Mastering your online-to-offline commerce strategy can help you create a competitive advantage that sets your brand apart. This type of strategy was a key for many retailers to boost growth in 2020, as the global pandemic pushed buyers online – it helped them open their doors to e-commerce visitors and drive offline sales.
So, what exactly is O2O commerce and why is it growing so quickly? What does an effective online-to-offline strategy look like? Keep reading to get answers to these questions and more.
What does Online-to-Offline Commerce Mean?
Online-to-offline commerce, or O2O, refers to a retailing strategy aimed at bringing in customers from online channels to physical stores. The goal is to capture your audience through your e-commerce site, social media channels, via email, or through digital ads and direct them to the physical store to finalize their purchase.
Unlike omnichannel marketing that encourages buyers to move back and forth between virtual and in-person experiences, O2O focuses specifically on driving traffic to your store locations. It can involve something as simple as allowing returns to be made at the retailer’s location (BORIS) or offering in-store pickup for online orders (BOPIS).
Regardless of the strategy, the key is to get online shoppers to engage with your brand in-person. Creating a successful O2O strategy is key, as many buyers prefer to research products and services online before they finalize a purchase. That means if you can direct even a small amount of this traffic to your store, you can significantly boost your revenues.
Why Has O2O Become so Popular?
So, why has developing an online-to-offline strategy become so popular?
The biggest driver is that consumers want instant gratification. Studies have shown that up to 80% of buyers will head to a store in person if there is something they want or need right away – and O2O strategies allow retailers to capitalize on that.
This led to the emergence of in-store pickup and home delivery. The fastest way for someone to get a product is to order it online and go to the store to collect it. If they can’t do that, receiving the package at home is the next best thing.
Rather than viewing e-commerce as competition that steals revenue from traditional brick-and-mortar stores, retailers are learning that it is best to use both channels as complements to each other.
Benefits of O2O Commerce
Now that you understand what online-to-offline commerce is – and why it has become so popular – let’s dive into the reasons why your brand should be prioritizing an O2O strategy. The benefits of O2O commerce include reaching more customers, improving the customer experience, increasing customers' lifetime value, and saving money on logistics efforts.
Expand Your Store Customer Base
One of the primary benefits of O2O is that it can help you expand your customer base. There is no doubt that online marketing campaigns allow you to reach a larger audience than you could if you just relied on the people walking through your doors.
Consumers rarely just walk into a store anymore – they spend time online researching new products and browsing social media first. Almost 90% of shoppers start their product searches online so that they can narrow down what they want to buy.
If you can effectively capture this channel and help your customers find what they need, you can direct that internet traffic right to your store. When you do this right, you will get much more foot traffic than if you relied solely on in-person marketing efforts.
Enhance the Customer Experience
Another benefit of a strong online-to-offline strategy is that it enhances the customer experience. Consumers have high expectations when it comes to retailers – they want access to information about your products instantly, whether they are in-store or on their mobile devices.
However, they don’t want to be forced to do everything online either. Research shows that over 60% of consumers prefer to buy from companies that also have a brick-and-mortar location when compared to those that only have an online presence.
An O2O strategy allows you to combine these experiences into one that is seamless and engaging!
Increase Customer Lifetime Value
The other major reason to motivate customers to visit you in-store is that customers shopping in-store tend to have a higher spend and a higher conversion rate. That means that by getting an online customer to visit you in-store, you’re going to see a higher overall lifetime value (LTV) from that customer.
That’s not to say that you want to force customers to only shop in-store, but giving them good reasons to shop in person can have a positive impact on your bottom line and their total spend over time.
Access Cost Savings
Online-to-offline commerce can also help you save money on logistics. The larger your business scales, the more complicated logistics can get – so giving your customers the option to buy online and pick up at the store can significantly cut down your costs, particularly on shipping and on returns - did you know that customers who purchase in-store only have as low as an 8% return rate? That's nearly a third of the return rate for online merchandise. Plus, store returns do not require any packaging and therefore are less costly to you and your customer.
