How O2O strategies can help brands navigate evolving shopping trends

The COVID-19 pandemic has had an undeniable impact on consumer behavior and drove more people to adopt online shopping in the face of government-mandated lockdowns and heightened awareness of public health risks.

Nowhere is this more apparent than in Southeast Asia, which has endured on-again off-again restrictions for more than 18 months now. 

Now as vaccination rates increase in cities across the region and restrictions ease, people are gaining confidence to venture out of the house again. And, many of them are heading straight to the mall with fuller wallets and heavier bags. 

O2O is Retail’s New Opportunity 

For those who may be unfamiliar, O2O business models attract customers online through digital ads and online product discovery and encourage them to visit an outlet in-person, be it to try-out items, pick-up an order placed online, or return items in person.

The trend, which first emerged in China, was already growing prior to the pandemic, with many of the region’s leading technology platforms already using both physical and digital infrastructures. In fact, of the 400 million internet users in Southeast Asia, approximately 115 million already use more than three O2O services, a recent study by Grab and Bain & Company found (Tech for Good Institute, 2021).

However, it took the pandemic for O2O to truly take off. In fact, as many as one in three people surveyed said that they began using these services during the pandemic and nine of ten said they will continue using the services in the future (Tech for Good Institute, 2021).

These findings suggest that people enjoy the convenience and flexibility O2O models provide – and are in line with how the pandemic has changed the way people shop. 

For retailers and brands seeking to leverage the opportunity—they must prepare to serve a shopper eager for more physical experiences but one that possesses a great familiarity with online shopping. 

The Pandemic Changed Shopping Behaviour

Shopping behaviour used to largely be divided into two camps: experiential and transactional. A shopper would head to a store to experience products and would turn to ecommerce to conduct research or purchase a product they were confident about immediately. But, as a Facebook IQ article posited, the pandemic has disrupted these behaviours, and even reversed the roles of online and offline shopping (Facebook, 2021). 

Recent surveys of shoppers have found that 87% begin product searches online (Retail Dive 2018), 71% use their mobile device while in a store (Retail Dive, 2018), and that they prefer to know what they’re looking for before they enter a store so that the visit is as efficient as possible (Google, 2018). What’s more, customers want online shopping platforms to provide immersive experiences, such as offering the opportunity to try-on products virtually (Facebook, 2021). 

O2O Provides the Best of Online and In-Store Shopping

With these shifts, the benefits of O2O come into clear focus. The business model provides the best of both online and in-store shopping so that customers can browse online or via an app and read product descriptions, redeem rewards or online discounts but receive an in-store experience that is more convenient and faster than online delivery or return models. 

Popular ecommerce marketplace Lazada provides a great example of one way O2O can work. In April 2021, Lazada launched a pop-up location in Singapore themed around the concept of home makeovers. Featuring an array of brands specialising in home furnishings, appliances, IOT and smart technology, and groceries, the physical outlet provided shoppers the opportunity to see how products could look and work in their home. If they wanted to make a purchase, customers could use the Lazada app to scan a QR code that directed them to the product page, and add the item to their cart so they could purchase it and have it delivered at their convenience (Marketing Interactive, 2021). 

Another example of an O2O model comes from the partnership between health and personal care store Watsons and Grab. Teaming up to provide online-to-offline services across six markets in Southeast Asia, Watsons has introduced same-day delivery for online orders via GrabExpress, expanded its ecommerce offerings by making products available via GrabMart, and launched an in-store cashless payment option via digital wallet GrabPay. These integrations give customers more shopping options and provide a seamless experience, whether they choose to make their purchases online or in-store (Ixtenso, 2021). 

How Brands Can Embrace O2O

Whether a business is a traditional bricks-and-mortar retail operation, an online-only venture, or somewhere in the middle, it’s likely that evolving shopper behaviour means they are looking for ways to provide a more seamless and intuitive customer journey – and O2O is a great solution for doing just that. It’s flexible so that businesses can implement strategies that work best for them, and can be used to make the shopping experience much more convenient for customers.

For brands now looking to introduce O2O strategies into their business model, here are a few ways to get started. 

