Online-to-Offline (O2O) is one of the most used buzzwords in China today, and with good reason. In most Western markets, O2O refers to ‘click-and-collect’ items – goods bought online and picked up at a brick & mortar store. Whilst retailers such as Ikea and Walmart are dabbling with it in China, cheap delivery and low car ownership means that click-and-collect hasn’t taken off here like other countries. Nevertheless, China is leading the world in O2O adoption.
Physical and digital objects are far more intertwined in the Middle Kingdom than in the West. This leads to a much broader definition of O2O, including services that are ordered online and delivered in the physical world. O2O covers everything from ride sharing and travel to in-home massage and dry cleaning pickup. The value of China’s O2O ecommerce sales is picked to grow from $335 million in 2015 to $626 million in 2018 according to iResearch.
Although most O2O forecasts are based on ‘Online-to-Offline’, ‘Offline-to-Online’ is equally important, particularly for marketers. Chinese consumers are increasingly interacting with brands online, with 72% online throughout the day according to Epsilon. However, 40% of consumers prefer to interact with a brand in a store – making it the most popular channel and one of the most effective touch points to connect online to build a sustainable and engaging relationship. Stores that integrate online channels backed up with great service, can take advantage of the 63% of consumers who follow brands on WeChat after a good experience.
Shopping centre operator Intime is one retailer starting to tap into O2O opportunities to drive foot traffic and sales to its stores, growing revenue at a time when offline sales at China’s top-50 retailers declined 3.1%.
Although most Chinese consumers use O2O services, it is the all-important females who are embracing it like no one else; 73% of women have used O2O restaurant and dining/food delivery services in the past 12-months versus 49% of men. Females are also 38% more likely to have used O2O travel services than males.
China’s leadership in the O2O space can be attributed to factors such as high smartphone usage, an eagerness for new technology including online payment platforms AliPay and WeChat Pay, QR code adoption, cashed-up tech startups constantly offering deals to win market share, convenience for busy urbanites, and Government policy encouraging Chinese innovation and leadership in the area. Having an understanding of Chinese consumers’ rational and emotional drivers means that O2O services can be best integrated into channel initiatives to ensure the greatest chance of success. China Skinny can assist with that. Go to Page 2 to see this week’s China news and highlights.