One Step Beyond Cyber

EP 6 The Broken Promise of Omnichannel (Part 1)

• One Step • Season 1 • Episode 6

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Are you ready to take your business and technology knowledge to the next level?

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Hi everyone and welcome to the next episode of One Step Beyond Cypher.

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And here we focus on conversations around using technology effectively

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in the business world. I'm Scott Kreisper, I'm your host and

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before we get started today I just want to have a friendly request and that is

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if you get any value from today's content go ahead and give us a rating

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and subscribe as you know that helps out the channel. Now let's introduce our

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guests today. I can start with one. We've been a little bit asked for a number of

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years. He's a senior compliance advisor and knows a heck of a lot about

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this topic that we're going to get in today. In fact,

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the topic for today is one that's been around for quite a while.

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It's probably maybe an overused term but we're going to do a three-part series.

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Vomitchel and today we're actually going to talk about the broken promise

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of Omitchel. So before we get started though Roman if you would do the

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honors and provide our listeners with our disclaimer.

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Absolutely so just so everybody knows the purpose of this podcast is to provide news

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and information on cybersecurity and technology law and regulations.

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All the data provided on this site is for informational purposes only and should

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not be considered legal advice. Wait a minute. And why am I studying for the bar?

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Boy that was like almost like an infomercial or thankful.

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All right let me get our next guest on right now. This is Kevin McCatum and Kevin

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is got a new technology experience. He's helped anything from a small

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business all the way up to billion-dollar businesses with their

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technologies. Extremely well educated when it comes to this topic today of Omitchel

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and he's helped very large corporations implement it. Welcome Kevin.

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Thanks Scott. Thanks for having me. Hi Roman.

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Hey Kevin. All right look let's dive right into it and I think our listeners are

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going to really want to learn more about this Omitchel topic.

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I'd like to just start off today's episode with a really brief explanation of what

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what what is everybody already know and think that Omitchel what was the promise

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in other words of Omitchel I'm going to start off with Kevin and what say you on that?

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Well Omitchel if you look at the word it's not actually a real word it was invented.

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Not that long ago maybe 10 years ago or so and it was invented to describe this

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experience that people were supposed to have customers specifically and brands

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brand selling products to customers and the idea behind it well actually you

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don't have to look at the idea behind it you're looking some of the common

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definitions and it has been promoted by consultants and publications and

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technologists for many many years but the the general idea and definition is that

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it's an approach to sales marketing customer service and distribution that

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provides a seamless and unified experience regardless of which channel they're

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using. We used to only have one channel we would go to the store and buy stuff

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but with the advent of the internet with the advent of phones even before that

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with the advent of catalog and telephone smart phones there's lots of ways to

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shop now so the concept of Omnys that there's a seamless experience for the consumer

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and it allows them to have that experience between the consumer and the brand itself.

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Absolutely. Yeah I mean it's a wonderful panacea so there are some people that do

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this better than others so Roman do you have anything to add to that particular

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definition because you decide you good job with our you know disclaimer

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you must you I thought you were supposed to let add levity to this

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platform but you're you know Mr. Legal. Right no actually Kevin

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hidden on the head it really is focused basically on shoppers and brands like

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we all want one spot to shop that that's what we what we've all asked for.

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Maybe we asked off a little bit too much and I think that's probably okay promises come in you know.

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Yeah well let's let's let's dive into that. Kevin you know this is such an interesting topic

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from your perspective because you've helped so many retailers with this with this you know this

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project so you know what is the perceived broken promise. I think Scott that the idea even if you

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look today if you look at what Omnichannel is supposed to be you hear the word seamless and effortless

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and I have worked with a lot of brands and retailers over the last couple of decades.

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I've probably done over 20 integration projects for various direct consumer brands and

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every major digital platform and you know probably every major ERP out there as well and I can tell

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you I haven't run across one yet that was seamless and effortless and I think that cuts to the core

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of the broken promise. I have more to say about it but I think that's the core of it. Okay so the fact

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that there's too many you know nuts and bolts to make this thing work and it can be a lot more

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complicated. Is that is that true for you Roman as well have you experienced that?

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Yeah so it kind of goes to that definition of simple and easy right. Running a marathon simple right

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you just do it. It's not easy right so these people that think it's going to be effortless

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that's not that's not my been my experience in the retail industry and compliance at all so.

