- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Pricing Trends
- 11 Market Size and Forecast
- 12 Market Outlook
- 13 Technology Roadmap
- 14 Competitive Landscape
- 15 Competitive Factors
- 16 Key Market Players
- 17 Strategic Conclusion
- 18 Further Reading
- 19 Appendix
Definition / Scope
The commercial transactions are undergoing a significant transformation, worldwide. The customer shopping experience has evolved over the years; from going to a physical store to purchase a product or a service; to purchasing the same product or service under the umbrella of e-commerce; to buying the same product or a service through multiple channels (that includes smartphones, web or a physical store); to finally been made available the same product or service at the customer's demand at anywhere and anytime.
Multi-channel retailing means a company sells in multiple online channels (e.g. a web store, marketplaces, and social media). Omni-channel refers to retailers with both a physical and digital presence.
It is a modern approach to commerce that focuses on designing a cohesive user experience for customers at every touchpoint. This differs from traditional marketing, where individual channels were optimized without necessarily taking the whole experience into mind.
Omni-channel basically aims at integrating all diverse shopping channels into one, so that consumer efforts are reduced and at the same time they make an informed choice. The omni-channel retailing aims at enhancing the customer buying experience by allowing them to seamlessly access the same product or service across different channels of shopping.
The omni-channel retail market is expected to increase due to growth in retail e-commerce industry, technological up gradation, innovations in point of sale terminal technology, increasing smartphone users, etc. Yet the market faces some challenges such as, need to develop sound order management system (OMS), reluctance to adoption of omni-channel retail concept and fast paced software development.
The global retail omni-channel commerce platform market is segmented as e-Commerce, Order Management and Others. e-Commerce is the largest segment in terms of revenue share, estimated to hold about 60% of the global market value share by the end of 2017. This is however anticipated to dip to about 55% by the end of the forecast period in 2025, resulting in a loss in BPS to the tune of 470 basis points.
The e-Commerce segment is estimated to reach a market valuation of US$ 8,305.2 Mn by the end of 2025, registering a CAGR of 18.7% in terms of value during the forecast period 2017 – 2025. However, the other segments are expected to register high Y-o-Y growth rates throughout the forecast period.
The Others segment will also lead in terms of value CAGR, exhibiting a growth rate of 21.8% during the forecast period. In terms of value, the e-Commerce segment is projected to be the most attractive solution type in the global retail omni-channel commerce platform market during the forecast period, with a market attractiveness index of 5.0. In 2016, the e-Commerce segment was valued at US$ 1,786.4 Mn and is expected to witness high growth in terms of revenue throughout the forecast period.
Below is a global overall progress chart of omnichannel market progress. This development is measured on a scale of 100 and depicts that US and UK are still focusing on the potential of omnichannel market and investing further to reap in the future retail benefits and better customer experience.
|Base Year||2017||Researched through internet|
With the accelerated pace of change in the retail environment, it is not possible to meet customers’ changing expectations in how they shop in stores or through eCommerce.
The risks associated with expansion into global markets include difficulties in attracting customers due to a lack of customer familiarity with the brands, lack of familiarity with local customer preferences and seasonal differences in the market.
While merchants are competing to quickly stop omnichannel fraud, the majority of merchants are still nervous about the blurring of card-present and card-not-present transactions. 77% of merchants believe their multichannel approach to retail makes fraud prevention harder and 76% actually say it makes them more open to fraud attacks.
There are possible vulnerabilities in cross-channel, or omnichannel, commerce. If not careful, merchants could compound their risk by having both online and brick-and-mortar stores. For example, if customers can buy things online, initiate chargebacks, and then return those things to brick-and-mortar stores for a refund, chargeback fraud might double in cost.
Top Market Opportunities
Redefine digital brand - Going omni-channel helps to redefine in a digital space. It sort of breathes a new life into what probably was not exemplary. With a little bit of technological and design upgradations, omni-channel business model can totally revamp the brand identity. It can help to reach markets that did not existed. Most people access information about brands using online properties, omni-channel strategy is the way to go.
