Omnichannel versus Multichannel Supply Chains and Marketing

I would venture to say most people use the terms omnichannel and multichannel interchangeably. For casual conversations, using them interchangeably is probably not a big deal. When it comes to creating supply chains and marketing efforts, however, the differences are important. “Omni” and “multi” don’t mean the same thing. The dictionary states that “omni” means “all; of all things” and/or “in all ways or places”; whereas, “multi” means “more than one; many, especially variegated” (i.e., marked by variety). The differences are subtle but important.

Omnichannel versus Multichannel Supply Chains

Jason Rosing (@JasonRosing), Founding partner of Veridian, writes, “In supply chains, omnichannel solutions are often used interchangeably with multichannel solutions. On the surface, both forms of supply chain operations seek to provide multiple sales channels to consumers. However, understanding the elements of omnichannel vs. multichannel supply chain is essential to maximizing profit margins in a tightening economy.”[1] He notes, “Multichannel supply chain solutions rose in response to the rise of the internet. Consumers wanted options in how they purchase goods.” He goes on to explain why multichannel supply chains can become a problem rather than a solution:

“Multichannel supply chains tend to develop organizational silos that focus solely on serving one channel. In other words, online sales may have its department, warehouse management system and transportation system, and brick-and-mortar stores use similar systems. Unfortunately, a disconnect grows between each department, increasing costs and reducing visibility across the supply chain.”

Source: iClipart

You might think about the difference between multichannel and omnichannel supply chains this way: Multichannel is about providing customers with a variety of ways to purchase your goods. Omnichannel is about ensuring order fulfillment is seamless for the customer. Rosing explains, “Omnichannel supply chains are like multichannel supply chains in respect to serving consumers across different channels. However, omnichannel solutions provide one-touch integration across all channels to provide a superior customer service experience.” Jon Kuerschner, Vice President of product management and consulting at HighJump, adds, “Success today is ultimately measured by the customer experience. … Providing that quality customer experience is the common goal of businesses navigating their way through the increasingly complex omnichannel world. In the recent past, companies viewed it as a distant goal. However, the ever-growing number of selling channels and competitors, along with customers’ growing expectations, have made it necessary for survival. … Omnichannel fulfillment has transformed the supply chain quickly, and another transformational shift could be closer than you think.”[2]

Omnichannel versus Multichannel Marketing

Just as the terms “omni” and “multi” mean different things for supply chain professionals, they mean different things for marketers as well. Jennifer Polk (@JenPolk1) writes, “When you apply [the definition of ‘omni’] to marketing, it suggests that your brand and your message should be everywhere, all the time — omnipresent in the lives of your audience. And, in fact, that’s how many marketing teams operate. They approach marketing the way you’d tackle grocery shopping. Milk, eggs, social, mobile — checking each box and covering every conceivable marketing channel. On the other hand, multi- means ‘more than’. Applied to marketing, this means more than one channel, but it doesn’t necessarily mean marketing occurs simultaneously across all touch points. It allows for synchronization.”[3] She explains:

“As your marketing matures, it’s time to evolve to a more carefully coordinated approach, based on data and driven by insight. Omni-channel marketing requires you to know your audience and which channels they use, but it ignores the distinct role that each channel plays in their buying journey. Multichannel requires context, specifically, a greater understanding of where your customers are in their buying journey or decision-making process, and the ability to apply that insight during planning and throughout execution to make sure your marketing is in tune with their needs.”

Polk’s views (or, at least, her definitions) are not universally accepted. Marketers from Whisbi insist an omnichannel marketing strategy is better than a multichannel strategy — exactly the opposite of what Polk stresses. They write, “The change from a multichannel strategy to an omni channel one can mean a big change for any business. Basically, it is the difference between having many strategies across multiple media channels and having a ‘multi-channel’ strategy.”[4] Although it seems the two views are contradictory, both views focus on the same goal: synchronization of marketing efforts. Lisa Manthei (@liiisamanthei), Marketing Communications Manager at Emarsys, agrees synchronization is the goal but believes multichannel is about platforms and omnichannel is about marketing.[5] She explains:

“Multi-channel marketing refers to the ability to interact with potential customers on various platforms. A channel might be a print ad, a retail location, a website, a promotional event, a product’s package, or word-of-mouth. Omnichannel refers to the multi-channel sales approach that provides the customer with an integrated shopping experience. The customer can be shopping online from a desktop or mobile device, via phone, or in a brick-and-mortar store, and the experience will be seamless. Upon first glance, it seems as though the aim of each approach is to interact with consumers via an assortment of different channels, but although the terms may appear to be only subtly different, the true meanings and resulting strategies go down two distinctly different paths. … The multi-channel approach merely aims to get the word out via the maximum possible number of channels. … The omnichannel approach inter-relates every channel to engage with customers as a holistic whole, to ensure they are having a wonderful overall experience with the brand throughout each and every channel.”

Manthei insists, “Marketers must make the shift to focus on omnichannel efforts in order to increase customer retention and in turn, revenue.” It appears to me the experts are pursuing the same goal. If you find the definition of terms confusing, focusing on the goal is probably a better way forward than worrying about whether you defined the terms correctly.

Omnichannel versus Multichannel Customer Experience

The bottom line for companies should be providing their customers with the best possible experience. If you take a macro-view of what analysts saying about multichannel and omnichannel strategies (regardless of whether the subject is supply chains or marketing), the overwhelming conclusion is that providing customers with a seamless path to purchase is what matters most. Omer Minkara (@omerminkara), Research Director at Aberdeen, reports his studies conclude, “Companies with well-defined omni-channel customer experience management (CEM) programs achieve a 91% higher year-over-year increase in customer retention rate on average, compared to organizations without omni-channel programs. These organizations also average a 3.4% increase in customer lifetime value, while those without omni-channel programs actually diminish customer lifetime value by .7% year-over-year.”[6] Erwan Paccard (@erwan_paccard), Director, Solution Marketing at Dynatrace, adds, “Omnichannel is no longer about maximizing channel efficiency. It puts the customer, not corporate silos, at the core of the strategy. The omnichannel goal is to deliver consistent and seamless experiences for the customer to better engage and convert him or her.”[7]

Footnotes
[1] Jason Rosing, “Omnichannel Vs. Multichannel Supply Chain: What’s the Difference?” Cerasis, 25 May 2017.
[2] Jon Kuerschner, “Transforming Your Supply Chain for Omnichannel Fulfillment,” Multichannel Merchant, 6 June 2017.
[3] Jennifer Polk, “Multichannel vs Omni-Channel Marketing,” Gartner for Marketers Blog, 16 October 2015.
[4] Staff, “Omnichannel,” Whisbi.
[5] Lisa Manthei, “4 Important Differences between Multi-channel & Ominchannel Marketing,” Emarysys, 3 October 2016.
[6] Omer Minkara, “Multi-Channel vs Omni-Channel Customer Experience: Distinct Value in the Subtle Differences,” Aberdeen Essentials, 11 July 2014.
[7] Erwan Paccard, “Omnichannel vs Multichannel: Are they so different?Multichannel Merchant, 13 February 2017.

Follow me on Twitter