Omnichannel Versus Multichannel (With Pros and Cons of Each)

Updated July 9, 2022

Omnichannel and multichannel are two types of sales and marketing approaches that aim to provide a seamless shopping experience to consumers. There are many similarities and differences between multichannel and omnichannel. You can choose the best retail marketing technique by learning about the advantages and disadvantages of each type of marketing. In this article, we explain the differences between omnichannel versus multichannel, list the various pros and cons of each marketing style, and answer a few frequently asked questions about multichannel versus omnichannel.

Omnichannel versus multichannel

When you're choosing between omnichannel versus multichannel, considering all the multiple contributing factors for each approach is vital. Multichannel retail focuses on information, whereas omnichannel retail focuses on the customer. In multichannel marketing, organizations communicate the same idea or message through multiple direct and indirect channels. For example, multichannel marketing use websites, stores, social media, catalogues, or emails to distribute their message. In contrast, omnichannel marketing allows customers to connect with brands through various channels that update automatically in response to their last interaction, contributing to a seamless experience.

Multichannel and omnichannel systems both involve selling across multiple physical and digital channels, but the key difference is how those channels coordinate to produce the same customer experience. More and more retailers are embracing omnichannel. Consumer expectations and behaviours may continue to motivate brands to invest in the technology they require to make the change. These adjustments are primarily being driven by the rising reputation of the digital generation.

Pros of omnichannel

Here are some advantages of using omnichannel marketing:

Efficient

Customers can access and connect with a company through all channels with the omnichannel strategy. This approach provides a comprehensive and centralized database that can increase product and promotion visibility. An example of an efficient omnichannel is when a customer starts a live chat to address an issue, and it escalates to a video chat. Integrating the two channels allows the customer to switch seamlessly from the live chat to the video chat without repeating any information.

Flexible

Customers may switch between both traditional and digital channels and it's important to ensure that brands are consistent with every interaction. An omnichannel approach provides excellent flexibility, which can boost consumer satisfaction. For example, a company may offer in-store returns and refunds for online purchases, along with mail returns and online refunds.

Insightful

There are several ways to collect and unify data with omnichannel marketing. Information such as different customer devices, IDs, shopping carts, social media accounts, mail lists, and cookies. Companies can target advertisements towards individual customers using the data they collect to promote sales and strengthen their reputations.

Cons of omnichannel

Here are some disadvantages of using omnichannel marketing:

Complex

Omnichannel marketing is proactive and comprehensive. A large part of the omnichannel method depends on knowing how to recognize and respond to customers' behaviour. Successful execution involves offering helpful solutions and immersive consultations at every step of the customer's journey. Employees may also require the capability to operate extensive software that assists companies with analyzing customer behaviour and preferences.

Expensive

The right tools are necessary for an omnichannel marketing system to succeed, which can be costly. Software that can streamline workflow is essential when executing the omnichannel approach. The omnichannel method requires a flexible software platform that adapts to customer preferences and contextual factors. Omnichannel marketing involves an extensive level of customization that requires special software and employees who can run the software.

Competitive

Offering multiple channels of sales increases the number of competitors. Competition within industries can fuel production, but it can also diminish sales and reputation. There are few options for overcoming this problem other than rewarding customers. A discount for loyal customers or a percentage off for in-store pickup or online purchases can increase sales.

Pros of multichannel

Here is a list of pros for using multichannel marketing:

Diverse

The more channels that feature a company's advertisements, the higher the probability that it can reach larger audiences. A key benefit of multichannel diversity is that it enables customers to purchase products in a variety of ways, making it more convenient for them to shop. An immense diversity of channels also presents companies with an advantage over single-channel businesses because more ways to make purchases can lead to more customers.

Informative

The goal of multichannel marketing is to deliver information. Each channel creates its message and delivers it to its customers. As an example, when a company wants to promote an upcoming deal, they ask each channel to inform their customers, to encourage more sales. After the promotion, companies can analyze how their promotions affect customer behaviour, adjust their channels, and improve their business with the information they gather.

Independent

Multichannel structures allow each channel to operate independently. By reducing lines of communication, employees can focus their efforts primarily on developing their main channel. Concentrating on a single channel can lead to higher-quality results within a shorter timeframe.

Cons of multichannel

Here are some disadvantages to using multichannel marketing:

Costly

The multichannel strategy distributes commodities across a wide range of locations, which can mean more suppliers, more employees, and additional shipping costs. Multichannel marketing may require companies to set aside budgets for multiple marketing plans and advertisements because each channel works independently to promote its products and services differently. When employees are handling multiple channels simultaneously, they may experience an increase in workload, resulting in longer hours and more pay. This can contribute to a rise in company expenses.

Time consuming

Multichannel marketing endorses independent channels rather than integrating channels, which increases the amount of inventory to manage and the number of orders to process. The coordination of systems, tools, and employees can also be time-consuming. It may become difficult to manage multiple channels, resulting in challenges such as insufficient stock levels or a slow order response.

Sales cannibalization

Sales cannibalization occurs when a company introduces a new product that displaces one of its older products. For example, when a chain store loses business after the opening of another store of the same brand nearby. While there may be a sales growth of the new product, the cannibalization of the existing products leads to no increase in the company's market share. It's common to encounter sales cannibalization in multichannel marketing because of the absence of correlation between channels.

Omnichannel and multichannel FAQs

It can be difficult to identify the differences between omnichannel and multichannel systems, and it's common to have many questions concerning the subject. Here are a few frequently asked questions about omnichannel and multichannel strategies:

Which industries apply omnichannel tactics?

Omnichannel approaches are growing in popularity, especially in the following industries:

Retail: With the ability to make purchases in-store and online, retailers are centralizing how their customers are interacting with their brands using multiple channels.
Healthcare: Patients interact with healthcare organizations at many touchpoints, including hospitals, primary care facilities, and pharmacies.
Finance: Banks and various financial institutes are shifting focus toward a customer-centric mindset. By using the omnichannel strategy, the finance industry can gain insight into customer preferences, allowing them to personalize their experiences with their businesses.

Which industries use multichannel tactics?

The multichannel approach can be very effective for a variety of industries, specifically in the following industries:

Technology: High-tech companies typically use multichannel tactics because it focuses on providing useful information. Tech stores offer interactive platforms where customers can preview and experience new technologies and devices.
Tourism: The travel industry benefits from a multichannel approach because it can effectively promote the features of various travel destinations to a diverse selection of people.
Real estate: Using multichannel marketing, real estate agencies can inform clients about different housing markets, specific residences, and they can promote their primary agencies.

What does the term "touchpoint" mean?

A touchpoint is a way a consumer interacts with a business. Touchpoints can refer to contact with a brand before, during, or after a purchase. Customers can find brands in various touchpoints such as online, on billboards, in ratings and reviews, on websites, in retail stores, or by contacting the customer service department.

What is a single channel?

Single-channel marketing refers to reaching customers through only one form of distribution. For example, single-channel marketing may mean reaching consumers through face-to-face communications, digital media, and direct mail. Typically, companies choose a single channel marketing program when they have a budget limit or if they're looking to excel in a specific niche. A single-channel marketing system makes tracking inventory, customer service, and shipping inventory simple.

Omnichannel Versus Multichannel (With Pros and Cons of Each)