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The new challenges of the omnichannel SMB

Part 2 in the SMB 3.0 series

In Part 1 of this series, I discussed the dynamics that have led to today’s’ omnichannel global small or medium business (SMB).  In this article, I explore the opportunities and challenges facing such a business. For a small business, examples of an omnichannel model include the company’s own webstore, participating in the Amazon FBA program and maintaining a distributor network. This model has become the norm in recent years, as consumers embrace online sales.

At the end of 2016, there were over 224 million online consumers, up 20 million from 2015.  Significantly these shoppers are buying online more frequently, with an increase in online transactions of 115 million over the prior year.  Amazon.com accounts for 25% of all online sales.

While the decisions about which sales channels to adopt are important, managing the implications of those decisions can be even more critical.

This is because each sales channel that is deployed requires a distinct set of skills and knowledge to administer, let alone optimize.  Further, decisions relating to specific channels can have far-reaching effects on internal resources, customer experience, and revenue.

For example, if a business decides to sell internationally, the choice of which countries to export to – or not – can be critical.  Selling to Canadian customers has very different implications than selling to consumers in Brazil, where customs delays and unexpected duties can cause logistical nightmares.

While effectively managing all aspects of all sales channels will help ensure the maximum revenue potential, poorly managed or implemented multi-channel strategies will result in:

  • Sub-optimal revenue growth
  • Inadequate Data flow from the various channels to accounting and inventory systems causing
    • sub-optimal sales, due to an inability to identify product and customer trends
    • negative customer experience due to unknown inventory levels
    • accounting noncompliance due to poor multi-currency control (if exporting)
  • Negative impact to the desired customer experience
    • Delivery delays whether caused by carrier errors or using a shipment method which results in a delivery date outside your customers’ expectation can have a severe impact on repeat purchases
    • Using any third party service, from a webstore to an eCommerce channel like Amazon causes the business to lose control over the purchasing experience.

This need for effectively managing an omnichannel strategy is arguably the greatest risk for a small business. This environment is traditionally a large company issue, where the resources exist to either mitigate the risks by sophisticated systems integration, or by manual effort, maintaining spreadsheets and rekeying data.  In a small business, without the people to take on this extra activity, such work goes undone or takes time away from revenue or customer focused activities.

In the next article, I will explore how these issues impact today’s typical distributor.

 

 

David van Toor

I have worked in and around ERP software for much of my (long) career from roles in Sage, Epicor and Avalara from New Zealand to Brazil. I am passionate about Customer Experience, oceans and mountains. I prefer personality over policy or process, and local companies over chains. I may write on any of the above...

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