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The retail business has changed to a new notion of online to offline, making the concept of internet channels eradicating physical ones seem unrealistic (O2O). The value of both online and offline channels is equal in terms of success. It's time to start studying O2O commerce, how it functions, how it benefits your business, and how to launch an O2O business if you want to improve your retailing commerce.
Let’s keep reading to learn more about the O2O business to have a better understanding of this business strategy.
O2O commerce- A digital transformation of online to offline business
A business technique known as online-to-offline (O2O) commerce encourages consumers to visit real stores to make purchases. Online-to-offline (O2O) commerce uses a number of techniques and strategies to persuade clients to leave the online environment after first identifying them there, such as through emails and Internet advertising. The strategies employed in this kind of plan are a combination of those used in traditional marketing and those used in online marketing.
The meaning of online and offline (O2O) commerce
The O2O Commerce business model has been adopted by a number of startups and well-established companies worldwide. After this company plan was perfectly executed, many of them experienced significant financial success.
Bonobos Clothing Company
The men's clothing retailer Bonobos opened retail locations that serve this market in 2011.
Bonobos opened a customer-facing guide shop that was a big success. They provided the identical O2O function, allowing clients to browse their products online, place an order, and have their purchases delivered the very next day.
With the current aim to increase it to 100 stores by 2021, this implementation was so successful that bonobos had to open 20 storefronts in various areas.
AllBirds Footwear Company
Men's foot items were the main focus of all birds' founding. Their O2O business strategy was a smashing success, and in just two years, the company sold one million pairs of shoes.
The process of integrating brick-and-mortar and internet was quick for the shoe shop Allbirds. From trying out pop-ups to opening outlets all over the world, including San Francisco, London, and Seoul, it has made rapid growth.
Beauty Heroes' online sales were booming before implementing its O2O commerce approach. It was so determined to succeed that it chose to establish its first physical location in Novato, California.
Sales information from both online and offline channels was compiled by Beauty Heroes using an e-commerce website. Sending them personalized promos based on their past purchases, also encouraged returning customers to make in-store purchases.
The Offline to Online (O2O) business examples
Online-To-Offline (O2O) Business Trends
You can see where the leader in online commerce is investing some of its bets in physical space by looking at Amazon's $13.7 billion acquisition of Whole Foods in 2017. You can also use your Amazon Prime credit card to make purchases at Whole Foods and still earn 5% in rewards, just as when you use your Amazon card to make purchases online. That is not to argue that conventional shops are not also taking precautions. Walmart has made significant investments to close the gap between online shoppers and physical stores, including the $3 billion acquisition of the e-commerce firm Jet.com in 2016. With their enormous user base that attracted around 400,000 new customers each month, Jet had excelled in attracting the millennial and city dweller markets, which was one of Walmart's goals for the acquisition.
One O2O commerce method that businesses like Walmart use are to acquire companies that already have a sizable customer base for online buying. Other O2O services that retailers provide include expanded offerings like curbside pickup and home grocery delivery. Numerous businesses, including Target, Walmart, Kroger, Nordstrom, and others, provide contactless curbside pickup. With the help of this service, customers can quickly and safely buy what they need without going inside the store or getting out of their automobile. According to Walmart executives, these kinds of value-added services are essential to the company's expansion. In the second quarter of 2020, e-commerce sales in the U.S. increased by 97 percent.
Online-To-Offline (O2O) Business Opportunities
O2O commerce enables you to simultaneously target the retail and online sectors. Brick and mortar stores can now access the 2.14 billion online shoppers in addition to just the local customers that are close to the business.
By 2024, it is anticipated that retail sales will total $5.94 trillion . But even while online and offline shopping by US consumers was equal in 2021, e-commerce is predicted to overtake traditional retail in terms of overall revenues. Ecommerce accounted for 5.1% of all US retail sales just over ten years ago. E-commerce sales currently make up 21.3 percent of all sales.
In the US, consumers spent $861 billion online in 2020, an increase of 44% over 2019. The COVID-19 pandemic likely accelerated it, making it the fastest annual rise in e-commerce in the previous 20 years.
Retailers formerly believed they wouldn't be able to compete with e-commerce companies on pricing and assortment because they sold their products online. Due to their small size and high running expenses (rent and workers), stores cannot provide a large range of products.
However, the reality is that when consumers have an item they instantly need or want, 80% of them will travel to the store to make a purchase.
Retailers began to regard physical and online channels as complementary rather than as rivals as a result of this. O2O commerce aims to increase brand awareness for goods and services online before encouraging customers to visit physical stores to make purchases. There are several methods you can use, such as home delivery, curbside collection, and allowing clients to order from your online store and pick them up in-store.
This is what a common model looks like:
How Online-To-Offline (O2O) Commerce Works
In comparison to other eCommerce business models, the online to offline business strategy is a relatively new idea. One of the biggest issues facing owners of physical stores is the decline in the number of customers visiting those stores. This problem is resolved by the online to the offline business model. Once the online to offline (O2O) business model is put into place, the problem regarding customers switching from offline to online appears to be resolved. The following is a list of the principal advantages of the O2O Business model:
Increase sales and recognition of a trustworthy brand
The modern buying experience is anything but linear. Customers buy all the time (frequently and unconsciously), especially when they purchase online.
Retailers need an O2O commerce strategy that targets them there and draws potential customers from various online sources into their brick-and-mortar business.
Businesses with an omnichannel strategy have a 91 % higher year-over-year client retention rate than those without, claims Aspect Software. Additionally, merchants with great omnichannel consumer involvement keep 89 % more customers on average than those with weak or no omnichannel customer engagement, which is only 33 %.
