Martin Öztürk, Sales Consultant at ROQQIO and an expert in complex backend processes, explains the challenges in omnichannel commerce and shows what solutions are available.
Omnichannel commerce is simple — just not for retailers
Omnichannel commerce is simple. For end customers, at least. They order, pay and have the goods delivered to their door — on the same day, preferably. And if something doesn’t fit, they return the product, either to the nearest store or through the post. The catch on the retailer’s side: For these supposedly simple processes to actually run smoothly, organisations have to tackle huge challenges.
The perceived 1-to-1 end customer relationship is a complex multi-to-multi relationship
If you take a closer look at a modern customer journey, you will quickly see that the functions geared towards the customer, on the one hand, and the backend processes, on the other, form a complex, multi-dimensional relationship. This means that behind the shopping experience described above, there is a range of omnichannel processes that have to be used flexibly because the customer determines how they buy and always expects the quality of service to be high.
So ultimately, it doesn’t really matter:
- how and where the end customer orders (eShops, marketplaces, stores, app, voice, social, etc.);
- how and where the end customer pays (cash, credit card, instalments, voucher, split payment);
- how and from where the package reaches the end customer (own warehouse, FBA, external logistics provider, third-party supplier, stores, manufacturer or dispatch via several warehouses);
- how and where the customer returns goods to, if necessary (in-store, by post); or
- what device the customer uses to sign in: they want to see their complete order history and take advantage of all service options (e.g. in the backend of the eShop, in the Instore App, in a mobile app, etc.).
It is also important during the customer journey that the company always presents itself in a uniform way and that the brand experience is consistent.
In short: Whatever the order process, the customer always demands that they receive their package as quickly and smoothly as possible, that they can return it just as easily and that they are well-informed at all times. Disruptions, for example, if an item is cancelled because the store runs out of stock, are a major annoyance for customers these days and often result in poor ratings that affect the retailer both online and offline. And: it’s easy to shop with Amazon or use other marketplaces that attract customers with a high level of service and an almost endless range of products.
Omnichannel backend: welcome to the surface
Most of an iceberg stays below the surface. It’s similar with omnichannel commerce. There is the visible surface, i.e. the touchpoints through which the end customer interacts with the company, and there are the backend processes that are hidden from the customer.
As an example, this includes the following tasks:
- connect different touchpoints quickly;
- specifically prepare item master data for each touchpoint;
- keep the stock for several warehouses up-to-date across multiple touchpoints to avoid over-selling;
- receive and process orders in a wide range of formats and all relevant forms, e.g. create delivery notes, invoices and credit notes;
- route orders to the warehouse that is best suited for shipping (e.g. main warehouse, store, third-party supplier, external logistics provider or manufacturer);
- split the order over several warehouses that have different features;
- ensure the best, uniform communication with the customer for each trigger point (e.g. when shipping goods, receiving returns, paying out a credit, cancellation, etc.); and
- the best integration into existing IT infrastructure to not build up an e-commerce silo.
Problems that arise with scaling
As a rule, a 1-to-1 relationship (an eShop and a dispatch warehouse) will change into a more complex multi-to-multi relationship over time. This means that the number of touchpoints and shipping warehouse options grow. To avoid adaptive programming in the eShop and/or in the ERP system, organisations need a strong solution that maps the backend processes and is especially designed for these kinds of scaling scenarios.
Data and business logic
When IT infrastructure grows, several systems are often used: an eShop, the ERP system, a system from the external logistics company, a system for connecting to marketplaces and a POS system. Each system contains customer and transaction data — and its own business logic. This not only makes it difficult from an operational perspective. Let’s take a look at support, for example: this often involves logging into several systems and being familiar with each one. It’s almost impossible to combine the data from these different pots to generate a uniform customer base, including the history. The result: personalisation, comprehensive reporting, good service and omnichannel are a long way off.
Adaptive programming prevents update capability
Some retailers that don’t have a backend solution try to meet scaling requirements with expensive and lengthy adaptive programming for eShop and ERP systems. Additional ports are also created, which makes the system landscape even more unstable. These adjustments are becoming more and more complex and expensive because of release changes to a new version of the eShop system or the addition of new touchpoints or dispatch warehouses, for example.
Over time, the iceberg under the surface continues to grow and take on uncontrollable shapes. Integrating a new backend solution into the existing IT infrastructure and the operational processes is necessary to prevent this growth, i.e. the creation of an additional e-commerce silo. Such a solution synchronises all customer data including all relevant transaction data and connects ERP, CRM, logistics or financial accounting systems. Special third-party systems can also be easily integrated, for example, for personalisation, automatic text generation, PIM or logistics systems. This is an excellent way to follow the best-of-breed approach.
The solution: a headless system that organises the system landscape
If you analyse the existing system landscape, it quickly becomes apparent that many systems are interconnected in various different ways. These are usually systems that are not designed for e-commerce transactions and their highly automated processes. If you were to add further e-commerce systems to this system landscape, it would quickly end in a chaotic mix of interfaces that sooner or later would no longer be negotiable. As a result, the necessary speed in e-commerce is lost; at worst, there is a risk of a ‘dead lock scenario’. This is because: the systems can no longer be updated due to too many adjustments and further adjustments are no longer possible due to butterfly effects.
Middleware that works in a ‘headless’ way and also contains sophisticated e-commerce business logic can help. This means that data is imported from surrounding systems and, after processing, is passed on to other systems. This is how existing systems are ‘decoupled’ from the online world. People speak of the ‘IT at two speeds’ principle. This is how the complexity in e-commerce is dramatically reduced: existing systems don’t slow down the e-commerce business, the business becomes scalable and the same options an online pure player has are available.
Open to all future touchpoints
A backend system that works in a ‘headless’ way can process a wide range of formats from different touchpoints and harmonise order and customer data. It’s also quick and easy to connect new touchpoints. Perhaps the biggest plus is that the complete business logic can be mapped centrally in such a system.
API: make remote data and functions available centrally
One requirement for a uniform customer experience is for there to be a central data view and that functions can be provided centrally for all devices via an API. As an example, this makes it possible to provide the same function for a return through all channels, whether it’s an online shop, app, PWA (progressive web app), the POS or mobile sales support. This has the benefit that functions do not have to be newly developed or adapted for each device. And that, in turn, leads to a faster time-to-market. Each touchpoint can also access customer data and transaction data, such as the purchase history and returns behaviour, centrally.
No e-commerce without logistics
Logistics is central to e-commerce. While traditional logistics systems are not designed for omnichannel logistics, a special backend solution opens up a huge amount of potential in this area. An order algorithm can be used to find the ‘right’ warehouse for each individual shipment, for example by stock level, proximity to the end customer (geo-routing) or the cheapest shipping option. A shipping order can also be split into different orders, for which several warehouses can be used. As the order algorithm takes place directly in the backend and runs centrally, this means that there is a considerable speed advantage, so over-selling can be massively reduced.