Use technology to fill the existing gap - Existing gaps can be filled with responsive technology that allows you to bolster the web, mobile and offline strategies while also ensuring that the cloud and ERP technologies are up to date. All these factors seamlessly allow to reach the targets, ultimately leading to better sales.
Enhance user experience - It is a well-known fact that when user experience is enhanced through technological or any other means, they usually come back for more. Omni-channel business model is all about enhancing user experience with seamless integration. This helps customers to make quick decisions without getting distracted while it also helps you run your business and clear inventory quickly, without causing unnecessary delays. Last but not the least, psychological studies have pointed out that a sense of unity is required to make people take action.
Drive more sales It does not need to be said again that seamless integration of technology and CRM helps to drive sales. Yet, it is one of the most important features of omni-channel business model. It helps people to go ahead and do what they want when they are using your website or app. At the same time, it creates a sense of connectedness so they usually end up buying more than with any other kind of business model.
Clear inventory quickly
One of the biggest pain points while running in ecommerce store is that inventories get stale. Seasons come and seasons go and retailers are often left wondering how to clear the stock. With omni-channel business model, doing this becomes much easier than on other platforms.
Boundary-less : Today’s retailing is boundary-less in the sense- The are no boundaries of when consumers shop No physical boundaries of where consumers shop and purchase from Retailing now transcends boundaries of states and even countries “Purchases” are not defined by a “sales transaction” … a purchase is now a journey that is boundary-less in scope, sources, touch points and time
Omnipresence : Consumers now have mobile phone portals that enable virtual shopping in the most rural areas of Africa, Asia or India.
As much of 60% of consumer search is on mobile devices
65% of retail purchases involve a mobile device in the purchase journey
70% of local mobile searches resulted in purchases
Technological Barriers: Requiring a complete integration of all channels, Omni-channel strategy increases the complexity of managing operations and supply chain. To satisfy customers’ expectation, retailers must have an advanced warehouse management system to track inventory in all repositories in real time.
Synchronization of data in Integration process: The challenge of Omnichannel retailing is how to synchronize all the data across channels in a faultless way without losing any information.
Channel Conflicts: At the very first phase of Omni-channel execution, infrastructure development of a retail business often fails to meet the goals and customers’ demands. Consequently, channel conflicts arise when inventory becomes limited while goals are incompatible.
It means that good products or services are not enough to turn a new customer into a long-term one without an engagement strategy. In this ever- changing market today, the first and foremost goal is to attract more long- haul partners, not the single-deal ones.
Associating Omni-channel model with inventory - There takes a considerable effort as people who purchase in a brick and mortar store may find that what they need is no longer available, even if they had cross-checked before leaving home. It becomes slightly difficult to ensure that omni-channel is really seamless in certain situations like this unless there is someone to monitor all the time and also to communicate to the customers. It is not always perfect.
Staying relevant in a changing market - While omni-channel model is as relevant as it could get today, remaining relevant in all spheres of business may be a challenge. This means, remaining omni-channel throughout the business career remains a challenge for a number of reasons. Marketing techniques, customer preferences, technology etc change very quickly. To be omni-channel truly, one needs to also remain in sync with the changes and make all those changes seamless across business processes.
Remaining technically up-to-date - There needs to continuously seek the help of developers and responsive designers who ensure that deeper levels of integration are made possible. There is nothing more undesirable than being irrelevant in a world that is constantly changing.
Being omni-channel also requires the help and assistance of the staff. Staff will need to be trained about its challenges and also the custom process of handling an omni-channel strategy. While this may not sound like a lot, training the staff requires additional expenditure and probable investment made to customize existing HRMS, through which training models can be delivered.
Retailers first must recognize that their core asset is their customer and invest in strong Master Data Management solutions to gather customer information in an Omni-Channel manner.
Other foundational components include having visibility to key master and transactional entities across the supply chain – i.e. product, inventory and orders.
An intelligent analytics platform deriving insights from these core entitites would then serve to be of tremendous value to retailers in framing their personalization strategy, CRM strategy and Omni-Channel initiatives.
