How O2O Business Model is Redefining the E-commerce Industry

It is easily noticeable that the O2O business model refers to the Online to offline (O2O) Commerce Model. The uniqueness of this model is that both online and offline options are considered to complete a shopping experience. Till now, online platforms were the only option to get heavy discounts, flawless products, and hassle-free shopping. But the O2O business model is adding a unique touch of making the payment online and taking the actual products from offline stores, with a try-on experience.

Let’s Make it simple:

• Sam, wants to buy a shirt of a particular brand.
• He searched for the shirt online.
• He landed on the webpage of the store, selling the same shirt he wanted to buy.
• He placed the order by choosing the size, color, discount coupon and made the purchase successful.
• He goes to the nearest store and collects his desired shirt by showing the purchase info to the store owner.
• He has the option to try the ordered shirt right in the store to check its look, feel, size and comfort. If he is not satisfied with the product, he can simply return it right away and get refunded in real-time.

In this way, he avails the maximum discount for the particular shirt, tries the shirt instantly in the nearest store without wasting time in waiting for his parcel. He can return that instantly and go to the other store if the size is the only issue.

Now the question may arise, What’s the other benefit of this Business model apart from getting discounts?
Scenario 1: Contrary to the general belief, O2O Business Model also has the option to deliver the product to your doorstep. This delivery is fast and takes some hours only.
Scenario 2: Suppose you like a product at a physical store but can’t find the suitable size or color, you can simply place an online order while at the store, and the product of desired size and color is delivered to your doorstep.

Online to offline (O2O) business model, is yet to see the full momentum of its growth. The future of the O2O Business Model was already in discussion among entrepreneurs when amazon purchased the wholefoods by paying $13.7 billion in 2017. Amazon also applied the O2O Model and offers a 5% discount on payment via amazon cards.
Walmart also purchased the eCommerce company Jet.com for USD $3 Billion in the year 2016 to fill the gap in online and offline commerce. Talking about the graphs, online eCommerce retails sales are projected to see a growth of up to 17.5% (online+offline) by the year 2021.

The following study conducted by Shopify Plus Says it all.

According to the reports of Shopify, “82.5% of all retail sales will still happen inside physical stores as late as 2021.”

Another survey conducted by Retail Environments says “70% of millennials prefer shopping in stores, which is surprising considering that their demographic spends an average of 7.5 hours a day online”

Online 2 offline business model is relatively a newer concept than other eCommerce business models. The online to offline business model solves one of the biggest problems of physical store owners of falling numbers of customers in their store. Their complaint about the customer shift from offline to online looks solved once the online to offline (O2O) business model is implemented. The major benefits of the O2O Business model are listed below:

Online to offline business model makes an offline store and brand more trustworthy in the eyes of customers. Brands can enhance their goodwill with easy and instant delivery of the product. By simplifying the exchange and return in most cases, brands can build their customer base stronger than ever.

Retail Customers easily shift to other stores if they don’t find an easy and convenient buying process. Online shopping has a big gap in actual order and delivery time. Online to offline commerce businesses fill this huge time gap with easy store pickup or fastest delivery. This provides a better customer experience to the shoppers.

O2O is upsurging as a viable model for both online and offline shopping businesses. The rivalry between online and offline commerce is easily eliminated with the O2O business model. This works as an add-on feature for brick-and-mortar stores with huge benefits.

The on-screen product viewing experience cannot replace the real touch experience, sought by the hardcore shoppers. It takes more time and research while finalizing an order online. The person needs to check several ratings, reviews about the build quality, material, life, and so on. Also, the process of delivery and return (in case) is long and time taking. The online to Offline business model helps in quickly finalizing orders with less worry ness, as users are not concerned about the long waiting time of return.

The biggest benefit of an online to offline business model is that it saves time and money for the customer. They can get hefty discounts while paying online and get the product fast with a store pickup option.

The rise of Social Media and influencer marketing cannot be neglected. The retails stores can opt for digital Marketing Services and get a whole bunch of new customers at their doorsteps. This is the most ideal way to get more customers in the retail store.

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The O2O Commerce business Model has been implemented by several Startups as well as established businesses around the world. Many of them have seen a big fortune after the perfect implementation of this business model.

In 2011, men’s retail clothes selling company Bonobos opened retail storefronts that cater to this market. The whole idea and implementation were done by the owners —Warby Parker, Harry, and Modcloth. Bonobos opened a guide shop for the customer that went a huge hit. They offered the exact O2O feature where customers could try on their wares, place an order online, and have their purchased goods delivered the very next day.
This implementation was so successful that bonobos had to open 20 storefronts in different locations, with the current plan to expand it to 100 stores by 2021.

All birds were founded by Tim Brown and Joey Zwillinge for selling men’s foot products. The online to offline business model went like fire for them and the company managed to sell 1 million pairs of shoes in just two spans of years.
“The entrepreneurs — who had no prior footwear experience — managed to pull off that $100 million feat during a tumultuous time in fashion. While many companies have floundered or disappeared altogether, Allbirds has succeeded by doing things differently” Says Footwear News Reporter Katie bell.

Major eCommerce companies are investing in O2O commerce. Recently, Alibaba invested USD $8 Billion in the Brick-And-Mortar store business, solely based on the O2O commerce idea.

O2O Business Model solves one of the major concerns of Store owners — not being able to complete the online market. The seamless growth of online e-commerce platforms puts the store owners at risk of continuous loss and insolvency as a final result. The online to offline business model eliminates this risk by letting them use the online platforms to generate customers and keeping the stores running simultaneously.

Online and offline businesses are no longer substitutes for each other. Instead, they are creating a whole new market with O2O Business Model. The fear of being left behind by the significant growth of e-commerce seems to be solved for offline retailers. This is the reason why more and more retailers are now getting custom e-commerce store development. 

O2O Business Model a revolutionary idea with huge potential of changing both online and offline Business. O2O commerce is likely to make a prominent space in the commerce industry very soon. The investment of big companies in this eCommerce business model signifies its value, at least. Brick-and-mortar stores have always played a significant role in the retail business. Click and collect strategy, if implemented by the best means can revolutionize the whole retail business idea.

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