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Got it. Yeah I can understand that. All right well let's let's dive into this complexity a bit but

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you know have you you know the prior to the pandemic it seemed like we were on this trajectory that was

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this you know the the store was was still sort of king right and unless you were an online only

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business and and then the online business was just a component per se of the most most let's say

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fashion retailers or independent retailers out there and then this thing you know hit right the

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the pandemic occurred and it seemed like it changed extensively. I kept you want to start us off

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on that? Yeah absolutely I think that the pandemic accelerated digital experiences for all of us

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because con got side so the the need to interact and conduct business specifically not just

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interact I mean we all were interacting digitally we were doing zooms zoom blew up all sorts of

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different ways of interacting while we were virtual not physically engaged with other people blew up

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and commerce was one of commerce was certainly one of them I read some reports that

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that 10 years of digital evolution occurred in six months in 2020 because we had to that was the only

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way of doing it and so I think you had a lot of brands before that knew what Omnichannel was I mean

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at its core Omnichannel is is is is taking the product the the product itself the inventory the

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customers any orders of a business and and and streamlining them across all channels I mean

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everybody do that but you need to do that as much when you primarily got your revenue from stores

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when you couldn't do that anymore all of a sudden the need became very very significant to move

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into an Omnichannel experience but for for brands specifically wow absolutely um

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rum have you noticed like anything different with the consumers after the pandemic are they back to

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you know considering the store the primary source or is as this you know post pandemic evolution stuck

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honestly it it varies I think would between industry and industry one of the things that I noticed

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mostly is from that pandemic pre pandemic to two pandemic not necessarily post but two pandemic is the

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need for compliance and security and I say compliance for for security is because nobody was thinking

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about it and then all of a sudden we almost doubled in like malware attempts from 2019 to 2020 I mean

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that's not huge anything you have that almost doubles you know and within a year is insane so the

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need for that has changed and it's actually continued to grow since then so the Omnichannel

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retailers and retailers need to look out for that because while we as consumers still wanted we

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still want that one stop shop but we want it to be safe right and so that's kind of what I've seen

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between pre pandemic and and either pandemic or post pandemic is still the necessity for us to feel

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safe buying online rather than going into the store do you mind if I add on to that real real quick

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Scott so it's very interesting that Roman Roman said that because you know I said one of the four

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key things of Omnichannel in terms of the data that needs to be all over the places customers

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and and you're right I mean we saw brands that all of a sudden were doing business online because

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they had to but they weren't that the broken promise of Omnichannel it's not easy it's not seamless

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and so they were cutting corners and you saw breaches going up and you know

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prior customer data information being released and to the point where the regulate right the regulators

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started coming down pretty hard on people because so much customer data was being breached because of

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just sloppy integrations because like I said Omnichannel isn't isn't necessarily it's achievable but

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it's not necessarily seamless and easy and it definitely provided a huge security yeah absolutely in

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fact that is a great transition to my next question for you Kevin is you know working with many

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retailers over the years have you seen that retailers were bolting let's you know bolting onto let's say

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legacy system right and because of that bolting on component you know could possibly cause some

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exposures like you were sharing their Roman as well or were you seeing more that like you know what

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let's scrap this and start from scratch that's a great question Scott I think there was two

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there's two types of companies that needed to adapt to this one was a new company that was emerging

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out of a digital first strategy and that wanted to go into stores and even even if I could step back

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from that Omnichannel isn't just necessarily a company with stores and digital it could be just a

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digital company that wants to be Omnichannel digitally what what I mean by that I mean like I have my own

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website great but so does Amazon and so does Walmart and so does Target and so does Instagram and so does

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you name it there are Google there are literally hundreds and hundreds of online marketplaces where you

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can market and sell your product each one of those needs customer data because you can't sell

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to somebody you don't know and so there's a bit of an a concept that oh as long as I pulled an app

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off an app store it must be safe right not necessarily I mean those are in often in many cases

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unregulated to it well unregulated is a good way to put it yeah self-regulated app markets right so

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whether you're a large brand that had stores yes you had a traditional legacy system generally speaking

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that ran those four things product inventory customers and orders and now you had to adapt

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that to an online footprint so it meant integration but you also had a lot that were just kind of coming

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in from a digital first footprint that just assumed that you know because these things are connected

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they must be safe and then there's a lot of other places where people started cut corners because they

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wanted to get there quick you know quick is great and in the pandemic especially we had to be quick

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quick is often cheap as well but there are downsides it it breaks sometimes it's hard on staff in

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the stores we saw that as a big trend I saw people doing brands and you you still see it today actually

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they want to get the army channel experience for the customer for like you know shop in store but

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sell what I don't have in the store meaning like it's a digital experience but it's in store but

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instead of doing that right they'll actually just put a computer in the store customer can check

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out on the web and type in their credit card well Roman as your compliance guy I'm sure I'll tell you

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PCI doesn't doesn't look too kindly on that did they get army channel yeah but that's an example of

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where some of the security break could occur and a bit of the broken promise I think wow

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we're gonna get into components of it next so but Roman what you know you have any like pros and

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cons to the way that it was rolled out initially because you know like the pandemic caused like Kevin

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said we know we all had to dive headfirst into the swimming pool and and it was it got a little

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interesting during during the first you know six to nine months absolutely how would say you know

