As predicted, 2013 has been a year of omnichannel discovery. The idea of interacting with a website while in a store, or ordering online for store pickup, has really taken off. These options are meant to give customers the ability to move between channels, without noticing a major shift in the customer experience. If omnichannel had a motto, it would be, "All the channels in one experience."
As online competitors continue to make the business of in-store selling more difficult, brick-and-mortar operations are trying to fight back with these sorts of experiences for customers. So far, it's a bit hit-and-miss. With all the marketing associated with omnichannel, consumers are starting to expect the sort of seamless experience promised by this good PR. Unfortunately, few retailers are consistently delivering on that promise.
The promise of omnichannel
The goal of omnichannel -- from a customer service point of view -- is to make it easy for customers to move between channels during a single transaction. Companies such as Best Buy (NYSE:BBY) have tried to use omnichannel sales to both increase store traffic and to compete with online-only retailers like Amazon.com (NASDAQ:AMZN). The problem retailers face is the ubiquity of online shopping.
Studies have shown that almost 50% of all retail sales across all channels either take place online or are influenced by online research. That can result in showrooming for retailers, where a customer makes a price decision online, and then uses the store to try out the physical item. Best Buy has fought showrooming with some success by offering to match online prices and by giving customers the option to order online and pick up the item at the store. That helped the company increase online sales as a total of all sales, and it pushed up online revenue by 15% last quarter.
Best Buy's success -- the company is still in business and the stock has risen 245% this year -- is one of the early feel-good stories. Other companies have not had the same level of success.
The failure of omnichannel
Omnichannel's biggest failure is its inability to live up to expectations. One of the biggest sticking points is the gap in service that customers experience after a sale is made. For instance, in order to return a Barnes & Noble Nook for repair under warranty, you have to mail the Nook back to the company, even if you bought it in a store. With other companies, the story is often similar -- products purchased online can't be fixed in-store, and forcing a customer to go online or get on the phone is the antithesis of omnichannel.
Even though it only has the one real channel, Amazon has been surprisingly good at managing the omnichannel experience. A perfect example is its new Kindle live video tech support. The company saw a niche that no one was even thinking about and jumped on it. Now, Kindle owners can get support through multiple channels -- or devices -- and they control the experience.
2014 is another chance to get it right
That's the crux of omnichannel -- allowing customers to decide how their interactions with the company flow. So far, while many companies have at least tried, very few have gotten it right. One other standout is Macy's (NYSE:M), which has made omnichannel a major part of its reinvention. The company has used in-store marketing, for instance, to move customers between channels when they're looking for more sizes and colors.
It's also changing its distribution system, shipping items directly from stores that are closer to customers or that have extra stock. The learning curve is still firmly in place for Macy's, as it is with most omnichannel retailers. Moving away from the classic shipping model costs money, and Macy's has seen a hit on margin, but if the program succeeds, the business could find itself out in front. Next year is an opportunity for other retailers to play catch-up and to learn from past mistakes.
Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.