Customers are more likely to trust an offline store and brand when there is an O2O business model. When a product is delivered quickly and easily, brands can increase their goodwill. In most circumstances, firms may strengthen their customer base by making the exchange and return process simpler.
O2O business helps increase revenue and gain more brand recognition.
Give customers what they want
Consumers in the modern era are savvy and safe. There are millions of retailers from which they can choose. If you don't meet their needs and expectations, they'll go to a rival who will.
How does this fit into the O2O commerce model? According to research , 61% of consumers prefer to buy from companies that also have physical stores (versus those that are online-only).
Customers have the opportunity to interact with salespeople, physically handle things, and otherwise have in-store experiences that entice millennials to part with their money when they purchase in person.
Customers can read thoroughly product details online without speaking to a salesperson if you combine that in-store customer experience with an online strategy. They can utilize a mobile app to leverage loyalty program points and social media coupons for in-store discounts.
O2O Commerce gives customers what they want
Reach more customers
O2O commerce allows traditional shops to connect with a larger audience than just customers who come into their store.
Not all passersby will stop by at your physical stores when they have the opportunity to do so. Search engines, social media sites, and review aggregators are used by the vast majority (87%) of consumers to study new products online before making a purchase.
Retailers can develop niche audiences around their physical locations when they use these online platforms wisely. As a result, brick-and-mortar establishments see greater foot traffic than they would if internet users only visited them in person.
Walmart's $3.3 billion purchase of Jet.com was motivated by its desire to expand its client base. The established department store wished to connect with a younger demographic of urbanites and millennial shoppers. Walmart was able to direct 400,000 new customers per month from Jet.com in that market to its 11,000+ shops.
O2O commerce enables traditional businesses to interact with a wider client base than just those who visit their physical location.
Cost-effective and saving time for logistics
As you scale, logistics in e-commerce can get more complicated.
However, an O2O strategy can assist retailers to reduce their logistical expenses, particularly the buy online, and pick up the in-store model. Retailers have the option of regionalizing their inventory and allocating a portion of their shop space to the storage of goods that have been sold online.
Retailers are able to do this to lessen their dependency on third-party logistics (3PL) partners. Since the products are already in stock, they can also confidently offer clients the same- or next-day pick-up.
Retail stores don't offer a simple and convenient purchasing process, customers will quickly switch to another one. Actual order and delivery times for online purchases differ significantly. Businesses who offer convenient store pickup or the quickest delivery bridge this enormous time gap. The shoppers will experience this as better service.
O2O strategy helps save money for delivery
Model for Enhanced E-Commerce
O2O is becoming more and more popular as a business model for both online and offline retailers. With the O2O business model, the competition between online and physical commerce is readily eliminated. With significant advantages, this functions as an add-on feature for physical and mortar establishments.
Rapidly Completed Orders
The genuine touch experience that die-hard shoppers prefer cannot be replaced by the on-screen product viewing experience. Making an internet purchase requires extra time and investigation. The consumer must read numerous ratings and reviews regarding the build quality and materials of life and other factors. Additionally, the shipping and return processes (if applicable) are drawn-out and cumbersome. The online to offline business strategy makes it easier to complete purchases fast and without as much anxiety because customers aren't worried about having to wait a long time for returns.
Online platforms, in particular, make it considerably simpler and more efficient to acquire lead and customer data for marketing purposes:
Information can still be gathered from first-time visitors who choose not to make a purchase in order to create leads that can be cultivated. Retailers can increase customer engagement with their brand or convert leads into customers by using marketing strategies like email marketing when they have a large client database.
When shops use online platforms, search engines can help them reach new potential customers:
O2O commerce enables customers to shop how and when they want, wherever they are.
Your company is accessible to clients around-the-clock via online platforms. But here's the really shocking part:
This system offers free shipping, in-store pickup, pickup location, or a center for online sale for more easy delivery. It also offers in-store cash payment or payment booths for simpler payment ways.
Customers may shop whenever they want, from any location, thanks to online-to-offline (O2O) commerce.
Online customer support will result in more competent customer service.
Retailers can engage with customers more effectively through online channels because:
PayCEC is a flexible and secure way to send and receive money. It is a payment method that O2O businesses can utilize for their online stores and physical stores to accept payments for their goods and services.
PayCEC accepts payments for more than 10 different currencies and is recognized around the world. It only takes a few minutes to sign up for a FREE PayCEC O2O Business Account.
We created a payment API to assist businesses and customers in receiving the best possible experience while also protecting them from scammers.
With the PayCEC payment gateway, merchants can quickly set up their online store and begin accepting online card payments from clients. To set up your payment platform, follow the instructions below:
Prepare your company profile including:
Our Relationship Manager will contact you and support you in processing and integrate your merchant account
Use fully features of our payment service on Dashboard
PayCEC was established in response to the growing need for businesses to accept online payments more quickly and easily. In the new media era, our payment flow has evolved to work seamlessly and effectively across all platforms and devices. We pride ourselves on combining superior technology with first-class customer service.
PayCEC is a truly global payments platform that not only allows customers to get paid but also withdraws funds to their Business accounts in various currencies.
We have created an open and secure payments ecosystem where people and businesses choose to securely transact with each other online and on mobile devices.
We are honored to serve as your reliable business partner and financial service provider in the industry and other business-related services. With the help of our professional staff, to help merchants to achieve their goals for the development and expansion of the international business market.
Our payment flow has developed in the e-commerce world to perform seamlessly and effectively across all platforms and devices. We take pleasure in combining technology with customer service, to solve your concerns at the moment.
PayCEC is a fully worldwide payment network that not only allows merchants to be paid immediately and securely, but also allows them to withdraw money in multiple currencies to their company accounts.