What Is Online-To-Offline (O2O) Commerce?
Let me explain online-to-offline (O2O) commerce directly: it's a business strategy that pulls potential customers from online channels to complete purchases in physical stores. You identify customers online through things like emails and internet ads, then use various tools to get them to step away from their screens and into a brick-and-mortar location. This approach combines online marketing techniques with traditional in-store methods, making them work together rather than against each other.
Key Takeaways
Here's what you need to know about O2O commerce. It's fundamentally a model that attracts customers online and directs them to buy in physical stores. Companies using this might offer in-store pickup for online purchases, allow returns of online buys at physical locations, or let customers order online right from the store floor. Look at examples like Amazon buying Whole Foods Markets or Walmart acquiring Jet.com—they show O2O in action. Also, retailers such as Target, Walmart, Kroger, and Nordstrom have ramped up home delivery and curbside pickup as solid O2O tactics, especially for safe shopping during uncertain times.
How Online-To-Offline (O2O) Commerce Works
Retailers used to worry they couldn't compete with pure e-commerce players on price and selection because physical stores come with high fixed costs like rent and staffing, plus limited space for inventory. Online sellers, on the other hand, can stock a huge variety without much staff, just relying on shipping. But if you have both online and offline presences, treat them as allies, not rivals. The point of O2O is to build awareness online so customers research products there and then head to your local store to buy. You can implement this with options like picking up online orders in-store, returning online purchases at the physical location, or even placing orders online while standing in the store.
Special Considerations
O2O's growth hasn't wiped out the edges that e-commerce holds. Customers will still visit your physical stores to try on items, check fits, or compare prices, only to buy online later—that's showrooming, and it's a reality. Your goal with O2O is to target customers who prefer walking or driving to a store over waiting for mail delivery. Remember, O2O is related to but distinct from 'clicks-to-bricks' or 'click-and-mortar' models; don't confuse them.
Online-To-Offline (O2O) Commerce Trends
Take Amazon's $13.7 billion buy of Whole Foods in 2017—it's a clear sign that even the online giant is investing in physical spaces. You can use your Amazon Prime card at Whole Foods for 5% rewards, just like online. Traditional retailers aren't sitting idle either; Walmart spent big on bridging online and in-store, including its $3 billion acquisition of Jet.com in 2016 to tap into urban and millennial shoppers, who Jet was adding at 400,000 new users monthly. Beyond acquisitions, strategies include expanding home delivery and curbside pickup. Retailers like Target, Walmart, Kroger, and Nordstrom offer contactless curbside options, letting you shop safely without entering the store or leaving your car. Walmart's leaders view these services as crucial for growth, with U.S. e-commerce sales jumping 97% in Q2 2020.
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