Back in the late 90s, the rise of e-commerce was deemed threatening to the business of brick-and-mortar stores. It blew on the scene with an incredible reception and the downfall of physical retail.
Cut to the present time, offline isn’t dying. Instead, it’s locking steps with the burgeoning online retail culture and changing the nuances. This great coming-together of the online and offline worlds of retail is referred to as O2O—Online-to-Offline or vice-versa—in modern industry jargon.
What is O2O?
O2O or Online-to-Offline strategy entails the successful integration of online and offline business channels while delivering a consistent customer shopping experience. The strategy identifies the potential customers online, gives them a brand hook, and prompts them to visit brick-and-mortar stores to make their purchase. It also allows customers to place orders online as they continue shopping at an offline location.
Basically, O2O is a two-way model, requiring businesses to create and converge their online and offline channels. Those, looking to adopt the model, must drive efforts to leverage both channels, and treat them as complements rather than competition. If they lack either of the two, they should focus on enabling the other.
As of now, the O2O strategy is at a nascent level, and coming in bits and pieces to the businesses worldwide. While a few techniques are in use, the strategy is set to grow dominant in the coming years. It includes features such as micro location-based services, bots, and virtual assistant platforms, and customer friendly advantages such as allowing them to pay online and skip waiting in long queues while shopping at a physical store.
Here are a few examples of the O2O model in action:
a. Amazon Builds Same-Day Delivery System
Amazon is adding another feather to its expansion cap—building a same-day delivery system. The execution plan includes the setup of warehouses in every city, with an army of delivery persons. The items will be packed, transported, and delivered on the same day itself; thereby, eliminating customer ‘wait time’ and giving the taste of both ‘online’ and ‘offline’ worlds in a single shopping experience.
b. Amazon’s Acquisition of Whole Foods
The talks about Amazon venturing into brick-and-mortar retail gained momentum with its $13.7 billion buyout of Whole Foods last year. In the hindsight, the giant’s real interest lay in tapping into customers’ physical shopping habits and behaviors, selling everything that the online platforms weren’t capable of, say the perishables, and getting the most out of the art of upselling—allowing customers to shop in-store and offering giveaways on additional items to be redeemed online.
c. Alibaba-Intime Deal Worth $2.6 Billion
Alibaba made a slew of ‘offline retail’ investments in a bid to expand its physical footprint. The buyout kitty included Intime, a department store chain, whose deal was pegged at $2.6 billion, and Sun Art Retail Group, which attracted a $2.9 billion investment from the Chinese giant. The objective was to sell everything while leveraging the digital touch points in the complete shopping cycle. Customers visit supermarkets, pay via Alipay, and get digital receipts against their bills.
The above examples emphasize the various ways online and offline business channels are meeting to create seamless omnichannel customer shopping experiences. It’s estimated that over 82.5% of retail sales will continue to happen in physical stores till 2021. And, the way these leading online marketplaces are gradually paving inroads to physical selling lends credence to the numbers.
Delivering a Coherent and Consistent UX across all the Channels
An omnichannel brand strategy thrives on consistency. Consistency is important in building an aura of trust, familiarity, and strong value around the brand. Let me explain.
Users interact with a business across various online and offline platforms and such interactions are built along the lines of multiple elements, including content, design, and functionality. A coherent and seamless balance of these elements and their consistent flow across all channels will ensure no fault lines in the branding of a business. The business will also be considered as ‘one’ complete entity, adding more substance to the omnichannel customer experience.
Simply speaking, a business must look and feel exactly the same to their customers, irrespective of the channel they’re using. This is a major stimulus to improving the brand’s customer experience, as well as its presence across all channels of interactions. The importance of this is constantly increasing due to the social media boom.
How to Simultaneously Succeed in both the Online and Offline World?
