Retail offline to online (O2O): how to tackle the challenge?
written by Giles Corbett
Blog11th September 2019
It just means we’re experiencing a rebalancing of old orders.
Just as some bricks-and-mortar retailers are struggling, many digital retailers are racing to gain the one advantage they can never replicate online: stores.
Whether through pop-up stores, investing in standalone outlets or choosing concessions, digital retailers are desperate to capture the magic of face-to-face shopping experiences.
Amazon bought Whole Foods for this very reason.
Missguided has opened two stores in the UK.
Zalando is opening stores in Germany.
Boden, formerly a catalogue-based retailer, is opening stores.
Warby Parker, eyewear specialist, has opened stores in the US and Canada.
The picture for retailers is complex, because some online retailers are also facing challenging conditions. For example, ASOS shares collapsed 40% in December 2018, partly due to competition from the high street, wafer-thin margins and the high costs of delivery and returns handling.
This is a problem that mixed-retailers such as Next Plc (the UK’s largest apparel retailer) manage to minimise. They get half their revenues online, and half of these orders are picked up in-store under click-and-collect, where roughly a third of collections lead to further purchases.
Amazon and Alibaba, the world’s largest online retailers, identify this mixed model, known as New Retail in China or omni-channel here, as being the most successful.
As a result, we are seeing advanced online brands set up physical retail locations. For instance, fledgling fashion retailer Hush is setting up concessions in John Lewis. And online giant Alibaba claims “[we] anticipate a transformed retail industry in the future, one driven by the integration of online and offline shopping, logistics and data transmission across a single value chain”.
Last year, Alibaba took a controlling stake in RTMart (China’s largest grocery retailer) as part of its strategy to build a network of one million physical points of presence. JD and Tencent both structured similar deals. Amazon acquired Wholefoods and increased links with others such as Morrisons and Next.
Forward looking retailers such as Next, Hush and Hammerson have caught on to Alibaba and Amazon’s plan and are prioritising digital investment in their stores. Unsurprisingly, research by McKinsey and 365Retail shows that digital savvy consumers and millennials are calling for more in-store technology.
For retailers who already have the coveted asset of retail space, the opportunity is clear – as is the head-start.
If you have bricks-and-mortar stores and an ecommerce presence, the challenge is in uniting these strands of your operations so that customers have a seamless experience travelling between the two.
Where do you begin?
With so many elements to consider, it can be difficult to know where to start with an offline to online retail project. For most retailers, the place to start is with your foundations. If you get the basics right, you can start from a position of strength and be prepared to adapt your strategy in response to new pressures or priorities.
Three core elements of your offline to online ecosystem:
Is your customer data stored in multiple locations? To achieve an effective offline to online setup, you may need to start by evaluating your data. How much of your data is useful, accurate, and lawfully maintained?
You may need to gather data into a central repository, such as your CRM system, so that future marketing actions, such as targeted offers, can be built dynamically from the data. This kind of rich data can also enable some of the automation and AI-powered actions that modern solutions make possible.
Alongside the rich data that paints a picture of your shoppers, it’s important to understand your customers, and to recognise the differences in their behaviours, patterns and trends. By grouping customers into different segment, you can create offers and exclusives that truly resonate with them, while avoiding the irritation caused when customers receive irrelevant offers.
Are your customer personas up-to-date? Are your customer portraits based on research, or assumptions? What more could you do to understand your customers’ priorities, preferences and goals?
This might mean conducting one-to-one interviews or focus groups to hear the customer’s own views. These insights, when combined with data, can provide a clear direction for the travel of your offline to online project.
Your offline to online commerce solution might be very simple, or it might be a complex, omni-channel operation with hundreds of possible touchpoints.
Whichever approach makes sense for your business, the key is to understand the systems and solutions that are involved in bringing this to life, and ensuring there are robust connections between application, as well as processes for safeguarding data.
Ksubaka’s own Cloudshelf solution provides a simple way to encourage in-store customers to shop your complete range of products. Cloudshelf is typically deployed on our fleet of interactive touchscreens, pre-loaded with a selection of your products. Customers can find additional sizes, colours or products, and place orders with just a couple of clicks. By using your existing ecommerce assets, this is one offline to online solution that can be implemented rapidly and without a complex integration.
Offline to online retail comes in many forms, and serves many purposes. You might want to encourage customers to use stores in particular ways, or to take advantage of new services, or to make your brand distinctive from your competitors. Your goals will likely dictate your approach, but the following examples provide a blueprint for O2O retail.
How can you use your online data to customise offers for in-store customers? Can you email customers coupons that they can use in-store? Or email invitations for in-store events? These kinds of incentives encourage positive behaviours, and also show customers that you understand them, and value their loyalty.
Or could you give in-store customers a unique code, based on their purchase, to save money when they next order online? For example, customers who buy jeans might be offered a discount code for additional denim purchases. Offers and discounts are an ideal way to nudge customers to make the most of your physical and digital retail offerings.
Book in-store experiences online
While this is technically an online-to-offline play, it can also support your goal of blurring the distinction between your two retail channels. By promoting in-store events, services and experiences, such as flash sales, free trials, tasting sessions and talks, you encourage digital-focused shopper to visit your stores, and re-discover the value they offer. This can be advantageous if your competitors are digital-first, and have no real estate on which to compete.
The best way to achieve a seamless link between your online and offline retail is to offer in-store shoppers a simple way to browse and buy products while they’re still in your store.
With as many as 90% of shoppers leaving empty-handed (TimeTrade), it’s clear that retailers need new ways to meet customer demand.
Endless aisle solutions, such as Cloudshelf from Ksubaka, give you the opportunity to meet every customer demand, by making your online items easily available in-store. Using our fleet of interactive touchscreens, Cloudshelf provides a prominent display of relevant products, which can be tailored to different seasonal requirements, or to the zone of the store.
With just a few taps, customers can browse the entire range, compare styles, colours and sizes, and even see products in context, such as in a home setting, or worn by a model.
Instead of leaving empty-handed, more of your customers can find the perfect item and order it immediately, either for home delivery or collection in-store.
Whether you are looking to resist pressures from online retailer, or simply provide customers with a more compelling in-store experience, we can help.
While it once took years for organisations to go digital, we can now achieve this overnight, and bring your online investment into stores in hours. This is something we did for Fortnum & Mason to help them sell their extensive range of hampers in-store, without carrying tonnes of stock.
Having worked with dozens of retailers in the UK and Asia, we understand how to use advanced technology to engage shoppers and boost sales.
Contact our team today