O2O: Essential Marketing
What is O2O?
O2O (that is O to O, not zero 2 zero) refers primarily to Online to Offline, although it can in some instances relate to Offline to Online. The concept is a much tighter co-operation between online and offline marketing channels.
Online to offline is a radical business strategy that at first appears to be counter-intuitive, where the approach is to bring offline consumers to an offline location (bricks and mortar) and through this process to create a positive and seamless digital journey.
Large companies such as Amazon, who are masters of E-commerce, have been developing O2O channels as well. This was demonstrated when the company spent $13.7 billion to acquire health food business wholefoods. Amazon appreciates that despite the encouraging trends shown in the next section, that even well into 2021, 82.5% of retail sales will still take place in bricks and mortar stores.
International Growth in Digital Sales
According to e-commerce experts, Shopify, there has been and will be, continued growth in digital sales in the period 2017 to 2021 driven by the increased use of “digital touchpoints.”
Share of Total Global Retail
- 2017 – 10.2%
- 2018 – 11.9%
- 2019 – 13.7%
- 2020 – 15.5%
- 2021 – 17.5%
These figures suggest that there will be a continuation of this trend throughout this decade.
Digital touchpoints, the umbrella term for all those interactions where a consumer engages with a business through being online. This would include a range of devices, like Smartphone and Tablet, using a variety of applications, such as social media and fixed websites.
China and O2O
Put simply O2O is any digital method that brings customers to a physical location to complete the sale. Examples would be from a variety of models, including Groupon and Uber. Some countries have developed digitally more than others. The USA is lagging behind the UK and China.
Share of Total Retail Sales in 2017
- The UK – 16.7%
- China 15.5%
- The USA 9%
China has many startups operating in this field. One such company is Dmall, who have an app that uses local supermarkets as inventory warehouses. The supermarket completes the sale and delivers in a 2km radius of their store within 1 hour. Just one startup in Beijing has received a record $100 million seed funding. China is embracing O2O on a substantial scale and will become the leader in the development of apps and business models that exploit it.
Benefits of O2O
Using O2O, it is possible to bring together potential sales from online users, with those of more traditional bricks and mortar consumers and reach a far more extensive section of the population. A document presented to the 2016 conference on Enterprise Systems by Po Ling Leung, has shown that O2L had a substantial impact on customer loyalty in the Beauty industry.
It is clear that any marketer is not seriously considering or implementing O2O techniques is missing out and will suffer the consequences of inaction. The fact that Amazon who is doing exceptionally well out of traditional online is not pursuing this, demonstrates the validity of the model.