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one of the biggest pro is that it did allow some of these smaller businesses you know like Amazon

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or you know marketplace to to be the crush that some of these companies could lean on right you

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can now start diverting some of your product to other retailers out there that you once didn't have

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right so that that was actually a real huge leg up for some some companies that knew how to use it

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you know good or bad whether they knew how to use it good or bad but the con is when you start

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doing things like that now when you guess when you go with a larger company you expect some sort

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of security but let's say you know you start going off and build your own e-commerce site and your

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own you know website that people could now purchase on a lot of times what happened is they're

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splitting databases because you you go into any shoe store in America whatever shoe store you like

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at one point in time all of their database material was on site right so that means your names

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your shoe sizes if they kept your credit card or not um was all in one spot but now I've got this

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other place that I've got to upload that data too so that when they come back or when they come

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there for the first time it's like they've already been there and they don't have to jump through

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hoops well now that's two points of failure that you have and that's just opening one site so I'd

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say that was a real big con and not a lot of people knew how to deal with that but that comes with

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like Kevin has mentioned integration right okay let me take your database on prem let me show you

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how to use it in the cloud but use it securely and encrypted whenever it's transmitting so you know

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there's pros and cons everything and it's just you got to weigh you got to weigh those out right so

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yeah those are all good points so listen I would like to dive into what what are um the intricate

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components of of Omni Channel of uh let's say we want to focus on data management and um some of

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the operational complexities uh Kevin yet you know you want to maybe respond something like that

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sure yeah yeah I'd love to I mentioned earlier kind of um a high level what do you what information

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and Roman described it great you have data what data needs to be at different locations in

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in terms of technology you have product data that means like what do I sell well that's obviously

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got to be everywhere that you want to be Omni Channel it's got to be on your marketplaces it's got

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to be any website it's got to be in your stores and listen there are other channels too um we haven't

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talked about business to business but b2b is a massive growing trend right now and it could be considered

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an Omni Channel channel because it's just another channel I still have product I still have customers

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I still have orders I still have inventory I'm just telling you the different different price point

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um so you've got product you've got inventory which means how much do I have of of what I have

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so that I can sell it and this becomes really critical in Omni Channel experiences online because if you

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want to allow customers to shop the product that you have in the stores that better be accurate

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because if it's not you're going to have an upset customer and there's actually more potential loss in

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you know in in the value of the brand from from doing that wrong then from not doing it at all um

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so inventory and then you need customer data obviously you need customer data to be everywhere

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and along with customer data there's other things like stored value gift cards virtual gift cards

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we're all used to them now we've all got our loyalty points we like our loyalty points all that stuff

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that goes with the customers identities um and then you've got orders what what orders are being

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processed and how are they being filled um I mentioned earlier the channels you've got your online

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channel or channels like I said marketplace is hundreds of them uh direct selling like you can

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chat with somebody on a website now and be connected with the associated store and actually complete

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a transaction directly with them uh you've got your stores and stores are hot right now they're coming

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back I think that was the other promise broken promise of Omni Channel but I know we're going to talk

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more about that later and then like I said business to business um b2b um you could also have things

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like pop ups franchise whole something there's a lot of ways to do it but those are the big components

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there were also some very specific transactions that people define as Omni Channel um and these

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were the ones that I think also led to a bit of a broken promise because technology companies in particular

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selling technology they they want you to get their technology so they hyped these really hard

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especially the beginning of their pandemic by-line return in store by-on-line ship from store by-on-line

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pick up in store whether it's curbside or whether it's in store same-day delivery I want this

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same day I want to be shopping online and have it delivered to me um so those are some of the bits

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and parts of Omni Channel that we could certainly dive into a little more yeah and we will like this

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is a big topic so um well let's see here since we have a data expert here um in mr mr rumen uh

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what's your perspective let's say on all of the data you mentioned it a little bit saying it used to

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be locally only and now it's spread over and then kevin just kind of echoed that is at the same way

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what what should a retailer be looking for and in doing the save uh to to to protect that data?

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well there's there's quite a bit actually that they need to do to protect it um you have data

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in transit you have data at rest right so those are for your your cyber um you know

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criminal bad guys bad actors what are you wearing calling um they're trying to get data right

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like that that's their goal um there's actually been a an uptick of um encrypted malware not for the

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purpose of uh extortion but just to do it i mean it's insane that's bad guys are bad um just a thrill of

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it huh yeah yeah and uh there's time on their hands exactly so you you have those two pieces but

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then you also have something else that comes into uh to play which helps or could help the bad guys

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um win and what that is is say my name was michael but i go by mike or maybe i go by my middle name

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tray you know and so if i go into a store and i've been going to any pharmacy USA um for you know

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years and years and i've picked up my prescription as they know be my mike um but then i have to put in

