Market Analysis
Omnichannel retail business models
Understand how stores, online ordering, delivery and collection work together, and how to assess the service and economics of an omnichannel retail model.
An omnichannel retailer connects the ways customers find, order and receive goods. The business model works when those choices improve service enough to justify the stock, labour and fulfilment costs behind them. Having both a website and stores is a starting point, not a complete model.
Map the customer journey
A customer might check availability online, order through an app and collect at a store. Another might inspect an item in a shop and arrange delivery. For each route, identify where the order is placed, where stock is picked and how the customer receives it.
| Model choice | Customer benefit to test | Operating question |
|---|---|---|
| Order online for delivery | Access without a store trip | Can the range and delivery promise be met at a viable cost? |
| Order online for store collection | A planned local pickup | Can staff pick orders without undermining service or stock availability in the store? |
| Order online for collection from a fulfilment site | Pickup without relying on a store’s shelf stock | Is the site accessible and its collection capacity well used? |
| Buy in store for later delivery | Inspect an item before arranging transport | Who resolves a failed delivery or handover? |
Product size, urgency, local access and the cost of serving an order affect which route is useful.
IKEA's Australian Home Planning Studio illustrates a journey where a store is a planning touchpoint rather than a stockholding outlet. Its first Australian studio opened at Westfield Warringah Mall in Sydney in 2019; customers booked appointments to plan their homes, then placed orders for home delivery or store pickup.
Woolworths provides a historical example of linking store and digital routes. By the end of September 2017, it had introduced in-store grocery pickup points in every supermarket across Australia. In 2018, it introduced in-app shopping, including shopping lists and information about in-store product stock.
Omnichannel model choices and their operating questions
- Order online for deliveryBenefit: access without a store trip. Question: can the range and delivery promise be met at a viable cost?
- Order online for store collectionBenefit: a planned local pickup. Question: can staff pick orders without undermining service or stock availability in the store?
- Order online for collection from a fulfilment siteBenefit: pickup without relying on a store's shelf stock. Question: is the site accessible and its collection capacity well used?
- Buy in store for later deliveryBenefit: inspect an item before arranging transport. Question: who resolves a failed delivery or handover?
Australian omnichannel milestones
- 2017Woolworths introduced in-store grocery pickup points in every supermarket across Australia by the end of September.
- 2018Woolworths introduced in-app shopping, including shopping lists and information about in-store product stock.
- 2019IKEA opened its first Australian Home Planning Studio at Westfield Warringah Mall, Sydney, where customers booked appointments to plan their homes and placed orders for home delivery or store pickup.
Make the promise operational
Customers need to know which items are available, when an order will be ready and what happens if an item cannot be supplied. Stock records, picking capacity and clear handover instructions support that promise. A short collection window is of little value if the order is incomplete or the customer cannot find the pickup point.
Assign responsibility for stock allocation, picking, substitutions, notifications, handover and returns. Record exceptions as part of the service design. A route that works only when every item is in stock and every customer arrives on time is not ready for a wider rollout.
The ACCC accepts reports about conduct people consider improper and can use them to inform education, compliance and enforcement work. It may investigate and take compliance or enforcement action if a business breaks rules when selling or advertising online, but it does not resolve individual complaints or approve online businesses' conduct or advertising.
Operational responsibilities to assign
- Stock allocation
- Picking
- Substitutions
- Notifications
- Handover
- Returns
Judge the whole-network result
Channel sales alone do not establish whether the model earns its keep. A collected order may use store stock, staff time and space. A delivered order may require picking, packing, transport and customer support. Compare the value of fulfilled orders with the full cost of serving them, including corrections and returns.
Ask how much demand is additional to the retailer. Some customers may buy who otherwise would not have; others may move an existing purchase from a store checkout to an online checkout. That move can still improve convenience or retention, but a change of ordering channel is not itself a new sale.
Use measures for separate questions: order completion and availability for reliability, time to handover for speed, contribution after fulfilment costs for economics, and total retailer sales for the overall outcome. State how collected orders are classified before comparing channel figures.
A connected journey can make a physical location a point that directs customers towards digital ordering, rather than only a place to complete a sale. Culture Kings, for example, used strategic search engine optimisation to drive online traffic to a scalable eCommerce platform customised to match its in-store style.
Measures for separate questions
- Reliability
- Order completion and availability
- Speed
- Time to handover
- Economics
- Contribution after fulfilment costs
- Overall outcome
- Total retailer sales
Choose a model for a defined task
Start with a product group and customer need, such as a routine grocery shop or an urgent replacement item. Specify the range, location, handover time and exception policy the retailer can support. Compare feasible routes against the same customer outcome and include their full operating costs. A limited launch can then show whether the promised service is dependable before expansion.
Choosing an omnichannel model for a defined task
- 1Start with a product group and customer need, such as a routine grocery shop or an urgent replacement item.
- 2Specify the range, location, handover time and exception policy the retailer can support.
- 3Compare feasible routes against the same customer outcome and include their full operating costs.
- 4Run a limited launch to show whether the promised service is dependable before expansion.
In this guide
- Click-and-collect as a retail service modelLearn how to define a click-and-collect promise, handle stock and pickup exceptions, and assess reliability and cost.
- Comparing online growth with total retailer growthCompare online and total retailer sales on matched definitions, calculate the change in mix, and avoid treating channel growth as new demand.
- Understanding channel shifts without double counting salesUse one sales record and separate channel attributes to reconcile online, store and collection reports without counting purchases twice.
