O2O business model – Definition, Examples, and its Advantages!

One of the most popular activities around the globe is - Online Shopping! Thanks to the pandemic and the lockdown it led to, retail e-commerce sales worldwide amounted to 4.28 trillion US dollars in 2020 alone. Experts project the growth to be more than 5.4 trillion US dollars by 2022! The local trade has begun to strengthen its hold on the internet, and the links between online and physical merchandising have gotten robust than ever. 

In the world of e-commerce and online shopping, where one can buy anything and everything from clothes to groceries, how do businesses appeal to online customers and get them to their retail stores?

The answer to this question is by using the O2O Business Model.

In this blog, we will discuss - what this O2O model is, its functions and the brands that have already implemented it. 

What is O2O?

O2O, an acronym for Online-to-offline commerce, is a business strategy that helps businesses attract customers online and gets them to make their purchases in physical stores.

In this blog, we will discuss - what this O2O model is, its functions and the brands that have already implemented it. 

For a novice, it is an approach used to reach out to the customers that entices them on an online network and then forces them to visit their retail site, aiming to create a seamless digital experience at all stages: before, during, and after the purchase.

Another front of this model is that it enables the customers to pay online and later pick up a product at a physical site.

In short, the O2O model merges the online and offline consumer behaviours by finding the customers from online mediums (for ex., website, emails, advertisements, and mobile applications) to engaging them offline (i.e., at a physical store), creating a coherent shopping environment for everyone.

For example, a famous retail outlet, Target, used this model by launching a new feature - a mobile application called Cartwheel by Target. It shows downloadable coupons and offers through the app that users can add use in-store at the checkout counter. The idea is to get mobile users into Target's brick-and-mortar location.

How does it work?

O2O has a simple technique – incentivize the customers to pick up their online purchased items from the nearby retail stores. O2O may also allow users to return items purchased online at physical stores and grant the customers to place orders online while visiting the offline stores.

In some countries, retailers have transformed their stores into full-fledged O2O outlets by establishing several web-connected kiosk machines helping the customers browse with ease.

In these ways and more, both the online and offline retail experience can deliver a better shopping experience by overlapping with each other than the segregated online and offline retail one. 

Thus, this model is an amalgamation of both - online plus offline business worlds, benefitting the consumer.

Some techniques used in the O2O model are:

  • In-store pick up of products bought online via web or on a mobile app.
  • Allowing customers to place an order online from a physical store.
  • Allowing the goods purchased online returned to a physical store.
  • Installing a mobile retail kiosk.

Companies that adopted O2O:

Many business leaders like Alibaba, Amazon, Reliance Jio and Flipkart have adopted this O2O business model and have seen immense success.

Now let us look into the benefits of this business model- 

While O2O is relatively new as compared to other eCommerce business concepts. The notable benefits of the O2O Business model are listed below:  

  1. Branding:

    Branding is much simpler and more efficient with online capabilities like advertising, social media, mobile app, combined with real-time data analytics, system integration, AI and more!

  2. Reduced Delivery Time:

    Retail Customers tend to swiftly move to another store if they do not find an easy and convenient buying process. While online shopping seems pretty convenient, the time taken from placing the order until getting it delivered is more compared to O2O, which is much easier to visit the store and do the pickup at their convenience.

  3. Shop at any time:

    It enables the end-user to shop anytime and anywhere, giving them the freedom to browse at their own will. Also, provide the flexibility to choose if they want to pick it up from the store or have the items delivered at their doorstep.

  4. Increase in-store footfall:

    With the technology and e-commerce evolution, and not to forget the recurrent lockdowns caused by Covid-19, retail businesses have seen a drastic dip in the number of people visiting their physical stores. Adopting O2O can help this business by increasing the number of customers visiting the physical stores.

In conclusion,

Online-to-offline (O2O) is an ingenious idea with a huge potential of changing online and offline businesses. The vast interest of big conglomerates signifies its value, and in upcoming years, we should expect more retailers and online stores to adopt this model.

Do you want to know what it will cost to build this type of software for your business? We can set up a workshop and come up with the best pricing for you! Contact us now!

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