Hybrid shopping O2O appoach

Specifically, in this upcoming Christmas holiday, customers all over the world are expected to “hybrid shop”. That means they will switch from multiple devices, platforms and even content forms just to make sure they buy the right thing they want. Shopping journeys can now involve an average of nine different touchpoints, according to Rob Garf, Salesforce VP and GM of retail.

Today, let’s explore how hybrid shopping will dictate your future’s commerce revenue and how brands all over the world are coping with this inevitable trend.

Hybrid shopping – A trend that comes to stay

Does the unprecedented growth of eCommerce come at a cost of the brick-and-mortar stores?

Long in mankind’s history, a retail store is where people go to see the real stuff, try it, feel it then decide to pay for it or not based on their experience. But the main problem with the physical stores is, their entire sale revenue counts on the scale of the inventory – meaning customer choice is limited to what the inventory at that moment has. The situation is the exact opposite to eCommerce, when customers may not have the chance to actually try the product, but they can always have better access to all product types and other attractive promotion campaigns. eCommerce relied mostly on delivery parcels from centralized distribution centers.

Imagine we can get the best of both worlds – that’s hybrid shopping. Covid has really blurred the lines between eCommerce and physical, guiding brands to many different forms of optimized distribution such as buy-online-pick-up-in-store (BOPIS) while increasingly engaging with customers in both digital and physical touch-points.

Giant retailers, such as Walmart, Target, Best Buy and Tractor Supply Co., as well as newer disruptive digitally-native brands, like UNTUCKit and Warby Parker, have done this and yielded huge success way before the outbreak. What they do is stop three main things:

• Stop seeing eCommerce and physical store performance in isolation.
• Stop engaging in channel-centric thinking and processes.
• Stop concluding that the massive growth of online ordering comes at the expense of brick & mortar. 

What they apply can be one of these three forms of the hybridization of the retail process:

The hybrid shopping journey

Today, a growing percentage of consumers are switching from digital to physical stores just for one purchase. The typical shopping journey can be digitally-influenced brick & mortar (the number for this type of revenue has increased 50% in many categories before the pandemic. Now that number is more like 70%, according to Forbes). On the other hand, online purchases that are sparked by seeing a right-up-their-street retail store are not something unusual (We’ve talked about the role of an online presence HERE).

This new scenario ignites a new concern: has the customer shopping journey stayed the same for a hundred years since its first introduction in 1990 at Volkswagen? When customers and technology evolve, will their journey remain unchanged?

To answer that, we must look at the visited online touchpoints that customers have with a brand before choosing to buy or walk away. 

Has the customer shopping journey stayed the same for a hundred years since its first introduction in 1990 at Volkswagen? When customers and technology evolve, will their journey remain unchanged?

As we can see, customers today are saturated with information and always in shortage of time and attention. In many cases, their buying journey starts passively and their mind absorbs the brand’s message in an unconscious mind, subtly nudging them throughout the buying journey. 

Throughout such a messy and unpredictable journey, customers can make an online-inspired physical purchase or a physical-driven online purchase at any point – as long as they feel satisfied with the experience they have with the brand at that touchpoint.

What we want to say here is that different individuals have different buying journeys and touchpoints with a brand. The experience they have, the time they spend with the brand also vary, making the traditional 3-step marketing funnel a not-so-relevant mindset in this digital-first world.

That’s why people come up with Omnichannel – the tool to create a seamless customer experience throughout all of the brand’s platforms and channels and perfectly cope with a customer’s ever-changing journey.

The hybrid store

Steve Jobs didn’t just change the smartphone or cartoon industry, his philosophy of customer experience also changed the smartphone retail store forever.

Before Steve Jobs, all mobile retail stores were used as a place to display models of mobile phones – meaning they would want to display as many models they have as possible. But Steve Jobs was different. He visioned the retail store as a discovery hub rather than a simple computer store. It’s long been known for encouraging customers to wander around its spacious, airy store to touch and feel the products. Part of Apple’s retail success amid closures was streamlining its buy-online, pick-up instore strategy.