For online-only brands: 

Though there are many benefits to operating entirely online – especially for startups and small businesses – the majority of shoppers still prefer brands with a physical store (Google, 2018). Adding an option for people to visit a location, be it a dedicated retail location, a pop-up, or a partnership with another business, and interact with your products can go a long way in gaining consumer trust and building brand loyalty.

One brand that found success with this model is Singapore’s Deliveroo, an ecommerce platform that specialises in meal orders. Though largely known for its food delivery option, Deliveroo introduced a self-collection option in April 2018 (The Straits Times, 2018). By choosing this option, customers can use the ecommerce platform to place their order with a restaurant that has partnered with Deliveroo, track its progress at the restaurant, and then swing by the outlet to pick up their meal themselves, rather than waiting for – and paying for – delivery. 

This model helps Deliveroo provide customers with convenient online options that suit their needs, and through its partnership with eateries, helps those establishments boost discovery, sales, and foot traffic.

For bricks-and-mortar businesses: 

Many traditional businesses that may have once found digital transformation unnecessary pivoted quickly to ecommerce during the height of the COVID-19 pandemic. But even if the plan was for online options to be a temporary solution until the business could fully open again, it’s worth considering O2O options, like partnering with an ecommerce marketplace, to drive discovery and provide customers more shopping and delivery options. 

Here’s how it can work: China’s on-demand ecommerce platform JDDJ partners with traditional retailers like supermarkets. Using JDDJ, customers can order items they need urgently – such as grocery products like dairy, rice, and noodles or healthcare items such as vitamins, supplements, and medicine – online and have them delivered the same day (Ascential, 2021).

Embracing digital advertising and social media tools such as livestreaming and augmented reality filters can also go a long way in helping people discover your products. Further, working with relevant content creators can help businesses reach new audiences, gain credibility, and increase foot traffic (Business Wire, 2020). 

For companies looking to launch into a new market: 

If a business is considering expansion and is relatively unknown in the new market, a robust digital marketing campaign paired with a pop-up shop can help shoppers get to know the business.

Beauty supply store VIRVICI found success in this model by teaming up with ecommerce marketplace Shopee to open a six-month pop-up shop in a Singapore shopping mall. The space showcased products from 10 different Korean beauty brands, and customers could try products, make purchases at the store, or scan a QR code that directed them to the Shopee product page so that they could complete their purchase online and have it delivered (Marketing Interactive, 2020). 

In addition, VIRVICI and Shopee used livestreaming and digital advertising on the Shopee website and within its app to promote both the beauty supply store and the pop-up, which helped amplify brand awareness and direct people to the physical location. 

Whatever a business’s current model and goals may be, implementing O2O strategies can help them grow their business, reach new customers, and gain consumer trust. What’s more, providing online-to-offline options allows customers to make purchases in a manner that works best for them, creating a seamless, convenient, and rewarding customer experience. 

As countries across Southeast Asia stabilise and restrictions lift, brands looking not only survive but thrive should look to O2O and how it can help them bring the best of in-store and online experiences together.

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Our capabilities in Southeast Asia

In Southeast Asia, Ascential Digital Commerce offers capabilities through Edge by Ascential and Yimian enabling brands to optimize their digital shelf, drive customer-centricity, compete and win market share, and future proof their business. 

Our Digital Commerce mission is to help brands and marketplaces win by optimising and accelerating their digital commerce performance. 

Edge by Ascential provides an unparalleled suite of solutions which enable brands to develop and implement strategies that maximize revenue growth, optimize product listings, drive margin growth, and outpace sales growth for both the category and their competition. We are unmatched in helping ecommerce practitioners beat the competition and improve their results: our customers grow sales 21% faster than their competitors who are not using Edge by Ascential. More than 400 global brands depend upon our weekly, daily, and real-time data-driven insights.

Yimian is a leading AI-powered commercial data analytics solutions provider devoted to unleashing the value of data, enabling smarter decisions for clients through data and AI technology. Using proprietary scraping algorithms, Yimian provides accurate real-time insights into both your own and competitors’ sales and share data over time. Using our own natural language processing technology, we help you instantaneously listen to and interpret your customers’ feedback in reviews and on social media. By keeping ahead of your own and your competitors’ performance, and anticipating and meeting your customers’ future needs, we give you the best chance of winning in a massively competitive market.