O2O: a hybrid strategy to shift the physical shopping experience

By Marcos Cipriani, Head of Business Development Iberia

The pandemic descimated the high street, causing a lot of casualties. Some businesses shuttered their doors temporarily, and some permanently. But, regardless of this, online shopping saw an increase of 4 to 6 years in just one, according to Adobe.

While physical retail managers were struggling to keep their business alive, the digital team were hurrying against their watches to improve and put in place new digital channels and logistical processes.

By that time we all thought: what’s going to be the future of brick-and-mortar? Will shopping malls re-open and be the same as usual? Will downtown streets again have people walking around holding shopping bags?

It’s true that the pandemic hammered physical retail, but as a normal life cycle, it didn’t kill it at all. It just encouraged transformation.

This post helps you understand the modern consumer’s mindset and how to take advantage of a hybrid (online and offline) experience to increase sales.

How is digitallstation shifthing Brick and Mortar?

As an entire industry was plunged into lockdown, new digital platforms formed, and new consumer behaviour was developed.

As the digital native shoppers keep turning up in the economic system day after day, the metaverse is being developed and the digital market statistics have been showing us e-commerce will continue to grow and will probably bypass brick-and-mortar sales as soon as expected. However, it will not fully replace it. It will leverage it –  if retailers act correctly.

There is no better proof of this statement than the largest e-commerce company in the world. 

Amazon launched its first physical bookstore in Seattle in 2015, expanding across the USA. Then, in a billion dollar deal acquired Whole Foods with over 500 stores, and recently we saw the opening of around 30 Amazon Go, it’s cashierless physical grocery stores.

While many people believed that physical retail was coming to its end, why did Amazon invest so much in it?

In the book “Amazon: How the world’s most relentless retailer will continue to revolutionize commerce”, Natalie Berg explains that Amazon believes that shoppers are tired of the current in-store shopping experience and sees an opportunity to disrupt it.

The idea is to reduce every possible friction point in the customer journey, generating a whole new shopping experience, and omnichannel is the core of it.

A glance at O2O (Online to Offline)

When we say “omnichannel”, we are also referring to an O2O – Online to Offline commerce strategy.

The O2O is a “consumer-centric” sales process that touches the customer across every channel: in-store, mobile, web or direct-to-consumer, keeping the physical store as a focal experience point throughout the journey.

Basically, the O2O is a process where the shoppers research, select and pay for a product online, but they have to go to a physical store to collect their purchases (also known as Click and Collect) or vice-versa, when the order is done physically and the product is shipped home.

Why does O2O matter for the modern retail business?

To start thinking how to benefit from an omnichannel process, let’s also understand the ROPO Effect and how a shoppers mind works.

First, if you have never heard about ROPO, it’s the acronym for Research Online, Purchase Offline.

ROPO may be defined as the purchasing behavior where customers research online to qualify a product and make a decision before heading to a physical store to purchase.

Differently from the O2O, the ROPO Effect does not consist in the online payment. You may have experienced this effect the last time you were searching for running shoes or new clothes. You have probably made up your mind online, but you went to the physical store to make sure it feels good and fits you before you open your wallet.

Keeping a brick and mortar business running may be a lot more expensive and less profitable than driving your clients to a 100% online purchasing journey.

But why is it so important to bring part of your audience to your physical store?

When it comes to the marketing and sales field, the most effective strategies arise when the professionals you choose to help your business grow, also have the capability to put themselves in the customer’s shoes.

It means that marketers must not only understand everything about your business’s strengths, weaknesses, processes, products and prices, but they must identify what sort of experience your brand can offer to your clients, in order to generate loyalty.

In addition, marketers must have the ability to present to your customers something that they still don’t know or even don’t expect about your brand.

Think about the last time you took a trip to a place for the first time. You’ve researched and chosen your destination, you’ve checked on Google for things to do, took a look at the map, restaurants, weather, etc. But it was nothing like getting there to feel the atmosphere, the temperature, the people, the stores, smell the air, taste the food and so on.

When you go 100% with an online channel, although your customer will receive and enjoy your product, in terms of shopping experience it may be the same as when you were searching for your traveling destination.

Your customer may interact with your brand, imagine things and have sensations, but you can offer a totally different experience if you’re able to invite them to your store or office to touch the products or meet the team delivering the service.

Once they step in, you will have the opportunity to show your entire product mix and possibilities, as well as the kindness of your team. 

This will definitely engage your client with your unique selling point.

Understanding Shopper’s Mindset to Boost Sales

Showing your clients the “something else” is a second possibility you have to promote an UpSell or Cross-Sell strategy to increase your ticket. It happens because we all have tricky minds.

According to Daniel Kahneman, winner of the Nobel Prize in Economics and author of the book “Thinking Fast and Slow”, humans divide their decision making process into two fundamental systems:

System 1: operates automatically and quickly, with little or no effort and no sense of voluntary control.

