Competing in the Age of Omnichannel Retailing - Term Paper Example

Competing in the age of omnichannel retailing (Author’s name) (Institutional Affiliation) Introduction Omnichannel is a business concept that is emerging for retail operations that are characterized by customer engagement and service delivery activities and blend in offline and online channels. Omnichannel is a modern model, but it is developing at a higher rate mainly concentrating on a simple crossover between stores, helpdesks, and websites. Scholars and analyst have revealed that the concept is expected to grow into a complete harmonization of an engagement channels and service delivery enabling clients to pursue various cross-channel journeys (Beck & Rygl 2015, p176). Omnichannel is a business model used by many companies in different industries. The model has many characteristics which make some commentators view the concept as an e-commerce-enabled natural extension (Beck & Rygl 2015, p176). Some of the features of omnichannel are; complex client segmentation, modularization of services and development of the universal image. Omnichannel retailing is a model largely driven by technology. The digital age has multiplied customers’ means of engagement and the way services are delivered. Additionally, the omnichannel concept has emerged as a dominant logic service strategy resulting in the participatory culture (Lazaris &Vrechopoulos 2014, np). Globalized retailers have become more competitive as the revolution of social media has continued which has declined the traditional strategy. After Brandon McDonald had visited a local store to acquire a camera's single-lens reflex, he discovered that the distinction between online and physical retailing was vanishing due to technology development (Brynjolfsson et al. 2013, p23). Emerging technologies are providing customers with information on products and how they can purchase items they do not find in physical retailing. Retailers can be helped by mobile technology both offline and online to reach new customers and expand their market share. Therefore, retailing competition in omnichannel age is growing, and retailers are expected to rethink their strategies. This essay aims at critically reviewing the article Brynjolfsson, E., Hu, Y.J. and Rahman, M.S., 2013 “Competing in the age of omnichannel retailing. MIT Sloan Management Review 54(4), p.23.” Critical review The perspective of Brynjolfsson et al., (2013), is that omnichannel has replaced traditional retailing. Therefore, the importance of competition in the retailing industry is to increase market share and acquire new customers. Omnichannel should be considered as a model that will increase globalization of companies as well as increasing customer engagement. According to Brynjolfsson et al., (2013), the interaction between clients and retailers has been enhanced by mobile technology advancement. Brynjolfsson et al., (2013), claims that the technology is increasing boundaries between the internet and traditional retailing and this is the reason retailers across the world are interacting more with their customers through various touch point (p23). The digital transformation research in The United Stated shows that 50 percent of the citizens who own phones are in possession of smartphones and over 70 percent of this population use their mobile devices for shopping purposes (Zickuhr 2012, n.p). Brynjolfsson et al., (2013), claims that this habit is increasing growing worldwide and people rely more on online information rather than physical retailing. According to Brynjolfsson et al., (2013), this advancement in technology has turned the retail industry into a showroom that has no walls. The article also argues that retails have adopted concierge model that helps customers, which are different from physical retailing that only focused on deliveries and transactions. The point of Brynjolfsson, article is that consumers’ ignorance and geographical barriers will become critical for most supply-chain partners and retailers. Thus, they should reevaluate their competitive strategies because people are becoming more focused on virtual contents accessible from devices such as wearable computers, Google Glass, and smartphones. According to the article, the developing popularity of application on smartphones that are location-based has brought the changes in the omnichannel age. Pew Research claims that 74 percent of mobile device owners in 2012, used smartphones to acquire location-based information. Therefore, the argument advanced by Pew research is supportive of Brynjolfsson view that these applications are increasing omnichannel retailing competitiveness. Pew research center, provide a prove that retailers such as Walgreens have colluded with social networking website such as Foursquare that provides applications that are location- based to offer electronic coupons to customers' phone when they enter the stores. Other retailers such as Redlaser have adopted the similar technology to increase its market share (Hansen & Sia 2015, p13). Brynjolfsson and others studies claim that mobile devices technologies also have become more advanced. Some of the advanced applications are Loopt and Doot which enables users to check location (Brynjolfsson