Retail TechnologiesUdentify

Combining Offline and Online Retail: O2O

online offline retail

Combining Offline and Online Retail

The amount of money invested in the retail sector has increased over the last decade. As it’s seen below, the amount of money spent is more in offline when it’s compared with online. However, online shopping is increasing at a faster pace than store sales, making a significant contribution to the overall growth in all retailing over the past decade.

online offline retail

Today, customers don’t want to choose between online and offline shopping. So that retailers have to stop treating online and offline shopping as an either/or scenario. Online and offline shopping have their own advantages. Online shopping allows customers to shop any time and anywhere that they like. However, offline shopping enables customers to have a real experience by trying or testing the product that they are interested in. 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. Preferably, customers want to mix and match their two different shopping experiences to satisfy their needs. Combining online and offline shopping might be the solution for retailers to give their customers the best shopping experience. 

After all, many successful retailers serve in only one channel. For instance, Aldi is a dominant offline retailer in its sector that has many stores across the globe. There are also groundbreaking online retail businesses in the world, such as Amazon, Alibaba, and Etsy. Retailers need to analyze the needs of their customers and decide on the channels that they are going to participate in. In that kind of situation, either of them (online or offline) may be unnecessary.

One of the industries where digital destructive effects are felt most is traditional retail. With the reduced customer loyalty, the reasons such as the ability of consumers to buy the products they want from not only physical stores but from internet platforms that are more affordable than the store they try, see, handle; convert the operational advantages of e-commerce sites to the price affected traditional retail severely. 

The question “E-commerce is going to take traditional retail?” is a question that everybody is curious about the answer. Nowadays, e-commerce is growing rapidly. 

Although the volume of online trade has increased significantly in the world, physical retail is still far more than online retail. In China, online commerce is around 20 percent of the total business. 

However, the perspective of both online and offline players has changed a lot over the past years. Instead of competing with online commerce, the world’s leading retailers realized that innovation could increase their business volumes by taking advantage of the facilities of the online world. Interestingly, many e-retailers who set off online and turned into big companies realized that it is a must to meet consumers offline apart from online. The best example of this is Amazon, which is to meet the consumers with its physical store by purchasing Whole Food. 

The desire of the consumer to see, touch, and experience the product will never end. The advantages of online are now at the top of the customer demands. So the solution is to provide a benefit to the customer by combining offline and online retail. O2O, namely offline-2-online, is the new agenda of leading retailers in large economies. There are many successful examples from both the online and offline world that have implemented this.

Successful O20 applications

Many examples in the world have successfully implemented O2O integration. Sephora is one of them. Cosmetics is an industry where the needs of people like touch, smell are essential motivations for purchasing. Sephora realized the risks and opportunities created by digitalization and turned this into an advantage for themself. 

cosmetics online offline

To this end, they successfully adapted the three elements to each other: to reconcile the company culture with digital, internalize technology and perfect the customer experience. Having established an Innovation Laboratory in its structure in 2015, Sephora started to purchase services from technology developing companies. The brand, which is one of the first to implement the e-commerce site and mobile application in the cosmetics sector, determines the skin color of its customers in a digital environment. They are achieving this with the help of a particular camera by using the color IQ and The Sephora Virtual Artist Tool applications, and by using augmented reality and artificial intelligence on the faces of its customers. It enabled customers to try in a virtual environment. 

How many eyeliners, how many lipsticks can you try in a store? But digitally, this number is unlimited! What could better appeal to women’s desire to experiment? Sephora also went out of the ordinary to activate the e-commerce site.

The cosmetics company, which has managed to keep the customer in focus and observes the cosmetic customer very well, has launched a membership system, where the trial sizes of popular products come to your door at a very affordable price and a discount coupon that can be used in both physical and digital stores. The result is a leap in turnover. 

Besides, it has managed to reduce the high costs of physical merchandising by opening mini-stores. They do not have storage space where products can be seen and tested but can only be ordered online with the help of sales consultants. 

Cashless life is becoming widespread.

