Getting O2O Commerce Right

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(Original publication by Javier Cazares on LinkedIn)

For brick and mortar retailers, online shopping has dealt a crushing blow by siphoning customers out of stores and redefining the shopping experience. Native digital retailers, meanwhile, are finding that people still want to “touch and feel” products before making a purchasing decision.

For any retailer, the key to sustained growth increasingly lies in an Online to Offline (O2O) model that blends digital capabilities and physical assets. Traditional retailers can, for example, use O2O to enable shoppers to search online for a specific product and pick it up at the store – where they can then be offered related products at a discount. So, buying a shirt might trigger an offer for a matching blazer at 20% off, plus a coupon for an additional 10% off a future purchase. Native digital players, meanwhile, can extend their presence to the physical stage, and leverage their capabilities in data analytics and customer insight to drive shoppers to their stores.

The O2O market is clearly heating up, with scores of start-ups dedicated to providing solutions to align physical and digital assets. In China, tech giant Tencent’s multi-platform tool WeChat has emerged as an O2O commerce model leader that is pulling customers closer to traditional merchants.

While clearly appealing, a successful O2O model requires fundamental changesacross a retail organization, ranging from corporate culture to lines of authority to incentives and rewards. The operational change required is equally transformational. Specifically, effective integration of back office systems and customer-facing applications is essential to achieve the benefits of O2O.

An effective O2O model must make the purchasing decision a no-brainer. Any inconvenience, delay or misstep gives the ever-fickle consumer an opportunity to delay the purchase – or worse – to make the purchase elsewhere. From an IT perspective, this means that all systems must be tightly integrated to ensure that every step in the buyer’s journey is captured and aligned to every bit of insight in that buyer’s data profile. For example, sales associates equipped with mobile POS devices should be able to instantly access a customer’s purchasing history and preferences and offer upsells or additional products on the spot. If the device does nothing more than make the check-out process more convenient, it’s a wasted investment.

Flexibility is also essential, so that new applications, tools and data sources can be easily added without impacting the performance of the overall O2O platform, which could in turn impact the customer experience.

A successful O2O solution should define the specific value-adding scenarios you aim to deliver.  Options include using geo-localization tools to monitor traffic and weather updates and direct consumers to the closest store. By tracking customers’ arrival to a store location, you can prepare a personalized welcome based on online browsing information. Or, imagine sending your customers pictures of themselves wearing the items they were just looking at on their mobile phone.

Enabling those scenarios requires identifying the appropriate systems, data, tools and talent. This process should connect the multiple business groups and work-streams involved to ensure that the planned scenarios meet expectations of various stakeholders in terms of delivering value to end customers. 

Implementation of the O2O solution must evaluate legacy systems to identify which ones to integrate as is and which ones to modernize and migrate to a new platform. A flexible architecture is essential to incorporate new applications and tools and adapt and respond to constantly changing customer expectations. Integration of applications should be a step by step process involving custom-built and standard packages; here, an open API platform can allow retailers to have a more collaborative and dynamic application ecosystem.

Once the integration is complete, an Agile + DevOps methodology can accommodate new application features and respond to business requests to continually enhance the O2O experience for customers.

Ultimately, O2O can help brick and mortar retailers address the challenge of elevating their customers’ experience and increasing sales. Digital natives can use O2O and physical space to complement existing strategies to leverage customer intelligence. In any case, getting O2O right requires a business and technology strategy that meets consumer expectations for a friction-less buying experience – regardless of the channel or scenario.