Online-to-offline (O2O) commerce is a business strategy that draws online customers to physical, in-person stores. This strategy is one of several emerging eCommerce trends becoming increasingly popular in Southeast Asia. Using a variety of tools, including special mobile apps that provide real-time information, O2O eCommerce companies are bringing customers back to brick and mortar stores by building a “reputation-based” relationship with users of their apps. 

A secondary goal of O2O commerce is the creation of a seamless digital experience for online customers, improving the reputation of the company and the trust of the consumers. Retailers who can provide a seamless shopping experience, one that meets customer expectations, earn the loyalty of these customers, and this is true online as well as in-store. 

Customer is king

The recent Accenture Seamless Retail Study found that 89% of consumers said it’s important for retailers to let them shop for products in whichever way is the most convenient for them, regardless of the sales channel. Polling 750 consumers, they asked what the single best improvement that retailers could make for their shopping experience was, and 49% responded that integration of in-store, online, and mobile shopping should be the company’s top priority. 

This response demonstrates that although both in-store and online experiences are important, so is the interplay between them. Although this is often a neglected area for many businesses, the same report found that 88% of potential buyers will search for a product online before purchasing it in a physical store. 

The study also highlights which sales channels consumers find the easiest to use. The overwhelming majority, 94%, described in-store shopping as easy. For online shopping, this dropped to 74%, but for mobile purchasing, this number dropped all the way down to 26%, presenting obvious opportunities for any kind of seamless, integrated sales experience across all channels. 

Chris Donnelly, managing director of Accenture’s Global Analytics Practice, described the issue: “Seamlessness is a tall order for most traditional retailers. In many cases we have found a significant gap between consumer expectations and reality, but we believe seamlessness is achievable. Traditional retailers must take stock of their operational capabilities. They require a presence at every stage of the customer journey to deliver a consistently personalized, on-brand experience from discovery through research, purchase, fulfillment and beyond to product maintenance or returns.”

Consistency is crucial

Another critical factor for consumers is consistency. Accenture reports that 73% of consumers expect online prices to be identical to in-store prices, and 61% expect promotions to be the same across both channels. However, such consistency is the exception, not the rule: only 16% of stores offer the same prices online and in-store, and only 19% even provide the same set of products on each channel.

Pomelo Fashion, a leading online retailer for fashion in Southeast Asia, is one brand that is focussing on O2O commerce. They have used the strategy to counter a perennial cost to online fashion retailers: returns. According to a report by the UK firm SaleCycle, this is far more of a problem for online retailers. Return rates to physical stores are only 8%, while for online retail this reaches 25%. Fashion and clothing have always been the worst hit, with 56% return rates.

Pomelo has turned to O2O commerce to solve the problem, and the CEO and co-founder David Jou has described the primary challenge as the current tech culture. He has highlighted the dynamic and fast-paced nature of modern business, as consumers buy, break, and replace products faster than ever before. Physical stores can temper the urge to return and replace products by making the process physical and tangible. 

The company has opened multiple stores, and have been going to great lengths to coordinate all their sales channels. For example, they have introduced a feature called ‘Tap Try Buy’, available on their site or app, in which customers can try on what they want in-store, and walk out with only the items they love. 

O2O commerce is an increasingly prominent strategy for businesses, as many stores integrate apps and websites, and many eTailers like Pomelo introduce physical stores with seamless integration with its online services. This approach means companies are with their customers throughout their experience, building trust and brand loyalty as a result. O2O commerce in Southeast Asia is one of the most interesting emerging eCommerce trends, and one all retailers should be implementing.