Another successful example is Starbucks, the choice of white-collar. The most critical problem of the white-collar world is timelessness. The brand aimed to make its customers’ daily life easier by combining its online and offline platforms. You can place your order on the Starbucks mobile app and take your coffee or breakfast out of the store without getting caught in the order-checkout-row triangle. Another company that tries to put up the cashless store application is Amazon, which puts it to be a giant in offline retail! The brand, which aims to avoid using a checkout in the concept store that it is trying to implement in the USA, aims to get the payment without the checkout. When the customer leaves the store through the application, the system can recognize the product bought from the store through the Amazon application. With the introduction of credit cards into our lives, we started to carry cards instead of cash. Very soon, we will be able to step into a cardless period thanks to our smartphones.

Finally, there is a successful example from the leading electronics retailing industries that feel the destructive effect of digital the most. The sector was perhaps the first to be adversely affected by the price competition of online commerce, as it is the product standard, unlike cosmetics or clothing. In addition to the cost of keeping physical stores open, many customers were seeing, comparing, and ordering from online platforms. Instead of competing with the online with the improvements that have experienced this problem, there is an example that is reborn from its ashes: Best Buy. After the Best Buy CEO left his seat in a somewhat scandal, he put an experienced consultant at McKinsey for years to head the company. The first task of the new management was to provide a ‘price guarantee in the store.’ If the customer finds the product he/she looks at in the store is more affordable in the online environment, Best Buy announced that it provides a low price guarantee for that product. Realizing that it cannot be competitive by focusing only on price, the company focused on understanding where it will create an advantage for its customers compared to e-retailers. They realized that some electronic products purchased through e-commerce are complicated to set up at home, competitors cannot provide enough support, and the customer complains about it. Providing access to its technical teams from both online and offline platforms, the company has established a comprehensive support system for its customers during both installation and product use.

The number of companies that feel the destructive power of digital for the converter and retail industry is changing day by day. The customer transforms, and his expectation differs. Traditional institutions need to gain a new identity by understanding expectations and change and blending traditional solutions and digital solutions. Now the question is not whether it will surpass retail or digital tradition. The question is whether old-style business models or old trade can stand up in the form of a new trade. 

Whether the retailers are participating in online or offline platforms, they need to take action to follow up with the developing technology and digital transformation. Understanding the needs of the customers is so crucial in both platforms. It’s easier to collect information about customers through their online shopping journey. There are different aspects to collect data about the customers, such as location-based advertising to utilize an internet-connected device’s IP address to build personalized data profile, asking it to the customer directly, following their online shopping habits, etc. However, retailers should not forget that digital transformation is not only affecting the online but offline. Retailers are able to track and analyze the in-store customer journey and take action according to their specific needs with the help of retail analytics. Retail analytics is the process of using analytical tools to provide analysis of business trends, patterns, and performance in the retail industry. Retail business analytics allow retailers to leverage data-driven insight from their store and their customers to improve customer experience, increase sales, and optimize operations. 

Udentify is a retail analytics solution that analyzes the costumers’ behaviors at the brick and mortar shops. Udentify provides local conversion rate, head counting, heat maps, and order analysis. Thanks to the image processing technology, it can follow the customers anonymously, with which it gives meaning to the data that is gathered from the tracking by converting them to statistical models. It enables company managers to take data-oriented decisions by its management interface. Would you like to give it a try? Visit us!

Did you check our retail analytics solution? You can start using Udentify that analyzes the customers’ behaviors at the brick and mortar shops. Udentify provides local conversion rate, head counting, heat maps, and order analysis. Thanks to the image processing technology, it can follow the customers anonymously, with which it gives meaning to the data that is gathered from the tracking by converting them to statistical models. It enables company managers to take data-oriented decisions by its management interface.

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About author

Şerif Ali Enes Yolcu works as a Marketing Associate for Udentify the Camera-based real-time physical store productivity measurement platform that can help retailers find the right shelf share and store location for the products, avoid unnecessary staff and rental costs, make the right planning for new products and have the opportunity to quickly identify and solve in-store problems.
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