What are the omnichannel challenges facing e-tailers opening stores?
Presented here for discussion is an excerpt of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
Most of the focus on omnichannel struggles has been traditional retailers trying to integrate with the online world. But, many online-first retailers opening up brick & mortar stores in recent years are facing their own unique challenges, according to Santiago Gallino, a Wharton professor of operations, information and decisions.
“The struggles that these new companies have, the companies that are opening the physical presence, is that they haven’t had the experience of doing that,” Mr. Gallino, who has done extensive research on omnichannel challenges, recently said in an interview with Knowledge@Wharton. “Running an operation in the real world is different than running an operation in the online world. But, I think they are young companies with smart people running them so they understand the challenges and are trying to overcome them.”
An initial assumption by many, he believes, is they can “learn as they go” in opening physical stores and they discount the experience that comes from running brick and mortar stores for years.
“In my experience, they very quickly find that there are some retail fundamentals that are still there,” said Mr. Gallino. “You still need to learn how to manage your inventory, your assortment, your staff, how to train them, how to have the right people in the right place.”
Still, an advantage is online-first retailers open stores gradually. The professor said, “They’re opening five, then 10, then 15 stores, so they are learning as they go. The challenge for the traditional retailers is that they already have more than 300, 500, thousands of stores and need to adjust all at once. So, I think that there is a little bit of advantage in the flexibility of the online-first retailer and more of an opportunity of learn as you go.”
Overall, Mr. Gallino believes the term, omnichannel, continues to evolve as buy online/pick up and other integrated services are expanded. He expects retailers will have to further adapt to consumers’ expectations as omnichannel evolves. Mr. Gallino stated, “I think that we are going to see a lot of changes going forward.”
DISCUSSION QUESTIONS: How are omnichannel challenges different for online natives integrating new physical stores versus traditional brick & mortars integrating online operations? What advice do you have for e-tailers entering physical retail?