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The 95 + 5 rule for OLD retailers to embrace omni-channel

In a long run, it's not just about growing the 5% online part, it's more like how retailers adopt omni-channel to grow the whole 95% offline + 5% online pie.

Last month, I was invited to BFM Rocks to share my opinions on omni-channel with fellow panelists. Truth be told, I have always felt that traditional retailers are fighting their internal battle (channels conflict), instead of fighting the external war with their old and new competitors.

First of all, let's classify retailers into the "NEW retailers" and the "OLD retailers".

Krabby Patty's secret formula

The NEW vs OLD retailers


NEW retailers are those who started their business online in the first place, while OLD retailers are brick & mortar who have been around much longer than NEW retailers.

Omni-channel for NEW retailers are much straight-forward, they are already familiar with online, using new systems and platforms. In some cases, NEW retailers are opening the physical store to serve as a "customer experience centre".

Omni-channel for OLD retailers are much more complicated, most of them have old (out of date) people, process, system, mindset and approach of doing retailing.

The problem here is many things have changed with the Internet and smartphones, a simple way to define omni-channel is that customers are coming to you via various channels and you need to be ready. At the same time, you've got to be aggressive in reaching out to your customers via digital and mobile channels too.

Omni-channel is not as simple as O2O (online to offline, offline to online) or setting up an online store and "treat it as one of your new outlets to create new sales channel".

For OLD retailers, omni-channel is how retailers can rethink their whole business to catch-up with their customers and competitors. In short, a ticket to sustain and success for the next 10 years and more.

3 omni-channel phases for OLD retailers


Our latest insights show e-commerce penetration in Malaysia stands at 5% this year. In actual fact, many retailers here are generating less than 5% sales from online channels.

In a long run, it's not just about growing the 5% online part, it's more like how retailers adopt omni-channel to grow the whole 95% offline + 5% online pie.

I recommend OLD retailers in Malaysia to consider 3 phases below:

Phase 1 (to boost 5%)

Start selling at e-marketplaces and learn setup, operation, online shoppers behaviour etc. This is easy to start with, but don't just make conclusions based on the sales acquired there.

Phase 2 (to boost 5% + 95%)

With experience gained, invest in your own online store and maximize brand reach & CRM.
* Don't focus so much on the 5% part or immediate online sales, it's the 95% + 5% you are growing.

Phase 3 (to boost 95% + 5%)

Execute the "real" omni-channel by combining both your online and offline channels together. Even though this could be an expensive and painful process, it's a matter of time for OLD retailers to revamp their existing system and business processes to maximize efficiencies and customer experience.

The "real" omni-channel
Image credit: DMA

3 wrong mindsets of OLD retailers


I have previously listed 7 reasons why traditional retailers would fail in e-commerce, here I summarized 3 wrong mindsets of OLD retailers not embracing omni-channel or e-commerce.

1. Online is too small (<5%) and I just need to wait and see.

Do you want to wait for new or modern retailers to make you irrelevant one day? Don't believe? Just refer to the Walmart vs Amazon case.

2. Online is too small and I don't want to invest in people, marketing etc.

Do you know by investing in people and online marketing, it helps your offline channels too?

3. I want to take care of my offline people and channels.

Hire internal talents or external consultants reporting directly to the boss or top management, this is not an internal battle, but you are fighting an external war with your competitors.

Practical tips for OLD retailers to start


It is neither mandatory nor easy for retailers to start with the online store first, but an optimized online or mobile presence is a must! Even without an e-commerce site, here are 5 simple tips for retailers to ponder:

Acquire new customers

#1. Use Google, Facebook to reach out your prospects (new customers), don't forget Google My Business and the recently launched Google Shopping!

#2. Google + Landing Page with leads form = best combination for B2B or service business!

Retain & grow existing customers

#3. Use SMS, email marketing, social media, content marketing, CRM etc. – be creative!

#4. Forget about O2O gimmicks, have you done enough to collect your customers' data via your store (POS or customer service)?

#5. Without going onto advanced CRM, have you started reaching out to your customers via say, email marketing?

Trust me, OLD retailers enjoy huge advantages over NEW retailers if they go online, with existing physical presences, good relationship with the manufacturers or distributors, and more importantly a recognizable or trustable brand.

You just need to play the cards right online.

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ecInsider: The 95 + 5 rule for OLD retailers to embrace omni-channel
The 95 + 5 rule for OLD retailers to embrace omni-channel
In a long run, it's not just about growing the 5% online part, it's more like how retailers adopt omni-channel to grow the whole 95% offline + 5% online pie.
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