The Future of O2O Commerce in the Retail Industry


We know that digitization is taking the world online. Innovations and convenience of digital marketplaces had entrepreneurs investing in an e-commerce website for their businesses.

We know that digitization is taking the world online. Innovations and convenience of digital marketplaces had entrepreneurs investing in an e-commerce website for their businesses.

Then came smartphones, encouraging retailers to join the mobile platform with an e-commerce app to provide consumers an extensive inventory on their fingertips.

Now, the retail industry is shifting, as we move from digital and traditional markets to a combination that offers the best of both types of commerce. If you're planning to invest in retail, you need to what is O2O commerce and its future in the industry:

What is O2O Commerce?

O2O or online to offline commerce is an emerging business model that connects the physical retail industry with its online market. Retailers target their online customers, drawing them into the real world to make purchases in brick-and-mortar stores.

It works by encouraging store owners and digital retailers to consider online channels and physical stores as one entity than as a competition. It offers an opportunity for entrepreneurs to leverage online and offline marketing to boost their advertising efforts, raise brand awareness, and conversion rates.

For example, through online channels, store owners can reach a global audience with a small budget. Plus, digital marketing targets consumers based on their preferences and profile, which helps bring in prospects that are likely to make a purchase.

The O2O business model will be the bridge between online and offline markets by combining the strategies from two types of commerce:

  • Users that search and buy products online can enjoy the offline experience by picking up their orders from the physical store.
  • Alternatively, if an item is unavailable in a particular color or size in-store, customers can place an order online while at the store.
  • Return or exchange of an online purchase is another hassle that customers can avoid by returning the product in-store.

With how fast the retailers are adopting the new business model, we can say that the retail industry is undergoing a revolution that will tilt it on its axis.

Advantages of Online and Offline Shopping

Modern shoppers demand convenience and smooth shopping experience online and offline. Online-to-offline eCommerce combines the best of digital commerce and traditional retail market to meet the demands of consumers and retailers.

Here are some of the benefits of a digital marketplace:

  • Access to an extensive inventory of various products on the go.
  • Price comparison engines allow consumers to make informed decisions when purchasing products online.
  • Detailed descriptions of product features are available without needing to get in touch with a sales representative.
  • Smart search and search filters make it easy to browse inventories and find desired products.
  • Secure payment options, including internet transactions, credit/debit cards, and more, without the need to carry cash on hand.

Some of the advantages of an offline market:

  • Accurate measurements are possible for custom orders or off-the-rack items in stores.
  • Consumers can physically examine products before purchasing.
  • They can try on fashion items for the utmost satisfaction.
  • Interaction with businesses boosts trust and customer loyalty.

O2O allows retailers to leverage the best of both markets to expand their reach, increase acquisition, conversions, and sales.

Benefits of O2O Commerce Model

Advancing digitization had people assuming that traditional retail practices might go extinct. The evolution of O2O, however, had other things planned for the retail industry. Combining both online and offline markets, it allows brands to expand their reach beyond the border and within the local community.

The O2O commerce is still in its infancy, but growing exponentially as startups and enterprises recognize its numerous benefits. Some of the perks of adopting the emerging business model for your brand include:

Omnichannel and Multi-Channel Marketing

O2O commerce allows businesses to use both offline and online marketing practices, including omnichannel and multichannel marketing.

Omnichannel marketing offers a unified shopping experience across all channels, whether online or offline. It streamlines the process, removing the 'boundaries' between different sales and marketing platforms for a fully-integrated approach, centering around the consumers. It ensures a single buyers' journey on every platform.

Contrarily, multichannel marketing centers around the products or services you are promoting. Where omnichannel is all-inclusive, multichannel retail treats each platform as an independent opportunity to target consumers where they are. It allows consumers to engage and shop on any platform they prefer.

