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2021 Trendy Marketing Essentials: Is it Online-to-Offline (O2O) Commerce or Offline-to-Online Commerce?

9nd December 2020                                                                                                                                                                                                     

It’s now become a common habit that customers will search for a product online to get all necessary information of a product such as price, features and learn about its feedback, then they will most likely visit physical store to see, touch and feel the actual products before finalising their purchasing decision to buy in-store or place an order online. As consumers bounce between stores, desktop and mobile devices like a loop, businesses are working to devise seamless omnichannel experiences to best serve these changing behaviors. This comes to a hot topic in the business society nowadays of what exactly are Online-to-Offline (O2O) Commerce and Offline-to-Online Commerce, and which one is the best approach for businesses? 

Offline-to-Online Commerce

“Long live the brick-and-mortar store”, everyone loves online shopping because it has never been easier or more accessible. But despite the surge in e-commerce capabilities, mobile application and other technology advancements- including voice-activated shopping and the proliferation of Amazon Dash buttons- the majority of consumers still want the tactile experiences offered by physical stores. 

According to Retail Dive Consumer Survey, the ability to see, touch and feel products ranks highest among the reason’s consumers choose to shop; and specifying that “Over 55% of consumers visits stores before purchasing online, emphasising the idea that high-touch physical and seamless omnichannel experiences are critical for modern retailing.”. The connections between digital and physical browsing and buying habits, so that the notion of “see in store, buy online” has been confirmed. 

(Source: RetailDive) 

Even though shoppers have so many paths to purchase these days, many still want to “kick the tires” before buying. Online reviews either from influencers or from real customers, which I would also name it as the “digital words-of-mouth” could make the big influences on consumer’s behavior in moving down the line of customer journey. As the research discovered that 97% of consumers consult product reviews and positive online reviews on the website and landing pages can boost conversions by 270%. To the second step, where interested consumers will visit the brick-and-mortar to see and feel the physical product before placing their online order.  

However, visiting stores to see items before buying them online tends to correlate with age too. High percentage of younger shoppers are more comfortable buying items online sight unseen, whereas the older shoppers would prefer to physically see the products first. 

Omnichannel approach would be the best fit to create effective Offline-to-Online commerce strategy. The main principle of omnichannel approach is to provide an ability to switch between different channels: laptop, mobile phone, social media, online & offline stores. It is the way to fill the gaps in data analytics about customers’ behavior and their shopping insights. Using this strategy gives a potential to collect more data, analyze it more accurately, and create the most personalized proposals for customers, both online and offline. 

Online-to-Offline (O2O) Commerce

When online commerce is now a superstar and keep growing nonstop, especially with the help (kind of) of coronavirus outbreak in 2020 hundreds of thousands of stores including those giant brands around the world were forced to close down, accelerating the pace of online transition than ever before by 221% growth in the last six years period (2015-2021).  

(Source: maveneecommerceinc.com) 

It’s impressive if you’re acing your online marketing strategies and your business has been showering with revenues, while many others are kicking hard to survive. However, let’ never forget that Covid-19 isn’t a gift but it’s the world’s disaster. Soon enough social distancing restriction will slowly fade away and we would be at ease having a real physical human interaction and able to experience that exciting shopping holiday again. You wouldn’t want to fall behind the trend from 2021 onwards, because no matter shining the online commerce’s getting, brick-and-mortar is still quite essential to most industries.  

Rather than treating the two different channels, online and offline, as the competitor; businesses should strategically collaborate them as complements. To keep the wheels spinning and more importantly to arrive at your organisational goals sufficiently, Online-to-offline (O2O) commerce should be effectively adopted to your business operation. Online-to-offline (O2O) commerce refers to a business strategy that draws potential customers from online channels to make purchases in physical stores. It identifies customers in the online space, involving through emails and internet advertising and then uses a variety of tools and approaches to entice the customers to leave the online space. The goal of Online-to-offline commerce is to create product and service awareness online, allowing potential customers to research various offerings then visit the local brick-and-mortar store to make a purchase.  

Similarly, with the fact remains that consumers still want the tactile experiences offered by physical stores, techniques that we always see majority of O2O commerce companies employ lately include click-and-collect, allowing items purchased online to be returned at a physical store, and allowing customers to place orders online while at a physical store. O2O provides the best of both worlds – online and offline – so that consumers can see deals online and then choose to seek them out offline. 

Key Takeaways:

As we’ve discussed, the path-to-purchase these days have multiple touchpoints crossing between the physical and digital worlds. And since there’s a mutual back-and-forth transition between online and offline commerce, no one can deny the strong connections between the twos, Online-to-Offline and Offline-to-Online commerce. 

  • Before visiting in-store product, consumers find it more convenient and faster to find information online and it’s also easier for them to compare between options. 
  • Online advertising creates brand and product awareness, so that conversions can be driven to either their online store or physical store. 
  • Out-of-stock in-store products is no longer a problem, your opportunities of gaining potential customer are more secure by placing them an order online while at a physical store, plus offering speedy and free delivery. 
  • A product purchased online can be returned offline at their local store, which is quicker and without going through all complicated returning policies and processes. 

Whichever channel makes sense for your business, the key is to understand the systems and solutions that are involved in bringing this to life, and ensuring there are robust connections between all processes. Beyond, to fully absorb the benefits that both the online and offline commerce proffer, and especially to outperform your competitors; the two strategies, Online-to-Offline and Offline-to-Online commerce, should be equally weighted and conducted in your service offerings. 

Seavhorng Yim

Seavhorng Yim

Digital Marketing Analyst at AI Australia

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