System 2: allocates attention to the effortful mental activities, demanding more time, attention and concentration.

When we bring Kahnemans’ definitions to the O2O shopping process, we can consider System 2 as the part where the consumer is doing his or her research and decision through your digital channel.

During this stage, the shopper has time to identify possibilities, compare and define pricing range. In this case, it’s a total statician decision action, and luckily your product will be the chosen one.

On the other hand, if you are able to bring your customers to your physical store, you may activate their System 1 decision making stage, which means you can impact them with sensitive activations.

You can rely on a sensory marketing strategy to activate your client’s mind and memories through the scent, thematic, tactile features, and even music, building your exclusive identity.

You can grab your clients’ loyalty showing how nice and easy your physical experience is, making them wish to come back again.

In addition, in order to increase sales, at the physical store it’s possible to create live combinations of products and display them all together for a comparison and fitting. 

Although you can offer all of your products through your website and create front-end design experiences to increase sales (upselling and cross-selling), it is definitely not the same as in real life.

Back to your running shoes, what if you see them next to a nice pair of socks, running shoes or even that smartwatch that you were thinking about? Oh! And also next to the t-shirt your wife would love as a gift.

In summary, our mind is strongly statician when we have time and lack of stimulus, but very weak when sensitively stimulated.

It’s easy, think about the difference between going to the supermarket in the morning with a list of products you need and with a budget in mind and going there at the end of the day, hungry and tired.

Key strategies to deploy a successful O2O commerce model

#1 Click and Collect

Beyond having a well structured online store, with security, that is quick and easy to navigate, with different options of payment methods and with wonderful UX/UI experience. One of the most important assets to build a successful O2O strategy is turning your brick-and-mortar into delivery points.

Once you have it established, you must have a Click and Collect shipping method on your website, easy to understand and providing benefits to your customers.

#2 Data Collection

To invite your customers to come to your physical location and provide them the best experience, you must first understand who they are, what they like and what they want.

Use your online infrastructure, such as your media channels, CRM and databases to collect as much information as you can. 

But it’s not only about collecting data. You also need to know how to store, segment and analyse it, for it to positively affect your marketing efforts.

Rely on a very well structured CRM strategy to keep a customer centric approach, covering every touchpoint with the same personalized message.

Use data to prepare your customer’s mindset and to be always ahead to help them decide during the purchasing journey.

#3 Offline Baits

Instigate In-Store visits by promoting offline rewards. Try to find reasons to bring your audience to your physical place.

Be creative with Discounts, gifts, exclusive in-store trial experiences, product releasing events, etc…

#4 Geotargeting

Running campaigns is vital for your business growth. However, if the focus is to bring your online customers to your physical store, a geo targeted campaign is essential.

Once you have the control of your Data and your customer’s habits tracked, you may use a Geo-Targeting campaign strategy to reach those who you know would be keen (and able) to drive or walk to your physical store.

Through Geotargeting it’s possible to specify a geographic location you want your digital ads to be shown. There are several ways you can customize and optimize your campaigns.

Beyond digital, you may also use your front store to promote your campaigns and increase your foot traffic.

#5 Sensory Marketing

When your client comes in, put effort into your sensory marketing strategy.

Reaching consumers through the five senses is an outstanding strategy that involves science and art to enhance customer loyalty and spending.

Sensory marketing In-Store is a powerful way to boost the decision making process and willingness of consumers to pay more for a product.

It happens because when the customer’s consciousness is activated by a sensation it improves the perception of product quality, since it sparks the memory of something associated with your products or place.

It’s a proven way to interact with your audience’s emotional connections and have their full attention.

#6 In-Store Communication

An O2O strategy is a hybrid process, so the communication with the customers must be covered at every touchpoint.

In the offline part of the journey, a well thought out way to display products is an extremely effective path to increase sales. The customer has selected their product, they’re ready to buy and therefore psychologically more likely to be influenced by compelling in-store display advertising.

#7 Reduce Friction 

Choose the right technology to reduce friction during in-store shopping journeys. 

Although having sales staff to provide support with any specific types of information, customers feel more comfortable and will likely discover products for themselves.

Implement robotics and automation to provide a good self service experience, as well as take the opportunity to collect more data from customers.

#8 Off to On

To make sure you are covering every touchpoint and not missing a sale, you can always use your eCommerce infrastructure within your physical store by installing terminals or totems where in case you don’t have a product physically available, your customer can connect from your physical store to make an order and receive it at their home.

This is also a great way to collect data and keep your relationship with customers who visit your local shop.

Final thoughts

Rather than focusing only on product, pricing, placing and promotion, in order to acquire and retain new clients in the competitive world, business must look to the customer and how the whole experience is integrated to leverage satisfaction and consequently increase sales.

Thus, technology and intelligent partners are there to help brick-and-mortar brands navigate O2O business models.