et al. 2013, p23). The article argues that for retailers to be successful in the omnichannel environment, new strategies should be adopted, these plans include building a customer relationship, pricing and scheming a new shopping experience. Brynjolfsson argument is that for omnichannel success, all retailers need to create short-term strategies such as switching costs through service contract and loyalty programs, creating product-service bundles and use of analytics to understand customer values and requirements. Dual-channel retailers should use the two channels to manage ROI and CRM metrics. Consequently, pure online retailers should focus on non-exclusive products, convert their product to search goods, provide niche products (Nault & Rahman 2011, np). Other researchers agree with the new strategies suggested by the article. Brynjolfsson and others seem to be claiming that mobile devices blend online and offline information to allow customers to virtualize the products. Along the line of Brynjolfsson and others, analysists argue that mobile technology is in the process of changing consumers’ expectations and behavior and can help both offline and online retailers to expand their markets and reach a wider market. According to the eBay CEO, Donahoe mobile technology has connected consumers to the retailer 24 hours a day and costumers buy online not physically. Additionally, the essence of Brynjolfsson and others article is that consumers want to buy products there and then without going to local outlets. Some theorists such as Brynjolfsson and others argue that availability of information and price online, the ability of customers to pick up and shop online have collectively made the retailing environment very competitive. Brynjolfsson's assumption is that all retailers used to depend on customer ignorance and geographical barriers in expanding their market share in the domestic market (Brynjolfsson et al. 2013, p23). The article argues that technology has eliminated these barriers. Therefore, Brynjolfsson and others analysis arguments are persuasive because they are in line with the recent study that has shown that sales of companies relying on physical retail shop have fallen and they must adapt to the changing world to increase their competitive advantages in the world of technology. As argued earlier in the article, location based application open up and increase selling opportunities. Brynjolfsson article claims that omnichannel retailing has been influenced by smartphone technology because retailers can track their customers and direct them to the available information about the product they may need. The article is objectives, and its concepts are well defined and also supported by other literature conducted about the same subject. Through the use of data from other studies such as those of Pew research center, the article gives adequate evidence of changing behavior of consumers which is calling for new competing strategies to be embraced by retailers (Piotrowicz & Cuthbertson 2014, p13). The article of Brynjolfsson and others fits well in the wider literature about omnichannel retailing because it provides supportive information about the advancing world of technology. Brynjolfsson et al., (2013), uses a style that is clear and that enables the reader to understand the argument of the article. The omnichannel retailing article advances retailers and readers’ knowledge on the subject of internet impact on consumers’ behavior and needs. According to the various researchers, in the coming days most retailers will choose incentives that will attract customers and trace their history information about their needs and preferences (Dorman 2013, np). However, the argument advanced here is opposite to that of Brynjolfsson work. Other literature claims that omnichannel retailing strategies are related to those of e-commerce but is explain well how using e-commerce approach will apply for the success of online retailing. Brynjolfsson view depends on the assumption that retailers should start adjusting to the online and offline world in building customer relationships, pricing and designing customers shopping experience. Therefore, Brynjolfsson and the others authors of the article claims that the omnichannel success strategy for the developing retailing environment depend on the type of consumer, the product and demand level of the customers the retailers are targeting to reach (Brynjolfsson et al. 2013, p23). However, the author does not provide enough data and information to support this claim. One cannot use the claim to advance their knowledge about the subject because the data provided is not adequate. Brynjolfsson article is right so far when it argues that providing curated content and attractive pricing expands the retailer market share and also attracts new customers. Amazon success supports the argument compared with other retailers that have ignored the importance of curator merchandising and the pricing strategy. Brynjolfsson also claims that consumers are attracted to shop at Amazon due to good pricing even though they suppose curate merchandise from the retail. Analysts agree with Brynjolfsson argument that Amazon has a greater competitive advantage as an online retailer compared