Understanding The Retail Channel Definition

When it comes to retail software, a retail channel definition is the most important aspect of the whole equation. Without it, the logistics of running any retail business can be extremely difficult, to say the least. To know how this channel is going to function in any given year, perhaps it would be beneficial to first look back at how it was conceptualized in the past. Perhaps, for those who don't know, it was actually conceptualized by a certain individual back in 1980. For those who do know, here's a brief recap.

What Is The Retail Channel?

The retail channel definition refers to the entire transaction flow within a business. This includes both sales and inventory, and any other elements such as revenue, pricing, and marketing. It is also the definition of how business logic will interact with any other element from the commerce runtime. For instance, some businesses may use point of sale (POS) software while others may use their supply chain management system (SOC). These are methods that are  highly efficient alongside marketing strategies that allow companies to better reach their consumers, such as the use of StreamOZ for Twitch.  There are also some businesses that use their own internal IDP application which works in tandem with any POS software or any other application that is available.

Breaking Down the Retail Channel Definition

Now, let's break down this retail channel definition into its various components. 

Commerce Runtime

As already mentioned, one of the most essential components of the definition is the concept of commerce runtime. A commerce runtime is the software program that controls the interaction of the different elements in the retail channel. It is typically used by any of the following: Checkouts & Disposures, Merchandising, Support, Order Entry, Merchandise Locating/Resolving, Registration & Security, Tracking/Payment, and many more. A good example of a commerce Runtime is the e-procurement software used by companies who purchase software and hardware.

Channel Strategy

A channel strategy is usually defined as the delivery methodologies and business processes that companies follow to get goods to their consumers. This part of the definition is very important, as it essentially defines which companies can work with which other companies. The meaning of "channel" in this definition is not simply dictated by the physical process of getting products to consumers, but it is affected by pricing, advertising and marketing strategies, and the way in which channels are exposed to a company. For instance, a direct distribution channel would require a certain level of advertising and marketing exposure, whereas an omnichannel distribution channel would not.

Identity Provider Solution

In this retail channel definition, an identity provider solution refers to the relationship between an organization's customer base and a specific sales and marketing infrastructure. In essence, an identity provider solution would be the supply chain management system that is responsible for providing the customers with all of the products and services that they need but are not able to physically deliver to their homes or offices. This allows companies to gain a lower margin in sales because they are not forced to maintain a massive warehouse or distribution center. By using a smaller number of employees, and spreading out the functions of different employees over a larger number of outlets, companies are able to reduce their cost base and their expenses.

Integrated Management Solutions

In this part of the definition, a business process is broken down into manageable units and subunits. These subunits are then integrated within an overall management platform. This overall platform is typically an application, but in some cases, a server and network environment may also be required.

Sales Channel Model

In many cases, a sales channel model will describe the specific operations that take place at each retail outlet, as well as the relationships that exist among them. These relationships may include inventory, pricing, promotions, and returns.

Omnichannel Retail Supply Chain Network

The definition of an omnichannel retail supply chain network is extremely complex and affects every aspect of the retail industry. However, simplified assumptions can be made. For example, an omnichannel requires that all sales and revenue have come from the same sources, which are generally located in-store. Also, it assumes that the customer is satisfied when entering a store and that they will make the purchase they were seeking. In both of these simplified assumptions, it becomes clear that the overall purpose of a retail supply chain network is to achieve maximum efficiency by reducing cycle times and maximizing the effectiveness of sales efforts.