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michael online because it's asking for a full name now i have two bits of data that don't match in the

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database same person so if somebody then goes and types in michael and tries to steal my prescription or

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get my information well it might not match the original database but now your online database is

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i don't want to say corrupted because that's not the right word but it's it's a skew so do you have a

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database manager that goes through there and checks that stuff hey as michael you know really supposed to

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be mike or um so you have certain things that aren't consistent your inconsistencies between uh data

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need to be addressed i pay with one credit card in the store i used another credit card online

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right so are they stored at the store is that stored online these are all valid questions for

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database administration and for your data to um to be consistent everywhere because if you start

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the more you start doing it i'm going by my sometimes i go by michael sometimes i go by my middle name

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you're literally just giving all of these ingresses to anybody that wants to try and steal your identity

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or steal product or you know having for bid do an email compromise on a business or literally

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break in through a system because now they know you go by my concept of michael when you're at work

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right little things like that for your database is is huge for any retailer or any

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retailer and that's that's what i saw yeah that's a lot that a lot to you know consider when you're

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doing this um yeah so Kevin is there any risks or rewards let's say for the concept of say

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buying online uh and then picking up in the store that's sort of a model or is that pretty straightforward

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nowadays i wouldn't say it's straightforward at all yeah there there's certainly risks this is part of

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that you know the the broken promise that it's all it was all going to be easy and i keep talking

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about this but i want to reiterate on the channel is achievable it absolutely is it's just not the

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necessarily like roman said running amerathon is also achievable doesn't mean i'm going to go do it

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tomorrow it takes work it takes work and effort and i think there's there's pros and cons of

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you know taking a more manual approach or you know having systems that are not properly integrated

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versus doing omni channel right with the integration um and i think by online pickup in stores is a

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great example of that you know you could um kind of organize around doing it through integration

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quite easily i could take an order and i could email it to my store and i could say pull this product

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off the shelf customer is going to come in and they could and the customer could come in it could go

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great but do you know how many points of failure there are right there um and as i mentioned before a

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lot of brands said okay this is it this is the bar we got to get to buy online pickup in store and

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for some businesses it really makes sense um if you've ever done like big order pickups like when

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i order 40 pounds of wood pellets for my smoker from walmart it's so great to be able to pull up in the

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parking lot and have them come and lug that stuff out of the store and put it in the bag of my truck

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it's a lot easier but if i'm buying a luxury pair of jeans i ain't going to do that i want to go try

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them on if they're two hundred fifty three hundred dollar pair of jeans i want to go try them on

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and the benefit for the store is to get me in because now i can go ahead and i can shop more and

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it's great but the risk of doing that if i'm a you know a specialty retailer that doesn't have a lot of

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product in my store or a fashion retailer that i might have very little product in my store

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if i get that wrong the lifetime value of that customer especially in a luxury environment

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where an average transaction is hundreds of dollars that customer could be worth tens of thousands

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of dollars lifetime if you have them leave work drive to the store come in expect to get their

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stuff and it's not there oh man you lost them that's just it you lost them and there's another study i saw

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recently talking to romans point about the risks associated with this eighty some odd percent of

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customers i saw surveyed so they would stop doing business with a brand if they breached their

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customer data so there's another risk in there so i think all of these workflows that we call them

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about omnichannel they could potentially be a great boon to the business but they need to be

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evaluated professionally see okay what are we actually going to get out of this and then what's the

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you know what's it going to take to get there and what's the risk of doing it before we we actually do

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it customer experiences everything the whole promise of omnichannel is a great customer experience

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if i cut corners on it to get the transaction done by online returning stores and other great

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example a lot of companies will try and do by online returning store because our systems aren't

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properly integrated they can't do something like an exchange you ever bought something in a retail

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store and want to change it for something else that's an expectation online systems don't usually

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understand the concept of an exchange they understand a return so if you go to a system a store

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that hasn't properly integrated by online return in store and now i can't actually exchange it

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i have to return it in one transaction then buy something else in another most customers will just

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say forget it just take it back instead of keeping the sale i lost the sale so those are all just some

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examples of the risks of doing this but the rewards are great as well because when you do wow that

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customer and they're like man that was easy that was cool it went right back on my credit card

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the one i used on the online transaction they didn't have to take it i didn't exchange not only

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that they gave me a discount for buying something else in the store now i increased my sale so

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hopefully that explains it a little bit Scott it explains it and it's it it it shows why people like

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the two of you exist retailers to meet your expertise to help them through this we're pretty much

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out of time for this episode but i will remind everyone that we've got two more episodes coming up

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for today i want to thank all our viewers for watching or listening on our podcast

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Kevin thank you for your time we're all men as usual always a pleasure to have you on and remember

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go ahead and give us a rating and subscribe if you so do so all right guys have a great day and

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thank you very much we'll talk to you guys soon