Table of Contents
What is an O2O solution?
O2O solution is often defined as an online to offline solution. Because this strategy allows a company to broaden its audience using a more comprehensive network of potential customers. Depending on the sector, the strategy can be used by businesses marketing to regional and even worldwide audiences. Companies with physical stores and eCommerce interfaces may create an audience from both platforms using O2O Commerce to expand their business or brand’s reach.
Retailers were worried that because eCommerce companies offered products online, they wouldn’t be able to compete on price or assortment. Because stores have substantial operational expenses (workers, rent), they cannot provide a diverse variety.
However, the reality is that 80% of customers will go to the store to buy when they have an item they want or desire right away.
The goal of online-to-offline commerce is to raise awareness of products and services before a consumer visits a store to make a purchase. Home delivery, curbside collection, and allowing clients to submit purchases online or for in-store pickup are all options.
Given that 87% of shoppers conduct online research before making purchases (up from 71% a year ago), directing even a small portion of their research to your offline store could result in significant revenue.
How does it work?
Online-to-offline (O2O) commerce is a business approach that attracts potential clients to make purchases in actual stores via online channels. In other words, O2O refers to the transition of clients from online interactions (through websites, emails, advertising, and mobile applications) to offline interactions (by heading to a store).
A typical model would look like this:
Consumers may use the web component to find a product and pay for it (smartphones, computers,…). They’re then led to the offline world (shops). They make their purchases in stores and shops.
O2O integration allows you to synchronize data across online and offline systems for real-time updates on your sales orders and inventory. As well as attracting more prospective consumers from online channels to make purchases in physical locations.
Customers are identified in the online environment – for example, through emails, SMS, social media, and apps. Then enticed to leave the online world using a range of tools and tactics. This sort of approach combines internet marketing tactics with offline marketing strategies. The relatively new but rapidly expanding proximity-based technology.
It turns eCommerce visitors into physical shoppers by:
- Offering in-store pickup of products purchased online
- Making it easier to purchase things at an actual store.
- Allowing customers to return online purchases at a retailer’s location.
Benefits of O2O solution
At a high level, the O2O approach has three major advantages:
- Appropriation of a brand’s reputation
- Revenue and customer loyalty
- It’s time to launch your product.
In many situations, businesses that use an O2O approach also reap the benefits of improved business processes and lower operational expenses.
Connect the consumer experience
According to research, 61% of buyers prefer to purchase with businesses that also have a physical site.
Regardless of where a customer makes a purchase, they will stay wise and seek the most suitable prices and incentives to stretch their dollars further. Allowing customers who buy in-store to take advantage of the same promotions or cashback offers as those who shop online encourages people to shop at a specific business.
Customers may talk to sales agents, handle things in person, and enjoy in-store experiences. That makes millennials open their wallets when they purchase in stores. Combine the in-store customer experience with an online approach that allows customers to read full product information without speaking with a salesperson. They may utilize a smartphone app to redeem loyalty program points and social media coupons for in-store discounts.
Consumer expectations shift, and they want to be rewarded for their devotion to a brand or merchant through promotions and discounts. According to our New Rules analysis, cashback availability influences 49% of worldwide shoppers to make purchases. Retailers may use O2O technology and card-linked incentives to provide cash back on in-store and online transactions. As well as promoting brand loyalty regardless of where a consumer decides to spend.
From the clients’ viewpoint, an online-to-offline business approach makes an offline store and brand more trustworthy. Brands can improve their reputation by providing quick and easy product delivery. In most circumstances, organizations can grow their client base more robustly than ever by streamlining the exchange and return process.
According to Aspect Software, businesses that use an omnichannel approach have a 91% year-over-year client retention rate compared to those that don’t. Furthermore, merchants with great omnichannel consumer involvement retain 89% of their customers on average, compared to 33% of shops with weak or no omnichannel customer engagement.
Everything in affiliate marketing is measurable, and that is one of the numerous advantages. Consider applying that level of precision to in-store transactions. Retailers may do this thanks to O2O tactics. O2O uses internet marketing campaigns and successfully evaluates them against in-store sales, allowing businesses to report on a campaign-wide basis. In terms of strategy, it creates a comprehensive user experience and allows for testing various incentives based on a retailer’s objectives.
Many shops still see online and in-store sales as separate entities, if not competitors. Instead, merchants should use one’s data and unique insights to fuel the other’s growth. Retailers may use geolocation data to create remarketing ads based on in-store behavior by implementing O2O tactics.
Furthermore, the comprehensive transactional data is made accessible by cardlinking – a way for consumers to “link” their credit card to a merchant’s loyalty program. As well as allows for audience segmentation, guaranteeing that the advertiser reaches the correct demographic with the right offering.
When retailers use this technology it allows them to acquire customer data via an API which bypasses any challenges of going direct to the source. Using this unique information, retailers can better target their customers and develop enticing offers and promotions.
