Ron Thurston x PeakSpan: The State of Commerce Part 3

Part III: From App to Aisle: Bridging the Gap between Online and In-Store -- FOH x BOH

As we enter a new age of retail, it’s tough to consider a world without eCommerce. It has changed the way we interact with goods and services, the expectations we put on delivery times, and the experience we expect when entering a store for the first time. Over the last two blog posts, we have discussed how the front-of-house (FOH) and back-of-house (BOH) impact the user experience in different ways. Despite contrasting roles in the customer journey, both the FOH and BOH must work in perfect harmony to create orchestrated commerce. 

Orchestrated commerce is the seamless integration of systems and processes (most of which we discussed in Parts 1 and 2 of this series) to provide a harmonious and enhanced customer experience across multiple channels and touchpoints. Let’s dive into one fulfillment model that highlights the importance of orchestrated commerce today. 

BOPA - The Poster Child of Orchestrated Commerce

Buy Online, Pickup Anywhere (BOPA), also known as click-and-collect, became a popular fulfillment model during COVID since it allowed customers to avoid crowded stores, minimize physical contact, and practice social distancing. However, post-COVID, BOPA became the poster child for orchestrated commerce given all of the integrations necessary to execute a seamless click-and-collect experience. 

US Shoppers spent more than $95B via buy-online-pickup-anywhere (BOPA) in 2022, making up 9% of all eCommerce sales. As more large retailers attack this macro trend, orchestration has proven difficult given the disparate legacy systems used for real estate, warehousing, logistics, and eCommerce. QR scanning capabilities via hardware for store associates, POS systems for said hardware, and integration between eCommerce platforms and supply chain management systems to enable a seamless and efficient customer experience. To say BOPA has added complexity to retail is an understatement, but it reveals a massive opportunity for software to enable seamless end-to-end user experience online and in-store.

The popularity of BOPA – driven by convenience, faster fulfillment, cost savings, reduced returns, and integration of online and offline channels – has highlighted for retailers the importance of investing in an integrated omnichannel strategy. 

Where are we now? 

Now that life has gone back to "normal," consumers have started to flood stores. eCommerce reached a plateau in 2020 after 8 years of continuous growth (it accounted for 16%+ of retail sales at its peak), but by the end of 2021 brick-and-mortar (B&M) sales growth exceeded that of eCommerce (18.5% vs 14.2% YoY growth, respectively) for the first time ever. Given how quickly brick-and-mortar and eCommerce have merged, the era of "unified commerce" (or "phygital" retail, as we've seen it be called before) has come upon us and will have a marked impact on retail's next chapter. eCommerce will undoubtedly continue to thrive on its own, yet stores act as a prime tangible "hub" for convenience, which highlights the criticality of providing accurate product availability and post-purchase follow-through. That's not to say it's an easy feat, especially in light of supply chain disturbances.

If we were to compare eCommerce to constructing a house, back-of-house operations are the bones of the house. Front-end tools like personalization and CX are the roof: obviously important for building brand affinity and loyalty but can only go so far and so high with a mediocre logistics strategy. Conversion, acquisition, and retention dominate the front-of-house conversation today, yet retailers (both online and in-store) have grappled with the question, how do I maintain loyalty after conversion?

The answer lies in providing ease of engagement and personalization throughout every node of the customer journey, visibility into shipping & returns, and building unwavering brand trust. From the front-of-house point of view (either landing page for online or retail-floor associate for brick & mortar), that can look like leveraging back-end processes so that customers have a personalized experience from the moment they click on a page or enter a store. To execute this harmony, decision-makers need to invest in technology that either a) leverages back-of-house technology to make a flawless front-end experience and/or b) arms retail associates with the knowledge and expertise to make browsing the aisles or shelves as effortless and delightful as possible.

Conclusion

Execution has long been a cornerstone in this industry, but it will prove to be even more invaluable in the coming years. In the future, seamless retail execution will hinge on investing in quality over quantity: the right tools to streamline communication, lessen the burden on retail employees, and ensure a sound customer experience – nothing more, nothing less. The margin for error is slimming, yet retailers are starting to realize that the perfect harmony between online and in-store (or online while in-store…) is not a “one-size-fits-all” approach

In the dynamic landscape of modern commerce, where customers expect convenience, personalization, and flawless execution, the strategic utilization of back-of-house and front-of-house eCommerce tools is no longer an option – it’s mandatory. Harmonious integration of these tools empowers businesses – especially those at scale – to deliver exceptional customer experiences in-store and online, optimize operations, and drive business growth. By investing in the right technology, businesses are not only working towards a better customer experience, but a better employee experience as well by arming retail associates and front-line workers with the communication and collaboration systems they need to delight customers. We’ll end with the same sentiment from our first post: It's a lot to ask of a big retailer to deploy hundreds of millions of dollars to transform their operations, no matter how much they want to make their orchestration more efficient. Do we have to wait until the next free money bull run to do this or will we see stores start to futurize during a bear market?