Rafiq Ansari

Manager Business Development


The Future of O2O eCommerce Model in the Retail Industry

o2o online to offline commerce

We went online with the advent of the Internet and mobile commerce. We have an inherent instinct to have instant access to the products or services whenever we want it. So, we have floated slogans for ecommerce like,

“Online shop never closes and provides instant access to the products and services you desire.”

We have uplifted user experiences (UX) by applying a variety of technologies and techniques, including eCommerce design, advanced search, personalisation engines, Chatbot, and security aspects. These all resulted in the rise of

  • Online surfing, which is accounted for today 88% of global buying.
  • Online e-retail sales, which is projected at 13.7% in 2019 and may go up to 17.5% of total retail sales (online + offline) by 2021
o2o e commerce model

Statista shared a beautiful graph to demonstrate the data. According to them –

“82.5% of total retail sales in 2021 will take place in physical stores.”

o2o online to offline commerce
online to offline retail

It shows a big gap between online and offline shopping behaviour of shoppers in the near future. CBRW Group Inc. has revealed that 70% of its millennial respondents prefer brick-n-mortar shopping against complete online shopping.

It is an astronomical figure to force only online eCommerce stores to think about physical outlets in various forms. Now, let’s check what recent surveys by Salesforce on the behavior of modern shoppers using Omni-channel approaches.

They have brought out one distinguish the fact that 43% of respondents prefer the online search of the products/services and also through online payment methods without visiting brick-n-mortar stores at all.

Opposed to those figures, only half of the respondents (21%) had preferred complete in-store search and purchase without visiting the online shop at all. It is natural that all offline retail buyers might not have access to local stores or unable to reach those by traveling long distances and burning fuel on it.

Now, what if we pull those online surfers and buyers of a particular brand to its B&M store or outlets for offline experiences?

These facts have given birth to a new retail shopping model/concept where mixing online and offline experiences were working. Experts have named it Online to Offline (O2O) commerce.

What is O2O Commerce?

A business finds shoppers through online channels with online experiences, and bring them into real-world stores to make purchases with offline experiences. Do you aware of what is online & offline experiences and how advantageous those are for modern shoppers?

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Advantages of online shopping

  • Quick access to tons of products even while on the go.
  • Advanced search makes life easy to find the desired products out of heaps in large enterprise-grade eCommerce storefronts.
  • Get details of all product attributes without spending time on calling or talking with a live sales representative.
  • Comparison engines allow shoppers to make logical and legitimate decisions to grab a good deal.
  • Offer to redeem facilities for various online incentives smoothly.
  • Offer secure payment without carrying any cash or credit cards at all.

Advantages of offline shopping

  • The physical touch of the products, which is the biggest benefit for some categories of products.
  • Try it on option gives utmost satisfaction when fashion and apparel like products are in question.
  • Measurement of the size of your legs or body/parts becomes a possibility to check or place a custom order in physical stores.
  • Personal touch with business increases rapports, trust, and branding.

Viability of O2O (Online-to-Offline) eCommerce Model

o2o e commerce model
o2o e commerce model

Now, we know both ends are apart and squeeze them into the one model may prove a nightmare, but the following statistics and surveys support their amalgamation.

Salesforce team had seen that the behavior of first-time shoppers and repeat shoppers are supporting the amalgamation of O2O experiences and model is viable.

They also noticed that modern shoppers expect retail businesses to keep pace with their changing needs and expectation, which is only possible with the O2O model.
Salesforce team also has found that online shoppers prefer offline experiences in certain ways, such as

  • Surf the products and buy those online, but pick it up from the retail outlet of the brand in their vicinity.
  • Visiting the physical store of the brand in the location, check the products available, but buy those products through online channels with an online order that delivers the product at their doorsteps.
  • Returning or replacing the product purchased through an online channel to the physical store in their vicinity, instead of avoiding returning via shipping channels.

