O2O Model

Benefits of O2O Model

 The first and most important benefit that O2O brings out to retailers is the
brand reputation. Branding is much simpler and more efficient with online
capabilities like advertising, social media, mobile wallet, SMS, mobile app, push
messages, proximity services, combined with real-time data analytics, system
integration, and AI.

 Another key factor to the success of the O2O business is that it enhances
customers’ loyalty and increases revenue at the same time.

O2O commerce follows a strategy that allows the retailer to optimize customer
experience. During their shopping journey, customers are provided with online and
offline benefits that they can’t resist. With all the information about the brands,
products or service available online, customers can make quicker and smarter
decisions on what they’re gonna buy.

Moreover, the purchasing is much more convenient and personalized that make them
feel it’s so enjoyable to buy something.

O2O commerce also lets retailers build up a database of customers’ information

including their name, age, address, interest and even shopping behavior. It then
improves the customer engagement strategy of the brands, leading to higher level of
customer loyalty. Once a company earns engagement from customers, that company
will see a dramatic increase in revenue, both short-term and long-term.

 One more benefit of O2O retail is that this strategy accelerates your speed to
market by minimizing the time to market.Collecting customers’ interest and
shopping behavior online, O2O helps reduce the length of time it takes from a product
being conceived until its being available for sale. For example, online channels can let
 a fashion brand know which items, colors or styles are the most-searched, helping
them anticipate the demands of customers and avoid out-of-stock status.

 Enhance Branding
It leads the retail business to do efficient branding using a variety of online branding
capabilities, including Online & Offline Ads, SMO, SEO, mobile notifications, SMS,
proximity, or location-based services. These all need to combine with the latest
technologies like AI, AR, analytics, and system integrations.

 Boost Conversion

O2O increase overall UX of the business that leads to increased traffic, engagement,
and finally conversion rate with high AOV.

 Augment Customer Loyalty

When online shoppers avail the offline experiences with ease, they tend to stick with
the brand and show increased consumer loyalty in the long run.

 Increase Speed-to-Market by Minimising Time-to-Market

 O2O model enables a business to collect the real-time data about inventory and
behavior of shoppers, including preferences for different products. It ultimately helps
the business to fix product strategies and fill up inventory, which is in demand. It
eventually leads to no product out-of-stock status in the store.

The weakness of O2O mode

 O2O mode inherits all of the disadvantages of traditional e-commerce, mainly in three
aspects.First, is the online banking system is not perfect. Online banking system is the
main channel to support customers pay the bill online, the major banks have invested
heavily in the development of online banking payment systems, but has never been
able to achieve perfect.

 Secondly, the recognition of online payment is not high. Online payment without any
paper receipts and certificates, in spite of reliable payment platform security,
customers still maintain the attitude to question the reliability of online payment. This
is also reflected from the side of the online banking system needs to be improved.

 Finally, difficult to protect after-sales rights lead customer stop step. Customers
receive the goods after purchase, or enjoy the service to the physical places, if they
found the goods or services from this company are different from those described in
the online. At this point, the goods can be return to merchandise, but the services have
been unable to return after they enjoyed, and it is difficult to search reliable evidence,
which makes the after-sale rights are difficult to protect, lead customer stop buying.

Online to Offline refers to a combination of offline business and online commerce. O2O
mode is characterized by its information flow and cash flow on the line, and logistics and
commerce flow on the offline which greatly expanded the scope of business of e-commerce.
The core of the model is that by providing information, services, offers discounts and other
ways to store offline messages through O2O platform pushed to online users which will bring
them to the reality of the store - that is the process of consumers buy goods and services
online and then go to store to enjoy service.
Business process and basic features of O2O
O2O process mainly includes online and offline two parts. Online process including the
business service information recommendation and search, online payment, the consumer
feedback. Offline process mainly refers to the consumption line.

1. Merchant Services information recommendation and search: In the market

development period, on the one hand, O2O e-commerce platform operators often
cooperate with businesses to offer some discounts, free gifts and other promotions to
attract customers and develop user’s spending habits. On the other hand, O2O e-
commerce platform operators based on the user’s geographic location and setting the
search scope to recommend appropriate business service information which users can
search what they want to obtain service categories. Information display includes two
ways: Classification shows the classification of the information to support service to
view while map showing the way to the actual location of the service businesses in
the map display and the user can click on the icon on the map to view business details.

2. Online payment: When the user selects a decision to buy business services, namely
online payment into links, and then automatically access third-party payment
platform. After the user completes payment the third party payment platform will be
sent payment information to the 020 electronic commerce platform and then 020 e-
commerce platform will be sent payment voucher to the mobile terminal user.

3. Offline consumption: Users can rely on proof of payment to get the appropriate
geographic location near the business entity to enjoy the service.

