-channel model can be highly rewarding for a business.
TABLE OF CONTENTS

• What is Omnichannel Retail?
• How Does Omnichannel Ecommerce Work?
• What is Multichannel Retail?
• How Does Multichannel Retail Work?
• Omnichannel vs Multichannel Differences
• Omnichannel vs Multichannel Examples
• When Should You Choose Omnichannel or Multichannel?
• In Conclusion

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