Over the past 20 years, online shopping has evolved from an anomaly to a tremendous force in the retail world. Using sites like Amazon and Wayfair, customers can purchase items they need quickly and easily and have them appear on their doorsteps in days.
However, online shopping does have its drawbacks. For instance, the possibility of generating more revenue from an online shopper is limited for retailers. Online shoppers usually have an item in mind when they shop and are therefore less likely to browse around like they would in a store.
Online shopping also displaces the personal aspects that an in-person shopping experience provides. There’s no one-on-one conversation with a chatty salesperson and no opportunity to try on clothing or flip through a book before making a purchase.
Nowadays, companies are trying to bridge the gap between online and offline shopping to create a new experience: online-to-offline commerce.
Online-to-Offline (O2O) Commerce: A Definition
Mauricio Vianna, CEO of MJV Innovation, a consulting firm to Fortune 500s on customer experience, explains O2O as a marketing strategy designed to encourage online consumers to further their shopping experience at their local retail store.
O2O combines online sales strategies with an in-person experience, encouraging virtual shoppers to put down their devices and visit the retail location of the store they’re interested in patronizing.
It’s important to distinguish O2O from an omnichannel strategy.
Omnichannel involves communicating with a customer online and offline through different platforms. O2O is different; it specifically encourages shoppers to visit their local shop in person.
O2O can occur in one of several different ways. Let’s look at a few examples.
Buy Online, Pick-Up In-Store
Some companies encourage a streamlined shopping process where customers place orders online and visit the closest store outlet to pick up their purchases.
You’ll commonly see this system with grocery stores that allow you to select products online. An in-store salesperson will gather and bag your items, saving you time and reducing impulse buys.
However, this method isn’t limited to just grocery stores. Other retail outlets, such as Best Buy and Macy’s, provide similar experiences.
Purchase Online And Return In-Store
Sometimes, someone will make a purchase online only to find out the product doesn’t suit their needs. When this happens, they have two return options: send the product back through the mail or take it to the store’s closest branch.
According to Vianna, the purchase online and return in-store option is particularly advantageous to retailers.
“Companies allow this as consumers who return products at an in-store location may buy other products they see when they enter the store that they may not have purchased if they returned the product by mail,” he says.
For instance, consider a shopper who purchases a pair of running shoes from Nordstrom.
When the shoes arrive, the shopper discovers that they don’t fit. They decide to visit their local Nordstrom and exchange them for the correct size. While at the store, they notice that athletic wear is on sale and purchase a pair of jogging shorts and a few tee shirts.
Benefits of O2O
While there are many possible benefits to an O2O strategy, three of the most prominent include:
1. Customer Experience
According to Google, 61% of shoppers prefer to shop with brands with a physical location.
Why? Because it improves the customer experience. When an individual visits a store, they can seek assistance from salespeople and view merchandise in person.
To improve the customer experience, stores should combine online and physical strategies where shoppers can get details about various products and use mobile apps to redeem loyalty points.
E-commerce platforms can use their extensive reach to push shoppers to visit their online storefronts. According to Retail Drive, nearly 87% of shoppers use the internet to research products and check reviews, guiding them toward the best purchase.
Online stores must provide quality information about their products to encourage in-store shopping. That way, there’s more incentive for the customer to visit the retail store in person.
3. Logistics Savings
O2O strategies can result in significant savings for logistical costs. Logistics costs typically increase as a retail store opens new locations.
Retailers can and should regionalize their inventory and dedicate a percentage of their store space toward storing previously sold online products.
Doing O2O Right: The Amazon Case Study
In recent years, Amazon has begun opening retail stores to complement its online platform. Whole Foods and Amazon Go Stores now offer the company’s customers an in-person option.
Both stores offer a wide range of products, and customers can place orders online and pick them up at their closest in-person location. At Amazon Go, clients can pay directly with their Amazon account without pulling out their wallets or presenting a credit card.
Amazon streamlines the shopping process, supplementing its massive online storefront with in-person retail stores to provide a better customer experience.
O2O Is a Sign of Things to Come
The tremendous success of Amazon and other retail stores embarking on an O2O strategy illustrate that in-person shopping remains vital to consumers. In the years to come, we’ll likely see more O2O options as shoppers realize the advantages both types of stores offer.