Omni-Channel vs Silo-Channel: What Does This Mean for Your Businesses?

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As a CEO of Hatch, together with my team, we are privileged to work with some of the biggest global consumer brands – many of which are Fortune 500 companies. As a marketing technology company that enables indirect-to-consumer sales, we are always closely involved with the considerations and decision-making surrounding go-to market strategies.

New channels are emerging rapidly; think about the rise of online marketplaces or Instagram’s recently introduced shopping functionality. Brands are also adopting direct-to-consumer (D2C) more, while traditional retail sales (online and in-store) remains the preferred choice for most consumers and the most important source of revenue for brands.

Joris Kroese HatchHatch CEO Joris Kroese

Omni-Channel and Digital Transformation

Two key focus areas we see with all brands are ‘omni-channel’ and ‘digital transformation’. To me, omni-channel means acknowledging the existence of, and embracing all sales channels by following a channel-agnostic sales approach. Digital transformation, on the other hand, builds on the expectation that sales are increasingly shifting to digital channels and touchpoints.

An omni-channel sales approach is truly customer-centric as it accommodates the different purchase preferences of the consumer. When thinking about my own shopping behaviour, it comes as no surprise that these different preferences exist.

While I may look for new headphones online, I’d also like to hear how they sound before buying them. And it’s the same with televisions – I can compare them online based on the specifications, but before making the actual purchase I would want to see it. But it works both ways. When I’m in-store considering an expensive purchase, I would also want to see what it retails at online. Or, perhaps I’d prefer to buy from an online retailer that has nearby stores for service, in case I need it. Consumer buying behaviour no longer follows a predefined sequence.

The data we collect at Hatch with all our global implementations also confirms this multi-channel purchasing behaviour. For products above a certain price point, we see a clear shift from online retail to local store demand. For commoditised products, we see online channels prevail.

Omni-Channel vs Silo-Channel

While many brands recognise this and articulate an omni-channel strategy, their organisations are often set up with different teams/departments (silos) for each sales channel, where each is tasked with its own goals and objectives. This means that different channel teams compete with each other, and the customer-centric omni-channel strategy is not taken into consideration by any department individually.

When it comes to marketing, all teams have an individual budget and each campaign is only aimed at conversion for a single channel – thus performing at a fraction of its potential compared to if all channels were combined (direct, online and in-store). It gets even worse when different campaigns are bidding for the same keywords. This ‘silo-channel’ approach lacks a holistic view of performance across channels.

Omnichannel Hatch

I acknowledge that each channel has different needs, and each requires different expertise (stores need POS material, online retailers need digital marketing assets and campaigns), so multiple roles exist to support these channels. But, why do they operate in silos? Does it really matter if a sale comes from one channel or another? In the end, it is all about the P&L anyway. Embracing an omni-channel approach means integrating all purchase options at every consumer touchpoint. This includes buying direct, in-store and online.

A Customer-Centric Approach

Instead of operating in silos, at Hatch, we believe that organisations should create sales teams that carry a shared sales quota across all channels. This will allow them to collaborate and use the collective budget and resources to drive sales across all channels.

One inbound lead to a brand’s website can convert through a range of different channels (e.g. direct, online and local). This way, the effectiveness of the same marketing dollar to acquire a prospect will be multiplied. Ultimately, the brands who fully embrace this approach will be most successful.

It creates an omni-channel and customer-centric organisation across all departments, where teams align to achieve channel-agnostic sales goals.

To conclude:

  • Although new sales channels are emerging rapidly (marketplaces, social shopping and voice-commerce to name a few) and brands also deploy D2C initiatives, most consumer brands continue to rely heavily on retail sales (both online and in-store) accounting for >90% of total revenues typically.
  • Brands who do not acknowledge the existence of different channels and leave consumers a choice in buying options fail to capitalise on their potential and miss out on millions of sales.
  • This is where Hatch Where to Buy solutions instantly adds incremental sales channels on any consumer touchpoint creating a true omni-channel and customer centric experience.

I’d like you to ask yourself this question: Are you omni-channel or silo-channel?

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