Question

Discuss the difference between omni-channel and multi-channel and why omni-channel dominates. Give an example of each solution and the costs associated with your selections.

Answer 1

Both omni channel and multi channel involves selling products and merchandise across different channels which includes digitial channels and physical channels. The key difference is how the experience of the customer is made different or seamless across these two channels. In a multi channel environment, there is a clear demarcation between the digital channel and the physical channel and hence both have separate distribution network and inventories. But in an omni channel framework, a customer may order from a digital interface and can actually collect the merchandise from the physical store thus providing the customer a seamless experience.
For the above reason of being able to provide a superior customer experience, the omni channel strategy definitely is superior to the isolated multi channel strategy and hence dominates the other one.
An example of a multi channel strategy is where a customer is able to make a purchase from an online channel or a brick and mortar store. The software backbone of these two different networks may be different and may have some legacy systems. Typically the cost associated with technology and supply chain integration is less but may incur additonal cost of higher inventory and lost sales.
In an omni channel strategy, there is significant technology intervention which necessitates higher capital expenditure and thus requires significant capital to be set aside. However, there could be significant savings due to lower inventory and better customer experience.