Today, you can see many cell phone brands are following Apple’s step with their spacious layout. It’s clear brick & mortar locations have gone from mere places to buy things, to product showrooms (e.g. Indochino, Allbirds), distribution hubs (where customers go to pick up their online orders and retailers fulfill local home delivery orders or ship eCommerce packages), customer service centers, places to engage in community with “the others”, and more entertainment-oriented venues (e.g. Lego). They are increasingly powerful sources of brand advertising that are critical to overall brand success in the local trade area, regardless of transactional channel.

Looking forward, brick-and-mortar stores that were built for a more singular purpose (and that’s just about all of them) will need to reimagine just about every aspect of their size, location, staffing, technology, operating processes, and much more to stay relevant and become more remarkable.

The hybrid supply chain

The traditional retail supply chain was largely built to supply bulk multi-unit packages to brick-and-mortar locations or other places inquiring about the big-ticket purchases. Thus there is a rising demand for a new hybrid strategy to help retailers everywhere adapt to ongoing supply chain disruptions and altered shopping habits over the past year.

With new arising issues like 88% of customers willing to pay for same-day (or faster) delivery services, home delivery orders containing multiple items, many of which may be fresh, frozen or refrigerated, and average order values may not cover the marginal cost of home delivery, retailers felt pressure to optimize their eCommerce fulfillment capabilities and build resilient delivery operations. 

Giant companies such as ASUS Singapore have found enormous success using predictive analytics and machine learning in inventory management and the O2O approach. See how they integrated AI-enabled tools to intelligently allocate inventory across networks to avoid stock-outs, reduce the distance traveled.

Why hybrid shopping is happening everywhere

Hybrid or O2O shopping is going to be the next big move in the industry. 

The role of the physical store remains

Despite the growing force that is eCommerce, this year, physical stores will play a more significant role, both for customer research and fulfillment. As more consumers are getting vaccinated against Covid-19, they’re feeling ready to shop in stores again, according to a new report from IBM’s Institute for Business Value.

A whopping 73% of consumers who typically shopped in stores surveyed by IBM said they intend to return again after being vaccinated, Chain Store Age reported.

In the US, a third of online shoppers say that they will visit a store to see an item before buying it, Shopify has found. According to Adobe, 40% of all online orders in the US in the two days right before Christmas Eve will be BOPIS.

This type of metric is the reverse of historical measurements that tracked how digital channels influenced in-store purchases. Now, online sales might also be fulfilled by store inventory through buy-online, pick-up-in-store (known as BOPIS), kerbside pickup, store delivery (products delivered from nearby stores) or ship-from-store.

Operational and organizational capabilities

The thrive of technical capabilities has led to so many possibilities in the eCommerce landscape. The hybrid new retail formulas offer new benefits through combining offline stores with online stores and technology. Through an intelligent operating system, brands are able to guarantee same-day or even 30-minutes delivery for online or offline selected items.

But delivery service seems not enough. According to Vogue Business, 79% of prosumers think delivery service is not going to be a key differentiating benefit in the future – it is going to be a normal benefit because all brands are deploying it, and they won’t expect anything less than that. This requests the need for more innovative services and content benefits by leveraging online and offline data to personalize and make the offering more relevant.

O2O also helps brands create 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. 

Demand to personalize customer experiences

Customers today expect all businesses to “talk to them in their language”. This demand includes understanding their insights, serving them intuitively based on their current context.

According to a Segment study, 44% of consumers will likely become repeat buyers after a personalized shopping experience with a particular company, and 49% say they have purchased a product that they did not initially intend to buy after receiving a personalized recommendation from a brand. The cherry on top? CMO.com reports that 42% of customers get annoyed when their content isn’t personalized. 

O2O is the key to your eCommerce success

The retail landscape is ever-changing. You must always adapt to the changing environment and customer expectations or you will be left behind. The change is for the better as it offers more convenience and connectivity as technologies continue to change the way we live.

Hybrid or O2O shopping is going to be the next big move in the industry. The fact that big brands like Amazon and Alibaba are deploying seamlessly O2O signifies its values and great potential. Rather than focusing on the product, this approach is built around a single most important core: its customers. It aims at creating the customer journey as integrated and cohesive as possible.

The model changes how businesses look at a customer experience. By simultaneously using both online and offline channels, your business can keep people satisfied, lead them to your store and increase profits.

For more industrial insights, Subscribe to our Blog or check out our Work to see how we help international businesses materialize their vision with technical expertise and consultancy capability.