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Reorganizing Retail In 2022 With The O2O Business Model – Structure, Benefits & Strategies

An average shopper today is thinking about buying three-five items every hour. The Online-to-Offline or O2O Business Model is coming more to light with increasing purchasing power and product options that are turning the market intense, both for manufacturers and consumers.

Shopping is no longer a chore always. Instead, it’s a discovery to grab the best deal the make the lifestyle better. And selling is no more a point to point marketing execution, but an integrated consumer experience to nurture a sale.

Meaning of O2O Business Model

The Online-to-Offline (O2O) business model is a business strategy, built as a part of a company’s omnichannel play, to attract consumers to step out of online interactions to an in-store retail experience. In the simplest sense, O2O Commerce motivates the customer to step into the store and explore the brand and its products more extensively.

Some O2O Business Examples present across different industries are:

Amazon Fresh Pickup: Reinventing the grocery shopping experience, Amazon has started letting customers order online on the Amazon app and visit the store at a scheduled time to pick up their packed groceries. This majorly increases the order fulfilment time while shifting the customer experience from an online space to the real world.

Lenskart India: After the company began its operations in the eCommerce world, it registered the growing need to create an offline footprint and merge the experience to increase the average order value. Today, shoppers can browse products on Lenskart’s website and book a free eye test at home, where they can try out over 250 frames right from their couch and place an order immediately, or try more options at a store near them anytime later. To make the sale happen, Lenskart’s retail stores offer a different set of discounts, than the ones on its website.

The Covid pandemic has accelerated the need for O2O Commerce, with shoppers preferring shopping online with ease, rather than making the effort to step into the store. But this ease is leading to thousands of abandoned carts and millions of dollars being spent to bring back to consumer.

The biggest benefits of O2O Commerce for retail businesses are:

O2O Business Model Benefits
  1. Makes the shopping experience more convenient
  2. Reduces abandoned carts and returns
  3. Faster order fulfilment
  4. Optimization of sales operations
  5. Increases brand trust, stickiness and top-of-mind awareness
  6. Increases reach of products to more customers
  7. Makes the consumer more aware of different products of the company
  8. Increases Average Order Value
  9. Boosts sales traffic and market share
  10. High-value route-to-market penetration
  11. Deeper insights into how consumers interact with products
But while the benefits are many, the effort is enormous. Moving the consumer from their comfort space to be present in shops requires higher value creation. The below framework illustrates the structure of the O2O Business Model and how it brings more value to the consumer and the company.
O2O Business Model Infographic

Understanding how O2O works and finding the right insights to build O2O strategies are core factors in driving a successful O2O business model.

That’s because different markets have different requirements. For example, rural consumers may need some information to motivate them to visit nearby brand stores, while hefty discounts might be needed to grab the attention in the urban markets.

Intelligent retail technology helps immensely in the strong formulation and execution of O2O Marketing Strategies by digitally managing the supply chain of O2O retail.

Integrating the backend of the online and offline engine with a retail intelligence platform, gives retail brands the ability to drive data across channels to make more effective business decisions.

Instead of fulfilling orders from one geography to another, all channel partners can be integrated into a single platform, to get online fulfilled by the nearest seller. Data will also create the scope for larger strategies where information can be leveraged to give the consumer the same personalized experience in the offline world, as online.

For example, if a consumer is looking for good house painters and colour shops near them, retail solutions like WhatsApp Bot can share a list of company stores and recommended painters over chat. Here, through this sharing of information, the company is being able to create value, which will translate into a sale when the buyer decides to visit the store and explore the products with the painter the company recommended.

Another recognised retail technology – Suggested Ordering, can predict the perfect order for every retailer by capturing the product’s demand on online platforms and the buying behaviour of offline consumers. Here, availability is backed by information, which makes distribution highly data-driven.

Find My Store is one of the most commonly found O2O focused retail solutions available on most company websites. A web-based store locator, this retail tech reads the current location of a consumer and shows them details and directions of the various outlets of the company near them.

So, in a nutshell, intelligent retail solutions with an omnichannel focus make product selling and distribution more effortless. Strategies are built on data, and when data can be compiled, studied and represented in an insightful manner, it appreciates the impact of the strategy.

The most needed O2O Strategies in 2022 that every business with a website and offline distribution should follow are:

  1. Unifying the experience and source of truth: For a customer, the experience of shopping with the brand should be unified irrespective of the channel they choose to shop on. When an offline shopper checks their orders tab online, all offline purchases should be present there, giving a single view of every transaction with the brand. This is more important when consumers buy from you frequently and from multiple touchpoints. Finding all orders on a single screen is a huge time saver and helps companies perfectly determine the Lifetime Value (LTV) of each consumer.
  2. Proactive sharing of information to invoke interest: To bring the consumer from the online space to the brick and mortar shop, a lot of targeted promotional marketing needs to be done. For example, if you are running a sale near your online shopper’s location, send them a message to share the information. Tell them when new products come to stores or even when you launch a new store near them.
  3. Increasing the value proposition of offline retail: Today’s consumers are living passive lifestyles and are more comfortable in their personal space with their mobile devices. They know everything they need they can find online. So what more can you give them? Something that they cannot find online. Run exclusive in-store promotions to bring in customers. Top it off with additional vouchers for the next time they come to shop.
  4. Leveraging offline interactions to fine-tune online suggestions: A consumer coming from the online space has definitely found comfort there. You don’t want to hinder that. Rather, you want to leverage that to ensure that they still browse and buy online. Offer your in-store sellers with online vouchers to make them visit your online store and keep the traffic flowing.
  5. Revolutionizing the in-store shopping experience: The touch and feel retail can never be replaced. Holding a product before buying confirms a purchase decision faster. But no customer wants to enter a cluttered store where they browse options easily. If you have an exclusive brand store, showcasing products lucratively is an easy task. But when your products are sitting in retailers’ stores, you need technologies like Smart Merchandising, which uses AI/ML algorithms to ensure your products are optimally placed where customers can see them without any effort.
  6. Building operational efficiency with data: Data of one consumer can tell a lot about each market. How a consumer browses and buys and what benefits they seek, both online and offline, should be captured to create customized experiences for them. So when someone enters your store and browses your products casually, they should see the same ads online, which will push them further in their buying journey.

Thus, to conclude, the O2O business model will help you create a bigger brand presence and meet the demand in the market more pertinently. To know more about how to use retail technology to enable the O2O business model in your retail trade, connect with our team at marketing@mobisy.com for a free demo.

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