4. Consumer feedback. Consumer can choose to comment the dealer service in 020 e-
commerce platform after the completion of offline consumption. 020 consumer e-
commerce platform provide certain points as a reward when user feedback and the
points can be used for the conversion of online users after payment.

O2O realize the combination of online and offline virtual economy entity economy and its
core is that let online consumers to actual shop and purchase goods and services through
online payment and then enjoy the service offline. For customers, first of all, they can obtain
more abundant and comprehensive business information and service content. Secondly, more
convenient online consultation to businesses and pre-sale. Thirdly, compared to offline to get
cheaper prices for direct consumption. For businesses concerned, firstly, effects to be
investigated and every transaction can be tracked. Secondly, Understand users’ psychology
through communicate with them. Thirdly, they can reasonable arrangement of operating cost
savings through effective way of booking online. Fourthly, to pull the new products, new
consumption more quickly. Fifth, to reduce offline store dependence on prime locations this
can greatly reduce the rent payments. Furthermore, for O2O platform itself, first of all, it is
closely related to users’ Daily life and can also bring convenience, preferential, consumer
protection function to users. Secondly, there are strong promotion effect to the businessman
which can attract a large number of service businesses to join this pattern.

Development of O2O for online retail platform:

With the exponential growth of smart handheld devices and social communities,
mobile commerce, social commerce and proximity commerce are also created in the last
decades.O2O e-commerce mode is a combination of offline business opportunities with the
Internet. O2O e-commerce platforms attract customers online, but the real consumption of
services must be experienced by consumer’s offline. This mode puts high request forward to
offline service quality.

With the changing commerce environment, it is very hard for company can know how
to apply Mobile Commerce, Social Commerce and Proximity Commerce with their
traditional commerce via Online / Offline. With the changing commerce environment, there
are lots of online to offline and offline to online interactions different from traditional bricks-
and-mortar and E-commerce. Focusing on mobile commerce, proximity commerce and social
commerce then developing the O2O commerce service model.
 The top area represents the real-world marketing service model (Offline).
Manufactures produce and send their products to channels or brick-and-mortar. According
the location-based service and proximity commerce marketing strategies, retailers can attract
users to use their mobile devices to get online coupons then shopping in the nearby physical
store. Besides, retailers propose their mobile apps to provide mobile services to provide after
services to retain their target audience loyalty.

The bottom area represents the online marketing service model. Users tend to
survey others’ opinions online before making decisions. Users are very willing to participate
with the brands on Social Network, such as Facebook fans group. They will click likes,
shares and post comments in any social events. So retailer can monitor online world of mouth
(WOM) to adjust their marketing strategies and sustain relationship with their customers
directly and instantly. Moreover, retailers can apply social events to influence and engage
consumers’ social network friends to participate and provide referral awards or group
purchase discounts.

O2O Service System Framework:

This framework is separated with interface, interaction, intelligence and

integration layers. The first Interface layer represents different kinds of channels which
include bricks-and-mortar (offline), proximity commerce, mobile commerce, social
commerce and E-commerce (online) to provide different user interfaces. The second
Interaction layer represents the interaction services where user or retailer can access from
interface layer according to the commerce lifecycle proposed by IBM and different channels
from interface layer. The third Intelligence layer represents integrated analytics applied to
single, multiple or Omni-channels. And the bottom Integrated layer represents the Cloud /
Enterprise Infrastructure Services, which can be applied to cooperated with the general SOA
of scalable systems.

Digital Marketing for O2O:

Since consumers may come from online or offline channels. It should have a
manageable and integrated digital marketing strategy. Using the Smart Insights RACE ((Plan)
> Reach > Act > Convert > Engage) digital marketing strategy to help retailer to manage and
improve digital marketing. Back-end server can gather the user interaction information such
as number of App downloads, counts of scanned QR codes, and Cost-per-click to analysis
which type of product will attract user to take interactions. Then we can calculate a first Click
through Rate (CTR) from QR Code scans to mod people counting.
Additional suggestions:

1. Personalized products: Both the real economy and virtual economy must be
dominated by the customer and pay attention to the differences in the use of
marketing strategy.

2. The flexibility of price: Business should adopt various marketing means to develop
town consumer groups and expand the scale of marketing through its flexible price
advantage to satisfy customers’ psychological that they prefer to seek cheaper goods
and obtain preferential.

3. The security of transaction: In O2O mode, most of customers are worried about the
problem of information leakage, password theft, firm credit are not reliable. It is the
necessary guarantee for customer trust in enterprise to establish perfect credit
mechanism, to build excellent technology platform, to provide the legal environment
for fair standard, to perfect the corresponding network supporting system.

4. The humanized service: O2O electronic commerce should focus on maintenance

every customer’s emotional and warm hospitality of every customer both online and
offline.