From Online To Offline - China Leads In O2O

Two years ago the global supply chain management experts Li & Fung published a detailed report predicting various changes in Chinese commerce. One of their top predictions then was the coming importance of online to offline - also know as O2O - and how the shift away from laptops to mobile devices would intensify this market.

There is no point repeating the numbers published two years ago, but it’s worth stressing that the direction of travel has been exactly as predicted. Many industry leaders now believe that China leads the world in O2O because there is a combination of high adoption of mobile devices and an acceptance of mobile payment. Other markets are exploring O2O, but in China all the ingredients to make it work well already exist and are being used by customers today.

But O2O is not just about taking online brands and opening a store in a shopping mall. There is an acceptance in China that customers actually want to experience brands physically in person as well as online. The different types of experience need to be blended into what marketers call an omnichannel.

This report from digital media firm L2 explores how 89 luxury brands are using digital media to enhance how customers interact with their brand, proving that the O2O trend is just as much focused on luxury products as general retail. The research found that less than 10% of luxury brands have no online platforms and the smartest ones are using several digital marketplaces and social networks.

This research highlights how brands such as Ermenegildo Zegna have adopted an omnichannel strategy that allows online customers to check in-store stock levels and make reservations. Additionally, customers can perform in-store pickups, in-store exchanges and in-store returns, at every one of their China stores. Zegna also guarantees delivery anywhere across China within 2 to 5 working days. Customers are now expecting brands to offer this level of interactivity with the physical stores - not just offer a way to buy products online.

There are many examples that show how O2O is changing the way that people shop in China. Topshop has successfully used pop-up stores that combine the physical presence inside a mall with their online experience. Taobao has created furniture stores that allow customers to see and experience home furnishings while still ordering products on their phone.

Wechat has already understood the importance for O2O for brands that blend the online and offline experience. Their “shake nearby” feature allows Wechat users to shake their phone and be immediately informed of online brands that have a physical presence nearby. The app allow allows retailers to target customers with offers and recommendations that can be used in the physical location. Outside China, apps such as Facebook have experimented with similar location-based services, but I don’t believe there is anything nearly as simple as the way that Wechat allows customers to blend online and offline merely by shaking their phone.

In the USA and Europe, O2O changes have been drowned out by a more general focus on omnichannel, but I think many online leaders there will be taking their lead from China where O2O is far more mature and designed to offer customers a great experience whether it is in-store or online. Teleperformance, with its extensive operational experience, is well-positioned to support companies in their omnichannel O2O strategies both in China and globally.