Omnichannel is the Key to Sustainable Growth
The late 2010s and early 2020s marked an incredible bull run for Direct to Consumer (DTC) brands. During this period, many of these brands saw their annual sales skyrocket, often surpassing over $1 billion from a single channel, and in some cases, even a single product. This period of rapid retail growth highlighted the potential of focusing on a single channel to drive significant revenue. However, that era of exponential growth driven by single-channel strategies is now behind us. Today, brands face significant challenges in growing profitably due to rising customer acquisition costs, increased competition, and higher production and shipping expenses. To navigate these challenges and achieve sustainable growth, brands must explore new channels for growth rather than relying solely on their DTC websites. This shift toward an omnichannel strategy is essential for long-term success.
How are you defining omnichannel?
It’s simple. Omnichannel means selling on multiple channels. In other words, an omnichannel strategy involves leveraging multiple ways to drive revenue, rather than being overly reliant on a single channel. This approach enables brands to diversify their revenue streams, reducing the risk associated with relying on a single source of income. For instance, a brand that initially sold its products exclusively through its own website might expand to include sales through online marketplaces, social media platforms, and physical retail locations. By doing so, the brand can reach a wider audience and mitigate the impact of any one channel underperforming. Below is a sample brand evolution from single-channel to omnichannel:
The complexity increased, but was it worth it?
To answer that, we have to look at the data. Omnichannel customers:
Are more loyal: One study shows they took 23% more repeat shopping trips to the retailer’s stores.
Spend more: An average of 4% more every time they shop in-store and 10% more when shopping online.
Provide more data: By connecting across multiple channels, brands can better understand (and own) their customer relationships.
This data highlights the benefits of an omnichannel approach in driving customer loyalty and increasing revenue. By engaging customers through multiple channels, brands can create a more personalized and cohesive shopping experience, leading to higher customer satisfaction and retention. The insights gained from these diverse touchpoints also enable brands to tailor their marketing and product development strategies more effectively, ensuring they meet the evolving needs and preferences of their customers.
In fact, you’d be in good company
Several brands that you know and love have moved from DTC-only to omnichannel:
What’s the point if I have one or two channels doing very well?
We totally get it–if something is working for you, keep at it! However, consider that each channel has a point where growth tapers. This can be due to many reasons, like market saturation, competition, or increasing customer acquisition costs as you capture more of the market. Relying on a single channel for retail growth can limit your brand’s potential and make it more vulnerable to market fluctuations.
Let’s call this a brand’s DTC channel, which might look like this over time (also known as an S curve because of the shape):
Notice how we had rapid growth and then ran out of gas. This may be all too familiar for some of you, especially if you experienced the DTC ‘bull run’ and slowdown.
However, if we add multiple channels, we can “stack” the S curves. This means that while your DTC channel is growing, but before it flatlines, we experiment by adding another channel. This ensures that when DTC runs out of gas, your new channel (wholesale, etc) is just hitting its growth phase, and so on.
By implementing an omnichannel strategy, brands can ensure continuous growth and avoid the plateau that often comes with relying on a single channel. This approach allows for a more balanced and resilient business model, capable of adapting to changing market conditions and consumer behaviors. For example, a brand might see its e-commerce growth slow down as it reaches market saturation, but by simultaneously developing a presence in physical retail stores or partnering with popular online marketplaces, it can continue to capture new customers and drive sales.
The role of technology in omnichannel retail growth
Adopting an omnichannel strategy may seem complex and daunting, but modern technology has made it more accessible than ever. Tools like Vanik can help brands automate and manage multiple channels efficiently, allowing them to focus on what matters most: building amazing products and delivering exceptional customer experiences. By leveraging technology, brands can streamline their operations, reduce costs, and maximize the benefits of an omnichannel approach.
For example, integrating inventory management systems across all sales channels ensures that stock levels are updated in real-time, preventing overselling and improving customer satisfaction. Additionally, advanced data analytics can provide insights into customer behavior and preferences, enabling brands to optimize their marketing efforts and personalize the shopping experience.
Conclusion
Omnichannel may seem complicated and expensive. While it’s more complex than a single channel, with tools like Vanik, you can automate channels as much as possible and spend your time where it matters: building amazing products and shipping them to dedicated customers. By embracing omnichannel strategies, brands can achieve sustainable retail growth and navigate the evolving landscape of modern commerce more effectively. The shift from a single channel to an omnichannel approach is not just a trend; it’s a necessity for brands looking to thrive in today’s competitive market. By diversifying their revenue streams and leveraging technology, brands can create a robust and adaptable business model that ensures long-term success and profitability. Ultimately, the ability to engage customers across multiple touchpoints not only drives sales but also strengthens brand loyalty and enhances the overall customer experience, positioning brands for continued growth and success in the ever-changing retail landscape.