Mobile technology investments are a must to ensure the connected customer can have desired levels of personalization.
Mobility enablement of in-store associates and mobile WFM solutions can play a key role in tackling show-rooming with empowered staff.
Digital signage, touch-screen kiosks and virtual trial rooms to bring in an endless aisle in-store are ways to provide superior and engaging experiences in store.
On the basis of solution, the global retail omni-channel commerce platform market is segmented as e-Commerce, Order Management and Others. e-Commerce is the largest segment in terms of revenue share, estimated to hold about 60% of the global market value share by the end of 2017. This is however anticipated to dip to about 55% by the end of the forecast period in 2025, resulting in a loss in BPS to the tune of 470 basis points.
In terms of value, the e-Commerce segment is projected to be the most attractive solution type in the global retail omni-channel commerce platform market during the forecast period, with a market attractiveness index of 5.0. In 2016, the e-Commerce segment was valued at US$ 1,786.4 Mn and is expected to witness high growth in terms of revenue throughout the forecast period.
Market Size and Forecast
The omnichannel segment is estimated to reach a market valuation of US$ 8,305.2 Mn by the end of 2025, registering a CAGR of 18.7% in terms of value during the forecast period 2017 – 2025.
However, the Others segment is expected to register high Y-o-Y growth rates throughout the forecast period. The Others segment will also lead in terms of value CAGR, exhibiting a growth rate of 21.8% during the forecast period.
Below chart, shows the growth of market in comparison to in-store sales channels. We see a clear growth in omnichannel platforms for eCommerce dominant over in-store sales. This trend is likely to increase in future as well at the same pace with many new entrants marking their presence.
Smarter consumer devices : Businesses worldwide have already moved toward the Bring Your Own Device (BYOD) environment. This trend reduced IT costs while freeing employees to use the tools with which they’re most comfortable. Cloud-based, browser-enabled solutions allowed this change in approach.
Advances in programming languages have dramatically increased the capabilities of browser-based software. HTML5 in particular has allowed browser-based applications direct access to a system’s hardware, which is one of the primary enablers of the BYOD movement.
At present there are more than 200 competitors in this segment but leaders are still amazon, facebook and google with their strategies. Although many retailers have elements of omnichannel within their business – click and collect or reserve in store for example – very few have fully embraced or implemented it throughout their business.
Seamless lightweight Experience: 4G LTE is the latest enhancement in bandwidth and soon 5G will be the new standard. These enhancements have enabled access to far more useful and context-aware information to the mobile field service employee, allowing instant exchange of important information from text messages and documentation to streaming video and inventory exchanges. With this technology, video calls have become commonplace between techs, dispatchers, field supervisors, and remote support, helping to identify and resolve problems more quickly.
Data analytics: The combination of smart devices, increases in network bandwidth, and advancements in programming languages have allowed for the high-velocity collection of valuable field data. Workforce efficiency, business trends, and customer feedback—just to name a few—are now measured in real time.
Availability of suitable technology:
Whilst there are a number of companies offering solutions that can help a retailer move towards omnichannel, there are very few technology solutions available that cover multiple significant areas of an omnichannel business. There are many sophisticated POS solutions available, but how many also offer enterprise web or mobile capabilities? There are many enterprise e-commerce platforms available, but how many could replace a POS in-store?
Key Market Players
The key market players in this segment are facebook, amazon, google, Cognizant, NCR, Oracle, IBM, SAP, Toshiba, Diebold Nix and many other others fighting in this segment. As the market still has loads of potential many other competitors are likely to intervene and fight for the revenue shares.
The omnichannel strategy should be adjusted to the specific purpose of each channel, and all channels should be tuned according to specific stages of a customer journey.
The strategy should also be influenced by the type of service a given customer is using, or their recent history of interaction with the CSP. In this respect, post-sales servicing is at least as important as online shopping, because it increases loyalty, decreases churn and boosts sales in the long run.
- B2B: Business to Business
- B2C: Business to Consumer
- CRM: Customer relationship Management