Blog

From O2O to O2O2O: Retail Revolution or Evolution?

Nearly two years into the COVID-19 pandemic, most retail brands have probably realised their initial overnight pivot into digital marketing and eCommerce was a one-way trip. Indeed, the “hybrid consumer” is here to stay, and brands will need a solid strategy for thriving in the new offline-to-online world.

But as consumers demonstrate increasing unpredictability along the path to purchase, the north star for retailers is no longer O2O. When consumers shuttle from offline to online stores and back again, they encounter the brand across multiple contexts and platforms, creating a new imperative for marketers to cater to an O2O2O environment. Done right, O2O2O deepens the ability of brands to deliver value to customers across myriad touch points and interactions in new and delightful ways.

Why O2O2O?

Jack Ma, the founder of Chinese eCommerce giant Alibaba, first put O2O in the marketing lexicon in 2017 when he extended his online retail empire to the offline world with such novel concepts at the time as virtual fitting rooms.

Like Alibaba did four years ago, marketers today have an opportunity to prepare for the post-pandemic future and an economic recovery by creating seamless omnichannel experiences. The retail brands that thrived because of – and not in spite of – COVID-19 have succeeded by redefining the value of a brick-and-mortar space, elevating their use from provision shop to experiential platform.

Nonetheless, the recent popularity of direct-to-consumer eCommerce brands may persuade some retailers to focus exclusively on building out online channels. Yet others may point to the recovering economy and footfall at physical stores as a reason to remain wholly offline, especially for service-oriented brands.

Taking an either-or approach would be a misstep.

Offline vs Online

The four walls of a brick-and-mortar store present three-dimensional challenges. On the retailers’ side, the use of real estate results in higher marginal costs that can curtail growth. Space limitations also mean many products will remain stashed away in the warehouse as inventory, reducing choice for consumers. And with COVID-19-related capacity constraints expected to remain for some time, retailers that depend solely on a physical presence will have to contend with underutilisation and lower revenue.

On the other hand, online stores allow brands to offer a near-infinite catalogue of products at near zero marginal costs. But for all its advantages, eCommerce comes with its own set of three-dimensional hurdles, as consumers miss out on being able to touch and feel products. The consequences of that are non-trivial: some 30% of online consumer purchases result in refunds, exchanges or disposals. In addition, eCommerce customers in Southeast Asia continue to face last-mile issues such as high shipping costs and delayed or damaged deliveries.

Fundamentals of Omnichannel

In 2021 and beyond, an effective O2O2O strategy should leverage on marketing technology (MarTech) to optimise the end-to-end customer experience and to innovate around new consumer lifecycles.

In the past, retail brands have attempted to do omnichannel in reactionary, short-term, or piecemeal bursts. Instead, marketers should outline the long-term roadmap for operating in an O2O2O world while being data-driven, so they can hedge against rapidly evolving consumer tastes.

There are three essential steps retail brands can take to succeed in O2O2O:

1. Customer Journey

Omnichannel experiences need to consider the entire flow and multiple variations a customer could take in the path to purchase. Given the myriad handoffs that need to occur when customers jump from one touch point to another, plotting these into a customer journey map using MarTech tools will help marketers spot any broken or missing links where conversions are underperforming. Personalisation tools such as Insider can then be brought in to optimise conversions.

A picture about the omnichannel touch point in ecommerce platforms

2. Data-Driven Decisions

Marketers should lean into their data to understand why customers are failing to convert on an online channel and how offline can fill the gap, or vice versa. As customers move across different channels and touch points, the integration of MarTech with customer data will be necessary to pick up on that trail and to derive useful insights in real time. A customer data platform can help brands automate that process by consolidating offline and online data gathered from customer relationship management software to create a unified customer view.

3. New Experiences

The final piece of the O2O2O puzzle is to create new customer experiences. One example is click-and-collect services where customers can enjoy the convenience of online shopping while being able to receive and check on their products in person. The example below spotlights the experience of a father heading to the store to get a bicycle for his son, only to be told he had to wait four hours for assembly. Instead of being turned away, the customer was put on a smooth digital journey that allowed him to enjoy the best of both the offline and online experience.

O2O2O customer journey on ecommerce platforms

Revolution and Evolution

With close to 90% of brands falling behind in preparing for omnichannel, there are long-term gains to be had for those willing to invest time and money in the next era of digital marketing transformation. Marketers need to look at bricks-and-mortar as part of the lead nurturing process, and not simply as an endpoint for sales. For traditional retailers, O2O2O is an opportunity to innovate, reinvent, and reset the playing field.

The ADA Difference

ADA’s core MarTech-as-a-Service (MaaS) offering works with brands as part of an extended and embedded team to help them realise the full potential of their MarTech stack. By focusing on the pillars of people, process, technology, and data, we enable brands in South and Southeast Asia to go from strategy to real business outcomes via the power of MarTech.

If you want to learn more about this unique approach, then get in touch with ADA’s MarTech experts here.