to eBay because of its systematic and neat presentation. Also, Amazon review and well-curated content improve the customer interaction with the retailer (Bell et al., 2014, p45). Rigby (2011) article argue that the limitation of omnichannel retailing is the inability to analyze and evaluate data (p70). The author supports this information by providing examples of Catalina Marketing Company that has introduced an in-store tool that personalizes online advertisement. The article also suggests that retailers should not use price comparison approach. The point being assumed here is, consumers using mobile devices to purchase the products from the retail only rely on easy search (Brynjolfsson et al. 2013, p23). The central concept addressed in the article is that retailers that offer products with distinctive features will be more competitive in the market. However, the concept is based on the assumption that the changes will add value and avoid the risk of annoying the customers. Additionally, Brynjolfsson and the other authors claim that historical data that explains the relationship between consumers’ transaction and products can create additional profits and sale. The point of Brynjolfsson argument appears to be that, a bundling strategy is a powerful approach for retailers to use when they need to improve sales. To cater to the needs of the consumers who prefer physical stores, retailers should ensure the price difference between local and online store should be minimal (Streitfeld 2011, p2011). The article claims that physical retails offer trust and instant gratification and services. This argument advanced here is supported by various analysists. For the success of companies that use the omnichannel retailing approach, they should sell products that are niche to attain a greater advantage compared to physical stores. Brynjolfsson seems to be claiming that, online retailers; products need to be different from those of physical stores to attract consumers and avoid competition (Bell et al. 2014, p45). The niche product will blur the boundaries between the internet and traditional retailing. Therefore, the world is of retailers is becoming more internet based and retailers are required to learn on how to cater for consumers’ needs. Stores providing high-quality products with attractive prices are assumed to be easily traceable by consumers, and their services are preferred while retailers with inferior products will not succeed in the omnichannel environment (Bell et al. 2014, p45). Conclusion Using Brynjolfsson article, it is possible to illustrate that omnichannel retailing concept has a greater impact on consumers shopping needs. As a result, retailers will be expected to provide exclusive and customized products and become agiler in producing batches of goods that are unique. Therefore, it is logical to conclude that online store has replaced the era of traditional retailing due to the advanced usage of location-based applications installed in personal mobile devices. Additionally, internet channels have given consumers a lot of information that they can use in making purchase decisions. The analyses of Brynjolfsson article demonstrate that retailers need to develop a strategy that will help them succeed in the omnichannel environment. Due to the advancing technology in smartphone application and other mobile devices, the omnichannel model is inevitable for all retailers for them to acquire new customers and expand their market share. Therefore, the article's argument is logical and adequately explains the change in the retailing industry. Bibliography Beck, N. and Rygl, D., 2015. Categorization of multiple channel retailing in Multi-, Cross-, and Omni‐Channel Retailing for retailers and retailing. Journal of Retailing and Consumer Services, 27, pp.170-178. Bell, D.R., Gallino, S. and Moreno, A., 2014. How to win in an omnichannel world. MIT Sloan Management Review, 56(1), p.45. Brynjolfsson, E., Hu, Y.J. and Rahman, M.S., 2013. Competing in the age of omnichannel retailing. MIT Sloan Management Review, 54(4), p.23. Dorman, A.J., 2013. Omni-channel retail and the new age consumer: an empirical analysis of direct-to-consumer channel interaction in the retail industry. Hansen, R. and Sia, S.K., 2015. Hummel's Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned. MIS Quarterly Executive, 14(2). Lazaris C, Vrechopoulos A. From multi-channel to “omnichannel” retailing: review of the literature and calls for research. In2nd International Conference on Contemporary Marketing Issues,(ICCMI) 2014 Jun 18. Nault, B.R. and Rahman, M.S., 2011. Reach versus competition in channels with the internet and traditional retailers. Working Paper. Calgary, Canada: University of Calgary. Piotrowicz, W. and Cuthbertson, R., 2014. Introduction to the special issue information technology in retail: toward omnichannel retailing. International Journal of Electronic Commerce, 18(4), pp.5-16. Rigby, D., 2011. The future of shopping. Harvard Business Review, 89(12), pp.65-76. Streitfeld, D., 2011. Amazon signs up authors, writing publishers out of the deal. The New York Times, 16, p.2011. Zickuhr, K., 2012. Three-quarters of smartphone owners use location-based services. Pew Internet & American Life Project. Read More