With omnichannel, you reform your marketing and engagement strategies based on user behavior in-store or online, making each experience a new one for your customers. On the other hand, with multichannel marketing, you target consumers following a standard digital marketing practice, but make every channel a separate purchase opportunity. Meaning, your consumers can shop your brand on any platform where they are.

Both strategies combined will not only help you with targeted marketing but also boost customer acquisition and retention.

Boost Conversion

Multichannel and omnichannel marketing tactics ultimately improve the shopping experience for customers in-store and online. It is the deciding factor, which, combined with targeted promotions, increases relevant traffic to your website and brick-and-mortar store.

With relevant traffic now visiting your online and physical locations, it leaves a positive impact on your brand engagement, conversions, and sales.

Enhanced Branding

With innovative technology, branding opportunities are already more advanced than they were back in times of traditional retail practices. Now, with offline and online channels combined through O2O eCommerce, businesses can exercise more sophisticated tactics to market their brand.

Retailers boost their branding through online channels, including social media, SMS, mobile apps, mobile wallet, push messages, and more. Digital platforms combined with AI provide real-time analytics of consumers' behavior on the website, their preferences, and more. Companies hire mobile app developer to play a vital role in enabling digital presence for brands.

Subsequently, marketers can use these analytics to optimize their offline marketing, including in-store advertising, fliers, signs, print ads, billboards, live demonstrations, loyalty programs, and more.

Customer Loyalty

O2O eCommerce helps optimize the shopping experience by providing hard-to-resist amenities online and offline. When you prioritize customers' experience, they are more likely to stick with your brand, which also leads to an increase in revenue.

With smartphones in every consumer's hands, they are likely to search for your business online. Meaning, a website allows your target market to read up on your products or services, reviews, and more.

If they continue shopping online, they can enjoy a personalized experience and convenience of home delivery. Alternatively, if they want an in-store experience, they can either pick up their order from the nearest store or shop after physically examining the products.

Allowing consumers to choose how they shop and providing a seamless experience through both options ensures they will return for future purchases.

Furthermore, O2O enables retailers to understand their target market through a database that stores customer's information, including personal details, interest, and shopping behavior. Following the data, brands can optimize their engagement strategy, which helps secure customer loyalty.

Boost Speed-to-Market by Minimizing Time-to-Market

As O2O helps brands understand customer behavior and preference, it also enables them to use the data and fill the gap between supply and demand. By optimizing their product strategies, businesses can stock up on items their consumers need.

It also helps avoid an out-of-stock status and keep inventories full, by shortening the time it between conceiving a product idea and making it available for sale.

In a nutshell, the O2O business model offers brands a way to optimize their marketing tactics, leveraging the benefits of both offline and online strategies. It also prioritizes customer experience and preference, which boosts acquisition, conversion, and retention, as well as customer loyalty.

Real-World Examples of Merchants Adopting O2O

O2O commerce is relatively new in the retail industry, but many merchants are adopting the business model and leveraging its benefits. Here are some real-world examples of retailers moving ahead in the race:

  • Whole Foods by Amazon

With the recent purchasing of Whole Foods across a few of the major cities of America, Amazon adopts an O2O business model. It offers consumers free home delivery of groceries from Whole Foods within two hours for every online order.

  • Walmart Groceries

Walmart is already raking profits from its on-demand grocery app and vast chains across the American soil. But with an O2O business model, it offers the working class an opportunity to shop their essentials online, with free pick up in-store. It provides convenience for people who want to avoid busy stores and pick up their orders at their time.

Future of O2O Commerce and the Retail Industry

Many emerging startups started with an online marketplace, instead of a physical store, unlike the retailers before digitization. Launching a website or mobile app is less expensive than renting a shop, setting up, and offline marketing channels.

Thus, so far, only retail giants are experimenting with the new business model. For small-to-midsized businesses, it requires not only a substantial investment but also extensive brainstorming to make the most of O2O.

However, that's not to say the future of O2O commerce is not promising. It is still growing and will continue as entrepreneurs understand its potential to boost conversions, sales, and revenue.

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