A breakdown of Online-to-Offline Business
The key takeaways
- Online-to-offline, abbreviated as O2O, is a business model that entices potential consumers on online channels to make purchases from physical stores.
- One indispensable aspect of newer O2O initiatives is allowing customers to pay online and pick up a product in a physical location.
- A plethora of techniques is used under the benchmark of O2O commerce such as letting the customers return the product at a physical store, allowing them to place orders online while being at the store, and making payment online.
- Initially, the O2O revolution was led by Alibaba. Later on, the biggest E-Commerce giants Amazon and Walmart also showed their interest in O2O commerce.
What is O2O?
Online-To-Offline (O2O) commerce is a business strategy that recognizes potential customers from online channels and then uses a set of tools to approach customers and get them to the stores for purchase. This type of marketing is driving e-commerce giants to a business combining online and offline channels.
The foremost advantage of e-commerce over traditional commerce is the effortless tracking of consumer behavior, payment information, and easy customer targeting. With the means of O2O business, it would be easy to track the status of offline transactions to boost branding and sales directly.
A business uses email marketing to boost sales via promotional or discount coupon codes where the customer has to visit the store to get benefitted from the code for making a purchase.
In the context of online channels expanding their sales, they are becoming complements of offline channels and improvising traditional marketing. By starting an online sales channel, store owners gain a pool of customers.
O2O was initiated a few years ago when Jack Ma, the founder and chairman of Alibaba Group Holding had coined the concept of “New Retail”. It is primarily the integration of online, offline, logistics, and data across a single value chain.
When it comes to marketing, retailers look for brand reputation and this is where O2O comes into the picture. Branding is much easier when using digital ways like advertising, social media campaigns, mobile app, wallet, SMS, push messages, combined with real-time data analytics and Artificial intelligence.
For instance, a person goes online and searches for a pair of casual jeans to buy. While searching he reads an article helping him to buy the right pair of jeans, he browses the picture, clicks the link, and gets a promo code on his email. He then purchases by visiting that particular brand store.
Such kinds of marketing tactics can be used to convert buyers into potential buyers who are actually interested in buying your products or services. It is the best way to create a brand reputation and improve revenue at the same time.
Not to pass over the fact that it allows the retailer to optimize customer experience even after. In the whole process, customers are provided with irresistible online and offline offers. For them, purchasing becomes easier and enjoyable.
O2O also allows retailers to maintain a database of their potential buyers such as name, age, email id, address, shopping behavior, likes, and dislikes. This is beneficial for the business that actually commits to the customer preferences before spending a huge amount on marketing tactics.
Once you earn engagement from customers, certainly you will witness a breakthrough in both short and long-term revenue.
Lastly, O2O helps bring down the time it takes a product available in the store from the manufacturers.
Why is O2O necessary for retailers?
Digital retailing has been incompetence with traditional marketing. But with the involvement of O2O business models, both complement each other rationally. When integrated, both online and offline channels bring much higher revenue compared to the stand-alone.
For offline businesses, online expansion helps to improve brand reputation and revenue at the age of digitalization. Online channels make it easier to collect data about customers for marketing purposes which is tough in the case of offline buying.
With a rich database of customers, retailers can use this information to convert leads to customers or enhance customers’ engagement with their business.
For retailers, having online access is a way to reach more and more customers who rely on digital channels to make purchases in the era of IoT.
Another factor that adds to the success of O2O is that having an online presence allows the customers to shop where and when they want to. Online channels make your business available 24/7 for customers.
Lastly, customers are served more professionally and personally with online customer support.
The importance of physical stores
Even after e-commerce growth, more than 80% of purchasing is still happening in brick and mortar stores. This is because the customers enjoy the convenience of seeing a product directly and touching it. This builds trust and satisfaction on the part of sellers when customers visit the store.
For some product lines such as fashion and accessories, electronics, customers still prefer buying in physical stores rather than making an online purchase.
Though customers always search for an item online before buying, they are unlikely to hit the place-an-order button for the products they want to touch and see in front of them.
Therefore, a physical store from where the customers can buy things will build brand trust and make them feel more likely to come back.
Physical stores also enjoy extra revenue given the fact that the customer has the option to exchange in-store and likely buy extra things when they revisit.
One more reason why physical stores are better is that face-to-face customer services always ameliorate sales.
On the other hand, having a physical store increases the traffic to the e-commerce sites which in return will improve the image of the brand on the digital channels. This will significantly facilitate digital retail.
Apparently, the O2O business is now one of the most useful strategies to draw sales and increase revenue. Therefore, retailers shall keep themselves updated with all the newest revolution in the retail industry.
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