Emergence of Omnichannel Retail in the Automotive Industry

April 20^th, 2021

Not too long ago, when we wanted to buy a product, we would just walk into a store and buy it. Today, the retail shopping experience has become far more complex—even in the automotive industry.

With the rise of e-commerce and online marketplaces, we have seen some significant changes in consumer buying behavior: We search for products and compare prices online, check our phones to see if an item is in stock at the closest store, or buy a product online and pick it up in store (BOPIS)—the list goes on.  

As the line between online and offline commerce becomes increasingly blurred, many businesses have shifted from a traditional retail approach to an omnichannel strategy. This is especially relevant for the automotive industry, as aftermarket retailers, dealers, and OEMs are attempting to meet the expectations of modern consumers who have grown accustomed to a certain buying experience: buy anywhere, have a product delivered anywhere, and return anywhere.  

It’s probably good to pause here for a second and briefly touch on the specifics of omnichannel retail. That is, how it is different from traditional retail and multi-channel retail when it comes to the automotive industry.

If you are already familiar with the omnichannel approach definition, you might want to skip the next section and jump directly to Omnichannel: A New Chapter in Automotive Retail. 

Single Channel vs. Multi-Channel vs. Omnichannel

Traditional, single channel retail is the way retailers operated before e-commerce, when brick-and-mortar stores were the only sales channel available. Today, a single channel approach implies that a product is sold through one channel only, whether that be online or offline.

On the other hand, multi-channel and omnichannel retail both involve the use of multiple channels—mobile devices, computers, online marketplaces, brick-and-mortar stores, and so on. Because of their apparent similarity, the terms are often erroneously used as synonyms.

However, there is a substantial difference between these two approaches. For starters, an omnichannel approach provides a seamless customer experience by integrating the customer interaction across all sales and fulfillment channels. In a multi-channel approach, the channels are generally siloed and disconnected.

A common example of a multi-channel approach is when you buy an item in store and can only return it in store or, similarly, when you buy a product online and cannot return it in store. In short, omnichannel retail puts the customer first—not the sales channel—with the goal of making the buying experience as consistent as possible, no matter what channel is used or in what order.

Think of the way we are used to buying products today. It’s totally common to first see a product on social media while on your phone. You might then switch to your computer to buy the product on the website and then go pick it up in store. An omnichannel strategy will offer a unified buying experience throughout all the channels that a customer uses to interact with a product. For example, a company might offer identical in-store and online promotions, or they might take an integrated inventory approach to show product availability regardless of the channel used to make the purchase.

Omnichannel: A New Chapter in Automotive Retail

While many industries have openly embraced the omnichannel model, the automotive sector has always been relatively slow to adopt e-commerce and omnichannel retail strategies.

However, things have recently changed due to three major factors that are currently pushing OEMs, dealers, and aftermarket retailers to reconsider their entire retail strategy.

1. Consumers that are used to the omnichannel experience in other industries are now expecting the same in the automotive industry.
    
2. Online marketplace giants like Amazon and eBay Motors—offering convenience, free delivery, and attractive prices—have set the bar high for brick-and-mortar stores. This has forced them to turn to e-commerce to remain competitive. In fact, price and convenience are listed as the top reasons auto parts consumers choose to shop online.
    
3. Most importantly, the COVID-19 pandemic has drastically accelerated the shift to auto parts e-commerce. In just a few months, we have seen online sales skyrocket, reaching unprecedented levels for the automotive industry. It would have likely taken a few more years for the automotive sector to reach this phase of e-commerce under different circumstances. But due to lockdowns, dealers and aftermarket retailers have had to quickly hone their digital processes out of necessity.
    

A Need for Omnichannel Integration

Despite the recent spike in online sales and the growing adoption of e-commerce, one thing remains clear: The in-person sales experience is not expected to entirely disappear anytime soon. According to the Forrester’s 2021 Global Automotive Consumer Study, 71% of US respondents said they would prefer to buy their next vehicle in person, ranking the need to see the vehicle before buying it as the number one reason why they are not interested in completing their purchase online.

The truth is, it’s not about choosing between an online or offline experience anymore, it’s about integrating them to make the transition from one channel to the other as seamless as possible. As more and more customers choose to start their shopping experience online and finish it in person, transitioning to an omnichannel strategy is more important than ever to remain competitive in today’s automotive retail world.

The Key to a Successful Omnichannel Retail Strategy

Building a successful omnichannel retail strategy is no easy task. It requires great collaboration among all parties involved—auto parts suppliers, dealers, distributors, 3PLs, retailers, carriers—and a complete reevaluation of your supply chain processes. Transitioning to omnichannel while maintaining a traditional supply chain infrastructure and relying on manual processes will put your entire approach at risk of failing.

Simply put, a winning omnichannel retail approach requires an automated and integrated supply chain. By integrating all your sales channels—retailers, marketplaces, your e-commerce storefront—with your business applications—ERP, CRM, WMS, or other—will allow for real-time visibility into product information, orders, shipping updates, and inventory. This will provide a consistent customer experience across all channels.

More Reasons to Consider Automation and Integration

One of the biggest barriers of omnichannel retail is inventory visibility. Inaccurate stock data can often turn frustrated customers to look elsewhere for a more trusted brand. A true omnichannel experience ensures that the customer has access to accurate inventory data at the right time and in the right place. This requires a centralized overview that can only be achieved with an integrated inventory approach that spans across all systems.

Also, from a fulfillment and shipping perspective, integrating with marketplaces, carriers, 3PLs, and all other partners involved in the process will help you to keep pace with today’s consumer delivery expectations.

One last thing to consider when planning for a successful omnichannel strategy is choosing the right business and technology partners. When it comes to supply chain automation and integration, there are plenty of options out there. But solutions that offer standard, direct integration with automotive e-commerce solutions, marketplaces, or your industry-specific ERP, for example, can provide faster and easier setup.