Reduced Delivery Time
If a customer does not find a quick and convenient purchasing experience, they will readily switch to another shop. When it comes to online shopping, there is a significant time difference between the time it takes to place an order and the time it takes to get it.
Online-to-offline commerce companies bridge this significant time difference by offering convenient store pickup or the quickest delivery. Customers will have a better shopping experience as a result of this.
According to McKinsey’s research, 23% of consumers are ready to pay extra for same-day delivery. In reality, customers’ perceptions of delivery dependability and timeliness are important decision-making factors, and so directly impact a company’s performance in O2O commerce.
Quickly Finalized Orders
The hardcore shopper’s need for a genuinely tactile experience cannot be satisfied by an on-screen product viewing experience. When placing a purchase online requires extra time and investigation. The user must look at various ratings and evaluations regarding the construction quality, material, and lifespan, among other things.
Furthermore, the delivery and return (if applicable) processes are lengthy and time-consuming. The online-to-offline business strategy allows customers to complete orders more quickly and with less anxiety since they are not concerned about a long return period.
Saves Time and Money
The most significant advantage of an online-to-offline company strategy is that it saves consumers time and money. They may save a lot of money by paying online and getting the items quickly using the store pickup option.
Acquire Easy Customer
It’s impossible to ignore the emergence of social media and influencer marketing. Retailers may use digital marketing services to attract a large number of new customers to their shops. This is the most effective approach to increasing the number of clients in your retail store.
Not everyone who passes by your physical locations will stop in when they have the opportunity. The great majority of shoppers (87%) use the internet to investigate new items, using search engines, social media platforms, and review aggregators to assist them in making purchasing decisions.
Retailers who properly use these internet platforms might create niche audiences around their physical presence. This attracts internet users to physical stores, resulting in higher foot traffic than if they were solely available in person.
E-commerce giant Alibaba launched an O2O solution – a physical store – in an attempt to capture 80% of China’s $4.9 trillion retail sales that happen offline. Alibaba expects to be able to alter and customize product offers, create targeted marketing campaigns, and simplify supply chains. By using consumer data such as brand membership details, purchase history, and shop visiting patterns.
Successful Examples of the O2O Business Model
Allbirds, a shoe shop, made quickly transitioned from the internet to brick-and-mortar. From pop-ups to opening locations worldwide, including San Francisco, London, and Seoul.
Visitors to Allbirds’ 20+ physical locations don’t have to go empty-handed if a product isn’t in stock, which is an essential aspect of the company’s O2O solution.
Allbirds leverages Shopify’s POS to complete the deal on the spot, receive money, and mail the goods to the consumer as soon as possible.
“The entrepreneurs – who had no prior footwear experience – managed to pull off that $ 100 million feat during a tumultuous time in fashion. While many companies have floundered or disappeared altogether, Allbirds has succeeded by doing things differently”, Says Footwear News Reporter Katie bell.
Beauty Heroes’ eCommerce sales skyrocketed prior to working on their O2O commerce strategy. It was so successful that it decided to go into the offline market and create its first physical store in Novato, California.
Beauty Heroes used Shopify POS to collect sales data from online and offline channels. It also enticed existing consumers to shop in-store by sending them personalized incentives based on their previous purchases.
Chip and Joanna Gaines of Fixer Upper founded Magnolia Market, a DTC furniture business. Its first physical site in Texas is more than just a store. For some, it’s a literal pilgrimage, with more annual visits than the Alamo.
Magnolia Market sought to provide a method for customers who couldn’t visit its main store to enjoy a similar experience. To launch its O2O commerce strategy, the store teamed up with Shopify’s AR team.
Online customers may now use its app to view how a product looks in person. Or, better still, how it would seem in their own house. If a consumer is impressed, they are more likely to return to the business and make a purchase.
Bonobos, a men’s clothing retailer, launched retail locations that cater to this demographic in 2011. Warby Parker, Harry, and Modcloth were responsible for the whole concept and implementation. Bonobos established a customer guide shop, which was a big success. Customers could try on their items, place an order online, and have their purchases delivered the next day, thanks to their O2O function.
Bonobos had to establish 20 shops in various places as a result of this implementation’s success, with plans to grow to 100 outlets by 2021.
O2O commerce enables you to target both the eCommerce and retail segments simultaneously. Instead of targeting only one customer (those in close proximity to the store), brick-and-mortar companies may also attract the $2.14 billion internet purchasers.
By 2024, retail sales are expected to reach $5.94 trillion. While people in the United States shopped equally online and offline in 2021, eCommerce is expected to gain the lead in overall retail sales.
E-commerce accounted for 5.1% of overall retail sales in the United States just over ten years ago. E-commerce sales currently account for 21.3% of total revenues.
So retailers must stay attentive and informed with all the newest revolutions as the retail sector transforms and innovates on a daily basis. It’s clear that business-to-consumer (B2C) is currently one of the most popular methods in the retail industry. No one wants to be left behind.