Regionalizing inventory can not only reduce your warehousing expenses but can also minimize the cost of same-day or next-day pickups.
Top O2O Strategies
Here are some of the top O2O strategies that retailers should consider to set themselves apart:
Offer In-Store and Curbside Pick-up
Buy online, pickup in-store (BOPIS) is one of the top strategies for O2O.
BOPIS makes it easy for shoppers to look for products online and then come to the store to retrieve them. The global pandemic significantly increased the demand for these services, and many consumers indicate that they will continue to rely on these services in the future, particularly in the form of curbside pickup.
Offer Appointment Booking
Especially with restrictions on store capacity because of COVID, offering in-store appointments is a great way to reassure customers about the safety of their store visit and increase store traffic. There are a number of different online booking systems such as Acuity you can leverage in order to encourage customers to book an in-store appointment that will give them access to an in-person expert who can help them find what they are looking for, and equip you with even more knowledge (including contact info) about who is visiting your store. Once a customer has booked an appointment, you can also empower your store team to reach out to them ahead of their appointment to get a sense of their size and product preferences.
Already Offering Appointment Booking?
Learn how Endear can help you personalize the appointment experience for both virtual and in-person appointments. No matter what platform you're using, Endear makes it easy to introduce a high-touch experience your customers will love.
Market Your Stores on Packaging
QR codes allow you to deliver more than just products to your online customers. Consider adding a QR code to your packaging so that customers can learn more about you, including where they can come meet you in-person. You can even add a promotion as part of the scan that they can redeem in-store.
Display Local Inventory Online
You can also satisfy customers with the most urgent shopping needs by indicating which products on your e-commerce site are available in a customer’s local area. All you need from the customer is their zip code. From there, you can help them understand what items are available for purchase without having to buy before they try.
Connect Your Online Customers with Your Salespeople
Customers who are new to your store may be hesitant to come in, especially during COVID. Your store associates are the best people to assuage their concerns and inform them about your store offering. Many retail salespeople today are already using their store's downtime in order to clientele with online customers to provide an extra helping hand as customers navigate your e-commerce site or seek out specific advice about products.
By giving your customers the opportunity to connect directly with a salesperson, you're creating a unique, two-way conversation that may be what a customer needs to actually visit you in-person.
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Which Brands have Great O2O Offerings?
As you develop your strategy to drive online consumers to your store, it can help to learn from brands that are already doing O2O well. Two brands that are successfully implementing O2O strategies include Allbirds and Magnolia Market.
Allbirds, the shoe retailer, is a great example of a company that learned to blend its in-store experience with e-commerce. They started by experimenting with pop-up locations, and eventually, they were able to open physical stores around the world.
How were they able to do this? One of the biggest reasons that shoppers love visiting their stores is that they never have to leave empty-handed. Even if the product they want isn't available at that store, they can process the transaction right there and ship it to them directly. It's the best of both worlds!
Hear from our Co-Founder and the Head of Retail at AllBirds
Learn what AllBirds's head of retail Travis Boyce had to say about the future of stores on a panel with Endear Co-Founder Leigh Sevin and Shopify's head of product, retail, Arpan Podduturi.
Another company that has succeeded in the online-to-offline space is Magnolia Market. This brand was created by Chip and Joanna Gaines who gained extensive popularity through their show Fixer Upper.
Their modern farmhouse and rustic furniture draw many people to their stores so that they can see the products up close – and Magnolia Market makes it easy for them to make the trip in person. They use Shopify's AR tool to see what the furniture would look like in their home, so they already know they will love their purchase when they go into the store.
How to Use Endear to Make O2O Commerce Work Even Better
With Endear, you can readily connect your store associates to your customers over email and text, and track how their outreach is impacting your stores' sales. By using Endear to properly clientele, you'll get a clear picture of which strategies are most effective, and who on your team are your top performers. Learn more about Endear's clienteling app here.