Driving an omnichannel retail strategy for success requires the right combination of online and offline realms. It’s all about channelizing the consumption patterns of customers in a way that:
● The flexibility and the versatility of the online environment isn’t lost
● The touch-and-feel factor of the physical shopping remains intact
Shoppers have become increasingly tech-savvy and are comfortable swiping from one app to another. Directing even a fraction of such shopping enthusiasts to physical stores can be a great sales multiplier. There are three ways a company can achieve it.
a) Buy Online, Pick Up in Store
The practice of ‘buying online and picking up in store’ is gaining popularity among shoppers for a host of reasons. They prefer the option of ‘in-store pick-up’ and ‘nearest offline stores’ to avoid shipping fees, use the item as soon as possible, or avail coupon offers. Businesses also prefer adding an option to the online checkout process because it personalizes B2C interactions, and boosts the chances of impulse buying, which in turn, boosts the customer experience, grows the sales funnel, and increases revenue.
b) Buying Online while at a Physical Store
Upselling and mobile payments are secrets to allowing customers to shop at every stage of the purchasing process. Online loyalty cards, membership cards, and coupon codes also help realize the aim. Businesses can upsell their products and ask customers to buy them from dedicated online sites. They can encourage them to use e-wallet services to pay bills. Also, they can provide loyalty/membership cards to customers for availing discounts or redeeming coupon codes online. Another skyrocketing trend is implementing kiosks in-store for items which aren’t available in-house at the time of purchase. Customers can scan an item’s tag, enter their sizes, and colors of preference to make a purchase. Additionally, these kiosks give them the option of at-home or in-store delivery.
c) Product Purchased Online to be Returned in Stores
Businesses can offer a provision to let customers return online purchases to physical stores. This improves shopping immediacy and increases customer satisfaction. It also increases the number of times a customer will shop with a certain brand, resulting in improved customer retention, loyalty, and sales.
Power of O2O
Online to Offline Benefits
#1 Brand Reputation:
The key reason why businesses are betting big on implementing an O2O strategy is to keep customers engaged without seeming too assertive or pushy. Brands build personalized relationships with customers by compelling them to visit physical stores rather than just being virtually existent. Customers enjoy receiving both online and offline benefits and develop a sense of belongingness. This contributes to increasing the brand’s credibility and improving the customer experience as a whole.
#2 Improved Business Strategies
The convergence of offline and online channels leads to a massive database of customer information, which further helps businesses in understanding user behaviors and crafting an engagement strategy that converts. Amazon’s acquisition of Whole Foods gave it access to the latter’s high-quality repository of user data and allowed it to develop a valuable perspective on user behaviors in shopping environments. This insight will improve Amazon’s ability to deliver a truly engaging customer experience, something in which they are constantly striving to excel.
#3 New Customers and Increased Traffic
There’s a section of customers who either is not connected over the Internet or is not technology savvy. By giving them the option to visit a store and pay in cash, brands are deepening their reach into new potential markets and inspiring more sales. Plus, an offline store at a strategic location can ensure higher footfalls each day, which can bump your revenues together with online traffic. Facebook and Google’s local business features are another way to boost brand visibility online and increase the daily presentation of customers.
Offline to Online Benefits
Taking a business, from offline to online, sets the stage for efficient processes, low operational costs, reduced staff overheads, and the pleasure of shopping right from the comfort of one’s couch. Businesses can take customers to their online store by offering amazing discounts, combo offers, or free shipping benefits, which will encourage them to purchase online. Flyers and brochures can be distributed in-store to promote the online store and get customers to take notice of it. Email marketing is another great tool to foster good customer relationships, keep conversations going, and convert one-time customers into repeat customers or even brand advocates.
The Future of E-commerce
Building a successful omnichannel customer experience is a masterstroke in its own right. Not only does it provide for continuous engagement with new, existing, and potential customers and raise brand awareness in the market, but it also opens multiple avenues for business growth. Since businesses with an O2O strategy aren’t pigeonholed into working on a single channel, they can optimize both offline and online channels, capitalize on them for maximum opportunities, and utilize them to gain a competitive edge.
Although highly lucrative, creating and implementing an O2O strategy is not a cakewalk. Taking the help of a strategic digital commerce partner, like Kellton Tech, will accelerate the seamless integration of both verticals and facilitate the rapid adoption of O2O technologies, resulting in the creation of a seamless customer experience and coherent brand presence across all channels to propel sustainable competitive growth.