The term “channel-less commerce” can mislead. How, after all, might one engage in commerce without some sort of channel to connect sellers to buyers?
Channel-less commerce means quite the opposite.
It’s about an ability to support any channel at all – wholesale, retail, business-to-business, business-to-consumer – via any medium, whether in-store, kiosk, vending machine, voice, or digital marketplaces, displays on walls, desktops, laps, or wrists. Some call it “channel-agnostic commerce.”
Whatever the name, the world’s largest consumer packaged goods (CPG) companies are embracing it, and for good reason. Vast brand and product portfolios combined with ever-evolving channel possibilities have made managing it all – much less optimizing it all – a herculean undertaking. Channel-less commerce lightens the load while opening new doors.
In contrast to omnichannel, which focuses on consistent front-end customer-brand interaction across physical and digital channels, channel-less commerce is about enabling the end-to-end automation and data integration of what have been stubbornly independent business processes. That lets CPG giants sell through whatever channels they like, adapt quickly to market twists and fickle consumer tastes, and grow faster. Early channel-less products tended to be higher-margin, long-shelf-life items such as cosmetics, portioned coffee, durable goods, and pet food; now all CPG categories are in play.
A feline example of channel-less commerce in action
Let’s consider a pet-food example. Someone whose cat prefers a combination of wet and dry food may, in a physical PetO store, find both in adjacent aisles. That’s thanks to the likes of Eastern Distributors, which stocks both wet and dry cat food and wholesales them to the retailer.
Even if they come from the pet food manufacturer, the pallets of wet and dry food probably arrive at Eastern Distributors from different plants with different supply chains. So, things get interesting if the pet food maker decides to sell directly to consumers. Whatever the omnichannel experience, it’s a split order (wet from factory A, dry from factory B). Plus, few cat owners are interested in buying full pallets. They’re ordering a bag of dry food at a time and perhaps a few cans.
For a CPG business, the implications are profound. On the front end, there’s now a different ordering experience, different search and merchandising, different content generation, different pricing and promotion management, different customer service. On the back end, there’s different order, inventory, and supply chain management; different logistics and fulfilment; and different financial reconciliation. Channel-less commerce is about connecting these new order-capture channels to the back end and ensuring that new end-to-end process work efficiently in the same technical environments as existing systems.
That’s just for one example from a single product category. But it turns out that fully 40% of U.S. pet food sales are now going through nontraditional channels even more than the 20% to 25% of overall CPG revenues that come from nontraditional sources. As nontraditional channels continue to gain traction, the need for channel-less commerce grows. So, how does one go about going channel-less?
APIs, composable architecture, and channel-less commerce
Channel-less commerce requires digital flexibility in a structured framework. That means cloud-based, open-platform, vendor-agnostic infrastructure capable of real-time access to reliable data from business applications handling the many processes noted in our cat-food example. Also indispensable are application programing interfaces (APIs).
APIs are how different software applications communicate. Independent applications are split into smaller cloud-service components to run logical tasks independently. Composable architecture enables the mixing and matching of microservices in orchestrated, optimal ways that can quickly adapt to changing business realities – for example, to handle the sale of split orders of cat food through a direct-to-consumer channel.
Channel-less commerce is about more than just technology
There are other benefits to the modularity that enables channel-less commerce. Chief among them is helping business functions and IT collaborate in new ways. It’s crucial that those who will run new or modified sales channels are involved from the start to ensure that user experience and supporting processes are done right. Other business functions adapting to new channels, from procurement to manufacturing to shipping, must also play their roles in the process redesign. Not surprisingly, major CPGs are using channel-less commerce to support their business-transformation efforts.
Another key benefit of channel-less commerce is that it encompasses data exchange not only internally, but also with external partners and other data providers. That can open doors to closer collaboration with those partners in areas such as sales, marketing and merchandising, supply chain, and logistics, extending the benefits of business transformation.
Further, the new channels that channel-less commerce open up provide fresh data about customers and their preferences that in turn can feed marketing, promotions, and product development.
Taken together, channel-less commerce is delivering greater customer satisfaction, increased sales, and higher profitability to household-name CPG firms around the world. That’s a welcome development, whatever the name.