Benefits of O2O eCommerce Model

Offers Omnichannel Marketing Benefits

o2o commerce

In the O2O model, a retailer has to use both online and offline marketing strategies with Omnichannel approaches as well as multi-channel marketing techniques.

Enhance Branding

online to offline retail

It leads the retail marketing business to do efficient branding using a variety of online branding capabilities, including Online & Offline Ads, SMO, SEO, mobile notifications, SMS, proximity, or location-based services. These all need to combine with the latest technologies like AI, AR, analytics, and system integrations.

Boost Conversion

O2O increase overall UX of the business that leads to increased traffic, engagement, and finally conversion rate with high AOV.

Augment Customer Loyalty

When online shoppers avail the offline experiences with ease, they tend to stick with the brand and show increased consumer loyalty in the long run.

Increase Speed-to-Market by Minimising Time-to-Market

O2O model enables a business to collect real-time data about the inventory and behavior of shoppers, including preferences for different products. It ultimately helps the business to fix product strategies and fill up inventory, which is in demand. It eventually leads to no product out-of-stock status in the store.

Futuristic Approaches of the World Leading Brands

We have seen that leading brands are experimenting in various ways and technologies to enhance the online as well as offline experiences. Let’s see what is going on at the world level.

Magnolia Market at Silos

Magnolia has recorded 1.6 million footprints in the previous year. How did it do? It has replicated offline retail experiences on its online channels. Shopify ARKit is one of the efficient ways to achieve it. The app can place 3D models of its products in the homes of prospective buyers using various AR tools.

It provides answers to a lot of queries from online buyers who never have touched the product at all. Now, shoppers can place virtual products in their places and find out how it seems in real-life. What is on the surface and inside of a product? Whether products are befitting in the designated places or not?

Whole Foods by Amazon

Recently, Amazon had spent $13.7 billion on buying Whole Foods traditional local stores in four major cities of the USA. It has declared that customers can get free of charge delivery of groceries from Whole Foods within two hours while ordering online. Now, Amazon is going to introduce automated warehouse technologies in such local locations of retailers and expand the O2O concept further across the globe.

Walmart Groceries

Walmart is offering a huge selection of grocery items online and offers free pickup services at its vast chains of stores across the regions. It eases the life of busy people who want to avoid visiting various stores for the collection of their groceries. They can pick up their orders from the convenient store at a convenient time.

Bonobos Guide Shop

Bonobos is an online-only marketplace for fashion products. It has opened guide shops in the New York office on a trial base. It offers customers try-on experiences of their products and enables them to place custom orders on-the-spot. The custom orders are delivering the very next day or on the given date to the homes of the buyers free of charge.

It got tremendous success in itself and now, Bonobos going to open 20 of such outlets across the various regions in the USA and elsewhere.

Shopify Merchant All-birds

o2o online to offline commerce

Instead of indulging in a discounting distribution system, All-birds have preferred O2O marketing strategies. They had the exclusive raw material from New Zealand merino wool to create the most comfortable shoes in the world. They have taken the help of Shopify Plus and created an online store along with offline outlets at two different places in the USA.

Their strategies worked well, and the O2O model got momentum with huge sales. After partnering with Nordstrom, the demand for new stores in other countries in the world increased many folds.

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For retail businesses, bringing online customers to offline outlets is not a new thing. Click and collect strategies are working great for many eCommerce brands and niches, but it is not a surefire way for all.

Similarly, O2O seems good as a concept, but many densely populated areas prohibit it from creating a location. Therefore, it is good for Amazon and Alibaba to dwell into O2O commerce buzz with a huge investment on Drone like delivery options, but for SMBs, it is demanding a lot of brainstorming sessions before spending capital on it.

If you are a Shopify merchant and think of Shopify Plus using O2O commerce strategies, our Shopify eCommerce consultants can help you a lot in giving the right guidance and services to customize your Shopify development with O2O features and functionality.