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Multichannel Retailing: Definition, Benefits & Challenges

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  • 0:03 What Is Multichannel…
  • 1:04 Benefits of…
  • 3:22 Drawbacks of…
  • 4:10 An Example
  • 5:07 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

This lesson will identify the benefits of multichannel retailing, such as customer loyalty and improved analytics. We will also look at challenges, such as information security and personnel time. Examples of multichannel retailing will be given.

What Is Multichannel Retailing?

Have you ever seen something you wanted to buy right then and there? When you go to the store, do you want to know if another store has the same product at a lower price? What about sitting on your couch and seeing a product advertised on television that you'd like to buy right away? If you like ordering goodies from your couch, car, or deck, you're a fan of multichannel retailing.

Multichannel retailing is when a company provides numerous ways for customers to purchase goods and services. This marketing strategy could include selling through traditional outlets such as catalogs, brick-and-mortar stores, mail, and telephone. But, it also includes nontraditional electronic and mobile outlets like websites, chats, emails, apps, and social networks.

Multichannel retailing is a way to build a brand and reach a lot of consumers. You want to target channels that give you the most return on your investment. Let's review the benefits of multichannel retailing and look at Sears as an example.

Benefits of Multichannel Retailing

Multichannel retailing is a marketing concept that is always evolving. The bottom line is that most companies these days are expected to give customers a variety of ways to shop. Customers want convenience, and they want things done immediately. Multichannel retailing offers the following benefits:

  • Flexibility for consumers when purchasing and paying for goods and services
  • More opportunities to build a brand among diverse audiences
  • Additional chances to solicit and use consumer testimonials
  • 24-hour access to customers to build brand loyalty
  • A greater degree of visibility among various demographics
  • Improved analytics to help understand consumer behaviors

Sears was one of the first companies to use a multichannel retailing model. Established in 1886, Sears started as a traditional outlet, a mail order catalog store. By the 1950s, the company built several brick-and-mortar stores. After expanding its Kenmore, Craftsman, and Diehard brands, it was acquired by Kmart in 2004. Sears continued its multichannel transformation.

Combined with Kmart, Sears has turned itself into a diversified, online behemoth. The company not only owns familiar brands such as Discover and Allstate, but it has dramatically improved convenience for customers wanting their brands. Now consumers can buy something in the store and have it shipped home or vice versa. Interestingly enough, Sears continues to invest in different types of brick-and-mortar stores, including outlets and discount stores.

The company has improved its retail sales with a large investment in online marketing channels and changes. For example, Sears became a part of the the Shop Your Way rewards program, which is an online platform that builds shopping around a social network. The company also expanded its app, Sears2go, which allows you the convenience of shopping with your mobile phone.

Sears even offers an electronic personal shopper from its website while giving store customers the flexibility to use a kiosk in its stores. By offering multiple shopping, payment, and shipping methods, Sears looks to continue shifting its business model to more of an online retailer. Now that we know the benefits of multichannel retailing, let's look at the drawbacks.

Drawbacks of Multichannel Retailing

The drawbacks of multichannel retailing are usually related to companies spreading themselves so thin that they are not able to offer a truly integrated experience to customers. For example, there are a few questions a company needs to answer before expanding into multiple channels as a marketing plan:

  • Are you able to keep the prices of goods and services comparative to competitors?
  • Can you offer a comparable customer service experience online?
  • Do you have the ability to keep customer information secure in all settings?
  • Are you able to compete when consumers compare quality across other retailers?
  • Do you have the money to invest in targeted messaging?
  • Do you have the staff available to maintain the multiple channels?

If a company answers yes to these questions, it may be ready to head into more retailing channels.

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