O2O — or online-to-offline — is the merger of two retail components that traditionally were separate entities. This merger allows businesses to encourage online customers to engage with physical stores and the offline shopping experience.
O2O’s objective is to bring together online and offline experiences, which used to be viewed as competitors, into one seamless shopping experience.
What is O2O?
O2O can be a lot of things. Simply put, it is a strategic method of using your online channels to get customers into brick-and-mortar retail stores and encourage offline sales.
Retailers use their marketing and communication teams to get their customers into stores or to make their experience better once they are in the physical space.
O2O strategies include:
- Buy Online, Pick Up in Store. Many retailers allow their customers to purchase an item online and pick it up in the store, sometimes including more personalization options if people choose to shop in this manner. This strategy has been available for years in many stores. During the COVID-19 pandemic, retailers who didn’t have this strategy adopted it. Most retailers began publicizing curbside pickup more because people were afraid to go into stores.
- E-Reservations. Another strategy that has been around for a while but gained traction during COVID-19 is e-reservations. Having an effective e-reservation system allows your customers to book personal shopping experiences or fitting room time slots online. Even with the expansion of ecommerce, many customers still like to browse online then “try before they buy” in-store.
- Return Online Orders to Physical Stores. Even if your customers prefer ordering online and waiting for at-home delivery, having a convenient physical location for returns adds to the customer experience. It also increases in-store foot traffic, creating the potential for impulse purchases.
- Location-Specific Searches. Our devices are always with us, always connected, and almost always know where we are. In fact, 46% of all searches on Google are local, such as “shoe store near me.” Retailers who want to take advantage of this O2O strategy need a local SEO strategy to get a customer through the doors.
- Use Social Media to Drive In-Store Traffic. While most retailers have embraced the use of social media, not all retailers are using this tool to drive traffic into their stores. Some brands have figured out how to create social strategies that bring their customers in-store. Strategies include offering exclusive deals and personalized incentives online that can only be used in-store.
The main thing that all of these strategies have in common is that they allow and encourage consumers to move between online and offline with ease. They treat both channels as complementary rather than in competition with each other.
What Makes O2O So Successful?
One factor that makes O2O so successful is the perception of convenience. Customers are often uninterested in having to wait — for a fitting room, for a drink order, or to check out. By giving your customers the ability to streamline shopping experiences by booking or ordering online in advance, you make in-store shopping a more convenient option.
Real-World Examples of O2O Strategies
Whether you’re already enacting O2O strategies or you’re trying to decide the best approach for your business, you don’t have to reinvent the wheel. Some companies set amazing examples for O2O strategies are done right. You may even get some ideas from them to use in your business.
Some of the most successful O2O strategies by retailers include:
The Starbucks Mobile Order & Pay initiative is an excellent example of O2O. Customers place their orders and pay from their phones prior to their arrival. When they get to the store, they simply walk up to the mobile order counter and pick up their coffee. This concept allows Starbucks customers to skip the store and drive-thru lines.
Amazon x Whole Foods
Amazon’s acquisition of Whole Food in 2017 is one of the most prominent recent examples of O2O. By adding physical stores to their business model, Amazon was able to start offering O2O services such as click-and-collect. They also offer incentives such as letting customers pay with Amazon Prime credit card at Whole Foods to earn 5% rewards, the same as if they were purchasing online.
Amazon’s Cashierless Store
The second example of O2O by Amazon was the launch of their cashier-less stores in 2018. These physical shops allow customers to browse grocery products in-store without having to queue and pay. The store tracks each item put into a shopper’s basket, and their online account is charged upon exit — a perfect way of seamlessly blending the online and offline experiences.
In Spain, Burger King created an InstaWhopper campaign. A customization tool was embedded into their Instagram accounts for users to create a custom Whopper through poll questions and ingredient choices. In the end, the users received a coupon for a free version of their customized Whopper in-store. Talk about having it your way!
Nordstrom has its own Innovation Lab, continuously researching the best ways to implement O2O strategies. One such recent innovation encouraged customers to download an app that pushed their online purchase history to in-store salespeople when they entered a store. The app leads to a better and more personalized in-store shopping experience.
How Does O2O Affect the Future of Ecommerce?
For many online retailers, O2O doesn’t require massive financial investment or change. Instead, you take the channels you already have and use them to come up with new and innovative ways to connect with customers.
The idea that someday physical stores will cease to exist is no longer a serious concern since the entirety of the retail industry has shifted to an online-to-offline strategy.
One of the most significant shifts has been Amazon’s acquisition of Whole Foods and the launch of their cashier-less stores. If ecommerce giant Amazon believed physical stores would be wiped out by online entities, it is unlikely they would have made such investments.
The Benefits of O2O for Retailers
By combining all channels into one seamless customer experience, retailers can reap massive benefits.
These benefits include:
- Increased Revenue. Shoppers ordering online and picking up or returning items to the store are more likely to make impulse purchases on site.
- Market Exposure. Having an online and offline presence allows you to appear in front of customers more often and reach a larger customer base.
- Brand Reputation You can improve your brand reputation by providing a seamless online-to-offline customer experience.