Technology and innovation open new opportunities for O2O retail, starting in Asia

Online versus offline is a hot topic in retail marketing at the moment, and it is only set to get hotter as new technologies and innovations accelerate the opportunities for retailers.

Here are three reasons why O2O will continue to dominate retail marketing strategy.

1. The changing role of the customer journey

A decade ago, most conversations were about e-commerce and focused on a belief that consumers would flock in their masses after abandoning traditional retailers.

Today, the reality is quite different. The realization that the combination of online and offline (O2O) retail is the winning model now plays an important role in improving our understanding of consumers and the customer journey.

Some services simply need more human interaction, the types of which can’t be transferred to the online world; yet still only about five to seven percent of transactions today take place online. This is expected to grow to nine percent by 2018, according to eMarketer.

emarketer-o2o-graph-500

2. Data

Though O2O is very simple in theory, it’s hard in execution. When observed in the most simplistic context, O2O ultimately boils down to data. Effective data implementation is the key to bringing us closer to true O2O. The more we know about our customers, the more data we can collect and use, in order to provide seamless customer experiences in both the online and offline world. Interestingly enough, today this path to purchase is driven by human behavior and needs, rather than technology. Identifying each shopper as they arrive in time to pull up their relevant information, use it in-store, and then feed this behavior back into the database, along with the resulting transactions, is one challenge O2O has. Up until now, the technology to support this process offline has been unavailable.

Here’s a short list of reasons why:

technology-v-reality-graph-500

As you can see, there’s not much hope with the existing technology.

3. Google: the game changer

What can really make an impact is technology that doesn’t force the user to do something specific – such as a download, switch on, or allow action – in order to benefit from true O2O. According to IDC, Google’s technology has access to more than 80 percent of global mobile devices.

Recently the search giant launched its beacon-like technology, Eddystone. Not only is Eddystone an open source protocol that supports both Android and Apple, but with all the Androids roaming the world, Google can easily update its operating system to support Eddystone by default.

IDC: Smartphone OS Market Share 2015, 2014, 2013, and 2012 Chart

For a brief introduction to Eddystone, check out this video from Google Developers:

Google also recently launched its Physical Web initiative. In essence, Google’s Physical Web project endorses Physical Web technology, which enables a connection between any tangible object and a mobile device, without a dedicated app.

This video from Google Developer’s Scott Jenson outlines the Physical Web.

Physical Web sends out a URL, the phone gets linked to a responsive design website – and BOOM! This is where the magic really happens. Now you have the data, you know who the customer is, all while happening in real-time. This creates endless possibilities for marketers to engage with the user offline.

Imagine if you saw a sign in a shop that directly spoke to you as an individual, with the ability to say, “So good to see you! Today, I’d like to offer you this pair of trousers, in your favorite color, and in the right size. However, be warned that this also happens to be the last pair available, but if you head to the cashier now, you can enjoy 20 percent off!”

Would you head to the cashier? I most probably would. How could anyone ignore a pitch that convincing?

4. Innovation starts in Asia

I predict that this innovation is going to first hit first in Asia, with China’s already mobile savvy population leading the way. China has the largest smartphone population in the world, and it is home to technology giants Baidu, Alibaba, and Tencent – collectively known as BAT.

Other examples of this mobile progress in China include:

  • With 600 million users, Tencent’s mobile communications app WeChat allows users to hire taxis, engage with brands from an offline QR code, make retail purchases, or even pay their gas bill all at the touch of a button.
  • Alibaba is already revolutionizing e-commerce as we know it. Its Singles Day smashed all online sales records this year, raking in U.S. $14 billion in just one day. This was backed by O2O and click-and-collect elements, as well as sophisticated mobile payments and financial offerings through its Alipay and Ant Financial Services arms.

What does it all mean for O2O?

Technology is already there to capture the data and turn it into unified account profiles and to execute contextual messaging. The missing ingredients are the retailers wanting to adopt it and the technology vendors willing to explore it.

Putting it into context, this is not science fiction. We will be seeing case studies of the use of this technology being rolled out to the markets in the next couple of months.

For marketers, it means no more silos between online and offline – gone are the days where we don’t know who our customers are. Today we have the means to treat each customer differently in both the physical and online worlds.

Watch this space as new technologies and innovation mean O2O retail will continue to evolve faster than any of us can imagine. Until next time, stay tuned.

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