Many believe that growth within the world’s online markets signifies the demise of traditional brick-and-mortar retailers. Companies strongly rooted in offline commerce have avoided this bleak reality by using new technologies and systems to rethink the connection between the digital and physical marketplaces. More and more, we see the potential for marrying online and offline commerce such that the growth of one does not have to come at the detriment to the other. Welcome to the new era of O2O commerce.
What is O2O?
O2O commerce refers to a general Online-to-Offline business model that utilizes web-based markets and tools to attract the digital shopper to participate in in-person retail consumption. While this definition might appear overly fluid, the term is intended to be quite broad in scope. Ultimately, O2O encompasses a whole industry with a wide array of different techniques and services aimed at incorporating the digital & physical marketplaces.
What Are Some O2O Techniques and Who Uses them?
In order to keep pace with the advances of the technological world, many traditional retailers have begun incorporating the evolutionary concept of “Survival of the Fittest” into the core of their business strategy. With this adaptive mentality, companies and services providers such as Apple, Best Buy, Wal-Mart, and The Home Depot have been able to construct creative ways to bring online shoppers into their stores. In most cases, these brick-and-mortal vendors have also begun to stake their claims in the digital commerce market, as well.
Those companies that see the advantages of O2O are now expanding their reach into the recapture of revenue lost to a concept known as “show-rooming”. This term, as coined by the NY Times, refers to the practice of consumers visiting physical retail locations only to test or inquire about products before they ultimately make the purchase online. The widespread presence of Show-Rooming has occurred in congruence with both the growth of online retail marketplaces and the decline in traditional in-store sales conversions. This drop in offline sales encouraged numerous major retailers such as Apple, Best-Buy and Wal-Mart to eventually develop the services now considered synonymous with O2O Commerce. A few of the O2O Commerce techniques noted by NY Times article include:
- In-Store Pick Up
- Free Shipping Outlets
- Web-Return Centers
- Pickup Locations
- Payment Booths
- Centers for Online Sales in their Brick-and-Mortar Buildings
By offering these services in addition to building their own online marketplaces, many well-established retailers can combat the “show-rooming” phenomena and turn the digital market into a revenue-generating ally.